Miller v. Cudahy Co.
| Decision Date | 28 September 1988 |
| Docket Number | Nos. 87-1502,87-2283,s. 87-1502 |
| Citation | 858 F.2d 1449 |
| Parties | , 19 Envtl. L. Rep. 20,177 Cecil W. MILLER and Mildred E. Miller, Joint Tenants; Margaret L. Birchenough Testamentary Trust, Donald L. Birchenough, Ansel Tobias and Walter Wright, Trustees; Ruth M. Hollinger, Individually and as Joint Tenant with Delbert Hollinger; John E. Edwards and Kermit C. Edwards, Joint Tenants; Homer Sharpe; Cecil M. Tobias and Frances Tobias, Joint Tenants; Paul F. Westrup and Ardis B. Westrup, Joint Tenants; Jay Brothers; Lyle Brothers, Individually and as Joint Tenant with Patricia R. Brothers; Alvin Engelland; Ansel Engelland; Jack Engelland and Vivian M. Engelland, Joint Tenants; Gerald N. Jones and Donna Jones, Joint Tenants; Robert A. Johannsen; Raymond E. Tobias; Gary Zwick; Lester Colle; Harvey Willhaus and Marilyn Willhaus, Joint Tenants; Wilmor H. Oden; Raphael Roeder and Annabelle A. Roeder, Joint Tenants; Edris Edwards; Edward F. Janda and Anna Mae Janda, Joint Tenants; Harry Zwick; Arthur H. Oden; Joleen J. Ottlinger; and William L. Bemis and Dorothy Bemis, Joint Tenants, Plaintiffs-Appellees, v. CUDAHY COMPANY, a Delaware Corporation, and General Host Corporation, a New York Corporation, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
John Logan O'Donnell (Thomas D. Kitch and Ron Campbell, Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., and E. Sherrell Andrews and Michael L. Spafford, with him on the brief), Olwine, Connelly, Chase, O'Donnell & Weyher, New York City, for defendants-appellants.
H. Lee Turner (Deborah Turner Carney, Golden, Colo., and Casey R. Law and Lisa A. Beran, with him on the brief), Turner and Boisseau, Chartered, Great Bend, Kan., for plaintiffs-appellees.
Before LOGAN, BARRETT and BALDOCK, Circuit Judges.
In this diversity action, plaintiffs-appellees claimed that the American Salt Company's (American Salt) salt mining operations caused the pollution of an underground aquifer passing under their farms, resulting in their inability to utilize the water in the aquifer for irrigation. At the time appellees filed their complaint, American Salt was an operating division of defendant-appellant Cudahy Company (Cudahy), which is a wholly-owned subsidiary of defendant-appellant General Host Corporation (General Host). The district court concluded that the pollution emanating from the salt plant constituted a continuing, abatable nuisance causing temporary damages and found appellants liable for $3.06 million in actual damages and $10 million in punitive damages. The court then held the punitive damages award in abeyance and retained jurisdiction over the award pending the presentation of a remedial plan to clean the aquifer. Subsequently, the court abandoned the remedial plan, entered final judgment on the punitive damages award and assessed as costs to appellants certain post-trial expert witness fees.
In this consolidated appeal, appellants contend that 1) appellees' claims are barred by the statute of limitations, 2) the district court's method of calculating actual damages was erroneous as a matter of Kansas law, 3) the court erred in awarding punitive damages, 4) General Host cannot be held liable in the absence of evidence that Cudahy was its alter ego, and 5) the court erred in assessing post-trial expert witness fees in excess of the statutory limit. We affirm in part and reverse in part.
The complex historical and factual background surrounding this litigation has been exhaustively detailed by the district court. See Miller v. Cudahy Co., 567 F.Supp. 892, 894-95 (D.Kan.1983) (Miller I ); Miller v. Cudahy Co., 592 F.Supp. 976, 981-1003 (D.Kan.1984) (Miller II ). As a consequence, we will provide only a brief overview of the factual setting. We note at the outset that we have carefully reviewed the voluminous trial transcript in its entirety and conclude that the district court's comprehensive factual findings, Miller II, 592 F.Supp. at 981-1003, are amply supported by the record.
Appellees are owners and lessees of real property located in Rice County, Kansas. The land is used primarily for agricultural production. American Salt, along with its predecessor, has operated a salt manufacturing plant near Lyons, Kansas since 1908.
