Delta Fuels, Inc. v. Ohio Dep't of Transp.

• Decision Date: 31 December 2015
• Docket Number: No. 15AP–206.,No. 15AP–28 ,15AP–28
• Citation: 57 N.E.3d 220
• Parties: DELTA FUELS, INC., Plaintiff–Appellant, v. OHIO DEPARTMENT OF TRANSPORTATION, Defendant–Appellee. Ohio Department of Transportation, Plaintiff–Appellant, v. Delta Fuels, Inc., Defendant–Appellee, Knight Enterprises, Inc. et al., Defendant–Appellee.
• Court: Ohio Court of Appeals

57 N.E.3d 220

DELTA FUELS, INC., Plaintiff–Appellant

v.OHIO DEPARTMENT OF TRANSPORTATION, Defendant–Appellee.

Ohio Department of Transportation, Plaintiff–Appellant

v.Delta Fuels, Inc., Defendant–Appellee

Knight Enterprises, Inc. et al., Defendant–Appellee.

No. 15AP–28

No. 15AP–206.

Court of Appeals of Ohio, Tenth District, Franklin County.

Dec. 31, 2015.

Wickens, Herzer, Panza, Cook & Batista Co., and Joseph E. Cirigliano, Avon; Giarmarco, Mullins & Horton, PC, and Daniel J. Kelly; and Ben M. Gonek, for Delta Fuels, Inc.

Michael DeWine, Attorney General, William C. Becker, and Craig D. Barclay, for Ohio Department of Transportation.

SADLER, J.

{¶ 1} This decision addresses two appeals from the Court of Claims of Ohio arising out of an unusual procedure in which the court held a simultaneous bench and jury trial to assess certain claims related to a 2005 Toledo-area fuel spill. In case No. 15AP–28, plaintiff-appellant, Delta Fuels, Inc. (“Delta Fuels”), appeals from the court's December 12, 2014 bench trial judgment finding in favor of defendant-appellee, Ohio Department of Transportation (“ODOT”), on Delta Fuels' negligence, breach of contract, and breach of implied warranty claims. In case No. 15AP–206, plaintiff-appellant, ODOT, appeals from the court's March 6, 2015 judgment denying ODOT's motion for judgment notwithstanding the verdict and motion for new trial on ODOT's negligence counterclaim, which, pursuant to ODOT's demand, was tried to a jury and produced a verdict in favor of Delta Fuels.¹ For the reasons that follow, we affirm the judgment of the trial court in both instances.

I. BACKGROUND

{¶ 2} Delta Fuels owns and operates a petroleum terminal facility in Toledo, consisting of five above-ground storage tanks, each capable of holding approximately 2.5 million gallons of fuel, surrounded by a secondary containment system. In this context, a secondary containment system is, in simple terms, a barrier intended by law to be “sufficiently impervious” to contain a spill equivalent to the facility's largest tank, plus a certain buffer percentage, long enough to allow the owner to recapture the gasoline. (Tr. 793.)

{¶ 3} On the morning of November 25, 2005, the Friday after Thanksgiving, a Delta Fuels employee inadvertently released over 100,000 gallons of gasoline from an above-ground storage tank. The gasoline escaped underneath the surrounding secondary containment system, entered state land where ODOT was coordinating construction of an entrance and exit ramp to the Veterans Skyway Bridge, and nearly reached the Maumee River.

{¶ 4} Litigation giving rise to this appeal commenced on April 24, 2006, with Delta Fuels filing a complaint in the Court of Claims against ODOT alleging negligence, breach of contract, and breach of implied warranties.² On June 7, 2006, ODOT filed an answer and counterclaim. ODOT subsequently amended its answer and counterclaims several times, with the last amendment filed on February 27, 2014. ODOT's original and amended answers and counterclaims included attached, endorsed jury demands. On April 10, 2014, for the first time, Delta Fuels filed its own general demand for a jury trial.

{¶ 5} The case proceeded to trial from November 10 through November 19, 2014. In a rare combined bench and jury trial, the judge and the jury heard evidence pertaining to both Delta Fuels' claim and to ODOT's counterclaim. The judge discussed with the jury and with the attorneys the unusual split nature of the proceeding, which the judge thought to have occurred only once before in the Court of Claims. Neither party objected to the nature of the proceeding.

