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FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
PETER M. RACHER JEFFREY B. KATZ
JAMES A. JOVEN Michigan City, Indiana
Plews Shadley Racher & Braun
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
WESTERN OHIO PIZZA, INC., MAS REALTY, )
and D.D., INC., )
)
Appellant-Plaintiffs, )
)
vs. ) No. 49A05-9802-CV-87
)
CLARK OIL & REFINING CORPORATION, )
)
Appellee-Defendant. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Kenneth R. Johnson, Judge
Cause No. 49D02-9104-CP-378
January 27, 1999
OPINION - FOR PUBLICATION
ROBB, Judge
Case Summary
Appellants-Plaintiffs, Western Ohio Pizza, Inc., MAS Realty, and D.D., Inc.
(collectively "Western"), appeal the trial court's judgment in favor of Clark Oil & Refining
Corp. ("Clark"), which determined that Clark was not liable to Western for damages related
to clean-up of leaking underground storage tanks ("USTs") on property which Clark
conveyed to Western. We affirm.
Issues
Western raises three issues for our review which we restate as:
1. Whether the trial court properly found that the contract for sale of the
property was clear and unambiguous in transferring liability to Western, and
properly concluded that the Underground Storage Tank Act in effect at the
time expressly permitted such transfer of liability;
2. Whether the trial court properly concluded that Western was not
entitled to reimbursement from Clark for clean-up costs and attorney fees
because the Indiana Department of Environmental Management ("IDEM") did
not issue a corrective action order; and,
3. Whether the trial court properly concluded that Western could not
recover clean-up costs from Clark under Ind. Code § 13-30-3-13 because
Western was not the owner of the property at the time of the leak and there
was no proof that Clark dumped any material during the time Western owned
the property.
Facts and Procedural History
The facts most favorable to the judgment show that on July 1, 1988, Western signed
a standard Purchase Agreement for the purchase of a lot at 5902 N. Michigan Rd. in
Indianapolis from Clark for the construction of a Domino's Pizza store. Clark had not used
the property as a gasoline station. The agreement contained the following conditions:
Subject to Bankruptcy Court Approval
. . . .
Buyer is aware underground storage tanks are still on the property and agrees to
assume all responsibility for said tanks.
Buyer is accepting the property "as is."
R. 496. On the same day, Western executed an Offer to Purchase prepared by Clark which
provided, in part:
2) . . .
SELLER DOES NOT WARRANT, EITHER EXPRESSLY OR IMPLIEDLY,
THE CONDITION OR FITNESS OF THE PROPERTY CONVEYED
HEREUNDER, ANY SUCH WARRANTY BEING HEREBY EXPRESSLY
NEGATED. Buyer, by acceptance hereof, acknowledges that he has made a
complete inspection of the above described property, and any improvements
and/or equipment located thereon and is in all respects satisfied and accepts
said property "AS IS."
. . . .
6) Such improvements as may be located on the property, including . . .
underground storage tanks and lines . . . are to be considered a part of the
purchase price . . . .
. . . .
12) . . . This agreement is to be merged with the Purchase Agreement . . . .
R. 498. On August 4, 1988, by corporate warranty deed, Clark conveyed the parcel to
Western Ohio.
Western's contractor began work on the new store in May or June of 1989 and
discovered contaminated soil during excavation work. The soil was tested and reported to
IDEM. An IDEM inspector orally ordered Western to remediate the soil. The contaminated
soil was removed by an environmental engineering firm. The new facility was completed
no later than December 1990.
Clark had previously filed a bankruptcy petition in December of 1987 and the
bankruptcy court had authorized the sale of the parcel. On August 16, 1990, Clark was
discharged and released under the bankruptcy court's reorganization plan and order.
On March 27, 1991, Western filed its complaint against Clark claiming that Clark is
liable to pay for the clean-up of the contaminated soils, for lost profits, and for punitive
damages. Clark filed a counterclaim and later moved for summary judgment which motion
was denied.
Settlement negotiations took place and a trial date was finally set for November, 1996.
