Opinion
Case No. CIV-00-331-N-EJL
August 8, 2002
ORDER, REPORT AND RECOMMENDATION
Currently pending before the Court are Defendants' Motion for Summary Judgment (Docket No. 72) and Clark Oil's Motion to Amend and/or for Voluntary Dismissal (contained in Response to Defendant's Motion for Summary Judgment, Docket No. 82).
Having carefully reviewed the record, considered oral arguments, and otherwise being fully advised, the Court enters the following Order, Report and Recommendation.
I. BACKGROUND
The instant action involves a commercial real estate parcel located in Sandpoint, Idaho which was used as a petroleum distribution and storage facility ("bulk plant") since approximately 1927. Plaintiffs allege that Standard Oil Company, which later became Chevron ("Defendant") constructed tanks and piping, both above the ground, and below the ground, for the transfer of refined petroleum products. Plaintiffs allege that numerous spill events, which varied in nature and severity, occurred during the time Chevron and its predecessor owned the property.
In or about 1984, Plaintiffs allege that Chevron disassembled and removed the bulk plant from the property. Thereafter, on January 7, 1985, Chevron sold the property to Lee and Joan Lyman. Later that same day, the Lymans conveyed the property to Clark Oil Company, an Idaho Partnership ("Clark Oil Partnership"). The Clerks then opened their new bulk plant facility on the property in November of 1985.
The two named Plaintiffs in the instant action are Clark Oil Partnership and Clark Oil Company, am Idaho Corporation ("Clark Oil Corporation") The Clark Oil Partnership was formed in the Spring of 1982 and includes as partners Dave T. "Buck" Clark and his two sons, Dave C. "Chris" Clark and Jeffery S. Clark. Deposition of Chris Clark, p. 17 ( Seventh Aff. of Stephen Thomas Ex. 1) (Docket No. 77). Thereafter, the Clark Oil Corporation was formed in the Spring of 1986. Id. at p. 11. Buck Clark averred that Clark Oil Partnership and Clark Oil Corponition are "essentially the same entity, both being owned by the same persons." Declaration of Dave T. "Buck" Clark ¶ 9 (Docket No. 85). Therefore, unless otherwise designated, for purposes of this Order, Report and Recommendation, the Court will refer to the two entities collectively as "Clark Oil."
Thereafter, in May 1991, the Idaho Department of Health and Welfare, Division of Environmental Quality ("IDEQ") filed a petroleum contamination clean-up action in state court against Ralph Williams, d/b/a the "Gas-N-Go." Although IDEQ did not sue Chevron or either Clark Oil entity, Williams eventually sited Clark Oil Partnership, Chevron, Louisiana Pacific, and Union Pacific Railroad ("UPRR").
On September 1, 1992, Clark Oil Partnership filed a cross-claim against Chevron. However, Williams settled with all of the third-party defendants and the third-party complaint was dismissed on June 9, 1995. Seventh Thomas Aff Ex. 10. As a result, the third-party defendants, including Clark Oil Partnership and Chevron, dismissed all of their cross-claims without prejudice and without costs or attorney fees to either party. Id.
Thereafter, the parties with an interest in the subject property (Clark Oil Partnership, Chevron, and UPRR) began working with IDEQ to address the issues regarding the petroleum contamination that had been discovered on, or adjacent to, the subject property. On May 31, 1995, the parties entered into an Agreement for Utilization of Expert Consultants ("Expert Agreement") which allowed the parties' respective expert consultants to negotiate directly with each other and with IDEQ. Id. Ex. 14. Following a series of' negotiations and meetings between the parties' experts and IDEQ, Clark Oil Partnership, Chevron, and UPRR executed a Consent Order with IDEQ in December of 1997, effective January 6, 1998, which. was based upon a detailed Corrective Action Plan ("CAP") to address the specified areas of concerns at the subject property. Id. Ex. 15. According to the terms of the Consent Order, Chevron is to "fully implement the approved CAP." Id. Clark Oil Partnership's obligation, however, is limited to allowing reasonable access to its property. Id.
On May 24, 2000, Plaintiffs originally filed the instant action in state district court and the case was removed to this Court. In its Complaint, Clark Oil alleges that Chevron is strictly liable for any environmental costs incurred as a result of releases of contaminants which occurred during the time Chevron owned the property. Complaint, ¶ 44. Clark Oil also asserts common law causes of action for fraud on the contract, defect in title, nuisance, breach of the sales contract, and breach of the forbearance contract.
II. ANALYSIS
A. Clark Oil's Motion to Amend and/or Voluntary Dismissal
Clark Oil argues that to the extent the Complaint fails to adequately plead a cause of action under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), they should be permitted to amend theft Complaint. Mem. in Response to Summery Judgment, p. 15 (Docket No. 82). Alternatively, Clark Oil seeks a voluntary dismissal pursuant to Fed.R.Civ.P. 41(a)(2). Id. at p. 17.
To the extent that the various requests contained in Clark Oil's Memorandum in Response to Summary Judgment can be considered as motions, the Court notes that Clark Oil has not filed either motions or supporting documents as required by District, of Idaho Local Rule 7.1. This Local Rule requires that "each motion, other than a routine or uncontested matter, must be accompanied by a separate brief . . . containing all of the reasons and points and authorities relied upon by the moving party." inasmuch as Clark Oil has not complied with the Local Rules by filing a motion and a brief, the Court concludes that the requested relief should be denied.
