29,379 La.App. 2 Cir. 4/11/97, Morris & Dickson Co., Inc. v. Jones Brothers Co., Inc.
| Decision Date | 11 April 1997 |
| Citation | 691 So.2d 882 |
| Parties | 29,379 La.App. 2 Cir |
| Court | Court of Appeal of Louisiana — District of US |
Simon, Peragine, Smith & Redfearn by Denise C. Puente, Daniel J. Caruso, and J. Thomas Hamrick, Jr., for Defendants-Appellants.
Taylor, Porter, Brooks & Phillips by Tom F. Phillips, for Plaintiff-Appellee.
Before NORRIS, HIGHTOWER and CARAWAY, JJ.
Conceding in this appeal the issue of its liability for a leaking underground gasoline storage tank, defendant, Jones Brothers Company, Inc. ("Jones"), appeals a jury verdict in favor of the plaintiff, Morris & Dickson Company, Ltd. ("M & D"), rearguing primarily that plaintiff's claims have prescribed. Additionally, Jones seeks review of the award for damages and interest and disputes the plaintiff's claim for attorney fees pursuant to the "Citizen Suits" provisions of La.R.S. 30:2026 of the Department of Environmental Quality Act, La.R.S. 30:2001 et seq. For the reasons stated hereinbelow, we affirm in part and reverse in part the rulings below and render judgment accordingly.
The Morris & Dickson Company, Ltd. is a wholesale distributor of pharmaceutical products located in Shreveport, Louisiana. In 1984, the company moved from downtown Shreveport to a newly constructed location south of town. M & D, the owner of the new premises, acted as its own general contractor in building the new facility, obtaining a building permit and contracting with other contractors to perform the various aspects of the job.
M & D wanted to provide a gasoline fueling facility for its fleet of delivery trucks. Toward this end, M & D sought a proposal from Jones to furnish and install two underground storage tanks (hereinafter "UST") with appurtenances that would allow M & D to fuel the delivery trucks. A proposal was submitted by Jones and accepted by M & D with certain modifications. These modifications addressed, among other things, the digging of the sites for the tanks by another contractor selected by M & D. According to testimony by M & D's president, Skipper Dickson, Jones was to provide its knowledge and expertise to M & D for the design, safety features, permits and the regulation compliance for the tank facility, and was to furnish the gasoline system and supervise its installation. The final invoices and other pertinent documents in the record indicate that total charge for goods and services supplied by Jones to M & D was $10,492. The sales price of the tanks and appurtenances was $5,806, indicating that the services provided by Jones were $4,686, or roughly 45% of the total invoice.
The two tanks, one with 4000 gallon capacity and the other with 6000 gallon capacity, were installed in 1984. The tanks were shaped in the form of large, horizontal cylinders with flat, vertical ends. As agreed, M & D contracted some of the excavation and installation work itself, with Jones overseeing all of the work and performing other installation aspects of the job, which was performed from late February until April.
In early 1987, M & D realized that problems it had recently experienced with its fleet of trucks indicated that there was water in the gas coming from their storage tanks. M & D contacted Jones in early February regarding the problem. An employee from Jones discovered 5 1/2 inches of water accumulated in the 4000 gallon tank. The water was pumped out of the tank by Jones. Problems with the water continued. The same problem occurred in subsequent months into 1988. The source of the water was unknown and according to M & D, Jones came on a regular basis to fix the problem and kept attempting to find the source of the problem. Eventually, in December of 1988, a leakage test known in the industry as a petrotite test was attempted on the 4000 gallon tank. The test was aborted, however, when it was ascertained that the tank or the system could not hold the requisite test pressure, which indicated a substantial leak in the tank or appurtenances.
In February, 1989, M & D and Jones decided to jointly dig the 4000 gallon tank out of the ground. Present at the time of the tank's removal was an inspector from the Louisiana Department of Environmental Quality ("DEQ"). A 1/2-inch hole was discovered in an area of corrosion near the top of one of the ends of the tank. It was also found that there had been groundwater contamination which would require remediation. On March 16, 1989, the DEQ issued an order to M & D to begin steps to clean up the site.
