Morello v. State

539 S.W.3d 330
Court of Appeals of Texas·Decided May 6, 2016·No. NO. 03–15–00428–CV·Published

Opinion

David Puryear, Justice

The State of Texas filed suit against Bernard Morello and White Lion Holdings, L.L.C., alleging various violations of rules promulgated by the Texas Commission on Environmental Quality (the "Commission") and seeking injunctive relief as well as the imposition of civil penalties against Morello and White Lion and attorney's fees. After filing its petition, the State filed a traditional motion for summary judgment against White Lion. See Tex.R. Civ. P. 166a(c). In addition, the State requested that the district court sever the claims against Morello from those against White Lion in the event that the district court granted the State's motion for summary judgment. See id. R. 41 (allowing for severance of claims). Ultimately, the district court granted the State's motion for summary judgment and motion to sever. Subsequently, the State filed a traditional motion for summary judgment against Morello. After reviewing the State's motion and Morello's response and after convening a hearing, the district court granted the State's motion for summary judgment and ordered Morello to pay $367,250.00 in civil penalties. Following that ruling, Morello filed a motion for new trial, and the district court denied the motion. Morello appeals the district court's judgment granting the State's motion for summary judgment and the district court's order denying his motion for new trial. We will reverse the district court's judgment and remand for further proceedings.

BACKGROUND

The property at issue in this case was originally owned by Vision Metals, Inc. ("Vision"), and was previously used as a *332pipe-manufacturing facility. See White Lion Holdings, L.L.C. v. State, No. 01-14-00104-CV, 2015 WL 5626564, at *1 (Tex.App.-Houston [1st Dist.] Sept. 24, 2015, no pet.) (mem. op.) (setting out background facts forming dispute between State and White Lion). There were five surface-water impoundments located on the property. Id. At some point, Vision became aware "that the impoundments were sources of groundwater contamination, including elevated concentrations of" various chemicals, and the Commission issued a hazardous-waste permit to Vision "to govern the management, closure, and long-term care of the" reservoirs. Id. ; see also Tex. Health & Safety Code §§ 361.017 (providing that Commission "is responsible for the management of industrial solid waste"), .024 (empowering Commission with ability to "adopt rules ... and establish minimum standards of operation for the management and control of solid waste"), .061 (authorizing Commission to "issue permits authorizing and governing the construction, operation, and maintenance of the solid waste facilities used to store, process, or dispose of solid waste"). As part of the closure process, caps were placed on the impoundments, and chemicals were added to stabilize them.

Along with the permit, the Commission also issued a compliance plan requiring Vision to engage in various corrective actions to clean up the contamination, monitor the groundwater, file reports regarding the corrective actions taken, file reports containing the results of testing performed on the groundwater, and "provide financial assurance for operation" of the corrective programs. See 30 Tex. Admin. Code §§ 305.401 (2016) (Tex. Comm'n on Envtl. Quality, Compliance Plan) (allowing Commission to "establish a compliance plan" "[i]n order to administer the groundwater protection requirements relating to compliance monitoring and corrective action for facilities that store, process, or dispose of hazardous waste in surface impoundments"), 335.167(a), (b) (2016) (Tex. Comm'n on Envtl. Quality, Corrective Action for Solid Waste Management Units) (requiring owner seeking permit for "processing, storage, or disposal of hazardous waste" to "institute corrective action as necessary to protect human health and the environment" and stating that "[f]inancial assurance for such corrective action shall be established and maintained"). Several years later, Vision declared bankruptcy.

After Vision declared bankruptcy, Morello bid on the property at an auction and entered into an agreement to purchase the property. A little over a month later, Morello assigned his rights to purchase the property to White Lion, which is a limited liability company that Morello formed. When the closing occurred after the assignment, Vision conveyed all of its interest in the property to White Lion. Subsequent to the closing, the Commission transferred the hazardous-waste permit and the compliance plan to White Lion.

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Morello v. State, 539 S.W.3d 330 (Tex. Ct. App. 2016).

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