(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
DAVID BAHRLE, ET AL. V. EXXON CORPORATION, ET AL. (A-34-95)
Argued October 10, 1995 -- Decided July 9, 1996
POLLOCK, J., writing for a unanimous Court.
The primary issue on appeal is whether an oil company should be liable for groundwater
contamination because of the activities of an independently-owned and operated gas station that sold the oil
company's products. Plaintiffs, residents of Lacey Township, claim that leaks and spills that occurred
between 1959 and 1975 at a gas station owned and operated by Donald W. Rule, contaminated their drinking
wells.
Between 1959 and 1975, Rule operated his gas station as Rule's Texaco. During that time, Rule sold
Texaco products. Kalsch-Forte Oil Co., Inc. (Kalsch-Forte), a distributor of Texaco products, supplied Rule
with the Texaco products and installed the underground gasoline storage tanks and other equipment.
Kalsch-Forte leased the underground tanks and other equipment to Rule for nominal rent. There was no
written agreement between the parties until 1972, when Kalsch-Forte supplied Rule with new underground
gasoline storage tanks. At that time, the parties entered into a written "Customer's Equipment Lease,"
which, among other things, required Rule to maintain the equipment and signs advertising Kalsch-Forte
brand products. During the time Rule operated the gas station, Kalsch-Forte distributed products to Rule,
except for three to six months during the oil crisis in the 1970's when Texaco directly supplied Rule. Nothing
in the record indicates any above-ground spills during the time when Rule operated the station.
In August 1975, Rule sold the station to Richard and Susan Ritchie. Initially, the Ritchies continued
to purchase Texaco products from Kalsch-Forte and to operate as a Texaco station. In October 1975, the
Ritchies purchased the underground tanks and other equipment from Kalsch-Forte and converted to an
Exxon station. The Ritchies installed new underground storage tanks and fuel islands in 1981. One of the
tanks that was removed showed signs of extensive corrosion.
In 1984, neighboring residents (plaintiffs) complained of foul-smelling well water. Investigators from
the New Jersey Department of Environmental Protection (NJDEP) found gasoline-related contamination in
fourteen residential wells. NJDEP identified the Ritchies's gas station as the most likely source and defined
a "red line area" in which residential wells were contaminated or threatened with contamination.
Under theories of negligence, nuisance and strict liability, plaintiffs sued Rule and Texaco
Corporation, for personal injuries, emotional and mental distress, loss of use and enjoyment of property, and
economic and financial harm. The plaintiffs also named Kalsch-Forte, the Ritchies, and Exxon Corporation
as defendants. Before trial, plaintiffs dismissed their claims against Kalsch-Forte, which was no longer in
business. The trial court granted summary judgment and dismissed most of plaintiffs' claims against Exxon
and the Ritchies. Plaintiffs settled the remaining claims with those defendants.
At trial, the court excluded the testimony of plaintiffs' expert as an inadmissible net opinion. At the
conclusion of the evidence, the court instructed the jury that it could find Texaco liable for Rule's negligence
if it found that Rule had apparent authority to operate a Texaco station. It further charged the jury that it
could find Texaco strictly liable under the Spill Act for leaks in underground storage tanks, if it found that
the tanks had leaked and that Texaco owned them. The jury found that Rule was not negligent, that the
tanks did not leak, and that Kalsch-Forte, not Texaco, owned them. Consequently, the jury returned a
verdict of no cause for all defendants.
On appeal, the Appellate Division affirmed the judgment in favor of Texaco, finding no basis for
apparent-authority liability and no private right of action for damages claimed by plaintiffs under the Spill
Act. The court also affirmed the Law Division's ruling not to admit the testimony of plaintiffs' expert. The
Appellate Division reversed and remanded for retrial the claims against Rule on issues of negligence,
nuisance and strict liability. In reversing, the Appellate Division directed the trial court to determine
whether operating a gas station is an abnormally dangerous activity under the Restatement (Second) of Torts
§ 520.
The Supreme Court granted plaintiffs' petition for certification.
HELD: Texaco Corporation is not vicariously liable for groundwater contamination caused by the activities
of an independently-owned and operated gas station that sold Texaco products.
