K.C.1986 Ltd. Partnership v. Reade Mfg.
| Decision Date | 16 September 1998 |
| Docket Number | No. 93-1062-CV-W-5.,93-1062-CV-W-5. |
| Citation | 33 F.Supp.2d 1143 |
| Parties | K.C.1986 LIMITED PARTNERSHIP, Plaintiff, v. READE MANUFACTURING, et al., Defendants, v. Habco, Inc., et al., Third-Party Defendants. |
| Court | U.S. District Court — Western District of Missouri |
Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for K.C. 1986 Limited Partnership.
Carl H. Helmstetter, Elaine D. Koch, Spencer Fane Britt & Browne, LLP, Kansas City, MO, John Bradley Leitch, Sonnenschein, Nath & Rosenthal, Kansas City, MO, Barry S. Sandals, Morrison & Foerster, San Franciso, CA, for Reade Manufacturing.
Richard J. Pautler, Thompson Coburn, St. Louis, MO, Ian P. Cooper, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, MO, Michele B. Corash, Gloria Jang, Sean J. Mahoney, Morrison & Foerster, San Francisco, CA, Joseph R. Colantuono, Wehrman & Colantuono, L.L.C., Leawood, KS, Barry S. Sandals, Morrison & Foerster, San Francisco, CA, for U.S. Borax, Inc.
Carl H. Helmstetter, Elaine D. Koch, Spencer Fane Britt & Browne, LLP, Kansas City, MO, for Remacor.
David E. Shay, Joel P. Brous, Shughart, Thomson & Kilroy, P.C., Kansas City, MO, for Nancy Reade Forster.
Joe B. Whisler, Susan Elizabeth McKeon, Cooling & Herbers, P.C., Kansas City, MO, Edward L. Smith, Theresa Shean Hall, Knipmeyer, McCann, Smith, Manz & Gotfredson, Kansas City, MO, Charles Rogers, Thomas Larson, Torbjorn Svensson, Minneapolis, MN, Donald G. Scott, Edward R. Spalty, Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, Joanne M. Barbera, Cooling & Herbers, Kansas City, MO, for Habco, Inc.
Edward L. Smith, Theresa Shean Hall, Knipmeyer, McCann, Smith, Manz & Gotfredson, Kansas City, MO, Charles Rogers, Thomas Larson, Torbjorn Svensson, Minneapolis, MN, Donald G. Scott, Edward R. Spalty, Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for Donald E Horne.
Pending before the Court is Terracon Environmental, Inc.'s ("Terracon") Motion for Summary Judgment on U.S. Borax's ("Borax") claims asserted against it under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA") and common law indemnity and for K.C.1986 Limited Partnership's ("K.C.1986") nuisance and common law indemnity claims. Also pending is Borax's Cross-Motion for Summary Judgment on its CERCLA claim against Terracon. Although this case is currently stayed pending approval by the United States Environmental Protection Agency ("EPA") of a remedial plan to clean up the site at issue, the Court is resolving certain pending motions at the request of the parties in an effort to expedite resolution of the dispute.
K.C.1986 has owned property located at 2251 Armour Road in North Kansas City, Missouri (the "Site") since December 1986. From 1963 to 1968, Borax leased the Site from a previous owner, Reade Manufacturing ("Reade"). Both Borax and Reade used the Site to store and blend chemicals used in herbicides. The Site was also used by Habco, Inc. ("Habco") and its predecessors to manufacture herbicides. In 1988, Hardee's Food Systems, Inc. ("Hardee's") began investigating the possibility of purchasing the Site from K.C.1986 for use as a restaurant. In 1988-1989, it was common in Kansas City for potential purchasers or lessees of commercial real estate to undertake some type of pre-acquisition environmental investigation. The scope and extent of work performed in these investigations varied considerably. Hardee's contacted and eventually retained Terracon to conduct a pre-acquisition environmental investigation.
Before the parties agreed to the scope and cost of the work to be done by Terracon, Terracon submitted several written proposals to Hardee's, the first of which is dated October 7, 1988. Terracon's initial proposal contemplated (1) a records review of state and federal environmental regulatory agencies to detect any history of environmental problems at the Site, (2) a title search to identify previous owners and historical land usage, (3) visual observation for signs of contamination, (4) tank, vat and floor sampling, (5) drilling and sampling, (6) well construction, (7) chemical analysis, (8) data evaluation, and (9) a final report. In the October 7, 1988, letter from Terracon to Hardee's outlining Terracon's initial proposal, Terracon noted that "[t]his property has a history of commercial development involving companies which regularly handled chemical commodities." In an undated letter by Hardee's concerning the scope of Terracon's investigation, Hardee's wrote, In a revised proposal for environmental investigation set forth in a letter dated December 21, 1988 from Terracon to Hardee's, Terracon stated, "the work scope has been developed to sample for contamination in an area where it may likely be present, based upon Terracon's knowledge of the site."
