Minyard Enterprises v. S. Chemical & Solvent Co.

• Decision Date: 27 January 1999
• Docket Number: Nos. 98-1207,98-1264,s. 98-1207
• Parties: (4th Cir. 1999) MINYARD ENTERPRISES, INCORPORATED; JBAND CR, INCORPORATED, Plaintiffs-Appellees, v. SOUTHEASTERN CHEMICAL & SOLVENT COMPANY, Defendant-Appellant, and PEE DEE TANK COMPANY, Defendant. MINYARD ENTERPRISES, INCORPORATED; JBAND CR, INCORPORATED, Plaintiffs-Appellants, v. SOUTHEASTERN CHEMICAL & SOLVENT COMPANY, Defendant-Appellee, and PEE DEE TANK COMPANY, Defendant. Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 373

184 F.3d 373 (4th Cir. 1999)

MINYARD ENTERPRISES, INCORPORATED; JBAND CR, INCORPORATED, Plaintiffs-Appellees, v. SOUTHEASTERN CHEMICAL & SOLVENT COMPANY, Defendant-Appellant, and PEE DEE TANK COMPANY, Defendant. MINYARD ENTERPRISES, INCORPORATED;

JBAND CR, INCORPORATED, Plaintiffs-Appellants, v. SOUTHEASTERN CHEMICAL & SOLVENT COMPANY, Defendant-Appellee, and PEE DEE TANK COMPANY, Defendant.

Nos. 98-1207, 98-1264

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: January 27, 1999

Decided: July 13, 1999

Amended: August 9, 1999

Appeals from the United States District Court for the District of South Carolina, at Greenville. Henry M. Herlong, Jr., District Judge; William M. Catoe, Jr., Magistrate Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] COUNSEL ARGUED: David Wegner Burchmore, SQUIRE, SANDERS & DEMPSEY, L.L.P., Cleveland, Ohio, for Appellant. William Alexander Coates, LOVE, THORNTON, ARNOLD & THOMASON, P.A., Greenville, South Carolina; William Henry Thomas, III, WILLIAM H. THOMAS, III, P.A., Greenville, South Carolina, for Appellees. ON BRIEF: Van Carson, SQUIRE, SANDERS & DEMPSEY, L.L.P., Cleveland, Ohio; Knox L. Haynsworth, III, Chris B. Roberts, BROWN, MASSEY, EVANS, MCLEOD & HAYNSWORTH, P.A., Greenville, South Carolina, for Appellant.

Before WIDENER, MURNAGHAN, and HAMILTON, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Hamilton wrote the opinion, in which Judge Widener and Judge Murnaghan joined.

OPINION

HAMILTON, Circuit Judge:

Minyard Enterprises, Inc. (Minyard) and JB & CR, Inc. (JB & CR) (collectively the Plaintiffs) are the past and present owners, respectively, of a parcel of land (the Property) located on Laurens Road in Greenville, South Carolina. For years, Minyard operated an automobile dealership (the Dealership), including an automobile body and paint shop, on the Property. Prior to the time Minyard sold the Property to JB & CR in July 1992, the Property became environmentally contaminated.

Believing that on November 22, 1988, Southeastern Chemical & Solvent Company (Southeastern) caused the contamination by negligently removing an underground storage tank located on the Property, which contained, inter alia, paint thinner that had been used in the automobile body and paint shop, Minyard filed the present action against Southeastern on October 18, 1994, in the United States District Court for the District of South Carolina. The complaint alleged a cause of action pursuant to § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), see 42 U.S.C. § 9607(a), and several causes of action pursuant to South Carolina common law. JB & CR joined the suit a short time thereafter as a plaintiff.

Pursuant to § 107(a) of CERCLA, the Plaintiffs sought to recover their costs in obtaining several environmental assessments, plus prejudgment interest, as well as a declaratory judgment for reimbursement of all future costs to remediate the property (i.e., Response Costs). Minyard also sought damages from Southeastern for diminution in value of the Property under, inter alia , breach of contract and negligence theories under South Carolina common law.¹

Following a bench trial, the magistrate judge² found Southeastern and the Plaintiffs were responsible parties for the contamination under § 107(a) of CERCLA, but apportioned past and future Response Costs among them pursuant § 113(f) of CERCLA. See 42 U.S.C. § 9613(f). In this regard, the magistrate judge entered judgment in favor of the Plaintiffs for $42,817.58, representing eighty percent of the past Response Costs, and, as yet, an undetermined amount, representing eighty percent of the future Response Costs. The magistrate judge also found that Minyard and JB & CR were each responsible for ten percent of past and future Response Costs. With respect to Minyard's negligence and breach of contract claims, the magistrate judge found in favor of Minyard and awarded it $200,000, representing the diminished value of the Property.

