Mckesson Corp. v. Grisham, CASE NO. 3:15-CV-03026
| Decision Date | 17 December 2015 |
| Docket Number | CASE NO. 3:15-CV-03026 |
| Parties | MCKESSON CORPORATION PLAINTIFF v. C.C. "BUD" GRISHAM; and THE ESTATE OF MARY FAYE (BURKE) GRISHAM DEFENDANTS |
| Court | U.S. District Court — Western District of Arkansas |
MCKESSON CORPORATION PLAINTIFF
v.
C.C. "BUD" GRISHAM; and THE ESTATE OF MARY FAYE (BURKE) GRISHAM DEFENDANTS
CASE NO. 3:15-CV-03026
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS HARRISON DIVISION
December 17, 2015
MEMORANDUM OPINION
This litigation revolves around a CERCLA superfund site in Omaha, Arkansas, and a related settlement agreement entered into by the parties on New Year's Eve of 1987. From 1962 to 1973, Arkwood, Inc. owned and operated the Arkwood Wood Treating Facility ("Treating Facility"), located on an 18 acre parcel of land in Omaha, Arkansas, owned by Hallie Ormond (the "Site" or the "Arkwood Site"). During this time, Ormond and Bud Grisham were stockholders and officers of Arkwood, Inc., and Grisham was actively involved in the operation of the Treating Facility. In 1973, Mass Merchandisers, Inc. ("MMI") leased the 18-acre parcel from Ormond and took over the operation of the Treating Facility from Arkwood, Inc. MMI ceased its operations at the Treating Facility in 1984. In 1985, MMI became a wholly owned subsidiary of McKesson Corporation ("McKesson"). MMI's lease expired in 1985 and the Treating Facility was dismantled in 1986. At an undetermined point prior to 1987, Mary Burke took title to the Site from Ormond.
In May of 1986, McKesson, MMI, and the United States Environmental Protection Agency ("EPA") executed an agreement whereby McKesson and MMI agreed to
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undertake a Remedial Investigation / Feasibility Study of the Site. As it turned out, the operation of the Treating Facility had caused various hazardous materials to be released into the environment, including pentachlorophenol, creosote, and dioxin. While substantial progress has been made, the Site is still subject to EPA and Arkansas Department of Environmental Quality ("ADEQ") supervision today.
The EPA's intervention resulted in two lawsuits between McKesson / MMI and a group of individuals known as the Ormond Group, over responsibility and liability for the cleanup. The Ormond Group includes Bud Grisham and Mary (Burke) Grisham. These suits were dismissed on December 31, 1987, when the parties entered into a Settlement Agreement and a Site Agreement. (Doc. 19-1). Pursuant to the Agreements, the Ormond Group paid $200,000.00 to MMI, and in exchange MMI released any claims it may have had against the Ormond Group, with some minor exceptions. The parties also agreed to dismiss their pending claims against each other. As a result of the Agreements, McKesson has incurred the liability for the cleanup, costing it over $20,000,000.00 to date.
One otherwise innocuous clause of the Settlement Agreement has become the centerpiece of the instant litigation. Section 9.2 of that Agreement declares, in pertinent part, that the Ormond Group "shall cooperate with MMI . . . by, among other things . . . not conferring with regulatory agencies . . . without MMI's prior written consent." (Doc. 19-1, p. 11). McKesson alleges that Defendants have repeatedly violated this clause, in breach of the Settlement Agreement, since at least 2010. Specifically, McKesson alleges that Bud Grisham's son, Curt Grisham, has repeatedly conferred with the EPA and the ADEQ without first receiving prior written consent. McKesson further alleges
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that Curt Grisham has been acting as his father's agent while conferring with the EPA and the ADEQ. According to McKesson, its costs related to the rehabilitation of the site have increased from $11,168.22 annually to $175,837.07 annually over the course of the last five years. It attributes at least $80,000.00 in costs over that time frame to Defendants' alleged breach.
McKesson filed a complaint with this Court on April 22, 2015, and later filed its Amended Complaint on May 22, 2015. The Amended Complaint asserts that Defendants breached the Settlement Agreement and asks the Court to provide declaratory relief as to the effect and enforceability of Section 9.2 of the Settlement Agreement, equitable relief to prevent Defendants from conferring with the regulatory agencies, and at least $80,000.00 in actual damages.
