Landlord Sues Tenant: And Wins

Landlord Holds Tenant Responsible For Cost of Cleanup of Discharge From Leaky Oil Tank

In a recent decision handed down in the Superior Court of New Jersey, Sussex County, a Morris County Landlord has secured a Judgment against a resident for the cost to clean up and remediate an oil discharge from the Tenant’s underground oil storage tank.

The park in question is thirty years old.  The Landlord purchased it in 1994.  The Landlord immediately undertook steps to impose lease amendments to require inspection and maintenance of mobile home tanks.  The Landlord’s rules required the underground tanks be replaced by above ground tanks placed on concrete pads or other spill prevention/ collection foundation.  The Landlord secured favorable quotes from a local contractor to complete the underground/above ground conversion process, which included interest free financing and Tenant owned spill insurance policies.

A majority of the park residents got rid of their oil.  Then the Tenant in question experienced a malfunctioning furnace which, after investigation, was traced to water in the fuel tank.  Upon further investigation a leak was detected.  The Tenant demanded that the Landlord remediate the problem and the Landlord refused.  The oil company wouldn’t deliver oil, so the Tenant hired a contractor to initiate the clean up.  This allowed the replacement of the underground oil tank with an above ground oil tank, but immediately thereafter the Tenant refused to pay the contractor for the clean up.  The Landlord contracted with the contractor to finish the clean up and secure a no further action letter from the Department of Environmental Protection and paid the contractor.

The Landlord then went in and removed all remaining underground oil storage tanks to avert further risk of contamination and imposed rent increases upon all of the tenants who occupied lots where the Landlord performed this work on behalf of the tenants to recover these costs.  The contractor then sued the Tenant for failure to pay its clean up costs.  The Tenant sued the Landlord for indemnification and the Landlord counterclaimed for its portion of the clean up costs.

In the decision recently issued by a Superior Court Judge, the Judge found the Tenant one hundred percent responsible for both bills and rejected the Tenant’s request to require the Landlord to contribute to the expenses that it contracted for directly with the environmental contractor.

The decision was based upon two considerations made by the Court.  The first was that the tanks in question were personal property owned and controlled by the tenants.  This conclusion was arrived at based upon the consistent practice of the Landlord not to exercise any control of any type over the tanks, with the single exception of the emergency response of the Landlord to use self-help to avoid further oil contamination.  The Court did not find this single exception was an adequate basis to conclude otherwise.

In addition, the Court relied upon provisions of the Spill Act and regulations promulgated pursuant to it, which provide a basis for an “environmental clean up” contribution claim by a landowner against others who would be responsible.  The Court applied the regulations which require an “equitable” apportionment of liability to conclude the Tenant was one hundred percent responsible because the Tenant had resisted the Landlord’s efforts to avoid this risk in the Landlord=s reasonable requests that the Tenant inspect her tank, maintain her tank and convert to a safer above ground oil storage tank with an insurance policy to provide additional financial protection to the parties.

The Landlord, Milton Oakridge Associates, LLC, was represented by Christopher J. Hanlon, Esq. of Hanlon Niemann & Wright, P.C., Freehold, New Jersey.

By Christopher J. Hanlon, Esq., a NJ Landlord/Tenant Attorney

Should you have the need for legal counsel in this area, please contact chanlon@hnlawfirm.com or call toll-free (855) 376-5291.