As an additional ground for denial of Clark Oil's Motion to Amend, the Court points out that the March 5, 2001 Scheduling Order required that all amendments to pleadings "shall be completed on or before May 31, 2001." (Docket No. 23). The District Court specifically stated that this deadline will only be extended by a showing of "good cause." This deadline was previously modified by this Court granting Clark Oil leave to file an amended complaint provided it did so by September 21, 2001. (Docket No. 62). Clark Oil did not file an amended complaint.
Clark Oil's pending request to amend, as contained in the Response to Defendant's Motion for Summary Judgment, was filed on February 6, 2002. The Court is of the view that Clark Oil has not demonstrated good cause to allow an amendment, especially in light of their failure to file an amended complaint when previously allowed to do so by the Court on September 12, 2001. Further, trial is scheduled to commence on September 10, 2002 and Chevron would be prejudiced by allowing Clark to file an amended complaint at this time.
Similarly, with respect to Clark Oil's Motion for Voluntary Dismissal, the Court notes that at the Scheduling Order states that all motions shall be filed on or before January 15, 2002. (Docket No. 23). Clark Oil's motion in this regard is untimely and is denied.
Finally, with respect to Clark Oil's Motion to Amend to include a claim under CERCLA, the Court is of the view that even if an amendment was permitted, such amendment would be futile due to the "petroleum exclusion." It is well established that CERCLA allows a private right of action for contribution of response costs against "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of" 42 US.C. § 9607(a)(2). However, CERCLA excludes "petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance." Id. at § 9601(14). The Ninth Circuit has specifically held that this exclusion applies to additives of refined petroleum products. Wilshire Westwood Assocs. v. Atl. Richfield Corp., 881 F.2d 801, 810 (9th Cir. 1989).
The plaintiffs in Wilshire brought suit to recover response costs for alleged petroleum releases, which included the additives benzene, toluene, xylene, ethylbenzenc, and lead. Although the court in Wilshire recognized that it is undisputable that benzene, toluene, xylene, ethylbenzene and lead are hazardous substances, having been specifically listed or designated pursuant to several of the statutes set forth in Section 9601(14)(a)-(f), the issue before the court was whether the exclusion from the definition of "hazardous substances' in CERCLA includes refined gasoline and all of its components and additives. Id. at 803.
In its analysis, the court in Wilshire examined the plain meaning of CERCLA, as well as the legislative history of the statute. In its discussion, the court in Wilshire recognized there is "virtually no legislative history contemporaneous with the enactment of CERCLA directly relevant to the scope of' the petroleum exclusion." Id. at 806. However, after considering the congressional action and the EPA's interpretation of the scope of the petroleum exclusion, the court in Wilshire held that the "petroleum exclusion in CERCLA does apply to unrefined and refined gasoline even though certain of its indigenous components and certain additives during the refining process have themselves been designated as hazardous substances within the meaning of CERCLA." Id. at 810 (emphasis added).
According to Clark Oil's Complaint, the alleged contamination "contained various refined petroleum products" Complaint ¶ 17. Specifically, Clark Oil's Complaint focuses on lead and MTBE. Id. ¶ 18.
According to the EPA website, MTBE is almost "exclusively used as a fuel additive in motor gasoline" MTBE in Fuels, at http://www.epa.gov/mtbe/gas.htm (June 24, 2002). As such, the Court finds that MTBE is a fuel additive and would be included within the Ninth Circuit Court of Appeal's petroleum exception. Similarly, although many of the substances listed in Clark Oil's Complaint have been designated as hazardous substances, such as lead, the Wilshire court clearly recognized that they still may be subject to the petroleum exception, if they are used during the refining process. 881 F.2d at 810.
In light of the court's holding in Wilshire, the Court concludes that the petroleum exclusion would bar Clark Oil's CERCLA claim. Thus, even if' Clark Oil was allowed to amend its complaint, the CERCLA claim would be futile. Accordingly, Clark Oil's Motion to Amend is denied.
B. Standard for Summary Judgment
Motions for summary judgment are governed by Fed.R.Civ. p. 56, which provides, in pertinent part, that judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).
The United States Supreme Court has made it clear that under Rule 56, summary judgment is required if the nonmoving party fails to make a showing sufficient to establish the existence of an element which is essential to his case and upon which he or she will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the nonmoving party fails to make such a showing on any essential element of his case, "there can be "no genuine issue as to any material fact, ' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323.
See also Rule 56(e), which provides in part:
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, it' appropriate, shall be entered against the adverse party.
Fed.R.Civ.P. 56(e).
Under Rule 56 it is clear that an issue, in order to preclude entry of summary judgment, must be both "material" and "genuine." An issue is "material" if it affects the outcome of the litigation. An issue is "genuine" when there is "sufficient evidence supporting the claimed factual dispute . . . to require a jury or judge to resolve the parties' differing versions of the truth at trial," Hahn v. Sargent, 523 F.2d 461, 463 (1st Cir. 1975) (quoting First Nat'l Bank v. Cities Serv. Co., Inc., 391 U.S. 253, 289 (1968)), or when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Ninth Circuit cases are in accord. See, e.g., British Motor Car Distrib., Ltd. v. San Francisco Automotive Indus. Welfare Fund, 882 F.2d 371 (9th Cir. 1989).
In ruling on summary judgment motions, the court does not resolve conflicting evidence with respect to disputed material facts, nor does it make credibility determinations. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626 (9th Cir. 1987). Moreover, all inferences must be drawn in the light most favorable to the nonmoving party. Id. at 631. As the Ninth Circuit Court of Appeals has stated, "[p]ut another way, if a rational trier of fact might resolve the issue in favor of the nonmoving party, summary judgment must be denied," Id.
