5200-keystone-limited-realty-llc-v-filmcraft-laboratories-inc-eric-j ( 2015 )

Apr 14 2015, 9:58 am
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE ERIC J.
SPICKLEMIRE
George M. Plews
Brianna J. Schroeder Thomas F. O’Gara
Jonathan Penn Bradley R. Sugarman
Plews Shadley Racher & Braun Jeffrey D. Stemerick
LLP Taft Stettinius & Hollister, LLP
Indianapolis, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
5200 Keystone Limited Realty, April 14, 2015
LLC, Court of Appeals Case No.
Appellant-Defendant, 49A02-1403-CT-188
v. Appeal from the Marion
Superior Court
Cause No. 49D07-0310-
Filmcraft Laboratories, Inc., Eric CT-003394
J. Spicklemire, Portrait America, The Honorable Michael D.
Inc., A.C. Demaree, Inc., Clean Keele, Judge
Car, Inc., and The Wax Museum
& Auto Sales, Inc.,
Appellee-Plaintiff
Friedlander, Judge.
[1] This litigation involves a dispute over responsibility for the costs of
environmental cleanup of commercial real estate (the Site) located near the
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corner of 52nd St. and Keystone Avenue in Indianapolis. 5200 Keystone
Limited Realty, LLC (KLR) acquired the subject property from Apex Mortgage
Corporation (Apex) after Apex had acquired the property through foreclosure
proceedings against Eric Spicklemire, who purchased the property in 1981.
Apex filed its complaint against Filmcraft Laboratories, Inc. (Filmcraft), a
company owned by Spicklemire. The complaint alleged causes of action under
these three statutes: 1) Ind. Code Ann. § 13-11-2-70.3 (West, Westlaw current
with legislation of the 2015 First Regular Session of the 119th General
Assembly effective through March 24 2015) (creating an “environmental legal
action” (ELA), which is a legal action “brought to recover reasonable costs
associated with removal or remedial action involving a hazardous substance or
petroleum released into the surface or subsurface soil or groundwater that poses
a risk to human health and the environment”); 2) Ind. Code Ann. § 13-30-3-
13(d) (West, Westlaw current with legislation of the 2015 First Regular Session
of the 119th General Assembly effective through March 24, 2015) (creating an
action to recover reasonable expenses and attorney fees incurred by a
landowner on whose land solid waste has been illegally dumped); and 3) Ind.
Code Ann. § 6-1.1-22-13 (West, Westlaw current with legislation of the 2015
First Regular Session of the 119th General Assembly effective through March
24 2015) (liability for back property taxes). KLR was substituted as plaintiff
after it purchased the Site from Apex. Shortly thereafter, KLR amended its
complaint, adding as defendants Spicklemire, Portrait America, Inc., A.C.
Demaree, Inc., Russ Dellen, Inc. (RDI), Clean Car, Inc., and The Wax
Museum & Auto Sales. KLR appeals the grant of Spicklemire’s motion to
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dismiss with respect to KLR’s statutory causes of action, and a grant of
summary judgment with respect to certain common-law claims presented by
KLR at trial. KLR presents the following consolidated, restated issues for
review:
1. Did the trial court err in excluding expert testimony
regarding whether the Wax Museum & Auto Sales and
Clean Car caused or contributed to the contamination at
the Site?
2. Did the trial court err in entering summary judgment
against KLR on its common-law claims?
3. Did the trial court err in dismissing KLR’s complaint
pursuant to Trial Rule 41(B) on grounds that KLR failed
to present sufficient evidence to show Spicklemire caused
or contributed to chlorinated solvent and petroleum
hydrocarbon contamination of the Site?
[2] We affirm.
[3] In order to understand the issues involved in this case, we must first set out in
detail the history of the ownership and activity on the Site. A.C. Demaree Inc.
(Demaree) owned and operated a commercial dry cleaning business on the Site
from at least 1948 to 1973. It is undisputed that during this time, dry cleaners
used two solvents to clean textiles: perchloroethylene, a chlorinated solvent,
and Stoddard solvent, a petroleum hydrocarbon. Demaree stored these solvents
in tanks at the Site.
[4] In 1973, Demaree sold the Site to Robert Dellen, who in turn conveyed the Site
in 1979 to Dellen Realty, Inc. (Dellen Realty), a predecessor of RDI. From
1974 to 1981, Filmcraft leased the Site from Dellen and Dellen Realty. In
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January 1981, Spicklemire and his father purchased the Site from Dellen
Realty, and from 1981 to 2000, Spicklemire leased the site to Filmcraft.
