Appeal from a judgment of the Supreme Court (Teresi, J.), entered January 19, 1999 in Albany County, upon a verdict rendered in favor of plaintiff.
Following a jury trial, two corporations and two individuals who owned the corporations’ stock and acted as their sole officers were held liable under Navigation Law § 181 (1) for cleanup costs for oil spills occurring on property owned by one
The following facts were adduced at trial. During the relevant period, defendant Think Big Auto Rental and Leasing, Inc. owned a parcel of land in Bronx County which was improved by a gas station. Until his 1993 death, Emanoil Marcovici was the sole shareholder and sole officer of Think Big. Defendant 242 East 138th Street, Inc. (hereinafter East 138th Street), the lessee of the site, operated the gas station thereon. Defendant Gurmit Singh Dhinsa was the sole shareholder and sole officer of East 138th Street. In April 1991, gasoline was discovered seeping into a utility tunnel beneath a street adjacent to the site, and the Department of Environmental Conservation (hereinafter DEC) ultimately determined that the principal cause of the spill was that a delivery truck had overfilled one or more of the station’s four gasoline storage tanks. Tank leakage tests conducted the following day indicated that one of the storage tanks — containing diesel fuel — showed a leakage rate slightly above that allowed.
On May 10, 1991 DEC mailed a letter addressed to Marcovici stating that it had received information that he was the owner of the site. The letter indicated the results of its investigation, recommended a number of remediation procedures and advised that DEC would remediate the site and seek reimbursement if he did not do so himself.
In August 1991, after another spill was detected at the site, DEC mailed a letter erroneously addressed to “Mr. L. Markowitz” to defendant Leah Markowitz
In August 1996 plaintiff commenced this Navigation Law § 181 (1) action seeking to hold Marcovici’s estate, Dhinsa and Markowitz personally liable, jointly and severally with the corporations — Think Big and East 138th Street — for clean-up costs (see, Navigation Law § 181). Plaintiff also sought statutory penalties against each defendant (see, Navigation Law § 192).
The jury found all of the individual and corporate defendants jointly and severally liable to plaintiff for clean-up costs of $910,000 and future costs of $150,000. The jury also assessed a $1 million penalty against Markowitz and a penalty of $2.25 million each against Marcovici’s estate, Think Big, Dhinsa and East 138th Street. Only Markowitz, Marcovici’s estate, Dhinsa and East 138th Street have appealed. Notably, in its appeal,
We begin our analysis recognizing that Navigation Law § 181 (1) provides that “[a]ny person who has discharged petroleum shall be strictly liable, without regard to fault, for all cleanup and removal costs * * * no matter by whom sustained.” Further, a “discharge” is defined as “any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of petroleum into the waters of the state or onto lands from which it might flow or drain into said waters” (Navigation Law § 172 [8]). The Court of Appeals has not yet addressed the issue of precisely who can be held liable as a discharger, a term not defined in Navigation Law article 12 (see, Matter of Art-Tex Petroleum v New York State Dept. of Audit & Control,
This Court has construed Navigation Law § 181 (1) to impose strict liability on corporations and individuals who directly own the system from which a discharge occurred; such liability has been held to attach despite a lack of proof that the owner caused or contributed in any way to the discharge (see, State of New York v Green, 271 AD2d 11 [decided herewith]; Matter of White v Regan, 171 AD2d 197, 199-200, lv denied
We next turn to the theory on which plaintiff prosecuted this action against the noncorporate individual defendants (Marcovici’s estate, Dhinsa and Markowitz) as dischargers under Navigation Law § 181 (1). To clarify, plaintiff has expressly disavowed seeking to pierce the corporate veil of the corporations — Think Big and East 138th Street — (see, New York Assn. for Retarded Children v Keator,
For reasons to follow we hold that, as a matter of fact and law, the respective statuses of Marcovici, his estate and Dhinsa — as officers and stockholders of these corporations — do not provide a basis under Navigation Law § 181 (1) for imposing personal liability upon them for clean-up costs in view of the lack of evidence of their active involvement in corporate operations relating to the spills. Further, as to Markowitz, we find absolutely no basis for the imposition of personal liability against her under any relevant section of the Navigation Law.
