Opinion
No. 1:03-cv-00400-LJM-VSS
March 31, 2004
CORRECTED ORDER ON MOTION TO DISMISS
This matter comes before the Court on Defendants', SS Consultants, Inc. d/b/a Deering Cleaners, Stephen D. Mears and Adam S. Mears ("SS," "the Mears," or "Defendants"), Motion to Dismiss under Fed.R.Civ.P. 12(b)(6). Plaintiff, Northstar Partners ("Northstar" or "Plaintiff), filed this action against SS and the Mears in March 2003 and, in June 2003, amended its complaint to include the following counts: (I) recovery of response costs against defendants under Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9607(a), (II) breach of a lease agreement by SS, (III) indemnification of Northstar by SS for all costs associated with an environmental cleanup action, (IV) recovery of all costs associated with environmental cleanup against Northstar under state environmental law, (V) recovery of damages against Northstar under a theory of common law and contractual waste, (VI) recovery against the Mears for all costs associated with the environmental cleanup action under a state law theory of the responsible corporate officer, (VII) recovery of damages against the Mears under a theory of common law waste, and (VIII) breach of a settlement agreement by SS. In the instant motion, Northstar seeks dismissal of all claims brought against it by SS. For the reasons set forth herein, Defendants' Motion to Dismiss is GRANTED in part and DENIED in part.
I. FACTUAL BACKGROUND
Considering the facts in the light most favorable to Northstar, the following factual picture emerges. Northstar, a general partnership headquartered in California and organized under the laws of that state, Am. Compl. ¶ 9, owns a commercial shopping plaza located at 6137 Crawfordsville Road in Indianapolis, Indiana ("the Plaza"), id. ¶ 1. Beginning in the early 1970s, part of the Plaza housed a laundry and dry cleaning business. Id. ¶ 15. In August of 1995, Northstar leased a portion of the Plaza to SS, an Indiana corporation with its principal place of business in Indianapolis, Indiana. Id. ¶¶ 11, 28. SS continued the tradition of operating a laundry and dry cleaning business in the Plaza from August of 1995 to approximately December of 2002. Id. ¶¶ 15, 35. Adam Mears and Stephen Mears-both Indiana residents-are SS's president and secretary respectively. Id. ¶ 12.
During SS's tenancy at the Plaza, its laundry and dry cleaning business released tetrachloroethene, listed under CERCLA as a "hazardous substance," into the environment. Id. ¶¶ 15-16. Consequently, beginning in December 1997 and concluding in December 1999, Northstar participated in a Voluntary Remediation Program under the direction of the Indiana Department of Environmental Management ("IDEM") to clean up the tetrachloroethene contamination at the Plaza. Id. ¶ 19. On July 28, 1999, IDEM issued a Certificate of Completion to Northstar for the successful conclusion of the voluntary remediation of the contamination. Id. ¶ 20. Further, on February 3, 2000, IDEM provided Northstar with the State of Indiana's Covenant Not to Sue for the environmental cleanup at the Plaza. Id. ¶ 21
In March of 2003, Northstar filed its original complaint in this suit, which it amended in June of 2003. In the amended complaint, Northstar seeks recovery costs incurred in remediating the tetrachloroethene contamination at the Plaza under Section 107(a) of CERCLA. Id. ¶ 1. In the alternative, Northstar alleges that the Defendants are liable for the costs incurred in cleaning up the contamination under both state contract and state environmental law. Id. ¶ 2. Finally, Northstar alleges that SS is liable under state law "for past due rent and other damages under the Lease" and that SS and the Mears are liable "under state tort law for the reckless abandonment of the Leased Premises." Id. ¶ 3. Northstar argues that this Court has subject matter jurisdiction over all counts pursuant to 28 U.S.C. § 1331 and 1367, and Sections 107(a) and 113(b) of CERCLA, 42 U.S.C. § 9607(a) and 9613(b). Id. ¶ 4. Alternatively, Northstar argues that this Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1) because the matters in controversy exceed the sum of $75,000, exclusive of interests and costs, and are between citizens of different states. Id. ¶ 7.
In seeking dismissal of the amended complaint, Defendants argue that Northstar qualifies as an "owner" with respect to its CERCLA claims and further that Northstar may not avail itself of the Seventh Circuit's "innocent landowner" exception. According to Defendants, because Northstar is itself liable as an owner for at least a share of the environmental costs at issue, Northstar does not have standing to bring a cost recovery action. Defendants further argue that four of Northstar's pendent state law claims-(III) indemnification of Northstar by SS for all costs associated with an environmental cleanup action, (IV) recovery of all costs associated with environmental cleanup against Northstar under state environmental law, (VI) recovery against the Mears for all costs associated with the environmental cleanup action under the state law theory of the responsible corporate officer, and (VIII) breach of a settlement agreement by SS-are subject to dismissal for failure to state claims upon which relief may be granted. Finally, Defendants contend that Northstar's three remaining state law claims-(II) breach of a lease agreement by SS, (V) recovery of damages against Northstar under a theory of common law and contractual waste, and (VII) recovery of damages against the Mears under a theory of common law waste-do not satisfy the minimum amount in controversy requirement for diversity jurisdiction and, therefore, should be adjudicated in state, rather than federal, court.
