Appletree Square 1 Ltd. v. WR Grace & Co.

• Decision Date: 25 February 1993
• Docket Number: Civ. No. 3-92-701.
• Citation: 815 F. Supp. 1266
• Court: U.S. District Court — District of Minnesota
• Parties: APPLETREE SQUARE 1 LIMITED PARTNERSHIP, CHRC of Bloomington, Inc., its general partner, and Crimark Office Building Associates Limited Partnership, its general partner, Plaintiffs, v. W.R. GRACE & CO., individually and as successor in interest to the Zonolite Company, Western Mineral Products Co., Inc., Multibestos Company, the Dewey & Almy Chemical Company, Universal Zonolite Company and all other predecessor companies, Defendants.

815 F. Supp. 1266

APPLETREE SQUARE 1 LIMITED PARTNERSHIP, CHRC of Bloomington, Inc., its general partner, and Crimark Office Building Associates Limited Partnership, its general partner, Plaintiffs, v. W.R. GRACE & CO., individually and as successor in interest to the Zonolite Company, Western Mineral Products Co., Inc., Multibestos Company, the Dewey & Almy Chemical Company, Universal Zonolite Company and all other predecessor companies, Defendants.

Civ. No. 3-92-701.

United States District Court, D. Minnesota, Third Division.

February 25, 1993.

COPYRIGHT MATERIAL OMITTED

James Rubenstein and Timothy Staum, O'Connor & Hannan, Minneapolis, MN, for plaintiffs.

Hugh V. Plunkett, III, Donald Lewis, and Patrick A. Reinken, Popham, Haik, Schnobrich & Kaufman, Minneapolis, MN, for defendants.

MEMORANDUM OPINION AND ORDER

KYLE, District Judge.

Introduction

Plaintiffs Appletree Square 1 Limited Partnership ("Appletree 1"), CHRC of Bloomington, Inc. ("CHRC"), and Crimark Office Building Associates Limited Partnership ("Crimark"), (collectively, "Appletree Partnership") commenced this action against W.R. Grace & Co., individually and as successor in interest to several corporations (collectively "Grace"). In their Complaint, the Appletree Partnership alleges that Grace's manufacture, distribution, and sale of a fire-proofing material containing asbestos subjected it to liability under various State common law theories and violated the Racketeer Influenced and Corrupt Organization Act, Title IX of the Organized Crime Control Act of 1970, as amended, §§ 1961-1968 (Federal RICO). The above-entitled action is before the court pursuant to Grace's Motion for Partial Summary Judgment on Appletree Partnership's claims under State law. The Motion is based upon the ground that all such claims are time-barred under applicable statutes of limitations.¹

Background

Plaintiff Appletree Partnership is comprised of a Minnesota limited partnership and its general partners. At all relevant times, plaintiff CHRC was the managing partner of the Appletree Partnership.²

Defendant W.R. Grace is a Connecticut corporation; it has merged with and/or is the successor in interest to Western Mineral Products Co., Inc., Multibestos Company, the Dewey & Almy Chemical Products Co., Inc., Universal Zonolite Co., and the Grace Zonolite Division.

Appletree Partnership owns One Appletree Square ("Appletree Project"), an office building development located in Hennepin County. The Appletree Project was designed and built by Ellerbe Becket, which also was the original owner. The Project consists of two separate commercial buildings, Building 8009 and Building 8011. At the time that this action was commenced, Building 8009 was a sixteen year old, fifteen story office building with two sub-grade floors and an attached four-level garage. Building 8009 is used by the tenants leasing space in the building, by maintenance and other administrative staff, and by the general public.

The Appletree Project was substantially completed and occupied in 1974. It is constructed of reinforced concrete with steel support beams. During the construction process, an asbestos-containing fireproofing product, Mono-Kote, was sprayed on the structural steel in Building 8009.

On September 21, 1981, Ellerbe sold the Appletree Project to Appletree Square One Limited Partnership. The original partners of Appletree Square One Limited Partnership were, as general partners, Crimark, CHRC, and Applemark, Inc.; the original limited partners were Capital Income Properties — XX and Investmark, Inc.

On October 28, 1985, there was a sale of partnership interest from Investmark, Inc. to Capital Investment Company Limited Partnership IV. After this sale, the ownership interest of the Appletree Project was held by the Appletree Partnership.

Until October 1986, the Appletree Project was managed by an affiliate of Ellerbe and a third party management organization. On October 1, 1986, management of the Appletree Project was taken over by Appletree Properties, Inc. ("Appletree Properties"), an independent organization serving as Appletree Partnership's agent. There is some dispute as to whether Appletree Properties had authority to make decisions affecting the Appletree Project, but it is undisputed that Appletree Properties was in close contact with the Appletree Partnership or its agents and/or employees.

