Summary
granting summary judgment based on undisputed facts showing knowledge of claims outside of limitations period
Summary of this case from Walker ex rel. D.W. v. City of E. Chi.Opinion
CAUSE NO. IP99-1489-C-H/G
January 5, 2001
ENTRY ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This diversity case arising under Indiana law presents a dispute over liability for leaking underground storage tanks on property that once was a service station. The court earlier dismissed plaintiffs' claims for nuisance, trespass, and negligence, predicting that the Indiana courts would not recognize such claims on the part of a subsequent owner against an earlier owner of the same property. Defendants have now moved for summary judgment on the remaining claims for violating the Indiana leaking underground storage tank act, Ind. Code § 13-23-13-8, as well as for strict liability for an abnormally dangerous activity and quantum meruit. Defendants' motion asserts only a statute of limitations defense. For the reasons explained below, defendants' motion for summary judgment is granted on plaintiffs' common law claims but denied on plaintiffs' statutory claim.
Standard for Summary Judgment
The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Under Rule 56(c) of the Federal Rules of Civil Procedure, the court should grant summary judgment if and only if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. On a motion for summary judgment, the moving party must first come forward and identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which the party believes demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party has met the threshold burden of supporting the motion, the opposing party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The court must consider the evidence in the light reasonably most favorable to the party opposing the motion, giving that party the benefit of genuine conflicts in the evidence and reasonable, favorable inferences that may be drawn from that evidence. Statute of limitations defenses are often suitable for an early decision on summary judgment, at least if the defenses are based on undisputed facts.
Undisputed Facts
Defendant Chevron USA, Inc. is the successor in interest to several previous owners of property located at 6416 West Washington Street in Indianapolis. From 1957 through 1973, the property was owned by Chevron USA's predecessors in interest, Tremarco Corporation and Gulf Corporation. The property was used as a service station.
In 1973, Chevron sold the property to David and Susanne Jones and Frederick Bartlett. In 1986, the property was sold to plaintiff H. Richard McFarland. In 1992, the property was then sold to plaintiff Kentucky Fried Chicken of California, Inc. ("KFC").
In 1991, an environmental consulting company, H.C. Nutting Company, performed a preliminary subsurface investigation of the property at the request of KFC. Pl. Resp. to Inter. 4. That investigation revealed "extensive petroleum and hydrocarbon contamination." Id. The findings were reported to KFC. Id.
On February 12, 1992, a lawyer for McFarland wrote a letter to Chevron stating the following: Gentlemen:
Pursuant to an Asset Purchase Agreement between Kentucky Fried Chicken of California, Inc. and H. Richard McFarland, McFarland Food Service Corp., and McFarland Foods Corp. ("McFarland"), McFarland has been required to remedy the environmental contamination on real property located at 6416 West Washington Street, Indianapolis, Indiana. Our investigation reveals that the environmental contamination at the property stems from an underground petroleum storage tank on the property. Our investigation has also revealed that Chevron Corporation owned the property and is potentially responsible for the environmental contamination at the real property.
Under Indiana law, McFarland is entitled to contribution toward its cleanup and remediation efforts from any person who owned or operated an underground storage tank which has caused an environmental defect. Ind. Code 13-7-20-21. You should be advised that McFarland intends to seek contribution from you for the costs of the cleanup. Please be advised that if legal action is necessary to obtain contribution from you, Ind. Code 13-7-20-21 also allows McFarland to recover reasonable attorney's fees and costs.
The standards McFarland intends to employ in its cleanup and remediation efforts are attached and listed in Table 1. In the event that you would like to discuss the situation, please contact the undersigned within ten (10) days from the date of this letter.
The lawyer's letter of February 12, 1992, shows beyond dispute that McFarland knew of pollution on the site at that time, and he knew or at least had reason to know that such pollution stemmed from an underground petroleum storage tank on the site. KFC also received the report of these findings in 1991. Pl. Resp. to Inter. 4.
McFarland incurred costs for corrective action at the property totaling $61,829 from April 7, 1992, through November 24, 1992. McFarland incurred further costs for corrective action totaling $50,840.33 from May 18, 1994, through May 17, 1999.
