Western Ohio Pizza, Inc. v. Clark Oil & Refining Corp.

• Decision Date: 27 January 1999
• Docket Number: No. 49A05-9802-CV-87,49A05-9802-CV-87
• Citation: 704 N.E.2d 1086
• Parties: WESTERN OHIO PIZZA, INC., MAS Realty, and D.D., Inc., Appellants-Plaintiffs, v. CLARK OIL & REFINING CORPORATION, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 1086

704 N.E.2d 1086

WESTERN OHIO PIZZA, INC., MAS Realty, and D.D., Inc. Appellants-Plaintiffs, v. CLARK OIL & REFINING CORPORATION, Appellee-Defendant.

No. 49A05-9802-CV-87.

Court of Appeals of Indiana.

Jan. 27, 1999.

Peter M. Racher, James A. Joven, Plews Shadley Racher & Braun, Indianapolis, Attorney for Appellant.

Jeffrey B. Katz, Michigan City, Attorney for Appellee.

OPINION

ROBB, Judge.

Case Summary

Appellants-Plaintiffs, Western Ohio Pizza, Inc., MAS Realty, and D.D., Inc. (collectively "Western"), appeal the trial court's judgment in favor of Clark Oil & Refining Corp. ("Clark"), which determined that Clark was not liable to Western for damages related to clean-up of leaking underground storage tanks ("USTs") on property which Clark conveyed to Western. We affirm.

Issues

Western raises three issues for our review which we restate as:

1. Whether the trial court properly found that the contract for sale of the property was clear and unambiguous in transferring liability to Western, and properly concluded that the Underground Storage Tank Act in effect at the time expressly permitted such transfer of liability;

2. Whether the trial court properly concluded that Western was not entitled to reimbursement from Clark for clean-up costs and attorney fees because the Indiana Department of Environmental Management ("IDEM") did not issue a corrective action order; and,

3. Whether the trial court properly concluded that Western could not recover clean-up costs from Clark under Ind.Code § 13-30-3-13 because Western was not the owner of the property at the time of the leak and there was no proof that Clark dumped any material during the time Western owned the property.

Facts and Procedural History

The facts most favorable to the judgment show that on July 1, 1988, Western signed a standard Purchase Agreement for the purchase of a lot at 5902 N. Michigan Rd. in Indianapolis from Clark for the construction of a Domino's Pizza store. Clark had not used the property as a gasoline station. The agreement contained the following conditions:

Subject to Bankruptcy Court Approval

....

Buyer is aware underground storage tanks are still on the property and agrees to assume all responsibility for said tanks.

Buyer is accepting the property "as is."

R. 496. On the same day, Western executed an Offer to Purchase prepared by Clark which provided, in part:

2) ...

SELLER DOES NOT WARRANT, EITHER EXPRESSLY OR IMPLIEDLY, THE CONDITION OR FITNESS OF THE PROPERTY CONVEYED HEREUNDER, ANY SUCH WARRANTY BEING HEREBY EXPRESSLY NEGATED. Buyer, by acceptance hereof, acknowledges that he has made a complete inspection of the above described property, and any improvements and/or equipment located thereon and is in all respects satisfied and accepts said property "AS IS."

6) Such improvements as may be located on the property, including ... underground storage tanks and lines ... are to be considered a part of the purchase price....

....

12) ... This agreement is to be merged with the Purchase Agreement....

R. 498. On August 4, 1988, by corporate warranty deed, Clark conveyed the parcel to Western Ohio.

Western's contractor began work on the new store in May or June of 1989 and discovered contaminated soil during excavation work. The soil was tested and reported to IDEM. An IDEM inspector orally ordered Western to remediate the soil. The contaminated soil was removed by an environmental engineering firm. The new facility was completed no later than December 1990.

Clark had previously filed a bankruptcy petition in December of 1987 and the bankruptcy court had authorized the sale of the parcel. On August 16, 1990, Clark was discharged and released under the bankruptcy court's reorganization plan and order.

On March 27, 1991, Western filed its complaint against Clark claiming that Clark is liable to pay for the clean-up of the contaminated soils, for lost profits, and for punitive damages. Clark filed a counterclaim and later moved for summary judgment which motion was denied.

Settlement negotiations took place and a trial date was finally set for November, 1996. Just prior to trial, Clark filed a complaint with the bankruptcy court claiming Western's claim was discharged in bankruptcy and seeking to enjoin the state court action. Clark also filed a motion to dismiss with the trial court. The trial court denied the motion, stating that Clark is barred from asserting discharge in bankruptcy as a defense for failure to affirmatively plead that defense.

