Cooley v. Pine Belt Oil Co.

• Decision Date: 03 March 2022
• Docket Number: 2019-IA-01835-SCT
• Citation: 334 So.3d 118
• Parties: Walter COOLEY and Tammy Cooley v. PINE BELT OIL CO., INC.
• Court: Mississippi Supreme Court

334 So.3d 118

Walter COOLEY and Tammy Cooley

v.PINE BELT OIL CO., INC.

NO. 2019-IA-01835-SCT

Supreme Court of Mississippi.

March 3, 2022

ATTORNEYS FOR APPELLANTS: WALTER H. BOONE, ANDY LOWRY, M. CHRISTINE CROCKETT WHITE, Jackson

ATTORNEYS FOR APPELLEE: MONIQUE M. WEINER, JAMES K. DUKES, Hattiesburg, DEBORAH DEROCHE KUCHLER

EN BANC.

KITCHENS, PRESIDING JUSTICE, FOR THE COURT:

¶1. This interlocutory appeal concerns whether the statute of limitations bars an action for implied indemnity. The action stems from damages that Pine Belt Oil Co. (Pine Belt) incurred for the remediation of a September 2008 gasoline leak that originated on property Walter and Tammy Cooley (the Cooleys) had sold to Pine Belt four months prior to discovery of the leak. In 2009, the Mississippi Department of Environmental Quality (MDEQ) issued an administrative order demanding that Pine Belt, the owners of Pine Belt, Robert Allen Morgan and Melissa Forte Morgan (collectively, "the Morgans"), and the Cooleys pay remediation costs, including future costs, for the properties afflicted by the gasoline leak. Since October 2008, Pine Belt has maintained that the Cooleys were responsible for the gasoline leak, not Pine Belt. After initially refusing to pay the remediation costs, Pine Belt did begin paying them in July 2009.

¶2. In April 2016, six years and nine months after its first remediation payment, Pine Belt filed a complaint seeking indemnification from the Cooleys for Pine Belt's past and future expenses incurred due to its remediation damage caused by the gasoline leak. The Cooleys moved for summary judgment, arguing that the claim was barred by the statute of limitations. The trial judge denied the summary judgment motion.

¶3. The Cooleys filed a petition for interlocutory appeal, which this Court granted. They argue that the statute of limitations bars Pine Belt's implied indemnity claim. The Cooleys argue alternatively that, if the statute of limitations does not bar Pine Belt's implied indemnity claim, then the claim fails because Pine Belt cannot prove that it did not actively participate in the underlying wrong, i.e. , the gasoline leak. Pine Belt argues that its claim is not time barred because an action for implied indemnity cannot accrue before a liable party can be identified and because there must be a final, fixed amount. We hold that the applicable three-year statute of limitations ran on Pine Belt's claim on March 5, 2012. Pine Belt's claim is time barred, and all other arguments are moot.

STATEMENT OF THE FACTS

¶4. This dispute involves a parcel of land in Forrest County, Mississippi. Sunrise Trading Post, a gasoline service station and convenience store, is located on the property. The property has been used for gasoline sales since the 1920s. In the late 1980s to the early 1990s, according to MDEQ's records, Pine Belt registered and paid for two underground gasoline storage tanks (USTs) on the property, which were removed from the property on April 24, 1992, while Pine Belt still owned them. The property was sold in February 1995 to James Mark Riley, who later installed several above-ground fuel storage tanks (ASTs). On June 25, 2002, Riley sold the property to Walter and Tammy Cooley. Two months later, on August 13, 2002, the Cooleys conveyed ownership of the property, including the building and the AST system, to Sunrise Trading Post, LLC, a company created by the Cooleys. On May 21, 2008, the Cooleys sold Sunrise Trading Post to the Morgans, who own Pine Belt. The parties described the sale as "a handshake deal" because there was no written contract or indemnity agreement between the Morgans and the Cooleys.¹

¶5. On September 6, 2008, gasoline was discovered leaching into a nearby landowner's pond. The release was reported to MDEQ, which visited the property and informed Pine Belt there had been a release of free gasoline product. Two days later, MDEQ requested that Pine Belt perform a precision tightness test (PTT) in order to test the fuel lines of Pine Belt's ASTs. In October 2008, MDEQ visited the property to verify that Pine Belt had performed the PTT test and witnessed Pine Belt's performance of a different test on the fuel lines, an air-line test. The fuel lines failed the air-line test, which indicated that there was a leak in the lines. After the test failure, MDEQ requested that Pine Belt stop usage of the fuel lines until repairs could be made and the release of gasoline was remedied. On October 21, 2008, MDEQ sent a letter to Pine Belt confirming that a release of gasoline had occurred at the property and requesting that Pine Belt perform an investigation and assess the property. The next day, October 22, 2008, Pine Belt sent the Cooleys a letter, stating the following:

