Hagen v. Texaco Refining & Marketing, Inc.

• Decision Date: 18 January 1995
• Docket Number: No. 93-1794,93-1794
• Citation: 526 N.W.2d 531
• Parties: Dean R. HAGEN and Nancy K. Hagen, d/b/a Grand Avenue Texaco, Plaintiffs, The Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, Appellant, v. TEXACO REFINING AND MARKETING, INC., Seneca Corporation, and J & R Drilling Services, Inc., Appellees.
• Court: Iowa Supreme Court

Page 531

526 N.W.2d 531

40 ERC 1679

Dean R. HAGEN and Nancy K. Hagen, d/b/a Grand Avenue Texaco, Plaintiffs, The Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, Appellant, v. TEXACO REFINING AND MARKETING, INC., Seneca Corporation, and J & R Drilling Services, Inc., Appellees.

No. 93-1794.

Supreme Court of Iowa.

Jan. 18, 1995.

Bonnie J. Campbell, Atty. Gen., and Dean A. Lerner, Asst. Atty. Gen., for appellant.

Paul E. Horvath of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for appellee Texaco Refining and Marketing, Inc.

Margaret C. Callahan, Charles F. Becker, and Roger T. Stetson of Belin Harris Lamson McCormick, P.C., Des Moines, for appellee Seneca Corp.

Philip H. Dorff, Jr. and Anne L. Clark of Hopkins & Huebner, P.C., Des Moines, for appellee J & R Drilling Services, Inc.

Considered by HARRIS, P.J., and CARTER, NEUMAN, ANDREASEN, and TERNUS, JJ.

TERNUS, Justice.

This case requires that we consider the scope and meaning of the cost recovery enforcement provisions of Iowa Code chapter 455G (1993). ¹ We granted permission to the Intervener, The Iowa Comprehensive Petroleum Underground Tank Fund Board, to bring this interlocutory appeal from the district court's ruling on the Board's motion for partial summary judgment. The district court held (1) factual issues existed which were material to whether defendants, Texaco Refining and Marketing, Inc., Seneca Corporation, and J & R Drilling Services, Inc., were liable for the release of petroleum from an underground storage tank, and (2) the owners of the underground storage tank could be assigned a percentage of fault in this cost recovery action. We affirm the district court's denial of partial summary judgment as to Texaco and reverse the district court's ruling on the other issues.

I. Background Facts.

In the fall of 1985, plaintiffs, Dean R. Hagen and Nancy K. Hagen, purchased a retail service station from Texaco. The purchase agreement required Texaco to install monitoring wells on the property. Texaco contracted with Seneca to install these monitoring wells. Seneca then subcontracted with J & R to drill the wells. Seneca was responsible for locating the exact place where J & R would drill.

The record shows that one Friday in the fall of 1985, a Seneca employee went to the Hagens' service station and placed "manways," (twelve-inch-diameter metal rings), on the ground where the wells were to be drilled. Three days later, on Monday, the cement contractor, Nelson Construction, poured cement at the station, encasing the manways in concrete. About one month later J & R drilled the monitoring wells at the locations designated by the manways.

Seneca did not check the location of the manways on Monday to be sure they had not been moved over the weekend nor did it have anyone present when the concrete was poured. Although the monitoring wells were not drilled until a month later, Seneca did not check the placement of the manways before J & R drilled.

It is undisputed that J & R pierced an underground storage tank when it drilled one of the monitoring wells. Unfortunately, the Hagens did not discover the hole in the tank for three weeks. During these three weeks, the Hagens filled the tank several times. It is estimated that 2300 gallons of petroleum escaped from the tank through the hole.

II. Procedural History.

In August of 1990, the Hagens applied for remedial benefits under Iowa's underground storage tank financial assistance program. See Iowa Code § 455G.9 (1993). The Board allowed the claim and expended money for corrective action taken at the site. The Hagens incurred expenses not covered by the program by virtue of the minimum copayments required of owners under chapter 455G. See id. § 455G.9(4).

The Hagens sued Texaco, Seneca and J & R alleging the defendants were negligent and seeking damages for the contamination and cleanup of the Hagens' property. Each defendant cross-claimed against the other defendants for contribution or indemnity. In addition, Seneca alleged that the Hagens were contributorily negligent.

The district court allowed the Board to intervene. The Board sought to recover from the defendants the moneys it had spent on corrective action. See id. § 455G.13.

After pursuing discovery, the Board filed a motion for partial summary judgment. It claimed that the undisputed facts showed that all defendants were strictly liable as a matter of law for the release of petroleum from the tank. See id. § 455G.13(7) (the standard of liability under section 455G.13 is strict liability). During the process of briefing, the parties also argued whether the Hagens could be assigned a percentage of fault to reduce the Board's recovery from the defendants. The trial court apparently treated this issue as a request for adjudication of law points. See Iowa Rule of Civil Procedure 105.

