COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-03-312-CV
K-7
ENTERPRISES, L.P. APPELLANT
V.
JESWOOD
OIL COMPANY, TOM D. APPELLEES
JESTER,
JR., PAUL M. HAYWOOD,
JR.,
DEMAB CORPORATION, AHMED
ELMADHOUN,
BILL ELMADHOUN, AND
P.J.’S
CONVENIENCE STORES, INC.
------------
FROM
THE 158TH DISTRICT COURT OF DENTON COUNTY
MEMORANDUM OPINION1 ON REHEARING
Appellant
K-7 Enterprises, L.P.’s motion for partial rehearing is denied. We
withdraw our opinion and judgment of June 3, 2004 and substitute the following
in its place. We write on rehearing to address K-7's estoppel and
fraudulent concealment claims.
I. Introduction
Appellant
K-7 Enterprises, L.P. sued Appellees, the owners and operators of PJ’s
Convenience Stores, Inc., for damages occurring when toxic chemicals leaked from
underground gasoline tanks at PJ’s #2 convenience store and migrated onto
K-7's adjacent property, contaminating it. The trial court granted a
traditional summary judgment for Appellees on limitations grounds. Because
K-7's controverting summary judgment evidence raises genuine issues of material
fact as to whether the contamination damages to K-7's property were temporary
and not permanent, we reverse the trial court’s summary judgment as to K-7's
claim for damages to its property sustained during the two years prior to filing
suit, that is injuries occurring on or after January 15, 2001, and remand those
claims to the trial court. We affirm the trial court’s summary judgment
on K-7's claims for damages sustained more than two years prior to filing suit,
that is, prior to January 15, 2001.
II. Standard of
Review
A
defendant is entitled to summary judgment on an affirmative defense such as
limitations if the defendant conclusively proves all the elements of the
affirmative defense. KPMG Peat Marwick v. Harrison County Hous. Fin.
Corp., 988 S.W.2d 746, 748 (Tex. 1999). To accomplish this, the
defendant-movant must present summary judgment evidence that establishes each
element of the affirmative defense as a matter of law. Ryland Group,
Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996). Once the defendant produces
sufficient evidence to establish the right to summary judgment based on
limitations, the burden shifts to the plaintiff to come forward with competent
controverting evidence raising a genuine issue of material fact with regard to a
matter in avoidance of limitations. See, e.g., Zale Corp. v. Rosenbaum,
520 S.W.2d 889, 891 (Tex. 1975); Forrest v. Vital Earth Res., 120 S.W.3d
480, 487 (Tex. App.—Texarkana 2003, pet. denied).
In
deciding whether a disputed material fact issue precludes summary judgment, the
reviewing court will take as true all evidence favoring the nonmovant. Tex. R. Civ. P. 166a(c); S.W. Elec.
Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); Nixon v. Mr. Prop.
Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Every reasonable
inference from the evidence will be indulged in favor of the nonmovant, and any
doubts will be resolved in the nonmovant’s favor. Nixon, 690
S.W.2d at 549. Applying this standard of review to the summary judgment
evidence, the facts viewed in the light most favorable to K-7 are set forth
below.
III. Factual
Background
In
February 1998, a prospective purchaser of the K-7 property obtained an
environmental site assessment of the property. The results of the site
assessment soil borings and groundwater samples revealed that the K-7 property
was contaminated with toxic substances generally associated with the underground
storage of gasoline. The toxic substances present in the K-7 soil and
groundwater exceeded the state-allowed levels. A PJ’s convenience store
located adjacent to the K-7 property, PJ’s #2, sold gasoline and stored it in
underground storage tanks. Consequently, K-7 made a claim against PJ’s
Convenience Stores, Inc.’s insurer, Tank Owners Mutual Insurance Company, (“TOMIC”),
and TOMIC agreed to clean up or remediate K-7's property and to be responsible
for any damages. Monitoring wells were placed on the K-7 property.