Extending personal liability to individuals such as stockholders or officers who have developed a sufficient relationship to the activities of a corporate owner or operator for the consequences of environmental contamination is not novel under Federal law, although it has been carefully circumscribed by the Federal courts. Recent Federal case law relating to the enforcement of the Comprehensive Environmental Response, Compensation and Liability Act (42 USC § 9601 et seq.) (hereinafter CERCLA) is instructive. Under the interpretation of who constitutes a responsible “operator” of a contaminated site, Federal courts have imposed liability against corporate owners and operators, who are by statute strictly liable under CERCLA. They have also recognized personal liability for other individuals such as officers who are directly involved and actively participate in the corporate activities which led to the contamination (see, State of New York v Shore Realty Corp., 759 F2d 1032, 1052-1053). Allegations that such individuals both “exercised management control over the company’s operations” and “knowingly exercised direct and personal control over the handling of the hazardous substance at issue” have been determined to sufficiently state a claim for personal liability under CERCLA (Arst Co. v Pipefitters Welfare Educ. Fund,
Consistent with the relevant Federal and State statutes and developing case law, we hold that in order to hold a corporate stockholder, officer or employee personally liable under the Navigation Law for a discharge occurring at a site owned or operated by the corporation, that individual must, at a minimum, have been directly, actively and knowingly involved in the culpable activities or inaction which led to a spill or which allowed a spill to continue unabated (see, Arst Co. v Pipefitters Welfare Educ. Fund, supra, at 421; State of New York v Shore Realty Corp., supra, at 1052-1053; see also, Matter of Jackson’s Marina v Jorling,
Plaintiffs theory with respect to the liability of the individual defendants herein is also assertedly premised on a decision of this Court imposing Navigation Law § 181 (1) strict liability upon a corporation which merely brokered the distribution of fuel oil, but did not own the system from which the spill occurred or actually deliver or own the oil which was spilled (State of New York v Montayne,
In light of the foregoing, we find that the jury charge regarding the basis for the imposition of personal liability was overly broad. Specifically, Supreme Court charged the jury as follows: “If you find that an individual defendant, that is, in this case [Marcovici (and later, his estate), Dhinsa or Markowitz] exercised control or managerial authority over a corporate defendant such as [Think Big or East 138th Street], and had the power to prevent a discharge or discharges, you may find that individual defendant liable for a discharge or discharges. It is defendants’ conduct you must examine, not their status [es]” (emphasis supplied). The charge incorrectly suggested an almost unqualified and automatic basis for liability premised upon an individual’s undefined “power to prevent” a discharge. However, as discussed, personal liability of officers and stockholders and other nonowners is more circumscribed. For example, the charge fails to require that the individuals played an active role in the corporate conduct or activities leading to the spill or in allowing the spill to continue. Applying the standard of liability articulated and adopted herein, we hold that none of the individual noncorporate defendants can be held personally liable as dischargers under Navigation Law § 181 (1).
Specifically, as to Marcovici, his ownership of all the stock in Think Big and his role as its sole officer do not support the imposition of personal liability upon him or his estate for the discharge at Think Big’s site, in the absence of any evidence in the record that he or his fiduciaries wrongfully did or failed to do anything which led to or could have prevented the spills. While corporate stockholders and owners may be said to have some measure of control over their corporations, they are not necessarily involved in the day-to-day operations of the business. This is particularly true regarding a real estate corporation such as Think Big. Indeed, neither Marcovici nor his estate directly owned the system from which the discharge occurred, nor can it be said they discharged the gasoline by any culpable
We also find merit in Dhinsa’s contention that he cannot be held personally liable. The proof submitted at trial indicated that Dhinsa was actually present at the gas station on only two occasions. While he is the sole shareholder and officer of the corporate operator of the station, no particular culpable activity or wrongful omission on his part was demonstrated at trial which would provide a basis for exposing him to personal liability as a discharger. Notably, there is no proof that either East 138th Street or Dhinsa was sent or ever received any noncompliance correspondence from DEC and he was never called as a witness at trial. If any proof actually exists which might establish Dhinsa’s role in the spills or their continuation, plaintiff failed to proffer it.
