Krygoski Construction Company v. Flanders Industries, Inc.

Filing 8

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF MICHIGAN N O R T H E R N DIVISION

K R Y G O S K I CONSTRUCTION COMPANY, P l a in tif f , F ile No. 2:08-CV-202 v. H O N . ROBERT HOLMES BELL F L A N D E R S INDUSTRIES, INC., d/b/a L L O Y D /F L A N D E R S INDUSTRIES, INC., D e f e n d a n t. / OPINION P la in t if f Krygoski Construction Company ("Krygoski") filed this action against D e f en d a n t Flanders Industries, Inc. ("Flanders"), seeking damages for environmental c o n tam in a tio n of Plaintiff's property. Defendant has moved for dismissal pursuant to Rule 1 2 (b )(6 ) on the basis that all of Plaintiff's claims against it are barred by the applicable sta tu tes of limitations. (Dkt. No. 3, Mot. To Dismiss.) Plaintiff opposes the motion. (Dkt. N o . 6, Pl.'s Resp.) For the reasons that follow Defendant's motion will be granted. I. P lain tif f Krygoski owns property in Menominee, Michigan, adjacent to property o w n e d by Defendant Flanders. On July 29, 2008, Plaintiff filed its complaint in the Circuit C o u rt for the County of Menominee, State of Michigan, alleging that its property is co n tam inated and that the contamination is likely caused by contaminants from Defendant's

p ro p e rt y by direct historical dumping and/or by migration of contaminants through g ro u n d w a ter flow, wave action, overland flow, or wind action. Plaintiff's complaint asserts th re e state law counts against Defendant: (1) trespass and continuing trespass; (2) nuisance a n d anticipatory nuisance; and (3) strict liability and negligence. Defendant removed the a c tio n to federal court on the basis of diversity of citizenship. (Dkt. No. 1, Notice of R e m o v a l .) II. " L ik e other Rule 12(b)(6) motions to dismiss, a motion to dismiss on statute of lim ita tio n s grounds should be granted `when the statement of the claim affirmatively shows th a t the plaintiff can prove no set of facts that would entitle him to relief.'" New England H e a lth Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir. 2 0 0 3 ) (quoting Ott v. Midland-Ross Corp., 523 F.2d 1367, 1369 (6th Cir. 1975)). In c o n sid e rin g whether to grant a 12(b)(6) motion to dismiss "a district court must accept as true a ll the allegations contained in the complaint and construe the complaint liberally in favor o f the plaintiff." Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006). "A district court n e e d not, however, accept as true legal conclusions or unwarranted factual inferences." Id. " [ A ] written instrument attached as an exhibit to a pleading is considered a part of the p le a d in g . . . ." Benzon v. Morgan Stanley Distrib., Inc., 420 F.3d 598, 603 (6th Cir. 2005) (c itin g Fed. R. Civ. P. 10(c)). Accordingly, the Court may properly consider exhibits

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a tta c h ed to the complaint in determining whether the complaint fails to state a claim upon w h ic h relief may be granted without converting the motion to a Rule 56 motion. Id. III. In diversity cases the court follows the law of the state in which it sits with respect to th e statute of limitations. Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99 (1945); Atkins v. S c h m u tz Mfg. Co. 372 F.2d 762, 764 (6th Cir. 1967). Because Plaintiff has alleged state law c la im s , the applicable Michigan statute of limitations must be applied. Plaintiff's trespass, nuisance, and strict liability claims are subject to Michigan's th re e -ye a r statute of limitations for actions to recover damages for injury to property. Mich. C o m p . Laws § 600.5805(10); Sable v. Gen. Motors Corp., 90 F.3d 171, 176 (6th Cir. 1996) (a p p lyin g Michigan's three-year limitation period to a trespass claim based on environmental c o n ta m in a tio n ), abrogated on other grounds by City of Warren v. City of Detroit, 495 F.3d 2 8 2 , 288 (6th Cir. 2007); Ostroth v. Warren Regency, GP, LLC, 709 N.W.2d 589, 592 (Mich. 2 0 0 6 ) (noting that Michigan's three-year statute of limitations applies to general negligence a c tio n s); Midwest Aluminum Mfg. Co. v. Gen. Elec. Co., No. 4:90-CV-143, 1993 WL 725569 a t *6 (W.D. Mich. Feb. 5, 1993) (applying Michigan's three-year statute of limitations to a s tric t liability claim based on environmental contamination). The period of limitations runs from the time the claim accrues. Mich. Comp. Laws § 600.5827. Unless otherwise provided in Mich. Comp. Laws §§ 5829 to 5838, "the claim a c c ru e s at the time the wrong upon which the claim is based was done regardless of the time