Spicklemire was a shareholder, officer, and employee of Filmcraft, and became
the company’s president in 1994, when he became sole owner of Filmcraft and
the Site. He remained in this position until the company ceased operation.
Portrait America, also a Spicklemire-owned entity, leased the Site from 2000 to
2001. During its years of operation, Filmcraft sublet the back of the Site to
several auto-detailing operations. These included Clean Car, Inc. and The Wax
Museum & Auto Sales (collectively, the Detailers).
[5] During the time its business was located on the Site, i.e., 1974 to 2000 or 2001,
Filmcraft operated a commercial photo-processing operation. This process was
accomplished by the use of machines, which ran approximately eight to twelve
hours per day. These machines processed film and printed images on paper.
The processing generally involved the feeding of paper through a machine that
sent the film or paper through a series of chemical baths and water-wash tanks.
The chemicals used in this process included bleaches, fixers, and stabilizers
manufactured by Kodak and other suppliers. Such chemicals were highly
diluted by water. None of these chemicals contained chlorinated solvents.
Filmcraft documents indicate that the only petroleum hydrocarbon used in
Filmcraft’s operation were white grease and photographic lacquer. White
grease was used to lubricate a single piece of equipment, and a single, three- to
four-inch tube lasted the entire time that Filmcraft was in operation on the Site.
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[6] During his ownership of the Site, Demaree had installed trench drains
throughout the Site that connected to the sewer. Later, photo-processing
chemicals spent in Filmcraft’s operations were discharged from its machines
through a silver recovery device in the form of an effluent and, per
manufacturer recommendations and standard industry practice, discharged into
the trenches Demaree had installed. This effluent contained minute amounts of
silver but did not contain chlorinated solvents or petroleum hydrocarbons.
Subsequent testing indicated the presence of silver in a sediment sample
collected from inside the trench where photo-processing effluent was
discharged. No silver above regulatory action levels, however, was found in the
soil and groundwater samples taken at the Site in 2013. On occasion, paper
from the paper processor would clog the drain and form a sludge. This sludge
did not contain chlorinated solvents or petroleum hydrocarbons. In 2013, the
sewer lines were scoped by Gurney Bush, Inc. (GBI) with a video camera,
which revealed certain offset joints in the sewer line, but no leaks were found.1
Also, GBI’s investigation confirmed that the sewer on the Site was usable and
that water sent down the pipes went into the city’s main sewer line.
[7] Filmcraft used small cans of aerosol lacquer that were approximately the size of
a can of spray paint. Each can would last approximately one month, and the
aerosol lacquer was applied directly to photographs in a ventilated area on the
Site. Any overspray ended up on a peg board that was used to hold the
1
Indeed, GBI indicated that its procedure was not intended to look for leaks.
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photographs or was vented out of the building through an exhaust fan. The
testing indicated that no lacquer was released to the soil or groundwater at the
Site.
[8] As indicated, the rear part of the Site was sublet to various auto-detail
companies during Filmcraft’s operation. The rear of the Site was separated
from Filmcraft’s operation by a wall and a windowless door. The Detailers had
their own main entrance to the Site on the outside of the building. Spicklemire
was not in any way involved with the Detailers’ operations and had no
knowledge of whether they used chemicals in their operations, much less what
those chemicals would have been if indeed any were used. His interaction with
those tenants was confined primarily to going to the rear of the Site to collect
rent when it was overdue. Also, on occasion, Spicklemire would go to the
Detailers and asked them to stop running cars inside the building when that
occurred. On four or five occasions, Spicklemire brought photo-processing
machinery through the garage door located in the Detailers’ space. Spicklemire
claimed to have no knowledge of any chemical releases by the Detailers.
[9] In 2001, Spicklemire defaulted on the mortgage and abandoned the Site. Apex
foreclosed and acquired title via a sheriff’s deed, purchasing the Site via a credit
bid of $240,000. After it acquired the property, Apex hired Keramida
Environmental, Inc. (Keramida) in 2002 to conduct soil and groundwater
samples at the Site. Keramida issued a report detailing the contamination it
had discovered and suggesting further evaluation. Keramida’s report estimated
that the cost of remediation for the problems it discovered would exceed
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$150,000. On October 9, 2003, Apex filed this action against Filmcraft. After
the lawsuit was filed, Portrait America paid Patriot Environmental &
Engineering, Inc. (Patriot) to inventory and remove all chemicals from the Site.
The chemicals removed included a gas can, motor oil, and various paints.
None of these chemicals were used in Filmcraft’s operations.
