Property Owner Awarded Attorneys’ Fees Even After Failing to Establish Source of Contamination
 
August 15, 2005
 

In 50 Day Street Associates v. Norwalk Housing Authority, 2005 Conn. Super. LEXIS 1335, a group of investors in Connecticut purchased a property without previously conducting an environmental assessment and later discovered petroleum contamination on the site. The Court held that the plaintiffs had failed to prove the neighboring property was the source of the contamination; however, under a state statute, the Court awarded the plaintiffs’ costs and attorneys’ fees.

The plaintiff, 50 Day Street Associates Limited Partnership (Partnership), purchased the property in South Norwalk in 1984 and renovated an existing building into commercial office space. The Washington Village Housing Complex is located on the adjoining property to the north and east sides and is owned by the defendant Norwalk Housing Authority (NHA). In the process of refinancing in 1999, a Phase I environmental study and a limited subsurface investigation of 50 Day Street revealed hydrocarbons in certain soil borings, causing the financing to ultimately collapse.

In 2000, the Partnership retained an environmental consultant to conduct a Phase I and Phase II assessment. The assessments revealed petroleum products in the groundwater in the northeast and southeast corners and significant oil contamination in soil borings in the northeast and south-southwest corners. The consultant stated that the source of oil appeared to be from an off-site location and also noted three underground storage tanks (USTs) for heating oil at NHA’s Washington Village Housing Complex. Based on its investigation and the groundwater flow direction indicating that the NHA tanks were up-gradient, the consultant concluded that the Washington Village USTs presented a potential source for the petroleum contamination.

Following a request from the Partnership to investigate the USTs, NHA retained its own environmental consultant to determine whether the USTs were leaking. NHA’s consultant noted that, although the soil around the USTs contained petroleum hydrocarbons, they apparently did not match the oils contained in the USTs. Thus, the contamination was likely the result of contact with contaminated groundwater in the area. The Partnership instituted the lawsuit in 2002. In 2003, NHA retained another environmental consultant to remove the three USTs. The USTs contained heating oil and remained substantially filled even though Washington Village had converted its heating system from oil to natural gas in 1987. The consultant noted that steel USTs generally have a life expectancy of about 15 years; however, in this case, two of the USTs were installed in 1976 and the other in 1941. When the oldest tank was excavated, it had numerous holes, one the size of a fist.

Defendant and Consultant Negligence

The Court found that the evidence established significant amounts of contamination at both the Partnership’s property and in the area of NHA’s Washington Village property directly to the north and east. The evidence also showed that at least one of the USTs had leaked significant amounts of oil. The Court determined that NHA was negligent in many respects including the following:

• leaving its tanks in the ground long after their useful life and long after they ceased to have any use to NHA

• failing to take steps to determine the possible environmental consequences of not removing the tanks

• delaying for almost two years the advice of their environmental consultant to remove the tanks

• delaying for another year to investigate the extent of oil contamination and begin remediation efforts

The Court also determined that NHA and its initial outside contractor were negligent in failing to properly investigate and identify the oil contamination found near the USTs in 2001.

Cause of the Contamination Not Proven

Although the Court found that NHA was negligent, based on the evidence presented, the Court concluded that the Partnership had not proven by a preponderance of the evidence that the source of the contamination was the NHA property. The Court noted that it was faced with determining the relative strength of two very conflicting and credible professional opinions from the environmental experts called to testify. The Court’s conclusion that causation was not demonstrated hinged on the contested flow of groundwater. The failure to prove causation precluded a finding of liability against NHA on five of the six counts asserted by the Partnership.

Natural Resources From “Unreasonable Pollution”

The final count was brought pursuant to Connecticut General Statutes Section 22a-16. That statute is part of the Connecticut Environmental Protection Act of 1971 (CEPA), which has a stated policy that there is a public trust in the natural resources of Connecticut and it is in the public interest to provide “all persons with an adequate remedy” to protect such resources from “unreasonable pollution.” Under Section 22a-16 the Partnership did not have to show its property was polluted by NHA but only that any natural resource of the state was unreasonably polluted. The Court noted that Section 22a-16 “provides redress for all ‘unreasonable pollution, impairment or destruction’ of ‘the air, water and other natural resources of the state’ in that it allows ‘any person’ to ‘maintain an action’ against ‘any person’ who ... directly engages in such activity.” The Court also noted that the Connecticut Supreme Court has defined “unreasonable” pollution as that which is not in compliance with the regulatory and legislative scheme established by CEPA.

Contamination Remediated Through Litigation

The Court held that the evidence was overwhelming that the leaking oil from NHA’s underground storage tank contaminated the soil and groundwater under NHA’s property that exceeded the Connecticut Department of Environmental Protection’s Remediation Standards Regulations and Direct Exposure Criteria. Therefore, the Court held that the Partnership prevailed to the extent it proved that NHA’s property was contaminated. The remedy available under the statute includes temporary and permanent equitable relief to protect the public trust in the natural resources of the state, as well as reasonable costs and attorneys fees. Finding no available legal remedy and an irreparable harm to the public interest in the natural resources at issue, the Court ordered an injunction requiring NHA to remediate its property in compliance with all applicable state regulations. In awarding attorneys’ fees, the Court noted that “it may seem ironic that the plaintiff which the Court has found to be largely unsuccessful in proving its claims and which sought relief under Section 22a-16 primarily to require NHA to pay for remediation” should be entitled to at least a portion of its litigation costs. However, the Court noted that, had the Partnership not proceeded with the litigation, it is likely that the soil and groundwater contamination caused by the leaking underground storage tank would have been ignored and not remediated.n

For more information, e-mail Nimesh M. Patel at nimesh.patel@hklaw.com or call toll free, 1-888-688-8500.