Scheufler v. General Host Corp.

• Decision Date: 24 October 1995
• Docket Number: Civil Action No. 91-1053-FGT.
• Citation: 915 F. Supp. 236
• Parties: Ted and Debra SCHEUFLER, husband and wife; Paul and Elva Scheufler, husband and wife, Harvey Wilhaus; Alice M. Richmond; Mabel V. Colle Trust; Kenneth D. and Eileen P. Knapp, husband and wife; Peirce Knapp Farms, Inc., by Walter C. Peirce, President; Violet Stockham, Coll-Mor Farm, Inc. and Lee Scheufler, Plaintiffs, v. GENERAL HOST CORPORATION, a New York Corporation, Defendant.
• Court: U.S. District Court — District of Kansas

915 F. Supp. 236

Ted and Debra SCHEUFLER, husband and wife; Paul and Elva Scheufler, husband and wife, Harvey Wilhaus; Alice M. Richmond; Mabel V. Colle Trust; Kenneth D. and Eileen P. Knapp, husband and wife; Peirce Knapp Farms, Inc., by Walter C. Peirce, President; Violet Stockham, Coll-Mor Farm, Inc. and Lee Scheufler, Plaintiffs, v. GENERAL HOST CORPORATION, a New York Corporation, Defendant.

Civil Action No. 91-1053-FGT.

United States District Court, D. Kansas.

October 24, 1995.

Casey R. Law, Bremyer & Wise, P.A., McPherson, KS, H. Lee Turner, H. Lee Turner, P.A., Great Bend, KS, for Ted Scheufler, Debra Scheufler, Paul Scheufler, Elva Scheufler, Harvey Wilhaus, Alice M. Richmond, Mable V. Colle, and Violet Stockham.

H. Lee Turner, H. Lee Turner, P.A., Great Bend, KS, for Kenneth D. Knapp.

Casey R. Law, Bremyer & Wise, P.A., McPherson, KS, H. Lee Turner, H. Lee Turner, P.A., Great Bend, KS, Kenneth E. Peirce, Turner & Boisseau, Chtd., Hutchinson, KS, for Eileen Knapp and Peirce Knapp Farms, Inc.

Thomas D. Kitch, Fleeson, Gooing, Coulson & Kitch, L.L.C., Wichita, KS, William R. Sampson, Bill J. Hays, Paul W. Rebein, Shook, Hardy & Bacon, Overland Park, KS, Rodney Zerbe, Thomas F. Munno, William F. Downey, Dechert, Price & Rhoads, New York City, for General Host Corp.

MEMORANDUM AND ORDER

THEIS, District Judge.

This is a nuisance action brought by several landowners and some of their tenants who claimed that the groundwater underlying their properties was polluted by salt which escaped from the American Salt plant in Lyons, Kansas, and into the Cow Creek Aquifer. At the relevant time, the salt plant was owned by a wholly owned subsidiary of the defendant, General Host. Trial of this matter resulted in a verdict for the plaintiffs on their claims for lost crop profits resulting from the inability to irrigate. After a verdict was reached on the issue of actual damages, the court held a second phase of trial before the same jury for the purpose of deciding whether punitive damages were appropriate in this case. The jury determined that the defendant is liable for punitive damages.

This is a diversity action in which Kansas substantive law applies. In accordance with K.S.A. § 60-3702(a), the court held an evidentiary hearing on September 11, 1995, to determine the proper amount of punitive damages. The parties presented evidence and argument at that hearing, and the court has had the benefit of numerous pleadings from both sides arguing the merits of the punitive damages issue. The court is now prepared to rule.

In addition to punitive damages, there are matters which the court must address. The parties have reached an agreement as to the actual damage award in this case. (Doc. 397). Also before the court is plaintiffs' motion for costs of proving matters which were the subjects of requests for admissions denied by the defendant. (Doc. 361).

1. Actual Damages Stipulation

Some of the tenants who farm the subject properties under sharecropping arrangements were joined as plaintiffs to this action pursuant to Federal Rule of Civil Procedure 17(a). (Doc. 315, Memorandum and Order, July 18, 1995). Other tenants were not joined, however, because the court ruled that they had settled all their claims with the defendant. Because under Kansas law the landowners and tenants each had claims only as to their own shares of the damages, Binder v. Perkins, 213 Kan. 365, 516 P.2d 1012 (1973), it became necessary to apportion damages between the landowners and tenants. To that end, the parties reached a stipulation as to how income and expenses from growing irrigated corn would have been divided. The court was prepared to ask the jury to determine the apportionment of damages, but counsel for both sides insisted they could apply the stipulation and reach an agreement as to the division of damages between landowner and tenant and the necessary reduction of damages to account for the settling tenants. In reliance on counsels' assurances, the court redrafted the jury instructions and verdict form so that the jury was responsible for apportioning damages by parcel of land.

