McDonald v. Sun Oil Company

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THOMAS MCDONALD; MARIAN 
MCDONALD; ALEX E. MCDONALD,
Plaintiffs-Appellants, No. 06-35683
v.
 D.C. No.
CV-03-01504-ALH
SUN OIL COMPANY; SUNOCO, INC.;
CORDERO MINING COMPANY; J.T. OPINION
BATTERSON; SUSAN BATTERSON,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Oregon
Ancer L. Haggerty, District Judge, Presiding
Argued and Submitted
July 10, 2007—Portland, Oregon
Filed November 19, 2008
Before: Harry Pregerson and Stephen Reinhardt,
Circuit Judges, and Lyle E. Strom, District Judge.*
Opinion by Judge Strom
*The Honorable Lyle E. Strom, Senior United States District Judge for
the District of Nebraska, sitting by designation.
15507
15510 MCDONALD v. SUN OIL CO.
COUNSEL
Brooks Foster (argued) and Brian D. Chenoweth, Chenoweth
Law Group, Portland, Oregon, for the plaintiffs-appellants.
Harold L. Segall (argued), James T. Esselman and Leah A.
Dundon, Beveridge & Diamond, P.C., Washington, District of
Columbia, for the defendants-appellees.
MCDONALD v. SUN OIL CO. 15511
OPINION
STROM, District Judge:
Thomas McDonald, Marian McDonald and Alex McDon-
ald appeal from the district court’s grant of summary judg-
ment in favor of Sun Oil Company, Sunoco, Inc. and Cordero
Mining Company (collectively, “Sun”). The McDonalds sued
Sun for, among other things, negligence, contribution, breach
of contract and fraud. Each of these claims arose out of an
alleged oral warranty that certain crushed rock at the Horse
Heaven Mine Property (“Horse Heaven”), a disused mercury
mine, was free of mercury. The district court held that Ore-
gon’s statute of repose barred the McDonalds’ negligence
claim, that their claim for contribution failed to comply with
an administrative requirement, that their breach of contract
claim failed because of the merger doctrine and the parol evi-
dence rule, and that their fraud claim failed to raise a genuine
issue of material fact. We have jurisdiction under 28 U.S.C.
§ 1291, and we affirm in part, reverse in part, and remand for
trial.
I. BACKGROUND
In 1934, Ray Whiting Jr. and Harry Hoy developed the
Horse Heaven Mine and operated it until 1936. From 1936 to
1973, the mine was owned and intermittently operated by
Sun. Sun permanently ceased mining operations at Horse
Heaven in 1958. In 1973, among over 2,600 acres of property
in Jefferson County, Oregon, Sun conveyed Horse Heaven to
Thomas and Marian McDonald via a bargain and sale deed.
In the deed conveying the property to the McDonalds, Sun
reserved “all of the oil, gas, and other mineral rights” in the
property to itself, but specifically excluded rights to “surface
materials which are used for road-building or construction
purposes, such as . . . calcine . . . except such quantities as are
reasonably used or useful in the enjoyment of [Sun’s]
reserved rights.” (ER 51.) At the time of this purchase, the
15512 MCDONALD v. SUN OIL CO.
Horse Heaven property contained a large pile or piles of cal-
cine tailings.
Calcine is a waste product resulting from the processing of
mercury ore into mercury. Mercury sulfide ore is mined,
crushed, and heated in a furnace or “retort” to separate mer-
cury from the ore. After the heating process is complete, the
crushed rock, now called calcine, is stockpiled. At Horse
Heaven, the calcine tailings were deposited in a pile or piles
on the surface of the property surrounding the mine. Some
mercury still remains in the calcine at Horse Heaven. How-
ever, the parties dispute the amount and potential harmfulness
of the remaining mercury.
Prior to the 1973 sale of the property, Thomas McDonald
met with Ray Whiting and Sun’s Wally Freeman at the mine
to discuss the potential sale. In his deposition, McDonald tes-
tified that while they were standing on the calcine pile prior
to the sale, Freeman told him that because the “retort” process
extracted mercury and other heavy metals from the ore, there
was no mercury in the calcine. During that same conversation,
McDonald told Freeman that he intended to use the calcine
for road construction or to sell it commercially as decorative
rock.