[10] “After full and complete disclosure of all potential environmental issues known
to Apex as a result of the Keramida [inspection]”, Apex sold the Site to KLR
for $20,000 in 2014. Exhibit 8B, paragraph 6, Admitted Exhibits Binder2
(Exhibits Binder). “Apex accepted the $20,000 sale price for the Site from
[KLR] as a discount from the earlier appraised value of $400,000 because of the
potential environmental contamination at the Site discussed in Keramida’s
Phase II report [.]” Id. At this point, KLR was substituted for Apex as plaintiff
in the present lawsuit. In 2013, KLR hired Terra Environmental Corporation
(Terra) to perform additional tests on the Site. Terra’s test results essentially
duplicated those of the tests performed earlier by Keramida in that they
revealed the presence of chlorinated solvents and petroleum hydrocarbons in
soil and groundwater samples.
[11] As indicated above, the original and amended complaints alleged three
statutory causes of action, including an ELA complaint under I.C. § 13-11-2-
70.3 to recover costs associated with remediation of hazardous substances
2
The pages in the Admitted Exhibits Binder (two volumes) are not numbered. The exhibits are, however,
arranged in numerical order and tabbed, which expedited our review.
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released into the soil or groundwater on the Site, an action under I.C. § 13-30-3-
13(d) to recover expenses and attorney fees incurred because solid waste was
illegally dumped on the Site, and an action under I.C. § 6-1.1-22-13 against
Spicklemire for back taxes owed on the Site. Ultimately, default judgments
were entered in favor of KLR against Demaree, the Wax Museum & Auto
Sales, and Clean Car. Claims against Portrait America were settled before trial.
Russ Dellen, Inc. prevailed on summary judgment. Therefore, all that
remained were the claims presented in a second amended complaint filed by
KLR against Filmcraft and Spicklemire.
[12] On March 28, 2013, KLR filed its Plaintiff’s Preliminary Contentions,
Itemization of Damages, and Witness/Exhibit Lists (Plaintiff’s Preliminary
Contentions), setting out for the first time among its “preliminary itemization of
damages” common-law claims for lost rent and lost use. In response,
Spicklemire sought summary judgment on KLR’s common-law claims on
grounds that they were never pleaded and that in any event they are not
available to a property owner against a prior owner of the same property. KLR
challenges the trial court’s grant of this motion, which the trial court entered
upon its finding that KLR was not entitled to recover economic damages under
the ELA and that KLR had not pleaded any common-law claims.
[13] Trial commenced against the remaining parties on the remaining counts on
February 19-21, 2014. At the conclusion of KLR’s case-in-chief, Spicklemire
and Filmcraft moved for involuntary dismissal under Trial Rule 41(B), arguing
that upon the weight of the evidence presented by KLR, there had been no
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showing of a right to relief. The trial court granted this motion and dismissed
the complaint. KLR appeals the grant of the T.R. 41(B) motion and the grant of
summary judgment on KLR’s common-law claims, as well as the exclusion of
certain expert testimony.
1.
[14] We begin with KLR’s evidentiary claim that the trial court erred in disallowing
KLR’s expert, Douglas Zabonick, Keramida’s president, to testify about his
opinion regarding whether the auto-detailing operations conducted on the Site
during Spicklemire’s ownership more likely than not used petroleum
hydrocarbons and chlorinated solvents. During Zabonick’s direct testimony, he
was asked whether he had an opinion regarding whether the Detailers’
operations more likely than not caused or contributed to the contamination at
the Site. Spicklemire’s counsel objected and asked the following preliminary
question: “You don’t have any knowledge whatsoever as to what chemicals
these particular auto detailers were using at any time, do you?” Transcript at
909. Zabonick responded, “That would be correct.” Id. Counsel objected to
this line of questioning on the basis that Zabonick’s testimony would be “just
speculation.” Id. KLR’s counsel then proceeded to question Zabonick about
whether his (Zabonick’s) car had ever been to an auto detailing shop, and he
responded that it had. When Zabonick was asked to describe that process,
Spicklemire’s counsel objected on grounds that “whatever nice experience Mr.
Zabonick may have had with the detailing of his car is utterly irrelevant to what
was going on with these auto detailers.” Id. at 912. Spicklemire’s counsel again
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objected on grounds that Zabonick’s testimony as it applied to the facts of the
present case was “inherently speculative.” Id. KLR contends the trial court
erred in sustaining the objection.
[15] Indiana Evidence Rule 702 governs the admissibility of expert testimony, and
provides as follows:
(a) A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if the expert’s scientific, technical, or other
specialized knowledge will help the trier of fact to understand the
evidence or to determine a fact in issue.
(b) Expert scientific testimony is admissible only if the court is
satisfied that the scientific principles upon which the expert
testimony rests are reliable.
