United States District Court, D. Colorado
SONRISA HOLDING, LLC, and LIVING TRUST AGREEMENT OF MELODY L. ORTEGA DATED JANUARY 21, 2002, Plaintiffs,
v.
CIRCLE K STORES, INC., Defendant.
ORDER
Scott
T. Varholak United States Magistrate Judge.
This
matter comes before the Court on three motions for summary
judgment: (1) Defendant's Motion for Partial Summary
Judgment (“Defendant's MPSJ”) [#63]; (2)
Plaintiffs' Motion for Partial Summary Judgment
(“Plaintiffs' MPSJ”) [#64]; and (3)
Defendant's Motion for Summary Judgment on
Plaintiffs' Claims for Assigned Damages
(“Defendant's Assigned Damages MSJ”) [#73].
Also before the Court is Defendant's Submission of
Affidavit of Troy R. Rackham in Support of Attorney Fees
Awarded By Court (the “Fees Motion”) [#82]
(collectively, the “Motions”). The Motions are
before the Court on the parties' consent to have a United
States magistrate judge conduct all proceedings in this
action and to order the entry of a final judgment. [##24, 27]
This Court has carefully considered the Motions and related
briefing, the entire case file, and the applicable case law,
and has determined that oral argument would not materially
assist in the disposition of the Motions, and accordingly
DENIES Plaintiffs' Request for Oral
Argument on Outstanding Motion for Summary Judgment [#91].
For the following reasons, Defendant's MPSJ [#63] is
GRANTED in part and DENIED in part,
Plaintiff's MPSJ [#64] is GRANTED in part and
DENIED in part, Defendant's Assigned Damages MSJ
[#73] is GRANTED in part and DENIED in part,
and Defendant's Fees Motion [#82] is GRANTED in
part and DENIED in part.
I.
BACKGROUND
This
case arises out of a gasoline spill at a gas station owned by
Defendant Circle K Stores, Inc. (“Circle K”),
which migrated from Circle K's property onto adjacent
properties owned by Plaintiffs Sonrisa Holding, LLC
(“Sonrisa”), and the Living Trust Agreement of
Melody L. Ortega Dated January 21, 2002
(“Ortega”). [See generally #1]
Sonrisa's principal is Eugene Lucero. [See #63
at 11; see also generally #63-15, #64-3] The
undisputed facts are as follows.[1]
Ortega
and Sonrisa each owned several properties in Denver,
Colorado, collectively located at West 38th Avenue, Lowell
Boulevard, and West Clyde Place (the “Impacted
Properties”). [#72-1, SSOF1-2] Circle K owns and
operates a retail gas station at 3600 West 38th Avenue in
Denver (the “Gas Station”), where it buys, sells,
and stores petroleum products, including gasoline.
[Id. at SSOF5-6] On June 8, 2011, Circle K reported
a gasoline spill of approximately 100 gallons at the Gas
Station to the Colorado Department of Labor, Division of Oil
and Public Safety (“OPS”). [Id. at
SSOF7; #71-1, CSOF3-4] There also have been historical
release of gasoline and other petroleum products at the Gas
Station. [#72-1, SSOF7] During the spill, petroleum products,
released from underground storage tanks and associated piping
at the Gas Station migrated onto portions of the Impacted
Properties. [Id. at SSOF8-10] Plaintiffs did not
give Circle K permission, approval, or authority to dispose
or place the released petroleum products onto the Impacted
Properties. [Id. at SSOF13]
Petroleum-related
contaminants entered the groundwater at the Impacted
Properties because of the spill. [Id. at SSOF14]
Days after the spill, Circle K hired CGRS as its
environmental consultant to perform cleanup procedures of the
petroleum hydrocarbon contamination of the groundwater,
including in areas underneath the Impacted Properties, and to
determine the extent of the contamination and the appropriate
corrective action. [Id. at SSOF11; #71-1, CSOF5-6]
In October 2012, CGRS submitted a Corrective Action Plan to
OPS, which called for a hydraulic fracturing procedure to
neutralize the petroleum in the groundwater. [#71-1, CSOF7-8]
OPS approved the Corrective Action Plan. [Id. at
CSOF9] In March 2014, CGRS provided a letter to Plaintiffs on
behalf of Circle K, explaining the cleanup procedures and
requesting access to Plaintiffs' properties to sample the
groundwater and perform the carbon injecting. [Id.
