Cooper Industries v. City of South Bend

• Decision Date: 11 April 2007
• Docket Number: No. 49A04-0511-CV-637.,49A04-0511-CV-637.
• Citation: 863 N.E.2d 1253
• Parties: COOPER INDUSTRIES, LLC, as successor to Studebaker Corporation, Century Indemnity Company, as successor to Indemnity Insurance Company of North America, Zurich American Insurance Company as successor to Zurich Insurance Company, Certain Underwriters at Lloyd's London and Certain London Market Insurers, Hartford Accident and Indemnity Company, Studebaker-Packard Corporation, and Studebaker Corporation, Appellants-Defendants, v. The CITY OF SOUTH BEND, Indiana and The South Bend Redevelopment Commission, Appellees-Plaintiffs.
• Court: Indiana Appellate Court

863 N.E.2d 1253

COOPER INDUSTRIES, LLC, as successor to Studebaker Corporation, Century Indemnity Company, as successor to Indemnity Insurance Company of North America, Zurich American Insurance Company as successor to Zurich Insurance Company, Certain Underwriters at Lloyd's London and Certain London Market Insurers, Hartford Accident and Indemnity Company, Studebaker-Packard Corporation, and Studebaker Corporation, Appellants-Defendants, v. The CITY OF SOUTH BEND, Indiana and The South Bend Redevelopment Commission, Appellees-Plaintiffs.

No. 49A04-0511-CV-637.

Court of Appeals of Indiana.

April 11, 2007.

Mark E. Shere, Indianapolis, IN, Dale E. Stephenson, Allen A. Kacenjar, Squire, Sanders & Dempsey L.L.P., Cleveland, OH, Mary Rose Alexander, Thomas Heiden, Latham & Watkins, L.L.P., Chicago, IL, Vicki Wright, Libby Mote, Krieg Devault, L.L.P., Indianapolis, IN, for Appellants.

George M. Plews, Jeffrey D. Featherstun, Tina M. Richards, Plews Shadley Racher & Braun Indianapolis, IN, Cheryl A. Greene, South Bend, IN, for Appellees.

OPINION

ROBB, Judge.

Case Summary and Issue

Cooper Industries, LLC, ("Cooper")¹ appeals from the trial court's order partially granting a motion by the City of South Bend, Indiana and the South Bend Redevelopment Commission (collectively, "the City") for partial summary judgment. The trial court found that, as a matter of law, Cooper was the corporate successor to the liabilities of Studebaker Corporation ("Studebaker") and entered summary judgment in favor of the City on that issue. The trial court also found that the City could maintain its claims against Cooper under the Environmental Legal Action Statute ("ELA")² and under Indiana tort law. The trial court further determined the City's claims were timely as to parcels of property purchased within six years of its filing the suit. On appeal, Cooper raises several issues, but we find the statute of limitations issue dispositive. Concluding that the applicable six-year statute of limitations bars the City's claims, we reverse.

Facts and Procedural History

Beginning in the 1850s, Studebaker, a Michigan corporation, manufactured first wagons and then automobiles in the City. Studebaker's facilities in the City ultimately covered 104 acres, including approximately 3.65 million square feet under roof. Studebaker became a diversified manufacturer of many types of industrial products in the 1950s and 1960s and continued to manufacture automobiles at its South Bend facilities until it discontinued manufacturing automobiles in December 1963, at which time Studebaker divested its automotive operations in the City.

In 1967, Studebaker combined with Worthington Corporation ("Worthington") to form a new company, Studebaker-Worthington Inc. ("Studebaker-Worthington"). In 1979, McGraw-Edison Company ("McGraw-Edison") acquired all outstanding shares of Studebaker-Worthington. In 2004, McGraw-Edison merged into Cooper, Industries, Inc. Then, Cooper Industries, Inc. merged into Cooper Industries, LLC.

Following Studebaker's divestiture of its automotive facilities in the City, the facilities were used for a variety of other operations. Subsequently, the City began acquiring property for its Studebaker Corridor Development Plan. The City planned to demolish the buildings and make the site available for disposition to a private developer. After conducting various evaluations of the former Studebaker facilities, the City determined there were significant environmental releases from Studebaker's manufacturing operations still impacting the soil and groundwater at those facilities and surrounding areas.

In March 2003,³ the City filed this action against McGraw-Edison, which later merged into Cooper,⁴ seeking to hold it liable as Studebaker's liability successor. The City seeks recovery of its costs under Indiana environmental statutes and common law tort theories.