[16] The admissibility of expert testimony under Evid. R. 702 is a matter within the
trial court’s broad discretion and we will reverse such determinations only for
an abuse of that discretion. Estate of Borwald v. Old Nat’l Bank, 12 N.E.3d 252(Ind. Ct. App. 2014). Expert testimony admitted under Rule 702 requires more
than subjective belief or unsupported speculation. Armstrong v. Cerestar USA,
Inc., 775 N.E.2d 360 (Ind. Ct. App. 2002), trans. denied. In conducting our
review, we presume the trial court’s decision is correct, and the party
challenging that decision bears the burden of persuading us that the trial court
abused its discretion. Id.[17] Citing Vaughn v. Daniels Co., 841 N.E.2d 1133 (Ind. 2006), KLR argues that the
trial court’s ruling improperly requires that in order to be admissible, an expert’s
testimony must be based on first-hand experience. In Vaughn, the trial court
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struck a paragraph in an affidavit completed by an expert and submitted by the
opponent of a motion for summary judgment. Among other things, the
proponents of the affidavit contended that the trial court erred in excluding that
paragraph on grounds that the opinion lacked the requisite foundation. The
trial court’s ruling was premised upon the fact that the expert did not view the
equipment in question, but rather reviewed only documents setting forth the
defendant’s proposal with respect to the equipment. Our Supreme Court
reversed, holding that the expert’s prior experience and review of documents
relating to the proposal provided a sufficient foundation for the expert opinion
and that it was not necessary for the expert to have actually seen the equipment
in question for him to render an expert opinion.
[18] Although it is true that the Vaughn expert was permitted to offer opinion
testimony even though he had not seen the equipment in question, it cannot
fairly be said that the resulting opinion was based on “pure speculation.” The
expert’s opinion as to the safety of the equipment at issue was based upon his
review of a design drawing of that equipment rendered by its creator, who also
happened to be a defendant. We reiterate, however, that in the present case,
Zabonick admitted that he did not have “any knowledge whatsoever as to what
chemicals these particular auto detailers were using at any time [.]” Transcript
at 909. Thus, it appears that the only evidence that the Detailers could have
caused or contributed to the particular contamination found at the Site involved
pure speculation on Zabonick’s part as to what chemicals they used. This is not
legally sufficient. See Estate of Dyer v. Doyle, 870 N.E.2d 573, 581 (Ind. Ct. App.
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2007) (the appellant challenged the admission of expert testimony regarding the
faked left syndrome,3 arguing that there was no evidence that the factual
scenario occurred in which the syndrome would be applicable; the court
reversed upon observing that the plaintiff “admitted during cross-examination
that there was no evidence that [the decedent] was ever in [the defendant’s]
lane” and that “there must be some evidence other than the opinion itself that
there was a ‘faked left’ occurrence for the opinion to pass muster”), trans. denied.
The trial court did not err in excluding this evidence.
2.
[19] KLR contends the trial court erred in granting summary judgment in favor of
Spicklemire on KLR’s common-law claims of lost rent and loss of use. The
trial court held, in pertinent part:
The Second Amended Complaint makes no mention of any
common law claims. Nor are the operative facts asserted against
Spicklemire sufficient for a reasonable person to be on notice that
[KLR] is making claims under any common law theories. The
facts pled in [KLR’s] Second Amended Complaint are simply not
3
This was explained in Smith v. Yang, 829 N.E.2d 624, 627 (Ind. Ct. App. 2005) as follows:
This syndrome is seen near curves and/or hill crests where an initial vehicle
enters the area left of center and the other driver steers to the left, now being
left of center in avoidance, when the initial vehicle steers back to the right
and a head-on collision occurs in the initial vehicle’s traveling lane.
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sufficient to put a reasonable person on notice that [KLR] is
asserting common law claims against Spicklemire.
Appellant’s Appendix at 40.
[20] Summary judgment is appropriate where the moving party shows there are no
genuine issues of material fact with respect to a particular issue or claim. Ind.
Trial Rule 56(C); Bleeke v. Lemmon, 6 N.E.3d 907 (Ind. 2014). We review a
summary judgment order de novo. Hughley v. State, 15 N.E.3d 1000 (Ind. 2014).
Considering only the facts supported by evidence designated to the trial court
by the parties, we must determine whether there is a “genuine issue as to any
material fact” and whether “the moving party is entitled to a judgment as a
matter of law.” T.R. 56(C); see also TP Orthodontics, Inc. v. Kesling, 15 N.E.3d
985 (Ind. 2014). Where the moving party designates material demonstrating
there are no genuine issues of material fact with respect to a particular issue or
claim, the burden shifts to the non-moving party to come forward with
designated evidence showing the existence of a genuine issue of material fact.