Bud Grisham, acting in his individual capacity,1 filed an Answer to the Amended Complaint on May 26, 2015. After the Court directed the Estate of Mary Faye (Burke) Grisham (the "Estate") to obtain counsel, it filed its First Amended Answer and Counterclaim on June 29, 2015. The counterclaims allege that McKesson breached the Settlement Agreement in several manners, including by (i) purposefully preventing the Arkwood Site from ever being rehabilitated; (ii) interfering with the Estate's rights in adjacent lands; (iii) violating the duty of good faith and fair dealing; (iv) preventing the Estate from being able to use or sell the land; (v) denying or restricting the Estate from accessing the land; and (vi) using the property to store boats. In addition to requesting damages for McKesson's breach, the Estate asks the Court to declare that Section 9.2
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of the Settlement Agreement violates public policy, the First Amendment of the United States Constitution, and Article 2 §§ 2, 4, and 6 of the Arkansas Constitution.
McKesson filed a Motion to Dismiss on July 13, 2015, in response to the Estate's First Amended Answer and Counterclaim, arguing that the Estate has failed to state any claim upon which relief can be granted. After that motion was fully briefed, the Estate moved for leave to file its Second Amended Answer and Counterclaim on August 20, 2015. The Second Amended Answer and Counterclaim makes five material changes. It: (i) adds the claims of Nuisance and (ii) Slander of Title; (iii) asserts that Section 9.2 of the Settlement Agreement is unconscionable; (iv) asserts that Section 1(e) of the Site Agreement, prohibiting the Ormond Group from selling the site without MMI's prior written consent, is unconscionable or void as a matter of public policy; and (v) abandons the Estate's constitutional claims. The Estate makes changes to the factual allegations levied against McKesson as well.
These Motions are now ripe for decision. The Court will first address the Estate's Motion to File Second Amended Answer and Counterclaim, and then explain its ruling with regard to McKesson's Motion to Dismiss.
Rule 15(a)(2) of the Federal Rules of Civil Procedure instructs courts to "freely give leave when justice so requires." "A district court can refuse to grant leave to amend a pleading only where it will result in 'undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.'" Dennis v. Dillard Dep't Stores, Inc., 207 F.3d
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523, 525 (8th Cir. 2000) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). "A court can deny leave to amend as futile where the amended pleading would not survive a motion to dismiss." Sentell v. RPM Mgmt. Co., 653 F. Supp. 2d 917, 919 (E.D. Ark. 2009) (citing Owen v. General Motors Corp., 533 F.3d 913, 921 (8th Cir. 2008)). To survive a motion to dismiss, a complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court assumes that "all factual allegations in the pleadings are true and interpret[s] them in the light most favorable to the nonmoving party." Bell v. Pfizer, Inc., 716 F.3d 1087, 1091 (8th Cir. 2013) (internal quotation omitted).
For the reasons detailed below, the Estate's proposed Second Amended Answer and Counterclaim is futile, except as to its claim regarding Section 1(e) of the Site Agreement. Its other proposed additional claims would not survive a motion to dismiss, and the additional facts offered in support of its existing claims would not change the Court's disposition of those claims.
The Estate's proposed nuisance claim alleges that McKesson unreasonably and wrongfully interfered with its use of its property by preventing the Estate from selling timber on its adjacent lands,2 thwarting the return of the Site to its beneficial use, and
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preventing the Estate from accessing the property. Arkansas defines nuisance as "conduct by one landowner that unreasonably interferes with the use and enjoyment of the lands of another and includes conduct on property that disturbs the peaceful, quiet, and undisturbed use and enjoyment of nearby property." Goforth v. Smith, 338 Ark. 65, 79 (1999). While the Arkansas Supreme Court has apparently not directly addressed the question of whether an action for nuisance can persist when only one parcel of land is involved, federal district courts in Arkansas have rejected the proposition that it can. Both Patton v. TPI Petroleum, Inc., 356 F. Supp. 2d 921 (E.D. Ark. 2005), and Sewell v. Phillips Petroleum Co., 197 F. Supp. 2d 1160 (W.D. Ark. 2002), held that the Arkansas Supreme Court has implicitly defined nuisance to involve two parcels of land, and dismissed claims involving only one parcel accordingly.
Following the leads of Patton and Sewell, this Court agrees that the Arkansas Supreme Court would be disinclined to "depart from the historic role that the law of private nuisance has played as a means of efficiently resolving conflicts between neighboring, contemporaneous land uses." Patton, 356 F. Supp. 2d at 932. Because the instant dispute involves only one parcel of land, this Court would dismiss the Estate's claim on a motion to dismiss. The proposed amendment is, therefore, futile.
The Estate's proposed slander of title claim arises from McKesson's alleged inclusion of superfluous restrictions in a deed apparently filed in 2010 as a part of...
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