1. The Court affirms the Appellate Division holding that Texaco is not liable under the theory of apparent
agency for the reasons expressed in that court's opinion. (p. 17)
2. Ordinarily, an employer that hires an independent contractor is not liable for the negligent acts of the
contractor in the performance of the contract. However, an employer is strictly liable for harm resulting
from the performance by an independent contractor of abnormally dangerous work. Essential to the
application of these rules is the existence of an independent-contractor relationship. Here, plaintiffs' claim
against Texaco fails because they failed to prove that Texaco hired Rule as an independent contractor. Rule
had no direct relationship with Texaco; he dealt exclusively with Kalsch-Forte. Moreover, neither Kalsch-Forte nor Texaco exercised control over the operation of the service station. Because Rule is not an
independent contractor, the Court need not consider whether Rule's operation of the service station was
either an inherently or abnormally dangerous activity or whether Rule created a nuisance. (pp. 18-20)
3. Plaintiffs urge the Court to fashion a common law basis of recovery against major oil companies when
defunct suppliers and uninsured gasoline service station owners cause surface and groundwater
contamination. Nothing in this record justifies the imposition of liability on oil companies for harms caused
by conduct over which they have no reasonable means of influence or control. Adequate statutory and
common-law remedies exist for parties who suffer injuries from the discharge of petroleum products into
surface and groundwater. (pp. 20-21)
4. The trial court properly excluded the testimony from plaintiffs' expert concerning industry practices, the
standard of care, and the relationship between Rule and Texaco. (p. 21)
Judgment of the Appellate Division is AFFIRMED.
JUSTICES HANDLER, O'HERN, GARIBALDI and COLEMAN join in JUSTICE POLLOCK's
opinion. CHIEF JUSTICE WILENTZ and JUSTICE STEIN did not participate.
SUPREME COURT OF NEW JERSEY
A-
34 September Term 1995
DAVID BAHRLE, IDA BAHRLE, MICHAEL
BAHRLE, STEVEN BAHRLE,
WILLIAM BAHRLE, PATRICIA M. BAHRLE,
STEVEN and PATRICIA M. BAHRLE
as Guardians Ad Litem for KYLE
BAHRLE, a minor, KAREN BENHAM,
MICHAEL BENHAM, MICHAEL BENHAM, as
Guardian Ad Litem
for CARLEY BENHAM, and MICHAEL C.
BENHAM, minors, DONNA BERGMANN,
KENNETH BERGMANN, KENNETH BERGMANN,
as Guardian Ad Litem for
JASON BERGMANN and MICHAEL BERGMAN,
minors, ELIZABETH BETZ, LAWRENCE
BETZ, JR., CAROLE A. BRILLY,
KATHLEEN BRILLY, MARYBETH BRILLY,
PATRICK J. BRILLY, CAROLE A.
BRILLY, as Guardian Ad Litem for
PARTICIA B. BRILLY, a minor, RUTH
CERVASIO, THOMAS CERVASIO, HILARY
DONOHUE, ROBERT M. DONOHUE, ROBERT
M. DONOHUE, as Guardian Ad Litem
for DAWN DONOHUE, MERRILEE DONOHUE
and TIFFANY DONOHUE, minors,
DOROTHY FORTUS, JOHN S. FORTUS,
PATRICIA D. FORTUS, STEPHEN J.
FORTUS, DEBRA A. FRIERMUTH, NEIL
ALAN FRIERMUTH, SHERRY A. FRICK,
THOMAS D. FRICK, THOMAS and SHERRY
FRICK, as Guardians Ad Litem for
ATRINA FRICK, a minor, DAVID
GALLINA, ELLEN GALLINA, ELLEN
GALLINA, as Guardian Ad Litem for
KAREN GALLINA, and KRISTINE
GALLINA, minors, ANDREW GLATZ,
BERTHA GLATZ, FREDERICK A. GLATZ,
PAUL T. GLATZ, CHERYL D. HEDBERG,
JOHN A. HEDBERG, CHERYL D. HEDBERG,
as Guardian Ad Litem for DERRICK
HEDBERG, JOHN HEDBERG, and MICHELE
HEDBERG, minors, NORA HENNESSEY,
MARIE HOWLEY, ELLEN KLEIN, JOSEPH
S. KLEIN, PATRICIA ANN KLEIN,
JOSEPH S. KLEIN, as Guardian Ad
Litem for THERESA KLEIN, a minor,
DALE R. KNOTT, DENISE L. KNOTT,
IRENE G. KNOTT, GEORGE T. LEARY,
III, JUDITH A. LEARY, JUDITH A.