At the time Pine Belt Oil Company purchased the property, it did not know, nor did you reveal to them, that the underground piping at the location was presently leaking or had leaked at any time in the past.... During an investigation of the scene, it was determined by Pine Belt Oil Company that if the fuel contaminating the property of the adjoining owner came from the Sunrise Trading Post, the fuel was produced prior to the time of Pine Belt Oil Company's purchase of the gas station. Therefore, I request that you contact [an MDEQ employee with a listed telephone number] and make arrangements with the Department of Environmental Quality to comply with their requests for testing and clean-up. I would ask for you to please keep me informed of your progress on this matter and your work with the Department of Environmental Quality.

Pine Belt also forwarded the MDEQ letter of October 21, 2008, to the Cooleys. A Pine Belt representative averred in his deposition that, in 2008, Pine Belt knew that the fuel leak occurred before Pine Belt had acquired the property because sampling had indicated that a component of the leaked fuel was "MTBE,^{[2 ]} and MTBE had been out of the fuel system long before we got there."

¶6. On November 19, 2008, Pine Belt met with MDEQ to discuss the release of gasoline. At that meeting, Pine Belt informed MDEQ that it did not intend to remediate damage caused by the release of gasoline. Pine Belt contended that it was not responsible for the remediation efforts. On November 24, 2008, a second meeting between MDEQ and Pine Belt occurred in which Pine Belt again declined to remediate the gasoline damage. The record shows that on December 1, 2008, MDEQ, along with the United States Environmental Protection Agency (EPA), hired a contractor to begin remediation efforts to contain and prevent the release of gasoline.³

¶7. On March 5, 2009, MDEQ issued an administrative order to Pine Belt, the Morgans, and the Cooleys. In its order, MDEQ ordered the parties to "immediately contain and remove the free product from the groundwater at the site and any properties that have been polluted" and that they were "responsible for any future containment and free product removal from the groundwater at the site and all properties affected[.]" The order cited Mississippi Code Section 49-17-43, which imposes strict liability upon an owner or operator of a facility that causes "pollution necessitating immediate remedial or clean-up action ...." Miss. Code Ann. § 49-17-43(4) (Rev. 2012). The order provided that "[c]ontinuing remediation will be necessary for the foreseeable future and Respondents must meet their statutory responsibility to remediate this site ...."

¶8. In a letter to MDEQ dated May 7, 2009, Pine Belt's lawyer wrote, inter alia , the following:

We did not receive the report prepared by Neel Schaffer until on or about April 29th, and after analyzing the same, I am now able to outline the position of Pine Belt Oil and make a proposal as to their willingness to assist in the clean up, although the evidence clearly indicates that Pine Belt Oil has little or no liability or responsibility. On behalf of Pine Belt Oil [and the Morgans], I wish to outline the proposal of Pine Belt Oil and the Morgans, as well as set forth the basis for the position of Pine Belt Oil, and its willingness to voluntarily participate in the remediation procedure, and submit the following to wit:

Based on the report ... prepared by Mr. John Malanchak, RPG of Neel-Schaffer, ... we concur with Mr. Malanchak's opinion concerning the urgency of the remediation of free phase gasoline and gasoline vapors in the immediate vicinity of the store and even though the factual date of the above referenced report concerning the fuel indicates Pine Belt Oil Company, Inc. had virtually no participation in the release of fuel, and Pine Belt Oil Company, Inc. has no liability in and accepts no responsibility for the release. Pine Belt Oil Company, Inc., in a demonstration of goodwill and concern for the safety of the customers and employees of Sunrise Trading Post, proposes the following.... Pine Belt Oil Company proposes to begin the remediation of the free phase gasoline and gasoline vapors in the area immediately surrounding the store[.] ... Pine Belt Oil Company, Inc. will ... oversee the remediation project of the aforementioned area. Pine Belt Oil Company, Inc. will begin the aforementioned remediation as quickly as is logistically possible.... Additionally, the evidence contained in the above referenced report prepared by Neel-Schaffer concerning the components of the fuel, such as lead and MTBE, proves beyond any doubt that the contamination of the area north and west of Sunrise Road occurred at a time when there was absolutely no possible involvement by Pine Belt Oil Company, Inc. during the brief period of time Pine Belt Oil Company, Inc. was associated with the facility and current AST's. It is important to note that Mr. Malanchak does identify the source of the leaded contamination as former UST's[.] ... Pine Belt Oil Company, Inc., via this letter, formally notifies the [MDEQ] that Pine Belt Oil Company, Inc. is in no way responsible for the remediation of the area north and

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