Danella Southwest, Inc. v. Southwestern Bell Telephone Co.

• Decision Date: 16 October 1991
• Docket Number: No. 88-0578-C-5.,88-0578-C-5.
• Citation: 775 F. Supp. 1227
• Parties: DANELLA SOUTHWEST, INC., Plaintiff, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

775 F. Supp. 1227

DANELLA SOUTHWEST, INC., Plaintiff, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Defendant.

No. 88-0578-C-5.

United States District Court, E.D. Missouri, E.D.

October 16, 1991.

COPYRIGHT MATERIAL OMITTED

Thomas F. Jones, Clayton, Mo., John E. Price and Joseph D. Sheppard, Woolsey, Fisher, Whiteaker & McDonald, Springfield, Mo., for plaintiff.

Thad Hollie, Jr., Southwestern Bell Telephone Co., St. Louis, Mo., for defendant.

MEMORANDUM

LIMBAUGH, District Judge.

Plaintiff Danella Southwest, Inc. is a corporation engaged in the construction and excavation business. Defendant Southwestern Bell Telephone Company is a corporation engaged in the business of providing telephone service in several states including Missouri. Defendant contracted with plaintiff to excavate and remove dirt that, unknown to either party, was contaminated with 2,3,7,8 tetraclorodibenzo-p dioxin ("dioxin"). This action arises from a dispute between plaintiff and defendant as to their respective liability for the cost of containing the dioxin-contaminated dirt.

Plaintiff filed a three count second complaint against defendant. In Count I plaintiff seeks a declaration that it is not liable to defendant under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9613, for contribution of the costs incurred by defendant in containing the dioxin-contaminated dirt. In Count II plaintiff seeks to hold defendant liable for a breach of contract. Alternatively, plaintiff seeks to hold defendant liable on the theory of promissory estoppel. In Count III plaintiff seeks to hold defendant liable for a prima facie tort.

Defendant filed a four count second amended counterclaim against plaintiff. In Count I defendant seeks to hold plaintiff liable for a breach of contract. In Count II defendant seeks indemnification. In Count III defendant seeks to hold plaintiff liable for negligence. In Count IV defendant seeks contribution from plaintiff under CERCLA for all costs incurred by defendant in containing the dioxin-contaminated dirt.

This action was tried before the Court on September 10, September 11, September 12, September 13, and September 14, 1990. The Court, having considered the pleadings, testimony of witnesses, and documents admitted into evidence, hereby makes the following findings of fact and conclusions of law as required by Fed. R.Civ.P. 52.

I. Findings of Fact

James Danella is the sole owner of a holding company that owns plaintiff and fifteen other construction companies operating in thirty states. The principal business of Mr. Danella's construction companies is digging trenches and laying cable for power companies. Mr. Danella's entire enterprise employs between 1,500 and 1,800 employees and has over 3,500 pieces of equipment.

Defendant approached Mr. Danella after learning of his excellent reputation and informed Mr. Danella that there was a lot of work for a good contractor in the State of Missouri. Defendant invited Mr. Danella to set up an operation in Missouri and promised him that defendant would have enough work to keep ten work crews busy. Defendant did not state how long it would offer work to Mr. Danella's operation. Mr. Danella accepted defendant's invitation and incorporated plaintiff in the State of Missouri in late 1984. Mr. Danella spent 2½ million dollars in start-up costs for plaintiff.

Defendant utilizes continuing unit price agreements with all of the contractors that perform excavation and construction work for it. In a continuing unit price agreement defendant and the contractor agree to a schedule of prices, i.e., the hourly cost for the use of a backhoe, the hourly wage for a backhoe operator for any excavation or construction work to be done in a designated area. The continuing unit price agreement sets forth a period, generally one year, in which such schedule of prices is effective. When defendant provided a job for the contractor in the area covered by the continuing unit price agreement, the contractor would do the job for the prices set forth in the continuing unit price agreement. The continuing unit price agreements contain other provisions that govern the relationship between defendant and the contractor. In paragraph 1, the continuing unit price agreements provide:

The Telephone Company does not commit itself to order any specific quantity of work under this agreement and may have the same or similar work performed by its own employees or other contractors; but, so long as this agreement continues in existence, the Contractor agrees to perform for the Telephone Company, at the scheduled prices and in the geographic locations listed in the Continuing Unit Price Schedule attached hereto and incorporated herein by this reference, such work as is specified in job requests as may be issued from time to time by the Telephone Company.

