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 820 |
| 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 Francisco, CA, for Reade Manufacturing.
Thompson Coburn, St. Louis, MO, Ian P. Cooper, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, MO, Michele B. Corash, Barry S. Sandals, Morrison & Foerster, San Francisco, CA, Sean J. Mahoney, Morrison & Foerster, San Francisco, CA, Joseph R. Colantuono, Wehrman & Colantuono, L.L.C., Leawood, KS, for U.S. Borax, Inc.
Carl H. Helmstetter, Elaine D. Koch, Spencer Fane Britt & Browne, LLP, Kansas City, MO, for Remacor.
David E. Shay, Shughart, Thomson & Kilroy, P.C., Kansas City, MO, 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, 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, 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 Hardee's Food Systems, Inc.'s ("Hardee's") Motion for Summary Judgment on the claims asserted against it in this action, which include claims asserted by U.S. Borax ("Borax") in its Amended Cross-Claim under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), (Count I and II), the Resource Conservation and Recovery Act ("RCRA") (Count III), declaratory judgment (Count IV), negligence (Count V), contribution (Count VI), indemnity (Count VII) and unjust enrichment (Count VIII) and claims asserted by K.C.1986 Limited Partnership ("K.C.1986") in its Second Amended Complaint for negligence (Count III), strict liability for ultra-hazardous activities (Count IV), nuisance (Count V), contribution (Count VII), indemnity (Count VIII), unjust enrichment (Count IX) and contractual indemnity (Count X). Also pending is Borax's Cross-Motion for Summary Judgment on its CERCLA claims against Hardee's. Although this case is currently stayed pending approval by the United States Environmental Protection Agency ("EPA") of a remedial plan to clear up the site at issue, the Court is resolving certain pending motions at the request of the parties in an effort to expedite 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 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 Environmental, Inc. ("Terracon") to conduct a pre-acquisition environmental investigation.
The contract entered between Hardee's and Terracon provides that Terracon "shall furnish all labor, supervision, machinery, equipment, materials and supplies necessary" and "shall be solely responsible for all materials, equipment, tools and work until the project is completed." The contract further provides that Terracon "shall conduct all operations in [Terracon's] own name and as an independent contractor, and not in the name of, or as an agent for Hardee's."
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 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." In an undated letter by Hardee's concerning the scope of Terracon's investigation, Hardee's wrote, 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. The amount of time Hardee's representatives were also present at the Site is disputed.
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]." Thereafter, on June 15, 1989, Hardee's and K.C.1986 entered into a "Ground Lease" for the Site. The Ground Lease states that "Subject to the satisfaction of the conditions set forth herein, Landlord agrees to lease to Hardee's, and Hardee's agrees to lease from Landlord, [the Site] ..." (Ground Lease, ¶ 1.1). Under the heading "Conditions Precedent," the Ground Lease further 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.
Under a separate section of the Ground Lease with the heading "Soil Testing," Hardee's obligation to conduct soil testing is set forth in more detail:
2A.1 (A) ... Hardee's shall order soil tests, including but not limited to geotechnical and contamination studies of the Premises....
(B) Within thirty (30) days of the written soil test results, Hardee's shall determine whether to: a) terminate the Lease on account of unacceptable soil conditions; b) perform further tests; or c) proceed with clearing the other conditions precedent contained herein.
. . . . .
(D) In the event that Tenant elects to proceed with clearing the other conditions precedent, Hardee's shall deliver to Landlord a copy of the soil report which will set forth the remedial actions which must be taken to make the soil suitable for Hardee's purposes and meet the soil and ground water requirements as established by the Missouri EPA.
The Ground Lease between Hardee's and K.C.1986 was fully executed on June 15, 1989. (See Ground Lease, ¶ 29). Pursuant to the terms of the Ground Lease,
Hardee's, its representatives, agents, and contractors, [were granted] the right to enter upon the Premises to make soil tests, provided that Hardee's hereby agrees to reasonably restore any damage caused by the soil tests. Landlord agrees that Hardee's shall not bear any liability arising through the discovery of hazardous waste conditions and its compliance with all laws relating to the disclosure of any adverse findings. Hardee's agrees to reasonably restore any such damage caused by such soil tests and will defend and hold Landlord harmless from claims, liens and expenses or damages arising out of the acts of Hardee's, its representatives, agents, and contractors in performing the soil tests.
(Ground Lease, ¶ 2.1(B)). While the right to enter the Site consistent with the above provision commenced upon the execution of the Ground Lease, Hardee's asserts that the lease itself never materialized because Hardee's terminated the Ground Lease, pursuant to ¶ 2A.1, prior to the date of commencement of the lease term. The Ground Lease provides that "The `Commencement Date' of the Term shall be the date which Hardee's takes possession of the Premises for the purpose of constructing the improvements contemplated herein." (Ground Lease, ¶ 6.1). In addition to granting Hardee's the right to terminate the lease under certain conditions, the lease provides, "If Hardee's effectively terminates this Lease, then Hardee's shall pay to Landlord the sum of $100,000 as liquidated damages." (Ground Lease, ¶ 2A.1(H)).
On September 5, 1989,...
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