Vorlon Holding, LLC v. Commissioner of Energy & Environmental Protection

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VORLON HOLDING, LLC, ET AL. v. COMMISSIONER
OF ENERGY AND ENVIRONMENTAL PROTECTION
(AC 37236)
Gruendel, Lavine and Lavery, Js.
Argued October 20—officially released December 22, 2015
(Appeal from Superior Court, judicial district of New
Britain, Cohn, J.)
Jonathan J. Klein, for the appellants (plaintiffs).
David H. Wrinn, assistant attorney general, with
whom, on the brief, were George Jepsen, attorney gen-
eral, and John M. Looney, assistant attorney general,
for the appellee (defendant).
Opinion
LAVINE, J. The plaintiffs, Vorlon Holding, LLC (Vor-
lon), Jody R. Smith, and Richard B. Smith, appeal from
the judgment dismissing their administrative appeal.
The court dismissed the plaintiffs’ appeal from the final
decision of a hearing officer upholding an order issued
by the defendant, the Commissioner of Energy and
Environmental Protection (commissioner), pursuant to
General Statutes § 22a-432, requiring the plaintiffs to
remediate the soil, groundwater and surface water at
540 New Haven Avenue in Milford (property).1 Specifi-
cally, the plaintiffs claim that the court erred in
determining that Vorlon is not entitled to the ‘‘blameless
owner’’ exception to liability for maintaining a condition
on the property that reasonably can be expected to
create a source of pollution to the waters of the state.
The plaintiffs further claim that the court erred in
determining that Jody Smith is personally liable for
violating § 22a-432 as the responsible corporate officer
of Vorlon. Finally, the plaintiffs claim that the court
improperly determined that they were jointly and sever-
ally liable pursuant to General Statutes § 22a-6a (b) for
violating § 22a-432 because the plaintiffs did not provide
evidence for the hearing officer to apportion the liabil-
ity. We disagree and, accordingly, affirm the judgment
of the court.
The following facts, which are not in dispute, and
procedural history are relevant to this appeal. Vorlon
is the owner of the property. The Hyman H. Smith and
Eleanor C. Smith Trust (Smith Trust) was the previous
owner of the property, which was the site of a ‘‘tank
farm’’ operated by Connecticut Aerosols, Inc. Richard
Smith was a trustee of the Smith Trust. In February,
1988, the Department of Energy and Environmental Pro-
tection (department) inspected the property after 500
gallons of a toluene based solvent had spilled. The
department found that the property was contaminated
with hazardous waste, specifically, several volatile
organic compounds, and issued abatement orders to
the Smith Trust and Connecticut Aerosols, Inc. The
abatement orders were recorded on the land records to
the property. Neither the Smith Trust nor Connecticut
Aerosols, Inc., complied with the abatement orders.
Vorlon acquired the property from the Smith Trust
on July 28, 1998, as payment of a debt that the Smith
Trust owed to Jody Smith. Jody Smith is the sole mem-
ber and president of Vorlon, a limited liability company
which she formed to take title to the property because
she knew that it was contaminated and sought to avoid
personal liability. Vorlon’s address and Jody Smith’s
home address are the same.
Jody Smith invested approximately $500,000 of her
personal funds to convert the property into a self-stor-
age facility. Vorlon leased the property to Deep Space
1, LLC (Deep Space), from May 1, 1998 to December
31, 2008. Jody Smith is the sole member and manager
of Deep Space. When the lease terminated, Vorlon
leased the property on January 1, 2009, for a period of
ten years, to The Narn, LLC (The Narn), whose manag-
ing member is Richard Smith.
In 2005, Jody Smith signed a form granting the United
States Environmental Protection Agency (agency) per-
mission to inspect the property. She also signed, on
behalf of Vorlon, a ‘‘Form III’’ and an ‘‘Environmental
condition assessment form’’ as required by General Stat-
utes §§ 22a-134 through 22a-134d as part of transferring
title to the property. Richard Smith managed the envi-
ronmental remediation on the property, and dealt with
the department and the agency. Despite retaining the
services of an environmental professional, the property
is still contaminated.