at CSOF13-14] Plaintiffs agreed and gave CGRS access to their
property for sampling and testing. [Id. at CSOF15]
In the
meantime, beginning in December 2013, Plaintiffs had
discussed potentially selling their properties to the
developer Trammel Crow.[2] [Id. at CSOF12] In April 2014,
Plaintiffs entered a contract to sell their properties to
Trammel Crow. [Id. at CSOF16] Both Trammel Crow and
Plaintiffs obtained environmental consultants. [Id.
at CSOF17-19, 22] Trammel Crow hired Terracon as its
environmental consultant, which recommended that a vapor
intrusion barrier and mitigation system (“vapor
barrier”) be constructed at the Impacted Properties to
remediate the petroleum contamination. [Id. at
CSOF22; #72-1, SSOF19] The parties dispute at length whether
the vapor barrier recommended by Terracon was necessary, and
whether Plaintiffs' own environmental consultant
concluded that such a barrier was required. [#71-1,
CSOF22-23; #72-1, SSOF19-23] Ultimately, Trammel Crow
required that the vapor barrier be constructed at the
Impacted Properties. [#72-1, SSOF20]
In an
amendment to the sales contract, Plaintiffs and Trammel Crow
agreed that Sonrisa and Ortega would each place $150, 000 of
the proceeds from the purchase price in escrow (the
“Environmental Escrow”), to fund the cost of
addressing “any reasonable cost of Contamination
Containment” at the Impacted Properties. [Id.
at SSOF18; #71-1, CSOF26] On April 6, 2015, Trammel Crow
requested a 90-day extension of the closing dates. [#71-1,
CSOF29]
Ortega
and Sonrisa sold their properties to Trammel Crow on May 22
and June 11, 2015, respectively. [Id. at CSOF39, 41;
#72-1, SSOF3] Ortega was paid over $2, 000, 000 for its share
of the property purchased by Trammel Crow, and Sonrisa was
paid over $9, 000, 000 for its share. [#71-1, CSOF43-44] At
closing, Ortega and Sonrisa each funded $150, 000 into the
Environmental Escrow for a total of $300, 000, as required by
the amendment to the sales contract. [Id. at CSOF40,
42] After Trammel Crow incurred the contamination containment
expenses from constructing the vapor barrier proposed by
Terracon, Plaintiffs were collectively refunded $116, 790-the
remaining balance from the Environmental Escrow.
[Id. at CSOF46] Plaintiffs then sent a demand to
Circle K for the remaining $183, 210 used from the escrow
account. [Id. at CSOF54]
In
August 2018, Trammel Crow assigned to Plaintiffs its interest
in any claims it had or could have against Circle K related
to the remediation. [Id. at CSOF71-72] Through
supplemental disclosures in September 2018, Plaintiffs
indicated that they were seeking additional damages,
including cost of capital damages, and damages based on the
assignment from Trammel Crow. [Id. at CSOF84-85, 87]
The claimed assigned damages include “dewatering
costs” spent by Trammel Crow in 2015 and 2016 after the
sales of the Impacted Properties had been completed.
[Id. at CSOF88]
Plaintiffs
identified a need for experts, including for damages, as well
as an environmental consultant/engineer and an environmental
transactional attorney, in the Scheduling Order [id.