II. STANDARD OF REVIEW
Under Fed.R.Civ.P. 12(b)(6), a claim is subject to dismissal when it "fail[s] to state a claim upon which relief may be granted." Fed.R.Civ.P. 12(b)(6); see also, e.g., United States v. Clark County, 113 F. Supp.2d 1286, 1290 (S.D. Ind. 2000). When ruling on a motion to dismiss, the Court shall "accept as true all well-pleaded factual allegations [in the complaint] and draw all reasonable inferences in favor of the plaintiff." Clark County, 113 F. Supp.2d at 1290; see also Dawson v. Gen. Motors Corp., 977 F.2d 369, 372 (7th Cir. 1992). Further, "when considering a motion under this rule, the Court must examine the sufficiency of Plaintiff's complaint, not the merits of the lawsuit." Clark County, 113 F. Supp.2d at 1290. "Dismissal under Rule 12(b)(6) is proper only if the plaintiff could prove no set of facts in support of his claims that would entitle him to relief." Chavez v. Illinois State Police, 251 F.3d 612, 648 (7th Cir. 2001) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); see also Veazey v. Communications Cable of Chic., Inc., 194 F.3d 850, 854 (7th Cir. 1999). "[I]f it is possible to hypothesize a set of facts, consistent with the complaint, that would entitle the plaintiff to relief, dismissal under Rule 12(b)(6) is inappropriate." Chavez, 251 F.3d at 648 (quoting Veazey, 194 F.3d at 854). Finally, a Court may consider documents other than the complaint "if they are referred to in the plaintiff's complaint and are central to his claim." Wright v. Associated Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994) (citing Venture Assocs. v. Zenith Data Sys., 987 F.2d 429, 431 (7th Cir. 1993)). Because the lease is attached to and referred to in Northstar's complaint, this Court may consider and interpret the lease in deciding this motion to dismiss without converting the motion to one for summary judgment. See Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856, 858 (7th Cir. 2002).
III. DISCUSSION
A. ANALYSIS OF THE CERCLA SECTION 107 COST RECOVERY CLAIM
There are two distinct causes of action under CERCLA that must be distinguished in deciding this motion. The first is a cause of action for cost recovery, which may be initiated by a party that has incurred costs in cleaning up a contaminated site. Cost recovery is enumerated in CERCLA § 107(a), 42 U.S.C. § 9607(a). The second is a cause of action for contribution, which may be initiated by a defendant in a CERCLA lawsuit or by a person at least partially responsible for contaminating the site. Contribution is enumerated in CERCLA § 113(f)(1), 42 U.S.C. § 9613(f)(1). The parties to the present suit disagree whether Northstar's CERCLA claim should properly be characterized as a claim for cost recovery or a claim for contribution. As this Court has noted, the applicability of the cost recovery or contribution provisions "depends upon whether [the Plaintiff] should be considered an innocent party or a responsible party under CERCLA." Taylor Farm LLC v. Viacom, Inc., 234 F. Supp.2d 950, 959 (S.D. Ind. 2002).
The Section 107 cost recovery and Section 113 contribution provisions of CERCLA serve independent and distinct legal purposes, an understanding of which provides context to the case at bar. Contribution under Section 113 refers to a claim "by and between jointly and severally liable parties for an appropriate division of the payment one of them has been compelled to make." Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764 (7th Cir. 1994); see also Black's Law Dictionary 399 (6th ed. 1990) (defining contribution as a right "of one who has discharged a common liability to recover of another also liable, the aliquot portion which he ought to pay or bear"). In other words, contribution is designed to facilitate the equitable allocation of liability on a pro rata basis between two or more non-innocent parties. See Akzo Coatings, Inc., 30 F.3d at 764; United Techs. Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 100 (1st Cir. 1994), cert. denied, 513 U.S. 1183 (1995). As the Seventh Circuit has noted, "[W]hen two parties who both injured the property have a dispute about who pays how much-a derivative liability, apportionment dispute-the statute directs them to § 113(f) and only to § 113(f)." Rumpke of lnd., Inc. v. Cummins Engine Co., 107 F.3d 1235, 1240 (7th Cir. 1997).
