Alpine Forrest v. Crown Central

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ALPINE FORREST PARTNERS, A
California Limited Partnership,
Plaintiff-Appellant,
v.
No. 95-1871
CROWN CENTRAL PETROLEUM
CORPORATION; ATEC ENVIRONMENTAL
CONSULTANTS, a Division of ATEC
Associates, Incorporated,
Defendants-Appellees.
Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Matthew J. Perry, Jr., Senior District Judge.
(CA-90-2730-3-0, CA-91-2526-3-0)
Argued: April 4, 1996
Decided: February 6, 1998
Before RUSSELL, WIDENER, and HALL, Circuit Judges.
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Affirmed by unpublished per curiam opinion. Judge Hall wrote an
opinion dissenting in part.
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COUNSEL
ARGUED: Deborah R.J. Shupe, BERRY, ADAMS, QUACKEN-
BUSH & DUNBAR, P.A., Columbia, South Carolina, for Appellant.
James Lynn Werner, OGLETREE, DEAKINS, NASH, SMOAK &
STEWART, L.L.P., Columbia, South Carolina, for Appellee Crown
Central; Charles E. Carpenter, Jr., RICHARDSON, PLOWDEN,
GRIER & HOWSER, P.A., Columbia, South Carolina, for Appellee
ATEC. ON BRIEF: Theodore von Keller, BERRY, ADAMS,
QUACKENBUSH & DUNBAR, P.A., Columbia, South Carolina, for
Appellant. Cheryl L. Behymer, OGLETREE, DEAKINS, NASH,
SMOAK & STEWART, L.L.P., Columbia, South Carolina, for
Appellee Crown Central; Francis M. Mack, RICHARDSON, PLOW-
DEN, GRIER & HOWSER, P.A., Columbia, South Carolina, for
Appellee ATEC.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Alpine Forrest Partners, a limited partnership, appeals from a judg-
ment entered on a jury verdict in favor of defendants Crown Central
Petroleum Corporation and ATEC Associates, Inc., in Alpine For-
rest's suit alleging property damage from a trespassing (and leaking)
underground gasoline storage tank. We affirm the judgment of the
district court.
I.
In 1987, Crown Central Petroleum purchased a convenience store
on Alpine Road in Columbia, South Carolina, which it operated under
the name "Fast Fare." The Fast Fare store sold gasoline. Next door
was the Alpine Forrest Mobile Home Park.
In the late eighties, there was a flurry of regulatory interest in the
old and often shoddy underground storage tanks used by gasoline sta-
tions. In June, 1989, Crown Central hired defendant ATEC Asso-
ciates, Inc., to install monitoring wells at the Alpine Road Fast Fare.
2
ATEC discovered a leak on August 28, 1989, and the leak was
promptly reported to state authorities. A faulty pipe was found and
quickly repaired. A small amount of gasoline has migrated under the
driveway leading into Alpine Forrest, though it has caused no harm
aside from its presence.1
In October 1989, Urban Assets, Inc., a company that buys and
operates mobile home parks, approached the owners of Alpine Forrest
about a potential sale. Lou Frasco was Urban Assets' founder and
prime mover. Frasco hired ATEC, through its ATEC Environmental
Consultants division, to prepare a "Phase I environmental survey" of
the property. ATEC agreed to do the survey for a $2,500 fee. As its
proposal states, "Particular emphasis will be placed on any above-
ground drums or tanks, the possibility of underground storage tanks
(USTs), stained areas, past dumping or disposal of debris, any areas
showing evidence of vegetative stress, on-site transformers, and a cur-
sory inspection for potential asbestos containing building materials
(ACBMs)."
Frasco testified that he told Davies Batterton of ATEC that the pur-
chaser of the property would be a limited partnership of investors to
be organized by Urban Assets. Batterton did not recall this alleged
comment, though he admitted that such arrangements are common in
the business, that ATEC often performs work for one party knowing
that a different legal entity will actually purchase the subject property,
and that ATEC is aware that the ultimate purchaser will rely on its
assessment.
On December 8, 1989, ATEC provided the survey to Urban Assets.
It reported no problems on or near the property, except for a leaking
electrical transformer, which was replaced. Full payment was then
tendered to ATEC by plaintiff Alpine Forrest Partners, a limited part-
nership newly formed by Urban Assets to hold title to the mobile
home park.2 ATEC accepted the payment.
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1 The tanks were removed in December, 1991.