In order to withstand a motion for summary judgment, the Ninth Circuit has held that a nomnoving party:
(1) must make a showing sufficient to establish a genuine issue of fact with respect to any element for which it bears the burden of proof; (2) must show that there is an issue that may reasonably be resolved in favor of either party; and (3) must come forward with more persuasive evidence than would otherwise be necessary when the factual context makes the nonmoving party's claim implausible.British Motor Car Distrib., 882 F.2d at 374 (citation omitted). Moreover, the Ninth Circuit has held that where the moving party meets its initial burden of demonstrating the absence of any genuine issue of material fact, the nonmoving party must "produce "specific facts showing that there remains a genuine factual issue for trial' and evidence "significantly probative' as to any [material] fact claimed to be disputed." Steckl v. Motorola, Inc., 703 F.2d 392, 393 (9th Cir. 1983) (citing Ruffin it County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979)).
The Ninth Circuit Court of Appeals has acknowledged that in recent years the Supreme Court, "by clarifying what the nonmoving party must do to withstand a motion for summary judgment, has increased the utility of summary judgment." California Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987). As the Ninth Circuit has expressly stated: "No longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment." Id.
In addressing the application of the "Summary Judgment Test," the Ninth Circuit has specifically explained that:
A "material" fact is one that is relevant to an element of a claim or defense and whose existence might affect the outcome of the suit. The materiality of a fact is thus determined by the substantive law governing the claim or defense. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment.T.W. Elec. Serv., Inc., 809 F.2d at 630 (citing Anderson it Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)) (emphasis added).
C. Chevron's Motion for Summary Judgment (Docket No. 72) 1. Statute of Limitations
According to the record, in January 1995, Clark Oil Partnership and Chevron negotiated the "Agreement for Tolling of Statute of Limitations" ("Tolling Agreement"'). Seventh Thomas Aff. Ex. 11. In this agreement, the parties agreed to toll the statute of limitations for any causes of action related to the subject property from September 1, 1992, the date that Clark Oil Partnership filed their cross-claim in the Gas-N-Go litigation, through one year after the stipulation and order of dismissal of the cross-claims. Id. As a result of the dismissal of the cross-claims on June 9, 1995, the tolling period ran from September 1, 1992 through June 9, 1996. Id. Ex. 10. Thereafter, on June 9, 1996, prior to the expiration of the Tolling Agreement, Clark Oil Partnership and Chevron entered into a second extension of the Tolling Agreement wherein the Tolling Agreement was extended until June 9, 1997. Id. Ex. 12.
Chevron argues that notwithstanding the Tolling Agreement, Clark Oil's claims are barred by the applicable statute of limitations. As a result, Chevron argues that Clark Oil's claims for strict liability, fraud on the contract, defect in title, nuisance, and breach of contract should be dismissed.
In response, Clark Oil argues that the common law claims for strict liability, fraud on the contract, defect in title, nuisance, and breach of contract are not barred because the claims are each "wrapped up and directly related to Chevron's concealment of the existence of MTBE and other pollutants." Mem. in Response to Summary Judgment, p. 5. Thus, pursuant to the "discovery exception," Clark Oil argues that their claims are timely.
In the instant action, Buck Clark averred that he was not aware of the surface contamination until he reviewed the aerial photographs accompanying the Site Characterization Report by David Brown Associates, May 5, 1997. Buck Clark Decl. ¶ 7. Further, Buck Clark averred that he "did not become aware of the subsurface contamination at the facility until July of 1992 when we received a report from the Idaho Underground Tank Trust Fund denying us tank insurance because of subsurface contamination at the site." Id. ¶ 5. With respect to the alleged MTBE contamination, Buck Clark averred that he did not become aware of it until 1997. Id. ¶ 6.
Despite this statement, the record actually demonstrates that the Petroleum Storage Tank Fund sent Chris Clark a letter dated January 22, 1992 informing him that the Fund would be unable to provide insurance coverage. Ninth Thomas Aff. Ex. A (Docket No. 91). The significance of this date will he discussed infra, with respect to Clark Oil's claim for fraud on the contract.
However, the record also contains evidence that prior to the purchase of the subject property, Buck Clark had been to the subject property to visit a friend several times in the 1940s and 1950s. Buck Clark Depo., pp. 37-38 (Seventh Thomas Aff Ex. 5) (Docket No. 77). Buck Clark also testified that during these visits, he had witnessed gasoline or other petroleum products that had been spilled on the ground. Id. at pp. 38-40. Subsequently, sometime in 1984 but prior to January 7, 1985, Buck Clark testified that he and other family members walked the subject property prior to purchase. Id. at p. 54.
In the spring of 1985, shortly after Clark Oil Partnership's purchase of the subject property, Buck Clark testified that Clark Oil Partnership excavated holes in order to install new underground storage tanks. Id. at pp. 70-72. During this time, one of the excavators reported to Buck Clark "that he smelled contamination." Id. pp. 73-74. However, Buck Clark did not consult anyone or notify Chevron of the potential contamination. Id. p. 76. The record also contains evidence that Jeff Clark smelled petroleum products emanating from the site where the Clarks' contractors were digging holes and installing new tanks. Jeff Clark Depo., pp. 7-10 ( Seventh Thomas Aff. Ex. 9).
In limited situations, the Idaho legislature has applied the "discovery" exception which tolls the accrual date of a cause of action until the act or omission is discovered or reasonably should have been discovered. See, e.g., I.C. § 5-218(4) (action for fraud or mistake); IC. § 5-219(4) (stating that a cause of action for damages arising out of the accidental placement of a foreign object in the body of a person by reason of professional malpractice accrues when "the injured party knows or in the exercise of reasonable care should have been put on inquiry regarding the . . . matter complained of . . . ").