On May 23, 2012, the commissioner ordered the plain-
tiffs to study, remediate, and monitor, with the assis-
tance of a licensed environmental professional,
contamination of the soil, groundwater and surface
water on the property. The order alleged that Vorlon,
Jody Smith, and Richard Smith were ‘‘maintaining a
facility or condition which reasonably can be expected
to create a source of pollution to the waters of the state.’’
A department hearing officer held a hearing on Sep-
tember 20, 2012. On March 21, 2013, the hearing officer
issued a final decision affirming the May 23, 2012 order,
finding Vorlon, Jody Smith, and Richard Smith jointly
and severally liable for maintaining the condition caus-
ing the pollution. Although Richard Smith had retained a
licensed environmental professional, the hearing officer
found that ‘‘[n]o remediation ha[d] begun and no reason-
able measures to address the contamination of the prop-
erty ha[d] been taken.’’ The hearing officer concluded
that Vorlon was liable under § 22a-432 because it was
the owner of the property and was maintaining a condi-
tion that reasonably can be expected to create a source
of pollution to the waters of the state. The hearing
officer also found that Vorlon was not entitled to the
statutory ‘‘innocent landowner’’ exception to liability.
Furthermore, the hearing officer found that because
the pollution existed on the property prior to the time
Vorlon leased it to Deep Space and The Narn, Vorlon
could not avoid liability as a ‘‘blameless owner’’ under
Starr v. Commissioner of Environmental Protection,
226 Conn. 358, 387, 627 A.2d 1296 (1993).
The hearing officer found that Jody Smith was per-
sonally liable, because corporate officers may be held
personally liable for their acts and omissions that result
in violations of § 22a-432. See BEC Corp. v. Dept. of
Environmental Protection, 256 Conn. 602, 618, 775 A.2d
928 (2001). Although Jody Smith claimed that she had a
limited role in Vorlon’s business operations, the hearing
officer found that she held a position of responsibility
in the company, that there was a nexus between her
decision-making authority and Vorlon’s failure to reme-
diate the contamination, and that her actions or inac-
tions facilitated Vorlon’s failure to fulfill its affirmative
duty to remediate the contamination on the property.
Richard Smith admitted that he was personally liable
for the conditions on the property.
The hearing officer found that the plaintiffs were
jointly and severally liable because they did not present
any evidence that would have allowed for the reason-
able apportionment of liability amongst the plaintiffs.
The plaintiffs appealed from the hearing officer’s final
decision to the Superior Court, raising the same issues
there as they do in this court. Following a hearing,
the court, in a memorandum of decision substantially
following the hearing officer’s analysis and legal conclu-
sions, rendered judgment dismissing the appeal. This
appeal followed.
On appeal, the plaintiffs claim that the trial court
improperly concluded that Vorlon did not fall within
the ‘‘blameless owner’’ exception recognized in Starr
v. Commissioner of Environmental Protection, supra,
226 Conn. 387; that the court improperly determined
that Jody Smith was personally liable for the violations
of § 22a-432; and that the court improperly determined
that the plaintiffs were jointly and severally liable for
the violations of § 22a-432.
