Integrated Waste Services, Inc. v. Akzo Nobel Salt, Inc.

Decision Date29 April 1997
Docket NumberD,No. 551,551
Citation113 F.3d 296
Parties27 Envtl. L. Rep. 21,138 INTEGRATED WASTE SERVICES, INC., and Bear Development Company, Inc., Plaintiffs-Appellants, v. AKZO NOBEL SALT, INC., f/k/a Akzo Salt, Inc., Defendant-Appellee. ocket 96-7507.
CourtU.S. Court of Appeals — Second Circuit

Donald G. McGrath, Buffalo, NY (Stephen F. Szymoniak, Falk & Siemer, L.L.P., Buffalo, NY, of counsel), for Plaintiffs-Appellants.

Kenneth A. Payment, Rochester, NY (A. Paul Britton, Harter, Secrest & Emery, Rochester, NY, of counsel), for Defendant-Appellee.

Before CARDAMONE and CALABRESI, Circuit Judges, and POOLER, District Judge. *

CALABRESI, Circuit Judge:

Plaintiffs-appellants Integrated Waste Services, Inc. and Bear Development Company, Inc. (collectively "Developers") appeal from a summary judgment entered April 16, 1996 in favor of defendant-appellee Akzo Nobel Salt, Inc. ("Akzo") in the United States District Court for the Western District of New York (Larimer, C.J.). The judgment dismissed the Developers' claims for negligence, strict liability, nuisance, trespass, and gross negligence arising out of the accidental collapse and inundation of Akzo's salt mine in Retsof, New York. We hold that because Akzo owed no duty of care to the Developers to preserve the underground mining cavities in usable condition, the decision in favor of Akzo on the Developers' claims for damage to the mine cavities was appropriate. We, however, vacate the portion of the judgment below that dismissed the Developers' claim for surface subsidence damages resulting from the mine collapse and remand that claim for further proceedings.


This case involves land in Retsof, New York that was being mined for salt by Akzo. 1 The Developers, hoping to create an incinerator ash repository in the mine shafts made by the salt operation, bought surface property interests in the land housing the mine. The respective rights of the Developers and Akzo were previously determined by this court in International Salt Co. v. Geostow, 878 F.2d 570 (2d Cir.1989), affirming 697 F.Supp. 1258 (W.D.N.Y.1988) (Larimer, J.). We there held that the original grants of mineral rights to Akzo's predecessor gave it fee simple ownership of all the salt in the mine as well as the exclusive right to present use and enjoyment of the mine cavity. Id. at 577 We also concluded that possession of the mining chambers would revert to the surface owners when the mine was exhausted or abandoned. Id. Both parties to this appeal agree that under that precedent, and given the terms of the original conveyances, Akzo could employ any available or future techniques in the extraction of salt from the mine and could take salt out on any timetable it chose. 2 See id. at 576. At the rate of On March 1, 1992, in order to exploit the commercial value of portions of the mine shaft for ash storage before the end of all mining operations, the Developers entered into an agreement with Akzo ("Agreement"). This Agreement gave Akzo an option to buy the Developers' reversionary property rights and in exchange obligated Akzo to make royalty payments to the Developers if Akzo pursued the ash storage enterprise. Akzo, however, was not required to do anything if it chose to terminate the Agreement before closing on its purchase of the Developers' interests. In the interim, and as part of the price of the option, Akzo made mortgage payments on the Developers' property.

removal obtaining when the mine collapsed, the mine would have been in operation for more than 200 years. The right to the exhausted cavities would then have reverted to the Developers.

In March 1994, a portion of the mine cavity collapsed. The collapse allegedly occurred as a result of Akzo's use of a small-pillar mining technique 3 that is claimed to have been ill-suited to this particular mine. 4 Water quickly inundated the mine and rendered it unusable either for mining or storage. Shortly thereafter, in February 1995, Akzo exercised its right to terminate the Agreement. After the accident and the termination, the Developers brought this diversity action against Akzo, stating claims for negligence, strict liability, nuisance, trespass, and gross negligence. They sought compensation for damages both to their reversionary interest in the mining cavities and to their surface property.

