Opinion ID: 2709472
Heading Depth: 2
Heading Rank: 1

Heading: Count III: Indiana ELA Claim

Text: We move next to the Trustees’ claim under the Indiana Environmental Legal Actions statute (“ELA”). In 1997, the Indiana General Assembly enacted a statute providing for an “environmental legal action” to “recover reasonable costs of a removal or remedial action” involving hazardous substances or petroleum. See Cooper Indus., LLC v. City of South Bend, 899 N.E.2d 1274, 1280 (Ind. 2009) (citing IND. C ODE § 13-30-9-2). The statute became effective on February 28, 1998. In Count III of the Complaint, the Trustees sued under the ELA to recover the costs of the removal actions undertaken pursuant to the 1999 and 2002 AOCs. At the summary judgment stage, the Bankerts argued that an ELA claim was barred by the applicable statute of limita50 Nos. 11-1501 and 11-1523 tions, and the district court agreed. Once again, we review the district court’s dismissal of the claim and its resolution of accompanying legal questions de novo. Storie, 589 F.3d at 876; Stepney, 392 F.3d at 239. We apply the statute of limitations of the state whose substantive law governs the claim, which in this case is Indiana. See Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 110 (1945) (holding that statutes of limitations are considered substantive law for purposes of the Erie doctrine). When this action was filed, the ELA did not include its own limitations provision.1 6 Accordingly, both 16 That changed in 2011, when the Indiana General Assembly enacted I ND . C ODE § 34-11-2-11.5. That section states, inter alia: (b) Subject to subsections (c), (d), and (e), a person may seek to recover the following in an action brought on or after the effective date of this section under IC 13-30-9-2 or IC 13-23-13-8(b) to recover costs incurred for a removal action, a remedial action, or a corrective action: (1) The costs incurred not more than ten (10) years before the date the action is brought, even if the person or any other person also incurred costs more than ten (10) years before the date the action is brought. (2) The costs incurred on or after the date the action is brought. If § 34-11-2-11.5 governed this litigation, the resolution of the ELA issue would be a simple affair. But this lawsuit was filed on April 1, 2008, more than three years prior to the section’s effective date, and we must apply the limitations period that existed at the time the action commenced. See (continued...) Nos. 11-1501 and 11-1523 51 parties looked elsewhere in the Indiana Code to find an applicable statute of limitations. The Trustees argue that Indiana’s ten-year “catch-all” statute of limitations should apply. See IND. C ODE § 34-11-1-2 (a cause of action which arises on or after September 1, 1982, and which is not limited by any other statute must be brought within ten years). The Bankerts’ position has continued to develop throughout the pendency of this appeal, and they now argue two related points. First, the Bankerts argue that the Trustees’ ELA claim is a claim for property damage, and should therefore be governed by the six-year statute of limitations for actions to recover damages to real property.1 7 Second, whichever statute applies, the Bankerts also dispute—and we must determine—when the limitations period began to run. 16 (...continued) Connell v. Welty, 725 N.E.2d 502, 506 (Ind. App. 2000) (quoting State v. Hensley, 661 N.E.2d 1246, 1249 (Ind. Ct. App. 1996) (“the period of limitation in effect at the time the suit is brought governs in an action[.]”)). 17 Found at I ND . C ODE § 34-11-2-7: The following actions must be commenced within six (6) years after the cause of action accrues: (1) Actions on accounts and contracts not in writing. (2) Actions for use, rents, and profits of real property. (3) Actions for injuries to property other than personal property, damages for detention of personal property and for recovering possession of personal property. (4) Actions for relief against frauds. 52 Nos. 11-1501 and 11-1523 See Doe v. United Methodist Church, 673 N.E.2d 839, 842 (Ind. Ct. App. 1996) (“The determination of when a cause of action accrues is a question for the court.”). The answer to that question depends on which limitations provision applies, as Indiana courts have held that the time at which a plaintiff’s cause of action accrues under each is different. Pflanz v. Foster, 888 N.E.2d 759 (Ind. 2008), explains the application of the ten-year catch-all statute of limitations, and Peniel Group, Inc. v. Bannon, 973 N.E.2d 575 (Ind. Ct. App. 2012), explains the application of the sixyear property damage statute of limitations. In combination, they provide the framework for the resolution of this case. Pflanz v. Foster concerned a dispute between the seller, Merrill Foster, and the buyers, Richard and Dolores Pflanz, of a parcel of land that was previously occupied by a gas station. When Foster sold the land to the Pflanzes in 1984, he advised them that under- ground petroleum tanks were present on the property, but were not in use and had been closed. 