Before addressing the plaintiffs’ claims we set forth
the applicable standard of review. The plaintiffs are not
contesting any of the hearing officer’s factual findings;
thus, this appeal raises only questions of law. ‘‘[A]s to
questions of law, [t]he court’s ultimate duty is only to
decide whether, in light of the evidence, the [agency]
has acted unreasonably, arbitrarily, illegally, or in abuse
of its discretion. . . . Conclusions of law reached by
the administrative agency must stand if the court deter-
mines that they resulted from a correct application of
the law to the facts found and could reasonably and
logically follow from such facts. . . . Ordinarily, this
court affords deference to the construction of a statute
applied by the administrative agency empowered by
law to carry out the statute’s purposes. . . . Cases that
present pure questions of law, however, invoke a
broader standard of review than is ordinarily involved
in deciding whether, in light of the evidence, the agency
has acted unreasonably, arbitrarily, illegally or in abuse
of its discretion. . . . Furthermore, when a state
agency’s determination of a question of law has not
previously been subject to judicial scrutiny . . . the
agency is not entitled to special deference.’’ (Internal
quotation marks omitted.) Lane v. Commissioner of
Environmental Protection, 136 Conn. App. 135, 144–45,
43 A.3d 821 (2012), aff’d, 314 Conn. 1, 100 A.3d 384
(2014). The court in its memorandum of decision noted
that these issues regarding landowner and personal lia-
bility under §22a-432 have been subjected to judicial
review. See BEC Corp. v. Dept. of Environmental Pro-
tection, supra, 256 Conn. 616; Starr v. Commissioner
of Environmental Protection, supra, 226 Conn. 360.
The plaintiffs first claim that Vorlon cannot be held
liable under § 22a-432 because the court erred in finding
that it was not entitled to the common law ‘‘blameless
owner’’ exception articulated in Starr v. Commissioner
of Environmental Protection, supra, 226 Conn. 387.
Specifically, they argue that because Vorlon leased the
property to Deep Space and The Narn, it maintained
‘‘passive ownership,’’ and thus cannot be held liable for
the pollution on the property. We disagree.
Section 22a-432 provides in relevant part: ‘‘If the com-
missioner finds that any person . . . is maintaining a
facility or condition which reasonably can be expected
to create a source of pollution to the waters of the
state, he may issue an order to such person to take
the necessary steps to correct such potential source of
pollution.’’ Section 22a-423 defines a person in relevant
part as ‘‘any individual, partnership, association, firm,
limited liability company, corporation or other entity
. . . or any member or manager of a limited liability
company . . . .’’ Our Supreme Court has determined
that ‘‘the legislature intended that the word ‘main-
taining’ in § 22a-432 be interpreted liberally to include
within its purview a landowner who has failed to abate
pollution existing on his or her land that reasonably
could be expected to create a source of pollution to
the state’s waters regardless of blame for the creation
of the condition.’’ (Emphasis added.) Starr v. Commis-
sioner of Environmental Protection, supra, 226
Conn. 382.
There are two primary exceptions to liability under
the statute. The plaintiffs recognize that the ‘‘innocent
landowner’’ exception under General Statutes §§ 22a-
452d and 22a-452e does not apply in this case. They
claim, however, that under the ‘‘blameless owner’’
exception Vorlon is entitled to relief. Our Supreme
Court discussed the ‘‘blameless owner’’ exception in
Starr v. Commissioner of Environmental Protection,
supra, 226 Conn. 387, stating that ‘‘[u]nder the common
law of nuisance, a landowner who was not in fact in
possession of his or her property, but who had leased
it to a tenant, was not considered liable for a nuisance
where that nuisance did not exist when [it was] leased
or was not a result reasonably to be anticipated from
[its] use for the purpose and in the manner intended.
. . . Because we construe § 22a-432 as having been
intended to embrace the common law of nuisance, we
do not read it to authorize the commissioner to issue an
abatement order pursuant to that section to a blameless
owner who was not in possession of his property, but
who had leased it to a tenant [at a time when the nui-
sance did not exist]. In such a case, the tenant in posses-
sion, rather than the landlord, would be considered
the person who had created or was maintaining the
condition that had the potential to cause pollution to
the waters of the state.’’ (Citations omitted; emphasis
added; internal quotation marks omitted.)2
Both the hearing officer and the court found that
Vorlon is not a blameless owner. Jody Smith, Vorlon’s
president, knew about the pollution on the property
prior to taking title to it and leasing it to Deep Space
and The Narn. The plaintiffs’ argument is based on a
misreading of Starr, as they assert that when ‘‘property
is leased to a tenant, the Supreme Court held that the
commissioner can reach the owner and impose liability
on it only under [General Statutes] § 22a-433.’’ This is
incorrect, as Starr makes clear that the commissioner
may impose liability under § 22a-432 on a landowner
who takes title to property with notice that it is polluted,
and then maintains the pollution by failing to abate it.