Whereas a contribution action under Section 113 "exists for the express purpose of allocating fault among [responsible parties]," a cost recovery action under Section 107 is designed to adjudicate the threshold issue of liability. Rumpke, 107 F.3d at 1240; see also Nutrasweet Co. v. X-L Eng'g Co., 227 F.3d 776, 784 (2000) ("[U]nder the CERCLA statutory scheme, § 107 . . . governs liability, while § 113(f) creates a mechanism for apportioning that liability among responsible parties.") (quoting Town of Munster, Ind. v. Sherwin-Williams Co., 27 F.3d 1268, 1270 (7th Cir. 1994)).
In general, owners of contaminated property fall within the statutory ambit of Section 107 and are thus themselves liable for cost recovery under CERCLA. See CERCLA § 107(a), 42 U.S.C. § 9607(a). Because Northstar is the undisputed owner of the Plaza, Northstar is confined to bringing a cost recovery action under Section 107 unless the facts of its claim entitle it to bring a contribution action under Section 113 instead. This Court does not think that the facts alleged in Northstar's amended complaint are sufficient to overcome the presumption that landowners may not avail themselves of CERCLA's contribution provision.
Northstar relies heavily on this Court's dicta in Taylor Farm in asserting that "[p]otentially responsible parties who have never been sued and have never admitted any liability for actually contaminating the subject site do not have the right to bring contribution actions under CERCLA." Pl.'s Answer Br. in Resp. to Defs.' Mot. to Dismiss Am. Compl. at 8 (emphasis added). The logical implication of Northstar's argument is that, barring a claim for contribution, a cost recovery action would provide the only means under CERCLA for "potentially responsible parties" to have their proverbial day in court.
The Court disagrees with Northstar's reading of Taylor Farm as holding that potentially responsible parties are always precluded from bringing actions for contribution. In fact, this Court's legal analysis in Taylor Farm is inextricably linked to the particular factual scenario presented by that case. As this Court noted in Taylor Farm, "Neither the EPA nor anyone else ha[d] ever brought suit or implemented a unilateral administrative order against Wm. Taylor (or his successors) regarding the cleanup of hazardous materials on the land. Nor did Wm. Taylor (or his successors) ever voluntarily agree to conduct cleanup operations at the EPA's behest." Taylor Farm, 234 F. Supp.2d at 972.
The present suit presents critically different facts. Though no party has ever brought suit or implemented a unilateral administrative order against Northstar, Northstar did voluntarily undertake a contamination remediation program "approved by and implemented in accordance with and to the satisfaction of the Indiana Department of Environmental Management. . . ." Am. Compl. ¶ 19. While this Court has not had occasion to decide the precise issue, other jurisdictions have sensibly concluded that when a plaintiff voluntarily agrees to undertake remediation efforts not precipitated by a suit or administrative order, that voluntary undertaking is sufficient to transform a subsequent suit by the plaintiff against other potentially responsible parties into one for contribution and not response costs. See, e.g., Transtech Indus., Inc. v. AZ Septic Clean, 798 F. Supp. 1079, 1085-86 (D.N.J. 1992), appeal dismissed, 5 F.3d 51 (3d Cir. 1993), cert. denied, Mayco Oil Chem. Co. v. Transtech Indus., Inc., 512 U.S. 1213 (1994).
One defense to a claim for cost recovery under CERCLA is the "innocent landowner defense," which is codified at 42 U.S.C. § 9607(b). This Court has noted elsewhere that "the owner of a hazardous waste site is not liable for any response costs under CERCLA, if he or she did not know that hazardous materials had been deposited at the site at the time he or she purchased the land and if he or she exercised the kind of diligence to find out that would have been appropriate at the time of purchase." See Taylor Farm, 234 F. Supp.2d at 966. While the "net of potential liability under [CERCLA] is wide indeed," see Rumpke, 107 F.3d at 1236, the "innocent landowner defense" provides for the possibility that the current, truly innocent landowner may be absolved of all potential liability in a cost recovery action. "Thus, the statute does not impose a strict regime of caveat emptor."Taylor Farm, 234 F. Supp.2d at 966.
The Seventh Circuit recognizes a corollary to the "innocent landowner defense," known as the "innocent landowner exception," which applies the equitable principles underlying the "innocent landowner defense" to innocent plaintiffs seeking to recover cleanup costs from responsible parties. Because Northstar is the plaintiff in the present suit, the common law "innocent landowner exception," rather than the statutory "innocent landowner defense," is the relevant device for determining whether Northstar might in fact be "innocent." The statutory "innocent landowner defense" would only be relevant insofar as it might help define the limits of the common law exception in a close case. The Court does not think the facts of the instant suit present a close question of owner innocence. Rather, the question of Northstar's innocence can be resolved simply by reviewing the "innocent landowner exception" jurisprudence and without reference to the boundary-defining limits of the statutory defense.
As this Court noted in Taylor Farm, "[T]he innocent landowner exception is not broader than the statutory defense, it is just different because it applies to plaintiffs, not defendants in a CERCLA action." 234 F. Supp.2d at 967 n. 18.