However, a review of Idaho case law indicates that the Supreme Court of Idaho has been reluctant to extend the discovery exception beyond what has been enacted by the legislature and instead acts "deferentially in the face of legislative action." Knudsen v Agee, 128 Idaho 776, 778, 918 P.2d 1221, 1223 (1996); see also Theriault v. A.H. Robins Co., 108 Idaho 303, 308, 698 P.2d 365, 370 (1985) (stating that "[s]ince the 1971 amendment, in deference to the legislative policy expressed therein, this Court has consistently refused to create additional discovery exceptions"); Martin v. Clements, 98 Idaho 906, 910, 575 P.2d 885, 889 (1978); Owyhee County v. Rife, 100 Idaho 91, 94-95, 593 P.2d 995, 998-99 (1979); Streib v. Veigel, 109 Idaho 174, 178, 706 P.2d 63, 67 (1985); Tingley v. Harrison, 125 Idaho 86, 89-90, 867 P.2d 960, 963-64 (1994). Therefore, the Court concludes that the controlling date is not the date of discovery of each individual constituent of the contamination but, rater, is the date the wrongful act occurred. See Ralphs v. Spirit Lake, 98 Idaho 225, 560 P.2d 1315 (1977) (recognizing that the statute of limitations commences from a wrongful act, albeit the full extent of damages may be unknown or unpredictable at the initial time).
The Court's finding that the general discovery exception should not be extended in the instant action is limited to Clark Oil's claims for strict liability, defect in title, nuisance, and breach of contract. By statute, a claim for fraud does not accrue until a party discovers the facts constituting the fraud. See I.C. § 5-218(4). The effect of the discovery exception in this regard is discussed infra.
Even assuming arguendo that the Court were to apply the discovery rule to the instant action, the Court would still conclude that the controlling date for a statute of limitations analysis would not be the date when MTBE or other specific constituents were discovered by Clark Oil.
As stated by the Ninth Circuit in a discussion regarding the discovery rule, "the critical determination of when an action accrues is knowledge of the facts essential to the cause of action." Mont Pole Treating Plant v. I.F. Laucks Co., 993 F.2d 676, 678 (9th Cir. 1993). As in Montana Pole, this Court is of the view that a party need not know every fact relating to the claim before the applicable statute of limitations begins to run. Id. at 678-79.
Although Buck Clark avers that he was not aware of the extent of the surface contamination at the property until he was shown aerial photographs in May 1997, Buck Clark Decl. ¶ 7, the Court concludes that Clark Oil had knowledge, albeit of not all the constituents, of the fact of potential contamination by at least the spring of 1985, the date at which they began to install the new storage tanks. Further, the Court concludes that Buck Clark's distinction of surface contamination and subsurface contamination is without merit.
Finally, the Court notes that Clark Oil argues that "perhaps the most important issue in this cases . . . is the existence of MTBE on the subject property." Memo, in Response to Summary Judgment, p. 3. However, the record does not contain evidence that Chevron even used MTBE in the petroleum products stored on the subject property or that it was contained in gasoline or petroleum products at the time Chevron had control of the property. Thus, the Court is of the view that the discovery of the element MTBE would not affect Chevron's potential liability. Therefore, based on the facts in the record, the Court concludes that the discovery of MTBE on the subject property is not controlling in the instant action. instead, the Court concludes Clark Oil's claims accrued at the time the wrong occurred.
a. Liability for Response Costs (Strict Liability)
In its Complaint, Clark Oil alleges that under applicable state and federal law, Chevron "is strictly liable, without regard to fault, for any environmental response costs incurred as a result of releases of contaminants which occurred during the time that Chevron owned and [sic] the property and operated a bulk plant thereon." Complaint ¶ 44.
Pursuant to Idaho Code § 5-224, "[a]n action for relief not hereinfore fore provided for must be commenced within four (4) years after the cause of action shall have accrued." Idaho statutes do not provide a specific statute of limitations for strict liability. Thus, the Court concludes that four years is the applicable statute of limitations for this cause of action. Where the discovery exception is inapplicable, the Court concludes that the tolling period commences to run when the wrongful act occurred. See Ralphs, 560 P.2d 1315.
Since IEPHA does not provide its own statute of limitations, the four year limitation provided by Idaho Code § 5-224 applies to actions brought under it. Aetna (Gas. Sur. Co. v Gulf Resources Chem. Corp., 600 F. Supp. 797 (D. Idaho 1985). Therefore, whether Clark Oil's claim for strict liability is based on common law or IEPHA, the same four year statute of limitations is applicable.
It is undisputed that on January 7, 1985, Chevron sold the subject property to the Lymans, who in turn sold it to Clark Oil Partnership that same day. As a result the Court concludes Chevron did not have control over the subject property after the date of sale, and therefore could not commit a wrongful act after that date.
According to the record, Clark Oil began to install new tanks in lines on the property in the spring of 1985, and Clark Oil opened the new facility in the summer of 1985. Buck Clark Depo, pp. 70-76. Therefore, although the record is not clear as to the exact date when Chevron finally removed all of its equipment from the subject property, it is clear that Clark Oil was in exclusive control of the property by the summer of 1985 at the latest.
The record states that "sometime in 1984 but prior to the closing on January 7, 1985" Buck Clark walked the property and witnessed Chevron "tearing down the old tanks and stuff" Buck Clark Depo., p. 54.