LEARY, as Guardian Ad Litem for
SEAN A. SCANLON and TARA B. SCANLON, minors, JEAN LUZETSKY, JOHN J. LUZETSKY, ROBERT J. LUZETSKY, JOHN and JEAN LUZETSKY as Guardians Ad Litem for JANENE LUZETSKY, a minor, WILLIAM J. MAGYARITS, ELAINE MANGAN, GRACE MANGAN, JUDITH MANGAN, MICHAEL G. MANGAN, SR., PETER MANGAN, WILLIAM MANGAN, WILLIAM MANGAN, as Guardian Ad Litem for CHRISTOPHER MANGAN, NOAH MANGAN, PATRICK MANGAN and WILLIAM MANGAN, JR., minors, ELAINE MANGAN, as Guardian Ad Litem for MICHAEL MANGAN, JR. and TARYN MANGAN, minors, ELLEN MARANO, SALVATORE MARANO, DENNIS MCCORY, DIANE B. MCCORY, ELEANOR MCCORY, DENNIS MCCORY, as Guardian Ad Litem for KATHLEEN MCCORY, a minor, CAROL ANN MCMAHON, PATRICK. L. MCMAHON, DORIS MEEHAN, JAMES J. MEEHAN, JOHN V. MEEHAN, MILDRED J. MEEHAN, VINCENT T. MEEHAN, JOHN V. and MILDRED J. MEEHAN, as Guardians Ad Litem for JOHN J. MEEHAN, a minor, MICHAEL A. METELSKY, ANITA J. O'BRIEN, THOMAS E. O'BRIEN, CHARLES OBRZUT, STELLA OBRZUT, LUCILLE PETERS, ESTATE OF HELMUTH PETERS, HAZEL F. PERTERSON, ROBERT PETERSON, ROBERT PETERSON, as Guardian Ad Litem for CHRISTINE PETERSON, a minor, CATHLEEN PETRIN, NICHOLAS PETRIN, STEFFANY PETRIN, TIMOTHY PETRIN, JOSEPH PINO, LINDA PINO, LINDA PINO, as Guardian Ad Litem for ANGELA CAPUTO and JOSEPH CAPUTO, minors, JOAN PONTICELLO, MATTHEW PONTICELLO, JOAN PONTICELLO, as Guardian Ad Litem for RENE PONTICELLO and TINA PONTICELLO, minors, CATHRYN POPP, ANGELA RIZZO, ANTHONY RIZZO, CHRISTINE RIZZO, GENE J. SANTUCCI, JUDITH ANN SANTUCCI, JUDITH ANN SANTUCCI, as Guardian Ad Litem for DIANE SANTUCCI, JOSEPH SANTUCCI, MICHAEL SANTUCCI, THERESA SANTUCCI and TIMOTHY SANTUCCI, minors,
EDWARD J. SCANLON, HEATHER V.
SCANLON, HEATHER V. SCANLON, as
Guardian Ad Litem for, CHAD
SCANLON, DIERDRE LEARY AND DREW
LEARY, minors, JAMES F. SMITH, JR.,
MARGARET SMITH, MARIE SMITH, JAMES
F. SMITH, JR. and MARIE SMITH, as
Guardians Ad Litem for DONNA SMITH,
a minor, RICHARD SPAFFORD, SUSAN
SPAFFORD, SUSAN SPAFFORD, as
Guardian Ad Litem for RICHARD
SPAFFORD, JR., RONALD SPAFFORD and
WENDI SPAFFORD, minors, BERTHA B.
TIER, JOHN E. TIER, CHRISTOPHER
VANDERKAM, MARK E. VANDERKAM,
PATRICIA VANDERKAM, EDWARD
VANDERKAM, MARK E. VANDERKAM, as
Guardian Ad Litem for LYNN
VANDERKAM WAGNER, a minor, BENJAMIN
WEDEKIND, FRANK WEDEKIND, KEVIN
WEDDKIND, MARY WEDEKIND, KURT
WEDEKIND,
Plaintiffs-Appellants,
v.
EXXON CORPORATION, a corporation of
the State of New Jersey doing
business as EXXON CO., USA; INNCO
FUELS, INC., a corporation of the
State of New Jersey; CONWAY AUTO,
INC., a corporation of the State of
New Jersey; RICHARD E. RITCHIE AND
SUSAN M. RITCHIE, trading as LACEY
EXXON; LACEY TOWNSHIP, a municipal
corporation of New Jersey; POINT
BAY FUEL, INC., a corporation
of the State of New Jersey; GARDEN
STATE PARKWAY AUTHORITY; JERSEY
CENTRAL POWER AND LIGHT COMPANY, a
corporation of the State of New
Jersey; CHARLOTTE W. RULE; KALSCH-FORTE OIL CO., INC., a/k/a K-FORTE
OIL CO., a corporation of the State
of New Jersey; "JOHN DOE"
DEFENDANTS B THROUGH Z; "JOHN DOE"