at CSOF58; see also #26 at 7], but did not identify
any expert witnesses in their initial disclosures and never
disclosed affirmative experts by the deadline [#71-1, CSOF60,
65]. At a discovery hearing on October 19, 2018, the Court
denied a belated request from Plaintiffs to disclose a
damages expert, and limited any expert testimony by
Plaintiffs to rebuttal expert testimony. [See Id. at
CSOF76-78; see also #56 at 26:9-31:25]
Plaintiffs
initiated this action in January 2017 asserting trespass and
nuisance claims and seeking to recover the $183, 210 in
expenses from the Environmental Escrow for which they were
not reimbursed, among other damages. [#1 at 7-10; #71-1,
CSOF56-57] The parties filed cross motions for summary
judgment in January 2018. [##63, 64] Plaintiffs' MPSJ
seeks summary judgment on the issue of liability on both the
trespass and nuisance claims. [#64] In Defendant's MPSJ,
Circle K argues that it is entitled to summary judgment on
all of Plaintiffs' damages requests, except for nominal
damages. [See generally #63] Specifically, Circle K
seeks summary judgment on Plaintiffs' requests for
remediation costs, transactional legal costs, cost of
capital, assigned damages claims, lost opportunity damages,
and noneconomic damages. [Id.] In Defendant's
Assigned Damages MSJ, Circle K elaborates on its contention
that it is entitled to summary judgment to the extent
Plaintiffs seek assigned damages. [#73] The Motions are fully
briefed. [##66-67, 71-72, 76-77] Circle K filed a
supplemental brief in support of its MPSJ on May 2, 2019
[#78], Plaintiffs filed a response [#79], and Circle K filed
a reply [#81]. On June 7, 2019, Plaintiffs filed a Request
for Oral Argument on Outstanding Motions for Summary
Judgment. [#91]
Meanwhile,
on February 20, 2019, this Court held a hearing on
Plaintiffs' Motion to Strike Affidavit of Julie Fraser
[#57] and Defendant's Motion to Exclude Untimely Damage
Claims and Other Sanctions [#61]. [#70] During the hearing,
the Court ruled that Defendant could re-depose Mr. Lucero and
that “[d]efense counsel shall be reimbursed the costs
of the re[-]deposition of Mr. Lucero for up to four
hours.” [Id. At 3] On May 23, 2019, Defendant
filed the Fees Motion seeking $5, 057.50 in fees, based upon
11.9 hours spent preparing for, traveling to and from, and
taking Mr. Lucero's deposition, at a rate of $425 per
hour. [#82; #82-1 at 2, 4] The Fees Motion also seeks $1,
072.00 in transcription services. [Id.] Plaintiffs
have responded to the Fees Motion [#86] and Defendant filed a
reply [#92].
II.
STANDARD OF REVIEW
Summary
judgment is appropriate only if “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal
Co., 41 F.3d 567, 569 (10th Cir. 1994). Where, as here,
the Court is presented with cross-motions for summary
judgment, the Court “must view each motion separately,
in the light most favorable to the non-moving party, and draw
all reasonable inferences in that party's favor.”
United States v. Supreme Court of New Mexico, 839
F.3d 888, 907 (10th Cir. 2016) (internal quotations omitted).
When
the moving party bears the burden of persuasion at trial,
“the moving party must establish, as a matter of law,
all essential elements of the [claim on which summary
judgment is sought] before the nonmoving party can be
obligated to bring forward any specific facts alleged to
rebut the movant's case.” Pelt v. Utah,
539 F.3d 1271, 1280 (10th Cir. 2008). In other words, the
moving party “must support its motion with credible
evidence showing that, if uncontroverted, the moving party
would be entitled to a directed verdict.” Rodell v.
Objective Interface Sys., Inc., No. 14-CV-01667-MSK-MJW,
2015 WL 5728770, at *3 (D. Colo. Sept. 30, 2015) (citing
Celotex Corp., 477 U.S. at 331). “The burden
then shifts to the non-moving party to produce evidence
demonstrating the existence of a genuine factual issue for
trial.” Id.
When
the moving party does not bear the burden of persuasion at
trial, the movant may satisfy its initial burden of making a
prima facie demonstration of the absence of a genuine issue
of material fact “simply by pointing out to the court a
lack of evidence . . . on an essential element of the
nonmovant's claim.” Adler v. Wal-Mart Stores,
Inc., 144 F.3d 664, 670-71 (10th Cir.1998). If the
movant carries this initial burden, the burden then shifts to
the nonmovant “to go beyond the pleadings and set forth
specific facts that would be admissible in evidence in the
event of trial.” Id. at 671 (quotation
omitted).
“[A]
‘judge's function' at summary judgment is not
‘to weigh the evidence and determine the truth of the
matter but to determine whether there is a genuine issue for
trial.'” Tolan v. Cotton, 134 S.Ct. 1861,
1866 (2014) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986)). Whether there is a
genuine dispute as to a material fact depends upon whether
the evidence presents a sufficient disagreement to require
submission to a jury. See Anderson, 477 U.S. at
248-49; Stone v. Autoliv ASP, Inc., 210 F.3d 1132,
1136 (10th Cir. 2000); Carey v. U.S. Postal Serv.,
812 F.2d 621, 623 (10th Cir. 1987). A fact is
“material” if it pertains to an element of a
claim or defense; a factual dispute is “genuine”
if the evidence is so contradictory that if the matter went
to trial, a reasonable party could return a verdict for
either party. Anderson, 477 U.S. at 248.
