Diversified Services, Inc. v. Simkins Industries

• Decision Date: 26 March 1997
• Docket Number: No. 94-0217-CIV.,94-0217-CIV.
• Citation: 974 F.Supp. 1448
• Parties: DIVERSIFIED SERVICES, INC., Plaintiff, v. SIMKINS INDUSTRIES, INC., et al., Defendant.
• Court: U.S. District Court — Southern District of Florida

Page 1448

974 F.Supp. 1448

DIVERSIFIED SERVICES, INC., Plaintiff, v. SIMKINS INDUSTRIES, INC., et al., Defendant.

No. 94-0217-CIV.

United States District Court, S.D. Florida.

March 26, 1997.

David Peter Charles Ashton, Robert Mark Brochin, Richard A. Pettigrew, Morgan Lewis & Bockius, Miami, FL, for Diversified Services, Inc.

Stephen Ross Verbit, Ruden McClosky Smith Schuster & Russell, Fort Lauderdale, FL, Jill Nexon Berman, Berman, Wolfe & Rennert, P.A., Miami, FL, Scott Daryl Lieberman, Wilson Elser Moskowitz Edelman & Dicker, Miami, FL, Rudolph F. Aragon, Paul Joseph Schwiep, Ava Janine Borrasso, Atagon Burlington Weil & Crockett, Miami, FL, for Simkins Industries, Inc.

Stephen Ross Verbit, Earl Blank Kavanaugh & Stotts, Miami, FL, Rudolph F. Aragon, Paul Joseph Schwiep, Ava Janine Borrasso, Atagon Burlington Weil & Crockett, Miami, FL, for Leon Simkins.

Rudolph F. Aragon, Paul Joseph Schwiep, Atagon Burlington Weil & Crockett, Miami, FL, for Steven F. Gadon, Ronald Simkins.

ORDER AFFIRMING MAGISTRATE'S REPORT AND RECOMMENDATION

FERGUSON, District Judge.

THIS CAUSE is before the Court on the Defendant Simkins Industries, Inc.'s motion to dismiss the plaintiff's amended complaint (D.E.28) and motion for partial summary judgment (D.E. 57), and the Plaintiff Diversified Services, Inc's motion for partial summary judgment (D.E.42).

THESE MATTERS were referred to the Honorable William C. Turnoff, United States Magistrate Judge. A Report and Recommendation dated November 27, 1995 has been filed, recommending that the Defendant Simkins' motion to dismiss (D.E.28) be DENIED as to Counts I, II and VII and GRANTED as to Counts III, IV, V and VI; the Defendant Simkins' motion for partial summary judgment (D.E.57) be DENIED; and the Plaintiff Diversified's motion for partial summary judgment (D.E.42) be GRANTED. The Court having considered the objections to the report and the pertinent portions of the file, it is

ORDERED AND ADJUDGED that United States Magistrate Judge William C. Turnoff's Report and Recommendation of November 27, 1995 is AFFIRMED.

REPORT AND RECOMMENDATION

TURNOFF, United States Chief Magistrate Judge.

This Cause has been referred to the undersigned United States Magistrate Judge by the Honorable Wilkie D. Ferguson, Jr., United States District Court Judge, for a Report and Recommendation in accordance with 28 U.S.C. § 636(b). Under consideration are Defendant Simkins Industries, Inc.'s Motion to Dismiss Plaintiff Diversified Services, Inc.'s Amended Complaint (D.E.28), Motion for Partial Summary Judgment (D.E.57) and Plaintiff Diversified Services, Inc.'s Motion for Partial Summary Judgment and Supporting Memorandum (D.E.42).

FACTUAL AND PROCEDURAL BACKGROUND

On February 14, 1994, Plaintiff Diversified Services, Inc. ("Diversified") filed an Amended Complaint against Defendant Simkins Industries, Inc. ("Simkins") and others alleging that Simkins released hazardous substances on real property leased by Diversified from Simkins. Diversified alleges that the hazardous substances on the property originated from Simkins' prior use of the property.

Simkins has owned the subject property located in Miami, Florida since approximately 1940. Up until 1987, Simkins operated a paperboard and cardboard box manufacturing plant on said property. Simkins also maintained aboveground and underground storage tanks which contained diesel oil, fuel oil, and leaded gasoline. Amended Complaint (D.E. 7 at ¶ 16).

In November 1987, Simkins entered into a "net net net lease" with Diversified whereby all ownership responsibility for the leased property was transferred to Diversified. From November 1987 until July of 1988, Diversified operated a rental car facility on the leased premises. In July 1988, Diversified began excavating on the leased premises in order to install underground storage tanks for the storage of unleaded gas and an oil/water separator. During the excavation process, two old and corroded fuel storage tanks were discovered. The Dade County Department of Environmental Resources Management ("DERM") was immediately notified of Diversified's discovery.

