Ball v. Versar, Inc., Cause No. IP 01-0531-C H/K (S.D. Ind. 3/26/2003)

Decision Date26 March 2003
Docket NumberCause No. IP 01-0531-C H/K.
CourtU.S. District Court — Southern District of Indiana

DAVID F. HAMILTON, District Judge.

This diversity case presents a contract dispute over the remediation of a "Superfund" hazardous waste site in Boone County, Indiana. Plaintiffs Roy O. Ball and Norman W. Bernstein ("the Trustees"), are trustees for the fund formed by hazardous waste generators to clean up the site under an agreement with federal and state government agencies. The Trustees filed this action against defendant Versar, Inc. for breach of its contract to perform remediation services at the site. In its answer, Versar denied having breached the contract and asserted counterclaims against the Trustees in six counts. Versar also filed a third party complaint against third party defendants Environmental Resources Management, Inc. and Radian International, LLC, companies that performed services for the Trustees in connection with the hazardous waste site.

The case comes before the court on plaintiff-trustees' motion for partial summary judgment, their motion to supplement their motion for partial summary judgment, and defendant Versar's motion for reconsideration of a discovery ruling. Briefing on these matters has been extensive. A summary of these filings will clarify the context of this entry. The Trustees filed on July 3, 2002, the present motion for partial summary judgment as to any of defendant Versar's counterclaims that predate November 30, 1999, the effective date of Amendment No. 2 to the parties' original agreement. The Trustees filed this motion before the court had ruled on their then-pending motion to dismiss several of defendant Versar's counterclaims. On September 6, 2002, the court then dismissed Counts II (negligent misrepresentations and/or fraud involving future incentives), III (breach of implied duty of good faith and fair dealing), and VI (negligent misrepresentation and/or fraud for failure to disclose information about ground water contamination) of Versar's counterclaims. In addition, the court determined that Indiana law governed the parties' dispute. The court also granted in part and denied in part defendant Versar's motion to compel responses to its discovery requests, which Versar has asked the court to reconsider. At the November 6, 2002 pretrial conference, the court denied Versar's motion for leave to file a proposed second amended answer and counterclaims and third party complaint. However, this denial was without prejudice to a third amended answer and counterclaim sufficient to meet the particularity requirements of Fed.R.Civ.P. 9(b) with regard to any alleged fraudulent misrepresentations made by the Trustees. Versar subsequently filed an amended counterclaim on November 18, 2002, asserting breach of contract, fraud, unjust enrichment, and implied contract. The Trustees then filed a motion to supplement their motion for partial summary judgment to address Versar's new fraud allegations.

The court grants the Trustees' motion to supplement their motion for partial summary judgment to allow the Trustees to address Versar's amended counterclaims. The Trustees could not have addressed Versar's amended counterclaims in their original July 2002 motion because Versar's amended counterclaims were not filed until November 2002. Granting the Trustees' motion to supplement will not prejudice Versar in any way other than by presenting additional arguments with which it disagrees. The parties' briefs concerning the motion to supplement have been considered by the court in ruling on the Trustees' motion for partial summary judgment.

As explained below, the Trustees' motion for partial summary judgment with respect to counterclaims that predate the effective dates of contract Amendment No. 1 and Amendment No. 2 is granted in substantial part. The broad language of the two contract amendments reflects objectively an intent by the parties to release those claims that predated the effective date of the amendments. However, Versar's fraud counterclaim based on the theory of affirmative misrepresentation survives summary judgment to the extent it is based on misrepresentations after the effective date of Amendment No. 1, with its broader release language. Amendment No. 2 released the Trustees only from fraud — like claims based on nondisclosure, as distinct from affirmative misrepresentations of fact. In addition, Versar's motion for reconsideration of the court's September 6, 2002 discovery ruling is granted.

Summary Judgment Standard

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment is appropriate when there are no genuine issues of material fact, leaving the moving party entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party must show there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A factual issue is material only if resolving the factual issue might change the suit's outcome under the governing law. Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). A factual issue is genuine only if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the evidence presented. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Contract interpretation often presents a question of law for which summary judgments is appropriate. E.g., National Fire & Casualty Co. v. West, 107 F.3d 531, 534-35 (7th Cir. 1997) (affirming summary judgment under Indiana contract law); Tri-Central High School v. Mason, 783 N.E.2d 341, 344 (Ind.App. 2000). In considering the Trustees' motion, the court must consider the evidence in the light reasonably most favorable to Versar.

I. Background

The Northside Sanitary Landfill ("NSL") and the Environmental Conservation and Chemical Corporation ("ECC") are adjacent hazardous waste sites located in Boone County, Indiana. The two sites were combined for remedial action for a number of reasons, including their close proximity and similar contamination. Def. Ex. A, Superfund Record of Decision: Remedial Alternative Selection, 1987. Prior to 1982, ECC had been involved in the recovery, reclamation, and brokering of primary solvents, oils, and other wastes from industrial clients. ECC received these products in drums or bulk tankers and prepared the drums and tankers for reclamation or disposal. The combination of accumulation of contaminated stormwater, poor management of drum inventory, and numerous spills led the state government and the United States Environmental Protection Agency to investigate. In 1982, a court ordered ECC to close and to environmentally secure the site due to ECC's failure to produce hazardous waste inventories. Emergency actions in 1983 and 1985 eliminated the major source of contaminants at the site, but as of 1987, the soil still contained high concentrations of trans-1, 2-DCE; trichloroethene; 1,1-DCE; vinyl chloride; and possibly other sources of contamination. Id.

By November 1982, NSL had accepted at least 16 million gallons of hazardous substances from industrial clients. As of 1987, the ground water, surface water, soil, and sediments were contaminated by inorganics, organics, pesticides, acids, base-neutral compounds, oils and VOCs (including benzene; 1,1-DCE; and TCE). Id.

In 1987, the EPA required that the following remedial action be taken for the combined sites:

The selected remedial alternative is ground water interception and treatment plus capping, and includes the following major components:

• Deed and access restrictions to prevent future development of the sites.

• A multi-layer cap over both sites which meets the requirements of the Resource Conservation and Recovery Act.

• Re-routing surface waters to reduce potential for contaminant movement to surface water.

• Leachate collection and treatment for NSL.

• Ground water collection and treatment for both sites.

• Monitoring to ensure effectiveness of remedy components listed above.

Id. This plan was intended to address both contaminated soil and contaminated ground water.

On June 7, 1991 the EPA modified its original plan for the ECC site. Def. Ex. D, Declaration for the Record of Decision Amendment. The EPA clarified that the original decision was amended "to reflect the decision to implement separate, complementary remedies" for the ECC and NSL sites. Id. The modified remedial plan for the ECC site included the following elements:

• Soil vapor extraction, concentration and destruction

• RCRA Subtitle C cap

• Access restrictions

• Subsurface and surface water monitoring

• Contingent subsurface water collection and treatment

Id. A Consent Decree in United States of America v. Environmental Conservation and Chemical Corp., Civil Action No. IP 83-1419-C, was then entered by the Southern District of Indiana in 1991 that required the hazardous waste generators to raise and administer funds and to manage the implementation of a remedial action to remediate the ECC site. Pl. Ex. 1, ¶ 1. The Trustees for the fund sought bids for remediation services and eventually accepted the bid of Versar, Inc.

On August 28, 1997, the Trustees entered into a contract with Versar for, among other things, the design, construction, operation, and maintenance of a soil vapor extraction system ("SVE") that would treat contaminants in the soil. Pl. Ex. 1, ¶ 2; Pl. Ex. 2, ¶¶...

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