Columbia Propane, LP v. Wisconsin Gas Co.
| Decision Date | 28 December 2001 |
| Docket Number | No. 01-0090.,01-0090. |
| Citation | 2002 WI App 9,250 Wis.2d 582,640 N.W.2d 819 |
| Parties | COLUMBIA PROPANE, L.P., a Limited Partnership, Plaintiff-Appellant, v. WISCONSIN GAS COMPANY, a Wisconsin Corporation, Defendant-Respondent, ABC INSURANCE Co., a corporation or other entity, and DEF Insurance Co., a corporation or other entity, Defendants. |
| Court | Wisconsin Court of Appeals |
On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Michael Ash, Michael B. Apfeld, and John L. Clancy of Godfrey & Kahn, S.C., Milwaukee.
On behalf of the defendant-respondent, the cause was submitted on the brief of Charles P. Graupner, Pamela L. Gergens, and Jon G. Furlow, of Michael Best & Friedrich LLP, Milwaukee; William A. Metcalf, of counsel, of Metcalf & Quinn, Wisconsin Rapids.
Before Vergeront, P.J., Roggensack and Lundsten, JJ.
¶ 1.
In this action, Columbia Propane, L.P. seeks to hold Wisconsin Gas Company liable for environmental contamination on real estate now owned by Columbia Propane; the contamination was allegedly caused by People's Gas Company, a prior owner of the real estate. The trial court entered summary judgment in favor of Wisconsin Gas, dismissing Columbia Propane's tort claims and claims for indemnification and subrogation on the ground that Wisconsin Gas did not assume these liabilities of People's Gas by agreement.2 The court also ruled that Columbia Propane was not a third-party beneficiary of the agreement between People's Gas and Wisconsin Gas and that the contract statute of limitations applied to Columbia Propane's claims.
¶ 2. We conclude that under the plain language of the asset purchase agreement between People's Gas and Wisconsin Gas, Wisconsin Gas did not assume liability for the indemnification and subrogation claims Columbia Propane asserts in its complaint, but that the contract language is ambiguous regarding whether Wisconsin Gas agreed to assume liability for the tort claims. We further conclude that resolution of the ambiguity involves the resolution of disputed issues of fact, making summary judgment inappropriate. Finally, we conclude that since Columbia Propane has alleged that Wisconsin Gas is liable for People's Gas's torts as a successor corporation having agreed to assume that liability, Columbia Propane need not plead and prove that it is a third-party beneficiary and the statute of limitations for actions on a contract does not apply. We therefore affirm summary judgment in part, reverse in part, and remand. ¶ 3. Columbia Propane also contends the trial court erroneously exercised its discretion in denying its motion to amend the complaint after the court granted summary judgment. We reverse that decision insofar as the court did not permit Columbia Propane to add allegations of constructive fraud and we direct the court on remand to reconsider the motion to add those allegations in light of this opinion.
¶ 4. Columbia Propane's complaint alleged as follows. People's Gas, now defunct, had operated a coal gas plant from 1920 to 1959 on the southern portion of People's Gas's real estate, and that operation had contaminated the soil and groundwater on the southern portion prior to 1960. In 1958, Columbia Propane3 purchased the northern portion of the real estate from People's Gas. The contaminants from the southern portion entered the soil and groundwater of the northern portion, and some or all of this contamination occurred before 1960. In 1960, Wisconsin Gas acquired the southern portion of the real estate from People's Gas under an asset purchase agreement.4 In 1962, Columbia Propane purchased the southern portion of the real estate from Wisconsin Gas, with the result that since 1962 Columbia Propane has been the owner of the entire parcel of real estate.5
¶ 5. The State of Wisconsin brought an action against Columbia Propane for the contamination caused by People's Gas. Columbia Propane seeks reimbursement from Wisconsin Gas for the sums it has expended for remediation, as well as other damages allegedly caused by the contamination, because, it alleges, Wisconsin Gas assumed all liabilities of People's Gas under the 1960 asset purchase agreement.6 Columbia Propane asserts claims of nuisance, trespass, negligence, strict liability, subrogation, indemnification, and contribution. Columbia Propane also requests a declaration of rights and obligations under the 1960 asset purchase agreement.