In the order from which the Board appeals, the district court denied the Board's motion for partial summary judgment and ruled that a factual dispute existed as to whether the defendants were liable for the release. The court also held that the Comparative Fault Act applied, see Iowa Code chapter 668, and therefore, any recovery by the Board would be reduced by any percentage of fault assigned to the Hagens. We granted the Board's application for interlocutory appeal.

III. Scope of Review.

Our review of a district court's decision on summary judgment is for correction of errors at law. Montgomery Ward Dev. Corp. v. Cedar Rapids Board of Review, 488 N.W.2d 436, 439 (Iowa 1992). We determine whether a genuine issue of material fact existed and whether the district court correctly applied the law. Farm & City Ins. Co. v. Anderson, 509 N.W.2d 487, 489 (Iowa 1993). We view the whole record in a light most favorable to the party opposing the motion. Id.

Our review of the court's ruling on the legal issue raised in the pleadings concerning the apportionment of fault pursuant to chapter 668 is also for correction of errors of law. Rasmussen v. Nebraska Nat'l Life Ins. Co., 170 N.W.2d 370, 372 (Iowa 1969) (review of ruling on rule 105 motion is on assigned error). If any facts essential to the disposition of the legal issue are disputed, we will remand the case to the trial court to determine the issue on the facts proven at trial. Andersen Constr. Co. v. National Bank, 262 N.W.2d 563, 566 (Iowa 1978).

IV. Statutory Framework.

In 1989 the Iowa legislature enacted a comprehensive law relating to petroleum underground storage tanks. 1989 Iowa Acts ch. 131. The act established the Iowa Comprehensive Petroleum Underground Storage Tank Fund which is administered by the Intervener Board. Iowa Code §§ 455G.3-.4 (1993). Revenue for the fund includes bonds issued by the Board, various taxes and fees, insurance premiums and recoveries from persons liable for petroleum releases. Id. § 455G.8.

Moneys in the fund are used in part for a "remedial program." Id. § 455G.9. This program provides assistance to eligible owners and operators of underground storage tanks for corrective action to clean up existing petroleum contamination. ² Id. The release involved here qualified for the fund's remedial program. See id. § 455G.9(1)(a)(2) ("a release reported to the department of natural resources after May 5, 1989, and on or before October 26, 1990" qualifies for remedial benefits).

Although moneys for the cleanup were available from the fund, a minimum copayment schedule applied to the Hagens as the owners of the tank. Id. § 455G.9(4)(a). They were required to pay eighteen percent of the first $80,000 for the cost of corrective action and thirty-five percent of the cost above that figure. Id. The fund was obligated to pay the balance of the costs of corrective action up to one million dollars. Id. § 455G.9(1)(a)(2), (4)(b).

Chapter 455G contains detailed provisions for the fund's recovery of moneys spent on corrective action. See id. § 455G.13. In general, these provisions require the Board to recover the cost of corrective action from an owner, an operator or any other potentially responsible party. Id. § 455G.13(1). In addition, the Board may recover reasonable attorney fees and costs of litigation. Id. However, if the owner or operator is eligible for assistance under the remedial program, the Board may not recover its expenses from the owner or operator except any unpaid copayment. Id. § 455G.13(2)(a).

The statute defines a "potentially responsible party" as "a person who may be responsible or liable for a release for which the fund has made payments for corrective action or third-party liability." Id. § 455G.2(15). The statute specifically provides that the "standard of liability for a release of petroleum ... is strict liability." Id. § 455G.13(7).

The interpretation of these cost recovery provisions is the heart of this case. Therefore, we will discuss section 455G.13 in greater depth when we address the legal issues presented in this case.

V. Positions of the Parties With Respect to Defendants' Liability.

The Board sought partial summary judgment on the basis that the defendants were strictly liable as a matter of law because they were potentially responsible parties "liable for the release" under section 455G.13. The defendants acknowledge that their conduct is judged under strict liability standards, but claim that summary judgment is inappropriate.

Texaco claims that it cannot be a potentially responsible party because it exercised no control over the installation of the monitoring wells. Seneca argues that when the record is viewed most favorably to the parties against whom summary judgment is sought, one can only conclude that Seneca's involvement in the release was limited to two actions. First, Seneca hired J & R to drill the wells. Second, Seneca identified the spot, albeit not the spot used, for the drilling. Seneca contends this conduct does not provide an adequate basis for a finding of causation.

Finally, J & R claims that...