Soo Line R. Co. v. BJ Carney & Co.
| Decision Date | 23 June 1992 |
| Docket Number | Civ. 4-92-161. |
| Citation | 797 F. Supp. 1472 |
| Parties | SOO LINE RAILROAD COMPANY, a Minnesota corporation, individually and on Behalf of the State of Minnesota, Plaintiff, v. B.J. CARNEY & COMPANY, a Nevada corporation; William Davenport, Luther Fendler, Jerome Nevin, Charlee O'Malley and Marvin Soehern, officers and directors of B.J. Carney & Company, as trustees of B.J. Carney & Company; B.J. Carney & Company Limited Partnership, a Washington limited partnership, as successor in interest to B.J. Carney & Company; U.S. Bank of Washington, as trustee of the Testamentary Trust of Milo P. Flannery fbo Jerome F. Nevin; U.S. Bank of Washington, as trustee of the Testamentary Trust of Milo P. Flannery fbo Charlee O'Malley; William Davenport, Luther Fendler and U.S. Bank of Washington, as trustees of the Living Family Trust of Maud O. Flannery fbo Jerome F. Nevin; William Davenport, Luther Fendler and U.S. Bank of Washington, as trustees for the Living Family Trust of Maud O. Flannery fbo Charlee O'Malley; U.S. Bank of Washington, as trustee of the Testamentary Trust of Aileen Flannery Nevin, Fund B fbo Jerome F. Nevin and Charlee O'Malley; U.S. Bank of Washington, as trustee of the Testamentary Trust of Aileen Flannery Nevin, Fund A fbo John C. Nevin together as general partners of B.J. Carney Limited Partnership; E.L. Rehn, William Davenport, Luther Fendler, as personal representatives of the Estate of John C. Nevin, Jerome Nevin, Charlee O'Malley, Gonzaga University and Gonzaga Preparatory School, as limited partners of B.J. Carney & Company Limited Partnership; and Marion Wilson and E.L. Rehn, William Davenport and Luther Fendler, as personal representatives of the Estate of John C. Nevin, individually; Defendants. |
| Court | U.S. District Court — District of Minnesota |
COPYRIGHT MATERIAL OMITTED
Wayne G. Popham, Thomas W. MacLeod, III, Bryan J. Leary, Popham, Haik, Schnobrich & Kaufman, Minneapolis, Minn., for plaintiff.
Delmar R. Ehrich, Douglas A. Holmberg, Faegre & Benson, Janet Pollish, Donohue & Rajkowski, Minneapolis, Minn., for defendants.
This matter is before the Court on defendants' motion to dismiss for failure to state a claim upon which relief may be granted. The motion will be denied.
This action arises out of the alleged contamination of the Humboldt Yard property (the site) in Minneapolis. Plaintiff Soo Line Railroad Company (Soo Line) owned a parcel of property that included the site. For about fifty years Soo Line leased the site to B.J. Carney & Company, a Nevada corporation (the corporation). Soo Line alleges that for the duration of the leasehold, which ended in 1973, the corporation caused the continual release of hazardous substances onto the site, which have migrated onto the adjacent property owned by Soo Line. Compl. ¶ 12-15.
In 1986, shareholders of the corporation contributed their shares of stock to a second entity, B.J. Carney & Company Limited Partnership (the limited partnership), in exchange for partnership interests. Compl. ¶ 31. After the limited partnership was formed, the corporation filed for dissolution on February 11, 1987. Compl. ¶ 4. Soo Line alleges that the corporation did not give it notice of the dissolution. Compl. ¶ 25. The limited partnership continued the business of the corporation until it too was dissolved on July 20, 1990, and all of its assets were distributed. Compl. ¶ 32, 33.
Meanwhile, in 1988, Soo Line entered into negotiations to sell the site to a third party. In connection with these negotiations, Soo Line conducted an environmental investigation of the site. Soo Line claims that it discovered that the site and its groundwater were severely contaminated with hazardous substances. The Minnesota Pollution Control Agency conducted an additional investigation, concluding that groundwater contamination could affect sixty municipal wells serving approximately 75,000 people, and that surface water contamination could affect over half a million people.