The plaintiffs’ argument entirely overlooks the signifi-
cance of the fact that Jody Smith had notice of the
pollution prior to taking title to the property. An owner
with notice of pollution on his or her property may not
escape liability for its abatement merely by leasing it
to a tenant.
The plaintiffs also assert that, because Deep Space
and The Narn conducted the business operations on
the property, Vorlon is absolved of liability under the
blameless owner exception because it maintained ‘‘pas-
sive ownership.’’ This argument fails because, regard-
less of Vorlon’s involvement in the day-to-day
operations on the property, it took title to the property
with notice that violations of § 22a-432 existed, and it
failed to abate the pollution. Furthermore, the court
noted that ‘‘the sole owner of Vorlon, Jody Smith, leased
the property to the sole member and manager of Deep
Space, Jody Smith. To allow blameless owner status
in this situation would defeat the liberal intent of the
legislature in passing § 22a-432 . . . .’’ We agree with
the trial court that Vorlon is not a ‘‘blameless owner’’
for purposes of § 22a-432.
The plaintiffs next claim that the court improperly
determined that Jody Smith is personally liable for Vor-
lon’s violations of § 22a-432 with respect to the pollution
on the property. The plaintiffs argue that Jody Smith
should not be held personally liable because she had
a limited role in Vorlon’s business operations, and Rich-
ard Smith, Deep Space, and The Narn operated the self-
storage facility and nominally assumed responsibility
for abating the pollution on the property. We disagree.
Our Supreme Court has held that ‘‘a corporate officer
is personally liable for the abatement of a violation
of § 22a-432 when: (1) the officer is in a position of
responsibility that allows that officer to influence cor-
porate policies and activities; (2) there is a nexus
between the officer’s actions or inactions in that posi-
tion and the violation of § 22a-432 such that the corpo-
rate officer influenced the corporate actions that
constituted the violation; and (3) the corporate officer’s
actions or inactions resulted in the violation.’’ BEC
Corp. v. Dept. of Environmental Protection, supra, 256
Conn. 618.
In regard to the first factor, the court determined that
Jody Smith had complete authority to determine the
policies of Vorlon, as she was its president and sole
member. She negotiated the leases with Deep Space
and The Narn, and she determined who had access to
the property, specifically, in initially granting permis-
sion to the agency to inspect the property. The court
also determined that Jody Smith made the decision to
convert the property into a self-storage facility. We
agree with the trial court, which properly concluded
that Jody Smith was in a position of responsibility that
allowed her to influence Vorlon’s corporate policies
and activities.
There also is a nexus between Jody Smith’s actions
or inaction, as the sole member and president of Vorlon,
and the § 22a-432 violations. Our Supreme Court has
determined that a nexus can be found between the
violation of the statute and a corporate officer’s actions
or omissions when that corporate officer, despite hav-
ing personal knowledge of the violation, fails to influ-
ence the corporation’s policies and operations to
remediate the conditions causing the violation of the
statute. See Celentano v. Rocque, 282 Conn. 645, 670–71,
923 A.2d 709 (2007). The hearing officer found that, as
president of Vorlon, Jody Smith knew of the pollution
on the property and failed to influence Vorlon’s policies
or operations to remediate it. The plaintiffs argue that
because ‘‘Jody [Smith] . . . was nothing more than the
titular head of [the] passive entity [Vorlon], who did
not actually do anything and had no day-to-day responsi-
bilities for anything happening at the property, [and]
was so far removed from maintaining the source of
pollution to the waters of the state, that she cannot
properly be held liable.’’ (Footnote omitted.) We agree
with the hearing officer’s conclusion that ‘‘[a]lthough
[Jody Smith] tried to separate ownership from opera-
tions, and claimed she left decision-making regarding
the environmental issues on the property to [Richard]
Smith, Jody [Smith] cannot ignore or abdicate her
responsibility as president of Vorlon.’’ The court prop-
erly concluded that there was a nexus between Jody
Smith’s failure as a corporate officer to remediate the
pollution on the property and the § 22a-432 violations.
