McDonald v. Sun Oil Co.

• Decision Date: 19 November 2008
• Docket Number: No. 06-35683.,06-35683.
• Citation: 548 F.3d 774
• Parties: Thomas McDONALD; Marian McDonald; Alex E. McDonald, Plaintiffs-Appellants, v. SUN OIL COMPANY; Sunoco, Inc.; Cordero Mining Company; J.T. Batterson; Susan Batterson, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

548 F.3d 774

Thomas McDONALD; Marian McDonald; Alex E. McDonald, Plaintiffs-Appellants, v. SUN OIL COMPANY; Sunoco, Inc.; Cordero Mining Company; J.T. Batterson; Susan Batterson, Defendants-Appellees.

No. 06-35683.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 2007.

Filed November 19, 2008.

Brooks Foster (argued) and Brian D. Chenoweth, Chenoweth Law Group, Portland, OR, for the plaintiffs-appellants.

Harold L. Segall (argued), James T. Esselman and Leah A. Dundon, Beveridge & Diamond, P.C., Washington, District of Columbia, for the defendants-appellees.

Appeal from the United States District Court for the District of Oregon; Ancer L. Haggerty, District Judge, Presiding. D.C. No. CV-03-01504-ALH.

Before: HARRY PREGERSON and STEPHEN REINHARDT, Circuit Judges, and LYLE E. STROM, District Judge.^*

STROM, District Judge:

Thomas McDonald, Marian McDonald and Alex McDonald appeal from the district court's grant of summary judgment in favor of Sun Oil Company, Sunoco, Inc. and Cordero Mining Company (collectively, "Sun"). The McDonalds sued Sun for, among other things, negligence, contribution, breach of contract and fraud. Each of these claims arose out of an alleged oral warranty that certain crushed rock at the Horse Heaven Mine Property ("Horse Heaven"), a disused mercury mine, was free of mercury. The district court held that Oregon's statute of repose barred the McDonalds' negligence claim, that their claim for contribution failed to comply with an administrative requirement, that their breach of contract claim failed because of the merger doctrine and the parol evidence rule, and that their fraud claim failed to raise a genuine issue of material fact. We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse in part, and remand for trial.

I. BACKGROUND

In 1934, Ray Whiting Jr. and Harry Hoy developed the Horse Heaven Mine and operated it until 1936. From 1936 to 1973, the mine was owned and intermittently operated by Sun. Sun permanently ceased mining operations at Horse Heaven in 1958. In 1973, among over 2,600 acres of property in Jefferson County, Oregon, Sun conveyed Horse Heaven to Thomas and Marian McDonald via a bargain and sale deed. In the deed conveying the property to the McDonalds, Sun reserved "all of the oil, gas, and other mineral rights" in the property to itself, but specifically excluded rights to "surface materials which are used for road-building or construction purposes, such as ... calcine ... except such quantities as are reasonably used or useful in the enjoyment of [Sun's] reserved rights." (ER 51.) At the time of this purchase, the Horse Heaven property contained a large pile or piles of calcine tailings.

Calcine is a waste product resulting from the processing of mercury ore into mercury. Mercury sulfide ore is mined, crushed, and heated in a furnace or "retort" to separate mercury from the ore. After the heating process is complete, the crushed rock, now called calcine, is stockpiled. At Horse Heaven, the calcine tailings were deposited in a pile or piles on the surface of the property surrounding the mine. Some mercury still remains in the calcine at Horse Heaven. However, the parties dispute the amount and potential harmfulness of the remaining mercury.

Prior to the 1973 sale of the property, Thomas McDonald met with Ray Whiting and Sun's Wally Freeman at the mine to discuss the potential sale. In his deposition, McDonald testified that while they were standing on the calcine pile prior to the sale, Freeman told him that because the "retort" process extracted mercury and other heavy metals from the ore, there was no mercury in the calcine. During that same conversation, McDonald told Freeman that he intended to use the calcine for road construction or to sell it commercially as decorative rock.

In 1976, the McDonalds sold all the Jefferson County property except for the forty acres comprising the former Horse Heaven mine. In 1982, the McDonalds transferred these forty acres to Ray Whiting and his wife. Whiting later conveyed his interest in the property to his daughter and grandson. The deed to Whiting reserved to McDonalds the rights to the calcine tailings until 2007. On several occasions, Mr. McDonald brought some of the calcine to his personal residence and placed it on his driveway and parking lot.