“Where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party,
there is no ‘genuine issue for trial.'”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (citing First Nat'l Bank of
Ariz. v. Cities Serv. Co., 391 U.S. 253, 289
(1968)).
III.
Analysis
Plaintiffs
assert two claims for relief: trespass and nuisance, caused
by Circle K's petroleum products migrating from the Gas
Station onto the Impacted Properties. [#1 at 7-10] The Court
first addresses Plaintiffs' MPSJ, which asserts that
Plaintiffs are entitled to summary judgment on liability for
these two claims. [#64] The Court then addresses
Defendant's MPSJ [#63] and Defendant's Assigned
Damages MSJ [#73], and related briefing, which contend that
Plaintiffs are not entitled to any damages relief, other than
nominal damages, and cannot recover for remediation costs,
transaction costs, cost of capital, assigned damages, lost
opportunity damages, or noneconomic damages. [##63, 73] Where
the motions for summary judgment overlap, the Court addresses
the legal arguments together. See Azzun v. Kan. Dep't
of Health & Env't, No. 09-4144-SAC, 2010 WL
4975557, at *1 (D. Kan. Dec. 2, 2010). Finally, the Court
rules upon the Fees Motion. [#82]
A.
Trespass
Under
Colorado law, [3] a trespass consists of the following
elements: “a physical intrusion upon the property of
another without the proper permission from the person legally
entitled to possession of that real estate.” Pub.
Serv. Co. of Colo v. Van Wyk, 27 P.3d 377, 389 (Colo.
2001). “By intentionally entering the land possessed by
someone else, or causing a thing or third person to enter the
land, an individual becomes subject to liability for
trespass, whether or not he caused harm to any legally
protected interest of the landowner.” Id.
(emphasis added); see also Cook v. Rockwell Intl's
Corp., 618 F.3d 1127, 1148 (10th Cir. 2010)
(“Cook II”) (same). “[P]roof that
the trespassory invasion caused actual damages is not
required to establish liability, and the plaintiff is always
entitled to recover at least nominal damages.” Cook
v. Rockwell Int'l Corp., 273 F.Supp.2d 1175, 1200
(D. Colo. 2003) (“Cook I”),
disapproved on other grounds on appeal, 618 F.3d
1127 (10th Cir. 2010).
Here,
the parties agree that there was a release of petroleum from
the underground storage tanks at the Circle K Gas Station,
and the petroleum from that release constituted a physical
intrusion by migrating onto portions of the Impacted
Properties, contaminating the groundwater. [#71-1, CSOF4;
#72-1, SSOF8-10, 14; see also #64 at 3-4; #67 at 3]
The parties also agree that Plaintiffs did not authorize the
physical intrusion of the petroleum. [See #72-1,
SSOF13; see also #64 at 4; #67 at 3] Accordingly, no
disputed material issues of fact remain with respect to
Circle K's liability for trespass.
Circle
K nevertheless argues that Plaintiffs have failed to support
their requested damages with adequate evidence or expert
testimony. [See generally #67] Circle K
“unequivocally disputes . . . that the petroleum
migration proximately caused Plaintiffs to suffer any actual
damages whatsoever” [id. at 4] and contends
that Plaintiffs' failure to provide adequate damages
evidence is fatal to their trespass claim [id. at
10]. But again, Plaintiffs are seeking summary judgment on
liability, not damages, and damages are not an element of a
trespass claim.[4], [5] See Cook I, 273 F.Supp.2d at
1200; Micale v. Bank One N.A. (Chicago), 382
F.Supp.2d 1207, 1223 (D. Colo. 2005) (“Defendants are
not entitled to summary judgment on Plaintiff's breach of
contract claim . . . based on damages, because damages . . .
are not an essential element of the claim.”); see
also Meredith v. Int'l Marine Underwriters, No.
GLR-10-837, 2012 WL 3025139, at *11 (D. Md. July 20, 2012)
(“Despite having stricken [plaintiff's] sole
retained damages expert, the Court denies [defendant's]
Renewed Motion for Summary Judgment, under its damages
argument, because under Maryland law, damages is not an
essential element of a claim for breach of contract.”).