DEFENDANTS
4 THROUGH 10; ** "JOHN
ROE"; DEFENDANTS A THROUGH Z; "JOHN
ROE" DEFENDANTS
1 THROUGH 10,
**RULES TEXACO, INC.
Defendants,
and
TEXACO REFINING AND MARKETING INC.,
improperly designated as TEXACO
CORPORATION, a corporation of the
State of Delaware; DONALD W. RULE,
improperly impleaded as the ESTATE
OF DONALD W. RULE, t/a
RULE'S SERVICE STATION,
Defendants-Respondents.
Argued October 10, 1995 - Decided July 9, 1996
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
279 N.J. Super. 5 (1995).
Alan H. Sklarsky argued the cause for
appellants (Tomar, Simonoff, Adourian,
O'Brien, Kaplan, Jacoby & Graziano and Valore
Law Firm, attorneys; Mr. Sklarsky and Carl J.
Valore, on the briefs).
James Crawford Orr argued the cause for
respondent Texaco Refining and Marketing Inc.
(Wilson, Elser, Moskowitz, Edelman & Dicker,
attorneys; Mr. Orr and Joseph A. Gallo, on
the briefs).
Donald W. Rule submitted a letter in lieu of
brief pro se joining in the brief submitted
by respondent Texaco Refining and Marketing
Inc.
Michael D. Loprete submitted a brief on
behalf of amicus curiae The American
Petroleum Institute (Crummy, Del Deo, Dolan,
Griffinger & Vecchione, attorneys; Richard E.
Wallace, Jr., a member of the District of
Columbia bar and Alan M. Grimaldi, a member
of the Maryland bar, of counsel).
Steven J. Picco submitted a brief on behalf
of amicus curiae New Jersey Fuel Merchants
Association (Picco Herbert Kennedy,
attorneys; Mr. Picco, Stacy Cohen and Diane
A. Davis, on the brief).
The opinion of the Court was delivered by
POLLOCK, J.
This appeal raises the issue whether an oil company should be liable for groundwater contamination because of the activities of an independently-owned and operated gas station that sold the oil company's products. Plaintiffs, residents of Lacey Township, claim that leaks and spills that occurred between 1959 and 1975 at a gas station owned and operated by defendant, Donald W. Rule, contaminated their wells. Under theories of negligence, nuisance and strict liability, plaintiffs sued Rule and Texaco Corporation (Texaco), a major oil company, for personal injuries, emotional and mental distress, loss of use and enjoyment of property, and economic and financial harm. Plaintiffs also named as defendants Kalsch-Forte Oil Co., Inc. (Kalsch-Forte), a distributor of Texaco's products; Richard and Susan Ritchie, who purchased the station from Rule in 1975 and converted it into an Exxon station; and Exxon Corporation (Exxon). Before trial, plaintiffs dismissed their claims against Kalsch-Forte, which was no longer in business. After the trial court granted summary judgment dismissing most of plaintiffs' claims against Exxon and
the Ritchies, plaintiffs settled their remaining claims with
those defendants.
The appeal resolves into two basic issues. The first
concerns Texaco's liability to plaintiffs for injuries to persons
and property resulting from groundwater contamination caused by
Rule's operation of the gas station. This issue subdivides into
three questions. The first involves the vicarious liability of a
principal for an apparent agent. The second concerns the
liability of an employer for an independent contractor that has
created a nuisance or is conducting inherently or abnormally
dangerous activities. Finally, plaintiffs argue that in the
interest of distributive justice, Texaco, as a nationwide
distributor of petroleum products, should be liable for harms
caused by the discharge of its products when service station
operators and suppliers are uninsured or otherwise unable to
satisfy damages. The second basic issue is whether the trial
court erred by excluding testimony of plaintiffs' petroleum
expert as an inadmissible net opinion.
The Law Division instructed the jury that it could find Texaco liable for Rule's negligence if it found that Rule had apparent authority to operate as Texaco's agent. It further charged that the jury could find Texaco strictly liable under the Spill Act for leaks in underground storage tanks, if it found
that the tanks had leaked and that Texaco owned them. The jury
found that Rule was not negligent, that the tanks did not leak,
and that Kalsch-Forte, not Texaco, owned them. Consequently, the
jury returned a verdict of no cause for all defendants.
The Appellate Division affirmed the judgment in favor of
Texaco, finding no basis for apparent-authority liability and no
private right of action for damages claimed by plaintiffs under
the Spill Act.