In September 1988, DERM tested the area which contained the corroded storage tanks and discovered the existence of possible diesel fuel. In addition, Diversified's consultants tested the excavated soils and discovered elevated levels of lead and chromium as well as other hazardous substances. These tanks were subsequently removed by Diversified.

In April 1989, DERM again inspected the property and discovered continuing contamination problems in both the soil and the groundwater. The contaminants DERM found to be present included petroleum hydrocarbons, chlorinated hydrocarbons, oil, grease, diesel fuel and lead.

Diversified has complied with all state and county regulations in remedying the hazardous waste problem on the leased property. Diversified alleges that it has spent approximately $1,180,000 in investigation and remedial activities on the leased premises.

Diversified and Simkins are in disagreement as to who is responsible for the environmental clean-up costs on the property pursuant to the subject lease and applicable law. Each believes that the other is responsible for the costs associated with the investigation and clean-up of the property. Unable to resolve the issue of whom should pay the clean-up costs, Diversified filed the instant action.

In its Amended Complaint, Diversified alleges seven causes of action against Simkins. Counts I and II are claims-for cost recovery and contribution under §§ 107 and 1113(f) of the Comprehensive Environmental Response, Compensation and Liability Act of 1986 (hereinafter "CERCLA"), 42 U.S.C. §§ 9601-9626. Counts III through VI are claims seeking recovery costs and contribution under Florida law.¹ Count VII seeks a declaratory judgment as to the parties' rights and obligations under the lease with respect to the environmental condition, investigation, assessment and clean-up of the property.

Both parties have moved for partial summary judgment as to whether the lease requires Diversified to remove any contamination from the property and whether the lease provides for indemnification. In addition Simkins moves to dismiss Counts III-VI of the Amended Complaint, for failure to state a cause of action for which relief can be granted and for lack of subject matter jurisdiction.

ANALYSIS

I. Summary Judgment as to Count VII

Federal Rule of Civil Procedure 56(c) provides that summary judgment is appropriate:

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Summary Judgment may be entered only where there is no genuine issue of material fact. Moreover, the Supreme Court has noted that "there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the evidence is merely colorable or is not significantly probative, summary judgment may be granted.

In the instant case, the issue presented by the motions for summary judgment is one of contract interpretation. As such, it is particularly susceptible to determination as a matter of law. See Quesada v. Director, 577 F.Supp. 695, 697 (S.D.Fla.1983), aff'd, 753 F.2d 1011 (11th Cir.1985).

Diversified seeks partial summary judgment finding that the lease does not hold Simkins harmless from any costs or expenses associated with the environmental contamination that existed prior to the effective date of the lease. Simkins, on the other hand, seeks summary judgment finding that the lease requires that Diversified assume all ownership responsibility for the property, including removal of contaminates from the property and indemnification for any costs Simkins has or will incur related to the environmental contamination.

Although the Eleventh Circuit, is silent as to the propriety of indemnification agreements in CERCLA cases, other circuits have clearly Established that private parties may allocate between themselves the costs of clean-up associated with hazardous waste. See Joslyn Mfg. Co. v. Koppers Co., Inc., 40 F.3d 750 (5th Cir.1994); Fisher Development Co. v. Boise Cascade Corp., 37 F.3d 104 (3d Cir.1994); Kerr-McGee Chem. Corp. v. Lefton Iron and Metal Co., 14 F.3d 321, 327 (7th Cir.1994); Niecko v. Emro Marketing Co., 973 F.2d 1296 (6th Cir.1992); Mardan Corp. v. C.G.C. Music Ltd., 804 F.2d 1454 (9th Cir.1986). Whether a specific contract provides for indemnity vis-a-vis CERCLA liability is determined by state rather than federal law. See Beazer East, Inc. v. Mead Corp., 34 F.3d 206 (3d Cir.1994); John S. Boyd Co., Inc. v. Boston Gas Co., 992 F.2d 401 (1st Cir.1993); Commander Oil Co. v. Advance Food Serv. Equip., 991 F.2d 49 (2d Cir.1993); United States v. Hardage, 985 F.2d 1427, 1433 (10th Cir.1993).

Under Florida law, indemnification agreements are not favored and are strictly construed. Florida law dictates that contracts which attempt to indemnify a party against its own wrongful conduct will be enforced only if they express an intent to indemnify in clear and unequivocal terms. Cox Cable Corp. v. Gulf Power Co., 591 So.2d 627, 629 (Fla.1992); Charles Poe Masonry, Inc. v. Spring Lock Scaffolding Rental Equip. Co., 374 So.2d 487, 489 (Fla.1979).

In the instant case, Simkins contends that the contract read as a whole allocates responsibility for environmental clean-up to Diversified. As additional support for its allegations, Simkins specifically relies on paragraphs 2 and 16.B of the lease. Paragraphs 2 and 16.B of the lease provide:

2. Site Preparation

The premises consist of parking areas, a two story office, warehouse and open air storage building to be site...