Farm Credit Bank of Louisville v. USMP

• Decision Date: 26 August 1994
• Docket Number: Civ. A. No. 91-0126-L(CS).
• Citation: 864 F. Supp. 643
• Parties: FARM CREDIT BANK OF LOUISVILLE, Plaintiff, v. UNITED STATES MINERAL PRODUCTS COMPANY, Defendant.
• Court: U.S. District Court — Western District of Kentucky

864 F. Supp. 643

FARM CREDIT BANK OF LOUISVILLE, Plaintiff, v. UNITED STATES MINERAL PRODUCTS COMPANY, Defendant.

Civ. A. No. 91-0126-L(CS).

United States District Court, W.D. Kentucky, at Louisville.

January 6, 1994.

Memorandum Supplementing Opinion August 26, 1994.

Marion C. Fairey, C. Alan Runyan, Speights & Runyan, Hampton, SC, Stanley W. Whetzel, Taustine, Post, Sotsky, Berman, Fineman & Kohn, Louisville, KY, for plaintiff.

Michael A. Owsley, English, Lucas, Priest & Owsley, Bowling Green, KY, Stephen J. Imbriglia, Philadelphia, PA, for defendant.

MEMORANDUM OPINION

SIMPSON, District Judge.

This matter stands submitted on two motions for summary judgment by the defendant, United States Mineral Products (hereinafter "USMP"). USMP claims that plaintiff, Farm Credit Bank (hereinafter "FCB"), is barred from bringing this action due to its failure to comply with the relevant statute of limitations. USMP alternatively asserts in a second summary judgment motion that FCB has improperly calculated its damages.

Material at this point was deleted by Judge Simpson for purposes of publication.

I

The Farm Credit Bank Building is located at 201 West Main Street, Louisville, Kentucky, and was constructed in the late 1960s and early 1970s. During construction, fireproofing was sprayed onto the underside of the concrete floor slabs, metal deck, and structural steel. The fireproofing, which was manufactured by USMP, contained anywhere between 20% to 30% chrysotile asbestos. According to EPA definitions, the fireproofing was "friable." This means that it was capable of being reduced to a fine powder by hand pressure.

Title to the building was transferred several times during the early 1970s. FCB did not obtain title until sometime in 1975. It moved into the building on May 30, 1975. During the 1970s, the scientific community began to articulate concerns about health risks posed by asbestos. It was also during this time that the federal government began passing various regulations either limiting or restricting the use of asbestos products.

The question of whether asbestos was present in building products installed in the FCB building first arose in 1978. Ray Sanders, the building manager of FCB, asked Thomas Jones, one of the architects involved in the building's design, whether the building's fireproofing was of an asbestos material. Mr. Jones responded on August 4, 1978, that it was his belief and the belief of those who applied the fireproofing that it did contain an asbestos fiber which was permissible at that time. However, he stated that this was just an assumption and that the material would have to be tested before that could be confirmed.

It was not until October 10, 1980 that Sanders again asked Jones to follow up on whether the fireproofing material did indeed contain asbestos. In the interim, James Willoughby, who had been hired as a maintenance employee at FCB, noticed that in some places the fireproofing had fallen off and landed on various ceiling tiles. In Sanders' follow-up letter, he asked Jones to determine if the material contained an asbestos fiber that was "being regarded by some agencies as a long range health hazard." Jones, pursuant to the request of Sanders, sought information from a sales manager of USMP about the asbestos content of its product. By letter dated November 24, 1980, Jones responded to Sanders' inquiry indicating that his research had led him to the conclusion that the product used was asbestos free. However, he stated that he wanted to make sure that the product used in FCB's building was the same product he found to be non-toxic. He concluded by adding that if he found out anything of further interest he would let FCB know.

This seemed to convince FCB that it had no cause for concern, and the issue of asbestos did not arise again until late 1984. Apparently Sanders again became concerned as to whether the fireproofing contained asbestos, and a sample of it was sent to Pittsburgh Testing Laboratory. In its report dated December 10, 1984, Pittsburgh Testing Laboratory revealed that the material tested positive for asbestos.

