Court Opinion

ID: 2735261
Source: CourtListenerOpinion
Date Created: 2014-09-20 01:10:38.463327+00
Date Added: 2024-06-11T11:05:30.675402
License: Public Domain

Sep 19 2014, 10:32 am
FOR PUBLICATION

ATTORNEYS FOR APPELLANT:                      ATTORNEYS FOR APPELLEE:

N. REED SILLIMAN                              GREGORY P. CAFOUROS
KAREN T. MOSES                                JENNIFER L. WATT
Faegre Baker Daniels, LLP                     Kroger Gardis & Regas, LLP
Fort Wayne, Indiana                           Indianapolis, Indiana

                             IN THE
                   COURT OF APPEALS OF INDIANA

JDN PROPERTIES, LLC.,                         )
                                              )
      Appellant-Plaintiff,                    )
                                              )
             vs.                              )    No. 43A05-1312-PL-586
                                              )
VANMETER ENTERPRISES, INC.,                   )
                                              )
      Appellee-Defendant.                     )

                   APPEAL FROM THE KOSCIUSKO CIRCUIT COURT
                        The Honorable Michael W. Reed, Judge
                             Cause No. 43C01-1101-PL-2

                                  September 19, 2014

                             OPINION - FOR PUBLICATION

BARNES, Judge
                                      Case Summary

       JDN Properties, LLC, (“JDN”) appeals the trial court’s grant of summary judgment

in favor of VanMeter Enterprises, Inc. (“VEI”). We reverse and remand.

                                            Issue

       The sole restated issue before us is whether there is any evidence VEI caused or

contributed to ground pollution in land that VEI sold JDN, as required to support JDN’s

claim against VEI under Indiana’s Environmental Legal Actions (“ELA”) statute.

                                            Facts

       In 1983, Farm Tech, Inc., sold land to VEI located in Warsaw. J. Brock VanMeter,

Sr., was the president of Farm Tech as well as the sole shareholder, director, and

incorporator of VEI. After sale of the property, VEI leased the land back to Farm Tech;

Farm Tech then conducted its business operations on the site. The property contained two

250-gallon underground storage tanks (“USTs”) for petroleum heating fuel.

       Sometime between 1988 and 1991, VanMeter, Sr., hired Thomas Moore to redirect

underground water lines serving Farm Tech’s facility away from a well located near the

USTs, close to the southeast corner of the land’s primary structure, to a different well on

the property. VanMeter, Sr., told Moore that he had noticed a significant drop in the USTs

fuel oil levels that could not be attributed to the facility’s heating oil usage and that water

drawn from the well was so contaminated with petroleum as to be unusable. While moving

the water lines, Moore observed that fuel from the USTs had leaked into and saturated the

surrounding soil.

                                              2
       VanMeter, Sr., died in 1994, and all of his stock in VEI was transferred to his estate.

His son, J. Brock VanMeter, Jr., was named executor of the estate. VanMeter, Jr., had not

been involved in the business operations of Farm Tech or VEI. In 1995, VEI sold the

Warsaw property to James and Daisy Nicholas. At that time, VanMeter, Jr. filled out an

environmental disclosure form and signed it on behalf of VEI. In it, VanMeter, Jr., stated

that USTs previously had been located on the property but had since been removed, which

was true. VanMeter, Jr., also indicated that there had never been a situation at the site

“which resulted in a reportable ‘release’ of any hazardous substances or petroleum as

required under state or federal laws[.]” App. p. 52. Additionally, VEI’s corporate records

failed to mention any petroleum leakage on the property. The Nicholases purchased the

property without conducting environmental testing of the land.

       In 2009, the Nicholases formed JDN, and they transferred title to the Warsaw

property to that entity. JDN, in turned, leased the property to a company that performed

soil testing of the land. That testing revealed the presence of petroleum contamination in

the ground located near the southeast corner of the primary structure on the land. JDN paid

$67,479.69 in pollution remediation costs, plus attorney fees.