Just prior to trial, Clark filed a complaint with the bankruptcy court claiming Western's claim
was discharged in bankruptcy and seeking to enjoin the state court action. Clark also filed
a motion to dismiss with the trial court. The trial court denied the motion, stating that Clark
is barred from asserting discharge in bankruptcy as a defense for failure to affirmatively
plead that defense.
Following a bench trial, the trial court entered findings of fact and conclusions of law
and entered judgment in favor of Clark.See footnote
1
The trial court concluded, in part:
4. . . . .
The clear and unambiguous language of the Offer to Purchase and the
MIBOR Purchase Agreement operate to preclude [Western] from bringing the
instant claims against [Clark]. Under the clear language of such contracts,
[Western] purchased the property "AS IS." The contracts specifically
informed [Western] that underground storage tanks were still on the property
and [Western] specifically agreed to assume all responsibility for the
underground storage tanks. Moreover, [Western's] agreement to assume
responsibility for the tanks was not limited in any way. The contracts clearly
shifted responsibility for the underground storage tanks from [Clark] to
[Western].
5. Were [Clark] not able to contract away Tank Act liability, [Western]
would still be precluded from seeking reimbursement from [Clark] for clean
up costs and attorneys fees. The Tank Act in effect at the time of the sale of
the property . . . provided that if the current owner of an underground storage
tank could prove that a release from the tank was caused solely by an act or
omission of a third party, the current owner was entitled to recover from the
third party its costs incurred in complying with a corrective action order issued
by IDEM. The issuance of an order by IDEM is an essential element to
recovery of remediation costs from a responsible third party. Because IDEM
did not issue an order requiring clean up, [Western is] precluded from seeking
reimbursement from Clark for clean up costs under the Pre-1991 Tank Act.
The pre-1991 Tank Act did not provide for recovery of attorney's fees.
6. [Western is] also precluded from seeking reimbursement and/or
damages from Clark under the amended Tank Act, effective July 1, 1991. The
amended Tank Act permits the current tank owner to recover remediation costs
and attorneys fees from a responsible third party whether or not IDEM issued
an order requiring the current tank owner to take corrective action. All costs
of remediating the property were incurred by [Western] prior to July 1, 1991.
The 1991 amendment to the Tank Act (permitting recovery from a third party
even if clean up is undertaken voluntarily) does not apply to clean up costs
incurred Prior to July 1, 1991.
7. [Western is] not entitled to recover their remediation costs and
attorney's fees from [Clark] pursuant to Indiana Code § 13-7-11-6 . . . . The
Illegal Dumping Statute requires proof that a party illegally dumped garbage
or other solid waste on the landowner's property without the landowner's
consent. This proof necessarily requires that the complaining party actually
own the land at the time of the alleged dumping. [Western has] failed to prove
that [Clark] dumped any material on the property during the time [Western]
owned the property.
R. 448-50 (citations omitted). Western appeals from the trial court's judgment.
Discussion and Decision
This is an appeal from a judgment entered in a bench trial, and our standard of review
on appeal is well-established. Because the trial court entered findings of fact and conclusions
of law, we apply the following two-tier standard of review: whether the evidence supports
the findings, and whether the findings support the judgment. Kettery v. Heck, 587 N.E.2d
1365, 1367 (Ind. Ct. App. 1992), trans. denied. The court's findings and conclusions will be
set aside only if they are clearly erroneous, that is, that the record contains no facts or
inferences supporting them. Id. A judgment is clearly erroneous when a review of the record
leaves us with a firm conviction that a mistake has been made. Id. Sua sponte findings
control only as to the issues they cover and a general judgment will control as to the issues
upon which there are no findings. Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind. 1997).
A general judgment entered with findings will be affirmed if it can be sustained on any legal
theory supported by the evidence. Id.
I.
Western argues that the parties' contract for sale of the real estate is ambiguous and
does not explicitly transfer liability for the leaking tanks to Western. Western contends that
without a specific provision transferring environmental liabilities, Clark cannot avoid
liability to Western for clean up costs.