Since the Court concludes that the discovery exception should not be applied to Clark Oil's claim for strict liability, and that the action commences when the wrongful act occurred, the last possible date in which Chevron could release contaminants was prior to the summer of 1985. Thus, the four year statute of limitations, as contained in Idaho Code § 5-224, had expired by the summer of 1989. As a result, the Tolling Agreement which tolled the statute of limitations from September 1, 1992 until June 9, 1997 is not controlling for this cause of action. Accordingly, die Court concludes that Clark Oil's cause of action for strict liability is barred by the statute of limitations and Chevron's Motion for Summary Judgment should be granted in this respect.
b. Nuisance
According to the Complaint, Clark Oil alleges that Chevron "and its predecessors created a nuisance on the property by releasing hazardous substances." Id. ¶ 62. Plaintiffs further allege that the nuisance continued over time, and continues at the present time. Id.
It is well established that a common law cause of action for nuisance is subject to the four year statute of limitations provided in Idaho Code § 5-224. Aetna Cas. Sur. Co., v. Gulf Resources Chem. Corp., 600 F. Supp. 797 (D. Idaho 1985); Idaho v. Hanna Mining Co., 699 F. Supp. 827 (D. Idaho 1987). In Aetna the court stated:
It is well settled that where the complained of nuisance is "permanent," the cause of action must be commenced within four years from the date the permanent nuisance was created or occurred. If the action is not so maintained, the statute of limitations bars any recovery for the nuisance. Where the nuisance is temporary and continuing in nature, the statute of limitations does not run and an action may be brought at any time to recover damages occurring within the previous limitation period.600 F. Supp. at 801.
The Supreme Court of Idaho has stated that a nuisance is temporary "if the cause of injury is abatable or preventable and the injury capable of rectification by reasonable restoration." Shaw v. City of Rupert, 106 Idaho 526, 528, 681 P.2d 1001, 1002 (1984). A nuisance is permanent if the "cause of the injury would most likely be unabatable, thus indicating an injury that would not be temporary." Id. at 1003.
In the instant action, while it appears to the Court that Clark Oil asserts that a cause of action for nuisance is one of a permanent nuisance and one of a temporary nuisance, the Complaint is not clear. However, to the extent that Clark Oil asserts both types of nuisances, the Court nonetheless concludes that the claims should be dismissed as both are barred by the applicable statute of limitations.
As the Court concluded, the last possible date upon which Chevron could have released contaminants on the subject property was in the summer of 1985. Thus, since "the discovery rule is inapplicable, the Court concludes that sometime in the summer of 1985 would be the period of time during which Chevron could have created the permanent nuisance. Thus, the applicable four year statute of limitations would have expired by the summer of 1989. As a result, to the extent that Plaintiffs assert a cause of action for a permanent nuisance, that action is barred by the statute of limitations. Accordingly, Clark Oil's claim for a permanent nuisance should be dismissed, and Chevron's Motion for Summary Judgment should be granted in this respect.
As for any continuing and temporary nuisance, according to the standard and analysis in Aetna, Chevron's Motion for Summary Judgment should be granted for damage which occurred prior to May 24, 1996. 600 F. Supp. at 801-02.
A review of Aetna demonstrates in that case the defendant was still in control of the property at issue. In the instant action, however, Chevron sold the property in January 1985 and, as discussed above, the last possible date of any control over contaminants on the subject property was during the summer of 1985. Therefore, any control over a temporary nuisance would have ended at that time. As a result, the Court concludes that the statute of limitations would begin to run at that time. Thus, to the extent that Clark Oil asserts a claim for a temporary and continuing nuisance, the Court finds, and thus concludes, that this claim should be dismissed. Accordingly, the statute of limitations bars Clark Oil's nuisance claims in its entirety, and Chevron's Motion for Summary Judgment should be granted in this respect.
c. Defect in Title
In the Complaint, Clark Oil alleges that Chevron "failed to deliver good and clear title to the property as warranted, delivering instead title encumbered by contamination." Complaint ¶ 55.
As concluded above, Idaho Code § 5-224 provides a four year statute of limitations for actions not specifically provided for by statute. Thus, since Idaho law does not provide a specific statute of limitations for defect in title, the Court concludes that Clark Oil had four years within which to bring the cause of action.
In the instant action, the alleged wrong occurred at the time Chevron delivered title to the Lymans, which was on January 7, 1985, and the four year statute of limitations expired on January 7, 1989. Accordingly, the Court concludes that Clark Oil's cause of action for defect in title is barred by the Idaho four year statute of limitations and Chevron's Motion for Summary Judgment should be granted in this respect.
d. Breach of Contract
Clark Oil alleges that Chevron breached contractual obligations as follows: breach of good faith and fair dealing by failing to disclose the presence of contamination, failing to provide marketable title, failing to provide a warranty deed, and "other statutory and common law obligations that arise in contracts for the sale of property." Complaint ¶ 65-69.
Apparently, Clark Oil's claim for breach of contract arises from the transaction between the Lymans and Chevron. Pursuant to Idaho Code § 5-216, an action must be commenced within five (5) years on "any contract, obligation or liability founded upon an instrument in writing." Further, the statute of limitations begins to run only upon accrual of a cause of action. Singleton v. Pichon, 102 Idaho 588, 635 P.2d 254 (1981). Likewise, a cause of action for breach of contract does not accrue until there is a breach of the agreement. Spence v. Howell, 126 Idaho 763, 890 P.2d 714 (1995).
