Patton v. Tpi Petroleum, Inc.

• Decision Date: 11 February 2005
• Docket Number: No. No. 4:04CV00081 JLH.,No. 4:04CV00081 JLH.
• Citation: Patton v. Tpi Petroleum, Inc., 356 F.Supp.2d 921 (E.D. Ark. 2005)
• Parties: William L. PATTON, Jr., LLLP, Baird, Inc., and Arkansas Acquisitions, Inc., Plaintiffs v. TPI PETROLEUM, INC., f/k/a Total Petroleum, Inc., Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

356 F.Supp.2d 921

William L. PATTON, Jr., LLLP, Baird, Inc., and Arkansas Acquisitions, Inc., Plaintiffs v.TPI PETROLEUM, INC., f/k/a Total Petroleum, Inc., Defendant.

No. No. 4:04CV00081 JLH.

United States District Court, E.D. Arkansas, Western Division.

February 11, 2005.

COPYRIGHT MATERIAL OMITTED

John F. Peiserich, Friday, Eldredge & Clark, Little Rock, AR, for Plaintiffs.

Richard H. Mays, Richard H. Mays Environmental Legal Services, Little Rock, AR, for Defendant.

OPINION AND ORDER

HOLMES, District Judge.

William L. Patton, Jr., LLLP, Baird, Inc., and Arkansas Acquisitions, Inc., commenced this action in the Circuit Court of Pulaski County, Arkansas, seeking damages for breach of contract, trespass, nuisance, negligence, and violation of the Arkansas Solid Waste Management Act, Ark.Code Ann. § 8-6-201 et seq.The defendant, TPI Petroleum, Inc., f/k/a Total Petroleum, Inc.("TPI"), removed the case to this Court because the parties are citizens of different states and the amount in controversy exceeds $75,000.See28 U.S.C. § 1332.Presently before the Court is TPI's motion to dismiss and for partial summary judgment(Docket # 10).TPI seeks dismissal of the claims for breach of contract, trespass, nuisance, punitive damages, and attorney's fees; and it asks for summary judgment on the breach of contract claim, should it survive the motion to dismiss, and on the statutory violation claim.¹The Court heard oral argument on this motion on February 4, 2005.For the following reasons, the Court hereby grants in part and denies in part TPI's motion.

Legal Standard

A motion to dismiss can be granted pursuant to Fed.R.Civ.P. 12(b)(6) only if "it appears beyond a doubt that the plaintiff can prove no set of facts which would entitle him to relief."Schmedding v. Tnemec Co., Inc.,187 F.3d 862, 864(8th Cir.1999)."[A]s a practical matter, dismissal under Rule 12(b)(6) is likely to be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief."Gebhardt v. ConAgra Foods, Inc.,335 F.3d 824, 829(8th Cir.2003)(quotingParnes v. Gateway 2000, Inc.,122 F.3d 539, 546(8th Cir.1997)).On a Rule 12(b)(6) motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff and accepts the allegations in the complaint as true.SeeColeman v. Watt,40 F.3d 255, 258(8th Cir.1994).However, when "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56...."Fed.R.Civ.P. 12(c).Casazza v. Kiser,313 F.3d 414, 417(8th Cir.2002).In response to portions of the motion to dismiss, namely in respect to the breach of contract claim and the punitive damages claim, the parties have presented and argued evidence outside of the pleadings.The Court will treat the motion as one for summary judgment on those portions of the motion in which the Court considers matters beyond the pleadings.

A court should grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."Fed.R.Civ.P. 56(c);see alsoAnderson v. Liberty Lobby, Inc.,477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986).The party moving for summary judgment bears the initial responsibility of informing the district court of the basis of its motion and identifying the portions of the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, that demonstrate the absence of a genuine issue of material fact.Celotex Corp. v. Catrett,477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986);Group Health Plan, Inc. v. Philip Morris USA, Inc.,344 F.3d 753, 763(8th Cir.2003).When the moving party has carried its burden under Rule 56(c), the non-moving party must "come forward with `specific facts showing that there is a genuine issue for trial.'"Matsushita Elec. Indus. Co. v. Zenith Radio,475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538(1985)(quotingFed.R.Civ.P. 56(c)).The non-moving party sustains this burden by showing that "there are genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party."Anderson,477 U.S. at 250, 106 S.Ct. 2505.When a non-moving party cannot make an adequate showing on a necessary element of the case on which that party bears the burden of proof, the moving party is entitled to judgment as a matter of law.Celotex,477 U.S. at 323, 106 S.Ct. 2548.In deciding a motion for summary judgment, the Court must view the facts and inferences in the light most favorable to the party opposing summary judgment.Boerner v. Brown & Williamson Tobacco Corp.,260 F.3d 837, 841(8th Cir.2001).If the evidence would allow a reasonable jury to return a verdict for the non-moving party, summary judgment should be denied.Derickson v. Fidelity Life Assoc.,77 F.3d 263, 264(8th Cir.1996).

