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Sonrisa Holding, LLC v. Circle K Stores, Inc.

United States District Court, D. Colorado

June 12, 2019

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 ...


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