{¶ 6} Delta Fuels' theory for its negligence claim centered on ODOT's relocation of Delta Fuels' private waterline to just a few feet from the base of its secondary containment system. Delta Fuels presented evidence that its clay-based secondary containment system could hold water prior to the waterline construction and, therefore, could theoretically hold fuel and that ODOT's engineers owed a duty to design and construct the ramp project, including relocation of the waterline, in a manner that did not adversely affect its neighbors. Specifically, Delta Fuels' experts opined that ODOT's location of the new waterline approximately four feet from the foot of the berm with a trench wall cut just two and one-half feet from the foot of the berm, ODOT's use of a granular base to bed the waterline, and ODOT's construction of a connected sewer approximately one hundred yards away at a depth of seventeen feet, combined to create a “drawdown”/French drain effect. (Tr. 485.) According to these experts, the drawdown effect of ODOT's waterline construction dried out and cracked the clay-based secondary containment system, thereby increasing its permeability and allowing the fuel to quickly escape underground onto ODOT's land. Further, Delta Fuels presented evidence that, by cutting sand seams with the waterline trench and filling the trench with a granular base, ODOT created a preferential pathway for the fuel to migrate to the sewer system and approach the river.

{¶ 7} Regarding its response to the fuel spill, Delta Fuels presented evidence that its actions reflected its initial belief that the spill approximated 10,000 gallons or less, and difficulties in measuring the fuel in the tanks delayed discovering the ultimate quantity of fuel lost. Delta Fuels also contended that it believed the Toledo environmental services department had been contacted on the day of the spill who, by procedure, would have then alerted the Ohio Environmental Protection Agency (“Ohio EPA”).

{¶ 8} Delta Fuels additionally claimed that ODOT breached implied warranties and two contracts with Delta Fuels: the 2002 Right of Entry Agreement and the 2004 eminent domain settlement agreement and judgment entry. In the 2002 Right of Entry Agreement, ODOT and Delta Fuels agreed that the state and its contractors could have access to property at issue in a pending eminent domain proceeding for the purpose of relocating a portion of the berm and a fuel pipeline, constructing a fence, and tying in a drainage facility in connection with the ramp project. Delta Fuels presented evidence that ODOT's relocation of the waterline in July 2002 went outside the scope of the right of entry granted and encroached on Delta Fuels' easement associated with the waterline.

{¶ 9} In the 2004 eminent domain settlement agreement, Delta Fuels agreed to transfer a portion of land to ODOT and release any and all claims for further compensation resulting from construction and improvement of I–280 and from the appropriation of the property, in exchange for monetary compensation and work performed, and to be performed, by ODOT. Work performed by ODOT included “Fire hydrants. ODOT has installed a water line and five fire hydrants between the ramp and Delta Fuels's property per Toledo fire department requirements. ODOT will provide engineering documentation of this construction.” (June 25, 2004 Settlement Letter, 2.) Delta Fuels presented evidence that ODOT failed to install all five fire hydrants as stated.

{¶ 10} The theory of ODOT's counterclaim in negligence focused on Delta Fuels' non-delegable duty to maintain its secondary containment system as legally required and Delta Fuels' delayed and inadequate remediation response, particularly within the critical first few days following the spill. To these points, ODOT presented evidence that Delta Fuels failed in preventing such a migration by not maintaining legally compliant and adequate emergency response and spill remediation plans, not training its employees, not adequately testing the containment area, not equipping its facility with overflow alarms and safeguards, and not maintaining the berm. ODOT additionally presented evidence that Delta Fuels failed in responding to the fuel spill by not estimating the quantity of lost fuel based on the duration of the spill, not reporting the spill to the EPA as required, and not otherwise conducting the remediation appropriately and with a sense of urgency. For example, ODOT showed that its own contractor contacted the Ohio EPA on Tuesday, November 29, 2005, and that, on arrival, the Ohio EPA observed only one vacuum truck onsite and no exploratory digging outside of Delta Fuels' property to test for migration. ODOT also showed that several days later the Ohio EPA notified Delta Fuels to hire another environmental remediation firm to address the fuel release and that the following April, the federal EPA assumed responsibility for the clean up of the fuel spill, estimating that 80,000 gallons of gasoline remained.

{¶ 11} Further, ODOT presented evidence that construction of the waterline did not impact migration of the fuel outside of the secondary containment system. ODOT's experts testified that the new waterline location sat only a few feet from the old waterline, and both ODOT and the city of Toledo approved the location and construction of the new waterline. Although fuel was found in the new waterline and sewer, ODOT presented evidence that the fuel spill also migrated below both the waterline and the sewer, tending to disprove Delta Fuels' “drawdown” theory. ODOT's experts testified that the fuel escaped Delta Fuels' property by absorbing into the topsoil and moving laterally through sand seams naturally occurring throughout the secondary containment area and would have escaped even if the new waterline had not been constructed. Furthermore, Delta Fuels' experts admitted, on cross-examination, that they could not say that the fuel would not have migrated onto ODOT's property without the new waterline construction but, instead, emphasized that ODOT's work accelerated the speed that the fuel exited the secondary containment area and migrated toward the river.

{¶ 12} After closing arguments, the jury exited and, on Delta Fuels' claims, the trial court judge rendered a verdict in favor of ODOT. The jury deliberated on ODOT's...