High Tech Fuels, Inc. v. Schiedlo

A-6937-96T1 & A-7060-96T1 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: January 12, 1999

ENVIRONMENTAL LIABILITY; SPILL ACT—Ownership of, or control over, property at the time of a discharge of hazardous substances, as evidenced by being the sole shareholder and officer of a corporation and by personally receiving sales proceeds from the property, will suffice to hold an individual responsible for the discharge.

After closing, a service station buyer discovered that the underground tanks had leaked. The purchase agreement provided that the seller would assume all responsibility for costs associated with the cleanup of any contamination discovered upon removal of the underground storage tanks. A few months after the buyer notified the seller of the contamination, the selling corporation was dissolved. At the time of dissolution, the corporation no longer had any assets because it had previously transferred all of the closing proceeds to the personal account of its sole shareholder. The lower court found evidence that the sole shareholder had drained the corporation of its major assets, which were needed to meet the corporation’s obligations under the sales agreement. As a result, the lower court determined that this was an appropriate case to pierce the corporate veil to impose personal liability upon the sole shareholder. The Appellate Division reached the same result, but found it was not necessary to pierce the corporate veil to do so. According to the Court, evidence of the sole shareholder’s daily involvement in the operation and management of the property, his positions as the sole shareholder and officer of the selling corporation, and his receipt of the funds when the property was sold were sufficient to find that he was the responsible party under the Spill Act. “Ownership or control over the property at the time of the discharge ... will suffice [to hold that person] responsible for the discharge of hazardous substances.”