Located two miles south of Lyons is Cow Creek, which flows in a southeasterly direction and is a minor tributary of the Arkansas River. Below Cow Creek is the Cow Creek Valley Aquifer (the aquifer), an underground fresh-water stratum which occupies a width of one to two miles and lies at depths of between approximately ten and seventy feet. The aquifer also flows in a southeasterly direction, at a rate of between one-and-a-half and five feet per day. The water in the aquifer passes under the land owned or leased by appellees after it has passed under American Salt's brine fields and plant.
Salt concentrations of over 30,000 parts per million have been recorded in water samples drawn from the aquifer. Concentrations of 250 parts per million are sufficient to render water unfit for domestic or irrigation use. As found by the district court, the salt present in the aquifer escaped from the property and control of American Salt. The majority of the salt escaped through subsurface leaks, while the remainder percolated downward from surface spills.
Due to insufficient rainfall, farmers in Rice County are unable to grow corn without irrigating their land. Appellees alleged that because of the salt pollution of the aquifer, they are unable to irrigate and therefore can grow only dryland crops such as wheat and milo, which do not produce the revenues generated by corn crops.
The district court, in commenting on the more than half-century of disputes between American Salt and area farmers, described the historical background of this case as "Dickensian" in nature. Miller v. Cudahy Co., 656 F.Supp. 316, 319 (D.Kan.1987) (Miller III ). Final resolution of this lawsuit itself required nearly a decade. On May 31, 1977, appellees filed their complaint seeking injunctive relief and actual and punitive damages. Following a protracted discovery period, the final pretrial order was filed on March 9, 1982.
The district court denied appellants' motion for summary judgment, 1 which was predicated on their contention that appellees' claims were barred by the statute of limitations. The court concluded that appellees' showing was sufficient to categorize the American Salt operation as a continuing, abatable nuisance causing temporary damages and giving rise to a continuing series of causes of action. Miller I, 567 F.Supp. at 906-08. The court also concluded that the two-year statute of limitations did operate to preclude appellees from recovering for injuries sustained more than two years prior to the filing of their complaint. Id. at 909. The court stated that appellees were entitled to attempt to prove and recover their damages accruing between a date two years before the complaint was filed (May 31, 1975) and the date of judgment. Id.
Following a bench trial, the court found appellants liable for temporary damages to annual crops and awarded appellees $3.06 million in actual damages for the period of 1975 through 1983. 2 Miller II, 592 F.Supp. at 1005. The court arrived at the amount of lost crop profits by calculating the difference between the net value of corn crops and the net value of the wheat and milo crops which were actually grown. Id. at 990-92. The court also awarded $10 million in punitive damages; however, it retained jurisdiction over the award and held final judgment in abeyance, pending appellants' "good-faith efforts to define and remedy the pollution they have caused." Id. at 1007-08. Pursuant to Fed.R.Civ.P. 54(b), the court entered final judgment on the issues of liability and actual damages. Id. at 1008-09. Appellants filed a timely notice of appeal, but this court dismissed their appeal as premature. Miller v. Cudahy Co., No. 85-1450, slip op. at 6 (10th Cir. Jan. 31, 1986).
Three years later, the district court rejected a court-ordered cleanup plan, because no feasible plan had been presented, and declined to remit any of the punitive damages award. Miller III, 656 F.Supp. at 356-57. The court also denied as untimely appellant General Host's motion to dismiss, in which General Host had argued that the court had incorrectly applied the doctrine of piercing the corporate veil in finding General Host liable for the salt pollution of the aquifer. Id. at 322-24. Finally, the court taxed as costs to appellants the expert witness fees of appellees' trial expert for his participation in the post-trial remedial action phase. Id. at 339.
Appellants first argue that appellees' claims are time-barred, the primary thrust of their argument being that the injuries suffered by appellees are permanent in nature and were ascertained long before the statute of limitations began to run. They additionally assert that they should not be equitably estopped from raising the statute of limitations defense.
The applicable Kansas statute of limitations, Kan.Stat.Ann. Sec. 60-513 (1983), provides in pertinent part:
(a) The following actions shall be brought within two (2) years: (1) An action for trespass upon real property.
* * *
(4) An action for injury to the rights of another, not arising on contract, and not herein enumerated.
The crucial question in regard to the applicability of the two-year statute of limitations is whether the injuries sustained by appellees are permanent or temporary in nature. Drawing a distinction between permanent and temporary damages resulting from a nuisance is at best problemmatical. 3 The district court, upon surveying Kansas nuisance law from 1876 to the present, noted that the relevant cases addressing the distinction between permanent and temporary injuries are somewhat unclear and inconsistent. Miller I, 567 F.Supp. at 899.
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