Following a bench trial, the trial court entered findings of fact and conclusions of law and entered judgment in favor of Clark. ¹ The trial court concluded, in part:

4. ....

The clear and unambiguous language of the Offer to Purchase and the MIBOR Purchase Agreement operate to preclude [Western] from bringing the instant claims against [Clark]. Under the clear language of such contracts, [Western] purchased the property "AS IS." The contracts specifically informed [Western] that underground storage tanks were still on the property and [Western] specifically agreed to assume all responsibility for the underground storage tanks. Moreover, [Western's] agreement to assume responsibility for the tanks was not limited in any way. The contracts clearly shifted responsibility for the underground storage tanks from [Clark] to [Western].

5. Were [Clark] not able to contract away Tank Act liability, [Western] would still be precluded from seeking reimbursement from [Clark] for clean up costs and attorneys fees. The Tank Act in effect at the time of the sale of the property ... provided that if the current owner of an underground storage tank could prove that a release from the tank was caused solely by an act or omission of a third party, the current owner was entitled to recover from the third party its costs incurred in complying with a corrective action order issued by IDEM. The issuance of an order by IDEM is an essential element to recovery of remediation costs from a responsible third party. Because IDEM did not issue an order requiring clean up, [Western is] precluded from seeking reimbursement from Clark for clean up costs under the Pre-1991 Tank Act. The pre-1991 Tank Act did not provide for recovery of attorney's fees.

6. [Western is] also precluded from seeking reimbursement and/or damages from Clark under the amended Tank Act, effective July 1, 1991. The amended Tank Act permits the current tank owner to recover remediation costs and attorneys fees from a responsible third party whether or not IDEM issued an order requiring the current tank owner to take corrective action. All costs of remediating the property were incurred by [Western] prior to July 1, 1991. The 1991 amendment to the Tank Act (permitting recovery from a third party even if clean up is undertaken voluntarily) does not apply to clean up costs incurred Prior to July 1, 1991.

7. [Western is] not entitled to recover their remediation costs and attorney's fees from [Clark] pursuant to Indiana Code § 13-7-11-6.... The Illegal Dumping Statute requires proof that a party illegally dumped garbage or other solid waste on the landowner's property without the landowner's consent. This proof necessarily requires that the complaining party actually own the land at the time of the alleged dumping. [Western has] failed to prove that [Clark] dumped any material on the property during the time [Western] owned the property.

R. 448-50 (citations omitted). Western appeals from the trial court's judgment.

Discussion and Decision

This is an appeal from a judgment entered in a bench trial, and our standard of review on appeal is well-established. Because the trial court entered findings of fact and conclusions of law, we apply the following two-tier standard of review: whether the evidence supports the findings, and whether the findings support the judgment. Kettery v. Heck, 587 N.E.2d 1365, 1367 (Ind.Ct.App.1992), trans. denied. The court's findings and conclusions will be set aside only if they are clearly erroneous, that is, that the record contains no facts or inferences supporting them. Id. A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. Id. Sua sponte findings control only as to the issues they cover and a general judgment will control as to the issues upon which there are no findings. Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind.1997). A general judgment entered with findings will be affirmed if it can be sustained on any legal theory supported by the evidence. Id.

I.

Western argues that the parties' contract for sale of the real estate is ambiguous and does not explicitly transfer liability for the leaking tanks to Western. Western contends that without a specific provision transferring environmental liabilities, Clark cannot avoid liability to Western for clean up costs.

The Indiana Underground Storage Tank Act provides, in part:

A person who ... undertakes corrective action resulting from a release from an underground storage tank, regardless of whether the corrective action is undertaken voluntarily or under an order issued under this chapter, ... is entitled to receive a contribution from a person who owned or operated the underground storage tank at the time the release occurred.

Ind.Code § 13-23-13-8. Western contends that it is entitled to contribution pursuant to this statute. Clark asserts that Ind.Code § 13-23-13-10 allows for the release of an obligation for contribution. That statute provides, in part: "This section does not bar an agreement to: 1) insure; 2) hold harmless; or 3) indemnify; a party to an agreement for any liability under this article." Ind.Code § 13-23-13-10.

Indiana's underground storage tank laws were "drafted in the same language and spirit" as the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq. The Pantry, Inc. v. Stop-N-Go Foods, Inc., 777...