Attorney General v. Polyone Corp ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
ATTORNEY GENERAL and DEPARTMENT OF UNPUBLISHED
ENVIRONMENTAL QUALITY, May 31, 2018
Plaintiffs-Appellants,
v No. 339754
Ingham Circuit Court
POLYONE CORPORATION, successor to M. A. LC No. 94-077813-CE
HANNA COMPANY,
Defendant-Appellee.
Before: MURRAY, C.J., and SERVITTO and BOONSTRA, JJ.
PER CURIAM.
Plaintiffs, Attorney General and the Department of Environmental Quality (MDEQ),
appeal as of right an opinion and order granting defendant summary disposition under MCR
2.116(C)(10) (no genuine issue of material fact). They also challenge an opinion and order
granting defendant PolyOne Corporation’s request to be reimbursed for the costs of operating a
disputed water treatment system. We affirm.
I. FACTS
This case concerns an upwelling of acidic water from the Dober Mine Complex in Iron
County, which was the subject of a 1998 consent decree between plaintiffs and M. A. Hanna
Company, to whom defendant is the successor in interest. Among other things, the consent
decree required M. A. Hanna and its successors to renew an NPDES1 permit and operate an
existing remedial water treatment system at the mine. The decree provided that, after defendant
had completed the decree’s requirements and had been issued “a final NPDES Permit,”
defendant would submit a notice of completion to the MDEQ, which would decide whether
defendant had completed the decree’s requirements. If the MDEQ determined that defendant
1
NPDES stands for “National Pollutant Discharge Elimination System,” a type of permit issued
through the MDEQ as part of a state-administered program under the Federal Water Pollution
Control Act. Mich Farm Bureau v Dep’t of Environmental Quality, 292 Mich. App. 106, 108-
109; 807 NW2d 866 (2011).
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had done so, it would issue a Certificate of Completion. The Certificate of Completion would
end defendant’s obligations under the consent decree.
On July 16, 2012, defendant sent the MDEQ a Notification of Completion and a draft
final report. Ultimately, on December 6, 2012, the MDEQ issued defendant a Certificate of
Completion. In its letter, the MDEQ stated that defendant would still be required to operate and
maintain the NPDES permit and maintain the water treatment system at the Dober Mine
Complex. This created a dispute between the parties regarding whether defendant had an
obligation independent of the consent decree to do so.
On May 14, 2013, the MDEQ sent defendant a letter revoking the Certificate of
Completion. Defendant responded by filing a petition for declaratory relief with the circuit
court, asking the court to determine that defendant had no independent obligations to operate and
maintain the water treatment system and that plaintiffs could not revoke the completion
certificate. The circuit court ultimately agreed with defendant and ordered plaintiffs to pay
defendant the costs of operating the system after December 2012, pursuant to stipulations
between the parties.
II. CONTINUING OBLIGATIONS
Plaintiffs argue that the lower court erred by determining that the consent decree did not
require defendant to continue operating the existing water remediation system after the MDEQ
issued the Certificate of Completion. We conclude that plaintiffs’ position is without merit
because the consent decree did not provide for ongoing maintenance obligations.
This Court reviews de novo the trial court’s decision on a motion for summary
disposition. Maiden v Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999). A party is entitled
to summary disposition under MCR 2.116(C)(10) if “there is no genuine issue as to any material
fact, and the moving party is entitled to judgment . . . as a matter of law.” A genuine issue of
material fact exists if, when viewing the record in the light most favorable to the nonmoving
party, reasonable minds could differ on the issue. Gorman v American Honda Motor Co, Inc,
302 Mich. App. 113, 116; 839 NW2d 223 (2013).
This Court interprets judgments entered by agreement of the parties in the same manner
as contracts. Gramer v Gramer, 207 Mich. App. 123, 125; 523 NW2d 861 (1994). This Court
reviews de novo the proper interpretation of an unambiguous contract. Klapp v United Ins
Group Agency, Inc, 468 Mich. 459, 463; 663 NW2d 447 (2003). This Court also reviews de
novo the legal effects of contractual clauses. Quality Prods & Concepts Co v Nagel Precision,
Inc, 469 Mich. 362, 369; 666 NW2d 251 (2003).
The goal of contractual interpretation is to honor the parties’ intent and to enforce the
contract’s plain terms. Davis v LaFontaine Motors, Inc, 271 Mich. App. 68, 73; 719 NW2d 890
(2006). This Court discerns the parties’ intent from the contract’s language. Id. If no reasonable
person could dispute the meaning of the contract’s plain language, this Court must enforce that
language as written. Rory v Continental Ins Co, 473 Mich. 457, 468; 703 NW2d 23 (2005). We
construe contractual terms in context, according to their commonly used meanings. Henderson v
State Farm Fire & Cas Co, 460 Mich. 348, 354; 596 NW2d 190 (1999). We must interpret a
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contract in a way that gives every word, phrase, and clause meaning, and must avoid
interpretations that render parts of the contract surplusage. Klapp, 468 Mich. at 468.