2 Frasco explained that Urban Assets serves simply as a real estate
agent for various groups of investors, and he always forms a limited part-
nership of those investors to be the legal owner of a property. Urban
Assets had previously paid half of ATEC's fee, so Alpine Forrest's ten-
der of the full $2,500 resulted in an overpayment to ATEC.
3
On January 12, 1990, Alpine Forrest Partners purchased the prop-
erty for $1,400,000, and it has operated the park at full or nearly full
capacity.3 It has been able to raise rents. The market value of the
property, though, is quite a bit less than Alpine Forrest paid. The
source of this deficit is the main issue here.
Just a few days after his purchase, Frasco inspected the property.
He noticed a fence that he believed encroached on his property, as
well as Crown Central's monitoring wells. The surveyor employed for
closing had not reported any encroachments.4 A new survey showed
that Frasco was right; Crown Central's tanks, fence, and some con-
taminated ground were on Alpine Forrest's side of the line.
Frasco immediately approached Crown Central with a proposal to
deed the parcel on which the tanks encroached to Crown Central if
it would purchase and convey to him an adjoining $45,000 parcel on
which he already held an option. Crown Central rejected the offer. In
a phone call and letter, its general counsel asserted that Crown Central
owned the land on which the encroachments stood by adverse posses-
sion. In the letter, counsel stated:
The tanks have been located on the property for well over
the [statutory period]. Second, the area in question has been
enclosed by a chain link fence. Third, the area is maintained
by Fast Fare, Inc.: the grass is cut periodically and concrete
pads have been constructed in the area surrounding the tank
fills. These pads and fill caps are clearly visible.
On October 8, 1990, Alpine Forrest filed separate suits in state
court against Crown Central and ATEC. The suit against Crown Cen-
tral alleged claims of nuisance and trespass. ATEC was charged with
professional negligence and breach of contract. The suits were
removed to district court. After a long period of discovery, the cases
were consolidated for trial. A jury trial was held from April 4-8, 1994.
At the close of the evidence, Alpine Forrest was permitted to amend
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3 We were informed at argument that the property has recently been
sold.
4 The surveyor has been sued in a separate case.
4
its pleadings to assert a negligence claim against Crown Central, and
Alpine Forrest voluntarily dismissed its claim for professional negli-
gence against ATEC.
The jury returned a defense verdict on all counts. Alpine Forrest's
motion for judgment notwithstanding the verdict or for a new trial
was denied. Alpine Forrest appeals.
II.
The suits against Crown Central and ATEC were filed separately.
Much of the discovery overlapped, though, as did the underlying
nucleus of fact and many of the witnesses. Shortly before the trial, the
district court granted ATEC's motion to consolidate the cases for
trial. Alpine Forrest opposed consolidation and now asserts error. The
district courts have broad discretion to consolidate related actions
pending in their districts, A/S J. Ludwig Mowinckles Rederi v. Tide-
water Construction Corp., 559 F.2d 928, 933 (4th Cir. 1977), and we
review only for abuse of that discretion.
Though Alpine Forrest alleges repeatedly in its brief that it was
"unduly prejudiced" by the consolidation, and that there was a "very
real possibility and likelihood of jury confusion," it has not explained
to our satisfaction when or how these ill effects occurred. We see no
abuse of discretion.
III.
We now turn to Alpine Forrest's attacks on the judgment for
Crown Central. We must affirm the denial of judgment n.o.v. if there
is substantial evidence to support the verdict. White v. County of
Newberry, 985 F.2d 168, 172-173 (4th Cir. 1993). The district court
may grant a new trial if the verdict is clearly against the weight of the
evidence, and we review its decision for abuse of discretion. Bristol
Steel & Iron Works, Inc. v. Bethlehem Steel Corp. , 41 F.3d 182, 186
(4th Cir. 1994).
In South Carolina, violation of a statute is negligence. This "doc-
trine" has its own name -- "negligence per se" -- and the name is
5
unfortunately misleading, inasmuch as it suggests something akin to
strict liability. Instead, all the statute does is to define the applicable
duty of care.
South Carolina has a statute that prohibits the direct or indirect dis-
charge of pollutants into the environment without a permit.5 S.C.
Code Ann. § 48-1-90. Alpine Forrest would take the indisputable fact
that there was a gas leak and convert it into liability. There are several
problems with this theory.