279 N.J. Super. 5, 26-27, 36-37 (1994). It
reversed and remanded for retrial the claims against Rule on
issues of negligence, nuisance, and strict liability. In
reversing, the Appellate Division directed the trial court to
determine whether operating a gas station is an abnormally
dangerous activity under the Restatement (Second) of Torts § 520
(1969). 279 N.J. Super. at 24, 37-39. The Appellate Division
also affirmed the Law Division's ruling not to admit testimony by
plaintiffs' expert.
We granted plaintiffs' petition for certification,
140 N.J. 326 (1995), and now affirm substantially for the reasons stated
by the Appellate Division. We explicitly address an issue that
the Appellate Division treated implicitly, the liability of
Texaco for the conduct of an abnormally dangerous activity.
From 1959 to 1975, Rule owned and operated a gas station at
930 Lacey Road in Lacey Township. Rule sold Texaco products,
displayed Texaco signs, and used Texaco's bookkeeping procedures
and credit card system. In 1975, Rule sold the station to
Ritchie, who sold Exxon products. The Ritchies also bought the
underground tanks from Kalsch-Forte.
In December 1984, residents of the neighboring Barnegat
Pines subdivision complained of foul-smelling well water.
Investigators from the New Jersey Department of Environmental
Protection (NJDEP) found gasoline-related contamination in
fourteen residential wells. NJDEP identified Ritchie's gas
station as the most likely source and defined a "red line area"
in which residential wells were contaminated or threatened with
contamination.
Twenty-five years earlier, in 1959, Rule and his father had
built the service station according to plans provided by Atlantic
Richfield Oil Co. (Arco). Because of a dispute with Arco over
the number of service bays, Rule abandoned his plans to operate
the station for Arco. While the station was still under
construction, Forte and Matthews, who were employees of Kalsch-Forte, offered to supply the Rules with products, equipment, and
services supplied by Texaco.
Rule agreed to sell Texaco products and operate the station
as "Rule's Texaco." Kalsch-Forte supplied Rule with Texaco
products and installed the underground gasoline storage tanks and
other equipment. Rule obtained uniforms and Texaco patches from
a uniform dealer in Philadelphia. After his father died in 1961,
Rule incorporated the business as "Rule's Service Station."
Kalsch-Forte leased the underground tanks and other
equipment to Rule for the nominal rent of one dollar per year, a
sum that Rule did not remember ever paying. No written agreement
evidenced the 1959 understanding between Rule and Kalsch-Forte.
In 1972, however, when Kalsch-Forte supplied Rule with new
underground gasoline storage tanks, the parties entered into a
written "Customer's Equipment Lease." The lease required Rule to
maintain the equipment and signs advertising Kalsch-Forte brands
of products. In addition to the gasoline tanks, the lease listed
the fuel oil and kerosene tanks, lights and light poles, air
compressor, and lift as Kalsch-Forte equipment. The name
"Texaco" appeared on the signs, the pumps, the products, and
attendants' uniforms.
Kalsch-Forte increased the underground gasoline storage capacity at the service station from 6,000 gallons in 1959 to 17,000 gallons in 1975, when Rule sold the station. During that time, Kalsch-Forte distributed products to Rule, except for three
to six months during the oil crisis in the 1970s when Texaco
directly supplied Rule. Nothing in the record indicates any
above-ground spills during the time when Rule operated the
station.
In August 1975, Rule sold the station to the Ritchies.
Initially the Ritchies continued to purchase Texaco petroleum
products from Kalsch-Forte and operate as a Texaco station. In
October 1975, however, they purchased the underground tanks and
other equipment from Kalsch-Forte and converted to an Exxon
station. The Ritchies installed new underground storage tanks
and fuel islands in 1981. They removed the old fuel islands,
pumps, and all underground tanks except for one, which they
drained and filled with concrete. One of the tanks showed signs
of extensive corrosion.
In December 1984, residents of Barnegat Pines complained to
the Ocean County Health Department (OCHD) about odors in their
well water. OCHD tested a number of wells, finding fourteen to
be contaminated with gasoline-related volatile organic compounds
(VOCs). VOC concentrations found in many residential wells
exceeded NJDEP's acceptable limits. The NJDEP circumscribed a
contaminated area covering fifteen blocks and determined that
Rule's Service Station was the most likely source of
contamination.