In the instant action, similar to Clark Oil's claim for defect in title, the Court concludes the alleged wrong occurred at the time Chevron delivered title to the Lymans, which was on January 7, 1985. Therefore, the five year statute of limitations had expired by January 7, 1990, and the Court concludes that Clark Oil's cause of action for breach of contract is barred by the statute of limitations and Chevron's Motion for Summary Judgment should be granted in this respect.
e. Fraud on the Contract
Clark Oil alleges that at the time Chevron sold the subject property to the Lymans, Chevron knew that contamination had been located on the property, yet it concealed its knowledge and misrepresented the "true state of the property." Id. ¶¶ 46-51.
Pursuant to Idaho Code § 5-218, an action for fraud must be brought within three years, but is "not deemed to have accrued until the discovery, by the aggrieved party." Thus, as discussed above, the Court recognizes that Clark Oil's cause of action for fraud on the contract is a legislative example of a "discovery" exception.
Clark Oil argues that the facts constituting the fraud were discovered in July of 1992, in connection with the Fund's denial of insurance. Memorandum in Response, p. 5; see also Buck Clark Decl. ¶ 5. However, according to the record, the Petroleum Storage Tank Fund sent Chris Clark a letter dated January 22, 1992 informing him that the Fund would be unable to provide insurance coverage. Ninth Thomas Aff. Ex. A (Docket No. 91).
Thus, even by accepting Clark Oil's assertions that they did not have notice of the fraud claim until the Fund's denial of insurance, the Court is or the view that the three year statute of limitations nonetheless bars their claim as the statutory period would have begun to run on January 22, 1992. The statute would have run until September 1, 1992, and then would have been tolled through June 7, 1997 pursuant to the Tolling Agreement. Then, on June 8, 1997, the statute would have begun to run again until Clark Oil filed the instant action on May 24, 2000. Thus, the three year statute of limitations would have expired before Clark Oil filed the instant action. Accordingly, the Court concludes that Clark Oil's cause of action for fraud on the contract should be dismissed, and Chevron's Motion for Summary Judgment should be granted in this respect.
2. Dismissal of Clark Oil's individual Causes of Action
Alternatively, in the event that a reviewing court determines that the statute of limitations has not expired with respect to the above causes of action, the Court determines that each of the causes of action should be dismissed due to the legal deficiencies discussed below. Further, the Court concludes that Clark Oil's claim for breach of a forbearance contract should also be dismissed.
a. Liability for Response Costs (Strict Liability)
According to the Complaint, Clark Oil alleges that "[u]nder the applicable laws, whether state or federal," Chevron is strictly liable for "environmental response costs." In response to Chevron's Motion for Summary Judgment, Clark Oil asserts that Chevron is strictly liable for contribution and cost recovery under CERCLA, the Idaho Environmental Protection and Health Act ("IEPHA"), and the Consent Order. Memorandum in Opposition, p. 2.
AS set forth in Part II(A) supra, the Court concluded that Clark Oil's Motion to Amend its Complaint to assert a cause of action under CERCLA should be denied. Accordingly, the Court will not discuss dismissal of any CERCLA claim in the following subsection.
i. The Consent Order and IEPHA
According to the record, the Consent Order was entered into pursuant to IEPHA. Seventh Thomas Aff. Ex. 15. IEPHA provides that "[i]f a party does not comply with the terms of the consent order, the director [of IDEQ] may seek and obtain, in any appropriate district court, specific performance of the consent order and such relief as authorized in this chapter." I.C. § 39.408(3)(a)(v). Chevron argues that only the director can enforce a consent order entered into pursuant to IEPHA and, as a result, Clark Oil's cause of action for strict liability should be dismissed. The Court agrees.
After careful review of IEPHA, while it is clear that the director of IDEQ has authority to enforce a consent order, the statute does not provide that a private litigant can seek enforcement as well. in the instant action, Plaintiffs argue a private cause of action for contribution and/or cost recovery should be "implied" from IEPHA. Memorandum in Opposition, p. 9.
In Yoakum v. Hartford Fire Ins., Co., 129 Idaho 171, 176, 923 P.2d 416 (1996), the Supreme Court of Idaho discussed whether a plaintiff could bring a private cause of action for a defendant's alleged violations of two Idaho criminal statutes. In its discussion, the court in Yoakum cited to the principals outlined in White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986), in which the court analyzed whether a private right of action against an insurer exists under the Unfair Claims Settlement Practices Act. Recognizing that in certain cases statutory law establishes rights, defines wrongs and implies remedies, the court in Yoakurn stated:
When a legislative provision protects a class of persons by proscribing or requiring certain conduct but does not provide a civil remedy for the violation, the court may, if it determines that the remedy is appropriate in furtherance of the purpose of the legislation and needed to assure the effectiveness of the provision, accord to an injured member of the class a right of action, using a suitable existing tort action or a new cause of action analogous to an existing tort action.923 P.2d at 421 (quoting White, 730 P.2d at 1020-21) (emphasis in original).
Further, the court in Yoakum stated that "[i]n the absence of strong indicia of a contrary legislative intent, courts must conclude that the legislature provided precisely the remedies it considered appropriate." id. Since the criminal statutes the defendant allegedly violated "satisfy none of the criteria set forth in White," the court in Yoakum concluded it would not extend a private cause of action in favor of the plaintiffs. Id.
In the instant action, the Court finds the analysis made by the Supreme Court of Idaho in Yoakum and White to be instructive to the circumstances presented here. Similar to the Yoakum and White cases, the statute relied on by Clark Oil does not expressly provide a private cause of action. Further, the Court notes that with respect to IEPHA, Idaho courts have not held that a private right of action is implied under the statute.