First, there was evidence from which the jury could find that the
discharge had completely ended before Alpine Forrest bought the
property.6 The right to sue on account of a completed tort is not con-
veyed sub silentio in a deed of realty. It is a chose in action, which
is a personal right that must be specifically assigned. See generally
63A Am.Jur.2d Property §§ 25-26; Restatement (Second) of Torts
§ 162.
Moreover, because Alpine Forrest asserts damages measured by
permanent diminution in the land's value, it must show permanent
damage. Gray v. Southern Facilities, Inc., 256 S.C. 558, 183 S.E.2d
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5 In relevant part, the statute reads:
(a) It shall be unlawful for any person, directly or indirectly, to
throw, drain, run, allow to seep or otherwise discharge into the
environment of the State organic or inorganic matter, including
sewage, industrial wastes and other wastes, except as in compli-
ance with a permit issued by the Department.
It if were read literally, the statute would be nonsensical, inasmuch as all
matter is either "organic or inorganic." However, the examples given
show that "matter" is limited to substances with a potential to cause envi-
ronmental harm. Noscitur a sociis. See also S.C. Code Ann. § 48-1-10,
defining, among others, "sewage," "industrial waste," "other wastes," and
"pollution," but not "matter").
6 Only the discharge violates the cited statute. The resulting condition
of pollution does not. Carolina Chemicals, Inc. v. South Carolina Dep't
of Health and Environmental Control, 290 S.C. 498, 351 S.E.2d 575, 577
(App. 1986). Alpine Forrest did present circumstantial evidence from
which the jury could have found that the tank leaked after 1989, but the
jury could rationally have rejected it.
6
438, 443 (1971). Gasoline is made of hydrocarbons-- the building
blocks of life -- and it is consequently biodegradable. Crown Central
presented expert testimony that the plume of gasoline has already
ceased to spread, because bacterial degeneration has begun to occur
at the fringes. Crown Central has given Alpine Forrest an uncondi-
tional promise of indemnity should any additional measures be
needed. There was no evidence presented of diminished rental value,
of other current expenses to Alpine Forrest, or of a permanent diminu-
tion that would outlast remediation of the leak. 7
Next, the jury could have found that the "diminution" was no dimi-
nution at all. Alpine Forrest paid $1.4 million for property assessed
for taxes at $785,400. The park may never have been worth more than
the $900,000 "after leak" value claimed by Alpine Forrest at trial.
Finally, "negligence per se" ordinarily requires a knowing violation
of the statute from which the duty of care is imputed. E.g., Niver v.
So. Carolina Dep't of Highways, 302 S.C. 461, 395 S.E.2d 728 (App.
1990) (plaintiff was not contributorily negligent for violating a statute
prohibiting passing near intersections, because the plaintiff did not
know he was approaching an intersection). The jury could certainly
have found that Crown Central did not knowingly discharge the gaso-
line.
IV.
Alpine Forrest's trespass claim is stronger, but we find no revers-
ible error.
In South Carolina, trespass is an intentional tort. Snow v. City of
Columbia, 409 S.E.2d 797, 802 (S.C. App. 1991).
Although neither deliberation, purpose, motive, nor malice
are necessary elements of intent, the defendant must intend
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7 Alpine Forrest was required to discontinue use of a water well and
hook up to city water, at considerable expense, but not on account of the
spilled gasoline; instead, new state water quality monitoring regulations
had recently gone into effect, rendering continued use of the well prohib-
itively expensive.
7
the act which in law constitutes the invasion of the plain-
tiff's right. Trespass is an intentional tort; and while the tres-
passer, to be liable, need not intend or expect the damaging
consequence of his entry, he must intend the act which con-
stitutes the unwarranted entry on another's land.
Id. To prove Crown Central's intent, Alpine Forrest attempted to
introduce an oral statement and, on rebuttal, a letter from Crown Cen-
tral's counsel asserting that the company owned the parcel by adverse
possession and making allegations of particular facts in support of
that contention. The district court excluded this evidence, as well as
any mention that Crown Central had initially asserted an adverse pos-
session defense in its answer.
At least as regards the statement of and letter from Crown Central's
general counsel, we are troubled by this ruling."Adverse" possession
is open occupation of the land, hostile to the true owner's rights.
Intent to do the act that invades the true owner's rights is surely sub-
sumed in the concept of hostility. Crown Central's assertions there-
fore admit intent to trespass.
