ASI, INC. v. Sanders
| Decision Date | 29 October 1993 |
| Docket Number | No. 92-1209-PFK.,92-1209-PFK. |
| Citation | 835 F. Supp. 1349 |
| Parties | A.S.I., INC., a Kansas Corporation, and QMI Aerospace, Inc., a Kansas Corporation, Plaintiffs, v. James T. SANDERS, Twila Maxine Sanders, Marshall J. Sanders, and Marcia Rene Larson, Defendants. |
| Court | U.S. District Court — District of Kansas |
COPYRIGHT MATERIAL OMITTED
Jana C. Werner, Grace, Unruh & Pratt, Wichita, KS, for plaintiffs.
Ronald K. Badger, Wichita, KS, for defendants.
Before the court are four motions for summary judgment filed by the defendant Sanders family, and one motion for summary judgment by plaintiffs A.S.I., Inc. and QMI Aerospace, Inc. in opposition to a counterclaim advanced by the Sanders. A.S.I. and QMI have brought the present action seeking recovery for damages and clean up costs relating to toxic contamination caused during the Sanders family's former ownership of QMI.
The court heard arguments relating to these motions on October 18, 1993. For the reasons stated herein, the court will hereby grant the various motions in whole or in part.
Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir.1988). The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir.1985). The moving party need not disprove plaintiff's claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir.1987).
In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. "In the language of the Rule, the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Most of the motions before the court are based upon the same general set of underlying facts. On July 10, 1985, the Sanders family sold QMI Aerospace to plaintiff A.S.I.. In 1988, A.S.I.'s president Jim Regan also became the president of QMI. Prior to assuming the position of president at QMI, Regan had visited the QMI plant about once a month. He now began to visit the QMI plant weekly and began to familiarize himself with QMI's contamination problems.
The KDHE wrote again to QMI some three months later. In an August 19, 1988 letter, the KDHE stated that a follow-up inspection of the QMI plant was performed which revealed that the problems identified in the May 3 letter had not been corrected.
After receiving the May 3 letter, Regan had assigned the correction of the problems to Harry Clements, a consultant of QMI. Regan again spoke to Clements about resolving the contamination problems at QMI after receipt of the August 19 letter, to the effect, "Let's get this taken care of." In January of 1989, QMI hired Reiss & Goodness, a consulting engineering firm, to help with the company's pollution problems. At approximately the same time, Regan stepped down as president of QMI, and was replaced by Clements.
On January 30, 1989, the KDHE assessed a $10,000.00 penalty against QMI for soil contamination arising from the discharge of industrial waste water. The order assessing the penalty reviewed the history of the KDHE's investigations, noting that a 1986 inspection of QMI revealed the discharge of industrial waste water without a permit in violation of K.S.A. 65-165. The waste water had been tested by the KDHE and found to contain nearly 10 times the amount of chromium considered to be hazardous by federal regulations. The KDHE had notified QMI of these results by letter on May 1 and again on May 20, 1986. QMI was instructed to correct these problems by June 30, 1986.
The order then states that the KDHE had returned to QMI to conduct three investigations in late March and early April of 1988. These investigations revealed both the continued presence of three waste water discharges at QMI and chromium soil contamination. The KDHE notified QMI of these results by its letter of May 3, 1988. The order then states that a follow-up investigation was conducted on August 17, 1988, which found no changes at QMI. This investigation also revealed that, although QMI had no permit to store hazardous wastes, 56 drums of hazardous waste were in storage at the QMI plant. The order concluded that "the generation, accumulation, management and disposal of hazardous wastes by QMI has polluted the soil of the state, threatens to pollute the waters of the state and threatens to become a hazard to the persons, property and public health."
After receiving the January 30, 1989 order assessing the administrative penalty, the management of A.S.I. and QMI began to explore their options for correcting the problem. In February, 1989, Clements prepared a summary of projects necessary to comply with the KDHE's order, and estimated that a full cleanup of the plant would cost $53,000.00. Clements noted in this summary that "all items except current discharge of contaminated waste waters were caused in part or in total by activities prior to present ownership."
On February 22, 1989, the City of Wichita filed an amended petition in an action against A.S.I. and QMI, alleging that the defendants had committed fraud in obtaining industrial revenue bonds from the city in 1985 and 1986. The amended complaint specifically alleged that prior to the issuance of the 1985 bonds, the KDHE had investigated the well water at QMI and found low levels of VOC contamination, referencing a June 18, 1985 letter from the KDHE to QMI. In their subsequent answer, A.S.I. and QMI admitted receiving the June 18, 1985 letter from the KDHE.
On April 19, 1989, QMI's consultants, Reiss & Goodman, reported to the KDHE on a proposed plan to clean up the QMI site. In a letter to Clements on May 17, 1989, Reiss & Goodman informed QMI's president that the costs of cleaning up the QMI facility had increased 10-fold from previous estimates. According to this letter, "a total clean-up of all contaminated soil" at QMI would cost approximately $500,000.00.
The present action by A.S.I. and QMI against the Sanders family was filed May 1, 1992. The Sanders family has moved for summary judgment on the plaintiffs' claims of fraud and strict liability in tort, contending that the plaintiffs' failure to bring any action until well over two years after they learned of the contamination problems at QMI renders the present action time-barred.
The Sanders family has moved to dismiss the common-law fraud claims asserted by A.S.I. on the grounds that the action is time-barred under the two-year statute of limitations applicable to fraud actions. The present action was filed May 1, 1992. Under Kansas law, a cause of action for fraudulent misrepresentation accrues, and the statute of limitations begins to run, when the fraud was reasonably discoverable. Wolf v. Brungardt, 215 Kan. 272, 281-82, 524 P.2d 726 (1974).
In the present case, A.S.I. had notice of a potential claim for fraud by early 1989, three years before the present action was filed. By February of 1989, A.S.I. knew that KDHE had been investigating pollution problems at QMI since 1986, and that it had cited the company for violations. It also knew that the City of Wichita was suing A.S.I. and QMI over the 1985 and 1986 issuance of bonds, a suit which specifically included an allegation of fraud at the time the bonds were issued in 1985 and 1986.
Here, QMI and A.S.I. knew of pervasive pollution problems at the QMI site. Although the KDHE's 1988 letters to QMI concentrate on the waste water contamination problem, they also cite other potential violations. In its May 3 letter, the KDHE cited as a possible violation:
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