In 1976, the McDonalds sold all the Jefferson County prop-
erty except for the forty acres comprising the former Horse
Heaven mine. In 1982, the McDonalds transferred these forty
acres to Ray Whiting and his wife. Whiting later conveyed his
interest in the property to his daughter and grandson. The
deed to Whiting reserved to McDonalds the rights to the cal-
cine tailings until 2007. On several occasions, Mr. McDonald
brought some of the calcine to his personal residence and
placed it on his driveway and parking lot.
In 2001, the Oregon Department of Environmental Quality
(“DEQ”) requested information regarding possible contami-
nation at Horse Heaven, and in 2002 determined that the
MCDONALD v. SUN OIL CO. 15513
McDonalds’ handling of the calcine tailings had created an
environmental release. The McDonalds were then ordered to
refrain from removing or disturbing the calcine piles at Horse
Heaven without DEQ approval. The McDonalds allege that
they did not learn that the calcine was potentially contami-
nated until 2001.
On August 25, 2003, the McDonalds sued Sun in Oregon
state court. On November 3, 2003, Sun removed the case to
the United States District Court for the District of Oregon. On
March 14, 2006, the district court granted summary judgment
against the McDonalds on all their claims. This appeal fol-
lowed. The McDonalds appeal only the district court’s rulings
granting summary judgment to Sun on their negligence, con-
tribution, contract, and fraud claims.
II. STANDARD OF REVIEW
This Court reviews “de novo a district court’s decision to
grant summary judgment. We must determine, viewing the
evidence in the light most favorable to the nonmoving party,
whether there are any genuine issues of material fact and
whether the district court correctly applied the relevant sub-
stantive law.” Del. Valley Surgical Supply, Inc. v. Johnson &
Johnson, 523 F.3d 1116, 1119 (9th Cir. 2008) (citing Lopez
v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc)). “A
factual dispute is genuine only if a reasonable trier of fact
could find in favor of the nonmoving party. A mere scintilla
of evidence supporting a nonmovant’s position is insufficient
to withstand summary judgment.” In re Ahaza Sys., Inc., 482
F.3d 1118, 1128 (9th Cir. 2007) (quoting Galen v. County of
L.A., 468 F.3d 563, 568 (9th Cir. 2006)).
15514 MCDONALD v. SUN OIL CO.
III. DISCUSSION
A. NEGLIGENCE
The district court granted Sun’s motion for summary judg-
ment on the McDonalds’ negligence claim, holding that the
claim is barred by Oregon’s statute of repose for negligent
injury to person or property, Or. Rev. Stat. § 12.115(1). The
McDonalds argue that the court below erred in applying the
Oregon statute because Section 309 of the Comprehensive
Environmental Response, Compensation, and Liability Act
(CERCLA) of 1980, 42 U.S.C. § 9601-9675, grafts a discov-
ery rule onto state statutes of limitations.1 We agree. The dis-
1
42 U.S.C. § 9658 (CERCLA § 309) provides:
(a) State statutes of limitations for hazardous substance cases
(1) Exception to State statutes
In the case of any action brought under State law for per-
sonal injury, or property damages, which are caused or con-
tributed to by exposure to any hazardous substance, or
pollutant or contaminant, released into the environment from
a facility, if the applicable limitations period for such action
(as specified in the State statute of limitations or under com-
mon law) provides a commencement date which is earlier
than the federally required commencement date, such period
shall commence at the federally required commencement
date in lieu of the date specified in such State statute.
...
(b) Definitions
...
(2) Applicable limitations period
The term “applicable limitations period” means the period
specified in a statute of limitations during which a civil
action referred to in subsection (a)(1) of this section may be
brought.
(3) Commencement date
The term “commencement date” means the date specified in
a statute of limitations as the beginning of the applicable lim-
itations period.
(4) Federally required commencement date
(A) In general
MCDONALD v. SUN OIL CO. 15515
trict court held that CERCLA § 309 does not apply because
§ 12.115(1) is a statute of repose, not a statute of limitations.
However, the term “statute of limitations” in CERCLA § 309
is ambiguous and the legislative history of the section indi-
cates that its meaning includes statutes of repose like
§ 12.115(1).
[1] Statutes of limitations and repose are distinct legal con-
cepts with distinct effects. “A statute of limitations requires a
lawsuit to be filed within a specified period of time after a
legal right has been violated . . . . On the other hand, statutes
of repose are designed to bar actions after a specified period
of time has run from the occurrence of some event other than
the injury which gave rise to the claim.” Raithaus v. Saab-
Scandia of America, Inc., 784 P.2d 1158, 1160 (Utah 1989).