After unsuccessfully seeking to maintain this case as a
class action, plaintiffs filed an amended consolidated complaint
against Exxon, Texaco, the Rules, the Ritchies, Kalsch-Forte, and
others. An initial hydrogeologic study commissioned by Exxon
revealed that contamination of groundwater derived from five
potential sources. Consequently, in March 1989, the court issued
a case management order that divided plaintiffs into three zones
according to the source and flow of contamination. Plaintiffs in
the western zone, filed a complaint against Rule, Texaco, Kalsch-Forte, the Ritchies, and Exxon.
Exxon commissioned a subsequent hydrogeologic study that
plaintiffs' experts endorsed. The subsequent study revealed that
discharges occurring after the Ritchies bought the station
could not have affected wells located outside a one-and-a-half
block radius from the station. On January 5, 1990, the Law
Division granted summary judgment for Exxon and the Ritchies,
dismissing all claims except those asserted by plaintiffs living
within that radius of the station. Texaco, which had asserted a
cross-claim against Ritchie, did not oppose the summary-judgment
motion. Exxon and the Ritchies settled with the remaining
plaintiffs, who stipulated to a dismissal with prejudice.
At trial, plaintiffs sought to prove that discharges of gasoline and other petroleum products from the gas station
between 1959 and 1975, when Rule operated the Texaco station,
contaminated their wells. In support of their allegations,
plaintiffs sought to introduce testimony of Albert D. Young, a
petroleum distribution consultant and retired Exxon executive.
At a "Rule 8" hearing, conducted under Evidence Rule 8 (now
N.J.R.E. 104(a)), Young testified that he believed that above-ground gasoline spills "probably happened more frequently than
not" during Rule's ownership of the station. According to Young,
in the 1960s, as the capacity of fuel trucks increased, the
trucks commonly pumped more fuel into the tanks than they could
hold, thereby causing overflow and spills. He theorized that
such spills, which were common during the 1960s and 1970s, had
occurred at Rule's station. Young postulated that soil
contamination in the areas around the underground tank and fuel
islands indicated that spills had occurred during the delivery of
gas or the pumping of fuel to customers' cars between 1959 and
1981. Young admitted on cross-examination, however, that he had
never visited the service station, had never spoken with Rule or
any of his employees, knew nothing about the operating practices
at the station, and knew of no spills or leaks having occurred at
the station from 1959 to 1981.
The trial court excluded Young's testimony as a "net opinion." Although the court found Young qualified as an expert
on petroleum-product distribution, it concluded that he was not
qualified as a hydrologist. Hence, Young was unqualified to
render an opinion on the likelihood that any of the spills would
reach the ground water. Because Young could not exclude spills
that occurred in the period from August 1975, when the Ritchies
purchased the station, to 1981, when they replaced the tanks, he
could not render an opinion indicating Rule as the source of
contamination.
At trial, Rule and Texaco moved to submit testimony of Lloyd
LaBrie, a consulting engineer. LaBrie stated that activities at
the station after 1975 could have contaminated some of
plaintiffs' wells. LaBrie's testimony conflicted with the
findings of the court when granting summary judgment for Exxon
and the Ritchies. According to LaBrie, post-1975 discharges from
the station could have contaminated the residential wells located
beyond the one-and-a-half block radius. Over plaintiffs'
objections, the trial court ruled that the summary judgment for
Exxon and the Ritchies did not preclude Texaco from arguing that
the contamination was due to the conduct of third parties. The
court, however, required LaBrie to base his testimony on the same
groundwater velocity rates used by experts for Exxon and
plaintiffs.
In its charge, the court instructed the jury that it could
find Rule liable under theories of negligence or strict
liability. Further, the jury could find Texaco strictly liable,
if it first found that Texaco had owned the underground tanks and
pipelines and that they had leaked. Finally, the court
instructed that the jury could find Texaco vicariously liable, if
it found that Rule had been negligent and an apparent-agency
relationship existed between Rule and Texaco.
In the Appellate Division, plaintiffs argued that the trial
court should not have allowed Texaco to introduce evidence that
post-1975 discharges could have caused contamination outside the
Exxon plume. The Appellate Division agreed, concluding that
Texaco's failure to oppose the summary judgment for Exxon and
Ritchie estopped Texaco from urging that the discharges had
occurred when the station was identified with Exxon. 279
N.J. Super. at 23. As to Texaco, the court ruled that the error
was harmless, because the jury had found that Kalsch-Forte, not
Texaco, owned the underground tanks and pipelines. As to Rule,
however, the error was not harmless, because it could have led
the jury to believe that post-1975 discharges were the sole cause
of the contamination. Id. at 23-24. Hence, the court reversed
and remanded for a new trial as to Rule. Id. at 24.