It is true, as Crown Central notes, that alternative pleadings cannot
be used as admissions, and neither, generally, can bare legal conclu-
sions. However, the letter by the general counsel was not a pleading;
it was written long before litigation commenced. Moreover, though
"adverse possession" is itself a "legal" term, in the context of the letter
it encompasses the assertions of fact (primarily"hostility") that are its
elements. Indeed, the letter contains statements of pure fact (e.g.,
Crown Central fenced the area and mows it) that go to Crown Cen-
tral's intent. Exclusion of these statements was likely error.
Any error, however, was rendered harmless by Alpine Forrest's
failure to prove actual damage resulting from the trespass of the tanks.
As we have noted, Alpine Forrest has measured its damage by the
permanent diminution of the value of its property. The tanks are gone,
and were gone long before the trial. Their mere memory does not
have a legally cognizable effect on the value of a mobile home park.
8
Cf. Gray, 183 S.E.2d at 443-444 (rejecting as "speculative" evidence
that a completed tort had injured the "reputation" of the land).8
V.
We next turn to Alpine Forrest's claim against ATEC for breach
of contract. In a special interrogatory, the jury found that Alpine For-
rest was not an intended direct beneficiary of the contract between
ATEC and Urban Assets. The special interrogatory read:
Do you find that the contracting parties, Urban Assets, Inc.,
and ATEC Environmental Consultants, intended to create a
direct, rather than an incidental or consequential, benefit to
the plaintiff, Alpine Forrest Partners?
The jury answered "No" to this interrogatory. 9 Alpine Forrest had
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8 It is, of course, among the most ancient of common law doctrines that
damage is presumed from a trespass to land. Snow, 409 S.E.2d at 802
(citing Lee v. Stewart, 10 S.E.2d 804 (N.C. 1940)). If the presence of the
tanks were a trespass, Alpine Forrest was entitled to an award of nominal
damages notwithstanding its failure to prove actual damages. If we were
a state court, we could enforce this hoary formality by granting a new
trial nisi additur awarding Alpine Forrest one dollar, which Crown Cen-
tral would doubtless accept. However, the Seventh Amendment pre-
cludes us from conditioning a new trial on the defendant's unilateral
acceptance of an additur. Dimick v. Schiedt, 293 U.S. 474 (1935). In
these circumstances, we must simply affirm or reverse. The question
before us, then, is whether an error that, at most, deprived Alpine Forrest
of nominal damages is an error that affects its substantial rights. Fed. R.
Civ. P. 61. It surely is not.
Alpine Forrest's other potential trespass claim involves the continued
presence of the gasoline, even though the initial discharge is not action-
able because of its accidental nature. See Ravan v. Greenville County,
434 S.E.2d 296, 306-307 (S.C. App. 1993). Again, though, the jury could
rationally have found that the mobile home park suffered no permanent
diminution in value because of the nonpermanence of gasoline, Crown
Central's unequivocal guarantee to bear the costs of any remediation, or
both.
9 The form of the special verdict mentioned above was agreed to by
Alpine Forrest. The case was also submitted to the jury by way of
9
agreed to the interrogatory which obviously was taken verbatim from
the law as stated by the South Carolina Supreme Court:
For the [third party beneficiary] rule to apply to a contract
not required by public law or regulation, it must appear that
the result of it was intended by the contracting parties, that
is that they intended (contrary to the presumption) to create
a direct, not incidental or consequential, benefit to the third
party, a stranger to the contract.
Cothran v. Rock Hill, 43 S.E.2d 615, 616-617 (S.C. 1947) (emphasis
added). That very language has since been followed at least twice in
South Carolina in Touchberry v. City of Florence , 367 S.E.2d 149,
150 (S.C. 1988), and Bob Hammond Construction Co., Inc. v. Banks
Construction Co., 440 S.E.2d 890, 891 (S.C. App. 1994).
The evidence presented at trial was sufficient for the jury to find
that there was no intention by ATEC to benefit directly anyone other
than Urban Assets and that any benefit to a third party was incidental
or consequential. Frasco contacted ATEC on behalf of Urban Assets.
The proposed contract from ATEC was addressed directly to Frasco
and Urban Assets without reference to Alpine Forrest or any other
party. Urban Assets responded to the proposed contract stating that it
enclosed a check for $2,500 for services without reference to any
other party, and ATEC's report was made directly to Frasco at Urban
Assets. While Frasco testified that he advised Batterton of ATEC that
he was acting in the name of a limited partnership, that testimony was
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another agreed to form of special verdict, as well as a general verdict,
both of which were returned in favor of ATEC as follows:
We the jury unanimously find for the plaintiff as to the following
cause of action: Breach of contract?
