Case Law Summaries

Adlerstein v. Estate of Myra Fishman

• Opinion Date: November 6, 2000
• Real Property Law
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DEEDS; COVENANTS—A claim based upon breach of a covenant against grantor’s acts must be premised on an act that encumbered the property; a claim that a grantor had discharged hazardous substances on the premises is inadequate.

Home buyers sought to recover expenses from their seller resulting from the need to remove an oil tank and clean up a related oil leak on a property that contained a single family home. Prior to closing, an inspection service reported that the home had a replacement gas furnace, but did not disclose the type of heating system the gas furnace replaced. Further, its report noted that it did not inspect for an “underground oil tank.” At closing, the seller delivered a bargain and sale deed with a covenant against grantor’s acts. Twelve years later, the home buyers resold the property and, during the course of that transaction, an underground oil tank was discovered. As a result, the home buyers were required to remove the oil tank, at considerable expense, in order to conclude their sale. They then sued the original buyer, seeking damages under the New Jersey Spill Compensation and Control Act and for breach of “the covenants against grantor’s acts.” During discovery, the buyers could not produce any evidence on when or how the oil leak occurred and admitted that they did not know the date or dates of the spill or the reason or cause of the spill. Their seller then successfully obtained summary judgment even though the buyers contended that “because they never used oil heat during their ownership, the oil leak must have occurred during” their seller’s ownership. The lower court concluded that because the home buyers could not establish when the leak occurred or that “defendant caused of contributed to the contamination,” the sellers could not succeed. The Appellate Division concurred. In doing so, it held that in order for the home buyers to prevail, they must prove that [their seller] discharged a ‘quantity of hazardous material during ... [its] ownership.’” When the buyers asserted that their seller should be liable because the seller was a person “is in any way responsible” for the discharge of oil, the Court responded by saying that “[t]he phrase in ‘any way responsible’ is not defined in the statute ... ownership or control over the property at the time of the discharge, however will suffice.” Because the buyers could not present proofs as to when the leak occurred, the Appellate Division agreed with the lower court’s dismissal of action. With respect to the claim based on a breach of the covenant against grantor’s acts, the Court held that the buyer failed to establish that its seller had performed “an act that encumbered the property.”

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