Plaintiffs also argued that absent LaBrie's testimony the
jury could have found Texaco vicariously liable under the
doctrine of apparent authority. The Appellate Division
disagreed, finding no evidence that Texaco had a direct duty to
guard against contamination of the groundwater. Id. at 24-25.
The court also found that Texaco was not vicariously liable
because "[p]laintiffs produced absolutely no evidence that they
in any manner relied upon the fact that Rule's station was a
Texaco station." Id. at 26.
Plaintiffs next argued that the trial court erred in barring
testimony by plaintiffs' expert, Mr. Young, concerning the
standard of care in the industry, occurrence of spills at the
station during Rule's ownership, and the relationship between
Rule and Texaco. The Appellate Division disagreed, holding that
the trial court properly excluded the testimony as a net opinion.
Id. at 30-31.
Plaintiffs also argued that the trial court erroneously charged the jury that the Spill Act imposed strict liability for discharges from underground tanks only. According to plaintiffs, the Spill Act applies to discharges above, as well as those below, the ground. Although the Appellate Division agreed that the trial court had erred, it found the error harmless. Id. at 37. The Appellate Division acknowledged that the Spill Act
creates a private cause of action for recovery of damages caused
by discharges of petroleum products, but held that the Act limits
recovery to clean-up and removal costs. We agree. Such a cause
of action does not extend, however, to damages arising from
emotional distress, enhanced risk of disease, loss of enjoyment
of property, and other economic and financial harm. Id. at 36-37.
Finally, the Appellate Division noted that the trial court,
in holding that Rule's operation of the service station was not
an abnormally dangerous activity, incorrectly failed to apply
factors set forth in sections 519-20 in the Restatement of Torts
(Second). The Appellate Division acknowledged that plaintiffs'
decision not to appeal this holding may have been influenced by
the fact that the trial court had charged strict liability under
the Spill Act. Consequently, the Appellate Division directed the
trial court, on remand, specifically to "apply the Restatement
factors to determine whether there is a jury issue concerning
strict liability against Rule on the abnormally-dangerous
activity theory." Id. at 37-38. Although the Appellate Division
did not explicitly address Texaco's liability on that theory, it
did so implicitly by concluding that "there was no factual or
legal basis to hold Texaco liable on a vicarious liability
theory." Id. at 27.
Plaintiffs claim that Texaco is vicariously liable for the
discharge from Rule's service station of petroleum products into
the groundwater. They predicate Texaco's liability on two
theories. First, plaintiffs claim that Texaco held out Rule as
its agent, thereby constituting him as its apparent agent. Their
second claim is that Rule, in operating the gas station, created
a nuisance or was engaged in inherently or abnormally dangerous
activity as Texaco's independent contractor. The Appellate
Division held that Texaco is not liable under the theory of
apparent agency. 279 N.J. Super. at 26-27. We affirm that
holding substantially for the reasons stated by the Appellate
Division. Ibid. The issue of Texaco's alleged liability for
conduct of an inherently or abnormally dangerous activity
requires further discussion.
Ordinarily, an employer that hires an independent contractor is not liable for the negligent acts of the contractor in the performance of the contract. Majestic Realty v. Toti Contracting Co., 30 N.J. 425, 431 (1959); Restatement (Second) of the Law of Torts § 409 (1969) (Restatement). The employer remains liable, however, for work that is inherently dangerous. Majestic Realty, supra, 30 N.J. at 435; Restatement §§ 416, 427; see also 41 Am. Jur 2d Independent Contractors § 52; Francis M. Dougherty,
Annotation, Liability of Employer with Regard to Inherently
Dangerous Work for Injuries to Employees of Independent
Contractor,
34 A.L.R.4th 914, 920 (1984). Similarly, an employer
is strictly liable for harm resulting from the performance by an
independent contractor of abnormally dangerous work. Majestic
Realty, supra, 30 N.J. at 436; Restatement § 427A;
41 Am. Jur 2d
Independent Contractors § 63; see also N.J. Dept. of
Environmental Protection v. Ventron Corp.,
94 N.J. 473, 491
(1983) (holding land owners engaging in abnormally dangerous
activity strictly liable for resulting harm); Restatement §§ 519,
520 (setting out strict liability rule and test for abnormally
dangerous activity). The employer's liability stems from a non-delegable duty to exercise reasonable care when performing the
inherently or abnormally dangerous activity, a duty that the
employer can not discharge by hiring an independent contractor.