Two related factual elements particular to this case lead this Court to conclude that Northstar may not avail itself of the "innocent landowner exception": (1) Northstar's ownership of the Plaza, which commenced well before SS's tenancy and, hence, before the period during which SS contributed to the contamination of the Plaza, and (2) Northstar's contractual relationship with its former tenant SS. In Taylor Farm, this Court determined that the plaintiff could attempt to establish that it was entitled to the benefit of the innocent landowner exception. 234 F. Supp.2d at 972. In that case, a family farmer, plaintiff's predecessor in interest, purchased 139 acres of land in 1977. Id. at 952. Eighteen of those 139 acres contained a solid waste landfill. Id. A decade before the sale of the acreage to plaintiff's predecessor, the defendant had deposited waste contaminated with PCBs for approximately two years at the landfill. Id. at 953. Though certainly aware of the landfill, plaintiff's predecessor was not alleged to have known about any hazardous wastes having been deposited in the landfill. Id. Because the contamination occurred well before the plaintiff's predecessor acquired an ownership interest in the property, this Court concluded that the plaintiff was entitled "to have [its] day in court" to resolve its potential innocence under the "innocent landowner exception." Id. at 972.
The conclusion in Taylor Farm was grounded in the Seventh Circuit's "innocent landowner exception" jurisprudence. The exception was carved from the court's opinion in Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764 (7th Cir. 1994). In that case, the court concluded that a direct suit for response costs rather than contribution is appropriate whenever a landowner is "forced to clean up hazardous materials that a third party spilled onto its property or that migrated there from adjacent lands." Id. Though the court concluded that Akzo was "a party responsible in some measure for the contamination," id., the parameters of the "innocent landowner exception" were more fully articulated in Rumpke of Indiana, Inc. v. Cummins Engine Co., 107 F.3d 1235 (7th Cir. 1997).
In Rumpke, the Seventh Circuit applied the "innocent landowner exception" and determined that the plaintiff's suit survived summary judgment on the issue of whether it was entitled to the benefit of the innocent landowner exception. Id. at 1243. The plaintiff Rumpke purchased a 273 acre dump, which it later discovered was contaminated with a "cocktail of hazardous wastes." Id. at 1236. At the time of purchase, the prior owners "informed Rumpke that the landfill had never accepted hazardous waste." Id. The court found this factor, together with evidence that all of the alleged contamination occurred prior to Rumpke acquiring an interest in the property, to be dispositive. Id. at 1241-42. The court noted that "we must regard [Rumpke] as a landowner on whose property others dumped hazardous wastes, before Rumpke even owned the property. This Court sees no distinction between this situation and a case where a landowner discovers that someone has been surreptitiously dumping hazardous materials on property it already owns. . . ." Id.
In AM International, Inc. v. Datacard Corp., the Seventh Circuit again found the timing of ownership to be dispositive in resolving the question of the applicability of the "innocent landowner exception." 106 F.3d 1342, 1352 (7th Cir. 1997). In that case, AM International "spilled hazardous chemicals at an industrial site . . . [f]or nearly 25 years" prior to Datacard acquiring an ownership interest in the contaminated property. Id. at 1345. Because the contamination occurred before Datacard entered the picture, the court, discounting the fact that Datacard knew the property was contaminated at the time of purchase, held that Datacard qualified under the innocent landowner exception. Id. at 1352.
Finally, in Nutrasweet Co. v. X-L Engineering Co., the Seventh Circuit affirmed the district court's ruling that the plaintiff Nutrasweet qualified under the "innocent landowner exception." 227 F.3d 776, 791 (7th Cir. 2000). While the plaintiff in Nutrasweet owned the property during the period in which it was contaminated with TCE, the court concluded that the facts established that the defendant, which owned and operated a facility adjacent to the plaintiff's property, was responsible for the contamination of the plaintiff's property. Id. at 783-84. As noted above, the Rumpke court had already interpreted Akzo to hold that a landowner whose property was contaminated by a neighbor's covert dumping of wastes could avail itself of the "innocent landowner exception." Rumpke, 107 F.3d at 1240 ("[T]he Akzo exception" certainly applies to "the landowner who discovers someone surreptitiously dumping wastes on its land. . . ."). Likewise, in Nutrasweet, other than operating their respective businesses on adjacent properties, the plaintiff and defendant bore no further relationship which would have signified to the plaintiff that the defendant was dumping hazardous wastes near their shared property line.
Summarizing this Court's and the Seventh Circuit's "innocent landowner exception"jurisprudence, the Court notes that a plaintiff has qualified as an innocent landowner in two distinct situations: (1) where the plaintiff acquires an ownership interest in the contaminated property after the contamination has occurred ( Rumpke, AM International, Inc., and Taylor Farm) or (2) where the plaintiff establishes that its property was contaminated by a third party's surreptitious dumping with which it bears no relationship and, hence, has no reason to suspect might be contaminating its land ( Nutrasweet Co.).