Statutes of limitations
preclude[ ] the plaintiff from proceeding, . . . the
right (moral or legal) goes on, but the plaintiff sim-
ply cannot go to court in order to enforce it . . . . A
statute of repose, however, has a more substantive
effect because it can bar a suit even before the cause
of action could have accrued, or, for that matter,
retroactively after the cause of action has accrued. In
proper circumstances, it can be said to destroy the
right itself. It is not concerned with the plaintiff’s
diligence; it is concerned with the defendant’s peace.
Underwood Cotton Co., Inc. v. Hyundai, 288 F.3d 405, 408-
09 (9th Cir. 2002) (internal citations omitted) (referring to the
distinctions between the two types of statute as “arcane”).
Except as provided in subparagraph (B), the term “feder-
ally required commencement date” means the date the
plaintiff knew (or reasonably should have known) that the
personal injury or property damages referred to in subsec-
tion (a)(1) of this section were caused or contributed to by
the hazardous substance or pollutant or contaminant con-
cerned.
15516 MCDONALD v. SUN OIL CO.
[2] The difference is manifest in Oregon’s statutory
scheme. For example, Or. Rev. Stat. § 12.110(1), not at issue
in this case, is a statute of limitations, providing that “[a]n
action for any injury to the person or rights of another, not
arising on contract . . . shall be commenced within two years
. . . .” Under this statute, it is evident that injury must be expe-
rienced before the time limit starts to run because an action
cannot be commenced until after the injury element of the
prima facie case is satisfied. However, the statute of repose at
issue here, Or. Rev. Stat. § 12.115(1), states that “[i]n no
event shall any action for negligent injury to person or prop-
erty of another be commenced more than 10 years from the
date of the act or omission complained of.” This statute does
not require injury before it operates. Therefore, if § 12.115(1)
applies to the nearly thirty year old negligence claim in this
case, and § 309 does not operate to impose a discovery rule
upon it, that claim is barred.
1. Plain Meaning vs. Ambiguity
The first step in construing the meaning of a statute is to
determine whether the language at issue has a plain meaning.
“The preeminent canon of statutory interpretation requires us
to ‘presume that [the] legislature says in a statute what it
means and means in a statute what it says there.’ Thus, our
inquiry begins with the statutory text, and ends there as well
if the text is unambiguous.” BedRoc Ltd., LLC v. United
States, 541 U.S. 176, 183 (2004) (internal citations omitted).
It should not be “presum[ed] that ‘the legislature was ignorant
of the meaning of the language it employed.’ ” Id. at 186-87.
Section 309 contains five uses of the term “statute of limita-
tions,” but no use of “statute of repose.” Sun argues that “stat-
ute of limitations” has a plain meaning which excludes
statutes of repose from its ambit. Therefore, according to Sun,
it would be improper for a court to graft the words “and
repose” onto the already clear language of § 309. “[T]he
proper inquiry focuses on the ordinary meaning of the [provi-
sion] at the time Congress enacted it,” and thus the appropri-
MCDONALD v. SUN OIL CO. 15517
ate question is whether “statute of limitations” was ambiguous
when § 309 was passed. BedRoc Ltd., 541 U.S. at 184 (citing
Amoco Prod. Co. v. S. Ute Tribe, 526 U.S. 865, 874 (1999));
see also Perrin v. United States, 444 U.S. 37, 42 (1979) (“A
fundamental canon of statutory construction is that, unless
otherwise defined, words will be interpreted as taking their
ordinary, contemporary, common meaning.”). In addition, it
is the plain meaning or ambiguity of CERCLA, not the state
statute involved, that this inquiry is concerned with.2
[3] The term “statute of limitations” was ambiguous regard-
ing whether it included statutes of repose when § 309 was
enacted in 1986. At that time, although some cases recognized
the differences between statutes of limitation and repose, a
number of cases confused the terms or used them interchange-
ably.3 In the legal context, ambiguity is defined as “[a]n
2
A The question of plain meaning or ambiguity refers to the meaning
Congress considered when it passed § 309, and therefore Oregon’s opin-
ion of the meaning of the term carries no more weight than does that of
any other State. The McDonalds make much of the fact that the Supreme
Court of Oregon referred to the statute of repose at issue in this case, Or.