Bleeke v. Lemmon, 6 N.E.3d 907. Upon review, we will accept as true those facts
alleged by the nonmoving party. Sees v. Bank One, Ind., N.A., 839 N.E.2d 154(Ind. 2005). “All designated evidence and reasonable inferences must be
construed in favor of the non-moving party, and doubts resolved against the
moving party.” Bleeke v. Lemmon, 6 N.E.3d at 917. The appellant bears the
burden of demonstrating that the grant of summary judgment was erroneous.
Hughley v. State, 15 N.E.3d 1000. Finally, we will affirm a grant of summary
judgment on any theory supported by the record. Holiday Hospitality
Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind. 2013).
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[21] KLR argues that the grant of the summary judgment was improper on the
stated grounds because Indiana is a notice-pleading state, and as such requires
only a short, plain statement of the claim showing an entitlement to relief, and a
demand for relief to which the pleader is entitled. See Ind. Trial Rule 8(A).
KLR claims that its complaint met these criteria because its second amended
complaint “pled the operative facts to support claims for lost rent and reduced
property value [.]” Appellant’s Brief at 41. In other words, the common-law
claims were tried by consent.
[22] In resolving this issue, it is important to note that at the time KLR filed its
Plaintiff’s Preliminary Contentions, the only claims that remained unresolved
were those presented in the second amended complaint against Filmcraft and
Spicklemire. In an introductory paragraph of the Plaintiff’s Preliminary
Contentions, KLR described its lawsuit against Spicklemire as an ELA action
(i.e., “[KLR] brought this Environmental Legal Action (“ELA”) against the
defendants for the payment of costs to delineate and remediate this Site”).
Appellant’s Appendix at 103. It was in this document that KLR referenced for the
first time its claim for lost rent and lost use. In response, Spicklemire filed a
motion for summary judgment on grounds that the ELA permits recovery only
of reasonable costs of removal or remedial action, and does not authorize
claims for lost rent or loss of use. See I.C. § 13-30-9-2 (West, Westlaw current
with legislation of the 2015 First Regular Session of the 119th General
Assembly effective through March 24, 2015). In its brief opposing
Spicklemire’s motion for summary judgment, KLR asserted that those costs
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were recoverable under various common-law theories. This was the first time
that KLR mentioned common-law remedies, or indeed described this lawsuit in
terms other than an ELA action. This was approximately ten years after the
onset of this litigation. Nevertheless, KLR contends these issues were tried by
consent because the second amended complaint pleaded operative facts
sufficient to support claims for lost rent and reduced property value, i.e., “these
substances were deposited in the soil and groundwater during the Defendant’s
ownership and/or operations at the Site and remained there after the
Defendants ceased ownership and/or operation at the Site and continue to
cause property damage.” Appellant’s Appendix at 59.
[23] We first observe that the foregoing language cannot be deemed to have
expressly presented the common-law claims in question. Not only are the
concepts of “lost rent” and “loss of use” not pleaded with specificity, but the
reference to continuing property damage is made in a complaint identified
explicitly as an ELA action. This leaves only the possibility that the common-
law claims were tried by implied consent of the parties, which is the main thrust
of KLR’s argument on this point.
[24] Trial Rule 15 (B) provides: “[w]hen issues not raised by the pleadings are tried
by express or implied consent of the parties, they shall be treated in all respects
as if they had been raised in the pleadings.” Generally, we consider two factors
when determining whether a party has impliedly consented to a non-pleaded
issue at trial. First, did the opposing party have notice of the issue? Second, did
the opposing party object to the issue being litigated at trial? Mercantile Nat’l
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Bank of Ind. v. First Builders of Ind., Inc., 774 N.E.2d 488 (Ind. 2002). Our
Supreme Court has stated, “[i]f the opposing party both had notice and failed to
object at trial, then that party will have impliedly consented to the non-pleaded
issue at trial.” Id. at 492-93. Both elements must be met in order for a party to
be deemed to have impliedly consented to a non-pleaded issue. See id. at 493(“[w]e find that Owner validly objected to the personal liability issue being
litigated, and although Owner had notice of this issue, Owner did not impliedly
consent to it being litigated within the meaning of Trial Rule 15(B)”).
[25] Even assuming Spicklemire had notice of the common-law claims, his objection
to the presentation of those claims when denominated as such for the first time
in Plaintiff’s Preliminary Contentions constituted a valid objection to those
issues being litigated. Therefore, Spicklemire did not impliedly consent to
litigating those issues at trial within the meaning of T.R. 15(B). The trial court
did not err in granting summary judgment in favor of Spicklemire on KLR’s
common-law claims.