In this case, § XXVI of the consent decree states: “Upon issuance of the Certificate of
Completion of Response Activities Performed Pursuant to this Decree, the Defendant’s
obligations as set forth in this Decree shall terminate, except as otherwise provided herein.”
Accordingly, unless an ongoing obligation is provided in the decree, defendant’s obligations end
when a Certificate of Completion is issued.
Plaintiffs rely on ¶ 4.4 (defining “Existing Remedial System”) and ¶ 4.8 (defining
“Operation and Maintenance Activities” or “O & M Activities”) of the decree to argue that the
consent decree provided an ongoing obligation to operate and maintain the existing remedial
system. Plaintiffs’ argument is not persuasive because these paragraphs are in the “definitions”
section of the consent decree. Because these paragraphs are only definitions, not terms and
conditions of the consent decree, they cannot constitute other obligations. Similarly, while § 3 of
the consent decree states that a general goal of the consent decree is “to operate and maintain the
Existing Remedial System,” this general statement of goals is not in the area of the decree that
defines the parties’ obligations.
Regarding operation and maintenance, the decree provided that defendant had an
obligation to “implement[] . . . the O&M Activities and sampling required by the current NPDES
Permit.” (Emphasis added.) However, the then-current permit ended at some point before
PolyOne renewed the permit on October 1, 2005.2 Because this provision was specifically
limited to the “current” permit, it would not require defendant to engage in operation and
maintenance activities past the expiration of that permit. Nowhere else does the decree mention
any obligations for ongoing operation and maintenance.
Also contrary to plaintiffs’ position, the consent decree contemplates that plaintiffs may
bring future actions against defendant regarding “response activities related to the facility” after
issuing a Certificate of Completion. The decree provides:
Plaintiffs’ Post-Certification of Completion Reservations: Notwithstanding any
other provision of this Decree except as provided in Paragraph 21.1(e), the
Plaintiffs reserve, and this Decree is without prejudice to, the right to institute
proceedings in this action or in a new action, or to issue an administrative order
seeking to compel Defendant (1) to perform further response activities relating to
2
Plaintiffs argue that defendant’s actions in consistently renewing the NPDES permit and
engaging in continued maintenance and operation of the facility provided evidence that the
parties intended defendant’s obligation to extend beyond the current NPDES permit. Extrinsic
evidence may help the finder of fact determine the meaning of a contract. Klapp, 468 Mich. at
471 n 13. However, extrinsic evidence of the parties’ intent is only relevant when attempting to
determine the meaning of an ambiguous contract. Id. at 470. The consent decree in this case is
not ambiguous. We will not look beyond the plain language of the consent decree to determine
its meaning.
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the Facility or (2) to reimburse the State of Michigan for additional costs of
response if, subsequent to Certificate of Completion of the response activity:
(a) Conditions at the Facility, previously unknown to the MDEQ, are
discovered; or
(b) Information is received, in whole or in part, and these previously
unknown conditions or this information together with other relevant information
indicate that the remedial action is not protective of the public health, safety and
welfare, or the environment. [Emphasis added.]
The consent decree expressly contemplates that further response activities may be required after
the decree ends. This phrase would be surplusage if we accepted plaintiffs’ assertion that the
consent decree obligated defendant to perform ongoing maintenance operations until they were
no longer required. We decline to interpret the decree in such a fashion.
Further, the circuit court’s interpretation is consistent with the use of the indefinite article
“a” in ¶ 25.1 when referring to when plaintiffs could issue a Certificate of Completion. The
consent decree provides: “Within sixty (60) days after Defendant is issued a final NPDES
Permit, Defendant shall submit to the MDEQ a Notification of Completion . . . .” (Emphasis
added.) Because the consent decree refers to “a” final NPDES permit, it does not refer to a
singular and specific permit. The circuit court’s interpretation was consistent with this paragraph
because the use of the indefinite article indicates that any of several NPDES permits may be final
for the purposes of the decree.
We conclude that the circuit court properly determined that defendant did not have an
obligation of ongoing maintenance and operation after the termination of the consent decree.
Reading the decree as a whole, defendant’s obligations to perform ongoing maintenance
activities — beyond those required by the NPDES permit that was current in 1999 — terminated
when plaintiffs issued a Certificate of Completion.
III. REVOCATION
Plaintiffs argue that the circuit court erred when it determined that they could not revoke
the Certificate of Completion because an agency has inherent authority to correct a decision that
was based on mistaken information. Plaintiffs assert that they validly revoked the certificate
because the decision was based on a mistake about who owned the Dober Mine Complex.
Because the mistake was not material to whether defendant was entitled to a completion
certificate, we disagree.
This Court reviews de novo the scope of an administrative agency’s statutory authority.
Mich Farm Bureau v Dep’t of Environmental Quality, 292 Mich. App. 106, 127; 807 NW2d 866
(2011). An agency acting in the public interest has both the duty and the right to correct its own
errors. Walter Toebe & Co v Dep’t of State Highways, 144 Mich. App. 21, 34; 373 NW2d 233
(1985).