Rev. Stat. § 12.115, as a “statute of limitations.” See Joseph v. Burns, 491
P.2d 203, 207 (Or. 1971). This is relevant to the question of ambiguity
merely as an example of a court using the two terms interchangeably, but
the fact that it is an Oregon case addressing the statute of repose at issue
here does not entitle it to any additional weight. The object of our inquiry
is what the intent of Congress was when § 309 was adopted in 1986, not
what Oregon courts may have said about Or. Rev. Stat. § 12.115(1) in
1971.
3
Compare City of Aurora v. Am. LaFrance Corp., No. 81-C-6638, 1984
U.S. Dist. LEXIS 20667, *2 (Dist. Ill. Jan 6, 1984); Chamberlain v.
Shmutz Mfg. Co., 532 F. Supp. 588, 590 (D. Kan. 1982); Bauld v. J.A.
Jones Constr. Co., 357 So. 2d 401, 402 (Fl. 1978); Tindol v. Boston Hous.
Auth., 487 N.E.2d 488, 489-90 (Mass. 1986); James Ferrera & Sons Inc.
v. Samuels, 586 N.E.2d 58, 60-61 (Mass. App. Ct. 1985); Berry v. Beech
Aircraft Corp., 717 P.2d 670, 672 (Utah 1985); City of Dover v. Int’l Tel.
& Tel. Corp., 514 A.2d 1086, 1089 (De. 1986), with United States v.
Kubrick, 444 U.S. 111, 117 (1979); Bridges v. United States, 346 U.S.
209, 230-31 (1953); Anderson v. Yungkau, 329 U.S. 482, 485 (1947);
United States v. Oregon Lumber Co., 260 U.S. 290, 300 (1922); Gates
Rubber Co. v. USM Corp., 508 F.2d 603, 611 (7th Cir. 1975); Bolick v.
Am. Barmag Corp., 306 N.C. 364, 366 (1982).
15518 MCDONALD v. SUN OIL CO.
uncertainty of meaning or intention.” Black’s Law Dictionary
(8th ed. 2004). Here, considerable uncertainty about the dis-
tinction existed in 1986.4 Because of this ambiguity it is evi-
dent that the term “statute of limitations” had no plain
meaning with respect to whether it included statutes of repose
when § 309 was adopted.5 It will therefore be necessary for
the Court to examine the statute’s legislative history in order
to determine Congress’s intent at the time of its adoption.
2. Burlington Northern
The district court based its decision that “the plain language
of [§ 309] does not extend to statutes of repose . . .” on Bur-
lington N. & Santa Fe R.R. Co. v. Poole Chem. Co. 419 F.3d
355, 363 (5th Cir. 2005). Burlington Northern involved two
large above ground storage tanks in Slanton, Texas, that were
sold by Skinner Tank Company (“Skinner”) to Poole Chemi-
cal Company (“Poole”), an agricultural blender, on October
28, 1988. Id. at 358. On January 29, 2003, one of the tanks
ruptured, releasing several hundred thousand gallons of chem-
icals onto Poole’s property and an adjacent railroad right-of-
way. Id. On April 19, 2004, Poole sued Skinner, alleging that
4
This becomes clear upon review of the scholarship of the time. For
example, one 1980 article suggests that there were at least five definitions
of “statute of limitations” in use, while a 1990 article stresses that there
is no standard definition and that “[o]lder case-law and treatises use the
phrases . . . interchangeably.” See Francis E. McGovern, The Variety, Pol-
icy and Constitutionality of Product Liability Statutes of Repose, 30 Am.
U. L. Rev. 579, 582 (1980); Lisa K. Mehs, Comment, Asbestos Litigation
and Statutes of Repose: The Application of the Discovery Rule in the
Eighth Circuit Allows Plaintiffs to Breathe Easier, 24 Creighton L. Rev.
965, 966-68 (1990).
5
Sun cites Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157(2004), for the proposition that “the Supreme Court has directed that CER-
CLA be construed according to its text.” (Br. of Appellee 13.) This mis-
represents the much narrower holding of Cooper, that CERCLA
§ 113(f)(1) has a plain meaning in relation to the issues in that case and
therefore it was unnecessary for the Court to look to CERCLA’s purpose
to aid interpretation.
MCDONALD v. SUN OIL CO. 15519
the tank Skinner sold to it was defective. Id. “Section 16.012
of the Texas Civil Practice and Remedies Code establishes a
15-year statute of repose for products liability cases.” Id.
