Shell Oil Co. v. Meyer

Decision Date19 August 1997
Docket NumberNo. 79A04-9512-CV-470,79A04-9512-CV-470
Citation684 N.E.2d 504
PartiesSHELL OIL COMPANY, Union Oil Company, Robert Van Meter, Van's Wholesale Auto Body Shop, and Margaret G. Smith, Appellants/Cross-Appellees-Defendants, v. Richard and Kim MEYER, Gary and Bridget McDaniel, Jim and Terri McDonald, Dan and Vivian McDaniel, Alvin and Verna Mae Casad, and Helena Byers, Appellees/Cross-Appellants-Plaintiffs.
CourtIndiana Appellate Court

CHEZEM, Judge.

Case Summary

Defendants-Appellants, Shell Oil Company ("Shell") and Union Oil Company ("Union"), (collectively, the "Oil Companies"), appeal from a judgment entered by the trial court in favor of Plaintiffs-Appellees, Richard and Kim Meyer, Gary and Bridget McDaniel, Jim and Terri McDonald, Dan and Vivian McDaniel, Alvin and Verna Mae Casad, and Helena Byers (collectively, the "Landowners"). Citing an allegedly improper jury instruction, the Landowners request a new trial regarding the issues determined by the jury. We affirm in part, and reverse and remand in part.


The parties present various issues which we restate as:

I. Whether collateral estoppel bars liability against the Oil Companies under the Indiana Underground Storage Tank Act ("USTA");

II. Whether Shell and Union are "operators" as the term is defined in the USTA;

III. Whether the fact that the Landowners are not liable for corrective actions precludes them from having a cause of action for contribution under the USTA;

IV. Whether the trial court's allocation of liability between Shell and Union is proper;

V. Whether the Landowners are barred from recovering costs for future corrective action under the USTA;

VI. Whether medical monitoring costs are corrective action costs recoverable under the USTA;

VII. Whether the attorneys' fee award is appropriate; and,

VIII. Whether the Landowners are entitled to a new trial because of the trademark instruction.

Facts and Procedural History

The facts favorable to the judgment indicate that in 1946, Fred Smith ("Smith") purchased property in West Point, Indiana, on the northwest corner of Washington and Main, to be used as a gas station. From the time of purchase until 1971, Smith leased the West Point gas station to various people who operated it as a Shell station, complete with Shell signage and Shell gasoline. During the next twenty-five years Smith owned the gas station, he also drove the tank truck that transported the Shell gasoline from a bulk plant in Lafayette to his station, filled the three underground storage tanks beneath the station with gasoline, held himself out as a Shell agent, wore a Shell uniform, displayed the Shell name and logo on his tank truck, and attended Shell-sponsored sales meetings and conferences.

In 1971, the bulk plant from which Smith had been acquiring gasoline switched from providing Shell gasoline to providing Union 76 gasoline. Thus, Smith's station changed from being a Shell station to a Union 76 station that year. As a result, Union paid to have the Shell signs removed from the station and replaced with Union signs, and paid for 500 bottles of Coca-Cola to help celebrate its grand opening. From 1971 until his death in 1979, Smith wore a Union 76 uniform, displayed the Union name and logo on his tank truck, and delivered Union gasoline to the station. From 1979 through 1981, the final two years the Union station was in business, another Union distributor supplied the station with gasoline.

In early 1989, West Point resident Kim Meyer first noticed the smell of petroleum in her family's drinking water. She reported the odor to the Tippecanoe County Health Department, which sampled and tested the Meyers' water. Laboratory results showed the presence of benzene at a concentration of 180 parts per billion. The Health Department warned the Meyers to stop drinking or washing with the water because it was unsafe. Meyers, her husband, and their three children avoided baths at home, began using bottled water for cooking and drinking, and purchased filters to screen out contaminants in their well water.

