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Court pierced the corporate veil & orders civil penalty in Newark Spill Act case

In NJDEP v. Little Mason Properties, LLC, Irfan Hassan, et. al., the court held that the defendants were jointly and severally liable for all cleanup, removal, and related costs required to remediate the discharge of hazardous substances at a Property in Newark, NJ, as well as wherever the contamination has migrated therefrom. Additionally, the order called for reimbursement of costs incurred by the Plaintiff, and for Defendants to pay a civil penalty of $1,000 pursuant to N.J.S.A. 58:10-23.11u(d). 

It is alleged that during removal of four 1,000-gallon underground storage tanks (“UST”) a discharge of gasoline was observed and reported to the NJDEP in November 2000. Allegedly, Little Mason Properties, LLC and Friends Gas, LLC are the current and former owners of the site with Irfan Hassan as the CEO and individual in control of both entities. According to NJDEP’s brief, Hassan owns and controls Little Mason, based on his testimony involving other stations. Similarly, NJDEP asserts that Hassan’s membership and control of Friends Gas was evidenced by his execution of a settlement agreement for Friends Gas in 2021. The brief highlighted Hassan’s previous repeated violations involving other gas stations and his abuse of the corporate form to evade liability.   

Following the alleged discharge in November 2020, Friends Gas owned the site from June 2010 to June 2015. Little Mason took over ownership and currently owns the Property. Hassan, as the individual in control of Friends Gas and Little Mason, is seemingly responsible for ensuring the companies comply with New Jersey’s environmental laws and regulations. It was alleged that all three defendants are “persons in any way responsible” under the New Jersey Spill Compensation and Control Act (“Spill Act”). The Spill Act provides that any person who discharges a hazardous substance or is “in any way responsible” for any hazardous substance that is discharged, “shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.” N.J.S.A. 58:10-23.11g.c.(1). As of February 2024, it was alleged that neither of the three parties had remediated the property nor investigated the discharge. The Commissioner and the NJDEP initiated the matter. Despite filing an answer, the above defendants allegedly failed to response to discovery requests, and consequently, default was entered against them. The NJDEP filed the subject motion for final judgment which was granted in March 2024. 

The Court granted the motion for final judgment against all three defendants, thus piercing the corporate veil to prevent Hassan from continuing to abuse the privilege of incorporation. Given the court’s evaluation of the “Lewis” factors, they also ordered the civil penalty, given the number and frequency of violations, the precautions taken to prevent further mishaps, the circumstances under which the offenses occurred, and the need to strip the violator of profits realized as a result of the violations.  

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