Because suit was filed more than fifteen years after the sale
of the tanks, if Texas’s statute of repose applied, Poole would
not prevail. The district court granted Skinner’s motion for
summary judgment on several grounds, and the Fifth Circuit
affirmed, stating in pertinent part that the plain language of
CERCLA § 309 does not extend to statutes of repose. Id. at
364. Although the court noted that “courts considering the
applicability of [§ 309] have not always clearly distinguished
a statute of repose from a statute of limitations,” Id. at 362-63,
it failed to address the question of whether the term was
ambiguous when it was adopted and instead held itself
“bound by [the] plain language, absent express congressional
intent to the contrary.” Id. at 364. It then failed to find express
congressional intent. Id.
We believe the district court’s reliance on Burlington
Northern is misplaced. After a review of the legislative his-
tory, the court in Burlington Northern stated that “Congress
intended for [§ 309] to preempt a state statute of limitations
that deprives a plaintiff who suffers a long-latency disease
caused by the release of a hazardous substance of his cause
of action, but not to preempt a state statute of repose like
[Texas’s].” Id. However, that court pointed out that the case
before it “does not involve the delayed discovery for which
[§ 309] was intended to address. The case does not implicate
a long-latency disease or involve a situation where the time
for filing a claim expired before the plaintiff learned that a
hazardous substance caused his injury.” Id. at 365. This case
does. Unlike the chemical spill in Burlington Northern, which
was discovered before the expiration of time under the statute
of repose, in this case the McDonalds did not discover the
mercury in the calcine until after the statute had run. Because
the discovery in Burlington Northern occurred prior to the
expiration of time under the statute of repose, § 309’s policies
against destroying a plaintiff’s claims before they could be
15520 MCDONALD v. SUN OIL CO.
asserted underlying § 309 were not in issue. However, they
are in issue in this case. Moreover, the Burlington Northern
court failed to analyze the meaning of “statute of limitations”
at the time § 309 was adopted. Therefore, the district court
was mistaken in relying on that case when it held that Or.
Rev. Stat. § 12.115(1) was not preempted by § 309.
3. Legislative History
[4] Having determined that the term “statute of limitations”
was ambiguous at the time CERCLA § 309 was adopted with
respect to whether the term includes statutes of repose, the
Court’s next task is to review the legislative history of the
section in order to determine Congress’s intent. Two signifi-
cant items of legislative history referencing this issue appear
in the record. The first is a committee print filed under Sec-
tion 301(e) of CERCLA which
recommends that all states that have not already
done so, clearly adopt the rule that an action accrues
when the plaintiff discovers or should have discov-
ered the injury or disease and its cause. The Recom-
mendation is intended also to cover the repeal of the
statutes of repose which, in a number of states have
the same effect as some statutes of limitation in bar-
ring plaintiff’s claim before he knows that he has
one.
Superfund Section 301(e) Study Group, 97th Cong., Injuries
and Damages from Hazardous Wastes—Analysis and
Improvement of Legal Remedies 256 (Comm. Print 1982)
(the “301(e) Report”). The second is from the House Confer-
ence Report, H.R. Conf. Rep. No. 99-962, at 261 (1986),
reprinted in 1986 U.S.C.C.A.N. 3276, 3354 (the “Conference
Report”), which immediately preceded enactment of the
Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499, 100 Stat. 1613 (1986), which adopted
§ 309. The Conference Report, referring to CERCLA § 309,
MCDONALD v. SUN OIL CO. 15521
states that “this section addresses the problem identified in the
301(e) study.” Id. The Conference Report also states that
State statutes of limitation define the time in which
an injured party may bring a lawsuit seeking com-
pensation for his injuries against the party alleged to
be responsible for those injuries . . . . In the case of
a long-latency disease, such as cancer, a party may
be barred from bringing his lawsuit if the statute of
limitations begins to run at the time of the first injury
—rather than from the time when the party “discov-
ers” that his injury was caused by the hazardous sub-
stance or pollutant or contaminant concerned.
Id. Taken together, the reports show that Congress’s primary
concern in enacting § 309 was to adopt the discovery rule in
situations where a plaintiff may lose a cause of action before
becoming aware of it—precisely the type of circumstance
involved in this case. This predicament can be caused by
either statutes of limitation or statutes of repose, and is proba-
bly most likely to occur where statutes of repose operate.
Thus, given the ambiguity of the term “statute of limitations”
at the time of the adoption of § 309, taken alongside the only
evidence of Congressional intent, it is evident that the term
“statute of limitations” in § 309 was intended by Congress to
include statutes of repose.