In paragraph 4 the continuing unit price agreements provide:

This agreement may be terminated by either party giving thirty days written notice to the other party. Jobs in progress at the time of termination will be continued under this agreement until completed by the Contractor and accepted by the Telephone Company.

After Mr. Danella set up plaintiff in Missouri, plaintiff entered into continuing unit price agreements with defendant for the purpose of laying cable. On July 9, 1985 plaintiff and defendant entered into a continuing unit price agreement whereby plaintiff would bury cable and service wire for defendant in the area designated as Manchester North. The area of Manchester North includes the city of Eureka, Missouri. On February 12, 1986 defendant asked plaintiff to dig a trench and place buried cable along North Street in Eureka, Missouri. Defendant considered the job to be of an urgent nature.

The North Street site in Eureka is approximately one mile from Times Beach, Missouri. Prior to 1982 an asphalt contractor sprayed dioxin-contaminated waste oils on the streets in Times Beach, Missouri. In 1982 the residents of Times Beach were evacuated due to dioxin contamination. Prior to 1984 dioxin-contaminated waste oil was also sprayed on East North Street in Eureka, Missouri. In 1984 the Environmental Protection Agency ("EPA") determined that the shoulders of East North Street were contaminated by dioxin with levels up to 6 parts per billion ("ppb").¹ The EPA placed a layer of bituminous pavement over the contaminated area on East North Street in order to contain the dioxin and mitigate the possible hazard at the site.

From February 11, 1986 to February 13, 1986 William Dye, an employee of defendant, prepared and mailed an application for a permit to Eureka City Hall. In the permit defendant requested permission to

Place buried cable along West North Street as shown on the attached work prints. Saw cut and restore 357 feet asphalt street.

Although the permit only mentioned excavation on West North Street, the map attached to the permit shows that the excavation extended from West North Street onto East North Street. The application for a permit was approved by Jim Branscum, the building commissioner of the City of Eureka. On February 19, 1986 Ernie Flora, an employee of plaintiff, visited Mr. Branscum at Eureka City Hall and picked up the approved permit. It was plaintiff's responsibility to arrange for a place to dump the excavated dirt. While at Eureka City Hall, Mr. Flora asked Mr. Branscum if there was any place available to dump the excavated dirt. At that time Mr. Mark Brummit intervened and gave permission to dump the excavated dirt on property leased by Mr. Brummit and owned by Mr. Russell J. Schwarz. The property, located on Williams Road in Eureka, was formerly used as a gas station. There was no mention of dioxin during this conversation between Mr. Branscum, Mr. Flora, and Mr. Brummit.

The job was to be performed by plaintiff pursuant to the continuing unit price agreement in effect since July 9, 1985 for the Manchester North area and Order No. 0610105. The work was performed by plaintiff between February 24, 1986 and March 3, 1986. Plaintiff was paid approximately $30,000.00 to complete the job. Kelly King was plaintiff's foreman at the North Street site. As foreman Mr. King was responsible for the supervision of plaintiff's work crew.² Mr. King was also responsible for contacting utility companies to determine the locations of buried water, electric, gas, and sewer lines.³ Mr. King visited utility companies to obtain up-to-date information because the maps supplied by utility companies were often inaccurate, and if plaintiff inadvertently damaged or ruptured a utility line or cable, plaintiff paid to fix it. Before plaintiff began excavation on North Street Mr. King visited James Thomas Stark, an employee of the City of Eureka Water Department, to ascertain where water lines were located under North Street.

Toward the completion of the North Street job plaintiff learned that it had been digging in dioxin-contaminated dirt. There is a factual dispute as to who notified Mr. King that the excavated dirt on East North Street was contaminated with dioxin. Mr. Stark testified that he notified Mr. King of the contamination when he revisited the site after plaintiff inadvertently ruptured a water line on East North Street during excavation. Mr. King testified, however, that he learned of the dioxin contamination from the mayor of Eureka after the rupture of the water line.

At the time plaintiff learned of the dioxin contamination, plaintiff had completed excavation of the trench and had laid the pipe and cable. Furthermore, plaintiff had hauled the last pile of dioxin-contaminated dirt to the Williams Road site, and had begun backfilling the trench with gravel. After plaintiff learned of the dioxin contamination, plaintiff ceased its operations and called Thomas Goughenour, a construction supervisor employed by defendant.⁴ William Ruck, the employee of plaintiff who hauled dirt away from...