Wickens v. Shell Oil Co., 1:05-CV-645-SEB-JPG.

• Court: U.S. District Court — Southern District of Indiana
• Writing for the Court: Sarah Evans Barker
• Citation: Wickens v. Shell Oil Co., 569 F.Supp.2d 770 (S.D. Ind. 2008)
• Decision Date: 01 August 2008
• Docket Number: No. 1:05-CV-645-SEB-JPG.,1:05-CV-645-SEB-JPG.
• Parties: Daniel J. WICKENS and Pamela M. Wickens, Plaintiffs, v. SHELL OIL COMPANY and Shell Oil Products Company, LLC., Defendants.

569 F.Supp.2d 770

Daniel J. WICKENS and Pamela M. Wickens, Plaintiffs, v. SHELL OIL COMPANY and Shell Oil Products Company, LLC., Defendants.

No. 1:05-CV-645-SEB-JPG.

United States District Court, S.D. Indiana, Indianapolis Division.

August 1, 2008.

COPYRIGHT MATERIAL OMITTED

Anne L. Cowgur, Bingham McHale LLP, Mark Eliot Shere, Indianapolis, IN, for Plaintiffs.

Harry Nicholas Arger, Lee T. Hettinger, Rosa Maria Tumialan, Dykema Gossett Rooks Pitts PLLC, Chicago, IL, Jeffery Alan Whitney, Miriam A. Rich, Gonzalez Saggio & Harlan LLP, Indianapolis, IN, for Defendants.

ENTRY ON PLAINTIFFS' PETITION FOR ATTORNEY FEES AND CORRECTIVE ACTION COSTS

SARAH EVANS BARKER, District Judge.

On July 9, 2004, contractors with the City of Anderson were digging near the sidewalk adjacent to commercial property owned by Plaintiffs, Daniel and Pamela Wickens (the Wickenses), when soil contaminated with hydrocarbons was discovered at a depth of about ten feet. The Wickenses retained HydroTech, a local environmental contractor with expertise in identifying sources of contamination, to determine the nature and source of the contamination. After an initial investigation, including three soil borings on the Wickens property, HydroTech concluded that the petroleum contamination was likely the result of a release from an underground gasoline storage tank. After advising Mr. Wickens of state law notification requirements, HydroTech reported its findings regarding the petroleum release to the Indiana Department of Environmental Management (IDEM) on July 27, 2004.

The discovery of petroleum contamination on the Wickens property was not entirely surprising, given that the property had previously been a Shell Oil gasoline filling station prior to its purchase by the Wickens family in 1953. After discontinuation of the filling station, the underground storage tank which had held the gasoline was abandoned and never removed from the site. In addition, the property across the street from the Wickens property had also once been the site of another gasoline filling station operated by Gulf Oil. That property was, and still is, owned by Richard Gardner; he is no longer a party to this litigation.

Regulation of Underground Storage Tanks

Article 23 of Title 13 of the Indiana Code sets out the provisions of the State's Underground Storage Tank Act (USTA), which includes a regulatory structure for dealing with any release from any underground storage tank (UST). Consistent with virtually all other states' statutes of this sort, Indiana law also includes "corrective action" provisions for storage tanks which have been found to have leaked in the past or are leaking currently. The USTA vests the Commissioner of IDEM with authority to require that corrective action be taken with regard to the release of any regulated substance from a UST. Ind.Code § 13-23-13-1. The owner of the property on which a UST is located can be required to personally remediate a release or to pay the costs of emergency corrective action undertaken by the State. Ind.Code § 13-23-13-8(a). However, in contrast to most other states, Indiana has not limited the ability to seek corrective action costs for a leaking UST only to the State's environmental management agency. Anyone who, acting voluntarily or at the state's behest, "undertakes corrective action resulting from a release from an underground storage tank" (Ind.Code § 13-23-13-8(b)(2)) can seek to recover for corrective action costs and attorney fees. The statute further provides: "In resolving a contribution claim, a court may allocate the cost of a corrective action among the parties to the action using equitable factors that the court determines are appropriate." Ind.Code § 13-23-13-8(b).