Undisputed Facts

This action arose after the plaintiffs paid for the removal of contaminated soil and water from property they own and had leased to TPI for a ten-year period beginning December 1, 1992.The property, located at 6137 West Markham, Little Rock, Arkansas, had been used as a service station and convenience store since approximately 1967.TPI entered into the lease on November 20, 1992, and operated a retail gasoline service station and convenience store on the property until July 25, 2002.On September 17, 2002, after deciding not to renew the lease, TPI removed three underground storage tanks from the property.During the removal process, it was discovered that the storage tanks had leaked.In response, TPI removed contaminated soil and groundwater from the tank area.SLA Environmental Services, Ltd., defendant's environmental consultant, submitted a Permanent Closure Report to the Regulated Storage Tank Division of the Arkansas Department of Environmental Quality("ADEQ").The SLA closure report documented the removal of the three tanks.Among other things, the report documented that evidence of leaks, namely contaminated soil and groundwater, had been detected in the tank area.The report stated that the contractor encountered contaminated soil and groundwater during the closure, that a vacuum truck recovered the contaminated groundwater from the tankhold and that tankhold backfill, consisting mainly of gravel, was returned to the tank pit.Both parties were aware of the information contained in the report.On October 25, 2002, ADEQ sent TPI a "no action letter" signed by Herman L. Springer, an Inspector for the Regulated Storage Tank Division of ADEQ, stating that ADEQ had received and reviewed the closure report and that it appeared that the regulatory requirements for the permanent closure of the storage tanks had been met.Based on this, ADEQ advised TPI that no further action was required at that time.

On November 30, 2002, TPI's lease term expired.On December 17, 2002, the plaintiffs and TPI entered into an agreement (the "2002 Agreement") wherein, for the consideration of fifteen thousand dollars, the plaintiffs accepted the return of all improvements in their existing condition.The plaintiffs waived and released TPI from all claims relating to the conditions of the improvements.They also granted TPI free access to the property should ADEQ require TPI to respond further regarding the underground storage tank area.

Meanwhile, on October 24, 2002, the plaintiffs entered into a lease agreement with Eyad Hassan, whereby Hassan would lease the property for a five-year term beginning December 1, 2002, for the operation of a service station and convenience store.After entering into the lease, Hassan began preparation for the installation of a new underground storage tank system.Coulson Oil, Hassan's affiliate, and their consultant, Pollution Management, Inc., evaluated the property and determined that the new underground storage tanks would be placed where TPI had placed his storage tank system.Pollution Management began installation of the tanks but, during the process, discovered evidence of contamination and halted the installation.Samples taken from the tankhold area where TPI's underground storage tank system had been located revealed contamination in the backfill and sidewalls of the tankhold.Both the plaintiffs and TPI were notified of the contamination.Hassan requested that the plaintiffs address the contamination problem.In January and February, 2003, the plaintiffs hired their consultant, Bradshaw Environmental, to remove the contaminated soil and water from the property.Bradshaw Environmental excavated and disposed of 1,080 cubic yards of contaminated material along with 3,312 gallons of contaminated liquids.The plaintiffs also paid to replace a broken sewer line on the property.On April 24, 2003, the plaintiffs demanded indemnification from TPI under the lease agreement for "costs arising out of contamination from TPI's operations of the Premises ... and ... any future costs to remediate the property."Upon TPI's failure to indemnify the plaintiffs, the plaintiffs filed this action.

Breach of Contract

Section 10 of the parties' lease agreement states in part:

Indemnification: The Tenant shall save the Landlord harmless from and indemnify it against, any liabilities, response cost, cost or expense to the premises of adjoining and nearby property arising out of or incident to the use of the Premises by the Tenant, its customers, invitees, licensees or employees.Without limiting the generality of the foregoing, the Tenant shall indemnify and hold harmless the Landlord against any liability, response cost, cost or expense arising...