3.
[26] KLR contends the trial court erred in dismissing its complaint pursuant to Trial
Rule 41(B) on grounds that KLR failed to present sufficient evidence to show
Spicklemire caused or contributed to chlorinated solvent and petroleum
hydrocarbon contamination of the Site.
[27] When reviewing a ruling on a T.R. 41(B) motion to dismiss, we apply the
following standard of review:
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The grant or denial of a motion to dismiss made under Trial Rule
41(B) is reviewed under the clearly erroneous standard. In
reviewing a motion for involuntary dismissal, this court will not
reweigh the evidence or judge the credibility of the witnesses.
We will reverse the trial court only if the evidence is not
conflicting and points unerringly to a conclusion different from
the one reached by the lower court.
Todd v. State, 900 N.E.2d 776, 778 (Ind. Ct. App. 2009) (quoting Thornton–
Tomasetti Eng’rs v. Indianapolis–Marion Cnty. Pub. Library, 851 N.E.2d 1269,
1277 (Ind. Ct. App. 2006)).
[28] In this particular case, in granting Spicklemire’s T.R. 41(B) motion, the trial
court ruled that KLR failed to establish a viable ELA claim. In order to
establish such a case, KLR was required to prove that Spicklemire “caused or
contributed to the release of a hazardous substance or petroleum into the
surface or subsurface soil or groundwater that poses a risk to human health and
the environment.” I.C. § 13-30-9-2. The parties stipulated before trial that
“chlorinated solvents and petroleum hydrocarbons [had] been detected in the
soil and groundwater at the Site.” Appellant’s Appendix at 45. Thus, in order to
prevail, or, as the case may be, survive a T.R. 41(B) motion to dismiss, KLR
was required to offer evidence that Spicklemire caused or contributed to the
release of chlorinated solvents and petroleum hydrocarbons in the soil and
groundwater at the Site.
[29] KLR contends that it did present such evidence, and further that the trial court’s
conclusion to the contrary is a result of the court applying the wrong legal
standard. According to KLR, “[t]he ELA does not require a person who cleans
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up a contaminated property to prove specific contaminating incidents with
direct evidence.” Appellant’s Brief at 12. Rather, according to KLR, it is enough
“to show with direct or circumstantial evidence that the defendant more likely
than not ‘had some involvement with the contaminants at issue’ or ‘helped
bring about’ contamination of the property.” Id. (citing Reed v. Reid, 980
N.E.2d 277, 289 (Ind. 2012), Gary v. Schafer 683 F. Supp.2d 836, 855 (N.D. Ind.
2010), and Neal v. Cure, 937 N.E. 1227, 1234 (Ind. Ct. App. 2010), trans.
denied)). KLR urges that “[e]ven if [Spicklemire] only helped spread
contamination others put at the Site or contributed to one-half of 1 % of the
contamination at the Site, he is liable under the ELA.” Id. at 12-13. KLR
claims that it presented evidence that Spicklemire contributed to a release of the
contaminants by having some involvement with the contaminants. In essence
KLR contends that Spicklemire helped spread the contaminants that were
brought to and released onto the Site by others. As KLR phrases it, “it is
against the logic and effect of the evidence presented at trial to hold that
Spicklemire’s 26 years of unlawful, chemical-laden operations and heavy daily
discharges at the Site had absolutely no effect on the Site.” Id. at 13.
[30] The standard to be applied in ELA cases alleging that a party “caused or
contributed” to environmental contamination of the sort covered by the ELA
was addressed by this court as follows:
The phrase “caused or contributed” is not defined by statute, and
we must give those words their plain and ordinary meaning.
“Each term of the phrase ‘caused or contributed’ requires some
involvement by the actor which produces a result.” Standard
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English dictionaries may also be consulted in determining the
meaning of this phrase. A standard dictionary definition of
“cause” is “‘a person, thing, fact, or condition that brings about
an effect or that produces or calls forth a resultant action or
state.’” “Among other things, ‘contribute’ means ‘to act as a
determining factor; share responsibility for something.’” Our goal
when construing the phrase “cause or contribute” should be to
hold accountable all parties “responsible for creating
environmental contaminations.”
JDN Props., LLC v. VanMeter Enters., Inc., 17 N.E.3d 357, 360-61 (Ind. Ct. App.
2014) (internal citations omitted). Therefore, KLR is correct in that “caused or
contributed” in this context requires proof that the defendant was in some way
involved in the contamination of the property in question.