After trial, neither side agreed with the other's actual damage proposal, and the court ordered both sides to endeavor in good faith to reach an agreement and report the results back to the court. (Memorandum and Order of September 12, 1995, Doc. 382). The parties have now, after consultation with the Magistrate, reached such an agreement and filed the necessary stipulation on October 17, 1995. (Doc. 397). The parties agree that the landowners and the tenants joined as plaintiffs are to be awarded a total of $480,000 in actual damages, with the landowners and tenants each receiving equal shares of the damages for their respective properties. Judgment for actual damages will therefore be entered in accordance with the October 17 stipulation, Document No. 397.

2. Motion for Costs

The court turns next to plaintiffs' motion for sanctions under Federal Rule of Civil Procedure 37(c)(2), which provides that a party who denies a request for admission may be liable for expenses, including attorney fees, incurred by the other party in later proving the truth of the matter.

The plaintiffs submitted a request for admission that the plaintiffs were unable to obtain fresh water for crop irrigation due to pollution caused by operations of the American Salt plant. The defendant denied the request except as to the property of Peirce Knapp Farms, Inc. The plaintiff also requested admissions as to each of the properties that but for the pollution, the plaintiffs would be able to irrigate. Again the defendant denied the requests, except as to the Peirce Knapp property. The defendant admitted that, but for the pollution, it would be practical to obtain fresh water on the Peirce Knapp property, but stated that an irrigation permit would be required. The plaintiffs also requested that the defendant admit that the groundwater pollution was caused by operations at the salt plant. The defendant responded by admitting that some contamination of the aquifer had occurred resulting from salt plant operations, but denying that the entire aquifer was so contaminated. Finally, the plaintiffs requested an admission that any groundwater pollution affecting the plaintiffs' properties was caused by salt plant operations. Again, the defendant admitted the contamination of the Peirce Knapp property, but as to other properties denied either the fact of contamination, that the contamination would prevent irrigation, or that the salt plant was the source of the contamination.

Each of the matters which plaintiff requested defendant admit was proved true at trial, except the jury found that the Paul and Elva Scheufler property was not contaminated in 1993 or thereafter and that the Mabel Colle Trust property was not contaminated in 1994 and 1995.

Rule 37(c)(2) provides in relevant part:

If a party fails to admit ... the truth of any matter as requested under Rule 36, and if the party requesting the admission thereafter proves ... the truth of the matter, the requesting party may apply to the court for an order requiring the other party to pay the reasonable expenses incurred in making that proof, including reasonable attorney fees. The court shall make the order unless it finds that (A) the request was held objectionable pursuant to Rule 36(a), or (B) the admission sought was of no substantial importance, or (C) the party failing to admit had reasonable ground to believe that the party might prevail on the matter, or (D) there was other good reason for the failure to admit.

This sanction is mandatory unless the court finds that one of the exceptions apply. Marchand v. Mercy Medical Center, 22 F.3d 933, 936 (9th Cir.1994); Herrera v. Scully, 143 F.R.D. 545, 548 (S.D.N.Y.1992). The court's application of those exceptions is reviewable for abuse of discretion. Marchand, 22 F.3d at 936; Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264, 1268 (9th Cir. 1990); Williams v. State Farm Mut. Auto. Ins. Co., 737 F.2d 741, 746 (8th Cir.1984), cert. denied, 469 U.S. 1159, 105 S.Ct. 910, 83 L.Ed.2d 923 (1985). The only question in this case is whether the defendant had reasonable ground to believe it might prevail on the relevant matters.

The court agrees with defendant that although it did not prevail on many of the matters involved in the requests, it had reasonable ground to believe it might. The requests dealing with whether salt pollution prevented the plaintiffs from irrigating appear simple at first look, but embrace a number of complicated technical issues, including the depth of the aquifer at a given location, the amount of water necessary for irrigation of crops, the level of pollution, the location of the irrigation well, the distance from which an irrigation well draws water, the concentration of salt which renders water unusable, and the movement and rate of recharge of the aquifer. See Board of Directors, Water's Edge, a Condominium Unit Owner's Ass'n v. Anden Group, 136 F.R.D. 100, 106-07 (E.D.Va.1991) (reasonable ground to deny "complex and contested factual matter"). Each of these matters was the subject of a great deal of conflicting expert testimony. The court denied plaintiffs' motions for summary judgment and directed verdict because there was sufficient evidence supporting the defendant's contentions to create a jury question. In fact, as to some properties for some years, the jury found the groundwater suitable for irrigation.

The other requests likewise involve complicated scientific issues about which there is little agreement among the experts. The court finds that the defendant's position on each of these matters had a reasonable basis in evidence, although the jury ultimately found for the plaintiffs on these issues. The court also notes that the defendant's responses were clear and unambiguous and set forth those matters about which there was no dispute. Se...