Sun argues that because the 301(e) Report differentiated
between statutes of limitation and statutes of repose that Con-
gress, by only using the former term, evidenced intent to
exclude the latter. However, this approach ignores the Confer-
ence Report, which states that the statute “addresses the prob-
lem identified in the 301(e) study.” 301(e) Report, at 256. The
problem of plaintiffs losing their cause of action before they
know they have it could not have been addressed unless stat-
utes of repose were addressed.
Sun cites the 301(e) Report for the proposition that statutes
of repose are excluded because “the question is when the stat-
15522 MCDONALD v. SUN OIL CO.
ute begins to run—the time when the action accrues . . . .”
Sun asserts that use of the word “accrues” in the report, a
word which typically applies to discovery of injury in statutes
of limitations cases, is evidence that Congress intended to
exclude statutes of repose from the definition of statutes of
limitation. However, the cases Sun cites do not support this
proposition. For example, in Freier v. Westinghouse Elec.
Corp., 303 F.3d 176, 196-97 (2d Cir. 2002), the court stated
that it is “indisputedly clear that Congress intended, in the
cases to which [§ 309] applies, that the [Federally Required
Commencement Date] preempt state law accrual rules . . . .”
However, this says nothing about whether Congress intended
that § 309 apply to statutes of repose. Statements that Con-
gress clearly intended § 309 to preempt state law accrual rules
are not evidence that those are the only rules it intended to
preempt.
Next, Sun argues that Congress could not have been igno-
rant of statutes of repose because it has enacted several of
them. Sun cites four sections of the United States Code that
contain provisions which would qualify as statutes of repose
under the definition discussed above. From this Sun con-
cludes that Congress knew the distinction when it omitted
statutes of repose from § 309. It is telling, however, that none
of the four sections cited by Sun use the phrase “statute of
repose.” In fact, an electronic search of the text of the United
States Code also fails to reveal a single instance of the phrase
“statute of repose.” The fact that Congress knew how to enact
a statute of repose, but to date has chosen not to label any as
such is not legislative intent that supports Sun. Rather, it is
additional evidence that the term “statute of limitations” was
ambiguous.
Sun also argues that § 309 is inapplicable by its own terms
because it requires “personal injury, or property damages,
which are caused or contributed to by exposure to any hazard-
ous substance, or pollutant or contaminant, released into the
environment from a facility . . . .” 42 U.S.C. § 9658(a). There
MCDONALD v. SUN OIL CO. 15523
are no known personal injuries here. Sun argues there are also
no property damages caused by a release into the environ-
ment. Even if one ignores the difference in value between
mercury-free calcine and the calcine the McDonalds received,
there is still damage in the form of $70,000 in cleanup costs
associated with the spreading of the calcine on Mr. McDon-
ald’s driveway and parking lot. Sun’s argument that under the
statute there was no property damage caused by a release into
the environment lacks merit.
[5] Lastly, Sun argues that the negligence claim is invalid
because the alleged violations are within the scope of contrac-
tual duties. It is true that in order to “bring a tort claim based
on conduct that is also a breach of a contract, a plaintiff must
allege . . . [that a breach of an] independent standard of care
stems from a particular special relationship between the par-
ties.” Strader v. Grange Mut. Ins. Co., 39 P.3d 903, 906 (Or.
Ct. App. 2002). Sun characterizes the conduct that it claims
gives rise to both the negligence and contract claims as a
“failure to provide mercury-free calcine and associated omis-
sions and misrepresentations.” However, the negligence claim
is not based on any alleged promise to provide mercury-free
calcine, but rather on alleged failures to warn about the mer-
cury in the calcine and to test the calcine. A jury could find
that there was no oral agreement, but that Sun was negligent
in failing to warn that, for example, the calcine was not tested.
The negligence claim should not have been dismissed.
B. CONTRIBUTION
[6] The district court also granted summary judgment to
Sun on the McDonalds’ claim for contribution under Or. Rev.
Stat. § 465. The statute provides that a class of persons “shall
be strictly liable for those remedial action costs incurred by
the state or any other person that are attributable to or associ-
ated with a facility and for damages for injury to or destruc-
tion of any natural resources caused by a release . . . .” Or.