Eventually, the monitoring wells were removed, and K-7 believed that its
property had been cleaned and that the contamination was now below state action
levels. K-7 later learned that subsequent leaks had occurred at PJ’s #2
and that the contaminants had migrated sporadically onto K-7's property
depending on rainfall and other factors. K-7 filed suit on January 15,
2003.
K-7's
president, Dennis Koop, explained in his controverting affidavit that in May
2002 he learned from the Texas Natural Resource Conservation Commission
(“TNRCC”) records that TNRCC “had found that another release of gasoline
had occurred between December 1999 and March 2000.” A TNRCC interoffice
memorandum also filed by K-7 as controverting summary judgment evidence
indicates that, based on an increase in the measure of toxins from 7.1 ppm to
326.55 ppm, “it appears that a subsequent release from the UST [underground
storage tank] system occurred between 12/99 and 3/00.”
The
memo explains that “the groundwater gradient [from P.J.’s convenience store]
is to the south-southeast,” and the parties agree that the K-7 property is to
the south of PJ’s convenience store.
K-7
also attached the affidavit of Daniel Airey as controverting summary judgment
evidence. Airey’s affidavit indicates that he has been “personally involved
in the investigation of the source and impact of the hydrocarbon contamination
of K-7 property.” According to Airey,
Contaminant migration direction has been documented on multiple occasions to be
from the PJ’s #2 facility towards the K-7 property. The release and migration
of contaminants from the PJ’s #2 property onto the K-7 property is sporadic
and intermittent based on multiple factors such as rainfall and the
heterogeneity of the subsurface lithology, and has occurred periodically during
the period of 1998 to the present as well as many other periods of time. . . .
The injury to the K-7 property is periodic, sporadic, and intermittent, and is
not constant and continuous.
Another
of K-7's experts, Sullivan Curran, executed an affidavit that K-7 relied upon as
controverting summary judgment evidence explaining discrepancies in Appellees’
monthly inventory control sheets for gasoline stored on the PJ’s #2
property. Curran summarized that the records “show significant
discrepancies for the years 2001 and 2002 in Unleaded, Plus and Super gasoline
quantities” delivered to PJ’s #2 and those quantities accounted for by
PJ’s #2 “resulted in significant unaccounted losses of gasoline stored and
dispensed.” Curran explained that in addition to the intermittent or
sporadic gasoline losses, corrected data from the inventory control sheets show
the likelihood of a separate and significant loss in Super gasoline during May
and June of 2002.
IV. Genuine
Issues of Material Fact Exist as to Whether Damages to K-7's Property were
Temporary and not Permanent
K-7's
original suit sought damages because “[d]ue to the negligent, careless, and/or
reckless behavior of one or more of these Defendants, these underground storage
tank systems have leaked on more than one occasion,” and alleged that the
petroleum products migrated underground and contaminated K-7's property.
Appellees moved for summary judgment on the affirmative defense of limitations,
alleging that “Plaintiff admits having had actual knowledge of the
contamination in February 1998, almost five years before Plaintiff filed this
lawsuit.”
A
suit for damage to land must be brought not later than two years after the cause
of action accrues. Tex. Civ. Prac.
& Rem. Code Ann. § 16.003(a) (Vernon 2002). The determination
of the accrual date depends upon whether the damage to the land is characterized
as permanent or temporary. Schneider Nat’l Carriers, Inc. v. Bates,
147 S.W.3d 264, 270 (Tex. 2004); Nugent v. Pilgrim's Pride Corp., 30
S.W.3d 562, 567 (Tex. App.—Texarkana 2000, pet. denied). An action for
permanent damages to land accrues, for limitations purposes, upon discovery of
the first actionable injury. Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868
(Tex. 1984), disapproved of on other grounds, Schneider Nat’l Carriers,
Inc., 147 S.W.3d at 281 n.78; Tennessee Gas Transmission Co. v. Fromme,
153 Tex. 352, 269 S.W.2d 336, 354 (1954). But damages for temporary
injuries may be recovered for injuries sustained within the two years prior to
filing suit. Bayouth, 671 S.W.2d at 868. The character of an
injury as either permanent or temporary is determined by the consequences
flowing from it.