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w h e n damage results." Id. Plaintiff has not asserted that its claim falls within any of the sta tu to ry accrual provisions in sections 5829 to 5838. Accordingly, for purposes of this

m o tio n , Plaintiff's claims accrued when the wrong was done. U n d e r Michigan law, "where a wrong is of a continuing nature, a plaintiff may re c o v e r damages resulting from that harm which occurred within the limitations period." V illa g e of Milford v. K-H Holding Corp., 390 F.3d 926, 933 (6th Cir. 2004) (citing Horvath v . Delida, 540 N.W.2d 760, 763 (Mich. App. 1995)). However, continuing harmful effects d o not toll, extend, or give rise to a new statute of limitations. "A continuing wrong is e sta b lish e d by continuing tortious acts, not by continual harmful effects from an original, c o m p le te d act." Id. (quoting Horvath, 540 N.W.2d at 763). "Even if further migration o c c u rre d , it was not a new act of trespass." Id. See also Sable, 90 F.3d at 176 ("Since there w e re no continuing tortious acts within three years from the date plaintiff filed the cause of a c tio n , only continual harmful effects, plaintiff's reliance on the continuing-wrongful-acts d o c trin e is misplaced."); Horvath, 540 N.W.2d at 762 ("The seepage of more water without f u rth e r acts by the defendant does not constitute an additional tort."). Plaintiff alleges in its complaint that Defendant's toxic waste has contaminated P la in tif f 's property as a result of historical dumping of wastes on Plaintiff's property and by th e migration of contaminants from Defendant's property onto Plaintiff's. In support of this alleg atio n Plaintiff's complaint references a Phase II Environmental Site Assessment Report (" P h a se II ESA") which is attached to the complaint as Exhibit A. For background on the

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h is to ric manufacturing processes and activities on the Flanders property the Phase II ESA re lie s on the 1992 Administrative Order issued by the Michigan Department of Natural R e so u rc e s ("MDNR") to Defendant Flanders. The Phase II ESA describes the processes and a c tiv itie s to include the discharge of rinse waters from the metal treatment processes into a d itc h , the generation of large quantities of paint sludge, and the disposal of waste on the G re e n Bay shoreline. The Phase II ESA summarizes the time frame regarding the discharges a s follows: The Flanders property was sold in December of 1982. The new owners c o n tin u e d the processes and activities used by the former owners, including the g e n e ra tio n of paint sludge from spray painting booths. These processes re p o rte d ly continued until the late 1980's. (Compl. Ex. A.) The Phase II ESA does not make any other references to any discharges of w a s te by Defendant. (Id.) Defendant contends that, based upon the facts alleged in Plaintiff's complaint, P la i n t i f f ' s causes of action accrued in the late 1980s or, at the latest, in 1992 when the M D N R issued its Administrative Order. The fact that there may be continuing harmful e f f e c t s does not extend the limitations period in the absence of continuing wrongful acts. H o rv a th , 540 N.W.2d at 763. Defendant contends that because there is no allegation or even a n y suggestion that it did anything wrong after 1992, Plaintiff's claims accrued, at the latest, b y 1992, and accordingly must be dismissed because they arose more than three years ago a n d are now time barred.

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P lain tiff notes that under Michigan law, "[t]he wrong is done when the plaintiff is h a rm e d rather than when the defendant acted." Trentadue v. Buckler Lawn Sprinkler, 738 N .W .2 d 664, 670 (Mich. 2007) (quoting Boyle v. Gen. Motors Corp., 661 N.W.2d 557, 560 n .5 (Mich. 2003)). Plaintiff contends that it was not harmed until 2006 or 2007 when it re c eiv e d the Environmental Site Assessments which disclosed that the contamination of P la in tif f 's property was likely caused by Defendant. Plaintiff's contention is in effect an argument for application of the discovery rule. In Village of Milford the Sixth Circuit assumed that the Michigan Supreme Court would a p p ly the discovery rule to groundwater pollution cases. 390 F.3d at 932. The Michigan S u p re m e Court subsequently held that, in light of the state's comprehensive statutory scheme o f limitations, courts may not employ an extrastatutory discovery rule to toll accrual in a v o id a n c e of the plain language of Mich. Comp. Laws § 600.5827. Trentadue, 738 N.W.2d a t 672. Even if Michigan would not apply the discovery rule, Plaintiff contends that the C E R C L A discovery rule preempts Michigan's limitations period for claims involving p rop erty damage caused by hazardous substance contamination. 42 U.S.C. § 9658(a)(1).1 Under the federal Comprehensive Environmental Response Compensation and L ia b ility Act ("CERCLA"), the statute of limitations commences on the date the plaintiff k n e w or should have known that the property damage was caused by the contaminant c o n c e rn e d . 42 U.S.C. § 9658(b)(4)(A). CERCLA further provides: In the case of any action brought under State law for personal injury, or p ro p e rty damages, which are caused or contributed to by exposure to any h a z ard o u s substance, or pollutant or contaminant, released into the e n v iro n m e n t from a facility, if the applicable limitations period for such action (c o n tin u e d ...) 6
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A s s u m in g application of the discovery rule, Defendant nevertheless contends that th e re is no dispute that Plaintiff knew or should have known of a possible claim no later than 2 0 0 0 when, according to the Phase II ESA attached to Plaintiff's complaint, Defendant was re q u ire d to post signs providing notice to the neighboring landowners (including Krygoski) o f the contamination. (Compl. Ex. A at 2.) 2 As noted in Village of Milford, "the discovery rule does not permit a party to await certainty." 390 F.3d at 932. Even under the discovery ru le the limitations period begins to run when the plaintiff "knew (or should have known) of its potential cause of action." Id. Plaintiff contends that even if its action is otherwise barred by the statute of lim itatio n s, it would nevertheless be entitled to additional time if the Defendant fraudulently c o n c ea le d the existence of the claim. Mich. Comp. Laws § 600.5855.3 Because neither the

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(...continued) (a s specified in the State statute of limitations or under common law) provides a commencement date which is earlier than the federally required c o m m e n c em e n t date, such period shall commence at the federally required c o m m e n c e m e n t date in lieu of the date specified in such State statute.