Rev. Stat. § 465.255(1). “Remedial action costs” are defined
15524 MCDONALD v. SUN OIL CO.
as “reasonable costs which are attributable to or associated
with a removal or remedial action at a facility, including but
not limited to the costs of administration, investigation, legal
or enforcement activities, contracts and health studies.” Id. at
§ 465.200(24). For there to be reasonable costs, there must
first be a removal or remedial action. A “remedial action” is
an action “consistent with a permanent remedial action taken
instead of or in addition to removal actions in the event of a
release or threatened release of a hazardous substance into the
environment, to prevent or minimize the release of a hazard-
ous substance so that it does not migrate to cause substantial
danger to present or future public health, safety, welfare or the
environment.” Id. at (23).
[7] The issue for the Court is whether remedial action must
be initiated by the government, or whether a private party
may bring the remedial action. The district court and Sun take
the view that, for “remedial action” to exist, the State must
undertake, require, or oversee the action. We agree. Section
465.315(1)(b) anticipates that the Director of the DEQ “shall
select or approve remedial actions . . .” and § 465.400(2)
directs DEQ to “adopt rules establishing the levels, factors,
criteria or other provisions for the degree of cleanup including
. . . the selection of remedial actions necessary to assure pro-
tection of the public.” Pursuant to § 465.400(2), DEQ
engaged in rulemaking resulting in Or. Admin. R. § 340-122-
0071(3), which states that “[a]fter a site evaluation is com-
pleted, [DEQ] will determine whether a preliminary assess-
ment, removal, remedial action, other action, or no further
action is needed at the facility.” This rule suggests that the
determination whether remedial action will occur will be
made by DEQ, after a preliminary assessment is made, and
not by the parties. Therefore, in order to proceed with reme-
dial action, it was necessary for the McDonalds to get
approval from DEQ. As they did not, the district court’s grant
of summary judgment on this issue will be affirmed.
MCDONALD v. SUN OIL CO. 15525
C. BREACH OF CONTRACT
The McDonalds asserted a breach of contract claim based
upon an alleged oral warranty by Sun’s Wally Freeman that
the calcine was free of mercury. The district court granted
summary judgment to Sun on this claim, citing the parol evi-
dence rule and the merger doctrine. The McDonalds argue
that it was error to grant summary judgment on either of these
grounds. Because the Court concludes that the district court
properly granted summary judgment to Sun based upon the
parol evidence rule, we affirm the district court’s grant of
summary judgment to Sun on the breach of contract claim and
find it unnecessary to reach the merger doctrine issue.
1. Parol Evidence Rule
[8] Oregon’s statutory parol evidence rule states that
“[w]hen the terms of an agreement have been reduced to writ-
ing by the parties, it is to be considered as containing all those
terms, and therefore there can be . . . no evidence of the terms
of the agreement, other than the contents of the writing . . . .”
Or. Rev. Stat. § 41.740. “The term ‘agreement’ includes deeds
. . . as well as contracts between parties.” Id. However, the
rule does not bar evidence extrinsic to the writing unless the
writing is an integrated agreement. Abercrombie v. Hayden
Corp., 883 P.2d 845, 850 (Or. 1994) (citing Land Reclama-
tion v. Riverside Corp., 492 P.2d 263 (Or. 1972)). An agree-
ment is integrated if “the parties intended [it] to be a final
expression of some or all of the terms . . . .” Abercrombie, 883
P.2d at 850; see also Restatement (Second) of Contracts § 209
(1979); 2 Farnsworth, Farnsworth on Contracts § 7.3 (1990);
Calamari & Perillo, Contracts § 3-3 (3d ed 1989). If a writing
is completely integrated, it may not be contradicted or supple-
mented by prior terms. Abercrombie, 883 P.2d at 851. How-
ever, if it is partially integrated, evidence of prior consistent,
additional terms is allowed so long as such terms do not con-
tradict the writing. Id. Whether the parties intended a writing
to be integrated or not and whether an integrated writing is
15526 MCDONALD v. SUN OIL CO.
completely or partially integrated are both questions of fact
for the court. Abercrombie, 883 P.2d at 851. The court may
consider all the circumstances, including parol evidence, to
determine whether the parties intended the writing to be a
complete or partial integration. Id. “An integrated writing is
partially integrated if the writing omits a consistent, additional
agreed-upon term, which was (1) agreed to by the parties for
separate consideration, or (2) such a term as in the circum-
stances might naturally be omitted from the writing.” Id.
[9] In this case, it is undisputed that if the alleged warranty
that the calcine was free of contamination had been made, the
warranty would be consistent with the terms of the deed. It is
similarly clear that there was no separate consideration for the
alleged warranty. The key issue therefore is whether the
alleged warranty “might naturally be omitted from the writ-
ing.” Restatement (Second) of Contracts § 216 cmt. d. (1979).
