Farm Bureau Mut. Ins. Co. of Michigan v. Porter & Heckman, Inc.

• Citation: 560 N.W.2d 367,220 Mich.App. 627
• Decision Date: 27 December 1996
• Docket Number: 171426,Docket Nos. 171425
• Parties: FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Subrogee of David and Peggy Carrico, Plaintiff-Appellant, v. PORTER & HECKMAN, INC., Defendant/Third-Party Plaintiff/Appellee, v. David and Peggy CARRICO, Third-Party Defendants/Appellants. Robert A. SMITHSON and Arlene V. Smithson, Husband and Wife, Plaintiffs, v. David CARRICO and Peggy Carrico, Husband and Wife, and Porter & Heckman, Inc., a Michigan Corporation, Defendants. PORTER & HECKMAN, INC., Defendant/Cross-Plaintiff/Cross-Defendant/Appellee, v. David CARRICO and Peggy Carrico, Cross-Defendants/Cross-Plaintiffs/Appellants.
• Court: Court of Appeal of Michigan (US)

Page 367

560 N.W.2d 367

220 Mich.App. 627

FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, Subrogee

of David and Peggy Carrico, Plaintiff-Appellant, v. PORTER & HECKMAN, INC., Defendant/Third-Party Plaintiff/Appellee, v. David and Peggy CARRICO, Third-Party Defendants/Appellants.

Robert A. SMITHSON and Arlene V. Smithson, Husband and Wife, Plaintiffs, v. David CARRICO and Peggy Carrico, Husband and Wife, and Porter & Heckman, Inc., a Michigan Corporation,

Defendants.

PORTER & HECKMAN, INC., Defendant/Cross-Plaintiff/Cross-Defendant/Appellee, v. David CARRICO and Peggy Carrico,

Cross-Defendants/Cross-Plaintiffs/Appellants.

Docket Nos. 171425, 171426.

Court of Appeals of Michigan.

Submitted Jan. 9, 1996, at Detroit.

Decided Dec. 27, 1996, at 9:15 a.m.

Released for Publication March 18, 1997.

Gault, Davison, Bowers, Hill, Parker & McAra by Frederick L. Schmoll, III, Flint, for Farm Bureau Mutual Insurance Company of Michigan and David and Peggy Carrico.

Collison & Collison, P.C. by Jeffrey C. Collison and Lori A. Ittner, Saginaw, for Porter & Heckman, Inc.

Before GRIBBS, P.J., and MARILYN KELLY and WHITE, JJ.

WHITE, Judge.

This is a suit under Michigan's Environmental Response Act (MERA) (Act 307), M.C.L. § 299.601 et seq.; M.S.A. § 13.32(1) et seq., ¹ which arose after fuel oil stored in an above-ground tank connected to a residential furnace leaked, resulting in groundwater and soil contamination. The issue is whether defendant Porter & Heckman, Inc., a plumbing and heating repair business that serviced the furnace, was an "operator" of a facility ² or an "arrange[r] for disposal" ³ of a hazardous substance under the MERA, such that it may be held liable for contribution ⁴ toward response costs incurred to remediate the contamination. The circuit court concluded that defendant neither operated the facility nor arranged for disposal of the fuel oil and granted defendant's motion for partial summary disposition brought under MCR 2.116(C)(8) and (10). Farm Bureau appeals, and we affirm.

I

Farm Bureau Insurance Company (plaintiff) is the insurer and subrogee of the Carricos, who own property in Columbiaville, Michigan. The Carrico home on that property is heated by a furnace that uses oil; the oil is stored in an outdoor, above-ground storage tank that is connected to the furnace by a pipe. The tank holds approximately 200 to 250 ⁵ gallons of fuel oil. Around the bottom of the fuel storage tank there is a spigot-like portion that connects to a small steel canister (the filter unit), within which sits a filter to trap impurities. This filter unit, like the fuel storage tank, is outdoors and is connected to the pipe that goes into the Carrico house and furnace.

In its complaint, plaintiff, as the Carricos' subrogee, sought legal and equitable relief and alleged common-law negligence, malpractice, nuisance, violations of Michigan's Environmental Protection Act, and violations of the MERA. It alleged that defendant was in the business of supplying fuel to and servicing heating oil tanks and that at all times relevant to this action the Carricos contracted with defendant to supply and service their above-ground heating oil tank. Plaintiff's complaint further alleged that on January 7, 1991, defendant made a service call to the Carrico home in response to a complaint that the house was not being heated, and that, after discovering that the stoppage was due to ice that had formed in a filter bowl (i.e., the filter unit) attached to the heating oil tank, defendant's agent cleared the ice and installed a new filter, but did not install a new filter unit. The complaint alleged that because of ice expansion and corrosion of the filter unit, a hole had developed at the bottom of the filter bowl, which caused fuel oil to leak onto the ground, and that the leak caused extensive contamination of the Carricos' and an adjacent neighbor's properties. ⁶ Plaintiff alleged that the contamination threatened the environment, including a lake around which many people live, and that it had been forced to spend large amounts of money to determine the extent of the contamination, which was not yet clear.