42 U.S.C. § 9658(a)(1). Defendant has attached to its reply brief a series of access agreements allegedly s ig n e d by Plaintiff indicating that Plaintiff was on notice of the Administrative Order re q u i ri n g Defendant to perform a remedial investigation to determine the nature of the c o n ta m in a t io n . (Dkt. No. 7, Def.'s Reply Br. Ex. A.) Because this evidence was first p rese n ted in Defendant's reply brief, the Court declines to consider these matters that are o u ts id e the pleadings. See Fed. R. Civ. P. 12(d). Under section 5855, if a person who may be liable for a claim fraudulently conceals th e existence of the claim, the action may be commenced within two years after the person (c o n tin u e d ...) 7
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P h a s e II ESA nor the Complaint excludes any particular date as being the date on which the c o n ta m in a ti o n was caused, because all facts are not known about the contamination, and b e c au s e the complaint must be read in the light most favorable to Plaintiff, Plaintiff contends th e r e is an issue of fact as to whether the contamination was caused by Defendant's past to rtio u s acts, continuing tortious acts, and/or acts of fraudulent concealment. Plaintiff's suggestion that discovery might disclose evidence of continuing tortious a c ts or fraudulent concealment is not sufficient to save Plaintiff's case. In Bishop v. Lucent T e c h n o lo g ie s, Inc., 520 F.3d 516 (6th Cir. 2008), the Sixth Circuit addressed a similar s itu a tio n where the face of the complaint made it appear that the statute limitations had run. T h e Court held: Under these circumstances, it is not enough for plaintiffs to argue that the c o m p l a in t, because it is silent as to when they first acquired actual knowledge, m u s t be read in the light most favorable to them and construed as not p re c lu d in g the possibility that they will be able to prove facts establishing their e n titlem e n t to relief. The obligation to plead facts in avoidance of the statute o f limitations defense is triggered by the fact that "it is apparent from the face o f the complaint that the time limit for bringing the claim[s] has passed." H o o v e r v. Langston Equip. Assocs., Inc., 958 F.2d 742, 744 (6th Cir. 1992). " T h e Sixth Circuit has adopted the view, at least in cases where the face of the c o m p l a in t discloses a failure to file within the time allowed, that the plaintiff m a y come forward with allegations explaining why the statute of limitations s h o u ld be tolled." Id. When it affirmatively appears from the face of the c o m p l a in t that the time for bringing the claim has passed, the plaintiff cannot " e sc a p e the statute by saying nothing." Id. at 745. See also LRL Properties v. P o rta g e Metro Housing Auth., 55 F.3d 1097, 1107 (6th Cir. 1995).

(...continued) w h o is entitled to bring the action discovers, or should have discovered, the existence of the c la im . Mich. Comp. Laws § 600.5855. 8

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A complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient. [Bell Atlantic Corp. v. T w o m b ly , 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007)]. The allegations must b e enough to "raise a right to relief above the speculative level" and state a c la im that is "plausible on its face." Id. at 1965, 1974. Where, as here, d e f e n d a n ts have highlighted the apparent untimeliness of the complaint, p la in tif f s may not simply rely on the bare assertion that they were unaware of th e facts underlying their cause of action. LRL Properties, 55 F.3d at 1107; H o o v e r, 958 F.2d at 744. B is h o p , 520 F.3d at 520. Plaintiff's complaint, like the complaint in Bishop, contains allegations which, on their f a ce , give rise to the reasonable inference that Plaintiff had been wronged, or that Plaintiff k n e w or should have known that it had been wronged, by 2000. Under these circumstances, th e complaint's silence as to the date Plaintiff was harmed or the date Plaintiff knew or sh o u ld have known of the existence of its claim, is not sufficient to defeat Defendant's m o tio n to dismiss. Because it affirmatively appears from the face of the complaint that the tim e for bringing the claim has passed, the plaintiff cannot escape the statute by saying n o th in g . Id. Plaintiff's speculation that during the course of discovery it might find evidence to bring its claim within the limitations period is insufficient to defeat Defendant's motion to dismiss. Accordingly, the Court will grant Defendant's motion to dismiss and enter an o rd e r dismissing Plaintiff's complaint. A n order consistent with this opinion will be entered.

Dated: March 17, 2009

/s/ Robert Holmes Bell ROBERT HOLMES BELL UNITED STATES DISTRICT JUDGE 9