Appeal from the Marion Superior Court. Cause No. 49D07-0310-CT-003394. The Honorable Michael D. Keele, Judge.
ATTORNEYS FOR APPELLANT: George M. Plews, Brianna J. Schroeder, Jonathan Penn, Plews Shadley Racher & Braun, LLP, Indianapolis, Indiana.
ATTORNEYS FOR APPELLEE ERIC J. SPICKLEMIRE: Thomas F. O'Gara, Bradley R. Sugarman, Jeffrey D. Stemerick, Taft Stettinius & Hollister, LLP, Indianapolis, Indiana.
Friedlander, Judge. Kirsch, J., and Crone, J., concur.
[¶1] This litigation involves a dispute over responsibility for the costs of environmental cleanup of commercial real estate (the Site) located near the 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 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 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.
[¶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. 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 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 $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 Binder (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 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 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.
[¶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 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 ...