Opinion
No. X10 UWY-CV-05-4010141 S
October 26, 2006
MEMORANDUM OF DECISION
Before the court is the defendant Coats American, Inc.'s (the "defendant" or "Coats") motion for summary judgment. Coats seeks judgment in its favor on each of the two counts that comprise the plaintiff ATC Partnership's (the "plaintiff" or "ATC") complaint in this matter, in which the plaintiff seeks to recover from the defendant the amount by which, in a condemnation proceeding, the fair market value of certain property formerly owned by the plaintiff was reduced due to the presence of environmental contamination. For the reasons set forth herein, the defendant's motion for summary judgment is granted.
This case concerns the allocation of responsibility for the environmental condition of certain multi-complex, multi-parcel properly (the "property") located on both sides of the Willimantic River in the town formerly known as Willimantic, Connecticut. The property has fomented an extraordinary amount of litigation over the past decade, the history of which presumably is familiar to the parties. For the sake of brevity, the court will recite such facts and history only as is necessary to resolve the motion presently before it.
The following facts are not in dispute. The property was utilized for many years for the manufacture of textiles, including thread and yarn, ending in 1985. At that time the defendant's corporate predecessor, the American Thread Company, which was then utilizing the facilities on the property, moved its operations out of this state. The following year, the American Thread Company sold the property to Eastern Connecticut Industrial Associates ("Eastern"), not a party to this action. Eastern, in turn, sold the property to the plaintiff in that same year. Thereafter, the plaintiff engaged in negotiations with the Town of Windham on plans for the joint development of the property. Those negotiations ultimately broke down, as a result of which the Town of Windham (not a party to this action) initiated condemnation proceedings with respect to the property. After several years of litigation between the plaintiff and the Town over the fair market value of the property, the plaintiff ultimately was awarded $1,752,365 as just compensation for the taking of the property.
In arriving at the value of just compensation, the trial court initially took into account the environmental condition of the property, but also factored into its award the potential recovery by a hypothetical prospective buyer from other sources, including the value of litigation against the defendant and an available state remediation grant. However, the trial court thereafter granted reconsideration and modified its ruling. Upon reconsideration, the trial court increased its award of just compensation based upon the availability of a state grant, but apparently backtracked from its earlier ruling attributing value to possible environmental litigation (although it did not make a concomitant reduction in its award). On that subject, the trial court observed that "I don't think that most buyers would be interested in buying a building just so they could buy the lawsuit and see how much they could get out of that" and concluded that, as a potential buyer, "this wasn't a pot of money that I would be going after."
The condemnation litigation concluded upon the decision of the Connecticut Supreme Court in Northeast CT. Economic Alliance, Inc. v. ATC Partnership, 272 Conn. 14, 861 A.2d 473 (2004), wherein the Supreme Court affirmed in all aspects the judgment of the trial court described above. The parties now dispute the extent to which these collateral sources ameliorated the reduction in value attributable to contamination, the plaintiff claiming that it was damaged "at a minimum" in the amount of $539,900; the defendants contend that the collateral sources factored in by the trial court ameliorated any reduction for contamination.
The plaintiff commenced the present action against the defendant in 2005, seeking to be compensated for the amount by which the fair market value of the property was reduced due to environmental contamination. The plaintiff's amended complaint is in two counts. The first count sounds in common-law indemnification. The plaintiff alleges that the defendant caused the environmental contamination on the property and neglected to fully remediate it, thereby causing the plaintiffs just compensation to be reduced in the condemnation proceeding. The second count seeks reimbursement from the defendant, pursuant to General Statutes § 22a-452, for the amount by which the just compensation awarded to the plaintiff was reduced due to pollution caused by the defendant. The defendant seeks summary judgment in is favor on both of these counts.
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law . . ." (Internal citations and quotation marks omitted.) Cantonbury Heights Condominium Ass'n, Inc. v. Local Land Development, LLC. 273 Conn. 724, 733, 873 A.2d 898 (Conn. 2005).