888 N.E.2d at 758. In fact, the tanks were still open and partially filled. Id. The Pflanzes first learned as much in 2001, when the Indiana Department of Environmental Management (“IDEM”) inspected the property and discovered that the tanks were leaking. Id. IDEM ordered the Pflanzes to clean up the property, see id. at 759, and the Pflanzes subsequently incurred over $100,000 in cleanup costs. Id. at 758. In 2004 and 2006, the Pflanzes filed complaints seeking contribution from Foster. Those complaints were dismissed on statute of limitations grounds, and the issue made its way up to the Indiana Supreme Court. Nos. 11-1501 and 11-1523 53 The Pflanzes’ claim was brought pursuant to the Underground Storage Tanks Act (USTA), IND. C ODE 13-23-13-1 et seq. The USTA is similar to the ELA in that it creates a cause of action for 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 [administrative] order[,]” to recover his expenditures by suing a party responsible for the release. IND. C ODE § 1323-13-8(b)(2). In fact, the two remedies are so substantively similar that the Indiana Code gives plaintiffs aggrieved by a release from an underground tank the option of choosing between the two. See IND. C ODE § 13-30- 9-6; see also Peniel, 973 N.E.2d at 581 n.5 (acknowledging the statutory option). Most importantly for our purposes, however, the two are identical to the extent that neither includes its own express statute of limitations. In Pflanz, both parties and the Indiana Supreme Court agreed that the ten-year catch-all statute of limitations therefore applied to the Pflanzes’ USTA claim. See 888 N.E.2d at 758 (citing Comm’r, Ind. Dep’t of Envtl. Mgmt. v. Bourbon Mini-Mart, Inc., 741 N.E.2d 361 (Ind. Ct. App. 2000), for the proposition that the ten-year catch-all, as opposed to the six-year limitations period for property damages, applies to an action for “recovery of environmental cleanup costs”).1 8 18 The Bankerts seem to argue that the applicability of the tenyear limitations period in Pflanz was assumed, rather than decided, due to the agreement of the parties. That cannot be (continued...) 54 Nos. 11-1501 and 11-1523 Next, the Indiana Supreme Court proceeded to determine when the ten-year limitations period began to run. Under the Indiana discovery rule, “a cause of action accrues, and the statute of limitations begins to run, when a claimant knows or in exercise of ordinary diligence should have known of the injury[,]” not of the mere possibility of an injury in the future. Id. In cases in which a party seeks to recover cleanup costs, “the damage [or injury] at issue is the cleanup obligation assessed by [the controlling government agency,]” not the mere fact of contamination. Id. The latter would be the injury in a suit to recover property damages, but suits to recover cleanup costs are different. Id. Following this path to its logical conclusion, the Indiana Supreme Court held that in an environmental cleanup case governed by the ten-year catch-all statute of limitations, the limitations period does not begin to run “until after the 18 (...continued) correct. Which statute of limitations applies to a claim is a question of law, and it is long-settled in Indiana that a “conclusion of law” is “beyond the power of agreement by the attorneys or parties.” App v. Cass, 75 N.E.2d 543, 395 (Ind. 1947) (citing Miller v. State ex rel. Tuthill, 171 N.E. 381, 384 (Ind. 1930)). Put even more bluntly, “[t]here is no question that the parties cannot agree upon the law and force a conclusion according to their understanding or agreement.” Id. The Indiana Supreme Court simply would not have applied the ten-year catch-all if it was legally incorrect to do so, whether the parties agreed to it or not. Their decision to honor the parties’ agreement therefore amounted to a decision that the limitations period agreed to was legally correct. Nos. 11-1501 and 11-1523 55 [plaintiff is] ordered to clean up the property.” 888 N.E.2d at 759. Since the Pflanzes brought their action within ten years of the cleanup order, their action was timely. In Peniel Group, Inc. v. Bannon, the Indiana Court of Appeals confronted a different kind of claim. The plaintiffs were the current owner and manager of a parcel of real property. After discovering that levels of contamination on the property exceeded limits set by the state, thus requiring a cleanup, the plaintiffs sued the previous owners and tenants of the parcel under the ELA. Since the ELA did not include a limitations provision at the time the suit was filed, the Indiana Court of Appeals was tasked with deciding which other statute of limitations to apply. 