       JDN sued VEI in a three-count complaint. The first count alleged breach of

contract; the second count alleged fraudulent inducement; and the third count stated a claim

under the ELA. JDN moved for summary judgment as to all three counts. VEI responded

with a cross-motion for summary judgment as to all three counts. The trial court denied

both parties’ motions for summary judgment as to counts 1 and 2 but granted summary

judgment to VEI as to count 3, the ELA claim. The trial court entered findings and

                                              3
conclusions with its order. JDN subsequently sought dismissal with prejudice of counts 1

and 2 of its complaint. The trial court granted this motion, thus making the granting of

summary judgment in VEI’s favor on the ELA claim final and appealable. JDN now

appeals.

                                         Analysis

       We review the granting of a motion for summary judgment using the same standard

as the trial court. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012). A party moving for

summary judgment must make a prima facie showing that there are no genuine issues of

material fact and that it is entitled to judgment as a matter of law.                    Id.

“Summary judgment is improper if the movant fails to carry its burden, but if it succeeds,

then the nonmoving party must come forward with evidence establishing the existence of

a genuine issue of material fact.” Id. We will construe all factual inferences in the non-

moving party’s favor and resolve any doubts as to the existence of a material issue of fact

against the moving party. Id. Our standard of review is not altered when parties file cross-

motions for summary judgment. Decker v. Zengler, 883 N.E.2d 839, 842 (Ind. Ct. App.

2008), trans. denied. “Instead, we must consider each motion separately to determine

whether the moving party is entitled to judgment as a matter of law.” Id. Also, in the

summary judgment context, a trial court’s entry of findings of fact and conclusions thereon

does not alter our de novo standard of review; such findings and conclusions merely aid

our review by providing us with a statement of the reasons for the trial court’s decision.

Id.

                                             4
        JDN elected to pursue recovery from VEI under the ELA.1 The legislature enacted

the ELA statutes in order “to shift the financial burden of environmental remediation to the

parties responsible for creating contaminations.” Cooper Industries, LLC v. City of South

Bend, 899 N.E.2d 1274, 1284 (Ind. 2009). The goals of the ELA are enforced through the

following statute:

                A person may, regardless of whether the person caused or
                contributed to the release of a hazardous substance or
                petroleum into the surface or subsurface soil or groundwater
                that poses a risk to human health and the environment, bring
                an environmental legal action against a person that caused or
                contributed to the release to recover reasonable costs of a
                removal or remedial action involving the hazardous substances
                or petroleum.

Ind. Code § 13-30-9-2.

        The central focus of this case is whether there is any evidence that VEI caused or

contributed to the petroleum contamination discovered on the land.2 The phrase “caused

or contributed” is not defined by statute, and we must give those words their plain and

ordinary meaning. Reed, 980 N.E.2d at 289. “Each term of the phrase ‘caused or

contributed’ requires some involvement by the actor which produces a result.”                           Id.

Standard English dictionaries may also be consulted in determining the meaning of this

phrase. Id. A standard dictionary definition of “cause” is “‘a person, thing, fact, or

condition that brings about an effect or that produces or calls forth a resultant action or

1
 In cases of pollution caused by USTs, a party may file a claim under either the ELA or the specific statute
governing USTs, Indiana Code Section 13-23-13-8. However, a party must choose which statute to proceed
under and cannot pursue recovery under both. Ind. Code § 13-30-9-6.
2
  There is no contention in this case that the petroleum leakage did not “pose[] a risk to human health and
the environment” as required to impose remediation liability under the ELA.

                                                     5
state.’” Id. at 289 n.10 (quoting WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY

356 (2002 ed.)). “Among other things, ‘contribute’ means ‘to act as a determining factor;

share responsibility for something.’” Id. (quoting AMERICAN HERITAGE DICTIONARY OF

THE ENGLISH   LANGUAGE 290 (1981 ed.)). Our goal when construing the phrase “cause or

contribute” should be to hold accountable all parties “responsible for creating

environmental contaminations.” Neal v. Cure, 937 N.E.2d 1227, 1234 (Ind. Ct. App.

2010), trans. denied.

