Daily Development for
Thursday, April 18, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

HAZARDOUS SUBSTANCES; CONTINUING LIABILITY: Whether seller remains owner of gasoline storage tanks not identified in purchase contract is question of parties' intent. Smith v. Weaver, 665 A.2d 1215 (Pa. Super. 1995).

Buyers purchased gasoline service station from seller. The contract stated that the sale was of real property "together with all equipment located on the property more particularly described in Exhibit "B"...." Exhibit "B" stated that there were 3 underground storage tanks on the property. The contract price was $70,000. Ten years after closing, the buyers began removing the 3 tanks and found 2 more tanks, both of them leaking waste and water. The buyers promptly notified state environmental authorities, which required buyers to spend more than $70,000 in testing and disposing of the tanks and contaminated soil. Buyers then filed an 11 count complaint against the seller. The trial court granted seller's preliminary objections and dismissed all counts. The buyers appealed.

Held: Reversed, for the reasons discussed below:

Misrepresentation: Did Seller misrepresent the number of storage tanks on the property? The trial court erred in concluding that the contract was unambiguous as a matter of law is providing that the number of tanks stated on Exhibit "B" was only the minimum number intended to be bought and sold. The jury should determine if the seller knew or had reason to know of the additional tanks and whether the buyers reasonably could rely on the contract as representing the number of tanks sold with the property.

Negligence, public or private nuisance, and contribution or indemnification: The trial court had dismissed each of these six counts on the basis that the seller was no longer the owner of the leaking tanks and could not be liable for their leaking. The Superior Court rejected seller's arguments that the 2 tanks were fixtures that had passed to the buyers at closing. Whether their removal would so damage the real estate so as to make the tanks fixtures as a matter of law is a question of fact that can not be determined on preliminary objections. Whether the parties intended that the tanks should be considered part of the real estate, a second way in which an item can become a fixture, is also a question of fact here.

The court recognized that, while some prior cases had applied an objective standard to determine the intent of the annexor, that standard does not necessarily apply in the law of fixtures. Here the parties had described the storage tanks as "equipment" in the contract of sale, indicating that they regarded storage tanks as personalty not realty. If the jury finds that the parties did not intend to treat the tanks as part of the real estate, it may also find that only the 3 tanks mentioned in Exhibit "B" passed to the buyers and that the seller is still the owner of the 2 leaking tanks. As owner, she could be liable to the present owner-buyers under one or more of these counts.

Strict Liability: The trial court's first reason for dismissing this count, that Seller was no longer the owner of the leaking tanks was rejected above. The second reason, that underground petroleum storage tanks are not an ultrahazardous activity creating strict liability was affirmed. Although the consequences of negligent operation and maintenance of these tanks can create significant harm, the use of underground storage tanks itself as is not an abnormally dangerous activity. It is the activity, not the potential consequences of negligent conduct of the activity, that gives rise to strict liability. Restatement (Second) of Torts 519 and 520; Melso v. Sun Pipe Line Co., 576 A.2d 999 (Pa. Super. 1990) (gasoline transmission pipeline under housing development not abnormally dangerous activity).

Declaratory Judgment Establishing Seller's Liability for Future Costs Occasioned by the Leaking Tanks: Dismissal affirmed. Liability should be determined as specific claims arise.

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