R.M. Packer Co. v. Marmik, LLC

• Decision Date: 25 November 2015
• Docket Number: No. 14–P–1638.,14–P–1638.
• Citation: 41 N.E.3d 54,88 Mass.App.Ct. 654
• Parties: R.M. PACKER CO., INC. v. MARMIK, LLC & others.
• Court: Appeals Court of Massachusetts

88 Mass.App.Ct. 654

41 N.E.3d 54

R.M. PACKER CO., INC.

v.MARMIK, LLC & others.¹

No. 14–P–1638.

Appeals Court of Massachusetts, Dukes County.

Argued Sept. 2, 2015.

Decided Nov. 25, 2015.

John D. Curran, Braintree, for the plaintiff.

Marilyn H. Vukota, Edgartown, for Vineyard Port Hole, Inc.

Present: MEADE, WOLOHOJIAN, & MILKEY, JJ.

Opinion

WOLOHOJIAN, J.

At issue is whether R.M. Packer Co. (Packer) was properly found liable for attorney's fees and costs under G.L. c. 21E, § 4A(f ), after it unsuccessfully sought contribution from the defendants for costs to clean up an oil spill. In three circumstances, the statute requires that reasonable attorney's fees and costs be awarded against a plaintiff who has sued seeking contribution for environmental clean-up costs. Those three circumstances are

“[i]f the court finds that (1) the plaintiff did not participate in negotiations or dispute resolution in good faith; (2) the plaintiff had no reasonable basis for asserting that the defendant was liable, or (3) the plaintiff's position with respect to the amount of the defendant's liability pursuant to the provisions of this chapter was unreasonable.”

G.L. c. 21E, § 4A(f ), inserted by St.1992, c. 133, § 294. Here, after a bench trial, a judge found that Packer had no reasonable basis for asserting its claim against the defendant Dockside at the time it filed suit, and accordingly awarded fees and costs under § 4A(f )(2). The judge reached this conclusion despite the fact that, before Packer filed its complaint, the Department of Environmental Protection (DEP) had issued a notice of responsibility to Dockside, stating that it had reason to believe that Dockside was a “[p]otentially [r]esponsible [p]erson.”

Packer argues that DEP's position vis à vis Dockside's potential responsibility provided a reasonable basis upon which Packer could sue Dockside for contribution. Hence, Packer argues, the judge erred in awarding fees and costs under § 4A(f )(2). We do not need to reach this issue because, on the facts found by the judge (and not challenged on appeal), the award was independently proper under § 4A(f )(3). We accordingly affirm the award on that basis.

Background.² Packer was in the business of selling and delivering petroleum-based products on Martha's Vineyard.³ Before the events at issue in this case, Packer had owned a piece of commercial property located at 27 Lake Avenue in Oak Bluffs, where a gas station was located. In 1998, Packer installed underground fuel⁴ storage tanks behind the station. Tank one was for diesel fuel; tank two was for gasoline.

Two piers stretched into Oak Bluffs Harbor nearby. On one of those piers, Dockside owned and operated pumps that dispensed fuel to motor boats. Dockside's pumps were connected to tanks one and two, and Dockside purchased the fuel it needed for its operations from Packer, who delivered it to, and stored it in, those two tanks.

In 2000, as part of a larger business deal, Packer sold the property, including the tanks, to Marmik, LLC (Marmik), an unrelated firm. As a result, Marmik inherited Dockside as what the parties call a “pass-through” customer; after the transaction, Dockside continued to purchase fuel from Packer (paying Packer directly), and Packer continued to deliver it to tanks one and two. However, those tanks were now owned and maintained by Marmik,⁵ and Dockside paid Marmik a per gallon handling charge for this arrangement.⁶

Marmik adapted the property to meet its business needs. Among other changes, it added a nine-foot fence enclosing the area where the tanks were buried. In this same area, Marmik had installed a concrete base with layers of sand on top, which was customized to serve as an outdoor seating area for a restaurant on an abutting parcel. These changes to the site made it difficult for Packer's deliverymen to use the pole method to check the fuel levels before filling the tanks. The pole method entails lowering a measuring pole through the direct fill cap of the tank to measure the level of the tank's contents. The pole method is a customary and reliable method of measuring the level of a tank's contents and allows the deliveryman to determine how much fuel can be added to the tank without risking a spill.

While Packer's deliverymen had on occasion used the pole method to measure the fuel levels, they usually relied instead on a remote electronic sensory system known as a veeder root system (VRS), which Packer had put in place when the tanks were added to the site. With the aid of sensors inside each tank, the VRS measured and recorded each tank's fuel capacity on a running tape (akin to a sales register printout); thus, the VRS recorded the volume of fuel in a tank and its ullage, i.e., the number

of gallons that could be added. The VRS terminal was housed in a nearby convenience store and available when the store was open for business.