The Indiana Underground Storage Tank Act provides, in part:
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, . . . is
entitled to receive a contribution from a person who owned or operated the
underground storage tank at the time the release occurred.
Ind. Code § 13-23-13-8. Western contends that it is entitled to contribution pursuant to this
statute. Clark asserts that Ind. Code § 13-23-13-10 allows for the release of an obligation for
contribution. That statute provides, in part: "This section does not bar an agreement to: 1)
insure; 2) hold harmless; or 3) indemnify; a party to an agreement for any liability under this
article." Ind. Code § 13-23-13-10.
Indiana's underground storage tank laws were "drafted in the same language and
spirit" as the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. § 9601, et seq. The Pantry, Inc. v. Stop-N-Go Foods, Inc., 777
F.Supp. 713, 721 (S.D. Ind. 1991), modified on denial of reconsideration, 796 F.Supp. 1164
(S.D. Ind. 1992). "Indiana's UST statutes follow the same remedial principles established
by CERCLA." Id. at 720. " Liability under CERCLA is strict - no showing of negligence is
required." Rodenbeck v. Marathon Petroleum Co., 742 F.Supp. 1448, 1456 (N.D. Ind. 1990).
CERCLA expressly preserves the right of private parties to contractually transfer to or
release another from the financial responsibility arising out of CERCLA liability. Id. Under
42 U.S.C. § 9607(e)(1), "parties remain liable for response costs in a government-initiated
cleanup," but "private parties may contractually transfer to or release another from CERCLA
financial responsibilities."See footnote
2
Mobay Corp. v. Allied-Signal, Inc., 761 F.Supp. 345, 355
(D.N.J. 1991). CERCLA, therefore, does not abrogate the parties' contractual rights.
Rodenbeck, 742 F.Supp. at 1456.
Western cites several cases, both from federal courts and courts of other states, which
hold that "[w]hile a contract can, under appropriate circumstances, act to preclude recovery
of response costs, there must be an express provision which allocates these risks to one of
the parties." Southland Corp. v. Ashland Oil, Inc., 696 F.Supp. 994, 1002 (D.N.J. 1988).
The Southland court held that "an 'as is' provision is merely a warranty disclaimer and as
such precludes only claims based on breach of warranty." Id. at 1001. Such a provision
"does not act to shift liability from one party to an agreement to another . . . ." Id. Two years
after Southland, another case from the same court arrived at a similar result regarding a
contract which provided: "Premises are sold 'as is.'" Allied Corp. v. Frola, 730 F.Supp. 626,
630 (D.N.J. 1990). The Allied court agreed that an "'as is' clause preclude[d] any cause of
action in contract," but did not extinguish all tort theories of liability. Id. The court held that
"strict liability may be avoided only by a knowing agreement to accept the risk of an
abnormally hazardous activity."See footnote
3
Id.
The majority of the cases cited above deal primarily with liability under CERCLA.
However, "the allocation of CERCLA liability is governed by state contract law." M & M
Realty, 977 F.Supp. at 687. To the extent an analogy with CERCLA is helpful, we must look
to Indiana law regarding release or transfer of liability.See footnote
4
Whether a contract is ambiguous is a question of law for the court. Indiana Erectors,
Inc. v. Trustees of Indiana University, 686 N.E.2d 878 (Ind. Ct. App. 1997).
This court will not construe clear and unambiguous provisions, nor will we add provisions
not agreed upon by the parties. Hyperbaric Oxygen Therapy Systems, Inc. v. St. Joseph
Medical Center of Ft. Wayne, Inc., 683 N.E.2d 243, 247-48 (Ind. Ct. App. 1997), trans.
denied.
"A release is a surrender of a claimant's right to prosecute a cause of action. We
construe a release to carry out the intent of the parties to the release. That intent is disclosed
by the language the parties used to express their rights and duties considered in light of all
the facts and circumstances." Wright Motors, Inc. v. Marathon Oil Co., 631 N.E.2d 923, 925
(Ind. Ct. App. 1994) (citations omitted). A release is construed in the same manner as any
other contract. Id. The construction of a release is a question of law for the court's
determination. Id.