973 N.E.2d at 581. Finding that the plaintiffs were the owners of the real property in question and were not themselves responsible in any way for the contamination at the site, the court concluded that the Peniel plaintiffs’ action was one for property damage. Id. at 581-82. That being the case, the sixyear limitations period governing actions for damages to real property was applied, and that limitations period begins to run “when a claimant knows, or in the exercise of ordinary diligence should have known of the injury.” Id. at 582 (quoting Martin Oil Mktg, Ltd. v. Katzioris, 908 N.E.2d 1183, 1187 (Ind. Ct. App. 2009). Under Indiana law, “parties are usually held accountable for the time which has run against their predecessors in interest.” Id. (citing Cooper, 899 N.E.2d at 1279). Since the plaintiffs’ predecessors in interest knew of the damage to the site more than six years before the action was filed, the Court of Appeals found that the action was barred. 56 Nos. 11-1501 and 11-1523 In light of Peniel, the Bankerts now argue that the Trustees’ claim must likewise be governed by the six-year limitations period for real property damages, since it, too, is brought pursuant to the ELA. But under these circumstances, the statute under which the claim is brought does not determine the limitations period. Indeed, it cannot do so, because the statute under which the claim was brought did not have a limitations period. That is the root of the problem. What Peniel shows is that the underlying nature of the claim is what matters, a principle which is well-established in Indiana law. See Bourbon Mini-Mart, 741 N.E.2d 361 (“The applicable statute of limitations is determined by the ‘nature or substance of the cause of action.’ ”) (citing Klineman, Rose & Wolf, P.C. v. North American Lab. Co., 656 N.E.2d 1206, 1207 (Ind. Ct. App. 1995), trans. denied (1996); Monsanto Co. v. Miller, 455 N.E.2d 392, 394 (Ind. Ct. App. 1983)). Specifically, the Peniel court found that a property damage claim brought under the ELA—at least, back when the ELA had no independent limitations provision—was governed by the statute of limitations for property damages. That makes sense, given the nature of the claim. But not every ELA claim is one for property damages. In this case, for example, the Trustees have no proprietary interest in Third Site. The Bankerts do. There is no plausible legal theory under which we might find that the Trustees are suing the Bankerts—who are the only parties with a proprietary interest in Third Site—for damages to the real property at Third Site. Neither the “nature or substance” of this ELA claim shows that it is an action for property Nos. 11-1501 and 11-1523 57 damages, and the property damages limitations period therefore does not apply. Accordingly, the Trustees’ ELA claim is not limited by the statute under which it is brought, since no internal limitations provision existed, and it is not limited by the statute applicable to property damage suits, since it is not a suit for property damages. If the action “is not limited by any other statute[,]” see IND. C ODE § 34-11-1-2(a), then the ten-year catch-all limitations period applies. It makes no difference whether we call the Trustees’ ELA claim a contribution action, or a cost-recovery action, or whether we call it by some other name. By the terms of the Indiana Code, where no other statutory limit exists, the ten-year limitations period applies. That is consistent with the Indiana Supreme Court’s decision to apply the ten-year period to a generic action for the recovery of environmental cleanup costs in Pflanz. See 888 N.E.2d at 758. And, once again, it makes no difference that the claim in Pflanz was nominally brought under the USTA while this one was nominally brought under the ELA. The “nature and substance” controls, and the two claims are alike in nature and substance. The Trustees are suing “not to recover for damages to their own property, but, instead, to allocate liability for the funds spent [ ] to clean up the environmental contamination of the [Bankerts’] property.” Bourbon Mini-Mart, 741 N.E.2d 361. Therefore, “[t]he nature or substance of their claim sounds [nearer] contribution or indemnity, and the general ten-year statute of limitations found at IC 34-11-1-2 applies.” Id. 58 Nos. 11-1501 and 11-1523 The ten-year limitations period for an action to recover cleanup costs incurred as the result of an EPA order did not begin to run “until after the [Trustees were] ordered to clean up the property.” Pflanz, 888 N.E.2d at 759. But the parties’ second dispute concerns the application of that rule. There are multiple cleanup orders in this case, each of which inflicted an injury on the Trustees in the form of a cleanup