[31] In Neal v. Cure, 937 N.E.2d at 1234, the definition of “caused or contributed”
was further refined for our particular purposes, i.e., in determining the liability
of a landlord under the ELA. In Neal, the plaintiff sued a landlord under the
ELA for contamination caused by its tenant. The landlord submitted a motion
for summary judgment, arguing that it was not responsible for the
contamination, nor was it aware that the contamination was occurring or had
occurred. On appeal, the plaintiff argued only that the evidence demonstrated
that the landlord “contributed” to (versus “caused”) the contamination. The
trial court granted the motion upon its conclusion that the plaintiffs had
presented no evidence demonstrating an affirmative act on the part of the
landlord that caused or contributed to the contamination. The court further
concluded, “any alleged inaction on the part of [the landlord] … cannot form
the basis for determining that the [landlord] caused or contributed to the
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contamination.” Id. at 1233. The court on appeal thus undertook to determine
the meaning of “contributed” in this context and concluded that “the plain
language of the statute does not permit an ELA action against landlords who
‘by all accounts were not involved in the alleged release of hazardous
substances and had no knowledge of the release.’” Id. at 1235 (quoting City of
Martinsville v. Masterwear Corp., 2006 WL 2710628, slip op. at 4 (S.D. Ind.
2006)).
[32] In the present case, the parties stipulated that Demaree was responsible for the
chlorinated solvent and petroleum hydrocarbon contamination at the Site. The
court found that subsequent purchaser Spicklemire had no involvement in the
day-to-day operations of Filmcraft’s subtenants, i.e., the Detailers, nor did he
have knowledge regarding whether those subtenants used chemicals in their
operations. Moreover, there was no evidence that the Detailers used any
chlorinated solvents or petroleum hydrocarbons in their operations. Therefore,
the evidence supported the determination that Spicklemire was not liable by
virtue of his status as landlord vis-à-vis the Detailers and their operations on the
Site.
[33] As for liability by virtue of Filmcraft’s own activities, the direct evidence
indicated that, with but one very minor exception, its operations did not involve
the use of chlorinated solvents or petroleum hydrocarbons. The exception
involved the use of a single tube of white grease – about three to four inches in
size – which contained petroleum hydrocarbon. That single tube was used so
sparingly that it lasted the entire time Filmcraft was in operation. This supports
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the trial court’s finding that Filmcraft’s operations did not contribute to the
petroleum hydrocarbon or chlorinated solvent contamination on the Site.
[34] We note also that sometime around 1980, Filmcraft purchased a fifty-five-
gallon drum of photographic lacquer. Filmcraft also purchased four one-gallon
cans of lacquer. None of these containers were ever used, or apparently even
opened, because Filmcraft did not have enough lacquer orders to justify it. The
full fifty-five-gallon drum was found during Patriot’s chemical
decommissioning, and was described by Patriot as sealed and not leaking.
Patriot properly disposed of it. The evidence also showed that Filmcraft used
small cans of aerosol lacquer, which was applied to photographs in a ventilated
booth. Overspray ended up on the pegboard used to hold the photographs at
the time, or was vented out of the building through an exhaust fan. Filmcraft
used approximately one can (about the size of a can of spray paint) per month.
This evidence supports the trial court’s finding that Filmcraft’s operations did
not contribute to the petroleum hydrocarbon or chlorinated solvent
contamination on the Site.
[35] Those chemicals that Filmcraft did use were heavily diluted with water, and
effluent from the photo-processing operations was discharged into a trench
drain that led to city sewers. Zabonick testified that the photo-processing
effluent did not contain chlorinated solvents or petroleum hydrocarbons, and
that discharge of photo-processing effluent to the trench did not cause
contamination at the Site. The effluent did contain silver, but not in amounts
above regulatory action levels in the soil or groundwater. A test of the soil
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around the drain did not reveal the presence of silver in the soil. Moreover, we
must bear in mind that this testing of the drain and sewer lines occurred in
2013, which was fully twelve or thirteen years after Filmcraft ceased operations
on the Site. Again, this evidence supports the trial court’s finding that
Filmcraft’s operations did not actively contribute to the petroleum hydrocarbon
or chlorinated solvent contamination on the Site.
[36] We understand that the gist of KLR’s argument is that the trial court applied an
impossibly high standard in determining whether KLR had proven its case
under the ELA. According to KLR, “the ‘contributed’ element of the ELA
should not be interpreted to require an ELA plaintiff to produce direct evidence
that the defendants released specific contaminants on specific dates, which
caused the contamination driving the remediation decades later.” Appellant’s
Brief at 8. It seems that KLR reads into the court’s findings and conclusions the
view that, in order to prevail under the ELA, KLR was required to present
evidence that on a specific date Spicklemire contributed to the release of a
particular contaminant into the soil or groundwater. We do not interpret the
trial court’s findings and conclusions to convey such an exacting standard.