The hole in the tank was apparently caused by corrosion. The question was why the corrosion occurred so rapidly, perforating the tank in three years, when the life expectancy of such a tank is usually 20 to 30 years, but a very minimum of 10 years. Evidence presented at trial questioned whether the cause of the hole in the tank was due to either the failure to install anodes for "cathodic" protection 1 against corrosion, installation of inadequate anodes, the failure to seal the tank with a mastic substance such as asphalt, mechanical damage to the tank, highly corrosive soil, or some, none, or all of the above.
Mr. Kevin Garrity, an engineer testifying for M & D as an expert in corrosion of underground tanks, viewed the tank in 1993, some 4 years after it had been excavated from the ground, and after it had been cleaned up and transformed into an above-ground tank. He testified that there was no evidence of the protective coating present on the tank that is typically applied to prevent corrosion in underground tanks. He also testified that he did not see evidence of a cad-weld on the outside of the tank. Although he could not pinpoint the exact cause for the problem and expressed surprise at the extent of the corrosion arising in only three years of underground use, he concluded that the hole was caused either by the absence of cathodization or the improper installation of anodes coupled with mechanical damage to the tank at the place where the hole developed.
Testimony also showed that the soil at the site was highly corrosive. With such soil, M & D argued that the installation of the 17 pound anodes used, coupled with other circumstances, would have been insufficient to provide cathodic protection against corrosion.
Jones contends that it properly installed magnesium anodes to the tanks to provide the requisite cathodic protection. It presented the testimony of William "Bill" Jones, Jr., vice-president, and John Hodges, an employee of 27 years, that they together installed the anodes on the tanks using a cad-weld. Bill Jones also testified that the tanks had a black asphalt mastic coating. Hodges, now retired, corroborated Jones' testimony describing in detail the removal of the mastic coating on the tank to perform the cad-weld. Additionally, Daryl Guyton, the salesman for Jones who negotiated the deal with M & D, testified that M & D's Mark Dickson wanted four magnesium anodes for cathodic protection, but did not specify the size. Guyton discussed the proper size with a Dr. Greco of F.W. Corrosion Company where later Jones purchased the anodes.
Following removal of the tank and the March 16, 1989 order from DEQ, M & D retained Southern Services to propose to the DEQ a plan of remediation. The plan was tentatively approved by DEQ on March 14, 1991 and ultimately involved the pumping of groundwater from four wells in the area around the tank site into an aerator to strip it of the gasoline and then discharge it into a filtration gallery. The pumping began in 1992. CK Associates replaced Southern Services in 1993 as M & D's environmental contractor.
M & D filed suit in August of 1991 against Jones and its insurer, Commercial Union Insurance Company, alleging that Jones improperly installed the tanks by failing to provide cathodic protection. Jones filed a peremptory exception of prescription alleging that the claim sounded in tort and had prescribed under the one-year prescription. The exception was overruled, and thereafter, the litigation evolved with the parties' contract being the primary focus of the dispute. Jones has renewed its exception of prescription on this appeal, claiming as it did at trial that the agreement was a contract of sale and that the plaintiff's claim is subject to the one-year liberative prescription applicable to claims for redhibitory defects.
The jury trial held in January of 1996 resulted in a verdict in favor of M & D. In reaching the verdict the jury was presented with the following special interrogatories in an apparent effort to address the issue of the nature of the contract and its breach:
The jury awarded damages in the amount of $142,000 for all prior costs expended by M & D, including the remediation cost for the wells, pumps and groundwater filtration system and the costs of monitoring the system and semi-annually reporting to the DEQ through the time of trial. Jones does not appeal this award of the actual costs through trial.
Additionally, the jury awarded $182,400 as the cost of future remediation. This amount was based upon the testimony of Mr. Gary Fulton of CK Associates, who was accepted as an expert in...
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