Western argues that we should construe the purchase agreement between it and Clark
so as to give effect to the intent of the parties at the time they entered into the contract.
Western then asserts that it did not intend to accept responsibility for leaking petroleum, only
for the tanks themselves. We decline to consider the extrinsic evidence set forth by Western,
as we find the agreement clear and unambiguous. The Purchase Agreement provided that
Western agreed "to assume all responsibility for said tanks." R. 496 (emphasis added). In
addition, the Offer to Purchase mentioned improvements located on the property, including
"storage tanks and lines," and stated that Western had made a complete inspection of these
improvements. R. 498. In light of these provisions, we cannot say that the "as is" clause
"stand[s] alone." Southland, 696 F.Supp. at 1001. While we do not go so far as to require
that the contract state that the buyer is accepting responsibility for clean-up costs, we do
think it clear that when Western accepted responsibility for the tanks and lines, it necessarily
accepted responsibility for whatever those tanks and lines contained or had contained.
The trial court did not err, as a matter of law, in finding that the contract for sale of
the property was clear and unambiguous and that the parties' contract transferred
responsibility for the costs of remediation to Western.
II.
Western argues that the trial court erred in concluding (apparently in the alternative)
that Western was not entitled to contribution from Clark because no corrective action had
been ordered by IDEM regarding the clean-up. We disagree.
As stated above, a person who undertakes clean-up of a release from an underground
storage tank may seek contribution from a former owner or operator "regardless of whether
the corrective action is undertaken voluntarily or under order . . . ." Ind. Code § 13-23-13-8,
formerly § 13-7-20-21. Prior to amendment, "the statute allowed a current owner to recover
from the prior owner only after the state required the current owner to take a corrective
action." The Pantry, 777 F.Supp. at 719; see P.L. 129-1991, SEC. 8, effective July 1, 1991.
"The 1991 amendment to Ind. Code § 13-7-20-21 changed the UST laws to allow a private
party to take voluntary cooperative action and then seek contribution from the person who
owned or operated the UST at the time the release occurred." Id. "In sum, the amendment
removes the intermediate step of a state-issued corrective action order," but "does not allow
recovery of response costs or attorneys' fees incurred prior to the effective date of the
amendment." Id. at 720 (emphasis added).
An attorney for IDEM testified that: "If the Commissioner of IDEM or any other
authorized representative of IDEM had issued an Order requiring or compelling . . .
[Western] to clean up or remediate the property, the Order would have been in written form
. . . . The file maintained by IDEM regarding the Property contains no written Order . . . ."
R. 770. The IDEM representative overseeing the clean-up of Western's property testified that
"there was an informal order from me verbally that there is going to be corrective action
taken on this site." R. 781. Yet, when questioned by counsel for Clark, the representative
agreed that he did not have "the authority to issue any formal, written order requiring
corrective action on behalf of IDEM." R. 797. The IDEM representative explained that "[i]f
we did not get cooperation to do the clean-up . . . the first thing would probably be a letter
requesting that they do it from the Office of Legal Counsel. If that did not bring action then
it would escalate into a Notice of Violation to do the necessary clean-up." R. 779. We
conclude that the evidence supports the findings and conclusions of the trial court that IDEM
had issued no corrective action order and Western's remediation of the property was
undertaken voluntarily.See footnote
5
III.
Western argues that the trial court erred in concluding that it could not recover
remediation costs from Clark under the Illegal Dumping Statute.See footnote
6
It contends that the trial
court improperly applied the statute to require that the complaining landowner must have
owned the property at the time of the illegal dumping. Western also contends that the trial
court erred in finding that there was no proof that Clark dumped any materials on the
property during the time when Western owned the property.
The Illegal Dumping Statute provides, in part:
A landowner on whose land garbage or other solid waste has been illegally
dumped without the landowner's consent may, in addition to any other legal or
equitable remedy available to the landowner, recover from the person
responsible for the illegal dumping:
(1) reasonable expenses incurred by the landowner in disposing of the garbage or
other solid waste; and
(2) reasonable attorney's fees.