The Pending Legal Issue

The parties successfully negotiated a settlement of the merits of this litigation. The petition now before us is based on the provisions of the USTA by which the Wickenses seek to recover attorney fees as well as reimbursement of costs incurred in connection with the environmental corrective action resulting from an environmental investigation into the cause and scope of the petroleum contamination that was first discovered by the city workers. The petition also seeks repayment of the costs and fees incurred by Plaintiffs in prosecuting this action or claimed to have been necessary to pursue their claim under Ind. Code. § 13-23-13-8. The dispute over repayment of these costs and fees is the remaining vestige of the parties' protracted settlement negotiations which were successful in all but this one respect. In settlement of this case, Shell has agreed to purchase the Wickens property, pay to the Wickenses certain damages and assume responsibility for the clean-up of the property and for coordinating with IDEM on the clean-up process. The amount of corrective action costs and attorney fees Plaintiffs should recover pursuant to the Indiana statutes remains unresolved. For purposes of settlement and to allow the Court to focus its attention on resolving the amount of fees and costs recoverable by Plaintiffs, the parties stipulate that Daniel and Pamela Wickens brought a "successful action" as referenced in Ind. Code § 13-23-13-8(b).

Factual Background and Procedural History

The extensive detail required by the Court to recount the tortuous, protracted journey of this litigation is almost as difficult and frustrating as it was to live through it as all as the dispute unfolded month after month, year after year. We shall begin at the very beginning, to borrow the well-known lyrics of Oscar Hammerstein.

Plaintiffs are the most recent in a line of proprietors of a family-owned shoe business (including shoe repairs) located on the site of the former Shell gasoline station. At the time the contamination was discovered in July of 2004 and further identified by HydroTech as a dated petroleum product release, the Wickenses were closing their business and attempting to sell the property and retire. After discovering the contamination, the Wickenses proceeded with the closure of their store but were unable to sell the property (hereinafter "the Wickens property). They had listed the property for sale at a total purchase price of $139,900.00.

Following discovery of the contamination, on August 2, 2004, Cory Smith of HydroTech contacted Mark Shere, an attorney with whom Smith and HydroTech had worked previously, to indicate that he (Smith) had a client who might need legal assistance. Smith put Shere in touch with Dan Wickens. The next day, August 3, 2004, in response to the report of the petroleum contamination on the Wickens property property, IDEM sent a letter to Mr. Wickens assigning an agency site number to the location and outlining the Wickenses' obligations as owner of property where a petroleum release was reported, including a directive to assemble further investigative information relative to the size and nature of the release. The Wickenses retained Shere to represent them in connection with resolving the legal issues relating to the contaminated property and also authorized HydroTech to engage in further soil and groundwater flow investigation. Shere agreed to represent the Wickenses on a contingency basis, subsequent to payment by them of an initial $1,000.00 retainer. Shere's fees were to be paid out of what he could recover for the Wickenses both in terms of damages and attorney fees. Contrary to Rule 1.5(c) of the Indiana Rules of Professional Conduct, that agreement between Shere and the Wickenses was never reduced to writing.

Now four years later, the property has yet to be completely cleaned up, and the legal journey has been circuitous, arduous and acrimonious. Among other things, in a questionable maneuver, HydroTech and Shere expanded their investigation sua sponte into the source and scope of the contamination to include the Gardner property through additional soil borings by HydroTech on that adjoining (or at least nearby) property. The results from the borings and two monitor wells which HydroTech had installed on the Gardner property were provided to IDEM in September of 2004 as a part of HydroTech's initial investigation of the Wickens property.¹ Meanwhile, Shere contacted Donn Wray, an attorney in Indianapolis whom Shere had known to represent Shell in the past. Shere advised Wray of the situation the Wickenses were facing and that the property had originally been sold to the Wickens family by Shell. In a letter dated October 6, 2004, Shere provided Wray with a copy of the 1953 deed from Shell to the Wickenses and a copy of HydroTech's initial investigative report covering the Wickens property as well as the borings from the Gardner property, noting that groundwater flow indicated the contamination likely went from the Wickens property to the Gardner property.

Wray apparently told Shere he would pass the information along to someone at Shell, but beyond that it is clear that very little, if anything, was done to initiate discussions between the parties until early 2005. In addition, the Wickenses' deed was never delivered to an appropriately responsible official at Shell.² Following HydroTech's receipt of the initial investigative report in September of 2004, IDEM sent Mr. Wickens a letter dated November 18, 2004, setting forth the details of the further investigation required by him regarding both his property and the "former gas station located across 23rd street" (a reference to the Gardner property).

On January 11, 2005, Wray sent an email to Shell's in-house legal department reminding them that Shere was seeking the name of a contact person at Shell to discuss his client's claim. Because of the substantial number of filling stations which Shell has owned over the years and the plethora of environmental problems which stem from leaking underground storage tanks, Shell has created a separate department to deal specifically with environmental claims arising from their...