[10] The district court found that Mr. McDonald, as the
owner of a number of businesses, a party to numerous real
estate transactions, and user of the property for a business
purpose, was a sophisticated businessman and that “parties
with business experience are more likely to reduce their entire
agreement to writing than parties without such experience
. . . .” Hatley v. Stafford, 588 P.2d 603, 609 (Or. 1978). The
court also found that the deed was prepared by Mr. McDon-
ald’s attorney and that it expressly addressed the issue of cal-
cine and did not offer any warranties concerning its
commercial viability. Taken together, these circumstances
show that if there had been a prior oral agreement warranting
the calcine, it would have been unnatural for Mr. McDonald’s
attorney to omit that term from the deed. For these reasons,
we affirm the district court’s grant of summary judgment to
Sun on the parol evidence rule issue and the contract claim.
D. FRAUD
[11] Last, the McDonalds argue that the district court erred
when it sustained Sun’s motion for summary judgment and
MCDONALD v. SUN OIL CO. 15527
dismissed their fraud claim. In order to succeed on their fraud
claim, it is the McDonalds’ burden to show by clear and con-
vincing evidence:
(1) a representation;
(2) its falsity;
(3) its materiality;
(4) the defendant’s knowledge of its falsity or igno-
rance of its truth;
(5) the defendant’s intent that the representation
should be acted on by the plaintiff and in the manner
reasonably contemplated;
(6) the plaintiff’s ignorance of its falsity;
(7) the plaintiff’s reliance on its truth;
(8) the plaintiff’s right to rely on the representation;
(9) and the plaintiff’s resulting injury.
Smallwood v. Fisk, 934 P.2d 557, 559 (Or. App. 1997) (citing
Rice v. McAlister, 519 P.2d 1263 (Or. 1974)). The key issue
here is whether Sun’s employee Freeman knew that his
alleged statement that there was no mercury in the calcine was
false when he made it or that he was ignorant regarding its
truth or falsity. The McDonalds concede that no evidence in
the record directly proves what Freeman knew about the
cleanliness of the calcine at the time of the negotiations. The
McDonalds argue that a jury could find that in 1973 Freeman
was reckless to rely on antiquated 1958 field testing designed
only to evaluate whether there was commercially recoverable
mercury in the calcine when he allegedly made the statement
to McDonald, or that he was reckless because of the high
15528 MCDONALD v. SUN OIL CO.
probability that he knew nothing about Sunoco’s 1958 field
assay. We disagree. The McDonalds offered no evidence to
support these theories. The only evidence in the record bear-
ing on Freeman’s mental state at the relevant time is that tests
conducted during the 1930s, 1940s, and 1950s would have
shown that all of the mercury had been removed from the cal-
cine, that by 1973 common assay methods would still not
have detected mercury in the calcine, and that calcine was
used in road construction at least into the 1980s.
[12] The McDonalds suggest that because there is no evi-
dence that Freeman ever went to the mine before meeting
with McDonald, because there is no evidence that Cordero
Mining ever reported the results of its field assays to corpo-
rate, because “[e]vidence about what Freeman knew or did
not know about the calcine is conspicuously absent from the
voluminous documents produced by Sunoco,” and because
they are entitled to all reasonable inferences at summary judg-
ment, that they have shown that the “record fails to establish
that Freeman had any basis for representing the calcine to be
mercury-free.” (Appellants’ Reply Br. 26 (emphasis in origi-
nal).) However, this statement ignores the burden of proof.
The McDonalds had the burden of presenting evidence suffi-
cient that a reasonable jury could find by clear and convincing
evidence that Freeman made the statements with ignorance as
to their truth. It was not Sun’s burden to show that Freeman
had a basis for making the statements; it was the McDonalds’
burden to show that he did not. The McDonalds provide no
evidence about Freeman’s knowledge of falsity, and therefore
they cannot meet their burden. The district court’s grant of
summary judgment on the fraud issue will be affirmed.
IV. CONCLUSION
The district court erred in granting summary judgment to
Sun on the McDonalds’ negligence claim and that claim is
remanded for trial. The district court correctly concluded that
summary judgment was proper on the McDonalds’ contribu-
MCDONALD v. SUN OIL CO. 15529
tion, breach of contract and fraud claim. Each party shall pay
their own costs.
AFFIRMED in part, REVERSED in part, and
REMANDED.