Both sides moved for summary judgment. The trial court issued partial summary judgment, finding that as a matter of law Cooper is the corporate successor to the liabilities of Studebaker. The trial court further found that the City can maintain its claims under tort law and under the ELA, and that all of the City's claims are timely as to any property purchased within six years of its filing the suit. Cooper appeals, arguing that all of the City's claims are barred by the statute of limitations, that Cooper did not assume Studebaker's liabilities, that the City may not pursue a claim under the ELA because the City is neither the State nor a private person, and that the City's tort claims are barred under the doctrine of caveat emptor. Cooper now appeals.

Discussion and Decision⁵

I. Summary Judgment Standard of Review

The standard of review for a ruling on summary judgment is well-settled.

In reviewing a motion for summary judgment, this court applies the same standard as the trial court. We must determine whether there is a genuine issue of material fact and whether the law has been correctly applied by the trial court. Summary judgment is appropriate only if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Neither the trial court, nor the reviewing court, may look beyond the evidence specifically designated to the trial court. Once the movant for summary judgment has established that no genuine issue of material fact exists by submission of materials contemplated by [Indiana Trial Rule 56], the nonmovant may not rest on his pleadings but must set forth specific facts, using supporting materials contemplated under the rule, which show the existence of a genuine issue for trial. A trial court's grant of summary judgment is "clothed with a presumption of validity," and the appellant bears the burden of demonstrating that the trial court erred.

Guerrero v. Allison Engine Co., 725 N.E.2d 479, 481 (Ind.Ct.App.2000) (quoting Stevenson v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 470-71 (Ind.Ct.App.1996)).

II. Statute of Limitations

A. Statute of Limitations Application To Tort Claims

The trial court determined Cooper did not sustain an affirmative defense based on the statute of limitations. Order at 3.

"A party pleading a statute of limitations bears the burden of proving the suit was commenced beyond the statutory time allowed." In re Paternity of K.H., (Ind.Ct. App.1999). Ind.Code section 34-11-2-7 allows claims brought within six years for injury to real property. South Bend's claims are timely as to all property purchased within six (6) years of the date of this action.

Id. Neither Cooper nor the City challenge the trial court's application of Indiana Code section 34-11-2-7, the general statute of limitations for injury to property other than personal property.

A determination of whether the City's tort claims are time barred by this statute of limitations rests on when the cause of action accrued. A cause of action accrues, and the statute of limitations begins to run, when the plaintiff knew, or in the exercise of ordinary diligence could have discovered, that an injury had been sustained as a result of the tortious act of another. Wehling v. Citizens Nat'l Bank, 586 N.E.2d 840, 843 (Ind.1992). The determination of when a cause of action accrues is generally a question of law for the courts to determine. Meisenhelder v. Zipp Exp., Inc., 788 N.E.2d 924, 928 (Ind. Ct.App.2003) (citing Malachowski v. Bank One, Indianapolis, 590 N.E.2d 559, 564 (Ind.1992)). For claims to accrue, it is not necessary that the full extent of the damage be known or even ascertainable, but only that some ascertainable damage has occurred. C & E Corp. v. Ramco Indus., Inc., 717 N.E.2d 642, 644 (Ind.Ct.App. 1999).

The City's complaint was filed on March 19, 2003. Thus, we must determine if the City knew of, or could have discovered, the damage to the Studebaker property before March 19, 1997.

Cooper argues this suit is time barred because the City had comprehensive knowledge of the contamination at issue for at least fourteen years before filing suit. In support, Cooper points out that the City acquired the Transwestern Site (the location of Studebaker's former Truck Assembly plant) by donation in 1986 and at that time "figured that there would be some problems" associated with the property possibly including "USTs" and "environmental contamination." See Appellant's Br., Tab B # 12, 13. To assess the environmental condition of the site, the City hired two consultants. Id. at Tab B # 14. The first environmental consultant conducted environmental testing and its report to the City concluded that "groundwater may be transporting contaminants under" the Transwestern Site and that "a source of hydrocarbons may exist below the site." Id. at Tab B # 15. The second environmental consultant also collected samples in a broader area of the Studebaker Corridor and its report revealed "VOC contamination in the groundwater sample from each boring." It also found barium, cadmium, chromium and mercury in Corridor groundwater at levels up to 170 times the national drinking water standards. Id. at Tab B # 16.

Further, in 1990, the City formally declared the Studebaker Corridor to be a redevelopment area. Id. at Tab B # 17. The City hired a third consultant to conduct an environmental assessment of a broad area of the Corridor. This assessment occurred in September of 1990. Id. at Tab B # 18. The report resulting from that assessment recommended "soil sampling" and a "hydrogeological investigation" of the site due to its use as a manufacturing facility and other events, including the presence of historic underground storage tanks. Id. at Tab B # 19. In October, 1990, the City hired environmental legal counsel to provide advice regarding the environmental concerns associated with the redevelopment of the properties. These concerns included the allocation of environmental liabilities to responsible parties. Id. at Tab B # 20. The City acknowledged the...