In 2001, the Oregon Department of Environmental Quality ("DEQ") requested information regarding possible contamination at Horse Heaven, and in 2002 determined that the McDonalds' handling of the calcine tailings had created an environmental release. The McDonalds were then ordered to refrain from removing or disturbing the calcine piles at Horse Heaven without DEQ approval. The McDonalds allege that they did not learn that the calcine was potentially contaminated until 2001.

On August 25, 2003, the McDonalds sued Sun in Oregon state court. On November 3, 2003, Sun removed the case to the United States District Court for the District of Oregon. On March 14, 2006, the district court granted summary judgment against the McDonalds on all their claims. This appeal followed. The McDonalds appeal only the district court's rulings granting summary judgment to Sun on their negligence, contribution, contract, and fraud claims.

II. STANDARD OF REVIEW

This Court reviews "de novo a district court's decision to grant summary judgment. We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Del. Valley Surgical Supply, Inc. v. Johnson & Johnson, 523 F.3d 1116, 1119 (9th Cir.2008) (citing Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir.2000) (en banc)). "A factual dispute is genuine only if a reasonable trier of fact could find in favor of the nonmoving party. A mere scintilla of evidence supporting a nonmovant's position is insufficient to withstand summary judgment." In re Ahaza Sys., Inc., 482 F.3d 1118, 1128 (9th Cir.2007) (quoting Galen v. County of L.A., 468 F.3d 563, 568 (9th Cir.2006)).

III. DISCUSSION

A. NEGLIGENCE

The district court granted Sun's motion for summary judgment on the McDonalds' negligence claim, holding that the claim is barred by Oregon's statute of repose for negligent injury to person or property, Or.Rev.Stat. § 12.115(1). The McDonalds argue that the court below erred in applying the Oregon statute because Section 309 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, 42 U.S.C. § 9601-9675, grafts a discovery rule onto state statutes of limitations.¹ We agree. The district court held that CERCLA § 309 does not apply because § 12.115(1) is a statute of repose, not a statute of limitations. However, the term "statute of limitations" in CERCLA § 309 is ambiguous and the legislative history of the section indicates that its meaning includes statutes of repose like § 12.115(1).

Statutes of limitations and repose are distinct legal concepts with distinct effects. "A statute of limitations requires a lawsuit to be filed within a specified period of time after a legal right has been violated.... On the other hand, statutes of repose are designed to bar actions after a specified period of time has run from the occurrence of some event other than the injury which gave rise to the claim." Raithaus v. Saab-Scandia of America, Inc., 784 P.2d 1158, 1160 (Utah 1989). Statutes of limitations

preclude[ ] the plaintiff from proceeding, ... the right (moral or legal) goes on, but the plaintiff simply cannot go to court in order to enforce it.... A statute of repose, however, has a more substantive effect because it can bar a suit even before the cause of action could have accrued, or, for that matter, retroactively after the cause of action has accrued. In proper circumstances, it can be said to destroy the right itself. It is not concerned with the plaintiff's diligence; it is concerned with the defendant's peace.

Underwood Cotton Co., Inc. v. Hyundai, 288 F.3d 405, 408-09 (9th Cir.2002) (internal citations omitted) (referring to the distinctions between the two types of statute as "arcane").

The difference is manifest in Oregon's statutory scheme. For example, Or.Rev. Stat. § 12.110(1), not at issue in this case, is a statute of limitations, providing that "[a]n action for any injury to the person or rights of another, not arising on contract ... shall be commenced within two years ...." Under this statute, it is evident that injury must be experienced before the time limit starts to run because an action cannot be commenced until after the injury element of the prima facie case is satisfied. However, the statute of repose at issue here, Or.Rev.Stat. § 12.115(1), states that "[i]n no event shall any action for negligent injury to person or property of another be commenced more than 10 years from the date of the act or omission complained of." This statute does not require injury before it operates. Therefore, if § 12.115(1) applies to the nearly thirty year old negligence claim in this case, and § 309 does not operate to impose a discovery rule upon it, that claim is barred.

1. Plain Meaning vs. Ambiguity

The first step in construing the meaning of a statute is to determine whether the language at issue has a plain meaning. "The preeminent canon of statutory interpretation requires us to `presume that [the] legislature says in a statute what it means and means in a statute what it says there.' Thus, our inquiry begins with the statutory text, and ends there as well if the text is unambiguous." BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004) (internal citations omitted). It should not be "presum[ed] that `the legislature was ignorant of the meaning of the language it employed.'" Id. at 186-87, 124 S.Ct. 1587. Section 309 contains five uses of the term "statute...