dana-companies-llc-v-chaffee-rentals-aka-chaffee-rentals-and-storage ( 2013 )

FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
GEORGE M. PLEWS N. REED SILLIMAN
TODD G. RELUE KAREN T. MOSES
Plews Shadley Racher & Braun Faegre Baker Daniels LLP
Indianapolis, Indiana Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
DANA COMPANIES, LLC, )
)
Appellant-Respondent, )
)
vs. ) No. 92A03-1208-CC-358
)
CHAFFEE RENTALS, a/k/a, CHAFFEE )
RENTALS AND STORAGE, BRC RUBBER )
GROUP, INC., CHARLES V. CHAFFEE, )
KAREN J. CHAFFEE and CLIFFORD ) Dec 19 2013, 7:17 am
CHAFFEE )
)
Appellee-Petitioner. )
APPEAL FROM THE WHITLEY CIRCUIT COURT
The Honorable James R. Heuer, Judge
Cause No. 92C01-0602-CC-92
December 19, 2013
MEMORANDUM DECISION - FOR PUBLICATION
PYLE, Judge
STATEMENT OF THE CASE
Dana Companies, LLC, (“Dana”) appeals their damages awarded in their lawsuit
against Chaffee Rentals, Charles V. Chaffee, Karen J. Chaffee, Clifford Chaffee, and
BRC Rubber Group, Inc., (collectively, “BRC”). On cross-appeal, BRC claims that the
trial court’s findings do not support its judgment and that Dana should not recover any
damages.
We affirm in part, reverse in part, and remand.
ISSUES
1. Whether the trial court properly determined that the fortuity principle did not
apply to Dana’s claim.
2. Whether Dana is entitled to recover any damages from BRC in light of their
negotiated settlement agreement.
3. Whether Dana is entitled to prejudgment interest.
FACTS
Dana is in the business of manufacturing and engineering parts for the automotive
industry. From 1963 through 1983, Dana occupied a plant (“the Plant”) located in
Churubusco, Indiana. As a part of their manufacturing process and general plant
operations, Dana generated hazardous waste. Thus, Dana was subject to regulations
issued by the Environmental Protection Agency (“EPA”) under the Hazardous Waste and
Consolidated Permit Regulations of the Resource Conservation and Recovery Act
(“RCRA”).1 In November 1980, Dana submitted an application to the EPA for a Part A
1
Passed on October 21, 1976, RCRA is the primary law used by the EPA to regulate the disposal of solid
and hazardous waste.
2
permit that would allow them to treat and store hazardous waste at the Plant. Dana did
not complete subsequent application requirements in a timely manner. As a result, the
EPA brought an action against Dana. The EPA and Dana entered into a consent
agreement that allowed Dana to operate as if it had acquired interim status.2 The EPA
further required Dana to comply with all permitted and interim status regulations under
RCRA. As Dana became more familiar with the requirements of compliance with
RCRA, the company believed that RCRA did not apply to its activities at the Plant. In
January of 1984, Dana notified the State of Indiana that it had ceased operations at the
Plant. In April of 1985, the State of Indiana notified Dana that it had to submit a closure
plan for the Plant. Instead, Dana sold the Plant to Chaffee Rentals in May of 1985, who
in turn, rented the property to BRC. At the time of the sale, Dana did not tell BRC that
the property was under EPA supervision.
BRC manufactures rubber seals and other rubber parts for automobiles. Shortly
after BRC began operations at the facility, the local water treatment company discovered
elevated levels of polychlorinated biphenyls (“PCBs”) that was traced back to BRC’s
facility.3 None of the manufacturing processes used by BRC included or produced PCBs.
2
[The] EPA recognized that it would be impossible for the Agency and authorized states to
issue permits to all hazardous waste management facilities before the RCRA Subtitle C
program became effective in November 1980. In RCRA § 3005(e), Congress established
provisions to treat certain facilities as though they had been issued a permit until final
administrative action was taken on their permit applications. This statutory grant of a
permit is referred to as “interim status.”
ENVTL. PROT. AGENCY, INTRODUCTION TO PERMITS AND INTERIM STATUS (2005).