Thus, if a nuisance occurs several times in the years leading up to a trial and
is likely to continue, jurors will generally have enough evidence of frequency
and duration to reasonably evaluate its impact on neighboring property
values. In such cases, the nuisance should be treated as permanent, even
if the exact dates, frequency or extent of future damage remain unknown.
Conversely, a nuisance as to which any future impact remains speculative at the
time of trial must be deemed “temporary.”
Schneider
Nat’l Carriers, Inc., 147 S.W.3d at 280.
While
these general rules governing whether an injury is temporary or permanent seem
straightforward, applying them to the facts involved in any particular case has
proved difficult. Nugent, 30 S.W.3d at 569 (setting forth an
excellent discussion of cases addressing whether various types of injuries to
land are permanent or temporary). In determining whether an injury to land
is permanent or temporary, it is helpful to focus first on the activity causing
the injury and then on the injury itself. Walton v. Phillips Petroleum Co.,
65 S.W.3d 262, 273 (Tex. App.—El Paso 2001, pet. denied).
Here,
the activity involved the underground storage of gasoline. Appellees’
activity, simply storing gasoline in tanks underground, did not cause any damage
to K-7's property. The summary judgment evidence shows that the injury
causing damage to K-7's property was multiple gasoline leaks from the
underground storage tanks on the PJ’s #2 property, occurring on distinct
occasions including one in May or June of 2002, and the sporadic and
intermittent migration of the contaminants onto K-7's property depending on
rainfall and the “heterogeneity of the subsurface lithology.” No
summary judgment evidence exists in the record that the gasoline storage tanks
at PJ’s #2 leaked continuously. In fact, Appellees’ summary judgment
evidence includes tank tightness tests performed on the tanks at PJ’s #2
indicating that at the times the tanks were tested they were not leaking.
Viewed in the light most favorable to K-7, these facts raise a genuine issue of
material fact as to the temporary nature of the damages to the K-7
property. See, e.g., Schneider Nat’l Carriers, Inc., 147 S.W.3d
at 280-81 (explaining that a nuisance that occurs monthly but is about to be
cleaned up so that surrounding property values are restored may be temporary); Bayouth,
671 S.W.2d at 868 (holding a genuine issue of material fact exists as to whether
damage from salt water migration onto adjacent land was a temporary injury); Atlas
Chem. Indus., Inc., v. Anderson, 524 S.W.2d 681, 684-85 (Tex. 1975) (holding
damage from deposits left on land when wastewater from chemical plant discharged
into creek that flowed onto land a temporary injury); Austin & N.W. Ry.
Co. v. Anderson, 79 Tex. 427, 15 S.W. 484, 485 (1891) (holding flooding of
land occurring only during heavy rains because of a railroad’s construction of
roadbeds and culverts that changed the natural flow of surface water a temporary
injury); Nugent, 30 S.W.3d at 566, 571 (holding damage from arsenic
contamination of land occurring when rain washed chicken litter and hatchery
waste downstream a temporary injury). In other words, in light of K-7's
controverting summary judgment evidence that the underground storage tanks at
PJ’s #2 suffered multiple, distinct gasoline discharges and that the
discharged gasoline migrated sporadically and intermittently onto K-7's
property, Appellees did not conclusively establish that the injuries to K-7's
property were permanent. Cf. Fromme, 269 S.W.2d at 337 (holding
damage from water flowing continuously from compression station across
plaintiff’s property was a permanent injury); Walton, 65 S.W.3d at 272
(holding damage from water seeping through salt pit filled in the late 1960's
was permanent and suit brought in 1996 was time barred). Summary judgment
evidence exists that current experiences are unrepresentative. See
Schneider Nat’l Carriers, Inc., 147 S.W.3d at 280.
