BULK TERMINALS, INC. v. ALUMINUM COMPANY OF AMERICA (ALCOA); ARKEMA, INC., SUCCESSOR TO M & T CHEMICALS, INC.; ATLANTIC RICHFIELD CO.; BASF CORPORATION; BLATZ PAINT COMPANY; BLAYLOCK TRUCKING AND WASTE REMOVAL COMPANY, INC.; BOB MONTGOMERY CHEVROLET, INC.; BOWLING GREEN EXPRESS, INC.; THE BOC GROUP (A/K/A AIRCO CARBIDE); CHEMICAL WASTE MANAGEMENT, INC.; CNA HOLDINGS, INC. (F/K/A HOECHST CELANESE CORPORATION); CELWAVE SYSTEMS, INC.; CINCINNATI MILACRON, INC.; CSX TRANSPORTATION, INC.; DEHART PAINT & VARNISH COMPANY; FLEXIBLE MATERIALS, INC.; GENERAL MOTORS CORPORATION; GEORGE M. O'BRYAN; THE GLIDDEN COMPANY (D/B/A ICI PAINTS); GOODRICH CORPORATION (F/K/A THE B.F. GOODRICH COMPANY); THE GOODYEAR TIRE AND RUBBER COMPANY; HERITAGE ENVIRONMENTAL SERVICES, INC.; HONEYWELL INTERNATIONAL, INC. (F/K/A ALLIED-SIGNAL, INC.); INDUSTRIAL WASTE DISPOSAL CO., INC.; IWD CHEMICAL
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RENDERED: MARCH 9, 2007; 10:00 A.M.
NOT TO BE PUBLISHED
ORDERED NOT PUBLISHED BY SUPREME COURT: DECEMBER 12, 2007
(FILE NO. 2007-SC-0254-D)
Commonwealth Of Kentucky
Court of Appeals
NO. 2005-CA-002448-MR
BULK TERMINALS, INC.
v.
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE STEPHEN P. RYAN, JUDGE
ACTION NO. 03-CI-001184
ALUMINUM COMPANY OF AMERICA (ALCOA);
ARKEMA, INC., SUCCESSOR TO M & T
CHEMICALS, INC.; ATLANTIC RICHFIELD CO.;
BASF CORPORATION; BLATZ PAINT COMPANY;
BLAYLOCK TRUCKING AND WASTE REMOVAL
COMPANY, INC.; BOB MONTGOMERY CHEVROLET,
INC.; BOWLING GREEN EXPRESS, INC.; THE BOC
GROUP (A/K/A AIRCO CARBIDE); CHEMICAL WASTE
MANAGEMENT, INC.; CNA HOLDINGS, INC. (F/K/A
HOECHST CELANESE CORPORATION); CELWAVE
SYSTEMS, INC.; CINCINNATI MILACRON, INC.; CSX
TRANSPORTATION, INC.; DEHART PAINT & VARNISH
COMPANY; FLEXIBLE MATERIALS, INC.; GENERAL
MOTORS CORPORATION; GEORGE M. O’BRYAN; THE
GLIDDEN COMPANY (D/B/A ICI PAINTS); GOODRICH
CORPORATION (F/K/A THE B.F. GOODRICH COMPANY);
THE GOODYEAR TIRE AND RUBBER COMPANY; HERITAGE
ENVIRONMENTAL SERVICES, INC.; HONEYWELL
INTERNATIONAL, INC. (F/K/A ALLIED-SIGNAL, INC.);
INDUSTRIAL WASTE DISPOSAL CO., INC.; IWD CHEMICAL
DISPOSAL OF OHIO; JOSEPH E. SEAGRAM & SONS, INC.;
APPELLANT
LEAR CORPORATION, SUCCESSOR IN INTEREST TO LEAR
SIEGLER SEATING CORPORATION; MARCUS PAINT CO., INC.;
MCKESSON CORPORATION; MOBIL OIL CORPORATION
(N/K/A EXXON MOBIL CORPORATION); MONARCH
MARKING SYSTEMS, INC. (BASE MATERIALS MONARCH
SYSTEMS, INC.); MURRY’S, INC. (MURRY’S COMPANY, INC.);
OKOLONA SANITATION, INC.; OKOLONA SEPTIC TANK
SERVICE, INC.; PARO SERVICES CORP. (CHEM-IDYNE
CORPORATION, FORMERLY DOING BUSINESS AS ROYAL
CHEMICAL COMPANY); PHELPS DODGE CORPORATION;
PPG INDUSTRIES, INC.; PORTER PAINT COMPANY; PROFORM,
INC.; PROGRESS PAINT MANUFACTURING, INC.; REYNOLDS
ALUMINUM COMPANY; REYNOLDS METAL COMPANY; RMT,
INC. (RESIDENTIAL MANAGEMENT TECHNOLOGY, INC.);
ROBERT BOSCH TOOL CORPORATION (VERMONT AMERICAN
CORP. & MULTIMETALS DIVISION OF VERMONT); SCA
SERVICES OF KENTUCKY; SCHERING-PLOUGH HEALTHCARE
PRODUCTS, INC. (DR. SCHOLL SHOE COMPANY); THE
SHERWIN-WILLIAMS COMPANY; WASTE MANAGEMENT, INC.;
and YENKIN-MAJESTIC PAINT CORPORATION
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: THOMPSON AND VANMETER, JUDGES; KNOPF,1 SENIOR JUDGE.
