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Russo v. Alfred Vail Mutual Association

A-0126-05T3 (N.J. Super. App. Div. 2006) (Unpublished)

COOPERATIVES; OIL TANKS; SPILL ACT—Where a cooperative housing association takes careful and plentiful steps to make sure that heating oil tanks are the responsibility of individual proprietary members, it will not be liable for contribution under the New Jersey Spill Act for tank leaks.

In 1957, the United States government sold former military housing units to a cooperative housing corporation. At that time, all of the units were heated by coal-burning furnaces. Over time, however, about two-thirds of the members of the cooperative association “switched over to oil-burning furnaces.” In 1958, a predecessor occupant of one of the units “installed an underground storage tank for heating oil.” At that time, the member “signed a statement acknowledging that he was responsible for [the tank’s] maintenance.” In 1995, the association “required all members with fuel tanks to obtain oil tank insurance.” In 2002, the current member removed the tank and discovered that it had been leaking into the water table. It notified its tank insurance company. The proprietary owner then sued the association for contribution under the New Jersey Spill Act.

The lower court held that the association “did everything in its power to prevent being the responsible party for such an oil spill.” It believed “that when somebody becomes a certificate holder, they undertake the internal components of the unit, not dissimilar from a condominium. And since there is a specific statement about oil tanks, underground or above ground, and they require a member, certificate holder, to maintain oil tank coverage, they [the association] were trying to create a situation where they would not be sitting here [in court], where a member did not maintain their tank or their premises, and then the Association would be the one who would be looked at for responsibility.” The lower court believed that the member whose apartment had the leaking tank was the responsible party. It “understood” the argument that the association actually owned the land but found that in “this particular situation, with a co-op of this nature, and with the historical perspective that applied to this,” it was not unfair to absolve the association’s responsibility and it was not within the spirit of the Spill Act to hold the association responsible. The co-op member appealed.

The Appellate Division found no error in the lower court’s ruling. According to the Court, “[t]here is no basis in the Spill Act or the public policies on which it rests, for assigning the remediation liability allocated by the [apartment owner] and the Association themselves, especially where the party to be held liable to pay the cost is financially responsible. The State has no interest in deciding spill remediation responsibility among potentially liable parties as long as the environmental purposes of the Act will not be frustrated by the arrangement the parties, themselves, have crafted.”

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