       In Neal, this court addressed the circumstances under which a landlord may be held

liable under the ELA for environmental contamination caused by a tenant. We held that

the ELA does not permit actions against landlords “who ‘[b]y all counts . . . were not

involved in the alleged release of hazardous substances and had no knowledge of the

release.’” Id. (quoting City of Martinsville v. Cure, 2006 WL 2710628 (S.D. Ind. 2006)).

In Neal, there was no evidence the landlords had any knowledge that their tenant was

contaminating the ground with a toxic chemical; thus, we affirmed the grant of summary

judgment in the landlords’ favor on an ELA claim brought against them. Id.

       VEI does not dispute Neal’s holding, but contends there is no designated evidence

either that it was involved with the petroleum pollution discovered in 2009 or that it had

any knowledge of any such pollution when the property was sold in 1995. It notes that

VEI was merely the landlord of the property and that VanMeter, Sr., was acting on behalf

of the tenant, Farm Tech, when he hired Moore to move the water lines on the property.

VEI also argues that Moore’s recollection of what VanMeter, Sr., told him in the late 1980s

                                            6
or early 1990s does not establish that the petroleum leakage occurred during VEI’s

ownership of the land or that VanMeter, Sr., even definitively knew about a leakage.3

        We first conclude that the designated evidence creates a genuine issue of fact as to

whether VanMeter, Sr., was aware of a petroleum leakage on the property. The reason

VanMeter, Sr., hired Moore was because the well from which Farm Tech was drawing

water was too contaminated with petroleum to be usable. That well was located in close

proximity to the USTs, and VanMeter, Sr., wanted water to be drawn from a different well

away from the USTs. VanMeter, Sr., also was aware that the fuel levels in the USTs were

decreasing faster than should have been expected from normal usage. This evidence

permits a reasonable inference that VanMeter, Sr., had actual knowledge that the USTs

were leaking petroleum into the ground.

        Furthermore, although VanMeter, Sr., technically was acting on behalf of Farm

Tech when he hired Moore, his knowledge of the petroleum leakage can be imputed to

VEI.    We need not delve into whether VEI and Farm Tech were merely alter ego

corporations, and whether the acts of one of the businesses could be imputed to the other.

It is sufficient to say that when a sole shareholder or incorporator of a corporation has

knowledge of facts, the corporation also may be deemed to have knowledge of such facts.

See Wathen v. Greencastle Skate Place, Inc., 606 N.E.2d 887, 891 (Ind. Ct. App. 1993).

3
  Moore signed an affidavit regarding his recollection of the work he did for VanMeter, Sr., and what
VanMeter, Sr., told him. During the summary judgment hearing, the trial court questioned whether Moore’s
recollection of what VanMeter, Sr., had said to him was inadmissible hearsay. However, VEI never moved
to strike Moore’s affidavit, nor does it argue on appeal that it should have been stricken. Also, after the
hearing JDN filed a brief addressing the trial court’s hearsay concerns. In its summary judgment order, the
trial court gave no indication that it was sua sponte striking Moore’s affidavit or any part of it. Thus, we
will consider the full contents of Moore’s affidavit.

                                                     7
Because VanMeter, Sr., was the sole shareholder and director and incorporator of VEI, it

is reasonable to impute his alleged knowledge of the petroleum leakage to VEI.

       VEI also contends there is a lack of evidence that the petroleum leakage discovered

in 2009 occurred sometime between 1983 and 1995, when VEI owned the property. We

again disagree. VEI seems to fault JDN for failing to prove with certainty when the

petroleum leakage occurred. Our supreme court addressed a very similar argument in Reed

and rejected it as a proper basis for granting summary judgment against a party pressing a

claim under the ELA. In that case, the defendant, a steel manufacturer, argued that it was

entitled to summary judgment because the plaintiff had failed to prove that hazardous

substances on the plaintiff’s property had come from the defendant’s factory. The court

disagreed, holding that the defendant had the burden of demonstrating as a matter of law

that the hazardous substances originated from a source other than the factory in order to be

entitled to summary judgment, and it had failed to do so. Reed, 980 N.E.2d at 287.