On the evening of Saturday, July 7, 2007, a Dockside employee measured the fuel in the tanks using the VRS, which recorded fifty-four inches of diesel fuel in tank one and eighteen inches of gasoline in tank two. In turn, according to the parties' well-established protocol, the Dockside employee reported the readings to Packer, stating (in inches) the height of fuel in each tank. In addition to reporting the fuel levels, the Dockside employee ordered gasoline (for tank two) to be delivered as early as possible the following morning. Dockside did not order any diesel (for tank one). On Sunday, at about 6:00 a.m. , Skip Bailey, Packer's employee, accurately recorded Dockside's fuel levels (i.e., fifty-four inches of diesel and eighteen inches of gasoline) in a company ledger.

For reasons set out in more detail in the margin,⁷ Packer was delayed in making the delivery and Dockside's owner, Terrence McCarthy, became correspondingly agitated that Dockside would run out of fuel.⁸ Ultimately, Leith made the delivery. However, rather than delivering gasoline, he delivered diesel fuel. Moreover, he did not check tank one's capacity, either by the pole method or by using the VRS terminal before filling the tank. Nor did he take any other reasonable step to ascertain the level of diesel fuel in tank one.⁹ Instead, Leith attached the truck's hose to the remote (indirect) fill spout for tank one and proceeded to fill it. At the moment he began offloading diesel fuel, tank one had room for about 273 gallons. By the time Leith stopped force pumping diesel fuel, he had delivered 1,060 gallons of diesel, the

tank had ruptured, the sensor rod within the tank had shot through the top of the tank “like a rocket,” and diesel fuel was gushing from the tank “like a small geyser.” The best estimate is that 787 gallons of diesel fuel spilled as a result.

In the aftermath of the spill, the DEP conducted an investigation that led it to send a notice to Dockside stating that it had reason to believe that Dockside was “a Potentially Responsible Party (a ‘PRP’) with liability under ... G.L. c. 21E, § 5, for response costs.” A like notice was sent by DEP to Packer, indicating that Packer was also a PRP liable under the Act for the spill.

Packer hired an environmental firm to remediate the spill and, all told, the clean-up costs came to $300,000, which were assumed by Packer's insurance company. Packer then, pursuant to G.L. c. 21E, § 4A, sent demand letters to both Dockside and Marmik, demanding that they each contribute eighty percent of the remediation costs (which, had the defendants acceded to the demand, would have resulted in a significant windfall). Packer's demand at no point changed despite the fact that, as the trial judge found, “Packer well knew that Dockside was blameless in this instance.” The parties did not resolve their differences and Packer brought this suit against Dockside, among others,¹⁰ asserting liability based on common-law (negligence) principles as well as certain provisions of G.L. c. 93A and G.L. c. 21E, the Massachusetts Oil and Hazardous Material Release Prevention Act (Act). Dockside asserted a counterclaim for an award of its attorney's fees and costs under G.L. c. 21E, § 4A(f )(1)-(3).

After an eight day bench trial, the judge issued findings of fact and found in favor of Dockside on all of Packer's claims. On Dockside's counterclaim, the judge awarded Dockside $66,409.50 in attorney's fees and costs, relying on G.L. c. 21, § 4A(f )(2),¹¹ and concluded: “[w]hen Packer filed its complaint, application of the facts to the existing law made it reasonably clear that Dockside was not liable under G.L. c. 21E.” The only issue

before us is the award of fees and costs.¹²

Discussion. General Laws c. 21E is a comprehensive statute designed to promote the prompt and efficient cleanup of sites contaminated by the release of hazardous materials and to provide a legal framework by which response costs are borne by, and appropriately allocated among, those responsible. See Commonwealth v. Boston Edison Co., 444 Mass. 324, 335, 828 N.E.2d 16 (2005) ; Bank v. Thermo Elemental Inc., 451 Mass. 638, 653, 888 N.E.2d 897 (2008). Under the Act, a person, as defined by § 2, is authorized to undertake response actions¹³ to remediate a contaminated site and is entitled to reimbursement “from any other person liable” for the release of hazardous materials. G.L. c. 21E, § 4, third par., as appearing in St.1992, c. 133, § 293. If two or more persons are liable, then each is liable to the others for their equitable share.¹⁴ Ibid. See Martignetti v. Haigh–Farr, Inc., 425 Mass. 294, 308, 680 N.E.2d 1131 (1997) ; Commonwealth v. Boston Edison Co., supra at 338, 828 N.E.2d 16.

Section 4A of the Act sets out a detailed prelitigation process that a person must follow if that person wishes to obtain contribution from others who may also have liability for environmental clean-up costs. To begin with, the person seeking contribution must send a demand letter specifying (among other things) the nature, scope, and cost of the remediation, the legal and...