The third factor requires us to determine whether
Jody Smith’s omissions as a corporate officer facilitated
a violation of the statute. The hearing officer and the
court both determined that under the statute, Vorlon
had an affirmative duty to abate the pollution in the
many years that it had held title to the property, and
that Jody Smith as the president and sole member of
Vorlon failed to take action to fulfill that duty. Section
22a-432 is a strict liability statute, under which imposing
personal liability on a responsible corporate officer
‘‘[does] not require a finding that the officer had commit-
ted, directly participated in or directed the conduct
that resulted in a violation before [s]he c[an] be held
personally liable, but require[s] only that the officer
have a position of responsibility and influence from
which [s]he could have prevented the corporation from
engaging in the conduct.’’ Ventres v. Goodspeed Airport,
LLC, 275 Conn. 105, 144, 881 A.2d 937 (2005), cert.
denied, 547 U.S. 1111, 126 S. Ct. 1913, 164 L. Ed. 2d
664 (2006). Under the statute and the common law of
nuisance, Vorlon had an affirmative duty to abate the
pollution on the property. See Starr v. Commissioner
of Environmental Protection, supra, 226 Conn. 382.
Because Jody Smith in her capacity as a corporate offi-
cer failed to remediate the pollution, Vorlon maintained
the pollution on the property. We therefore agree with
the court that her omissions facilitated a violation of
the statute. We also agree that all three factors of the
responsible corporate officer test articulated in BEC
Corp. v. Dept. of Environmental Protection, supra, 256
Conn. 618, have been met, and that the court did not
err in finding Jody Smith personally liable.
The plaintiffs’ final claim is that they should not have
been found jointly and severally liable for the § 22a-432
violations. We disagree.
Section 22a-6a (b) allows the commissioner to impose
joint and several liability when a reasonable apportion-
ment of responsibility is not possible. ‘‘Where the tor-
tious conduct of two or more actors has combined to
bring about harm . . . and one or more of the actors
seeks to limit his liability on the ground that the harm
is capable of apportionment among them, the burden
of proof as to the apportionment is upon each actor.’’
(Internal quotation marks omitted.) Connecticut Build-
ing Wrecking Co. v. Carothers, 218 Conn. 580, 608, 590
A.2d 447 (1991), quoting from 2 Restatement (Second),
Torts § 433B (1965). The court noted and agreed with
the hearing officer’s finding that the plaintiffs did not
present evidence that would have allowed the commis-
sioner to reasonably apportion liability. On the basis
of our review of the record, we agree with the court.
The judgment is affirmed.
In this opinion the other judges concurred.
1
The plaintiff’s brief to this court states that Richard Smith is not pursuing
any claims regarding the commissioner’s finding that he is personally liable
for the abatement of the pollution on the property. In this opinion, we refer
to Vorlon and Jody Smith collectively as the plaintiffs and individually by
name where necessary.
2
We note that our Supreme Court recognized that General Statutes § 22a-
433 allows the commissioner to impose liability on a landlord who otherwise
would have qualified for the common law ‘‘blameless owner’’ exception.
Starr v. Commissioner of Environmental Protection, supra, 226 Conn.
387–88. The department, however, brought the present case only under
§ 22a-432.