In light of the analysis applied by the court in Yoakum, this Court concludes that there is no legislative indication that providing an additional civil remedy is "necessary to assure the effectiveness" of IEPHA. Id. Without "strong indicia of a contrary legislative intent, " the Court concludes that IEPHA does not provide Clark Oil with a private cause of action. As a result, Clark Oil cannot assert IEPHA based claims under the Consent Order and Chevron's Motion for Summary Judgment should be granted in this respect.
ii. Common Law
Chevron argues that IEPHA preempts a common law cause of action for strict liability for environmental response costs.
In State of Idaho v. Bunker Hill Company, 635 F. Supp. 665 (D. Idaho 1986), the United States District Court for the District of Idaho addressed a similar issue with respect to a common law action for nuisance. In Bunker Hill, the court recognized that the director "is given the power to bring suit under [IEPHA]." Id. at 677-78. Citing Idaho Code § 39-108(7), the court in Bunker Hill held that [IEPHA]." does not preempt the State's common law nuisance claims. Id. at 678. The court concluded that "[i]f the legislature has intended to preempt the State's nuisance claim, it must clearly appear from the Act or other indicia of legislative intent." Id.
At the time the court made its ruling in Bunker Hill, I.C. § 39-108(7) provided that "[i]n addition to such civil penalties, any person who violates this act shall be liable for any expense incurred by the state in. — enforcing or terminating any nuisance, source of environmental degradation, cause of sickness, or health hazard." Today, the provision remains substantially unchanged, but is codified in I.C. § 39-108(6).
In the instant action, unlike Bunker Hill, the State of Idaho is not asserting a common law cause of action. Further, in Bunker Hill, the court noted that IEPHA expressly recognized nuisance claims. Id. In the instant action, however, IEPHA does not provide for a claim for strict liability and the Court concludes that Bunker Hill is distinguishable from the instant action.
Further, in the Court's view, to the extent that IEPHA does not preempt a common law claim for strict liability, this Court concludes that IEPHA provides that only the State could assert such a claim. As concluded above, since IEPHA does not provide a private cause of action, Clark Oil's claim for common law strict liability should be dismissed, and Chevron's Motion for Summary Judgment should be granted in this respect.
b. Breach of Contract, Fraud, and Defect of Title
It is well established that "a person not in privity cannot sue on a contract." Wing v. Martin, 107 Idaho 267, 272, 688 P.2d 1172, 1177 (1984). The court in Wing specifically stated that "[a] party must look to that person with whom he is in a direct contractual relationship for relief. . . ." Id. (emphasis added).
In addition to the contracting parties, it is well established that a third party beneficiary may also sue on a contract. The test in Idaho for determining a party's status as a third party beneficiary is "whether the transaction reflects an intent to benefit the party." Hilt v. Draper, 122 Idaho 612, 619, 836 P.2d 558, 565 (Ct.App. 1992) (citing Stewart v. Arrington Constr. Co., 92 Idaho 526, 532, 446 P.2d 895, 901 (1968)). "The party must show that the contract was made for his direct benefit and that he is not merely an incidental beneficiary." Id. (citing Adkison Corp. v. Am. Bldg. Co., 107 Idaho 406, 409, 690 P.2d 341, 344 (1984)).
In the instant action, Defendant sold the subject property to the Lymans, who in turn conveyed it to Clark Oil Partnership later the same day. Thus, with no direct purchase or conveyance between the parties to this action, the Court concludes that Clark Oil is not in privity with Chevron.
Further, the record does not contain evidence that Clark Oil was a beneficiary of any kind to the contract between Chevron and the Lymans. According to the record, Clark Oil Partnership was clearly not a party and is not mentioned anywhere in the purchase and sale agreement. Seventh Thomas Aff. Exs. 6, 7. In fact, Buck Clark testified that it was "common knowledge" that Chevron did not sell to competitors. Buck Clark Depo., pp. 4546. Since the record establishes that Buck Clark was viewed as a competitor to Chevron, Lee Lyman testified that he would have to purchase the property for Buck Clark. Lyman Depo., pp. 14-16 ( Seventh Thomas Aff. Ex. 8). Thus, Buck Clark was not a beneficiary of the sales agreement between the Lymans and Chevron.
In light of the foregoing, the Court finds, and thus concludes that Clark Oil's causes of action for breach of contract, fraud on the contract, and defect in title should be dismissed for lack of privity with Chevron. Accordingly, Chevron's Motion for Summary Judgment should be granted in this respect.
c. Nuisance
As discussed above) Clark Oil asserts that the contamination on the subject property existed at the time of sale in January 1985, thus creating a nuisance. Chevron argues, however, that it cannot be liable for this claim, because it did not owe a duty to Clark Oil.
Although not addressed by Idaho courts or by the Ninth Circuit Court of Appeals, courts in other jurisdictions have recognized that "a property owner owes no duty under the law of nuisance to later purchasers of the property." Lilly Indus., Inc. v. Health-Chem Corp., 974 F. Supp. 702, 706 (S.D. Ind. 1997); see also Moore v. Texaco, 244 F.3d 1229 (10th Cir. 2001); Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303 (3d Cir. 1985).
As discussed above, the Lymans purchased the property from Chevron, who in turn conveyed it to Clark Oil Partnership. Thus, the Court concludes that Chevron did not owe a duty to Clark Oil as the subsequent purchaser of the property. Accordingly, Clark Oil's claim for nuisance should be dismissed, and Chevron's Motion for Summary Judgment should be granted in this respect.
d. Breach of Forbearance Contract
Clark Oil alleges that "Chevron bargained for forbearance by Clark Oil Company by stating that if Clark Oil Company would forbear to pursue a judicial remedy for the contaminated property, and for the resulting damages, Chevron would satisfy Clark Oil Company's legitimate claims." Complaint ¶ 71. Further, Clark Oil asserts there were "formal expressions of intent to be bound to the agreement" and that there was a "meeting of the minds on the terms bargained for exchange." Id. ¶¶ 72-73.