VANMETER, JUDGE: Under the discovery rule, the statute of limitations begins to run
once a party knows or, in the exercise of due diligence, should know of his injury and its
cause. In this case, the injury involved the contamination of groundwater which
stemmed from soil contamination which occurred more than twenty years preceding the
filing of the complaint. The Jefferson Circuit Court correctly held that approximately six
1
Senior Judge William L. Knopf sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
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years prior to the filing of the complaint, appellant Bulk Terminals, Inc. took actions
which indicated sufficient knowledge of both of the injury and its cause to trigger the
running of the applicable five-year statute of limitations. We therefore affirm the court’s
summary judgment dismissing the complaint as untimely.
Between 1970 and 1980, Bulk Terminals leased a parcel of land to Liquid
Waste Disposal of Kentucky. Liquid Waste was in the business of receiving waste or byproduct chemicals which were then either redistilled or incinerated. The appellees are
parties which disposed of chemicals at Liquid Waste. In 1979, the federal Environmental
Protection Agency (EPA) began to investigate potential soil contamination on the
property leased to Liquid Waste. After finding soil contamination, the EPA ordered
Liquid Waste to cease treating and disposing of chemicals at the site, and it ordered the
removal and clean up of the contaminated soil. According to the record, Bulk Terminals
paid approximately ten percent of the total clean up costs, while the appellees paid the
remaining costs incurred by the EPA.
In 1995, a contractor who was installing a water line notified Bulk
Terminals’ owner, Kenneth Helfrich, of a suspicious odor on a portion of the property
previously occupied by Liquid Waste. Since Bulk Terminals was winding up its
operations on the property in preparation for its potential sale or transfer, it hired
environmental consultants to determine whether any contamination was present on the
property. Initial tests in November 1996 showed possible contamination, and further
tests in early 1997 showed groundwater contamination. In April 1997, Bulk Terminals
notified the Kentucky Natural Resources and Environmental Protection Cabinet (Cabinet)
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of the test results. In addition, on April 17, 1997, Bulk Terminals, through its attorney,
wrote its insurance company “to make an environmental contamination claim under
comprehensive general liability insurance policies issued . . . to Bulk Terminals from
August, 1967 through February 15, 1983.” The letter also included the following:
Environmental consultants have conducted initial
environmental sampling indicating environmental
contamination of Bulk Terminals’ property. It is my
understanding that there also may be contamination on
property adjoining Bulk Terminals’ property. Pursuant to
Kentucky law, Bulk Terminals is notifying the
Commonwealth of Kentucky of the contamination. Because
Bulk Terminals believes that Kentucky law will require
that the contamination be remediated, it is hereby
demanding that Aetna indemnify and reimburse it for all costs
associated with said investigation and remediation.
(Emphasis added). In October 1997, Helfrich sent a letter to one of his consultants,
stating in part that “there is a possibility that the people who sent material to the [Liquid
Waste] site on our property could be assessed for the clean up costs.”
In February 2003, Bulk Terminals filed this action alleging, under theories
of negligence and nuisance, that the appellees were responsible for the groundwater
contamination at the site. After conducting discovery related to the statute of limitations
issue, the appellees filed a motion for summary judgment. The Jefferson Circuit Court
granted the motion, and Bulk Terminals appeals.
Bulk Terminals argues that under the discovery rule, its cause of action did
not accrue until July 1998 when it first knew or should have known that damage had
occurred. It asserts that only at this point did the Cabinet and its environmental
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consultants complete their testing and inform Bulk Terminals that the property was
damaged and that remediation would be required.
The parties agree that KRS 413.120(4), the five-year statute of limitations
for damage to real property, controls in this case. Contrary to appellees’ argument that
Kentucky does not adhere to the federal discovery rule in actions involving damage to
real property, in Rockwell International Corp. v. Wilhite, 143 S.W.3d 604, 617 (Ky.App.