Presuming that plaintiffs operated under a mistaken belief that defendant owned the
Dober Mine Complex, this mistake would not entitle plaintiffs to relief in this case because
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plaintiffs cannot show that the initial decision to issue the Certificate of Completion was
erroneous. The consent decree provides as follows regarding issuance of a Certificate of
Completion:
Within sixty (60) days after receipt of the Notification of Completion, the
MDEQ will review the Notification of Completion and will determine whether
Defendant has completed satisfactorily all requirements of this Decree. Within
the sixty (60) day period after receipt of the Notification of Completion, MDEQ
will notify Defendant of its determination as to whether or not Defendant has
satisfied all requirements of the Decree. If MDEQ has determined that Defendant
has satisfied all requirements of the Decree, it shall issue a Certification of
Completion of Response Activities Performed Pursuant to this Decree within the
sixty (60) day period. If MDEQ has determined that Defendant has not satisfied
all requirements of the Decree, the letter so advising Defendant shall specify those
requirements which Defendant has not satisfied. [Emphasis added.]
The term “shall” is mandatory. Walters v Nadell, 481 Mich. 377, 383; 751 NW2d 431
(2008). Thus, this paragraph required the MDEQ to issue a Certificate of Completion if
defendant had completed the requirements of the consent decree. Nothing in this paragraph, or
the remainder of the consent decree, requires defendant to continue to own the Dober Mine
Complex. Because the term “shall” in ¶ 25.2 is mandatory, plaintiffs did not have discretion to
deny defendant a Certificate of Completion if defendant met the requirements of the consent
decree, and those requirements do not include ownership. As previously discussed, ongoing
operation and maintenance is also not a requirement of the parties’ consent decree. Accordingly,
we conclude that plaintiffs have not shown that their mistake regarding the owner of the mine led
to an erroneous initial decision. While the circuit court did not explicitly address an agency’s
inherent authority to correct an error, the court did not err by determining that plaintiffs could not
revoke the Certificate of Completion.
IV. COSTS AS DAMAGES
Plaintiffs argue that the circuit court erred by failing to grant them summary disposition
on defendant’s claim for damages on the basis of governmental immunity. Plaintiffs’ argument
is without merit because this case concerns an action arising from a contract and governmental
immunity applies only to tort-based claims.
This Court reviews de novo questions concerning the applicability of governmental
immunity. Moraccini v Sterling Hts, 296 Mich. App. 387, 391; 822 NW2d 799 (2012).
Generally, governmental entities are immune from tort liability. Koenig v South Haven, 460
Mich. 667, 675; 597 NW2d 99 (1999). “However, governmental immunity does not extend to
contract actions, even when the contract action arises out of the same facts that would support a
tort action.” Id. A tort action arises from an action concerning a contractual obligation only if
the obligation violates “a legal duty separate and distinct from the contractual obligation.” Fultz
v Union-Commerce Assoc, 470 Mich. 460, 467; 683 NW2d 587 (2004) (quotation marks and
citation omitted).
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Plaintiffs argue that defendant’s claim used language similar to language used for a tort
action. However, the question is not what language defendant used, but whether this case arose
from a separate and distinct legal duty outside the consent decree. In this case, defendant alleged
that plaintiffs breached the parties’ consent agreement by purporting to revoke its Certificate of
Completion. Defendant’s costs were incurred from its operation and maintenance of the water
remediation at the Dober Mine Complex under the NPDES permit after plaintiffs issued the
certificate. The claims did not arise from separate, distinct legal duties between the parties.
Accordingly, we conclude that the lower court properly determined that governmental immunity
did not apply to bar defendant’s claim for damages because the damages arose from a contract,
not a tort.
V. DISCOVERY ON COSTS
Plaintiffs argue that the lower court erred by denying them the opportunity to engage in
discovery regarding costs. We conclude that plaintiffs have waived this issue.
A waiver is an intentional relinquishment or abandonment of a known right. Quality
Prod, 469 Mich. at 374. A party may not take a position before this Court that is contrary to a
position the party took before the lower court. Grant v AAA Mich/Wisconsin, Inc (On Remand),
272 Mich. App. 142, 148; 724 NW2d 498 (2006).
In this case, the following exchange took place:
[Counsel for defendant]. . . . I am pleased I have worked with [counsel
for plaintiffs], and we have agreed and stipulated that the costs that were
submitted . . . were, in fact, incurred by PolyOne and were incurred in connection
with the Dober Mine, although he retains all his other arguments regarding the
collectability of those costs. But we need not have a witness he has agreed.
THE COURT. So the amounts, [counsel for plaintiffs], are not in dispute?
[Counsel for plaintiffs]. Correct.
Plaintiffs thus expressly agreed that the costs that defendant submitted were in fact incurred by
defendant in connection with the Dober Mine Complex. To allow plaintiffs to challenge this
issue on appeal would be to allow them to take a position contrary to the position they took
before the lower court. We decline to allow plaintiffs to do so.
Affirmed.
/s/ Christopher M. Murray
/s/ Deborah A. Servitto
/s/ Mark T. Boonstra
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