We
next address Appellees’ arguments concerning K-7's summary judgment
evidence. Appellees lodged objections to portions of K-7's summary
judgment evidence, including Airey’s and Curran’s affidavits. K-7
subsequently tendered supplemental affidavits from Airey and Curran.
Appellees lodged objections to the supplemental affidavits, but the trial court
did not rule on them and signed an order granting K-7 leave to file the
supplemental affidavits.
Appellees
claim on appeal that the trial court “implicitly” sustained their objections
to K-7's summary judgment evidence and urge this court to not consider the
objected-to evidence. A party must obtain a ruling on an objection as to
defects in the form of an affidavit or attachment, or it is not preserved for
our review. See Tex. R. Civ.
P. 166a(f) ("Defects in the form of affidavits or attachments will
not be grounds for reversal unless specifically pointed out by objection by an
opposing party with opportunity, but refusal, to amend."); Wren v.
G.A.T.X. Logistics, Inc., 73 S.W.3d 489, 498 (Tex. App.—Fort Worth 2002,
no pet.) (op. on reh’g). Because the trial court did not rule on
Appellees’ objections, their form objections are not preserved for our
review. See Wren, 73 S.W.3d at 498. Appellees lodged
substantive objections to Airey’s and Curran’s supplemental affidavits, but
when the trial court granted K-7 leave to file those affidavits it implicitly
overruled Appellees’ objections. See Tex. R. App. P. 33.1(a); see also
Rapp v. Mandel & Wright, P.C., 127 S.W.3d 888, 895 (Tex.
App.—Corpus Christi 2004, pet. denied) (op. on reh’g) (recognizing trial
court implicitly overruled appellant’s motion to strike intervention by
proceeding to trial and granting relief for intervener); Chappell v. State,
850 S.W.2d 508, 510 (Tex. Crim. App. 1993) (recognizing trial court implicitly
overruled defendant's objection to jury shuffle by granting State's motion to
shuffle). When the trial court took action inconsistent with the
sustaining of Appellees’ objections to Airey’s and Curran’s affidavits,
i.e., signing an order granting leave to file the supplemental affidavits, it
implicitly overruled Appellees’ objections, rather than implicitly
sustaining them as Appellees argue. Consequently, we consider Airey’s
and Curran’s supplemental affidavits as properly part of the summary judgment
record before us. We sustain K-7's first and second issues.
In
its third issue, K-7 claims that the trial court erred by granting summary
judgment because the continuing tort doctrine applies. The continuing tort
doctrine involves continuing wrongful conduct and continuing injury. Dickson
Constr., Inc. v. Fid. and Deposit Co. of Maryland, 960 S.W.2d 845, 851 (Tex.
App.—Texarkana 1997, no writ). Because, as outlined above, the summary
judgment evidence establishes that the PJ’s #2 storage tanks suffered
multiple, distinct gasoline discharges and that the discharged gasoline migrated
sporadically and intermittently onto K-7's property, the summary judgment record
fails to establish the opposite, continuing wrongful conduct and continuing
injury. See Cook v. Exxon Corp., 145 S.W.3d 776, 785 (Tex.
App.—Texarkana 2004, no pet.); see also Walton, 65 S.W.3d at 275
(holding doctrine of continuing tort does not apply to injury to property); Loyd
v. ECO Res., Inc., 956 S.W.2d 110, 127 (Tex. App.—Houston [14th Dist.]
1997, no pet.) (same). We overrule K-7's third issue.
V. No Genuine
Issues of Material Fact Exist as to Equitable
Estoppel or
Fraudulent Concealment
We
also address whether K-7 raised a genuine issue of material fact regarding
whether the doctrines of equitable estoppel or fraudulent concealment preclude
Appellees from asserting limitations as a defense to its claims for damages to
its property sustained prior to January 15, 2001. K-7 contends that it
raised a genuine issue of fact as to whether Appellees are estopped from
asserting the defense of limitations because Appellees’ actions and
representations wrongfully induced K-7 to delay filing suit until after the
limitations period expired.