The present case presents neither of these possibilities. First, taking the facts alleged in the amended complaint as true, it is undisputed that during the time in which SS operated its laundry and dry cleaning business at the Plaza, Northstar was the owner of the property. Likewise, it is undisputed that during this same time, SS's laundry and dry cleaning operation released a hazardous substance into the environment. This case presents a situation where the plaintiff owned the contaminated property throughout the period in which the contamination was occurring; thus, this case is factually distinct from Rumpke, AM International, Inc., and Taylor Farm. Those three cases involving subsequent purchasers of contaminated land each presented plaintiffs factually detached from the contamination during the period in which the contamination was occurring. Further, two of those cases presented plaintiffs which remained unaware of the contamination even after purchasing their respective properties. Northstar's relationship to the ongoing contamination of the Plaza is significantly less innocent than a subsequent purchaser of contaminated land.
Second, this case is factually distinct from Nutrasweet Co., which held that the "innocent landowner exception" may apply to a plaintiff whose land is surreptitiously contaminated by a third party, even though the contamination occurred during the plaintiff's ownership of the property. From 1995 to 2002, SS leased a portion of the plaza from Northstar for its laundry and dry cleaning business. The relationship between SS and Northstar was defined by the lease, which set forth the parties' agreement regarding SS's use of property owned by Northstar. Further, it was out of SS's use of property owned by Northstar that the contamination of the property occurred. This situation is wholly dissimilar from the Nutrasweet context, in which the only relationship between the parties was that they were adjacent landowners. While a landowner should not be expected to monitor his neighbor for a potential surreptitious dumping of hazardous waste along a shared property line, it does not follow that a landowner need not worry about potential environmental hazards posed by a lessee operating under contract on the landowner's property.
Indeed, the cases carving out the "innocent landowner exception" do not reward lessors for failing to recognize contamination caused by lessees operating under contract on the lessor's land. Northstar is liable as a landowner for at least a share of the environmental costs resulting from the contamination of the Plaza; hence, Northstar does not have standing to bring a cost recovery action. Any CERCLA claim Northstar may have against Defendants must be construed as a claim for contribution and brought under Section 113. For the above stated reasons, Defendants' Motion to Dismiss Plaintiff's Count I, a claim for cost recovery under CERCLA Section 107, is hereby GRANTED.
B. ANALYSIS OF THE COST RECOVERY CLAIM UNDER STATE ENVIRONMENTAL LAW AND THE RESPONSIBLE CORPORATE OFFICER CLAIM
Because this Court holds today that Northstar is not an "innocent landowner" and, hence, may not maintain a cost recovery action under Section 107 of CERCLA against defendants, see supra Part III.A, Northstar likewise may not maintain either a cost recovery action against Defendants pursuant to state environmental law or a cost recovery action against the corporate officers of Defendant corporation under a theory of the Responsible Corporate Officer Doctrine. As a result, Northstar's claims for cost recovery pursuant to state environmental law and the Responsible Corporate Officer Doctrine likewise must be dismissed.Count IV of Northstar's amended complaint states that "[p]ursuant to Ind. Cod § 13-30-9-2, SS is liable to Northstar for causing or contributing to the tetrachloroethene contamination of the Leased Premises and Plaza," while Count VI states that "[p]ursuant to Ind. Code § 13-30-9-2, Adam Mears and Stephen Mears are personally liable to Northstar for causing or contributing to the aforementioned tetrachloroethene contamination." Am. Compl. ¶¶ 46, 55. Northstar correctly relies on this Court's language in Taylor Farm, where this Court concluded that Section 2 of the Indiana Environmental Legal Action ("IELA"), codified at Indiana Code § 13-30-9-2, is not a contribution provision, but rather more closely resembles the CERCLA Section 107 cost recovery provision. See Pl.'s Answer Br. in Resp. to Defs.' Mot. to Dismiss Am. Compl. at 17 (citing Taylor Farm, 234 F. Supp.2d at 962). For this Court to permit Northstar's contribution actions against Defendants to proceed under Section 13-30-9-2 would push the statute beyond its intended use, which is to provide a supplemental state law cause of action closely resembling the cost recovery provision enumerated in CERCLA Section 107.