The elements of a common-law indemnification claim are well-established: "(1) the party against whom the indemnification is sought was negligent; (2) that party's active negligence, rather than the defendant's own passive negligence, was the direct, immediate cause of the accident and the resulting injuries and death; (3) the other party was in control of the situation to the exclusion of the defendant seeking reimbursement; and (4) the defendant did not know of the other party's negligence, had no reason to anticipate it, and reasonably could rely on the other party not to be negligent." Smith v. City of New Haven, 258 Conn. 56, 66, 779 A.2d 104 (2001).
The defendant contends that the plaintiff cannot, as a matter of law, establish any of the four elements of common-law indemnification. Specifically, the defendant asserts that the plaintiff (1) cannot prove that the defendant was negligent because, inter alia, the defendant discharged its duty to remediate the property by complying with a state remediation order; (2) cannot establish that the defendant was the proximate cause of any injury under the decision of the Appellate Court in CT Page 19836 McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 890 A.2d 140 (2006), because the plaintiff purchased the property "as is," was on notice of the contamination, and had the opportunity to inspect the property prior to purchase; (3) cannot prove that the defendant was in exclusive control of the situation giving rise to the alleged injury; and (4) was not harmed or damaged, because the plaintiff was fully compensated by the award of just compensation in the condemnation litigation with the Town of Windham.
At oral argument on the present motion, counsel for the plaintiff conceded that the plaintiff's claim for common-law indemnification is not viable in light of the decision of the Appellate Court in McCann, supra, given the facts that the plaintiff purchased the property "in its present condition" (a synonym of "as is"), was aware of pollution issues at the time of the purchase, and had the opportunity to inspect the property at the time of purchase. See McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., supra, 93 Conn.App. at 524-25. The plaintiff nevertheless contends that it is entitled to pursue a claim for "equitable indemnification" against the defendant. According to the plaintiff, equitable indemnification differs from common-law indemnification in that it is based upon equitable principles of restitution, rather than upon tort or contract obligations, such that the elements of traditional common-law indemnification-including the element of causation-are not a prerequisite for the plaintiff to prevail on its indemnification claim. The court declines the plaintiff's invitation to recognize such a cause of action.
The plaintiff has proffered, and the court has found, no Connecticut case recognizing a general cause of action for equitable indemnification. The plaintiff has cited to American Jurisprudence 2d, and to the decision of the court in 55 Motor Ave. Co. v. Liberty Industrial Finishing Corp., 885 F.Sup. 410 (E.D.N.Y. 1994), in support of its argument that the court should recognize such a cause of action in the present case. The court concludes that neither of those authorities support the recognition of the cause of action urged by the plaintiff.
A cause of action for "equitable indemnification" has been mentioned in a single trial court decision, Harris v. Levin, 2003 WL 21716455 (Conn.Super. July 7, 2003) (McWeeny, J.). That decision ordered stricken both the common-law and "equitable" indemnification claims in that case without any independent discussion of the equitable indemnification claims.
The section of Am.Jur.2d to which the plaintiff cites does no more than provide a brief overview of the three types of indemnity: CT Page 19837
A party's rights to indemnity can rest on three bases: (1) an express contract; (2) a contract implied-in-fact; or (3) equitable concepts arising from the tort theory of indemnity, often referred to as a contract implied-in-law. Accordingly, the right to indemnity may be express or implied by law. Express and implied contractual indemnity claims require proof of a contract to indemnify, whereas implied or equitable indemnity is based on concepts of equity. The purpose of the doctrine of equitable indemnity is to avoid the unfairness, under the joint and several liability theory, of holding one defendant liable for the plaintiff's entire loss while allowing another responsible defendant to escape all liability. Indemnity may also be based upon a theory of unjust enrichment, and if two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, that person is entitled to indemnity from the other if the other would be unjustly enriched at his or her expense by the discharge of the liability.