       Here, VEI suggests, as did the trial court, that VanMeter, Jr.’s, lack of personal

knowledge of any petroleum leak on the property, along with the failure of VEI’s corporate

documents to mention any such leakage, imposed a requirement upon JDN to submit

conclusive proof that such a leak occurred during VEI’s ownership of the property. For

purposes of VEI’s summary judgment motion, however, JDN did not have to submit such

conclusive proof. It only had to designate evidence creating a genuine issue of material

fact, and it did so. Viewing the designated evidence in a light most favorable to JDN, it

would be reasonable to infer that the leakage of which VanMeter, Sr., and Moore were

aware occurred near in time to their direct and indirect observations of the leakage, during

                                             8
the late 1980s or early 1990s. VanMeter, Jr.’s lack of personal knowledge of any leak and

the silence of VEI’s corporate documents is not proof as a matter of law that there was no

leak during that time frame.

      We also disagree with VEI’s suggestion that there is no evidence the petroleum leak

discovered in 2009 was in the same location as where the USTs were located. Moore’s

description of where the USTs were located and where he observed the petroleum leakage

precisely matches where the contamination was discovered in 2009: near the southeast

corner of the land’s primary structure. This certainly is enough to create a reasonable

inference that the contamination discovered in 2009 was in the same place as where the

USTs were located and was the same contamination Moore observed.

      In light of the conflicting designated evidence in this case, it is consistent with the

purposes of the ELA to permit JDN’s suit against VEI to move forward. The evidence

most favorable to JDN is that VEI, as a landlord, presumably received rents from Farm

Tech while being fully aware that Farm Tech’s use of the property was causing petroleum

contamination in the ground. We conclude that a landlord who has knowledge that a

tenant’s use of land is causing environmental contamination, but does nothing to halt or

remediate such contamination and goes on to sell that property to a third party without

disclosing the property’s condition, may fairly be said to “share responsibility” for or

contribute to such contamination. See Reed, 980 N.E.2d at 289 n.10. The ELA clearly

was intended to broaden the avenues for purchasers of property to recoup hazardous waste

remediation costs and to shift the costs of such remediation onto those who were in the

better position to prevent or alleviate the pollution. As between JDN and VEI, VEI was in

                                             9
the better position to do so. This is not to say that Farm Tech could not also be liable under

the ELA as a party causing or contributing to the pollution. See Peniel Group, Inc. v.

Bannon, 973 N.E.2d 575 (Ind. Ct. App. 2012) (addressing ELA lawsuit brought by landlord

against tenant who allegedly contaminated property), trans. denied. But Farm Tech’s

potential liability does not preclude VEI’s liability. The ELA does not require a plaintiff

to sue the person who caused or contributed to pollution, just a person. See I.C. § 13-30-

9-2.

           To the extent VEI implies that a party seeking recovery under the ELA must prove

that a defendant both caused or contributed to pollution and had knowledge of such

pollution,4 the plain language of the statute does not require both. Rather, we believe

knowledge of pollution is one way in which an owner of land may be held liable under the

ELA for causing or contributing to hazardous pollution, under circumstances like those

present here. Because there are genuine issues of material fact as to whether VEI had actual

knowledge of petroleum contamination caused by its tenant, whether such contamination

occurred during VEI’s ownership of the land and whether the contamination discovered in

2009 was the same contamination discovered between 1988 and 1991, it was improper to

grant VEI’s motion for summary judgment.5

           Conversely, we reject JDN’s claim that it is entitled to summary judgment in its

favor. The evidence we have described is conflicting as to whether VEI had knowledge of

4
    VEI’s brief is not clear on this point.
5
    VEI does not argue alternative theories upon which the grant of summary judgment could be affirmed.

                                                    10
a petroleum leak occurring during its ownership of the land. Thus, there are genuine issues

of material fact still to be resolved as to whether VEI caused or contributed to the petroleum

contamination and a grant of summary judgment in JDN’s favor would be inappropriate.

                                        Conclusion

       There are genuine issues of material fact in this case regarding whether VEI caused

or contributed to the ground contamination discovered by JDN in 2009. We reverse the

grant of summary judgment in favor of VEI on JDN’s claim under the ELA and remand

for further proceedings.

       Reversed and remanded.

FRIEDLANDER, J., and MATHIAS, J., concur.

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