3
PCBs belong to a broad family of man-made organic chemicals known as chlorinated
hydrocarbons. PCBs were domestically manufactured from 1929 until their manufacture
was banned in 1979. They have a range of toxicity and vary in consistency from thin,
3
The Indiana Department of Environmental Management (“IDEM”) conducted an
investigation. IDEM collected sediment, soil, and water samples to identify the source of
the PCBs. The results of IDEM’s testing showed elevated PCB levels at the Plant.
Dana was notified of the findings, and its investigation confirmed the findings of
IDEM. Dana also determined that the cause of the contamination was a heat transfer
fluid used between 1964 and 1972 to heat rubber injection presses. Thereafter, with
IDEM’s knowledge, Dana conducted extensive remediation activities at the Plant and
other affected areas from July 1986 to March of 1988. Having been responsible for the
PCB contamination, Dana paid all of the costs of remediation. After Dana completed its
work, IDEM prepared an agreement that would serve as a settlement of the PCB
contamination. However, the agreement was never executed by Dana or IDEM.
On September 12, 1988, IDEM sent a violation letter to BRC directing it to submit
a revised part A application or to comply with interim status requirements. BRC
responded that the violation was improperly directed at them, as Dana was the original
applicant on the Part A application. In March of 1990, the EPA issued a complaint and a
compliance order to BRC directing them to cease all hazardous waste operations, comply
with all permit application procedures, or submit an appropriate closure plan for those
areas of the plant treating hazardous waste. In turn, BRC filed a lawsuit against Dana in
light-colored liquids to yellow or black waxy solids. Due to their non-flammability,
chemical stability, high boiling point, and electrical insulating properties, PCBs were
used in hundreds of industrial and commercial applications including electrical, heat
transfer, and hydraulic equipment; as plasticizers in paints, plastics, and rubber products;
in pigments, dyes, and carbonless copy paper; and many other industrial applications.
Polychlorinated Biphenyls (PCBs), http://www.epa.gov/epawaste/hazard/tsd/pcbs/pubs/about.htm (last
visited October 23, 2013).
4
October of 1991, seeking indemnity from the EPA action and possible sanctions. As a
part of the EPA investigation, a visual site inspection (“VSI”) began on May 6, 1992.
Before the inspection was completed, Dana and BRC entered into a settlement agreement
resolving BRC’s lawsuit and the EPA administrative actions. The agreement, in relevant
part, provided:
AGREEMENT
In exchange for good and valuable consideration recited herein, the
receipt of which is acknowledged, it is hereby agreed:
1. Dana indemnifies BRC Parties from all liability, incurred after the
date of this agreement, that they may suffer as a result of judgments or
settlements against them in the administrative or civil actions identified
above and in any subsequent administrative, civil or criminal action
brought against BRC Parties arising out of or relating solely to Dana’s
alleged treatment, storage or disposal of hazardous waste or hazardous
substances at the Plant. Such indemnity shall include, without limitation,
indemnity from penalties, closure, corrective action, disposal and cleanup
activities, and shall continue in full force and effect until June 1, 2007.
2. BRC Parties agree to notify Dana in writing, by certified mail,
return receipt requested, at its address as stated in this Agreement, within
20 days of receipt of an action specified in paragraph 1 giving rise to an
indemnity claim. BRC Parties agree to allow Dana full control over the
defense, including without limitation the compromise or settlement of any
matter in which BRC Parties may claim as covered by this Agreement.
Dana agrees to keep BRC Parties fully informed about the defense,
including but not limited to compromise and settlement.
3. Dana agrees to assume BRC Parties’ defense in the pending EPA
administrative proceeding, In the Matters of Dana Corporation-Victor
Products and BRC Rubber Group, Docket Nos. V-W-90-R-14 and V-W-
90-R-15 on the date of execution of this Agreement. For this pending claim
and for any subsequent claim on which BRC Parties seeks indemnification,
Dana shall have the right to defend BRC and to select counsel of its choice.
