McCabe Corp. v. Environmental Protection Agency

[Cite as McCabe Corp. v. Environmental Protection Agency, 2012-Ohio-3643.]
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
MCCABE CORPORATION, et al.
Plaintiffs
v.
OHIO ENVIRONMENTAL PROTECTION AGENCY, et al.
Defendants
Case No. 2009-01476
Judge Joseph T. Clark
DECISION
{¶ 1} On November 28, 2011, defendants filed a motion for summary judgment
pursuant to Civ.R. 56(B). With leave of court, plaintiffs filed a response on January 10,
2012. On January 27, 2012, defendants filed a reply. The motion is now before the
court on a non-oral hearing pursuant to L.C.C.R. 4(D).
{¶ 2} Civ.R. 56(C) states, in part, as follows:
{¶ 3} “Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits, transcripts of
evidence, and written stipulations of fact, if any, timely filed in the action, show that
there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law. No evidence or stipulation may be considered except as
stated in this rule. A summary judgment shall not be rendered unless it appears from
the evidence or stipulation, and only from the evidence or stipulation, that reasonable
minds can come to but one conclusion and that conclusion is adverse to the party
against whom the motion for summary judgment is made, that party being entitled to
Case No. 2009-01476 -2- ENTRY
have the evidence or stipulation construed most strongly in the party’s favor.” See also
Gilbert v. Summit Cty., 104 Ohio St.3d 660, 2004-Ohio-7108, citing Temple v. Wean
United, Inc. (1977), 50 Ohio St.2d 317.
{¶ 4} Plaintiff Edward McCabe is a licensed professional engineer and the CEO
of plaintiff McCabe Corporation, which engages in the business of environmental
remediation. On June 29, 1998, plaintiffs bought the land and buildings located at 636
North Irwin Street, in Dayton, Ohio. In 1990, the site where the buildings were located
had been designated as a hazardous waste facility. On September 18, 1998,
defendants filed a complaint against the previous owners of the site, including Republic
Environmental Systems (Ohio), Inc., f.k.a. Ecolotec, Inc., Republic Environmental
Systems, Inc., and BRAC Inc., for violations of Ohio’s hazardous waste laws. On that
same date, the previous owners entered into a consent order with defendants, which
required that numerous steps be taken to address the matters of soil and ground water
contamination at the facility and to maintain certain financial assurance and liability
coverage for the facility. The previous owners initially maintained a trust fund to assure
funding of the closure of the facility. Plaintiffs sent a written notice to defendants in
1998, stating that only the property and buildings were being sold to them, and that no
attempt was made to transfer any license, permit, or other right to operate a regulated
facility at that location. Plaintiffs also informed defendants that the previous owners
would complete the closure requirements under the terms of the consent order.
However, on July 20, 2007, defendants filed a “motion to show cause, written charges in
contempt and request for hearing” against plaintiffs for failure to comply with the terms
of the consent order.
{¶ 5} Plaintiffs allege that defendants fraudulently and tortiously administered the
closure of the facility and that defendants’ actions resulted in interference with plaintiffs’
contract rights. In their complaint, plaintiffs allege that defendants knew of
contaminated conditions at the site but concealed such and failed to include those
Case No. 2009-01476 -3- ENTRY
conditions in the closure plan; that defendants knew of contaminated conditions at the
site and affirmatively represented that those conditions were provided for in the closure
plan; that defendants understated the costs necessary to complete the work to
remediate the site; that the false, misleading, inaccurate, and erroneous statements of
defendants concerning the conditions at the site constituted actionable non-disclosure in
violation of defendants’ duty to disclose the conditions; and that defendants fraudulently
induced plaintiffs to purchase the site.
{¶ 6} On July 6, 2009, the court issued an entry wherein it dismissed plaintiffs’
claims of defamation and any other claims that accrued on or before January 20, 2007,
on the basis that they were barred by the applicable statute of limitations. However, the
court further stated: “If plaintiffs discovered defendants’ allegedly fraudulent conduct
when the motion to show cause was filed [on July 20, 2007], plaintiffs arguably have
timely filed a claim for fraud. * * * Therefore, any claims that accrued on or after January
20, 2007, may be cognizable in this court.”
