American Fiber & Finishing v. Tyco Healthcare
| Decision Date | 28 July 2003 |
| Docket Number | No. CIV. A. 01-10294-GAO.,CIV. A. 01-10294-GAO. |
| Parties | AMERICAN FIBER & FINISHING, INC., Trustee of American Fiber & Finishing, Inc. Realty Trust, Plaintiff, v. TYCO HEALTHCARE GROUP, LP, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
O'TOOLE, District Judge.
The plaintiff, American Fiber & Finishing, Inc., Trustee of American Fiber & Finishing, Inc. Realty Trust ("AF & F"), claims that the defendant, Tyco Healthcare Group, LP ("Tyco") is liable, as a successor-in-interest to the Kendall Company ("Kendall"), for costs and damages in connection with the decontamination of property in Colrain, Massachusetts, that AF & F acquired from Kendall in 1986. AF & F presents claims arising under the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Mass. Gen. Laws ch. 21E, § 5 (Counts I and II); the warranty and contractual indemnification clauses of the Asset Purchase Agreement between AF & F and Kendall (Counts III and IV); the common law of misrepresentation (Count VI); and the Massachusetts Consumer Protection Act, Mass. Gen. Laws. ch. 93A, §§ 2 and 11 (Count VII). A claim under the common law for indemnification (Count V) was abandoned.
Tyco has moved for summary judgment, arguing that AF & F's claims are either time-barred or necessarily fail on the merits. The defendant's motion is GRANTED for the reasons that follow.
On March 20, 1986, AF & F purchased from Kendall an industrial site, including both land and buildings, located in Colrain, Massachusetts ("the Site" or "the Colrain property"), pursuant to an Asset Purchase Agreement ("Agreement"). Kendall had owned the Site from 1932 to 1986 and engaged in the manufacture of cotton products there. At the time of AF & F's acquisition of the Site, there were three 25,000-gallon underground storage tanks used to store No. 6 fuel oil. There had been a release of about 2,000 gallons of oil from an underground tank in November 1983, and there is evidence that there had been other releases of a significantly greater amount of oil sometime in the 1970s.
Kendall reported the 1983 release to the Massachusetts Department of Environmental Quality Engineering ("DEQE").1 In December 1983, Kendall decommissioned the three underground tanks. Based on the information that Kendall had provided to it (some of which AF & F claims was false), the DEQE did not require Kendall to remove the tanks, but instead permitted them to remain in place, although their use was discontinued. From late 1983 on, oil continually seeped from the ground into the wheel pit area, and a dam of absorbent booms and pads was employed to soak up the seeping oil.
At the time of the acquisition of the Site, AF & F's principals, J.J. Kiser and Edward C. Shotwell, had worked for Kendall for more than 20 years, and each possessed extensive knowledge of Kendall's business conducted at the Site. Another employee of AF & F, Robert A. Young, had worked for Kendall since 1980 and had served as Kendall's plant manager at the Site.
Before the acquisition, AF & F hired Goldberg-Zoino & Associates ("GZA") to perform an environmental assessment of the Site. In addition to interviewing Kendall employees and reviewing DEQE files, GZA conducted some soil sample analyses, although it did not take any borings or analyze any soil samples in the vicinity of the underground oil storage tanks. GZA had been informed of the 1983 release of oil, as well as a much smaller (about 40 gallons) surface spill in 1985. GZA was not informed that there had been significant releases in the 1970s.
In 1997, AF & F decided to sell the Colrain property. In connection with this effort, AF & F sought engineering services from William Volk, a former Kendall employee who had served as AF & F's Engineering Manager in 1986 and later formed his own engineering firm. In his proposal, Volk listed several "environmental issues" that AF & F needed to address, including the need to reach a "[l]ong-term solution to the early '80s underground # 6 oil spill" at the Site. Clements Aff., Ex. I(3), § 7 at 2. AF & F then retained GZA to perform an updated environmental assessment. GZA's report, dated June 4, 1997, concluded that the evidence at the Site showed oil was present in the soil or groundwater in the wheel-pit area and in the vicinity of the three abandoned underground oil storage tanks. Id. Ex. L, § 9.20, at 27.
The Department of Environmental Protection ("DEP") (successor to the DEQE) inspected the Site in July 1997. The DEP found oil in the wheel-pit area, and on August 25, 1997, issued a Notice of Responsibility to AF & F, requiring the company to "conduct a subsurface investigation, including installation of soil borings and monitoring wells ...." Id. Ex. H(7), at 2.