From March 20, 1998, through March 23, 1999, KFC incurred costs for corrective action at the property totaling $328,924.02. KFC asserts in conclusory terms that it did not incur "costs for corrective action" at the property until March 20, 1998, but plaintiffs' responses to interrogatories show that KFC had requested the "preliminary subsurface investigation" carried out by H.C. Nutting Company in 1991.
Plaintiffs McFarland and KFC deny that they knew of underground storage tanks on the property until January 1998. The undisputed facts show, however, that both knew no later than February 1992 that the site was contaminated and that investigation had shown "that the environmental contamination at the property stems from an underground petroleum storage tank on the property." Def. Ex. 4 (letter of Feb. 12, 1992). The same letter shows that plaintiffs knew Chevron might be a responsible party. General and conclusory denials of these facts cannot raise a genuine issue of fact for purposes of summary judgment.
There is no evidence that a contractual relationship ever existed between Chevron and plaintiffs. (Plaintiffs contend there is no evidence to support this statement, but a party can move for summary judgment on the ground that an opposing party who has the burden of proof on an issue will not be able to prove a particular point that may be relevant under a legal theory. See Celotex Corp. v. Catrett, 477 U.S. at 324.) Plaintiffs have not presented any evidence of such a contractual relationship. Plaintiffs filed suit in this case on September 3, 1999.
Discussion
Plaintiffs' three remaining theories of recovery are strict liability for abnormally dangerous activities, quantum meruit, and violation of the Indiana leaking underground storage tank act, Ind. Code § 13-23-13-8. Defendants assert, and plaintiffs do not dispute, that the statute of limitations applicable to the strict liability and quantum meruit claims is a six year statute of limitations. See Ind. Code § 34-11-2-7(3) (six year statute for "actions for injuries to property other than personal property"). The parties disagree, however, about when the statute began to run. The court addresses those issues first. The parties also disagree on whether the statute that applies to the underground storage tank statutory claim should be a ten year or six year limit, but that issue has recently been resolved by the Indiana Court of Appeals in favor of the ten year limit, which makes plaintiffs' statutory claim timely.
I. The Common Law Claims A. Accrual of the Common Law Claims
The applicable statute of limitations begins to run when a plaintiff's cause of action accrues. Under Indiana law, a cause of action accrues when the plaintiff knows or, in the exercise of ordinary diligence, should have discovered that an injury has been sustained as the result of the tortious act of another. Malachowski v. Bank One, Indianapolis, 590 N.E.2d 559, 564 (Ind. 1992); Wehling v. Citizens National Bank, 586 N.E.2d 840, 843 (Ind. 1992).
Plaintiffs acknowledge that they knew in 1992 that Chevron had previously operated a service station at the property and that those operations had probably resulted in contamination of the property. Plaintiffs argue, however, that they did not know until January 1998 that Chevron had abandoned a number of underground storage tanks at the property. Pl. Br. at 9.
The court puts aside the obvious question as to whether the exercise of "ordinary diligence" would lead the owner of a property known to be a contaminated site of a former service station to inquire as to whether there are any underground storage tanks on the property. The court need not answer that question because the undisputed evidence shows that plaintiffs knew in February 1992 that at least one underground tank was on the property, and that they believed it was the source of the contamination that had been discovered on the site. That is clear from McFarland's attorney's letter of February 12, 1992, which told Chevron: "Our investigation reveals that the environmental contamination at the property stems from an underground petroleum storage tank on the property." The undisputed evidence also shows that KFC had received the consultant's report that was the basis for that letter. Accordingly, plaintiffs' conclusory denials of such knowledge prior to January 1998 are not enough to raise a genuine issue of fact on this point. See, e.g., Darnell v. Target Stores, Inc., 16 F.3d 174, 176 (7th Cir. 1994).
As of February 1992, plaintiffs were ahead of most potential plaintiffs. They knew (or at least believed) that an injury had occurred as a result of a tortious act of another. They also knew (or at least believed) what the act had been and the identity of the responsible party. Cf. Richards-Wilcox, Inc. v. Cummins, 700 N.E.2d 496, 498 (Ind.App. 1998) (plaintiff need not be able to identify proper defendant or full extent of damage for statute to begin running). Accordingly, plaintiffs' common law claims accrued no later than February 1992.