Ind. Code § 13-30-3-13(d), formerly § 13-7-11-6. "Solid waste" includes "any garbage,
refuse . . . or other discarded material, including solid, liquid, semisolid, or contained gaseous
material . . . ," Ind. Code § 13-11-2-205(a), but does not include certain hazardous wastes.
Ind. Code § 13-11-2-205(b)(1).
However, we need not address Western's specific contentions. It is irrelevant whether
Western owned the property at the time of the release of the solid waste. Likewise, it does
not matter whether the release occurred during the period when Clark owned the parcel.
Having already held that the parties' contract was sufficient to transfer liability for the costs
of remediation to Western under the Indiana Underground Storage Tank Act, we conclude
that it is likewise sufficient to transfer responsibility under the Indiana Illegal Dumping
Statute. Indiana Code Section 13-30-3-13 imposes no additional liability over and above that
dictated by Ind. Code § 13-23-3-13.See footnote
7
The contract for sale of the property explicitly
transferred all responsibility for the underground tanks and lines to Western. Having held
that this encompassed responsibility for leaks from the tanks, the transfer of responsibility
is no less applicable to the Illegal Dumping Statute.
We hold that the parties' contract for sale of the property prohibits Western from
recovering from Clark under Ind. Code § 13-30-3-13.
Affirmed.
STATON, J., and KIRSCH, J., concur.
Footnote:
1 Neither party requested special findings pursuant to Ind. Trial Rule 52(A). R. 1095.
Footnote:
2 United States Code Section 9607(e)(1) is substantially the same as Ind. Code § 13-23-13-10.
Footnote:
3
See also M & M Realty Co. v. Eberton Terminal Corp., 977 F.Supp. 683 (M.D.
Penn. 1997); Robertshaw Controls Co. v. Watts Regulator Co., 807 F.Supp. 144 (D. Maine
1992); Mobay Corp., 761 F.Supp. 345; Channel Master Satellite Systems v. JFD Electronics
Corp., 702 F.Supp. 1229 (E.D.N.C. 1988); Chemical Waste Mgmt., Inc. v. Armstrong World
Indus. Inc., 669 F.Supp. 1285 (E.D. Pa. 1987); Garb-Ko, Inc. v. Lansing-Lewis Servs., Inc.,
423 N.W.2d 355 (Mich. App. Ct. 1988).
But cf. AM Int'l v. International Forging Equip., 982 F.2d 989 (6th Cir. 1993); Niecko
v. Emro Marketing Co., 769 F.Supp. 973 (E.D. Mich. 1991), aff'd, 973 F.2d 1296 (6th Cir.
1992); CPC Int'l v. Aerojet-General Corp., 759 F.Supp. 1269 (W.D. Mich. 1991); FMC Corp.
v. Northern Pump Co., 668 F.Supp. 1285 (D. Minn. 1987).
Footnote:
4 Western has not raised any claim under CERCLA.
Footnote:
5 Western also contends that the trial court erred in concluding that it was not entitled to recover from
Clark costs for installing additional monitoring wells that IDEM neglected to require, and apparently were
never installed, but which Western believes are required. Western points to no evidence that it incurred any
additional expenses or will be required to expend any funds in the future pertaining to the soil remediation.
Western incorrectly asserts that the trial court erred in determining that it could not recover costs for
"remediation expenses potentially required." Appellant's Brief at 25. The trial court found that "[a]ll costs of
remediating the property were incurred by [Western] prior to July 1, 1991." R. 449. There is no evidence in
the record that Western has expended any additional funds. We express no opinion regarding Clark's liability
for any remediation costs which might have arisen after July 1, 1991, or might arise in the future.
Footnote:
6 This statute has been referred to as the "landowner recovery statute." Walling v. Appel Serv. Co.,
Inc., 641 N.E.2d 647, 649 (Ind. Ct. App. 1994).
Footnote:
7 Both statutes provide for attorney's fees. See Ind. Code §§ 13-23-13-8-(b) and 13-30-3-13(d)(2).
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