Two recent State court decisions may signal a less skeptical, more friendly attitude toward oil companies.
On March 29, 1996, a New Jersey trial court held that Atlantic Richfield Company ("ARCO"), a former underground storage tank ("UST") owner, was not liable under the State's Spill Compensation and Control Act for contamination caused by the USTs because the current property owners acquired the tanks for value without notice of ARCO's interest in them and asserted control over the tanks during their ownership.
Under the facts of Studenko v. ARCO Petroleum Prods. Co., ARCO owned two gasoline USTs and leased the tanks to a dealer who owned and operated a service station on the property in question. The tank lease was not recorded and, when the dealer sold the service station, the new owners were unaware of ARCO's interest in the tanks. The court found that because the lease was not properly recorded, it was void against all subsequent innocent purchasers. In addition, the court found that the new owners' acts of dominion and control (e.g., allowing their tenant to store waste oil in the tanks) were evidence that they wrongfully exerted control over ARCO's property and, thereby, converted the tanks.
In July, the New Jersey Supreme Court addressed the issue of whether an oil company should be held liable for groundwater contamination caused by the activities of an independently-owned and operated gas station that sold the company's products. In Bahrle v. Exxon Corp., the court held that the plaintiff homeowners, who complained of discharges at a nearby gas station that allegedly contaminated their wells, failed to prove that Texaco Corp., a third party defendant in the action, hired the owner/operator of the gas station as an independent contractor. By so holding, the court avoided deciding the issue of whether the independent contractor's operation of the service station was an inherently or abnormally dangerous activity.
The court found that the owner/operator of the gas station merely purchased Texaco products from a third party and had no direct relationship with Texaco. Therefore, the court concluded that Texaco could not be found vicariously liable for the owner/operator's activities at the service station.