Except for the pending EPA administrative proceeding specified above,
Dana shall not have the obligation to defend BRC Parties on any claims in
which the scope of indemnification is in dispute. BRC Parties agree to
5
waive any conflict of interest which such counsel may have in accepting
such representation, or to which such counsel may later become subject to
by said representation.
4. BRC Parties shall hold Dana harmless for, and the extent of
Dana’s indemnification under this Agreement shall not extend to, any
claims for violations, fines, pollution, remediation work, contaminations,
natural resource damage, personal injury or property damage arising out of
acts, conduct or omissions at the Plant since May 21, 1985, unless such
claims arise out of Dana’s alleged treatment, storage, or disposal of
hazardous waste or hazardous substances activities at the Plant.
****
8. Dana and BRC Parties and their attorneys shall keep strictly
confidential the existence and terms of this Agreement and shall not
disclose the existence or terms of this Agreement, unless expressly required
by law or required to fully enforce this Agreement. In addition, BRC
parties may disclose the existence and terms of this Agreement to
prospective purchasers of the Plant upon 48 hours advance notice to Dana
and after execution by the prospective purchaser of a confidentiality
agreement prohibiting the disclosure of the existence or terms of this
Agreement.
(Ex. Index, Vol. III, Ex. 5). Dana and BRC executed the settlement agreement in early
August 1992. The EPA concluded its VSI and issued its report in October of 1992. The
report identified twenty-nine (29) solid waste management units (“SWMU”) and six
areas of concern (“AOC”) which the EPA recommended for further investigation and
possible remediation.
On June 22, 1994, the administrative law judge (“ALJ”) in the original action
brought by the EPA against Dana and BRC issued a ruling on Dana’s and BRC’s motions
for summary judgment and the EPA’s motion for an accelerated decision against Dana
and BRC. As to BRC, the ALJ found that BRC had no knowledge of the Plant’s interim
status at the time it acquired the Plant and that “BRC has not conducted any operations at
6
the facility in violation of RCRA.” (Ex. Index, Vol III, Ex. 7). As to Dana, the ALJ
found Dana liable for violation of the applicable statutes and regulations. However, the
civil penalty that Dana was required to pay was disputed and was not resolved under the
accelerated decision.
In August of 1996, BRC contacted Dana and requested that Dana investigate the
areas that the EPA recommended for further action in the VSI. Dana replied that while it
intended to “abide by the terms of the Settlement Agreement . . . ,” Dana had no
obligation to indemnify BRC unless an administrative action was brought against it. (Ex.
Index, Vol III, Ex. 13). As a result, BRC decided to apply to IDEM’s voluntary
remediation program (“VRP”).4 BRC invited Dana to participate as well; Dana refused,
stating it did not believe participation in the program would reduce the possibility of
subsequent action by IDEM. IDEM accepted BRC into the remediation program.
During the preliminary stages of the VRP, IDEM project manager Andrea Robertson
Habeck (“Habeck”) learned from a contact at BRC that an agreement existed requiring
Dana to indemnify BRC if an enforcement action arose.5 BRC hired a firm to take
samples at the plant and develop an analysis plan. The cost to BRC was over $65,000.
BRC failed to meet the additional requirements of the VRP and was withdrawn by IDEM
in July of 1999.
4
The Voluntary Remediation Program was created by statute “to provide an alternative procedure to
assure compliance with the law and to encourage the voluntary remediation of hazardous substances and
petroleum.” Ind. Code § 13-25-5-1.
5
At trial, Habeck testified that either Mr. Chaffee (not clarifying if it was Charles or Clifford Chaffee),
Tom Maher, or Marty Gaughan, both employees of BRC, informed her of the existence of the agreement.
7
In April of 2000, IDEM issued a Notice of Violation (“NOV”) to BRC because of
the level of PCB contamination at the site and the fact that BRC did not comply with the
requirements of the VRP. Pursuant to the negotiated settlement agreement, BRC sought
indemnification and submitted the NOV to Dana. Dana took over the resolution of the
NOV and negotiated an agreement with IDEM. The Agreed Order required further
investigation and, if necessary, remediation of the same areas identified by the EPA’s
1992 VSI. The Agreed Order was signed by representatives of Dana and BRC; it was
approved by IDEM on March 24, 2003. Dana retained RMT Inc. (“RMT”) to perform
the work required by the Agreed Order. Dana spent a total of $640,579.30 in performing
the required work. Dana instructed RMT to allocate the costs of the work between Dana
and BRC. Where PCB contamination was found, RMT allocated all of the costs to Dana.