The first two types of indemnification mentioned in this section-pursuant to an express or implied contract-are inapposite, as the plaintiff has not claimed an express or implied contractual basis for indemnification.
41 Am.Jur. 2d, Indemnity § 2.
The plaintiff seizes upon the use of the term "equitable indemnity" in this section in support of its argument for the recognition of a general equitable action for indemnity. The use of this nomenclature, however, is wholly unremarkable. There is no question that non-contractual indemnity has its roots in equity jurisprudence; the Connecticut Supreme Court has recognized as much in a seminal case on the subject of common-law indemnification. See Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 412, 207 A.2d 732 (1965) (Observing that "both an implied obligation to indemnify and contribution are based on equitable principles").
In support of its argument for the existence of a cause of action for equitable indemnification, the plaintiff also points to the reference to unjust enrichment in that section, specifically, the statement that "Indemnity may also be based upon a theory of unjust enrichment . . ." The authority cited for that statement, however, is the Restatement (Second) of Torts § 886B(1), which provides that "[i]f two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, he is entitled to indemnity from the other if the other would be unjustly enriched at his expense by the discharge of the liability." Therefore, instead of supporting the plaintiff's argument, the reference to unjust enrichment serves only to underscore the need for underlying tort liability to support a claim for indemnification.
It does not follow from the equitable nature of non-contractual indemnification, however, that there is extant a general, equitable cause of action for indemnification in the absence of an underlying duty in tort or contract. This is confirmed by a subsequent section in Am.Jur.2d, which elaborates upon the doctrine of "equitable indemnity" as follows:
For indemnification implied-in-law, more an equitable remedy than an action in and of itself, there must be an underlying injury sounding in tort, and the party seeking indemnity must have imputed or derivative liability for the tortious conduct from which indemnity is sought. In order for the doctrine of equitable indemnity to apply, there must be some basis for tort liability against the proposed indemnitor, which generally is based on a duty owed to the underlying plaintiff, although vicarious liability, strict liability, and implied contractual indemnity between the indemnitor and the indemnitee can provide a basis for equitable indemnity.
41 Am.Jur. 2d, Indemnity § 20 (Emphasis added).
This analysis is entirely consistent with common-law indemnification as it presently exists in Connecticut, which, as set forth above, requires a claimant to establish negligence (or breach of contract) in addition to the other prerequisites for indemnification. See Burkert v. Petrol Plus of Naugatuck, Inc., 216 Conn. 65, 74, 579 A.2d 26 (1990) (Noting that, under Kaplan v. Merberg Wrecking Corp., supra, "a party is entitled to indemnification, in the absence of a contract to indemnify, only upon proving that the party against whom indemnification is sought either dishonored a contractual provision or engaged in some tortious conduct"). Contrary to the plaintiff's argument, there is nothing in Am.Jur.2d to support the existence of an action for indemnification based upon nothing more than nebulous concepts of general equity.
The second authority relied upon the defendant, the decision of the court in 55 Motor Ave. Co. v. Liberty Industrial Finishing Corp., supra, is no more persuasive. In that decision, the court denied the defendant's motion to dismiss the plaintiff's indemnification claim, which arose out of the environmental pollution of certain property allegedly caused by defendant (which owned the subject property prior to the plaintiff). The defendant in that case argued that the plaintiffs were at fault in causing the pollution, such that their claim for indemnity was barred as a matter of law. The court determined that the issue of fault could not appropriately be resolved in the context of a motion to dismiss. Id., 425-26. Although the court referred to the plaintiff's claim as one for "equitable indemnification," there is simply nothing in the decision to support the existence of a broad, equitable cause of action for indemnification separate and apart from typical common-law indemnification principles. To the contrary, the New York authorities cited by the 55 Motor Ave., court underscore the need for an underlying duty, arising out of tort law, to support a claim for indemnification. See Trustees of Columbia University v. Mitchell/Giurgola Associates, 109 A.D.2d 449, 452, 492 N.Y.S.2d 317 (1985) (Describing implied indemnity as "permitting one who is held vicariously liable solely on account of the negligence of another to shift the entire burden of the loss to the actual wrongdoer"); New York v. Keene Corp., 132 Misc.2d 745, 749, 505 N.Y.S.2d 782 (Sup.Ct. 1986) (Holding that "[t]he duty on the part of the defendants in this case, whether in negligence or in strict products liability, gives rise to an additional duty to indemnify plaintiffs in their cleanup of a grave and imminent hazard").