2003), a panel of the court squarely adopted and applied the discovery rule to actions
involving chemical contamination of, and damage to, real property. Under the discovery
rule, “‘[a] cause of action will not accrue . . . until the plaintiff discovers or in the
exercise of reasonable diligence should have discovered not only that he has been injured
but also that his injury may have been caused by the defendant’s conduct.’” Louisville
Trust Co. v. Johns-Manville Products Corp., 580 S.W.2d 497, 501 (Ky. 1979), quoting
Raymond v. Eli Lilly & Co., 117 N.H. 164, 371 A.2d 170, 174 (1977).
As recognized by the trial court, the real issue in this case is not whether the
discovery rule applies, but when Bulk Terminals discovered or, in the exercise of
reasonable diligence, should have discovered its injury, i.e., the groundwater
contamination. Bulk Terminals argues that it did not know it was injured until July 1998,
when its consultants advised it that the contamination would require remediation. We
disagree. As noted by the court in Rockwell, “a plaintiff’s lack of knowledge as to the
extent of his injury does not toll a statute of limitations to which the discovery rule is
applied.” 143 S.W.3d at 612-13. In this case, the injury was present as far back as 1980,
and Bulk Terminals was aware of the renewed concerns about the possibility of
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contamination at least as early as 1995. Certainly, Bulk Terminals had knowledge that
contamination was present when it sent the letter to its insurance company in April 1997,
stating that “Kentucky law will require that the contamination be remediated.” The trial
court did not err in its determination that the statute of limitations started to run no later
than April 1997, and that this action therefore was untimely when it was filed in February
2003.
Finally, we cannot agree with Bulk Terminals’ argument that the issue of
when the statute of limitations began to run should be submitted to a jury. In interpreting
the statute of limitations for the discovery rule under the Federal Employers Liability Act
in Lipsteuer v. CSX Transp., Inc., 37 S.W.3d 732 (Ky. 2000), the Kentucky Supreme
Court stated that the question of when a plaintiff was put on notice about the cause of his
injury was an issue of fact to be answered by the fact finder. However, whether that
notice occurred within the statutory period of limitations was a question of law. Id. at
737. While Lipsteuer may superficially appear to support Bulk Terminals’ contention,
we note that the disputed issue in Lipsteuer involved the timing of the plaintiff’s notice
regarding the cause of his injury. In Lynn Mining Co. v. Kelly, 394 S.W.2d 755, 759 (Ky.
1965), a case relied upon by the court in Lipsteuer, the court admonished that “[w]here
the pertinent facts are not in dispute, the validity of the defense of the statute of
limitations can and should be determined by the court as a matter of law.”
In this case, Bulk Terminals makes no allegation that it was unaware of the
cause of the injury. Bulk Terminals alleged in its complaint that the initial contamination
occurred between 1970 and 1980. In 1979-80, the EPA conducted extensive remedial
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clean up of the property, ninety percent of the cost of which was borne by the appellees.
Bulk Terminals knew of a suspicious smell on the property in 1995, and the presence of
chlorinated solvents was confirmed by January 1997. The initial report of Bulk
Terminals’ experts in March 1997 was significant enough that Bulk Terminals put its
insurance company on notice of the contamination in an April 1997 letter which both
unequivocally stated its belief that Kentucky law would require remediation, and
demanded indemnification for the costs of investigation and remediation. Under these
facts, no reasonable jury could find that Bulk Terminals did not know of its injury in
April 1997. The action filed in February 2003 was therefore untimely.
The summary judgment of the Jefferson Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
Kenneth L. Sales
Paul J. Kelley
Louisville, Kentucky
BRIEF FOR APPELLEES ALUMINUM
COMPANY OF AMERICA, INC.