In response, AF & F retained East Coast Engineering ("ECE") to determine the depth of contaminated soil in the vicinity of the underground tanks and whether the presence of oil in the wheel pit was related to the release from these tanks. Among other things, ECE reported that soil borings near the underground tanks indicated the presence of No. 6 oil at the depth of about 14 feet and proposed removing the contaminated soil from under the storage tanks. Id. Ex. M, ECE Report October 15, 1997, § 4.0, at 8, 9. In April 1999, AF & F first gave Tyco notice that it had received, about a year and a half earlier, a Notice of Responsibility from the DEP regarding the Site. Id. Ex. J, Pl.'s Answers to Tyco, Interrog. # 16, at 15-16; see also Statement of Undisputed Facts Supp. Def.'s Summ. J. Mot., ¶ 88 at 18. In July 1999, AF & F began excavation to remove the three underground storage tanks and learned that the soil contamination was far more extensive than "anticipated." Clements Aff., Ex. N, Cummings Report, October 1, 2002, at 4.
As a result of the contamination at the Site, AF & F incurred cleanup costs and expended substantial sums for site investigation, including soil borings, the installation of monitoring wells, water and sediment sampling and analysis, engineering drawings, legal fees, and the preparation of various reports.
AF & F commenced this action against Tyco, as a successor to Kendall, on February 16, 2001.
Tyco asserts that four of AF & F's six claims (Counts II, III, VI, and VII) are barred by the applicable statutes of limitations. A three-year limitations period applies to Count II (property damage under Mass. Gen. Laws ch. 21E, § 5), see Mass. Gen. Laws ch. 21E, § 11A(4), and also Count VI (common law misrepresentation), see Mass. Gen. Laws ch. 260, § 2A. The Chapter 93A claim in Count VII has a four-year limitations period, see Mass. Gen. Laws ch. 260, § 5A, and the claim for breach of warranty set forth in Count III is governed by a six-year limitations period, see Mass. Gen. Laws ch. 260, § 2.
This action was commenced February 16, 2001. All four of the causes of action referred to in the previous paragraph are based on events preceding or coinciding with the execution of the Asset Purchase Agreement in 1986. For example, any misrepresentation or deception about the condition of the property that induced the purchase must have occurred prior to the signing of the agreement. The warranty at issue in Count III (if it exists) is set forth in the agreement, and its breach allegedly occurred immediately as, according to AF & F, it was false when made. See Compl. ¶ 42. The defendant's liability under chapter 21E as an owner of the property necessarily arises from the period of its ownership, which ended with the sale in 1986.
Thus, unless the accrual of any of these causes of action was deferred for some reason, the complaint was filed well outside the limitations periods applicable to them. AF & F suggests two reasons why the accrual of the claims should be deemed delayed. First, it invokes the "discovery rule," which holds that a cause of action does not accrue until the plaintiff knows or, in the exercise of diligence, ought to know of facts giving rise to the claim. See Patsos v. First Albany Corp., 433 Mass. 323, 741 N.E.2d 841, 846 (2001) (summarizing rule). This rule applies to the statutory claims as well as the common law claims. See Szymanski v. Boston Mut. Life Ins. Co., 56 Mass.App.Ct. 367, 778 N.E.2d 16, 20 (2002).
The discovery rule can toll the limitations period applicable to actions under chapter 21E. In such cases, the Supreme Judicial Court ("SJC") has said that the limitations period begins to run Taygeta Corp. v. Varian Assocs., Inc., 436 Mass. 217, 763 N.E.2d 1053, 1061 (2002).
However, "[t]he plaintiff need not know the full extent of its injury for a cause of action to accrue and for the statute of limitations to begin running." Taygeta Corp., 763 N.E.2d at 1063. See also Beaconsfield Townhouse Condo. Trust v. Zussman, 49 Mass.App.Ct. 757, 733 N.E.2d 141, 146 (2000); Olsen v. Bell Tel. Labs., Inc., 388 Mass. 171, 445 N.E.2d 609, 612 (1983). Rather, a party is considered to have "discovered" the cause of action when it has learned of the fact of injury or damage.
It is of no consequence that AF & F did not know the exact source of the contamination when it purchased the property. Fidler v. Eastman Kodak Co., 714 F.2d 192, 199 (1st Cir.1983). Onc...
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