Several months later, the Indiana Department of Environmental Management ("IDEM") installed carbon filters in 4-foot-high canisters in the Meyers' home. Upon further testing, IDEM found that residential water in the neighborhood contained quantities of benzene, 1,2-dichloroethane, and other gasoline constituents. After determining that drinking or being exposed to the unfiltered water would be unsafe, IDEM installed similar filters in the homes of the other Landowners who lived nearby. Thereafter, IDEM hired an environmental consulting firm to conduct a study of the groundwater in the Landowners' neighborhood, in the hopes of finding the contaminant source.

In 1992, the consulting firm finally determined that the contamination was coming from the property that had formerly been the West Point Shell/Union 76 gas station. By then, the underground storage tanks at the gas station had been excavated pursuant to IDEM's request of the current site owner, Robert Van Meter ("Van Meter"). Soil in the pit where the tanks had been buried was tested and found to be heavily contaminated with petroleum hydrocarbons. The contaminated soil had not been removed, and the excavation pit had been refilled with contaminated backfill after the tanks were excavated.

After making unsuccessful demands for clean up of the contamination, the Landowners filed suit on May 4, 1993 against Shell, Union, Van Meter and his autobody shop, and Smith's widow. The complaint consisted of six counts: Count I (liability under the USTA), Count II (liability under anti-dumping statute, Ind.Code § 13-7-11-6(c)), Count III (negligence), Count IV (trespass), Count V (nuisance), and Count VI (strict liability for an abnormally dangerous activity). Although originally named as defendants only under Counts III-VI, Shell and Union were later added by the Landowners as defendants under the USTA count as well.

At a pre-trial conference in September of 1994, the parties suggested that the USTA claim was equitable in nature and should be decided separately by the court after disposition of the Landowners' common law claims by a jury. The court agreed and a jury trial was scheduled for Counts III-VI. Following an unsuccessful attempt by the Oil Companies to have the case removed to a federal district court, the jury trial began in Tippecanoe County. The jury trial lasted from October 3, 1994 through October 16, 1994 when the jury returned a general verdict in favor of the Oil Companies on all four counts.

On February 7, 1995, Shell, Union, and the Landowners each filed a separate motion for summary judgment. The trial judge denied each one and set the claim for bench trial on July 5, 1995. When the parties made it clear that they had no further evidence on the USTA issue, the judge agreed to make a preliminary determination of liability. On May 16, 1995, the trial court issued an opinion 1 adjudging that the Landowners "are not estopped from litigating their claim under the UST Act, and further determin[ing] that Shell and Union are liable under the UST Act as UST operators." (R. 2676). The trial judge then ordered the following:

1. [The Landowners'] motion for partial summary judgment on Count I of the Second Amended Complaint is granted.

2. [The Oil Companies'] motions for summary judgment on Count I are denied.

3. Shell and Union shall pay the reasonable corrective action expenses as may be incurred by [the Landowners] in cleaning up groundwater and soil contamination emanating from the former West Point station. Shell and Union shall divide the expenses based on their respective duration of operation of the former station over the 35 years spanning 1946 through 1981. Shell (1946 to 1971 = 25 years) shall pay 70 percent of the expenses; Union (1971 to 1981 = 10 years) shall pay 30 percent.

4. Shell and Union shall pay the reasonable attorney fees and expenses incurred by [the Landowners] in bringing that action, pursuant to the UST Act. Shell and Union shall divide the attorney fees and expenses on a 70:30 basis, as set forth in the preceding paragraph.

5. Within 30 days of the date of this Order, [the Landowners] shall file a proposed Work Plan setting forth the corrective action to be performed by [the Landowners] to remediate the groundwater and soil contamination in West Point, consistent with applicable environmental statutes and rules. The Work Plan shall include a detailed description of the investigation conducted by [the Landowners] in preparing the Work Plan and shall identify as specifically as possible all tasks to be accomplished in conducting the corrective action; the timetable for completion of each task; and...

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