On appeal, Southeastern challenges as clearly erroneous the magistrate judge's finding that it ruptured an underground storage tank while removing a system of underground storage tanks from the Property, thus proximately causing the Property to become environmentally contaminated. According to Southeastern, because there is no credible evidence that it ruptured the underground storage tank, the judgment with respect to Minyard's negligence claim must be reversed. Southeastern also contends that the magistrate judge erred in determining that in rupturing one of the underground storage tanks, it breached a contractual duty it owed Minyard not to damage the Property. Accordingly, Southeastern seeks reversal of the judgment with respect to Minyard's breach of contract claim. Southeastern also contends that Minyard's negligence and breach of contract claims are barred by the statute of limitations. Further, Southeastern contends that if we affirm the magistrate judge's finding of liability with respect to Minyard's negligence and breach of contract claims, we must vacate the magistrate judge's $200,000 award in connection with those claims as duplicative of his award pursuant to CERCLA.

Moreover, Southeastern contends the magistrate judge erred in holding it liable for contribution for Response Costs pursuant to § 113(f) of CERCLA, because while the Plaintiffs expressly alleged a cause of action for recovery of all Response Costs pursuant to § 107(a) of CERCLA, they did not expressly seek contribution among potentially responsible parties pursuant to § 113(f) of CERCLA in their complaint. In the alternative, Southeastern seeks vacatur of the judgment with respect to the damages portion of the Plaintiffs' contribution claim pursuant to § 113(f) of CERCLA and a remand for the magistrate judge to reapportion costs with respect to that claim, asserting that the magistrate judge, in apportioning costs, improperly placed the burden of proving the appropriate apportionment of costs on Southeastern instead of on the Plaintiffs.

Minyard cross-appeals, claiming the magistrate judge erred in not awarding it $2,375,000, which it claims represents the full amount owed to it for diminution in value of the Property. For reasons that follow, we affirm in part, vacate in part, and remand for further proceedings consistent with this opinion.

I

Prior to December 1986, Minyard's predecessors-in-interest owned the Dealership and the Property.³ In 1977, Minyard Sr., on behalf of the Dealership, entered into an agreement with Southeastern for it to install, lease, supply, and maintain an underground storage tank system, known as the Transchem System, on the Property.⁴ The Transchem System consisted of four tanks installed five feet underground. Non-chlorinated solvents, supplied by Southeastern, were stored in three of the tanks and were transported from the tanks to the Dealership's automobile body and paint shop where they were dispensed and used as paint thinner.⁵ Used paint thinner was collected and returned to the fourth tank, known as the waste tank, via an underground pipe.

In the early 1980s, the Dealership discontinued purchasing paint thinner solvents from Southeastern. It continued, however, until late 1984 or early 1985 to use the Transchem System as a waste receptacle for solvents obtained from other vendors.⁶ On June 6, 1984, the Dealership, through its employee, Tommy Carson, asked Southeastern to remove the Transchem System, which it failed to do at that time. The request was repeated in May 1986 to no avail.⁷

In December 1986, Minyard Enterprises, Inc. (Minyard) became the owner of the Dealership and the Property. Thereafter, Southeastern continued to maintain the Transchem System for Minyard. Nearly two years later, on November 22, 1988, Southeastern ruptured one of the Transchem System tanks while attempting to unearth it for removal of the entire Transchem System from the Property. ⁸ The rupture of the tank resulted in the Property becoming environmentally contaminated, although Minyard did not become aware of the contamination for some time.

In 1991, William Bradshaw (Bradshaw) contracted to purchase the Dealership from Minyard. Additionally, Bradshaw separately contracted to purchase the Property for $4,000,000 contingent upon his receiving complete financing for the purchase price plus $200,000 to finance property improvements from South Carolina National Bank (SCNB). Bradshaw's purchase of the Property was also contingent upon the Property being certified as free of environmental contamination. Bradshaw also entered into an agreement with Minyard for Bradshaw to manage the Dealership and the Property pending the closing of the contracts. Thereafter, Bradshaw retained a company named Law Engineering to perform an environmental assessment of the Property. Law Engineering identified potential environmental problems with the Property and recommended that all improper waste disposal be reported to the South Carolina Department of Health and Environmental Control (DHEC). Bradshaw then retained the services of Alan Lehocky (Lehocky), a hydrologist, to conduct a further environmental assessment of the Property. Minyard agreed to pay the costs of Lehocky's assessment. Lehocky recommended sampling the locations of three former underground storage tank systems on the Property, including the former location of the Transchem System. Lehocky took the first samples from monitoring wells in the former location of the Transchem System on October 18, 1991. Those samples revealed the presence of volatile organic hydrocarbon contamination. Additional sampling indicated the presence of both chlorinated and nonchlorinated chemicals in the former location of the Transchem System.

Lehocky submitted a preliminary study to SCNB, in which Lehocky outlined the findings of his environmental assessment of the Property. In...