Defendant's answer denied that it engaged in the business of supplying fuel. The answer admitted that on January 7, 1991, defendant replaced "the fuel filter which had become inoperative due to accumulation of water or condensation" within the heating oil tank, but that defendant did not replace the canister/filter unit because it was intact, was not leaking, and was functioning properly. Defendant denied that on January 7, 1991, the filter unit had a hole in it causing oil to leak out. Defendant's answer included a host of affirmative defenses.

Defendant filed a third-party complaint against the Carricos, alleging that the Carricos were liable to defendant for all or part of the claims asserted against defendant, that the Carricos owed duties to owners of adjacent property that they breached by failing to inspect, test, or properly maintain heating equipment and its component parts, and that they failed to mitigate damages or take immediate corrective action.

In response to an interrogatory asking if the allegedly defective equipment had been examined, plaintiff responded that a corrosion engineer and a mechanical engineer had examined the unit in June and July 1991 and April 10, 1992, and opined that the release occurred through a pin-size hole in the bottom of the filter canister. Plaintiff's answers also stated that the defect in the filter unit manifested itself when the tank "needed to be refilled earlier than normal. It was at that time, February 19, 1991, that the leak was found." In response to an interrogatory asking plaintiff to state in detail what representations, if any, were made by defendant concerning mechanical repairs made, plaintiff responded that it had three invoices from defendant. Subsequent answers stated details about the three invoices. The first one was dated December 20, 1990, at which time no heat was being produced and defendant replaced the blower motor and v-belt; the second one was dated January 7, 1991, at which time no heat was being produced and defendant reset the electrodes and replaced a frozen fuel filter; and the third one was dated February 19, 1991, when defendant replaced the oil pump.

In subsequent interrogatories, plaintiff was asked to list all firms making fuel oil deliveries to the Carricos' premises from January 1, 1989, through the date of the interrogatories. The Carricos answered by naming only Clark Fuel Oil. Plaintiff was also asked to state the date the furnace, tank, and component parts were purchased, along with the supplier and manufacturer, to which the Carricos responded, "I do not know when the furnace was purchased, it was in the house when I bought the house."

Defendant moved for summary disposition pursuant to MCR 2.116(C)(8) and (10), with respect to plaintiff's MERA claim only, arguing it could not be joined for purposes of contribution under the act because it did not fall within any of the classes of potentially responsible persons set forth at M.C.L. § 299.612; M.S.A. § 13.32(12), quoted infra. Defendant attached to its motion an affidavit of Larry Porter, defendant's president and co-owner, which averred that at all pertinent times defendant's business generally included plumbing repair, heating and cooling, and the sale of water-conditioning equipment; that defendant at no time undertook to provide the Carricos with fuel oil or any other hazardous substance for consumption or heating purposes; ⁷ that defendant at no relevant time arranged for disposal, treatment, or transport or engaged in the business of transporting fuel oil or any other similar hazardous substance; and that defendant at no relevant time had possession, ownership, or a possessory interest in either the Carrico or Smithson property.

Plaintiff's response to defendant's motion for summary disposition argued that a genuine issue of material fact existed regarding whether defendant may be liable as having "otherwise arranged for disposal" of the heating oil under the MERA, M.C.L. § 299.612(1)(d); M.S.A. § 13.32(12)(1)(d), quoted infra, and set forth the following factual statement:

Around the first of January 1991, the Carricos noticed that the furnace which heated their residential dwelling at 721 Lakeshore Drive, Columbiaville, Michigan was not functioning. The furnace utilizes fuel oil for heat generation. The Carricos contacted Porter & Heckman, a company involved in the repair of furnace [sic] to come out and fix the problem. Unbeknownst to the Carricos, the canister [filter unit] housing the filter system attached to the fuel oil tank was damaged due to the freezing or excess water in the system. On January 7, 1991, Porter & Heckman's repair person replaced a frozen fuel filter on the Carrico's fuel oil tank. The repair person did not inspect nor [sic] replace the damaged canister housing. The water build up in the canister housing caused corrosion to the interior of the canister allowing fuel oil to flow out of the fuel oil tank. The leak was detected around February 19, 1991.

Since discovery of the release, the Carricos and Farm Bureau have had to retain the services of environmental consultants to investigate the extent of the contamination caused by the release. During an initial excavation phase, approximately 420 cubic yards of soil were removed. Further investigations are continuing to fully define the extent of the remaining soil and groundwater at the Carrico residence. ⁸

In its response to defendant's motion, plaintiff noted that there was no dispute that there had been a release of a hazardous substance at the Carricos' residence, which was a "facility" under the act, or that plaintiff had incurred response costs.

The Smithsons, who are not parties to this appeal, also opposed defendant's motion, arguing that defendant was either an "operator" under ...