In light of the foregoing, it is evident that the plaintiff's argument conflates the means of recovery (indemnification) with the underlying right of recovery (breach of a duty or obligation arising out of tort or contract law.) The equitable nature of the former does not obviate the need to establish a right of recovery under the latter. Any difference between common-law indemnity under Connecticut law, and the types of indemnity discussed in the authorities cited by the plaintiff is purely nominal. The defendant's motion for summary judgment on the first count of the plaintiff's complaint is granted.
The court now turns to the second count, which seeks reimbursement from the defendant pursuant to General Statutes § 22a-452(a). In support its cause of action under this statute, the plaintiff relies solely upon a reincorporation of the facts alleged in support of the first count. General Statutes § 22a-452(a) provides in relevant part:
Any person, firm, corporation or municipality which contains or removes or otherwise mitigates the effects of oil or petroleum or chemical liquids or solid, liquid or gaseous products or hazardous wastes resulting from any discharge, spillage, uncontrolled loss, seepage or filtration of such substance or material or waste shall be entitled to reimbursement from any person, firm or corporation for the reasonable costs expended for such containment, removal, or mitigation, if such oil or petroleum or chemical liquids or solid, liquid or gaseous products or hazardous wastes pollution or contamination or other emergency resulted from the negligence or other actions of such person, firm or corporation.
In its motion for summary judgment, the defendant argues that this cause of action is barred by the Statute of Limitations. The defendant further contends that the plaintiff's claim must fail as a matter of law because the plaintiff has not alleged that it incurred costs for the containment, removal, or mitigation of pollution within the meaning of the statute. According to the defendant, the alleged reduction in just compensation suffered by the plaintiff as a result of pollution on the property does not constitute costs expended for the remediation of the property. The court agrees with the defendant on the latter ground and, therefore, need not reach the Statute of Limitations issue at this time.
The Connecticut Supreme Court discussed extensively the history and purpose of General Statutes § 22a-452 in Knight v. F.L. Roberts Co., 241 Conn. 466, 696 A.2d 1249 (1997). The plaintiff in that case had, in settlement of prior litigation, paid $400,000 to Connecticut Light Power ("CLP") "toward the cost" of remediating gasoline contamination of water and soil. The plaintiff then brought a claim against the defendant pursuant to § 22a-452, seeking to recoup that amount. The trial court granted the defendant's motion to strike the plaintiff's claim, holding that a right to reimbursement exists under § 22a-452 only when sums are expended to directly address the remediation.
The Supreme Court reversed, concluding that the trial court's reading of the § 22a-452a was overly restrictive. After reviewing the legislative history of the Connecticut Water Pollution Control Act, the court observed that "[t]he clear purpose of this provision is to encourage parties to pay for remediation by providing them with an opportunity to recoup at least some of their remediation costs from others who are found to be responsible for the contamination." Knight v. F.L. Roberts Co, supra, 241 Conn. 475. The court held that this purpose would be thwarted if parties that had compensated another landowner for remediation costs were precluded from recovery merely because they did not pay remediation costs directly. Id. Significantly for present purposes, the court concluded its discussion as follows:
In light of the inclusive language of § 22a-452 and the broad remedial purpose of the statutory scheme of which it is a part, we conclude that the plaintiff is entitled to reimbursement from the defendants under § 22a-452(a) for their pro rata share of the costs of containing, removing or otherwise mitigating the contamination of CLP's property if, as the plaintiff has alleged, the defendants are also negligently responsible for contaminating that property, and CLP used the $400,000 it received from the plaintiff to remediate the contamination.