Shortly after discovering the contamination, Soo Line sent a letter dated October 19, 1988 to the corporation and demanded that the corporation clean up the site and pay for costs. Compl. ¶ 26-27. On November 2, 1988, the corporation responded that it would cooperate and would contact Soo Line once it had managed to collect various documents. Compl. ¶ 28. The corporation did not inform Soo Line of its dissolution until February 13, 1989, two days after the applicable corporate survival statute had run. Compl. ¶ 29.
Soo Line filed this action on February 18, 1992. Its ten-count complaint asserts various claims against numerous defendants, all of which are in some way related to the corporation. The first defendant is the corporation itself. The second group of defendants are the statutory trustees of the dissolved corporation (William Davenport, Luther Fendler, Jerome Nevin, Charlee O'Malley and Marvin Soehern). The third defendant, the limited partnership, consists of two subgroups of defendants: the general partners (the trustees of various living trusts and testamentary trusts) and the limited partners (the personal representatives of the estate of John Nevin, Jerome Nevin, Charlee O'Malley, Gonzaga University, and Gonzaga Prep School Inc.). The fourth group of defendants consists of a former president of the corporation and the personal representatives of the estate of a former president of the corporation (Marion Wilson and the personal representatives of the estate of John Nevin).
Counts I, II, and III of the complaint allege that all of the defendants are responsible for releasing hazardous substances on the site in violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) as amended, 42 U.S.C. §§ 9601 et seq., the Minnesota Environmental Response and Liability Act (MERLA), Minn.Stat. §§ 115B.01 et seq., and the Minnesota Environmental Rights Act (MERA), Minn.Stat. §§ 116B.01 et seq., respectively. Compl. ¶ 35-45 (Count I), 46-56 (Count II), 57-61 (Count III).
Count IV alleges that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners breached the corporation's lease of the site by failing to surrender the site in the same condition as it was at the time the lease was made and by failing to maintain the site in a clean, safe, and sanitary condition. Compl. ¶ 62-69.
Count V alleges that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners are strictly liable under the common law by conducting abnormally dangerous activities on the site that caused harm to the soil and the groundwater. Compl. ¶ 70-76.
Count VI alleges that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners were negligent in that they breached a duty to Soo Line to conduct operations at the site with due care, causing the release of hazardous substances that have caused injury. Compl. ¶ 77-84.
Count VII alleges that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners committed a trespass by causing hazardous substances to contaminate the site and to spread to surrounding property. Compl. ¶ 85-90.
Count VIII alleges that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners have created a continuing nuisance by causing hazardous substances to contaminate the site and to spread to surrounding property, which as a result has interfered with Soo Line's free use and enjoyment of the property. Compl. ¶ 91-98.
Counts IX and X allege that the corporation, the statutory trustees, the limited partnership, the general partners, and the limited partners may be liable to Soo Line for either indemnity or contribution for the costs of cleaning up the site. Compl. ¶ 99-103 (Count IX), 104-110 (Count X).
This matter is before the Court on defendants' motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6). In reviewing a motion to dismiss for failure to state a claim the Court presumes all factual allegations to be true and all reasonable inferences from those allegations are construed in favor of the non-moving party. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Palmer v. Tracor, Inc., 856 F.2d 1131, 1132 (8th Cir.1988). The appropriate inquiry is not whether plaintiff will ultimately prevail but whether he will be allowed to introduce evidence to support his claims. Scheuer, 416 U.S. at 236, 94 S.Ct. at 1686. Because dismissal on the pleadings is an extreme remedy it is not favored by the courts and is employed only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (footnote omitted). Robinson v. MFA Mutual Insurance Co., 629 F.2d 497, 500 (8th Cir.1980). See also Palmer, 856 F.2d at 1132.
The defendants first argue that the corporation cannot be held liable under any theory of relief because it no longer exists. Rule 17(b) of the Federal Rules of Civil provides that a corporations' capacity to be sued depends upon the law of the state of incorporation. See Fed.R.Civ.P. 17(b). The corporation at issue in this case was organized under the laws of the state of Nevada. Compl. ¶ 4. Nevada law provides for a two-year winding-up period for corporations that have filed certificates of dissolution. See Nev.Rev.Stat. § 78.585. During this survival period, a corporation may still be sued. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853, 855-56 (1941), overruled on an unrelated point in Turpel v. Sayles, 101 Nev. 35, 692 P.2d 1290 (1985). Soo Line alleges that the...
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