(ALCOA); BASF CORPORATION;
BLATZ PAINT COMPANY;
BLAYLOCK TRUCKING & WASTE
REMOVAL COMPANY, INC.;
CHEMICAL WASTE MANAGEMENT,
INC.; CINCINNATI MILACRON, INC.;
THE GLIDDEN COMPANY (D/B/A ICI
PAINTS); INDUSTRIAL WASTE
DISPOSAL CO., INC.; IWD
CHEMICAL DISPOSAL OF OHIO;
MURRY’S, INC. (MURRY’S
COMPANY, INC); OKOLONA
SANITATION, INC.; PROGRESS
PAINT MANUFACTURING, INC.;
REYNOLDS ALUMINUM
COMPANY.; REYNOLDS METAL
COMPANY.; SCA SERVICES OF
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KENTUCKY; THE SHERWINWILLIAMS COMPANY.; and WASTE
MANAGEMENT, INC.:
Dennis J. Conniff
Steven M. Crawford
Amy D. Cubbage
Louisville, Kentucky
BRIEF FOR APPELLEE LEAR
CORPORATION, SUCCESSOR IN
INTEREST TO LEAR SIEGLER
SEATING CORP.:
Joseph A. Gregg
Toledo, Ohio
Dustin E. Meek
Louisville, Kentucky
BRIEF FOR APPELLEE BOB
MONTGOMERY CHEVROLET, INC.:
J. Matthew Carey
Louisville, Kentucky
BRIEF FOR APPELLEE PROFORM,
INC.:
Richard J. Kelber
Mark B. Peterson
Minneapolis, Minnesota
BRIEF FOR APPELLEES PHELPS
DODGE CORPORATION; PPG
INDUSTRIES, INC.; PORTER PAINT
CO.; and ARKEMA, INC.,
SUCCESSOR TO M & T CHEMICALS,
INC.:
Marcus P. McGraw
Lexington, Kentucky
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BRIEF FOR APPELLEE GOODRICH
CORPORATION (F/K/A THE B.F.
GOODRICH CO.):
Heidi B. Goldstein
Erin Alkire
Cleveland, Ohio
BRIEF FOR APPELLEE OKOLONA
SEPTIC TANK SERVICE, INC.:
Michael S. Maloney
Louisville, Kentucky
BRIEF FOR APPELLEE ROBERT
BOSCH TOOL CORPORATION
(VERMONT AMERICAN
CORPORATION AND MULTIMETALS DIVISION OF VERMONT
AMERICAN CORPORATION):
Charles G. Middleton III
Dana L. Collins
Louisville, Kentucky
BRIEF FOR APPELLEE MOBIL OIL
CORPORATION (N/K/A EXXON
MOBIL CORPORATION):
Stephen C. Cawood
Pineville, Kentucky
Howard E. Jarvis
Knoxville, Tennessee
BRIEF FOR APPELLEE DEHART
PAINT & VARNISH COMPANY:
Walter J. Swyers, Jr.
Louisville, Kentucky
BRIEF FOR APPELLEE GEORGE M.
O’BRYAN:
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Michael L. Maple
Louisville, Kentucky
BRIEF FOR APPELLEES CNA
HOLDINGS, INC. (F/K/A HOECHST
CELANESE CORPORATION); and
THE GOODYEAR TIRE AND
RUBBER COMPANY:
Thomas T. Terp
Laura R. Ringenbach
Robert B. Craig
Cincinnati, Ohio
BRIEF FOR APPELLEES CSX
TRANSPORTATION, INC.; FLEXIBLE
MATERIALS, INC.; HONEYWELL
INTERNATIONAL, INC. (F/K/A
ALLIED-SIGNAL, INC.); SCHERINGPLOUGH HEALTHCARE PRODUCTS,
INC. (DR. SCHOLL SHOE
COMPANY); and PARO SERVICES
CORP. (CHEM-IDYNE
CORPORATION, FORMERLY DOING
BUSINESS AS ROYAL CHEMICAL
COMPANY):
Donald Kelly
Louisville, Kentucky
BRIEF FOR APPELLEE RMT, INC.
(RESIDENTIAL MANAGEMENT
TECHNOLOGY, INC.):
Matthew Gay
Louisville, Kentucky
BRIEF FOR APPELLEE YENKINMAJESTIC PAINT CORPORATION:
James Cooper
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Lexington, Kentucky
BRIEF FOR APPELLEE MCKESSON
CORPORATION:
Charles L. Cunningham, Jr.
Louisville, Kentucky
John D. Edgcomb
Shannon L. Fagan
San Francisco, California
BRIEF FOR APPELLEE JOSEPH E.
SEAGRAM & SONS, INC.:
Philip A. Grashoff, Jr.
Bloomfield Hills, Michigan
BRIEF FOR APPELLEES ATLANTIC
RICHFIELD CO.; THE BOC GROUP
(A/K/A AIRCO CARBIDE); CELWAVE
SYSTEMS, INC.; and GENERAL
MOTORS CORPORATION:
Harry K. Herren
Jill F. Endicott
Louisville, Kentucky
BRIEF FOR APPELLEE MONARCH
MARKING SYSTEMS, INC. (BASE
MATERIALS MONARCH SYSTEMS,
INC.):
Timothy C. Ammer
Cincinnati, Ohio
BRIEF FOR APPELLEE HERITAGE
ENVIRONMENTAL SERVICES, INC.:
Donna Marron
Alexandria Sylvia
Amy Romig
Indianapolis, Indiana
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