obligation. The Bankerts latch onto the earliest AOC—issued in 1996 to the Trustees’ predecessors-in-interest, see Cooper, 899 N.E.2d at 734 (“third parties are usually held accountable for the time running against their predecessors in interest[.]”) (quoting Mack v. Am. Fletcher Nat’l Bank & Trust Co., 510 N.E.2d 725, 734 (Ind. Ct. App. 1987))—and argue that the limitations period for any ELA claim with respect to Third Site began to run as soon as possible after its issuance.1 9 The Trustees, of course, disagree. They concede that the limitations period, with respect to an action to recover costs expended pursuant to the 1996 AOC, began to run on February 28, 1998. The Trustees cannot recover for those expenditures, and they are not trying to do so. But they do not believe that has any effect on the limitations period for 19 The Bankerts rightly note that the limitations period for an ELA claim could not begin to run on the date of the 1996 AOC because the ELA was not yet enacted. Accordingly, they argue that it began to run on February 28, 1998, the date the ELA went into effect, instead. This action was not filed until after February 28, 2008, leading the Bankerts to argue that it is therefore untimely. Nos. 11-1501 and 11-1523 59 recovering the costs of the removal actions mandated by the 1999 or 2002 AOCs. We agree with the Trustees. This action was filed on April 1, 2008, and we find that any injury—meaning, in this context, any costs incurred under a cleanup obligation imposed by the EPA—which occurred subsequent to April 1, 1998, is actionable under the ELA and is not time-barred. This plainly includes the damages suffered through compliance with both the 1999 and 2002 AOCs, which is all the damages the Trustees hope to recover. The Bankerts’ argument fails to persuade us for several reasons. First, the cleanup obligations that the Trustees incurred by executing the 1999 and 2002 AOCs simply were not incurred, either explicitly or implicitly, when the respondents to the 1996 AOC agreed to realign Finley Creek. Neither the Trustees, who did not yet exist in that capacity, nor the 1996 respondents, incurred any obligation at that time to engage in removal or remedial efforts at Third Site itself. Generally, parties bringing actions to recover cleanup costs “must wait until after the obligation to pay is incurred, for otherwise the claim would lack the essential damage element.” Pflanz, 888 N.E.2d at 759 (internal citations omitted). It is true, as the Bankerts and the district court observe, that “it is not necessary that the full extent of the damage be known or even ascertainable but only that some ascertainable damage has occurred” for the statute of limitations to be triggered. Doe v. United Methodist Church, 673 N.E.2d 839, 842 (Ind. Ct. App. 1996). But that just means an obligation to pay may be considered an “injury” for statute of limitations purposes even 60 Nos. 11-1501 and 11-1523 before it gives rise to an actual monetary loss. It does not, however, support conflating one obligation with another as though they create the same injury, which is what the Bankerts hope to do. Furthermore, the Bankerts’ argument that the statute of limitations began to run with respect to the Trustees’ obligations under the 1999 and 2002 AOCs before they incurred those obligations would, if applied to other cases, lead to impractical results. What if the EPA’s process had been more drawn out (as is often the case), and the AOCs governing the Third Site cleanup were not issued until 2010, or 2012? According to the argument advanced by the Bankerts, in that case, the statute of limitations would have run entirely on the Trustees’ requests for relief before they had even suffered the damages from which relief might be requested. They would have been legally required to bring their action based on nothing but speculation about what sort of cleanup might be ordered in the future at Third Site, what it might cost, what the present discounted value of those potential future costs might be, etc., or else they would lose their right to bring an action at all. The law does not require such clairvoyance. Furthermore, any action that was filed under such circumstances would raise serious justiciability concerns, thereby putting plaintiffs who have expended their own resources in redressing environmental harms in between a rock and a hard place. That is not a desirable outcome, but under the Bankerts’ understanding of the law it could be a common one. Nos. 11-1501 and 11-1523 61 Finally, before moving on, we note that the Trustees suggested we might certify this issue to the Indiana Supreme Court. In deciding whether certification is appropriate, “the most important consideration guiding the exercise of our discretion is whether we find ourselves genuinely uncertain about a question