Reynolds v. Childers Oil Co.

• Decision Date: 04 April 2014
• Docket Number: NO. 2013-CA-000710-MR,2013-CA-000710-MR
• Parties: PEYTON REYNOLDS and JOSEPHINE D'AMATO RICHARDSON APPELLANTS v. CHILDERS OIL COMPANY; HINDMAN PETROLEUM SERVICES; and MOUNTAIN RAIL PROPERTIES, INC. APPELLEES
• Court: Kentucky Court of Appeals

PEYTON REYNOLDS and JOSEPHINE

D'AMATO RICHARDSON APPELLANTS v. CHILDERS OIL COMPANY; HINDMAN PETROLEUM SERVICES;and MOUNTAIN RAIL PROPERTIES, INC. APPELLEES

NO. 2013-CA-000710-MR

Commonwealth of Kentucky Court of Appeals

RENDERED: APRIL 4, 2014

NOT TO BE PUBLISHED

APPEAL FROM LETCHER CIRCUIT COURT

HONORABLE JAMES L. BOWLING, JR., JUDGE

ACTION NOS. 09-CI-00063; 09-CI-00065; 09-CI-00068; 09-CI-00252

OPINION

AFFIRMING

BEFORE: JONES, MAZE, AND MOORE, JUDGES.

MOORE, JUDGE: Peyton Reynolds and Josephine Richardson appeal from an order of summary judgment entered by the Letcher Circuit Court dismissing theirclaims of nuisance, trespass, and negligence against the above-captioned appellees (who we will collectively refer to as "Childers"). We affirm.

I. FACTUAL AND PROCEDURAL HISTORY

This is a continuation of the case addressed in Childers Oil Co. v. Reynolds, No. 2011-CA-001352-ME, 2012 WL 1900135 (Ky. App. May 25, 2012) (hereafter "Childers I"). We will therefore paraphrase the factual and procedural background of this case, as discussed in that opinion, to the extent that it is relevant and supported by the record before us.

On or about November 1, 2008, Childers dumped sludge from an oil plant into a plastic-lined pit next to the Kentucky River in Whitesburg, Kentucky. The sludge from the pit seeped into the river and flowed downstream toward the drinking water treatment plant operated by the Letcher County Sewer and Water Company which provides water to the residents and businesses of Whitesburg, Kentucky, as well as the surrounding Letcher County communities. Subsequently, Kentucky's Department for Environmental Protection ("DEP") issued an advisory to consumers informing them that they should not use the water pumped out of the plant except for flushing toilets. The advisory was in effect from November 1 through November 6, 2008.

Again, in February 2009, a diesel fuel tank stored on Childers' property began leaking into the water. From February 16 through February 25, 2009, the DEP issued another water quality advisory, which lasted ten days. During this time period, residential and business customers of the Letcher CountySewer and Water Company were again advised by the DEP not to use the water supply for anything other than flushing toilets. The DEP eventually determined that Childers' sludge pit was the source of the spill in the November 2008 incident and issued it a notice of violation. The DEP also issued a notice of violation to Childers Oil with regard to the February 2009 occurrence.

By March 2009, four separate civil actions involving over eighty named plaintiffs had been filed against the appellees with respect to the two water advisories. At least two of these civil suits requested class action status. Most of these lawsuits were filed in Letcher Circuit Court and were later consolidated on April 2010.¹ The named plaintiffs asserted the same theories of liability and causes of action (i.e., nuisance, trespass, and negligence ), and sought redress for damages allegedly caused by the November 2008 and February 2009 spills, specifically, monetary damages representing inconvenience and loss of the use and enjoyment of their homes and businesses due to the two water advisories.

After completing written discovery, the plaintiffs then sought an order certifying the action as a class action under Kentucky Rules of Civil Procedure (CR) 23.01 and CR 23.02(c). The circuit court held a class action certification hearing on June 28, 2011. At the conclusion of the hearing, the circuit court confirmed that the case was best managed as a class action and instructed Peyton Reynolds and the other plaintiffs to tender findings of fact with a correspondingorder that directed the certification of the class. Further, the circuit court advised Childers that it could submit objections to these findings of fact. Afterwards, on July 20, 2011, the circuit court entered an order certifying the class action and designating two subclasses of plaintiffs: 1) a class of residential customers of the Letcher County Sewer and Water Company, to be represented by plaintiff Peyton Reynolds; and, 2) a class of its business customers, to be represented by plaintiff Josephine Richardson d/b/a The Courthouse Café.