Majestic Realty, supra, 30 N.J. at 438-39;
41 Am. Jur 2d
Independent Contractors, §§ 53, 63.
Essential to the application of these rules, however, is the existence of an independent-contractor relationship. An independent contractor is a person "who, in carrying on an independent business, contracts to do a piece of work according to his own methods without being subject to the control of the employer as to the means by which the result is to be accomplished but only as to the result of the work." Wilson v.
Kelleher Motor Freight Lines, Inc.,
12 N.J. 261, 264 (1953); see
also AT&T v. Winback and Conserve Program, Inc.,
42 F.3d 1421,
1435 (3d Cir. 1994) (defining independent contractor), cert.
denied, ___ U.S. ___,
115 S. Ct. 1835,
131 L. Ed. 757 (1995).;
Restatement (Second) of Agency § 2(3) (1958) (same);
41 Am. Jur. 2d Independent Contractors § 1 (same). The employer-independent
contractor relationship, then, differs from the employer-employee
relationship, in which the employer controls not only the result,
but also the means of achieving it. Wilson, supra, 12 N.J. at
264; AT&T, supra, 42 F.
3d at 1435; Restatement (Second) of Agency
§ 2(2).
Plaintiffs' claim against Texaco fails for the basic reason
that they have failed to prove that Texaco hired Rule as an
independent contractor. Except for the three- to six-month
period during the early 1970's when Texaco supplied Rule with
gasoline, Rule had no direct relationship with Texaco. Rule
dealt exclusively with Kalsch-Forte. A contractual relationship
existed between Rule and Kalsch-Forte, not between Rule and
Texaco. Rule leased the tanks, pumps, and other equipment from
Kalsch-Forte, not Texaco. Indeed, the jury found that Kalsch-Forte, not Texaco, owned the tanks. Neither Kalsch-Forte nor
Texaco exercised control over the operation of the service
station. Rule simply purchased Texaco products from Kalsch-Forte.
The record is devoid of information about the relationship
between Kalsch-Forte and Texaco. Nothing supports plaintiffs'
allegations that Texaco hired Rule as an independent contractor
to sell Texaco products. Hence, we need not consider whether
Rule's operation of the service station was either an inherently
or abnormally dangerous activity, or whether Rule created a
nuisance at the station. Our holding that Rule was not an
independent contractor makes explicit the premise implicit in the
Appellate Division's conclusion that Texaco was not vicariously
liable for Rule's operation of the service station. 279
N.J. Super. at 23-24.
Plaintiffs also urge us to "fashion a common law basis of recovery against major oil companies when defunct suppliers and uninsured gasoline service station owners cause [surface and ground water] contamination." In effect, they invite us to constitute major oil companies as insurers of due care at all service stations, regardless of the relationship between the oil company and the service station operator or the degree of control exercised by the oil company over the operations at individual stations. We decline the invitation. Nothing in the record justifies the imposition of liability on oil companies for harms caused by conduct over which they have no reasonable means of influence or control. See Balsam v. Delma Engineering Corp., 532 N.Y.S.2d 105, 108-09 (A.D.), appeal dismissed in part, denied in
part
533 N.E.2d 671 (N.Y. 1988) (holding that oil company did not
have sufficient control over service station activities to be
liable for injuries caused by dangerous condition at the
station). Adequate statutory and common-law remedies exist for
parties who suffer injury from the discharge of petroleum
products into surface and ground water.
Finally, plaintiffs appeal the Appellate Division's decision
to affirm the trial court's ruling that barred testimony from
plaintiffs' expert, Albert D. Young, concerning industry
practices, the standard of care, and the relationship between
Rule and Texaco. We affirm the Appellate Division substantially
for the reasons stated in its opinion. 279 N.J. Super. at 28-31.
The judgment of the Appellate Division is affirmed.
JUSTICES HANDLER, O'HERN, GARIBALDI and COLEMAN join in JUSTICE POLLOCK's opinion. CHIEF JUSTICE WILENTZ and JUSTICE STEIN did not participate.
NO. A-34 SEPTEMBER TERM 1995
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
DAVID BAHRLE, et al.,
Plaintiffs-Appellants,
v.
EXXON CORPORATION, etc., et al.,
Defendants,
and
TEXACO REFINING AND MARKETING INC.,
etc., et al.,
Defendants-Respondents.
DECIDED July 9, 1996
Justice Handler PRESIDING
OPINION BY Justice Pollock
CONCURRING OPINION BY
DISSENTING OPINION BY