## Facts

- Joseph M. Tomaino was vice president of Concord Oil Company and president/director of its subsidiary, Concord Oil of Newport, Inc. (Concord/Newport), which supplied gasoline to numerous New England retail sites.
- In the late 1970s, it was common in the regional retail-gasoline business for distributors to own underground storage tanks and related equipment at stations they supplied.
- In 1978, Tomaino arranged for Concord/Newport to operate three gasoline stations.
- Tomaino acquired the land in one transaction and, in a separate transaction, acquired the buildings, pumps, and underground storage tanks for $1.
- Tomaino then sold the pumps and underground tanks at each location to Concord/Newport for $5,000.
- Concord/Newport treated the tanks as corporate property (including by insuring them and taking depreciation deductions).
- By the mid-1980s and early 1990s, environmental regulation increased the risk and potential liability associated with underground tanks.
- In 1993, Concord/Newport stopped renting one of the stations but left the underground tanks in place and refused to remove them.
- Tomaino attempted to lease the property, but prospective tenants would not accept the potential liability associated with the tanks.
- Domino’s Pizza agreed to rent the site only if the tanks were removed; Tomaino removed them at significant expense, and the property was vacant for nearly a year before the lease began.
- Concord/Newport later stopped renting the other two station sites and again left the tanks behind; those properties remained vacant when trial began.
- Tomaino sued for declaratory and injunctive relief regarding tank ownership and removal, and for money damages including tank-removal costs and lost rent.

## Issues

1. Whether Concord/Newport was entitled to judgment as a matter of law on the theory that its 1978 purchase of tanks from Tomaino was a voidable interested-director transaction that was not authorized/ratified and was unfair to the corporation.
2. Whether the evidence was sufficient to support the jury’s finding that Concord/Newport owned the underground tanks at the three sites and was responsible for their removal-related consequences after the leases ended.
3. Whether the trial justice could reduce the jury’s damages award by remittitur for failure to mitigate where mitigation was not submitted to the jury by instruction and was not supported by adequate proof.

## Decision

- The court affirmed the denial of Concord/Newport’s motion for judgment as a matter of law and upheld the jury’s verdict that Concord/Newport owned the tanks.
- The court upheld the verdict rejecting Concord/Newport’s attempt to avoid the 1978 tank purchase as unfair self-dealing, concluding that the evidence permitted findings of corporate authorization or ratification and fairness when made.
- The court affirmed the order requiring Concord/Newport to remove the remaining underground tanks at the other properties.
- The court reversed the remittitur and reinstated the jury’s damages award of $88,950 for removal costs and lost rental income, because mitigation was not properly put to the jury and was not proven.

## Legal Principles

- A corporation may not automatically void an interested-director transaction; the transaction may stand where corporate approval or later ratification is supported by the evidence and the transaction was fair at the time it occurred.
- In reviewing denial of judgment as a matter of law, an appellate court views the evidence in the light most favorable to the nonmoving party and leaves credibility and competing inferences to the jury when reasonable jurors could differ.
- Ownership of equipment may be proved by business custom, course of dealing, and how the parties treated the property (including insurance and tax treatment), even when formal documentation is limited.
- Failure to mitigate damages generally must be raised and supported by the defendant, submitted to the jury through appropriate instruction, and proven with evidence of unreasonable conduct.
- A trial court should not reduce a jury’s damages award on a mitigation theory the jury was never asked to decide.

## Conclusion

The Rhode Island Supreme Court held that the record supported the jury’s determination that Concord/Newport owned the underground tanks and could not escape its 1978 purchase from Tomaino as improper self-dealing, and it affirmed injunctive relief requiring removal of remaining tanks; however, it reversed the trial justice’s remittitur because mitigation was neither instructed nor adequately proven, and it reinstated the jury’s $88,950 damages award.


Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016 (1998)