It is unclear when exactly Sanders learned of the Pittsburgh report. However, sometime in mid-1985 Sanders read a Governor's Consumers Advisory Council report entitled Confronting the Problems of Asbestos in Kentucky: Findings with Recommendations for Action. One of the experts whose testimony was included in this report was that of David Banks. On September 25, 1985, Banks sent a letter to Sanders stating that he understood FCB might be seeking professional help concerning an asbestos related problem in its building. Shortly thereafter, FCB proceeded to hire Banks to conduct an asbestos survey of its building. The survey, which included bulk and air samples as well as a written report, was conducted and released on November 29, 1985. The report confirmed that asbestos-containing building materials, including fireproofing, were present in the building. However, the report also indicated that although asbestos-containing products were present, there was no detectable asbestos in the air. Nevertheless, the report made several recommendations including the following:

1. Now that friable asbestos-containing materials have been documented inside the building, occupants should be made aware of their presence and precautions they can take to avoid exposure to these materials. Legal counsel should be consulted to determine the best approach of informing persons involved. As a part of this notification, asbestos warning signs should be posted in areas where those materials may be encountered such as mechanical equipment rooms, penthouse, above suspended ceilings and on parking levels. Signs are important in warning persons not familiar with the building or this report who may come in contact with the asbestos. Such persons are maintenance and service personnel working for outside service companies, contractors, safety enforcement agencies, etc.

2. Until such time as asbestos in the building can be permanently abated, steps should be taken to protect occupants from exposure. These include continuous monitoring of these materials and cleanup followed by encapsulation of any damaged areas where friable material is dislodged or left exposed to the air or contact by persons. Maintenance staff are key to the success of these operations. They should receive special instruction covering what conditions to look for and steps to take in safely cleaning up any loose or damaged materials. Each instance should be reported and appropriate documentation filed in a permanent file....

4. Until permanent measures are taken to resolve possible exposure to asbestos, periodic testing of the air inside the building should be conducted using qualified consultants and laboratories. Although our testing indicated no problem at the time of testing, it should be remembered that testing was done at a time of very low activity within the building (a weekend). Conditions do change and when they do, the potential for changes in the airborne concentration of fibers exists. Periodic test data is also an important part of the permanent asbestos record....

7. A plan for dealing with asbestos-containing materials in the building on a long term basis should be developed soon. Once the presence of asbestos has been established, it is important to take steps to prevent exposure by employees or the public, and it is important to document the steps taken.

Professional consultants should be engaged to help in developing the plan.

Options available for consideration include removal, encapsulation and enclosure. Discussions and comparisons of these options is beyond the scope of this report since costs and disruption to office operations vary from one to the other. Removal, however, is the only permanent solution and has the advantage of not requiring continual monitoring of the condition of materials. ...

8. Legal counsel should also be consulted concerning the possibility of cost recovery actions. While most of the class action claims have already been closed to additional claimants, other avenues of cost recovery are still possible. It may be possible to recover some of the cost of dealing with asbestos in this building.

The extent to which these recommendations were followed is uncertain. What is apparent is that the situation remained a cause of concern for FCB. This concern was heightened even more so on September 19, 1988 when samples of air and settled dust in the building were analyzed and found to contain asbestos fibers. This was the first time FCB became aware that its building had been "contaminated" with asbestos fibers.

FCB then filed this action on February 28, 1991,¹ alleging six different causes of action against USMP. The relief requested was based on theories of (1) conspiracy, (2) breach of implied warranties, (3) restitution, (4) strict liability, (5) breach of post manufacture/sale duty to warn, and (6) negligence. USMP moved for summary judgment in relation to each count based on the statute of limitations. Alternatively, it sought summary judgment on the issue of damages.

Material at this point was deleted by Judge Simpson for purposes of publication.

III

CONSPIRACY

FCB asserts that USMP had available to it, since the 1930s, scientific data which clearly indicated that asbestos products were hazardous. USMP then allegedly conspired to deprive the public of this data, which in turn cost FCB the opportunity to choose not to expose itself to the asbestos product.

Both parties concede that the relevant statute of limitations for a conspiracy claim is one year. KRS 413.140(1)(c) states:

(1) The following actions shall be commenced within one (1) year after the cause of action accrued:

. . . . .

(c) An action for malicious prosecution, conspiracy, arrest, seduction, criminal conversation or breach of promise of marriage....

FCB had information available to it in 1985,...