Id., 476 (Emphasis added.)
Central to the court's holding was its assumption, based upon the allegations of the plaintiff's complaint, that the party compensated by the plaintiff had in fact used the funds to remediate the property. See id., 471 (Noting that, in light of its duty to construe the complaint in the light most favorable to the plaintiff, "we must assume that CLP has, in fact, used those funds to defray the costs associated with containing, removing or otherwise mitigating the effects of the alleged contamination").
Further, federal and state trial courts have consistently held that the expenditure of funds for remediation is a prerequisite to recovery under § 22a-452, both before and after the decision of the Connecticut Supreme Court in Knight. See Durham Mfg. Co. v. Merriam Mfg. Co., 294 F.Sup.2d 251, 272 (D.Conn. 2003) ("In order for a plaintiff to be able to bring a claim under Conn. Gen. Stat. § 22a-452, the remediation must have already taken place and the plaintiff must have expended funds for such remediation"); Albahary v. City Town of Bristol, 963 F.Sup. 150, 156 (D.Conn. 1997) ("by its terms, § 22a-452 allows reimbursement of remediation costs only if a plaintiffs has `contain[ed] or remove[d] or otherwise mitigate[d]' contamination"); Cadlerock Properties Joint Venture, L.P. v. Schilberg, 2001 WL 950233, at *1 (Conn.Super. July 17, 2001) (Sferrazza, J.) ( 30 Conn. L. Rptr. 85) (Holding that a cause of action under § 22a-452 does not accrue until remediation has taken place); Blackburn v. Miller-Stephenson Chemical Co., 1998 WL 661445, at *10 (Conn.Super. Sept. 11, 1998) (Leheny, J.) (Collecting cases and holding that plaintiff could not recoup costs of investigating the presence of contamination where remediation had not taken place under § 22a-452, because that statute requires that "remediation has already taken place"). Applying these authorities to the matter at hand, it is plain that the plaintiff's claim under General Statutes § 22a-452 cannot succeed. It is undisputed that the plaintiff did not expend funds for the "containment, removal, or mitigation" of pollution with respect to the property, whether by remediating the property itself or by reimbursing a third party for the costs of remediation (as was the case in Knight). Instead, as discussed above, the plaintiff is seeking to recover the amount by which its award of just compensation was reduced due to the environmental condition of the property. Therefore, even under the broad construction of § 22a-452 given by the court in Knight, the plaintiff's claim does not fall within the ambit of that statute.
The plaintiff attempts to avoid this result by arguing that it never had a chance to expend sums for the remediation because the property was taken by condemnation. Therefore, according to the plaintiff, it would be inequitable to preclude the plaintiff from recovering the amount by which the value of the property was reduced due to contamination, because the taking of the property was a matter beyond the plaintiff's control. While the court appreciates the perceived inequity caused by the plaintiff's inability to recover, the court cannot rewrite the statute to conform to general notions of fairness. It is clear that the statute was not intended to be a means for parties to recover for harm to the value of property; instead, as discerned by the Supreme Court, the purpose of the statute is "to encourage parties to pay for remediation by providing them with an opportunity to recoup at least some of their remediation costs from others who are found to be responsible for the contamination." Knight v. F.L. Roberts Co., supra, 241 Conn. 475. It is difficult to fathom that permitting the plaintiff to recover under the statute, when it has not expended funds for the remediation of the property (and, indeed, cannot do so in the future because it no longer owns the property) would further that purpose.
As discussed hereinabove, General Statutes § 22a-452, in letter and spirit, requires that the party seeking reimbursement has expended funds in furtherance of the remediation of environmental contamination. Because it is undisputed that the plaintiff has not done so here, the defendant is entitled to summary judgment on second count of the plaintiff's complaint.
The defendant's motion for summary judgment is granted.