The
doctrine of equitable estoppel is based on the principle that if one party by
his conduct induces another to act in a particular manner, he should not be
allowed to adopt an inconsistent position and thereby cause loss or injury to
the other. Super Wash, Inc. v. City of White Settlement, 131 S.W.3d
249, 260 (Tex. App.—Fort Worth 2004, pet. filed); Maguire Oil Co. v. City
of Houston, 69 S.W.3d 350, 367 (Tex. App.—Texarkana 2002, pet.
denied). Thus, equitable estoppel may bar a limitations defense when a
party, his agent, or his representative makes representations that induce a
plaintiff to delay filing suit until the limitations period has run. Vaughn
v. Sturm-Hughes, 937 S.W.2d 106, 108 (Tex. App.—Fort Worth 1996, writ
denied).
To
invoke equitable estoppel in response to a motion for summary judgment on
limitations grounds, the nonmovant must raise a fact issue that show the
following: (1) a false representation or concealment of a material fact; (2) the
representation was made with knowledge or the means of knowledge of the true
facts; (3) the representation was made to a party without knowledge or the means
of knowledge of the true facts; (4) the representation was made with the
intention that it would be acted on; and (5) the party to whom the
representation was made relied on or acted on it to his or her prejudice. Id.
at 108-09. When equitable estoppel is alleged in avoidance of a
limitations defense, the failure to file suit must be “unmixed” with any
want of diligence on the plaintiff’s part. Id. at 109.
Fraudulent
concealment is based on the doctrine of equitable estoppel, and where
applicable, it likewise estops a defendant from asserting limitations as an
affirmative defense. Mitchell Energy Corp. v. Bartlett, 958 S.W.2d
430, 439 (Tex. App.—Fort Worth 1997, pet. denied). The doctrine of
fraudulent concealment tolls or suspends the running of limitations because the
defendant has concealed from the plaintiff facts necessary for the plaintiff to
know that he has a cause of action against the defendant. DiGrazia v.
Old, 900 S.W.2d 499, 504 (Tex. App.—Texarkana 1995, no writ). The
estoppel effect ends, and the statute of limitations begins to run, when a
plaintiff has knowledge of facts, conditions, or circumstances that would cause
a reasonable person to make an inquiry, which, if pursued, would lead to
discovery of the concealed cause of action, because such knowledge is the
equivalent for limitations purposes of knowledge of the cause of action
itself. Bayou Bend Towers Council of Co-Owners v. Manhattan Constr. Co.,
866 S.W.2d 740, 747 (Tex. App.—Houston [14th Dist.] 1993, writ denied); Stephens
v. James, 673 S.W.2d 299, 303 (Tex. App.—Dallas 1984, writ ref’d n.r.e.).
In order to invoke the estoppel effect of fraudulent concealment, a plaintiff
must show (1) the existence of the underlying tort; (2) the defendant’s
knowledge of the tort; (3) the defendant’s use of deception to conceal the
tort; and (4) the plaintiff’s reasonable reliance on the deception. Mitchell
Energy Corp., 958 S.W.2d at 439.
In
the instant case, the summary judgment evidence reflects that when K-7 became
aware of the first release of contaminants in early 1998, it immediately
contacted PJ’s Convenience Stores, Inc.’s insurer, TOMIC, to discuss the
contamination. In his controverting affidavit, Koop explained that, during
both 1998 and 1999, he had “numerous and repeated telephone conversations”
with TOMIC regarding the contamination. According to Koop, TOMIC
represented that Jim Adams of Complete Earth Services (“CES”) had been hired
to assess and to remediate K-7's property. TOMIC also agreed to indemnify K-7's
prospective purchaser for any damages associated with the release of
contaminants from PJ’s #2. In a letter dated January 12, 1999, TOMIC
advised Koop that it would be responsible for “Damages on account of Personal
Injury or Property Damage for claims arising out of the Pollutant
emanating from PJ’s #2.”