The district court first dealt with the reversionary interests. On the negligence-based claims, the court granted Akzo summary judgment, holding that Akzo owed no duty to the Developers to preserve the cavities. Integrated Waste Servs., Inc. v. Akzo Nobel Salt, Inc., 921 F.Supp. 1037, 1041-42 (W.D.N.Y.1996). On the strict liability claims, the district court also entered summary judgment for Akzo, but on a different basis, concluding that "plaintiffs' proof d[id] not indicate that the risk of collapse could not have been eliminated through the exercise of reasonable care." Id. at 1045. As to all claims, the district court stated as an alternative ground for its grant of summary judgment the fact that the Developers could not, with reasonable certainty, establish lost profits damages for the unrealized ash storage project. The present value of the cavities, the court held, belonged to Akzo alone. Id. at 1042-45.

With respect to surface damage, the court noted Akzo's willingness to pay substantiated claims but still gave summary judgment to Akzo because the Developers had failed to come forward with specific evidence of such surface damage. Id. at 1046.

The Developers challenge the determinations of the district court that Akzo owed no duty to preserve the cavities for the Developers; that Akzo was not strictly liable for engaging in an ultrahazardous mining activity; that the Developers could not prove damages to their subterranean interests with reasonable certainty; and that the Developers presented no evidence of surface damage. On appeal, the Developers apparently abandon all of their other claims (e.g. trespass and nuisance).


We review a grant of summary judgment de novo, taking the evidence in the light most favorable to the party opposing it. Rodriguez v. City of New York, 72 F.3d 1051, 1061 (2d Cir.1995). The party moving for summary judgment must establish that no genuine

                issue of material fact exists and that the undisputed facts establish the movant's right to judgment as a matter of law.  Id. at 1060-61.   We find that Akzo has met that burden with respect to its liability for damage to the cavities in the Retsof mine, but not with respect to the surface claims
I. Akzo's Liability for Damage to the Mine Cavity

Like the district court, we view duty as the central and dispositive issue in assessing the Developers' suit for damages to the mine cavities. The Developers acknowledge that Akzo has no duty to preserve the cavities under the language of the original mineral conveyances. But they invite us to imply a term to this effect in the granting deeds. Alternatively, they urge us to create a new common law duty of care that would require mineral licensees to preserve such cavities. We read the original conveyances of salt to Akzo's predecessors as placing the risk of mine shaft destruction on the surface land owners. Furthermore, we have no reason to believe that the New York Court of Appeals would imply a cavity preservation term in the original deeds or would create such a duty at common law. 5 Because we hold that Akzo operated under no duty to preserve usable mine cavities for the Developers, Akzo cannot be held liable for damages to the cavities, whether such damages are sought under theories of negligence or of strict liability.

A. Negligence

In order to establish a prima facie case of negligence under New York law, a claimant must show: "1) the existence of a duty flowing from defendant to plaintiff; 2) a breach of this duty; 3) a reasonably close causal connection between the contact and the resulting injury; and 4) actual loss, harm or damage." Febesh v. Elcejay Inn Corp., 157 A.D.2d 102, 104, 555 N.Y.S.2d 46, 47 (1st Dep't 1990), appeal denied, 77 N.Y.2d 801, 566 N.Y.S.2d 586, 567 N.E.2d 980 (1991). In the case before us, the second and third requirements are either conceded for purposes of this appeal or present no problem. Because we find that the first imperative, the existence of a duty, is not met, we need not reach the fourth, which the district court also found lacking.

To establish a duty on the part of Akzo, the Developers argue that their right to surface support, reserved to them by operation of common law, Marvin v. Brewster Iron Mining Co., 55 N.Y. 538, 556 (1874), as a practical matter made it necessary for Akzo to preserve pillar-supported cavities. This, they say, gave the Developers an implicit right to cavity preservation and thereby created a duty on Akzo. We disagree.

While preserving and supporting the cavities might well have been an appropriate, or perhaps even the only, means of maintaining surface support, this fact cannot create any rights in the Developers beyond those that they already had. The right to surface support thus cannot give the Developers an interest in the cavities which, under Westerman v. Pennsylvania Salt Mfg. Co., 260 Pa. 140, 103 A. 539 (1918) and our prior decision in International Salt, were not theirs. Any other holding would in effect mean that whenever, by negligently damaging a plaintiff's property, a defendant also inevitably harms his own property, that defendant could be made to compensate the plaintiff not only for the injury to what belonged to the plaintiff but also for the additional damage done to what was the defendant's. Not surprisingly, the Developers cite us to no authority supporting such a remarkable result. And the fact that the plaintiff has an expectancy in the defendant's property--that the defendant's current will, for example, leaves the plaintiff the very property that defendant's...

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