B. Plaintiffs' Tolling Argument
Plaintiffs argue next that they are entitled to toll the statute of limitations for their common law claims. Indiana Code § 34-11-5-1 provides: "If any person liable to an action shall conceal the fact from the knowledge of the person entitled to bring the action, the action may be brought at any time within the period of limitation after the discovery of the cause of action." The statute does not apply to plaintiffs' common law claims here for two independent reasons.
First, the undisputed evidence shows, as noted above, that all plaintiffs were aware of the contamination, the tanks, and the identity of the potential defendant (Chevron) no later than February 1992. By its own terms, the statute could apply to toll a statute of limitations only until "discovery of the cause of action." Potential plaintiffs who know the alleged wrong, the alleged cause, and the identity of the alleged wrongdoer do not need or receive the help of the tolling statute.
Second, plaintiffs have not identified any action undertaken by defendants to misrepresent or conceal anything from plaintiffs at any time. As plaintiffs point out correctly, "mere silence is [typically] not actionable fraud" and will not create a duty to disclose. Pl. Br. at 11, quoting Indiana Bank Trust Co. v. Perry, 467 N.E.2d 428, 431 (Ind.App. 1984).
Plaintiffs nonetheless contend that Chevron had an affirmative duty to disclose to plaintiffs, as subsequent purchasers of property that Chevron once owned, the existence of the underground tanks. Plaintiffs cite Malachowski v. Bank One, Indianapolis, 590 N.E.2d 559, 563 (Ind. 1992), for the proposition that a failure to disclose may be sufficient to toll the statute if there is a legal duty to disclose.
In Malachowski, however, the duty to disclose arose from an obvious fiduciary relationship — a trustee's duty to the beneficiaries of the trust. Plaintiffs have not cited any case providing more direct support for their tolling argument. They properly acknowledge they are aware of no Indiana case holding that the act of burying and "abandoning" an underground storage tank containing petroleum creates an affirmative duty to disclose that fact to "subsequent landowners and interested parties." The Indiana case most closely on point is in fact to the contrary. See Jackson v. Blanchard, 601 N.E.2d 411, 418-19 (Ind.App. 1992) (rejecting fraudulent concealment claim and holding that prior seller of property with underground storage tanks had no duty to disclose existence of tanks to later purchaser).
C. Plaintiffs' Recurring Injury Theory
Plaintiffs argue further that they should be permitted in any event to recover contribution under the common law claims for any corrective action costs they incurred in the six years before they filed suit. Under that theory, plaintiffs might recover the vast majority of KFC's expenditures and a substantial portion of McFarland's.
To support this theory, plaintiffs rely on the distinction in Indiana nuisance law between "permanent" injuries and "recurring" injuries. If an injury is deemed permanent, the plaintiff must bring one timely action to recover all resulting damages (past, present, and future). If the injury is deemed recurring, each new injury starts the limitations period running anew with respect to that injury, allowing for repeated litigation in which damages are limited to those effects that have already occurred. See Dolph v. Mangus, 400 N.E.2d 189, 191-92 (Ind.App. 1980) (flooding and erosion on plaintiff's property occurred so often as to be "permanent," and claim was subject to statute of limitations). For example, a recurring injury was recognized in a nuisance action based on noise in an upstairs apartment. Keane v. Pachter, 598 N.E.2d 1067, 1072 (Ind.App. 1992).
The Indiana courts have not extended this theory to any context comparable to this case. See CE Corp. v. Ramco Industries, 717 N.E.2d 642, 645 (Ind.App. 1999) (recognizing Keane's theory of recurring or continuing wrong had also been applied to worker's compensation cases where injuries were caused by cumulative effects over years and in a case of administrative agency inaction); Konkle v. Henson, 672 N.E.2d 450, 458-59 n. 10 (Ind.App. 1996) (treating Keane as limited to nuisance, but distinguishing it any event from case alleging repeated sexual molestations). The only reported case that appears actually to follow Keane on the recurring injury theory is a decision by Judge Barker of this court, but that case was also limited to a continuing nuisance claim. See Heath v. Wal-Mart Stores, Inc., 113 F. Supp.2d 1294, 1300 (S.D. Ind. 2000) (applying Keane where fill and construction materials were allegedly dumped in floodway, causing recurring nuisance each time creek backed up and flooded plaintiff's property); but cf. Dolph v. Mangus, 400 N.E.2d at 191-92 (finding that flood damage recurred so often as to render the injury permanent and subject to statute of limitations). The recurring injury principle does not apply here. Accordingly, defendants are entitled to summary judgment on plaintiffs' common law claims for strict liability for an abnormally dangerous activity and in quantum meruit.