Where no contamination was found and both BRC and Dana used a particular area, the
allocations of costs were equally split between the two. RMT allocated the cost of
remediating the trash burning area and the underground storage tanks entirely to BRC.
Dana claimed that it never used the trash burning area in its operations. It further claimed
that the cost associated with the storage tanks should have been allocated to BRC because
it assumed the ownership of the tanks when purchasing the property.
Dana finished the remediation work in 2005 and, on March 16, 2005, submitted a
letter to BRC demanding reimbursement for a portion of the costs incurred. BRC did not
pay any of the fees Dana demanded, claiming that the Settlement Agreement required
Dana to indemnify BRC for the costs. In February 2006, Dana filed a complaint against
BRC for breach of the Settlement Agreement. Dana filed an amended complaint in April
8
of 2009 adding claims under the Environmental Legal Act (Ind. Code § 13-30-9-1) and
for unjust enrichment. Dana filed a second amended complaint in October of 2010,
modifying the amount of damages sought from $189,000 to $1,016,286.91.
The case was heard by bench trial on February 9, 10, and 11, 2011. Considering
the facts and evidence submitted, the trial court made the following Conclusions of Law:
1. In August 1992, Dana and BRC executed a Settlement Agreement (“the
Agreement”) to resolve any disputes between them regarding the
liability and damages associated with the EPA actions and BRC’s
purchase of the property on April 8, 1985. The Agreement is the sole
basis for a recovery by Dana against BRC. The other theories
propounded by Dana are inapplicable.
2. In the Agreement, Dana undertook an indemnity obligation in Section 1
for “subsequent administrative, civil[,] or criminal action.”
3. Dana’s failure to obtain a closure letter terminating RCRA oversight
and its release of hazardous materials at the plant caused the application
of Paragraph 1 of the Agreement to be effective.
4. BRC was fully aware that withdrawal from the VRP program would
create a red flag causing corrective action and remediation activity to be
required by IDEM.
5. While withdrawal from the VRP was a prudent business decision by
BRC to accelerate the resolution of environmental issues affecting the
plant, the decision also caused the application of Paragraph 4 of the
Agreement to become effective to the extent that any remediation
activity required by IDEM resulted from BRC’s conduct subsequent to
May 21, 1985, would be BRC’s responsibility.
6. The allocation of 100% to BRC of the costs associated with SWMU 4 is
reasonable and correct. As to SWMU 2, SWMU 14, SWMU 26,
SWMU 27, AOC “C”, AOC “E”, and AOC “F”[,] the activities of the
parties before and after May 21, 1985 are intertwined to the extent that a
50% allocation to BRC is reasonable and correct.
9
7. Based upon these allocations, Dana is entitled to recover from BRC
$73,294.69 for investigation and remediation work performed at the
plant.
8. In the terms of the indemnification provisions of the Agreement, the
Court sees no distinction between the cost for investigation and
remediation and the cost for administration incurred by Dana in
connection with the NOV. $73,294.69 represents 17.73% of the total
sum expended by Dana for investigation and remediation. Therefore,
Dana is entitled to recover 17.73% of the administrative cost from BRC
or $40,291.78.
9. Pursuant to Paragraph 4 of the Agreement, Dana is entitled to
indemnification in the total sum of $113,586.47.
10. Dana made a demand for payment (of a greater sum) on March 16,
2005, nearly seven years ago. To date, BRC has maintained that
nothing is owed to Dana. An award of prejudgment interest at 8.0% is
appropriate. However, the period may not exceed 48 months.
11. Prejudgment interest is computed as follows:
a. Year one: $9,086.92
b. Year two: $9,813.87
c. Year three: $10,598.98
d. Year four: $11,466.90
Total: $40,946.67
12. There shall be no award of attorney fees.
(App. 41).