In December 1986, Appletree Properties President Darryl Durheim was contacted by Thomas Kromroy, a former employee of Ellerbe Becket. Kromroy expressed his belief that the Appletree Project included asbestos-containing materials. Kromroy also sent Durheim a laboratory report purporting to state that a sample of fireproofing from Building 8009 contained asbestos. Kromroy did not, however, tell Durheim about any hazards connected with asbestos. Durheim relayed this information to Gregory Akins, the Appletree Partnership's representative to Appletree Properties.

Thereafter, the Appletree Partnership authorized Appletree Properties to perform tests on the fireproofing in the Appletree Project. Twin City Testing, Inc.³ performed the tests and its report dated February 9, 1987, indicates that asbestos was detectable in some areas of Building 8009, but not Building 8011. That information was transmitted to the Appletree Partnership.

In 1987, R.H. Rubin Management Corporation ("Rubin") considered purchasing the Appletree Project. After being advised by Appletree Partnership that Building 8009 contained asbestos, Rubin retained Testwell Craig Laboratories, Inc.⁴ to conduct a survey of the Appletree Project. In its November 2, 1991, report, Testwell Craig confirmed that asbestos was present in Building 8009. The report also stated that the asbestos was in "poor" condition, a designation of "poor" indicating that the asbestos was highly friable and that "priority removal" was recommended. The Testwell Craig report also provided an estimate of abatement costs. Rubin eventually decided not to purchase the Appletree Project.

In January 1988, Durheim met with a representative of the Institute for Environmental Assessment⁵ ("IEA") to discuss the asbestos situation. Also during January, Appletree Partnership authorized Appletree Properties to perform air quality testing in Building 8009. Appletree Properties retained Applied Environmental Sciences⁶ ("AES") to perform the testing. AES' tests indicated that asbestos fibers were present in the air sampled, although the concentration was within state and federal standards. The test results were discussed with the Appletree Partnership.

In early 1988, Appletree Properties, with the authorization of the Appletree Partnership, engaged the law firm of Hart, Bruner, O'Brien & Thornton ("Hart, Bruner") to advise it on asbestos-related issues. Durheim Dep., at 151. On February 9, 1988, Hart, Bruner sent Appletree Properties a letter discussing hazards from asbestos exposure, state and federal regulations concerning asbestos levels, and abatement issues. A copy of this letter was provided to the Appletree Partnership. Id.

In early 1988, Appletree Properties placed a "hold" on above-ceiling maintenance work; its purpose was to ensure that neither maintenance personnel nor tenants would disturb the fireproofing.

In January 1990, CRI, Inc. authorized Appletree Properties to retain Hart Associates ("Hart") to perform an independent asbestos survey. A draft of the Hart report was prepared in July 1990 and a revised draft was prepared in November 1990. Thereafter, Durheim recommended to Akins that abatement procedures be instituted. Akins authorized abatement of a portion of the 8009 Building. In late 1990, Appletree Properties implemented an operations and maintenance program relating to the asbestos in the property. This action was commenced in early July 1990. The motion now before the Court seeks dismissal of plaintiffs state law claims (Counts I through IX) as being time-barred under applicable Minnesota statutes of limitation.

Discussion

I. Standard of Decision

Rule 56 of the Federal Rules of Civil Procedure governs motions for summary judgment. Under that Rule:

summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). Summary judgment is to be granted only where the evidence is such that no reasonable jury could return a verdict for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

On a motion for summary judgment, the movant bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The evidence of the non-moving party is to be believed and all justifiable inferences are to be drawn in a light most favorable to that party. Matsushita Elec. Indus. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986); Liberty, 477 U.S. at 255, 106 S.Ct. at 2513; Trnka v. Elanco Prod., 709 F.2d 1223, 1225 (8th Cir.1983). Where a moving party, with whatever it provides the court, makes and supports a motion for summary judgment in accordance with Rule 56, a party opposing the motion may not rest upon the allegations or denials of his pleadings; rather, the adverse party's response must "set forth specific facts showing that there is a genuine issue for trial." Liberty Lobby, 477 U.S. at 256, 106 S.Ct. at 2514; Fischer v. NWA, Inc., 883 F.2d 594, 599 (8th Cir.1989), cert. denied, 495 U.S. 947, 110 S.Ct. 2205, 109 L.Ed.2d 531 (1990).

II. Minnesota's Asbestos Revival Statute

Grace contends that...