II. Plaintiffs' Statutory Claim Under Ind. Code § 13-23-13-8(b)(2)
Plaintiffs' last claim is for contribution of the costs of corrective action. Plaintiffs seek relief under Ind. Code § 13-23-13-8(b)(2), which provides that a person who "undertakes corrective action resulting from a release from an underground storage tank, regardless of whether the corrective action is undertaken voluntarily or under an order issued under this chapter, IC 13-23-14-1, IC 13-7-20-19 (before its repeal), or IC 13-7-20-26 (before its repeal); is entitled to receive a contribution from a person who owned or operated the underground storage tank at the time the release occurred." The statute on underground storage tanks does not include a specific statute of limitations.
Defendants contend that the applicable statute of limitations is the six year statute for "actions for injuries to property other than personal property," Ind. Code § 34-11-2-7(3). Plaintiffs contend that their statutory claim for corrective action costs is governed by the ten year statute that applies to a cause of action that "is not limited by any other statute." Ind. Code § 34-11-1-2(a).
The parties agree that, under Indiana law, the selection of a statute of limitations is governed by the nature or substance of the cause of action. See Schuman v. Kobets, 698 N.E.2d 375, 378 (Ind.App. 1998), aff'd in relevant part, 716 N.E.2d 355, 356 (Ind. 1999); Monsanto Co. v. Miller, 455 N.E.2d 392, 394 (Ind.App. 1983), citing Shideler v. Dwyer, 417 N.E.2d 281 (Ind. 1981). The Indiana Court of Appeals addressed this question a few weeks ago (though that was also in the last millennium). In Commissioner v. Bourbon Mini-Mart, Inc., ___ N.E.2d ___, 2000 WL 1824262 (Ind.App. Dec. 13, 2000), the current owner and operator of a filling station had been required by the state Indiana Department of Environmental Management to clean up pollution caused at least in party by a leaking underground storage tank on the property. The current owner and operator asserted a third-party claim under Ind. Code § 13-23-13-8(b)(2) for contribution from a company that had previously supplied fuel to the facility. With respect to that statutory claim, the parties in Bourbon Mini-Mart argued the same statute of limitations issue presented here. The prior supplier argued that the six year statute for injury to real property should apply. The current owner and operator argued that the ten year statute for otherwise unspecified claims should apply. The trial court had applied the six year statute and granted summary judgment for the defendant on the statutory claim.
The Indiana Court of Appeals reversed. It held that the ten year statute of limitations applied because the "nature or substance of [the statutory] claim sounds in contribution or indemnity ." ___ N.E.2d at ___; 2000 WL 1824262 at *8.
This court has no sound basis for disagreeing with the Indiana Court of Appeals on this controlling issue of Indiana law. The fact that the claimants in Bourbon Mini-Mart had made payments to reimburse IDEM for its corrective efforts rather than undertaking such efforts on their own offers no sound distinction from this case. As the Supreme Court of Indiana has recognized, Ind. Code § 13-23-13-8(b)(2) was amended in 1991 to allow private parties to take corrective action on their own, without being required to do so, and still to pursue a statutory claim for contribution. See Shell Oil Co. v. Meyer, 705 N.E.2d 962, 967 (Ind. 1998). Where the legislature has chosen to treat both situations similarly under the same statute, the applicable statute of limitations should be the same.
Under the ten year statute of limitations the applies to the statutory claim, plaintiffs' claim was timely. Defendants' motion for summary judgment is denied as to the claim under Ind. Code § 13-23-13-8(b)(2).
Conclusion
Accordingly, defendants' motion for summary judgment is granted as to plaintiffs' remaining common law claims but denied as to plaintiffs' claim for contribution under Ind. Code § 13-23-13-8(b)(2).
In addition, defendants' pending motion to exclude expert testimony is denied as moot in light of the parties' notice of agreement filed September 7, 2000.
So ordered.