On February 29, 2012, BRC filed a motion to correct error alleging that the trial
court’s conclusions were not supported by its factual findings. The court denied BRC’s
10
motion but decided, sua sponte, that the award of prejudgment interest was in error. The
trial court removed the added prejudgment interest from the award of damages.
DECISION
Dana and BRC, through its cross-appeal, essentially claim that the trial court’s
judgment is not supported by its findings. Specifically, Dana claims that the findings do
not support the judgment because: (1) BRC breached the settlement agreement; (2) the
trial court misinterpreted the settlement agreement; and (3) BRC’s indemnification claim
was not fortuitous. Dana also claims that the trial court erred in not awarding
prejudgment interest.
BRC, on the other hand, argues that because the trial court found that Dana was
responsible for the PCB contamination and failed to properly close the area as required
by RCRA, the trial court cannot also find BRC responsible for any of the remediation
work done by Dana. BRC claims that in apportioning liability to them, the trial court
expanded the terms of the settlement agreement.
The trial court entered findings of fact and conclusions of law. The record shows
that while there was a discussion between the court and parties regarding the submission
of materials prior to its ruling, neither party made a written request for findings of fact or
conclusions thereon. Accordingly, our standard of review is as follows:
Where the trial court enters specific findings sua sponte . . . the specific
findings control our review and the judgment only as to the issues those
specific findings cover. Where there are no specific findings, a general
judgment standard applies and we may affirm on any legal theory
supported by the evidence adduced at trial.
Argonaut Ins. Co. v. Jones, 953 N.E.2d 608, 614 (Ind. Ct. App. 2011), trans. denied.
11
We apply the following two-tier standard of review to sua sponte findings
and conclusions: whether the evidence supports the findings, and whether
the findings support the judgment. Findings and conclusions will be set
aside only if they are clearly erroneous, that is, when the record contains no
facts or inferences supporting them. A judgment is clearly erroneous when
a review of the record leaves us with a firm conviction that a mistake has
been made. We consider only the evidence favorable to the judgment and
all reasonable inferences flowing therefrom, and we will neither reweigh
the evidence nor assess witness credibility.
Barkwill v. Cornelia H. Barkwill Revocable Trust, 902 N.E.2d 836, 839 (Ind. Ct. App.
2009) (internal citations and quotation marks omitted), trans. denied. “[W]hile we defer
substantially to findings of fact, we do not do so to conclusions of law.” McCauley v.
Harris, 928 N.E.2d 309, 313 (Ind. Ct. App. 2010) (internal citation omitted), trans.
denied. “We evaluate questions of law de novo and owe no deference to a trial court’s
determination of such questions.” Id.A. Fortuity
Dana argues that the trial court erred by concluding that the doctrine of fortuity did
not apply to its claim. Specifically, Dana claims that BRC, rather than an unexpected,
unintended action or event, caused IDEM to issue its NOV, which triggered the
settlement agreement’s indemnity clause. We agree with the trial court; fortuity is not
applicable in this case.
In relying on the doctrine of fortuity, Dana attempts to use the terms “insurance”
and “indemnity” interchangeably. Indiana courts have generally defined “insurance” as a
contract of indemnity. City of Gary v. Allstate Ins. Co., 612 N.E.2d 115 (Ind. 1993);
12
Motorists Mut. Ins. Co. v. Morris, 654 N.E.2d 861 (Ind. Ct. App. 1995). Indiana Code §
27-1-2-3(a) defines “insurance” as:
a contract of insurance or an agreement by which one party, for
consideration, promises to pay money or its equivalent to do an act valuable
to the insured upon the destruction, loss or injury of something in which the
other party has a pecuniary interest, or in consideration of a price paid,
adequate to the risk, becomes security to the other against loss by certain
specified risks; to grant indemnity or security against loss for a
consideration.
“Implicit in the concept of insurance is that the loss occur as a result of an event that is
fortuitous, rather than planned, intended, or anticipated.” General Housewares Corp. v.