It is well settled that the forbearance to exercise a right against either a promisor or a third person is sufficient consideration for a contract. McMahon v. Auger, 83 Idaho 27, 38, 357 P.2d 374, 380 (1960); see also Quayle v. Macken, 92 Idaho 563, 569, 447 P.2d 679, 685 (1968).
According to the record, after the August 5, 1997 IDEQ meeting, while standing in the parking lot of IDEQ's Coeur d'Alene office, Chris Clark testified that Chevron's expert, Jack Fraim, stated "something to the effect of bear with us, we'll take care of this." Chris Clark Depo. p. 40. However, Chris Clark further testified that he does not remember if that was Fraim's exact words, and Chris Clark did not say anything to him in return. Id. After this conversation with Fraim, Chris Clark testified that Clark Oil "carried on business as usual." Id. at p. 41.
Although it is clear that forbearance can be a form of consideration, a forbearance contract must have the other basic elements of a contract in order to be enforceable. In Haener v. Ada County Highway Dist., 108 Idaho 170, 173, 697 P.2d 1184, 1187 (1985), the court stated that it is the "very essence of contract law that there must be a meeting of the minds of the parties for the contract to be binding upon the parties." Further, the Idaho Court of Appeals has stated:
Proof of a "meeting of the minds" requires evidence that the parties had a mutual understanding of the terms of their agreement and that they mutually assented to be bound by those terms. The determination of whether there was sufficient evidence to show a meeting of the minds to form an express agreement is a question of fact to be resolved by the trier of fact.Thomas v. Schmelzer, 118 Idaho 353, 355, 796 P.2d 1026, 1028 (Ct.App. 1990) (citing Glenn v. Gotzinger, 106 Idaho 109, 675 P.2d 824 (1984)).
Based on the alleged conversation with Fraim, the Court concludes that the purported forbearance contract lacks the essential elements to present a prima facie case or to be enforceable even in summary judgment proceedings. Accordingly, the Court concludes that Clark Oil's claim for breach of a forbearance contract should be dismissed.
In Barnes v. Huck, 97 Idaho 173, 178, 540 P.2d 1352, 1357 (1975), the Supreme Court of Idaho stated that "as a general rule if a contract is so vague and indefinite that the intent of the parties cannot be ascertained therefrom, it is unenforceable." However, the court in Barnes recognized that absolute certainty is not required, but "only reasonable certainty is necessary before a contract will be given legal effect." Id.; see also Black Canyon Racquetball Club, Inc. v. Idaho First Nat'l Bank, 119 Idaho 171, 804 P.2d 900 (1991) (stating that "the terms of a contract must be sufficiently definite and certain in order to be enforceable").
In the instant action, the Court finds that the alleged contract of forbearance lacks definiteness and certainty as required by Idaho law and also fails to establish a prima facie case as required by the cases interpreting Fed.R.Civ.P. 56. The agreement was not reduced to writing, nor does the record demonstrate there were any definite terms to the contract or the conversation. Thus, even assuming that there is a genuine issue of fact regarding whether there was a "meeting of the minds, " the Court concludes there is no genuine issue of fact regarding the purported contract's enforceability because the essential elements have not been established. Accordingly, Chevron's Motion for Summary Judgment should be granted in this respect.
Alternatively, even assuming that the contract included the requisite terms to be enforceable, the Court concludes that Fraim did not have authority to bind Chevron to a forbearance contract. According to the record, the Expert Agreement states:
[N]othing said or done by the parties' expert consultants in furtherance of this Agreement or the Confidential Side Agreement shall be deemed an admission against interest, or an admission by party opponent, or otherwise [be] used at a hearing as evidence against the party for whom the expert is consulting in settlement discussions, mediation or litigation . . .Seventh Thomas Aff. Ex. 14.
It is well-settled that under appropriate circumstances, an agent can bind a principal to a contract. See, e.g., Podolan v. Idaho Legal Aid Servs., 123 Idaho 937, 943-44, 854 P.2d 280, 286-87 (1993). The court in Podolan recognized there are three types of agency which when established are sufficient to bind a principal to a contract entered into by an agent with a third party: express, implied, and apparent authority. Id. The court in Podolan went on to explain that:
Express authority is articulated between the parties. Implied authority is authority which is necessary, usual, and proper to accomplish or perform the main authority expressly delegated to an agent. Apparent authority exists where a principal voluntarily places an agent in a position where "a person of ordinary prudence, conversant with the business usages and the nature of the particular business, is justified in believing that the agent is acting pursuant to existing authority."Id. at 287 (citations omitted).
In the instant action, the Court has considered the three types of authority which may bind Chevron and concludes that none are applicable to the circumstances presented in this record. The Expert Agreement limits Fraim's authority in which he cannot bind Chevron by contract and because he lacked authority to enter into a binding contract, the Court concludes that Clark Oil's claim for breach of a forbearance contract should be dismissed and Chevron's Motion for Summary Judgment should be granted in this respect.
III. ORDER
Clark Oil's Motion to Amend and/or for Voluntary Dismissal, as contained in the legal memorandum in the Response to Defendant's Motion for Summary Judgment (Docket No. 82) is DENIED.
IV. RECOMMENDATION
Based on the foregoing, this Court recommends that Defendants' Motion for Summary Judgment (Docket No. 72) be GRANTED, thereby dismissing Clark Oil's Complaint in its entirety.