Following an interlocutory appeal, however, we reversed the circuit court's order and remanded for additional findings. Of relevance to this appeal, we remanded for a determination of whether the plaintiffs had asserted an amount of damages sufficient to invoke the circuit court's jurisdiction.

Upon remand, Childers then filed a motion for summary judgment. Regarding the plaintiffs' claims for trespass, Childers argued: 1) the two interruptions in water services alleged in the plaintiffs' complaint did not satisfy the element of trespass requiring an "interference with exclusive possession of property"; 2) the evidence did not support that anything had entered and harmed the plaintiffs' respective properties during the advisories; 3) even if Childers had played a role in causing the state environmental agency to issue the consumer advisories in November 2008 and February 2009, the issuance of consumer advisories, by itself, was not evidence that trespasses had occurred; and 4) even assuming any trespass had occurred, no evidence of record supported that Childers had caused it or acted intentionally in doing so.

Regarding the plaintiffs' claims for private temporary nuisance,² Childers argued: 1) the plaintiffs had failed to produce evidence demonstrating standing to sue (i.e., that they each had title and possession of affected property); 2) no evidence supported that any property had actually received contaminated water or had otherwise become contaminated due to the water during the two advisories; 3) no evidence established that any contaminants had originated from Childers; and 4) the plaintiffs had adduced no evidence demonstrating the extent to which any purported contamination caused the value of use or the rental value of any property to be reduced.

With regard to the plaintiffs' claims for negligence, Childers argued: 1) no plaintiff had asserted injuries consisting of anything other than real property damage and damages to real property caused by another's negligence sound in trespass, not negligence; and, 2) no plaintiff had produced evidence demonstrating that Childers had damaged any property.

Finally, Childers argued that the plaintiffs had also failed to produce any evidence demonstrating that Childers had acted, if at all, in any manner that would support awarding punitive damages.

Initially, the plaintiffs responded to Childers' motion with four arguments. First, they argued that the sworn testimony of Michael Klein (one of their experts and an engineer specializing in hazardous materials and water resources) "not only addresses Defendant Childers' failure to comply with environmental standards, industrial facility standards, and other industry standard violations, it stands completely uncontroverted." However, the plaintiffs' responsive pleading cited no particular section of Klein's testimony in support of this general statement.

Second, the plaintiffs argued that Childers had

[W]holly fail[ed] to address the Consent Judgment entered into by the Defendants. Obviously, at this juncture, this Court has not had an opportunity to rule upon what kind of preclusive or res judicata effect the Consent Judgment has on Defendant Childers as it relates to the allegations and claims in this case.

We note that this "consent judgment" was briefly mentioned in Childers I, 2012 WL 1900135 at *1. However, the specifics of that purported judgment are unknown, it does not exist in the record before us, and there is no indication that it was ever added to or considered part of the record below.

Third, the plaintiffs argued that summary judgment was inappropriate because their complaint had pled the requisite elements of trespass, nuisance, and negligence, and because Childers had failed to present evidence demonstrating that it was not liable for trespass, nuisance, and negligence.³ In making this argument,however, the plaintiffs misunderstood what the function of summary judgment is (as discussed further below), along with whose responsibility it was for carrying the burden of proof in this matter. See CR 43.01(2) ("The burden of proof in the whole action lies on the party who would be defeated if no evidence were given on either side," e.g., the plaintiffs, not Childers).

Fourth, with respect to Childers' argument that the plaintiffs lacked standing to sue, the plaintiffs produced no evidence to the contrary. The extent of the plaintiffs' response was:

As it relates to standing, each of the Plaintiffs and class members by definition would own or possess the property at issue via their status as a residential or business customer. Compensation for a private nuisance is based upon the lessening of the value of the use of the property to the plaintiff as a result of the nuisance. (See 13 Ky. Prac. Tort Law Sec. 14.3 (1995)). For a temporary nuisance, as is the situation in this case, compensatory damages are measured by how much the value of the property is reduced by the presence of the nuisance during the continuance of the nuisance.

Approximately one month later, the plaintiffs then filed another pleading in response to Childers' motion for summary judgment. As before, this additional pleading urged that summary judgment in favor of Childers would be inappropriate because

Defendant's Motion for Summary Judgment is completely devoid of any evidence properly considered for summary judgment purposes that is even remotely supportive of Defendant Childers, its conduct in operating and maintaining its facility, or suggesting Defendants were not responsible for causing the water advisories. There is zero evidence properly considered by the Court for summary judgment purposes that stands for the proposition that Defendant Childers did not cause

...