Submitted: January 27, 2017
Defendants' Motion to Dismiss - DENIED
Patrick C. Gallagher, Esquire, Law Office of Curley, Dodge,
Funk & Street, LLC, Dover, Delaware, Attorney for
Michael W. Arrington, Esquire, Parkowski, Guerke &
Swayze, P. A., Wilmington, Delaware, Attorney for the
T. Earle, Esquire, Cohen, Seglias, Pallas, Greenhall &
Furman, P.C., Wilmington, Delaware, Attorney for the
Jeffrey J. Clark Judge.
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"). 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.
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.
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
Background and Arguments of the Parties
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.
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."
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 . . .
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
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.
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.
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
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.
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.
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.
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