National Surety Corp., 741 N.E.2d 408, 414-15 (Ind. Ct. App. 2000) (quoting 7 LEE R.
RUSS AND THOMAS F. SEGALLA, COUCH ON INSURANCE, § 102:7 at 17 (3d ed. 1997)).
However, under the facts of this case, “indemnity” is appropriately defined as follows:
Indemnity in its most basic sense means reimbursement and may lie when
one party discharges a liability which another rightfully should have
assumed, and it is based on the principle that everyone is responsible for his
or her own wrongdoing, and if another person has been compelled to pay a
judgment which ought to have been paid by the wrongdoer, then the loss
should be shifted to the party whose negligence or tortious act caused the
loss.
41 Am.Jur.2d Indemnity § 1 (2013).
Though insurance is generally defined as a contract of indemnity, the facts of this
case show that every contract which contains an indemnity clause is not a contract of
insurance. BRC did not seek to “insure” its business activities through Dana. Instead,
Dana failed to notify BRC that the Plant was under EPA supervision. Once the EPA
cited BRC for violations which it was not responsible for, BRC sued Dana. Simply
stated, the settlement agreement was born out of BRC’s desire to seek reimbursement or
13
to properly assign the cleanup costs to Dana for its use of PCBs and its subsequent
omissions in complying with RCRA. BRC did not offer valuable consideration to Dana
in exchange for payment for a future loss. Indemnity in this context is more geared
toward the appropriate parties taking responsibility for the costs associated with conduct
that has already occurred. Accordingly, the trial court properly concluded that the
principle of fortuity did not apply.
B. Breach of Contract & Damages
Dana argues that the trial court erred by not awarding it the full amount of
damages it sought. Specifically, Dana claims that because BRC disclosed the existence
of the settlement agreement, presented a deceptive claim for indemnity, and refused to
honor its “hold harmless” obligations under the settlement agreement, the trial court
should have awarded the requested amount. In turn, BRC argues that Dana presented no
evidence that any of its actions caused damage to Dana.
The measure of damages in a breach of contract case is the loss actually suffered
by the breach. Sammons Communications of Indiana, Inc. v. Larco Cable Const., 691
N.E.2d 496, 498 (Ind. Ct. App. 1998), trans. denied. To recover under a breach of
contract claim, Dana must show that its damages flowed directly and naturally from the
breach. Id. Although no particular degree of certainty is required in awarding damages,
the award must be within the scope of the evidence. Id. Damages may not be awarded
on guess or speculation, but must be ascertainable with reasonable certainty. Ind. &
Mich. Elec. V. Terre Haute Indus., 507 N.E.2d 588, 601 (Ind. Ct. App. 1987), trans.
denied.
14
Regarding the breach of the confidentiality clause of the settlement agreement,
Dana presented evidence of a possible breach but failed to show how any of the money
spent on the remediation at the plant was a direct result of disclosing the existence of the
settlement agreement. Mike Sickles from IDEM testified that the NOV was issued in
response to the level of PCB contamination at the site and BRC’s withdrawal from the
VRP. Thus, it appears from the record that knowledge of the settlement agreement
played no role in IDEM issuing the NOV.
As to the rest of its claims, Dana relies on the case of Fowler v. Campbell, 612
N.E.2d 596 (Ind. Ct. App. 1993) to support its claim of full damages sought because
BRC’s actions were a substantial cause of the breach of the settlement agreement.
In Fowler, the Campbells hired Fowler to build a custom house, including a septic
system. Before entering into a contract with Fowler, the Campbells consulted with their
homeowner’s association and the local department of health to ensure the septic system
complied with association and department standards. Once both entities approved the
plans, a contract was executed providing that Fowler would build the house, including the
septic system, according to the approved plans. After the Campbells moved in, their
septic system failed three times, with sewage backing up in their home. Each time
Fowler performed repairs, he found debris in the septic system. Fowler told the
Campbells that this debris prevented the septic system from functioning properly. During
the third repair, Fowler installed a new septic tank and warning light on the system. It
was then that the Campbells discovered that the septic system was not installed according
to their contract. Fowler fixed the septic system and sewage no longer backed up in the
15
Campbell’s home, though sewage water continued to leak into the Campbell’s driveway,
yard, and lake behind their house. The Campbells sued Fowler for breach of contract.