It should be noted that even if the Court were willing, as it is not, to interpret Section 13-30-9-2 as analogous to a cause of action for contribution under CERCLA, the statute would be subject to the statute of limitations governing CERCLA contribution claims under Section 113. In United States v. Navistar International Transportation Corp., the Seventh Circuit held that with respect to a cost recovery action brought under the Indiana cost recovery statute, see Ind. Code § 13-25-4-8, the six year CERCLA Section 107(a) limitations period for cost recovery actions would apply. 152 F.3d 702, 714 (7th Cir. 1998) ([I]f Indiana had decided to employ a statute of limitations other than that contained in CERCLA, it would have done so explicitly."). Though this precise question has yet to have been raised with respect to Indiana Code § 13-30-9-2, the logic of the Seventh Circuit's reasoning in Navistar must guide the Court's analysis of the case at bar. If the Court were to interpret Section 13-30-9-2 as analogous to a cause of action for contribution under CERCLA, then, because Section 13-30-9-2 is silent with respect to the appropriate limitations period, the statute of limitations governing the CERCLA contribution provision would apply. According to CERCLA § 113(g)(3) governing contribution, "No action for contribution for any response costs or damages may be commenced more than 3 years after . . . the date of an administrative order . . . or entry of a judicially approved settlement with respect to such costs or damages." CERCLA § 113(g)(3), 42 U.S.C. § 9613(g)(3).
Thus, any state environmental law claim Northstar may have against Defendants pursuant to Indiana Code § 13-30-9-2, whether against the corporate entity or against the officers of the corporation through an alternative theory of corporate officer responsibility, must be construed as a claim for contribution rather than cost recovery and brought under the applicable state law provision. For the above stated reasons, Defendants' Motion to Dismiss Plaintiff's Counts IV and VI, a claim for damages under state environmental law and a claim pursuant to the Responsible Corporate Officer Doctrine, is hereby GRANTED.
C. ANALYSIS OF THE CONTRACTUAL INDEMNITY CLAIM
Count III of Northstar's Amended Complaint seeks indemnification from SS for all costs incurred from Northstar's voluntary remediation of the environmental contamination at the Plaza. Northstar grounds its indemnification claim on its reading of § 17.1 of the lease agreement between Northstar and SS, which was repeatedly referenced in the Amended Complaint and attached to the pleading as Exhibit C. Not surprisingly, SS counters that the same language in the lease provision supports its conclusion that Northstar is not entitled to recover from SS for costs it incurred in the voluntary remediation effort. As noted below, this Court holds that the language of the indemnification clause set forth in § 17.1 of the lease agreement plainly precludes recovery for costs associated with remediation efforts undertaken voluntarily.
The primary goal of contract interpretation under Indiana law is to give effect to the parties' intent. See Trs. of First Union Real Estate Equity and Mortgage Invs. v. Mandell, 987 F.2d 1286, 1289 (7th Cir. 1993). Naturally, when the terms of a contract are clear and unambiguous as written, those terms are conclusive as to the contract's meaning. See In re Forum Group, Inc., 82 F.3d 159, 163 (7th Cir. 1996); see also C.S. V. Ltd. v. W.E. Buehler Paper Co., 2002 WL 31255408, at *2 (S.D. Ind. 2002) (quoting Alien v. Cedar Real Estate Group, LLP, 236 F.3d 374, 380 (7th Cir. 2001)) ("[T]he construction of an unambiguous written contract is a question of law for the court."). When faced with an unambiguous contract, "[t]he court will not look to extrinsic evidence in construing [the] . . . contract language." In re Forum Group, 82 F.3d at 163; see also Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856, 859 (7th Cir. 2002) (affirming the dismissal of a contract interpretation case under Fed.R.Civ.P. 12(b)(6)). Further, "if the words of an indemnity agreement are clear and unambiguous, they are to be given their plain and ordinary meaning." Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 756 (Ind.Ct.App. 2002).
When a court, applying Indiana law, concludes that a contract is ambiguous, the court must determine whether the ambiguity is "patent" or "latent." See Mandell, 987 F.2d at 1290 (7th Cir. 1993) (applying Indiana law). A latent ambiguity is one that arises because of external facts; that is, the ambiguity does not become apparent until the terms of the contract are applied to a given set of circumstances. See, e.g., C.S. V. Ltd., 2002 WL 31255408, at *2. "Thus, with a latent ambiguity, introduction of extrinsic evidence merely completes the instrument by identifying its object or subject matter." Estate of Starkey v. United States, 223 F.3d 694, 701 n. 6 (7th Cir. 2000) (internal citation omitted).
"A patent ambiguity, on the other hand, is apparent from the face of the contract by virtue of the words used and is capable of resolution by carefully reading the contract." C.S. V. Ltd., 2002 WL 31255408, at *2. The resolution of a patent ambiguity is a decision for the court as a matter of law. See id.; see also First Fed. Sav. Bank v. Key Markets, Inc., 559 N.E.2d 600, 603-04 (Ind. 1990). Without considering extrinsic evidence, the court must ascertain the parties' intent from the contract as a whole. See C.S. V. Ltd., 2002 WL 31255408, at *2. In other words, individual clauses, phrases, and sentences must be "clarified from within the four corners of the document." Mandell, 987 F.2d at 1290-91; see also Beanstalk Group Inc., 283 F.3d at 860. In the present case, the parties dispute the substantive breadth of the indemnification provision. At issue is the correct interpretation of the indemnification provision-a patent ambiguity that does not require the Court to consider evidence extrinsic to the specific language of § 17.1 of the lease. A careful reading of § 17.1 in its entirety provides all of the interpretive tools necessary to resolve any ambiguity.