[37] For purposes of this litigation, the important dates were those dates for which
KLR could establish that Spicklemire was present on the Site, or had
knowledge of or bore some responsibility for what was occurring on the Site.
KLR adduced such evidence, establishing the date range of Spicklemire’s
ownership of the Site, the date range of Filmcraft’s operations, and the date
range of the operations of the subtenants, i.e., the Detailers. It was then up to
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KLR to present evidence linking Spicklemire to the particular contaminants
discovered to be present at the Site via the inspections performed by Keramida
in 2002 and Terra in 2013, i.e., chlorinated solvents or petroleum hydrocarbons.
As explained above, KLR’s evidence did not establish that Filmcraft used
products containing those contaminants in its operations, nor did Filmcraft’s
subtenants, the Detailers.
[38] KLR points to the testimony of its expert, Zabonick, to the effect that “the
historical operations of the Site have contributed to the contamination present
at the Site.” Transcript at 854. He went on to include Filmcraft as a contributor
to that contamination on grounds that some of the chemicals used in the film
processing operation “more likely than not would have contributed to the
contamination or cause some additional contamination.” Id. at 855. Yet,
Zabonick also testified on this subject as follows:
Q Now, let’s talk about your opinion that Filmcraft’s photo
and film processing operations contributed to the
contamination at the site. You understand that Filmcraft
used chemicals to develop film and photographs, correct?
A Correct.
Q You understand that these chemicals included developers,
fixes, bleaches, as well as some other -- as well as water,
correct?
A Correct.
Q You also understand that Filmcraft used a variety of
machines when they developed film and photographs,
correct?
A Correct.
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Q But it’s not your opinion that day-to-day effluent or
discharge from these machines contained any chlorinated
solvents or petroleum hydrocarbons, is it?
A That would be correct.
Q In fact, you agreed with me that introducing chlorinated
solvents would be detrimental to that photographic or film
processing, didn’t you?
A I believe so.
Q So rather you believe that Filmcraft may have conducted
other activities at the site that contributed to that -- to the
petroleum hydrocarbon and chlorinated solvent
contamination, correct?
A By “contributed to”, are you meaning adding additional
chlorinated and petroleum hydrocarbons or contributing to
the migration of the existing contamination?
Q Let’s stick with your old opinion. Just contributing to the
chlorinated solvent and petroleum hydrocarbon
contamination at the site and then we’ll talk about this
migration.
A Okay. Can you ask the question again, please.
Q So you believe that Filmcraft conducted some other
activities at the site other than discharging effluent that
added something to the petroleum hydrocarbon and
chlorinated solvent contamination at the site, correct?
A Yes.
Q And you believe these activities could have included
cleaning the film and the developing equipment, is that
right?
A That’s correct.
Q Even though you have no knowledge of whether or not
they used chlorinated solvents or petroleum hydrocarbons
in that process?
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A That’s correct.
Q You also believe that these activities could have included
cleaning film, correct?
A Correct.
Q What film cleaners did the photo processing, the photo
and film processing operations use?
A This specific operation?
Q Yes.
A I have no knowledge of any specific cleaners that they
would have used.
Q So you don’t know the company that manufactured it,
correct?
A That would be correct.
Q You don’t know the chemical that they supplied, correct?
A That would be correct.
Q You don’t know how Filmcraft may have used that
chemical, is that correct?
A That would be correct.
Q How do you know that these operations could have
contributed?
A I guess I’m not sure – [.]
Transcript at 940-43. In light of this testimony, among other things, Zabonick’s
opinion as to Spicklemire’s responsibility for the contamination was not so
irrefutably supported by the direct and circumstantial evidence presented during
KLR’s case-in-chief that, in rejecting it, the trial court committed clear error.
See Todd v. State, 900 N.E.2d 776. In the end, the evidence cited by KLR as
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crossing the minimum threshold4 is just too speculative to mandate a different
result. We cannot say that the evidence pertaining to whether Spicklemire
caused or contributed to contamination at the Site is non-conflicting and points
unerringly to a conclusion different from the one reached by the trial court. See
id.[39] Judgment affirmed.
Kirsch, J., and Crone, J., concur.
4
E.g. “The contaminants found at the Site are consistent with some of the petroleum hydrocarbons and
chlorinated solvents typically used by photo processors during Filmcraft’s operations.” Appellant’s Brief at 5
(emphasis supplied).
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