After a bench trial, the trial court entered judgment for the Campbells.
On appeal, Fowler claimed that the Campbell’s misuse of the septic system, and
not his failure to install it according to plan, caused the damages. In affirming the trial
court’s judgment, we stated that where there are multiple causes of injury arising from a
breach of contract, Indiana follows the common law test of causation in contract actions;
that is, we decide if a breach was a substantial factor in bringing about the harm, not
whether other causes may have contributed. Fowler, 612 N.E.2d at 602.
Here, while BRC’s entry into the VRP may have contributed to bringing any
remaining contamination at the Plant to IDEM’s attention, the evidence shows that it was
the high levels of PCB and Dana’s failure to fully comply with RCRA that were the
substantial causes of IDEM issuing the NOV and the subsequent remediation costs.
Accordingly, Dana’s reliance on Fowler is misplaced.
C. The Settlement Agreement
Dana claims that the trial court erred in its allocation of damages by not properly
interpreting the settlement agreement. Specifically, Dana claims that the trial court
incorrectly interpreted the word “solely” in concluding that Dana’s indemnity obligations
had been triggered. In its cross appeal, BRC argues that it is not liable for any of the
costs because the settlement agreement, which the trial court has concluded is the sole
basis for recovery, provides no basis for the allocation of costs based on whether either
BRC or Dana used an area of the plant.
16
We observe first that our courts strongly favor settlement agreements in
resolving disputes and controversies. This is because settlements allow our
courts to operate more efficiently and equally important, allow the parties
to fashion the outcome of their disputes through mutual agreement.
Interpreting and construing contract provisions is a task often undertaken
by our courts. When reviewing a trial court’s ruling in that regard, our task
is essentially the same as that employed by the trial court. We assign words
and phrases employed in a contract their plain and ordinary meaning, unless
we conclude the terms are ambiguous. Where the terms of a contract are
clear and unambiguous, the terms are conclusive and we will not construe
the contract or look at extrinsic evidence but will merely apply the
contractual provisions. The terms of a contract are not ambiguous merely
because controversy exists between the parties concerning the proper
interpretation.
Travelers Indem. Co. v. P.R. Mallory & Co., 772 N.E.2d 479, 485 (Ind. Ct. App. 2002)
(internal citations and quotations omitted).
Here, the trial court determined in its conclusions of law that the settlement
agreement was the only basis for recovery. Yet, the trial court concluded that splitting
the allocation of costs between the parties was reasonable because Dana and BRC used
certain areas of the plant during the time period in question. This conclusion would be
appropriate if the settlement agreement was ambiguous as to which party was responsible
for costs in the event a claim was brought. However, the terms of the settlement
agreement, particularly the indemnity and hold harmless clauses, are clear and
unambiguous as to these issues. Per our standard of review, we must simply apply the
contract to the facts at hand.
The scope of Dana’s indemnity to BRC if a claim arises is clearly stated: “Such
indemnity shall include, without limitation, indemnity from penalties, closure, corrective
action, disposal and clean-up activities, and shall continue in full force and effect until
17
June 1, 2007.” (Ex. Index, Vol. III, Ex. 5). The only thing limiting Dana’s
indemnification was the hold harmless clause in paragraph 4 of the settlement agreement.
BRC was to hold Dana harmless:
for violations, fines, pollution, remediation work, contamination, natural
resource damage, personal injury or property damage arising out of acts,
conduct or omissions at the Plant since May 21, 1985, unless such claims
arise out of Dana’s alleged treatment, storage or disposal of hazardous
waste or hazardous substances activities at the Plant.