We further find that the evidence presented at trial was entirely inadequate to support the imposition of personal liability against Markowitz. We outright reject plaintiffs central, unsupported assertion that Markowitz is liable as a discharger of petroleum on the theory that she was in control of the affairs of Think Big and wrongfully failed to take action to prevent or remedy the spills at the gas station (compare, State of New York v Montayne,
Likewise, any marginal or indirect connection between Markowitz and Think Big — including that she may have discussed Marcovici estate business decisions with her 22-year-old daughter after the daughter became administrator of the estate in 1995 — fails to establish that Markowitz played any legally cognizable active role in the business, the spills or the failure to remediate. Indeed, most of the State’s proof against
Next, we turn to the appeal by East 138th Street. Initially, we reject its contention that Supreme Court erred in failing to instruct the jury that statutory penalties can be imposed only where a discharger has “knowingly” acted in derogation of the Navigation Law. Navigation Law § 192 states as follows: “Any person who knowingly gives or causes to be given any false information as a part of, or in response to, any claim made pursuant to this article for cleanup and removal costs, direct or indirect damages resulting from a discharge, or who otherwise violates any of the provisions of this article or any rule promulgated thereunder or who fails to comply with any duty created by this article shall be liable to a penalty of not more than twenty-five thousand dollars for each offense in a court of competent jurisdiction” (emphasis supplied).
We have previously recognized that Navigation Law § 192 permits penalizing any person who knowingly gives or causes to give any false information in a claim for clean-up costs or in response to a claim for clean-up costs (see, State of New York v Tarrytown Corporate Ctr. II,
We do, however, find merit in the claim of East 138th Street that Supreme Court erred in giving a negative inference
Initially, we recognize that the use of deposition testimony of an employee of a party is permitted for any purpose by any adversely interested party (see, CPLR 3117 [a] [2]). However, while a party’s invocation of the privilege against self-incrimination can be used to draw an adverse inference against that party in a civil case (see, Marine Midland Bank v Russo Produce Co.,
Accordingly, because of the likely prejudicial effect of the improper negative inference the jury was permitted to make (see, CPLR 2002), we find that East 138th Street has been denied its right to a fair trial on the issue of penalties — the only issue it addressed in its appeal — and is entitled to a new trial to determine the propriety and amount of penalties under Navigation Law § 192.
We have considered the parties’ remaining contentions and find them to be without merit.
Cardona, P. J., Peters, Carpinello and Graffeo, JJ., concur.
Notes
. The same tank was tested eight weeks later and tested within the permissible parameters.
. DEC’s recommended procedures included, inter alia, the installation of overfill protection on the fill lines (no mention was made of the stick lines),
. Leah Markowitz, the daughter-in-law of Marcovici, is the widow of Marcovici’s son, Mike Markowitz, who died in 1989. Significantly, she has never held any ownership interest in nor was she ever an officer of Think Big or East 138th Street.
. Plaintiff, in seeking to hold the individuals personally liable, also relies upon less recent Federal case law in which corporate officers were found personally liable for civil and/or criminal penalties for violating Federal public health legislation or regulations which were subject to Federal Food and Drug Administration enforcement (see, United States v Park,
. We note that, in our view, Navigation Law § 181 (1) does not impose liability on individuals solely based on their having parental “control” or influence over the adult fiduciary of the stockholder of the corporate entity which owns the discharge site. If liability were so extended, the corporate attorneys and accountants, among others, would similarly be liable as dischargers. The fact is, no legally sufficient nexus ever existed between Markowitz, Think Big or the estate.