On April 5, 1989, Hardee's made a Freedom of Information Act ("FOIA") request to the EPA requesting information "pertaining to chemical, asbestos, petroleum, or other contamination you have investigated or know of at the [Site]." On June 15, 1989, Hardee's and K.C.1986 entered into a "Ground Lease" for the Site. The Ground Lease provides in part:
4.1 Hardee's agreement to lease the Premises is subject to all of the following conditions precedent being satisfied on or before the One Hundred Eightieth (180th) day after the last execution hereof ...
* * * * * *
(C) Hardee's obtaining, at its sole cost, satisfactory soil tests and determining that the soil or ground is free from contamination and is otherwise suitable for constructing the improvements contemplated by Hardee's herein.
On September 5, 1989, Terracon issued its preliminary environmental assessment of the Site, stating that "... [e]levated levels of several contaminants have been detected in the soil and groundwater samples collected at the site, which we feel will require further exploratory efforts and, most likely, remedial actions...." Hardee's forwarded the preliminary environmental assessment to K.C.1986 under cover of letter dated September 8, 1989. Terracon issued its final report outlining its environmental assessment of the Site on September 22, 1989. That same day, Hardee's notified K.C.1986 by certified mail of its election to terminate the Ground Lease as a result of the contamination uncovered incident to Terracon's investigation. A copy of Terracon's final report was then provided to K.C.1986 on October 9, 1989. The report advised K.C.1986 that the owner of the Site was required to notify the Missouri Department of Natural Resources ("Mo DNR") of Terracon's finding of contamination, and that if it failed to do so, Terracon would be required to report its findings to the Mo DNR.
In connection with its investigation, Terracon was present on the Site during all or part of approximately seven to 10 days between October 1988 and September 1989. As part of its investigation, Terracon installed monitoring wells at the Site in 1989. There is a dispute as to whether those monitoring wells contributed to the contamination of the regional alluvial aquifer beneath the Site. Contaminants, such as arsenic which was found in levels at the Site requiring remedial action, naturally migrate downward through soil. The rate of migration is affected by the amount of precipitation and the porosity and permeability of the soil. In contrast to natural migration of substances through soil, Borax asserts that because Terracon screened monitoring wells 1, 2 and 5 through the near-surface groundwater zone, high concentrations of arsenic were released directly to the top of the regional aquifer, and the arsenic loading to the regional aquifer beneath the Site was increased by 17 percent. Borax also argues that the conduits created by Terracon's monitoring wells have allowed concentrations of arsenic and other contaminants to migrate from the more highly contaminated clay into the less contaminated underlying sand aquifer. According to Terracon, its monitoring wells "did not cause a substantial increase in arsenic contamination" at the Site. Terracon asserts that its wells "were constructed in accordance with the standard of care in the community in the Greater Kansas City area that existed in 1989" and that they are "similar in design to monitoring wells installed and paid for by Borax and K.C.1986." Terracon's final report on September 22, 1989, recommended "that the five monitor wells be properly abandoned at the site, including removing the PVC casing and filling the boreholes with appropriate material." After the Ground Lease was terminated, Hardee's sent K.C. 1986 a letter dated November 21, 1989, in which it offered to cap or in some form remove the monitoring wells installed on the property by Terracon. According to Hardee's, K.C.1986 did not respond.
Terracon again informed K.C.1986 that it considered itself under an obligation to inform the Mo DNR of the contamination at the Site if K.C.1986 did not do so. K.C.1986 did not respond. Accordingly, by letter dated December 20, 1989, Terracon notified the Mo DNR of its findings of contamination at the Site. In September 1993, the Mo DNR and K.C.1986 entered a Consent Agreement requiring K.C.1986 to prepare and implement a remedial action plan for the Site. K.C.1986 did not abandon the monitoring wells installed by Terracon until September 1995.
On March 20, 1995, K.C.1986 sent Borax a Resource Conservation and Recovery Act ("RCRA") claim notice. On August 16, 1995, Borax sent Terracon an RCRA claim notice. The RCRA notice was not sent to Terracon, however, until...
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