¶ 6. Wisconsin Gas moved for summary judgment. It contended that it was not liable to Columbia Propane under the asset purchase agreement for several independent reasons: (1) the language of the agreement plainly provided that Wisconsin Gas assumed liability only for "then outstanding" liabilities and that did not include liability for contamination which was then unknown; (2) Columbia Propane was not a third-party beneficiary of the asset purchase agreement; and (3) all claims that were based on Wisconsin Gas's liability under the agreement were subject to the statute of limitations for contract actions, not for tort actions, and so were time-barred. Columbia Propane opposed the motion, disputing each of Wisconsin Gas's legal contentions and also arguing that if Wisconsin Gas did not assume liability for the contamination under the agreement, then it had engaged in fraud. Columbia Propane asked that a partial summary judgment be granted in its favor, determining that Wisconsin Gas was liable to Columbia Propane for the contamination caused by People's Gas.
¶ 7. The trial court agreed with each of Wisconsin Gas's contentions and granted summary judgment in its favor. In discussing the third-party beneficiary issue, the court observed that the complaint did not plead that Columbia Propane was a third-party beneficiary of the asset purchase agreement, but it decided nonetheless that Columbia Propane was not a third-party beneficiary. The court refused to consider Columbia Propane's argument regarding fraud, because the complaint contained no allegations of fraud.
¶ 8. After the court issued its decision, Columbia Propane moved to amend its complaint to allege breach of contract, third-party beneficiary status, and constructive fraud. The court denied the motion and entered judgment dismissing the complaint. In denying the motion, the court observed that Columbia Propane had pleaded only tort claims and, after losing the summary judgment motion based on that complaint, now wanted to change its entire theory. The court also stated that, even though Columbia Propane had not pleaded a breach of contract or third-party beneficiary status, the court had ruled on these issues because, in the court's view, the agreement was "what everything was all about." Therefore, the court concluded, there was no point in an amendment to the complaint in those respects. As for the constructive fraud allegations, the court rejected Columbia Propane's argument that it had not learned of the basis for these allegations until after Wisconsin Gas had filed its motion for summary judgment, when it discovered Public Service Commission (PSC) records indicating that Wisconsin Gas had represented to the PSC that it would be assuming all the obligations and liabilities of People's Gas. The court pointed out: (1) that information could have been discovered in the PSC files sooner, and (2) Columbia Propane did not bring a motion to amend as soon as it discovered the files but waited to see how the court decided the summary judgment. The court concluded that it would be unfair to Wisconsin Gas to allow the amendment at that time.
¶ 9. On appeal, Columbia Propane contends that in granting Wisconsin Gas's motion for summary judgment, the court erred in its interpretation of the asset purchase agreement and in its rulings that Columbia Propane had to be a third-party beneficiary of that contract and that the contract statute of limitations applied to its claims. Columbia Propane also asserts that the trial court erroneously exercised its discretion in denying its motion to amend the complaint.
[1, 2]
¶ 10. We address first Columbia Propane's challenge to the court's decision granting summary judgment. Our review of that decision is de novo, and we apply the same methodology as that applicable in the trial court. Brownelli v. McCaughtry, 182 Wis. 2d 367, 372, 514 N.W.2d 48 (Ct. App. 1994). Summary judgment is appropriate if there are no material disputes of fact and one party is entitled to judgment as a matter of law. Id. at 372-73.
[3]
¶ 11. The complaint alleges various torts committed by People's Gas against Columbia Propane for which, the complaint alleges, Wisconsin Gas is liable because of the asset purchase agreement. The subrogation, indemnification, and contribution claims are also premised on People's Gas's obligations—to third parties—which Columbia Propane has allegedly paid. For these claims, too, the source of Wisconsin Gas's liability is alleged to be the asset purchase agreement. Although a corporation that purchases the assets of another does not necessarily assume liability for the seller's obligations, there are four recognized exceptions to that rule: (1) purchaser corporation expressly or implicitly agrees to assume liability; (2) transaction amounts to a consolidation or merger of purchaser and seller corporations; (3) purchaser corporation is merely a continuation of seller corporation; or (4) transaction is entered into fraudulently to escape liability for such obligations. Fish v. Amsted Indus. Inc., 126 Wis. 2d 293, 298, 376 N.W.2d 820 (1985). Therefore, under the first exception, Wisconsin Gas would be liable to Columbia Propane for claims the latter has against People's Gas if Wisconsin Gas agreed to assume liability for those claims in the asset purchase agreement.
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