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Blakeland Drive Investors, LLP IV v. Taghavi.

2023 COA 30. No. 21CA1957. Toxic Substances—Trespass—Nuisance—Negligence—Damages—Pro Rata Liability.

March 30, 2023

Duggan owned a lot on which it operated a gas station (lot 5). Blakeland Drive Investors, LLP IV (BDI) owned adjoining property (lots 7–10). In 1999, Duggan discovered that its underground gasoline storage tanks had leaked. Colorado’s Division of Oil and Public Safety (OPS) ordered further monitoring of the leaks, which showed two toxic substances, BTEX and MTBE, migrating through the soil and groundwater on lot 5. Duggan attempted to remove the toxic substances without success. Duggan sold lot 5 in 2000 to Willary Metro, LLC, which then sold the property to Rimfire31, Inc. No leaks were reported on lot 5 during Willary Metro’s or  Rimfire31’s ownership. Taghavi purchased lot 5 from Rimfire31 in 2004, and Taghavi, Inc. operates a gas station and convenience store there. Taghavi received an environmental report notifying him of the leaks of the toxic substances, and after he acquired the property, he reported another leak from the gasoline storage containers. Duggan remained liable for the contamination on lot 5 according to the OPS, and Duggan continued monitoring and remediation efforts. In 2006, OPS issued a no-further-action-required letter to Duggan based on reduced levels of the toxic substances present on lot 5, and Taghavi received a copy of the letter. In 2010, the storage tanks leaked again. Taghavi hired Palmetto Environmental to conduct tests and report on the leak, and it found that toxic substances on lot 5 were migrating to lots 7–10. Palmetto Environmental continued monitoring the migration until 2016, when it stopped reporting. In 2017, when BDI attempted to sell lots 7–10, it learned of the migration of toxic substances from lot 5 onto its property. BDI’s own assessment found toxic substances present on Lots 7–10 at levels above the limits required for detection. BDI sued Duggan, Taghavi, and Taghavi, Inc. (collectively, Taghavi) for continuing trespass, continuing nuisance, and negligence. Taghavi denied liability and designated Willary Metro and Rimfire31 as nonparties at fault. The trial court held Duggan and Taghavi jointly and severally liable based on what it determined was the indivisible nature of the contamination they had caused through the leaking storage tanks. The trial court calculated damages in favor of BDI at $490,000 based on the diminution of value of its property.

On appeal, Taghavi contended that the trial court erred by incorrectly applying the legal standards for trespass and nuisance in finding him liable for intrusion of the toxic substance MTBE onto BDI’s property. Taghavi maintained that he could not have committed an affirmative act that caused the migration of MTBE as a matter of law because he purchased lot 5 in 2004, after MTBE had been banned in Colorado and was no longer sold. However, the trial court found that the BTEX from the 2010 gasoline leak on lot 5 combined with the already present BTEX and MTBE from the earlier leaks, and the continued migration of both toxic substances, occurred because of the condition Taghavi created by storing the gasoline. That condition then set in motion further repetition and continuation of the contamination started by Duggan. Therefore, the trial court applied the correct standard in finding Taghavi liable for committing a continuing trespass and nuisance because of the further migration of the MTBE already present on lot 5.

Taghavi also argued that the trial court erred because it applied a nonfeasance legal standard without a special relationship between the parties. Taghavi contended that the nonfeasance standard applied because he did not have an affirmative duty to remediate the preexisting condition of MTBE contamination caused by Duggan. Here, the trial court properly found Taghavi liable for allowing gasoline to leak in 2010, which created a condition that harmed BDI’s property. This risk was foreseeable and preventable because Duggan had already harmed BDI’s property through the earlier leaks from the gasoline tanks. Because the trial court’s determination of negligence was based on Taghavi’s misfeasance, the court was not required to find a special relationship between the parties based on nonfeasance.

Taghavi further contended that the trial court erred by not determining whether BTEX caused substantial interference with BDI’s use of the property. He maintained that BTEX was present in only small, unharmful quantities and the trial court failed to acknowledge his remediation actions. However, the trial court was not required to determine that the BTEX levels specifically threatened personal health to find that an invasion of property occurred, and it properly determined that the interference was unreasonable and substantial.

Taghavi also argued that the trial court erred in its calculation of damages for continuing trespass and negligence caused by the presence of BTEX by not limiting the damages to the remediation costs associated with a vapor barrier. However, the trial court properly awarded damages based on the diminution of the value of BDI’s property, awarding the difference between $500,000—the amount in a letter of intent for the contaminated property—and $990,000, which Taghavi’s appraiser opined was the value of the property before the contamination.

Lastly, Taghavi asserted that the trial court erred by holding him jointly and severally liable with Duggan because such liability violates Colorado’s pro rata liability statute. CRS § 13-21-111.5(1) requires liability to be apportioned between or among tortfeasors, whether or not their tortious acts were intentional or negligent. The statute thus mandates that juries must return a special verdict or trial courts must make special findings determining the percentage of negligence or fault attributable to each party. Here, the trial court recognized that CRS § 13-21-111.5(1) mandates apportioning liability for an injury according to the actor’s percentage of fault but it did not make special findings that apportion liability between Taghavi and Duggan for the contamination on BDI’s lots, and its ruling contradicts the statute’s plain language precluding joint liability. Accordingly, Taghavi’s rights were substantially affected by not receiving a determination of his pro rata liability under CRS § 13- 21-111.5(1), and the trial court erred by holding Taghavi and Duggan jointly and severally liable.

The judgment as to joint and several liability was reversed, and the case was remanded with directions to make special findings apportioning fault to the liable parties in accordance with CRS § 13-21-111.5(1). The judgment was affirmed in all other respects.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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