A: No.
We the jury unanimously find for the defendant, this Eighth Day
of April, 1994.
/s/ Leslie Johnson
Foreperson
Columbia, South Carolina
10
refuted by Batterton who testified that there was no mention of a lim-
ited partnership during his initial conversation with Frasco or at any
time prior to Urban Assets' acceptance of ATEC's proposal. There
was no reference to any other parties than Urban Assets in the pro-
posal or acceptance letters. ATEC's final report was dated December
8, 1989 and was directed to and received by Urban Assets and Frasco
in December. Frasco testified that there was, in fact, no limited part-
nership established at the time of his contracting with ATEC and that
Alpine Forrest Partners, the plaintiff limited partnership, was not
established until January 9, 1990, just prior to closing on the purchase
of the property.
The jury's verdict that ATEC and Urban Assets did not intend to
create a direct, rather than an incidental or consequential, benefit to
the yet unformed limited partnership, which is now the plaintiff, is
quite supported by the evidence. Thus the district court did not abuse
its discretion in denying ATEC's motion to set aside the verdict.
The judgment of the district court is accordingly
AFFIRMED.
HALL, Circuit Judge, dissenting in part:
I concur in Parts I through IV of the majority opinion, but I cannot
agree with Part V. The verdict for ATEC is clearly against the weight
of the evidence, and I would grant Alpine Forrest a new trial on its
contract claim.
ATEC contracted to survey the property with "particular emphasis"
on underground storage tanks. By doing so, it implicitly warranted the
suitability of its services for the purpose at hand, i.e. helping the pro-
spective purchaser to evaluate the property. Hill v. Polar Pantries,
219 S.C. 263, 64 S.E.2d 885, 888 (1951). Though it had corporate
knowledge of the leak at the Fast Fare, and the monitoring wells
invited careful investigation, ATEC failed to discover the encroach-
ments or contamination. A reasonable jury could find that ATEC fell
short of its contractual obligations.
11
ATEC performed the work at the instance of Frasco, whom it knew
was considering the purchase of the property. There is not any indica-
tion that the specific legal identity of the ultimate purchaser had any-
thing to do with ATEC's contractual duties. It contracted with a
Frasco-organized corporation (Urban Assets) and accepted payment
from a Frasco-organized partnership (Alpine Forrest). Alpine Forrest
was not just an intended beneficiary of the contract; it was the only
one. Cf. Kennedy v. Columbia Lumber & Manufacturing Co., 299
S.C. 335, 384 S.E.2d 730, 736 (1989) (strict privity of contract unnec-
essary in action to enforce an implied warranty); JKT Co. v.
Hardwick, 274 S.C. 413, 265 S.E.2d 510, 512 (Ct.App. 1980) (South
Carolina is "in the vanguard in permitting a plaintiff to recover eco-
nomic loss from a seller with whom he did not deal and who made
no express warranties to him") (overruled in part on other grounds,
Town of Winnsboro v. Wiedeman-Singleton, Inc., 303 S.C. 52, 398
S.E.2d 500 (Ct.App. 1990), aff'd, 307 S.C. 128, 414 S.E.2d 118 (1992)).1
Because the jury's finding is so clearly against the weight of the evi-
dence, I believe that the district court abused its discretion in denying
a new trial.2
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1 I suspect that the law of third-party beneficiaries is not the best fitted
to Alpine Forrest's case. Urban Assets' rights in the sales transaction and
ATEC contract were surely, even if informally, transferred to Alpine
Forrest. ATEC received notice of this transfer when it received Alpine
Forrest's check, to which it consented through acceptance. An assign-
ment of contractual rights can establish the privity required for a first-
party claim. Professional Bankers Corp. v. Floyd , 285 S.C. 607, 331
S.E.2d 362, 364-365 (Ct.App. 1985).
2 ATEC also argues that the general verdict cures any possible error on
the third-party beneficiary issue. I disagree. Where a general verdict may
rest on an erroneous ground, and there is no way to discern otherwise,
the verdict must be set aside. Sunkist Growers, Inc. v. Winckler & Smith
Citrus Products Co., 370 U.S. 19, 29-30 (1962). Here, there is positive
evidence -- the special interrogatory -- that the jury rested its general
verdict on the third-party beneficiary issue, so the Sunkist rule applies
with full force.
12