(Ex. Index, Vol. III, Ex. 5). Of all the areas investigated and remediated, SWMU 4, the
trash burning area, was the only area of the plant used solely by BRC; Dana never used
this area during the time it operated the plant. Confining recovery of damages to the
settlement agreement, and effecting the intent of the parties as stated therein, BRC should
hold Dana harmless for these costs. We find that the trial court erred by not confining its
allocation of costs to the four corners of the settlement agreement. Accordingly, we
affirm the trial court’s award of damages to Dana, but reverse the amount awarded.6
Dana is entitled to damages of $3,608.87 in investigative costs and administrative costs
of $1,818.01, for a total damage award of $5,426.88.
D. Prejudgment Interest
6
In the alternative, Dana claimed that it was entitled to reimbursement for the costs of removing
underground storage tanks as a matter of law. Dana relies on sections of the Indiana Fire Code and
Petroleum Facility Statute in making this claim. However, as we found with Dana’s claim of lack of
fortuity, and as the trial court stated in its conclusions of law, the settlement agreement is binding and is
the sole basis for recovery in this case.
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Dana claims that the trial court erred in not awarding prejudgment interest to
damages. BRC contends that the damages were not easily ascertainable, thus preventing
the award of prejudgment interest.
We review a decision regarding the award of prejudgment interest for an abuse of
discretion. Bopp v. Brames, 713 N.E.2d 866 (Ind. Ct. App. 1999), trans. denied. “An
award of prejudgment interest rests on a factual determination and this Court may only
consider the evidence most favorable to the appellee.” Board of Sch. Trustees of Baugo
Community Schools v. Indiana Ed. Employment Relations Bd., 412 N.E.2d 807, 812 (Ind.
Ct. App. 1980).
Prejudgment interest is appropriate in a breach of contract action when “the
amount of the claim rests upon a simple calculation and the terms of the contract make
such a claim ascertainable.” Kummerer v. Marshall, 971 N.E.2d 198, 201 (Ind. Ct. App.
2012) (quoting Olcott Int’l & Co. v. Mirco Data Base Sys., Inc., 793 N.E.2d 1063, 1078
(Ind. Ct. App. 2003), trans. denied), trans. denied. The award of prejudgment interest is
considered proper when the trier of fact does not have to exercise judgment in order to
assess the amount of damages. Town of New Ross v. Ferretti, 815 N.E.2d 162, 170 (Ind.
Ct .App. 2004) (citing Noble Roman’s, Inc. v. Ward, 760 N.E.2d 1132, 1140 (Ind. Ct.
App. 2002)). Examples of such cases where prejudgment interest is appropriate include
those for breach of contract when the damages were principal payments made under a
promissory note, Tracy v. Morell, 948 N.E.2d 855, 867 (Ind. Ct. App. 2011), the amount
of a mechanics' lien for a contractor’s unpaid bills for a remodeling project, Hayes v.
Chapman, 894 N.E.2d 1047, 1054–55 (Ind.Ct.App.2008), trans. denied, and an amount
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stipulated to at a damages hearing, Noble Roman’s, Inc., 760 N.E.2d at 1140. In all of
these cases, the amount of damages was clear and did not require any interpretation or
judgment on the part of the trier of fact.
Here, where the trial court’s allocation of liability was split between the parties
based upon whether RMT’s method was reasonable, prejudgment interest would
normally not be appropriate. However, allocating costs according to the terms of the
settlement agreement, BRC was to hold Dana harmless for conduct at the plant after May
12, 1985. Thus, BRC would be responsible for the cost of investigating and remediating
the trash burning area. This amount was readily ascertainable at $5,426.88. “Once it
appears that damages can be ascertained with reasonable precision, an award of
prejudgment interest is mandatory.” Hayes v. Chapman, 894 N.E.2d 1047, 1054-55.
(Ind. Ct. App. 2008), trans. denied. Per Ind. Code § 24-4.6-1-103, an interest rate of
eight percent (8%) per year for forty-eight (48) months is allowed on the damages for a
prejudgment interest award of $1,956.32.
Accordingly, we affirm the trial court’s judgment in favor of Dana, but reverse
and remand with instructions to award damages and prejudgment interest consistent with
this opinion.
Affirmed in part, reversed in part, and remanded.
KIRSCH, J., and VAIDIK, J., concur.
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