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Legal Watch: Volume 18
Prepared by William H. BodeCase Summary: Sinclair Marketing, Inc. owned a service station at I-35 and Chouteau Trafficway that was condemned by the State of Missouri for development purposes in 1999. Prior to vacating the site, Sinclair removed a used oil tank, but left three underground gasoline tanks. When Chouteau Development entered the property for development purposes, it found the three tanks and also petroleum hydrocarbon contamination in the vicinity of the tanks. Chouteau asked Sinclair to remove the tanks and remediate the contamination. Sinclair replied that it no longer owned the site and had complied with its legal obligations. Chouteau removed the tanks, remediated the site, and then sued Sinclair under the theory of “equitable indemnity” – a legal theory providing that if a landowner neglects to perform a duty and another party performs that duty, the performing party is entitled to reimbursement of its costs. The trial court concluded that, as a matter of law, Sinclair had no duty to remove the tanks or clean the condemned site. Chouteau appealed, and the Court of Appeals of Missouri reversed. The Appeals Court found that under Missouri environmental statutes and regulations, Sinclair had a duty to meet EPA standards for new tanks, or to close the station. Since Sinclair failed to comply with either of these options, Sinclair breached its statutory duty. The Court ruled that Sinclair’s breach of duty was the prime element of an equitable indemnification, thereby permitting Chouteau to recover its costs for removing the tanks and cleaning up the contamination.
Bode & Grenier, LLP
1150 Connecticut Ave., NW
Washington, D.C. 20036
Telephone: 202-862-4300 | Email: firstname.lastname@example.org
SINCLAIR HAD DUTY TO REMEDIATE PETROLEUM SPILL EVENTHOUGHSERVICE STATION TAKEN BY CONDEMNATION
LESSON: An oil company is not relieved of its obligation, found in most state environmental laws, to remove tanks and clean up a retail outlet upon closure, even when the property is subject to a condemnation proceeding. When another party then performs these tasks, the prior property owner can be assessed the costs incurred. And remember: the party performing the clean-up may not be as efficient and cost-conscious as the original property owner. Chouteau Development Co., L.L.C. v. Sinclair Marketing, Inc.
BUYER WHO FAILED TO REJECT UNAMBIGUOUSLY DELIVERY OF NO. 6 OIL WITH A 7.5% WATER CONTENT MUST PAY SELLER
LESSON: A buyer of a petroleum product who, after testing, finds the product nonconforming must reject the shipment unequivocally. Unless such a rejection is timely received, the buyer is obligated to pay for the fuel oil, even if the water content grossly exceeds applicable ASTM standards. Midwest Generation, L.L.C. v. Carbon Processing and Reclamation, L.C.C.
Please address any comments or questions to Mr. Bode at 202-862-4300 or email@example.com.
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