of state law that is vital to a correct disposition of the case.” Craig v. FedEx Ground Package Sys., Inc., 686 F.3d 423, 429430 (7th Cir. 2012) (citing Cedar Farm, Harrison Cnty., Inc. v. Louisville Gas & Elec. Co., 658 F.3d 807, 812-13 (7th Cir.2011)). “Certification is appropriate when the case concerns a matter of vital public concern, where the issue will likely recur in other cases, where resolution of the question to be certified is outcome determinative of the case, and where the state supreme court has yet to have an opportunity to illuminate a clear path on the issue.” Id. When considering certification, we are mindful of the state courts’ already busy dockets. Id. We also consider several factors when deciding whether to certify a question, including whether the issue “is of interest to the state supreme court in its development of state law.” Id. (citing State Farm Mut. Auto. Ins. Co. v. Pate, 275 F.3d 666, 671 (7th Cir.2001)). We see no reason to certify this question. First, we are not genuinely uncertain about it. While it is not at all a frivolous issue, we are confident in proceeding under the guidance provided by existing Indiana law. Between the settled rule that the nature or substance of an action governs which statute of limitations applies; the fact that this particular action plainly is not one for property damages; and the Indiana Supreme Court’s previous 62 Nos. 11-1501 and 11-1523 application of the ten-year catch-all under substantially similar circumstances, the appropriate resolution is clear. Second, we cannot say this issue concerns a matter of vital public concern. The remediation of environmental hazards is certainly an issue of public concern, but the limitations issues discussed herein have by this time been resolved conclusively by legislative action in Indiana. The limitations period in effect at the time an action is brought governs that action, Connell, 725 N.E.2d at 506, and any future ELA actions will be governed by the independent limitations period legislatively added to the ELA. Accordingly, we can say with certainty that this issue will not reappear in any cases not already pending. Third, the Indiana law question is at most only partially outcome-determinative in this case. To the extent that the ELA claim will allow the Trustees to seek recovery of costs incurred under the 2002 AOC, it is merely duplicative of the CERCLA cost recovery claim we have already reinstated. To the extent that it will allow recovery of costs incurred under the 1999 AOC, it extends farther than the CERCLA claim, but that twist is not enough to offset the lack of genuine concern we have about its resolution, or to independently warrant certification. We move on to Count VIII. III. Count VII: Seeking a Declaratory Judgment Against the Bankerts’ Insurers In Count VII of the Complaint, the Trustees seek a declaratory judgment that each of the insurer defendants are obligated to provide insurance coverage, subject to Nos. 11-1501 and 11-1523 63 their respective policy limits, for any liabilities owed by their policy holders to the Trustees. After dismissing Counts I through V on statute of limitations grounds, the district court asked the Trustees and the insurers to report on the status of Count VII. All parties agreed it was moot. Obviously, in light of our reinstatement of the CERCLA and ELA claims, that conclusion is no longer warranted. Count VII is not moot, and we proceed to a consideration of Auto Owners’s conditional cross-appeal. AUTO OWNERS’S CROSS-APPEAL Auto Owners Mutual Insurance Company is one of the Bankerts’ former insurers, targeted by the Trustees in Count VII of the Complaint. Early in this litigation, Auto Owners filed a motion to dismiss Count VII on res judicata and/or issue preclusion grounds. Auto Owners previously litigated several of the insurance policies in question during the Enviro-Chem Site cleanup in the 1980s and obtained relief in the form of a consent decree and a default judgment. As a result, Auto Owners believes the present claim against it is precluded. The district court treated the motion as one for summary judgment and denied it. To the extent that Auto Owners prevailed regardless when Count VII was dismissed as moot, the final judgment in the case was a favorable one. But they filed a conditional cross-appeal to hedge against a possible reversal, challenging the district court’s adverse finding on the preclusion issue. The Trustees responded by challenging the procedural propri64 Nos. 11-1501 and 11-1523 ety of the cross-appeal and, in the alternative, by arguing that the district court reached the correct result. Because we have reinstated the CERCLA, ELA, and declaratory judgment claims originally dismissed in the district court’s final judgment, we now reach Auto Owners’s conditional cross-appeal.