Thereafter,
CES installed two wells on K-7's property to monitor the levels of
contamination, and K-7 believed that Appellees were in the process of
remediating the property. Koop indicated that in February 2001, CES
contacted him and requested permission to enter K-7's property to remove the
monitoring wells because “the contamination levels were decreasing and the
wells were no longer needed.” According to Koop, he agreed to allow CES
access to the property to remove the wells because he believed that the
contamination on K-7's property was below state action levels at that
time. He further explained that he did not file suit against Appellees
during that time due to the affirmative representations by TOMIC and CES that
the property was being remediated and that the levels of contamination had
decreased. Until May 2002, K-7 was wholly unaware that its property had
not been remediated or that a subsequent release of contaminants had occurred
between December 1999 and March 2000. At that time, K-7 discovered that in
February 2001, two weeks prior to removing the wells, CES had taken samples from
the wells and the levels of contamination had actually increased rather than
decreased. In addition, according to Koop, although CES was instructed by
TNRCC to install two other monitoring wells on K-7's property in February 2001,
CES never informed K-7 of this information until approximately a year-and-a-half
later during the summer of 2002.
Viewing
the summary judgment evidence in the light most favorable to K-7, we conclude
that K-7 possessed knowledge of facts that would make a reasonable person verify
the contamination levels on its property after the alleged remediation and that
would make a reasonable person verify that the leakage from the PJ’s #2
storage tanks had been solved. Although K-7 originally had knowledge of
the contamination in February 1998 and delayed in filing suit based on
affirmative actions and representations by Appellees and its agents indicating
that K-7's “property was being remediated” and that “the levels of
contamination had decreased,” K-7 nonetheless undisputedly possessed knowledge
of facts that, if investigated, would have revealed K-7's cause of action
against Appellees. That is, K-7 knew its property had been contaminated,
and therefore knew of its cause of action. K-7 knew that TOMIC had hired
CES to remediate the property, knew that CES was in communication with the
TNRCC, and knew CES was removing the monitoring wells from the property.
K-7 did not attempt to verify the contaminant levels at the time CES removed the
monitoring wells, but admits that the TNRCC conducted testing two weeks before
the wells were removed and that results of this testing indicated the
contamination levels had risen. In short, K-7's reliance on CES’s
representations were not reasonable under the circumstances. Accord
Walton, 65 S.W.3d at 275 (holding reliance on deception unreasonable after
plaintiff knew of contamination). Moreover, we question whether CES, a nonparty,
had a duty to disclose any information to K-7; K-7's summary judgment evidence
concerning fraudulent concealment and estoppel focuses on CES’s alleged
deception, not Appellees. See Bayou Bend Towers, 866 S.W.2d at 746
(holding plaintiff failed to meet fraudulent concealment burden because no
evidence existed establishing a duty to disclose). Thus, we hold that the
doctrines of equitable estoppel and fraudulent concealment do not preclude
Appellees’ limitations defense concerning damages occurring prior to January
15, 2001. We overrule K-7's fourth issue.
VI. Conclusion
Having
sustained K-7's first and second issues and having overruled K-7's third and
fourth issues, we reverse the trial court’s summary judgment for Appellees
foreclosing K-7's right of recovery for the successive injuries to its property
occurring on or after January 15, 2001 and remand those claims to the trial
court. We affirm the trial court’s summary judgment for Appellees as to
any injuries to the K-7 property occurring before January 15, 2001.
SUE
WALKER
JUSTICE
PANEL
B: HOLMAN, GARDNER, and WALKER, JJ.
DELIVERED:
January 27, 2005
NOTES
1.
See Tex. R. App. P. 47.4.