In its amended complaint, Northstar claims that "[t]he Lease provides that SS will indemnify Northstar for any and all costs associated with environmental clean up necessitated by SS's contamination of the Leased Premises or Plaza." Am. Compl. ¶ 40. Focusing on the language of § 17.1 of the lease agreement, Defendants dispute this alleged contractual obligation to indemnify Northstar for the costs of remediation. Specifically, Defendants contend that the contractual obligation to indemnify is limited by the phrase " required by any federal, state or local governmental agency or political subdivision. . . ." See Am. Compl. Ex. C at § 17.1 (emphasis added). Because Northstar voluntarily undertook the environmental remediation, SS argues that Northstar's cleanup effort cannot be characterized as "required" and, therefore, falls outside the contractual indemnification provision. Northstar counters that SS's reading of § 17.1 is overly selective. Northstar argues that the "required" phrase is connected with a non-exhaustive list of situations in which the Tenant is obligated to indemnify the landlord. Northstar highlights that the critical clause in the provision is the following: "This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local government agency or political subdivision. . . ." See Am. Compl. Ex. C at § 17.1 (emphasis added).
Alternatively, Northstar argues that the environmental remediation it undertook with respect to the Plaza was not really "voluntary" but, in fact, was a mandatory "means for a clean bill of health from the State of Indiana. . . ." See Pls.'s Answer Br. in Resp. to Defs.' Mot. to Dismiss Am. Compl. at 12. Given that the IDEM project was termed a "Voluntary Remediation Program" and that a Certificate of Completion was issued to Northstar "for the successful completion of the voluntary remediation conducted at the Site," see Am. Compl. ¶¶ 19-20, the Court thinks Northstar's semantic attempt to question whether "voluntary" really means "voluntary" is without merit.
Though the Court agrees with Northstar that to accurately access the substantive breadth of the indemnification provision, the provision must be considered in its entirety, the correct reading of the phrase "without limitation" does not require the Court to subsequently read the "required" phrase out of the provision. By prefacing the list of situations in which the Tenant would be expected to indemnify the Landlord with the phrase "without limitation," the drafters were undoubtedly signifying that the list was not exhaustive. Nevertheless, while the list merely typifies situations in which the provision might apply, the enumerated situations must themselves bear significance. After all, the drafters must have been aware that the examples chosen for the list would provide the situational context by which parties would ultimately conclude whether future, non-enumerated courses of action would nevertheless trigger the provision. If "without limitation" were interpreted to broaden the "required" phrase to include "environmental cleanup efforts undertaken voluntarily," any significance in including the "required" phrase in the first place would be lost. The phrase would constitute mere clutter-an artificial limitation-itself signifying nothing.
For this reason, the Court agrees with SS that if the "required" phrase is to carry any substantive significance, the phrase "without limitation" may not be interpreted so broadly as to include remediation efforts undertaken voluntarily. To trigger the indemnification provision, the costs must have been incurred as part of a "required," as opposed to a "voluntary," remediation project. Further, the Court does not agree with Northstar that an Indiana state statute authorizing voluntary remediation programs should be considered as relevant evidence in interpreting this contract provision. Rather, as noted above, any ambiguity in the indemnification provision is a patent ambiguity that must be resolved without resorting to evidence extrinsic to the lease.
Likewise, the Court does not agree with Northstar that a patent ambiguity in a lease provision may not be appropriately disposed in a 12(b)(6) motion. As noted earlier, a court may consider documents other than the complaint "if they are referred to in the plaintiffs complaint and are central to his claim." Wright v. Associated Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994) (citing Venture Assocs. v. Zenith Data Sys, 987 F.2d 429, 431 (7th Cir. 1993)). Because the lease is attached to and referred to in Northstar's amended complaint, the Court may consider and interpret the lease in deciding the motion to dismiss without converting it to a motion for summary judgment. See Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856, 858 (7th Cir. 2002). For the above stated reasons, Defendants' Motion to Dismiss Plaintiff's Count III, a claim for contractual indemnity under the lease agreement, is hereby GRANTED.
