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Duncan v. STTCPL, LLC

Superior Court of Delaware, Kent

February 28, 2017

ROBERT DUNCAN, Plaintiff,
v.
STTCPL, LLC, SERVICE ENERGY, LLC, and COASTAL PUMP AND TANK, INC., Defendants.

          Submitted: January 27, 2017

         Upon Defendants' Motion to Dismiss - DENIED

          Patrick C. Gallagher, Esquire, Law Office of Curley, Dodge, Funk & Street, LLC, Dover, Delaware, Attorney for Plaintiff.

          Michael W. Arrington, Esquire, Parkowski, Guerke & Swayze, P. A., Wilmington, Delaware, Attorney for the Defendants.

          Scott T. Earle, Esquire, Cohen, Seglias, Pallas, Greenhall & Furman, P.C., Wilmington, Delaware, Attorney for the Defendants.

          MEMORANDUM OPINION

          Jeffrey J. Clark Judge.

         I. Introduction

         Before the Court is a motion to dismiss for failure to state a claim filed by Defendants STTCPL L.L.C. and Service Energy L.L.C. (hereinafter collectively "STTCPL").[1] STTCPL leased Plaintiff Robert Duncan's (hereinafter "Mr. Duncan's") gasoline station in Harrington, Delaware. In 2009, the Delaware Department of Natural Resources and Environmental Control (hereinafter "DNREC") found environmental contamination at that location. After that discovery, Mr. Duncan and STTCPL entered into a Settlement Agreement and Release of Claims (hereinafter "Settlement Agreement") that broadly addressed liability for contamination at the Harrington site.

         On January 23, 2012, DNREC issued another notice of violation regarding the Harrington gas station. The notice cited the same project identification number that was the subject of the Settlement Agreement. DNREC seeks significant additional compensation from Mr. Duncan for the remediation costs associated with the 2012 environmental contamination at the Harrington property. As a result, Mr. Duncan is suing STTCPL for those costs, alleging STTCPL's failure to indemnify him as required under the original lease agreement. Mr. Duncan is also suing Defendant Coastal Tank and Pump, Inc. (hereinafter "Coastal") for the negligent cleanup of the site and STTCPL as Coastal's alleged principal.

         STTCPL responds seeking dismissal of Mr. Duncan's claims alleging that the Settlement Agreement between the parties released his future claims against STTCPL for environmental contamination at the property. STTCPL also seeks dismissal of the negligence claim alleging insufficiency of the Complaint. When reading the Settlement Agreement as a whole, however, and considering documents integral to the Complaint, Mr. Duncan could conceivably recover for his claims. For this reason and those set forth herein, STTCPL's and Coastal's motions to dismiss are DENIED.[2]

         II. Background and Arguments of the Parties

         As this is a motion to dismiss pursuant to Superior Court Civil Rule 12(b) (6), the facts referenced herein are those found in Mr. Duncan's Complaint and the two documents incorporated by reference in the Complaint. Prior to 1994, Mr. Duncan owned and operated a gasoline station in Harrington, Delaware, and during the time he operated it, the station sold only leaded gasoline. In 1994, Mr. Duncan entered into a lease agreement with New Dawn Enterprises, Inc. (hereinafter "New Dawn") for several properties including the gasoline station at issue here. This agreement contained an indemnity clause, which provided

Lessee will indemnify and hold Lessor harmless against, all claims, demands and causes of action, . . . for . . . damage to any property arising from Lessee's tenancy of the premises and not caused by the negligence, omission, intentional act or breach of duty by Lessor or its agents.

         At some point during the end of 1999 or the beginning of 2000, New Dawn sold or assigned its business to STTCPL which included an assignment of the lease for Mr. Duncan's gasoline station. Mr. Duncan consented to this assignment, and in furtherance of it, he entered an Assignment and Lease Modification with New Dawn and STTCPL whereby the original lease remained in effect, including its indemnification clause. This amended lease included a provision stating "[t]he Landlord shall be responsible for and shall hold harmless STTCPL . . . from any claims for environmental damage which has occurred prior to the time that they have become a tenant on the property."

