624 F.2d 1384 (5th Cir. 1980), 78-3006, City of Jackson, Miss. v. Filtrol Corp.

Docket Nº:78-3006.
Citation:624 F.2d 1384
Party Name:CITY OF JACKSON, MISSISSIPPI, a Municipal Corporation, Plaintiff-Appellant, United States of America, Plaintiff-Intervenor-Appellant, v. FILTROL CORPORATION, a Delaware Corporation, Defendant-Appellee.
Case Date:August 29, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1384

624 F.2d 1384 (5th Cir. 1980)

CITY OF JACKSON, MISSISSIPPI, a Municipal Corporation,

Plaintiff-Appellant,

United States of America, Plaintiff-Intervenor-Appellant,

v.

FILTROL CORPORATION, a Delaware Corporation, Defendant-Appellee.

No. 78-3006.

United States Court of Appeals, Fifth Circuit

August 29, 1980

Page 1385

Brunini, Grantham, Grower & Hewes, Newt P. Harrison, Lawrence E. Allison, Jr., Howard C. Ross, Jr., City Atty., Jackson, Miss., for plaintiff-appellant.

Page 1386

Robert E. Hauberg, U. S. Atty., L. K. Travis, Asst. U. S. Atty., Jackson, Miss., Joshua I. Schwartz, Carl Strass, Atty., James W. Moorman, U. S. Dept. of Justice, Land & Natural Resources Div., Washington, D.C., for plaintiff-intervenor-appellant.

Watkins & Eager, William E. Suddath, Jr., John L. Low, IV, Jackson, Miss., for defendant-appellee.

Appeals from the United States District Court for the Southern District of Mississippi.

Before BROWN, HENDERSON and SAM D. JOHNSON, Circuit Judges.

SAM D. JOHNSON, Circuit Judge:

This is an appeal from a diversity case, Mississippi law controlling, brought by the City of Jackson, Mississippi (the City) against Filtrol Corp. for additional costs that the City incurred in constructing a sewer line on its right-of-way over Filtrol's property and some property adjacent to Filtrol's. 1 The City alleged that it incurred these additional costs because Filtrol had contaminated its property and the adjacent property with a concentration of sulfuric acid high enough to corrode ordinary cement sewer pipes. At the close of the City's evidence, the district court directed a verdict for Filtrol on a variety of grounds.

I. The Facts

In 1936 Filtrol began operations at its Jackson plant to process bentonite clay into a powder that it used to purify petroleum and vegetable oils. As a part of the process, the clay is washed in a sulfuric acid bath. After the sulfuric acid bath, a water bath removes the acid from the clay. The water bath produces an effluent that is ninety-five percent water, four percent electrolytes, and one percent sulfuric acid.

In 1943 Filtrol built several concrete ponds on property that it owned outside the Jackson City Limits. Filtrol used these ponds to hold the effluent from the water bath when the water level of the nearby Pearl River was low. Filtrol would discharge the effluent from the Ponds when the river's level rose high enough that the discharge of effluent would not significantly lower the river's pH. 2 The City produced evidence at trial that one of the Filtrol ponds, Pond No. 4, began to leak on the first day in 1943 that Filtrol channeled effluent into it. The pond leaked at a very slow rate, but for a long period of time. Sometime around 1954 or 1955, the area where the City eventually laid its sewer pipe became so contaminated with acid that its pH was only 2.5.

In 1960, the City began an area wide sewage treatment project that required the construction of a 96 inch diameter concrete collector pipeline. This pipeline is called an interceptor line because it was designed to travel along the Pearl River and intercept all the other lines that had dumped raw sewage into the river. The interceptor line was designed to be gravity fed so it had to follow the downhill contours of the area topography. These downhill contours dictated that the pipe go through Filtrol's property and some adjacent property belonging to the Ridgeway family.

In 1971, twenty-eight years after Filtrol's Pond No. 4 began to leak and seventeen years after the subsoil in the area had already become contaminated with sulfuric acid, the City approached Filtrol to acquire an easement for its sewer line. Filtrol voluntarily agreed to grant a sewer easement to the City for the same amount that all the other landowners received, $1.00 per lineal foot. In addition to paying $2,518 for the

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easement over Filtrol's property, the City agreed to indemnify Filtrol from all losses arising out of the presence of the interceptor line on Filtrol's property. At around the same time the City acquired the easement from Filtrol, it also acquired an easement to construct the interceptor line over the Ridgeway property adjacent to Filtrol's property. At the time these easements were executed, no one knew, at least as far as the facts in the record show, that the soil in the easements had been contaminated with acid.

To construct the interceptor line, the City began excavating dirt so it could lay the sewer pipe twenty-five to thirty feet below the surface. Large quantities of subsurface water complicated the excavation. To prevent the collapse of the walls of the ditch it was digging for the sewer pipe, the City had to dewater the ditch by pumping out the subsurface water. The dewatering pumps failed repeatedly. The City investigated and determined that sulfuric acid in the subsurface waters had corroded its pumps and caused them to fail. The City's investigation revealed that Filtrol's Pond No. 4 was the source of the acid in the subsurface soil.

Concrete pipe, according to the evidence at trial, will corrode in a pH of less than 5.5. The City could not reroute its interceptor line to avoid the contaminated soil, so it had to protect the concrete pipe from the acid with an asphalt coating. The City coated 1,158 feet of pipe that lay in the easement on Filtrol's property and 373 feet of pipe on the Ridgeway property. Further downstream where the soil was not as contaminated, the City packed 302 feet of pipe on the Ridgeway easement with a compacted clay backfill.

The City claimed it spent almost one-half million dollars to protect its sewer pipe from the acid. It sued Filtrol in state court on a variety of grounds. Filtrol removed to federal court on the grounds of diversity, and the federal district court ordered a bifurcated trial on damages and liability. At the close of the City's evidence in the liability phase of trial, the district court granted Filtrol's motion for directed verdict. It relied heavily on an indemnity agreement...

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