And, as Circle K recognizes [#67 at 10], Plaintiffs are at
least entitled to nominal damages for their trespass claim
even if they cannot ultimately recover any other categories
of damages. See Sanderson v. Heath Mesa Homeowners
Ass'n, 183 P.3d 679, 684 (Colo.App. 2008) (“If
the court finds that the [plaintiffs] did not present
sufficient evidence of the actual damages incurred by them
resulting from this trespass, it shall nevertheless award
them nominal damages for [defendant's] trespass.”).
There
is no genuine issue of material fact that the gasoline spill
at Circle K's Gas Station, which caused petroleum
contamination on at least a portion of Plaintiffs'
Impacted Properties, constituted a trespass. Accordingly,
Plaintiffs' MPSJ [#64] is GRANTED to the
extent it seeks summary judgment on liability for the
trespass claim. For the same reasons, Circle K's MPSJ
[#63] and MSJ on Assigned Damages [#73] are
DENIED to the extent they seek summary
judgment on liability for Plaintiffs' trespass claim.
B.
Nuisance
Plaintiffs
also argue that they are entitled to summary judgment on
their nuisance claim. [#64 at 6-9] “A claim for
nuisance is predicated upon a substantial invasion of a
plaintiff's interest in the use and enjoyment of his
property when such invasion is: (1) intentional and
unreasonable; (2) unintentional and otherwise actionable
under the rules for negligent or reckless conduct; or (3) so
abnormal or out of place in its surroundings as to fall
within the principle of strict liability.” Pub.
Serv. Co., 27 P.3d at 391; see also Safe Streets
All. v. Hickenlooper, 859 F.3d 865, 886 (10th Cir. 2017)
(same). Here, Plaintiffs' nuisance claim is predicated on
Circle K's negligence. [#64 at 7; see also #1 at
¶¶ 43-44] Accordingly, Plaintiffs must not only
demonstrate that Circle K unreasonably and substantially
interfered with their use and enjoyment of the Impacted
Properties, but also that Circle K breached a legal duty that
proximately caused Plaintiffs' damages. See
Restatement (Second) of Torts § 822 (noting that in
addition to the necessary elements for a nuisance claim, a
nuisance claim predicated on negligent conduct also must
include the regular elements of a negligence cause of
action); 1 State Env'l L. § 3:6 (2018)
(“Because a finding of negligence requires a
determination that a defendant's action is unreasonable,
a nuisance action founded on negligence differs little from
the usual tort action based on negligence.” (collecting
cases)); Milwaukee Metro. Sewerage Dist. v. City of
Milwaukee, 691 N.W.2d 658, 676, 681 (Wis. 2005)
(“[N]egligence-based nuisance requires proof of
causation, which may require expert testimony if falling
outside the realm of ordinary experience and
comprehension.”). Indeed, Plaintiffs recognize the
standard for a nuisance claim predicated on negligence in
their MPSJ, arguing that Circle K had a duty to prevent
conditions at the Gas Station from creating an unreasonable
risk of harm to Plaintiffs' properties, breached that
duty, as evidenced by the contamination on the Impacted
Properties, and that the petroleum contamination
“caused damages to Plaintiffs' property, as well as
monetary damages that Plaintiffs' incurred in paying the
buyer of the Impacted Properties for remediation of the
contamination.” [#64 at 8]
While
the parties' briefing on the nuisance claim focuses on
whether Circle K unreasonably and substantially interfered
with Plaintiffs' use and enjoyment of the Impacted
Properties [id. at 8-9; #67 at 11-13; #72 at 5-9],
the central problem for Plaintiffs is that regardless of
Circle K's unreasonable or substantial interference,
Plaintiffs have failed to raise a genuine issue of fact with
regard to causation and damages-elements necessary to their
nuisance claim, which is based on negligence.[6] Accordingly, as
discussed in detail below, Plaintiffs' MPSJ [#64] is
DENIED to the extent it seeks summary
judgment on liability for their nuisance claim, and
Defendant's MPSJ [#63] is GRANTED to the
extent it seeks summary judgment on Plaintiffs' nuisance
claim.
1.
Damages ...