D. ANALYSIS OF THE CLAIM FOR BREACH OF THE SETTLEMENT AGREEMENT
In Count VIII of Northstar's amended complaint, Northstar alleges a breach of a settlement agreement entered into between the parties in July of 2000. Though Northstar's precise conception of the scope of this settlement agreement is unclear from the face of the amended complaint, it appears to encompass three separate but related agreements: (1) the July 21, 2000, First Lease Renewal Addendum, see Am. Compl. ¶ 63, which extended the terms of the lease and set forth the above-market monthly rent designed to reimburse Northstar for incurred cleanup costs, (2) the July 24, 2000, Release, see id. ¶ 64, which released and discharged SS from all claims and liabilities arising from the contamination at the Plaza provided that SS did not fail to make any payment due under the lease, and (3) a July 17, 2000, oral agreement, see id. ¶ 69, which allegedly tolled any applicable statute of limitations.
After articulating the various agreements constituting the "settlement agreement, "Northstar alleges that SS breached the settlement agreement and that, as a result, Northstar was damaged. See id. ¶¶ 65, 70, 71. First, Northstar alleges that "[o]n or about December 1, 2002, SS breached the settlement agreement, as alleged in Count II, by failing to meet its monthly rental obligation." Id. ¶ 65. Second, Northstar alleges that "[a]ny assertion by the defendants that Northstar's claims related to the environmental remediation response costs are time-barred constitutes a breach of the parties' tolling agreement." Id. ¶ 70. The first allegation, regarding the failure to timely remit rents, appears to supplement the Count II Breach of Lease claim. Insofar as it alleges a distinct claim for damages distinguishable from the claim alleged in Count II, it is well-pled and should survive dismissal at this stage.
Likewise, the allegation regarding the existence and alleged breach of an oral tolling agreement is sufficiently well-pled to survive dismissal at this early stage. Defendants essentially argue that the existence of the alleged oral tolling agreement of July 17, 2000 is simply too doubtful to support a claim for damages. The Court disagrees. Such doubt about the existence of the agreement should only be resolved after further discovery. Under the liberal notice pleading standard set forth in the federal rules, a complaint must include only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Such a statement should simply be sufficient to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Swierkiewicz v. Sorema, 534 U.S. 506, 512 (2002); Conley v. Gibson, 355 U.S. 41, 47 (1957). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz, 534 U.S. at 512; see also Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168-169(1993). Because Northstar's amended complaint sets forth-albeit in sparse detail-the existence of an oral tolling agreement between the parties, it would be inappropriate for this Court to resolve doubt as to the efficacy of the breach of settlement claim in a motion to dismiss order. Rather, the issue may only be properly resolved after the discovery process either proves or disproves the existence of the alleged agreement. For the above stated reasons, Defendants' Motion to Dismiss Plaintiff's Count VIII, a claim for breach of the settlement agreement, is hereby DENIED.
E. ANALYSIS OF THE QUESTION OF DIVERSITY JURISDICTION WITH RESPECT TO COUNTS II, V, VII, VIII
Defendants seek dismissal of Counts II, V, and VII only upon the theory that those three claims do not satisfy the $75,000 amount in controversy requirement for diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). Thus, for the purpose of resolving this motion, the Court need only consider whether those three claims-together with Count VIII, the fourth remaining claim for breach of the settlement agreement-allege damages sufficient to overcome the $75,000 jurisdictional bar. The Court concludes that they do.
Setting aside the requests for damages articulated in Counts II, V, and VII, the Court notes that the request for damages articulated in Count VIII is alone sufficient to satisfy the jurisdictional bar. With respect to Count VIII, Northstar made a demand for "judgment against SS for damages related to the environmental remediation. . . ." Am. Compl. ¶ 70. Further, Northstar had specifically alleged earlier in its amended complaint that it "paid approximately $120,000 to remedy the tetrachloroethene contamination." Am. Compl. ¶ 41. Paragraph 59 specifically incorporated this precise articulation of the monetary value of the environmental remediation effort into Count VIII. See Am. Compl. ¶ 59.
In its reply brief, SS argues that the claim for breach of the settlement agreement does not request additional damages distinct from those requested under the common law and contractual waste claims and the breach of lease claim. In light of the fact that of the four remaining claims, only Count VIII seeks contribution for the costs of the voluntary environmental cleanup effort, the Court finds Defendants' argument unpersuasive. Consequently, since Count VIII satisfies the amount in controversy bar for diversity jurisdiction, this Court retains subject matter jurisdiction over Counts II, V, VII, and VIII of this action. Defendants motion to dismiss Counts II, V, VII, and VIII is hereby DENIED.
IV. CONCLUSION
For the foregoing reasons, the Court concludes that Counts I, III, IV, and VI of Plaintiff's amended complaint fail to state claims upon which relief may be granted. As a result, the Court GRANTS Defendants' Motion to Dismiss Counts I, III, IV, and VI of Northstar's amended complaint. The Court DENIES Defendants' Motion to Dismiss Counts II, V, VII, and VIII of Northstar's amended complaint.IT IS SO ORDERED.