         DNREC, prior to May 2009, alleged the existence of environmental contamination at the gasoline station due to lead in the soil. After DNREC issued its notice of violation, Mr. Duncan and STTCPL entered the Settlement Agreement on May 12, 2009. Pursuant to this agreement, Mr. Duncan assumed responsibility, financial and otherwise, for all future costs related to alleged environmental damage at the Harrington property. The Settlement Agreement also specifically references Mr. Duncan's release of future claims for contamination involving DNREC Project Identification Number K0804036. Elsewhere, the Settlement Agreement broadly references Mr. Duncan's intention to indemnify STTCPL for all future monitoring and remediation costs at the Harrington location. On the other hand, still elsewhere in the Settlement Agreement, this assumption of responsibility, contradictorily, is "limited to solely those environmental matters currently identified by DNREC and the remediation required by DNREC in regard thereto . . . ."

         The present controversy centers on a January 23, 2012 DNREC notice of violation to both Mr. Duncan and STTCPL for alleged gasoline contamination of soil and groundwater at the Harrington station. The January 2012 DNREC notice references Project Identification Number K0804036 which was also specifically referenced by the Settlement Agreement as being included in Mr. Duncan's release of any future claims. The new January 2012 notice related to the underground storage tanks at the station. As alleged however, that notice applied to contamination from unleaded gasoline as opposed to leaded gasoline, which had been the subject of the prior remediation.

         On December 18, 2013, STTCPL hired Costal to remove the underground storage tanks at the station. As alleged, once Coastal excavated and removed the storage tanks, the company negligently took the contaminated fill dirt and placed it directly back into the ground, worsening the contamination.

         In June 2014, DNREC and STTCPL, apart from Mr. Duncan, entered into a Settlement Agreement and Release regarding the 2012 environmental damage. Pursuant to that agreement, STTCPL paid $70, 000 to DNREC in exchange for DNREC releasing STTCPL from further liability for the 2012 environmental damage. After STTCPL reached this agreement with DNREC, DNREC asserted that Mr. Duncan was responsible for a remaining $492, 014 in remediation costs incurred at the site.

         Thereafter, when STTCPL refused to indemnify him as required by the terms of the original lease, Mr. Duncan filed a complaint alleging that STTCPL breached the lease's indemnity provision. He argues that the Settlement

         Agreement's release of liability did not cover what he characterizes as a new DNREC violation, and therefore, under the lease's indemnity clause, STTCPL is responsible for the contamination and its remediation.

         Additionally, Mr. Duncan alleges that his tenants breached the lease because STTCPL did not pay the required rent. Namely, according to Mr. Duncan, STTCPL owes approximately $48, 000 in back rent. Finally, Mr. Duncan sues Coastal for its alleged negligence in removing the underground storage tanks and STTCPL as Coastal's alleged principal. Mr. Duncan claims that Coastal breached its duty of care by removing the underground storage tanks and returning contaminated soil to the ground in violation of Federal and State law.

         In response, STTCPL argues that the Court cannot grant Mr. Duncan relief on either his breach of contract or negligence claims. As to the contract claim regarding environmental harm, STTCPL argues that the Settlement Agreement between Mr. Duncan and STTCPL controls and applies fully to the January 2012 notice of violation. Pursuant to that document's release language, STTCPL argues that Mr. Duncan is responsible for the costs of remediation. Furthermore, as to his rent claim, STTCPL claims that a portion of the $70, 000 paid to DNREC included $48, 000 in escrowed rent that STTCPL paid to DNREC on behalf of Mr. Duncan.

         STTCPL also argues that with regard to Mr. Duncan's negligence claim, Mr. Duncan was contractually responsible for the condition of the soil at the property pursuant to the 2009 Settlement Agreement. Because he was contractually responsible, STTCPL argues that he cannot maintain a negligence claim. Further, STTCPL also argues that Mr. Duncan's negligence claim is set forth in a conclusory fashion and does not provide sufficient specificity to state a claim. Namely, STTCPL argues that Mr. Duncan did not sufficiently allege proximate cause or damages in his Complaint. According to STTCPL, the Court cannot grant Mr. Duncan relief based on the allegations as presented and should dismiss his Complaint pursuant to Superior Court Civil Rule 12(b)(6).

         III. ...


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