{¶ 7} In their motion for summary judgment, defendants assert that plaintiffs’
remaining claims are barred by the doctrine of res judicata, inasmuch as the issues
before this court were determined by the Montgomery County Court of Common Pleas,
which judgment was affirmed by the Second District Court of Appeals.
{¶ 8} Under the doctrine of res judicata, “[a] valid, final judgment rendered upon
the merits bars all subsequent actions based upon any claim arising out of the
transaction or occurrence that was the subject matter of the previous action.” Grava v.
Parkman Twp., 73 Ohio St.3d 379, 1995-Ohio-331, syllabus. “In Ohio, ‘[t]he doctrine of
res judicata encompasses the two related concepts of claim preclusion * * * and issue
preclusion, also known as collateral estoppel.’” State ex rel. Davis v. Pub. Emps.
Retirement Bd., 120 Ohio St.3d 386, 2008-Ohio-6254, ¶27, quoting O'Nesti v. DeBartolo
Realty Corp., 113 Ohio St.3d 59, 2007-Ohio-1102, ¶6. “‘[I]ssue preclusion, [or]
collateral estoppel, holds that a fact or a point that was actually and directly at issue in a
Case No. 2009-01476 -4- ENTRY
previous action, and was passed upon and determined by a court of competent
jurisdiction, may not be drawn into question in a subsequent action between the same
parties or their privies, whether the cause of action in the two actions be identical or
different.’” Id., quoting Ft. Frye Teachers Assn., OEA/NEA v. State Emp. Relations Bd.,
81 Ohio St.3d 392, 395, 1998-Ohio-435. “‘While the merger and bar aspects of res
judicata have the effect of precluding the relitigation of the same cause of action, the
collateral estoppel aspect precludes the relitigation, in a second action, of an issue that
had been actually and necessarily litigated and determined in a prior action that was
based on a different cause of action.’” Id.{¶ 9} Defendants have attached to their motion a copy of the Court of Appeals
decision in State, ex rel. Rogers v. Republic Environmental Systems, Inc., et al., and
McCabe Corp., et al., 2nd Dist. Nos. 23513, 23644, 23723, 2010-Ohio-5523, wherein
plaintiffs appealed from several orders issued by the Montgomery County Court of
Common Pleas. Three separate appeals were consolidated from Case No. 1998-CV-
3499.1
{¶ 10} The Second District Court of Appeals decision arose from the same
transaction as set forth in plaintiffs’ complaint, namely, the 1998 sale of a hazardous
waste facility located at 636 N. Irwin Street in Dayton, Ohio. The court of appeals
affirmed the trial court’s findings that the purchase agreement established that plaintiffs
took possession of the facility pursuant to the terms of the Consent Order; that in late
1998, McCabe allegedly discovered the presence of hazardous materials at the facility
which were not disclosed prior to the sale of the property; that on September 17, 2008,
McCabe filed an amended answer and cross-claim, as well as a third-party complaint
1
The court notes that the court of appeals decision was not incorporated into a properly framed
affidavit pursuant to Civ.R. 56(E). However, plaintiffs did not object to its use in their response.
Therefore, the decision shall be considered in support of defendants’ motion. “When ruling on a motion
for summary judgment, a trial court may consider documents other than those specified in Civ.R. 56(C) in
Case No. 2009-01476 -5- ENTRY
alleging claims for fraud, fraudulent inducement, and/or misrepresentation; that
McCabe’s claims for fraud and fraudulent inducement were barred by the applicable
statute of limitations; and that McCabe was properly held in contempt for failure to
comply with the Consent Order. See Rogers, supra, ¶3-9, 21, 49-50, 68.
{¶ 11} The court of appeals also stated: “McCabe does argue briefly that the
Ohio EPA, acting in conjunction with Republic, failed to disclose hazardous conditions
that it was allegedly aware of at the facility. The record, however, does not support
McCabe’s bare assertion in this regard. The record establishes that there were no
communications between McCabe and the Ohio EPA regarding the facility until after
McCabe purchased the facility from Republic. Further, the evidence presented at the
hearing before the trial court establish[es] that the Ohio EPA did not even know of
McCabe’s involvement with the facility until well after the Consent Order had been
finalized and filed. Thus, no evidence exists which supports McCabe’s affirmative
defense that the State participated in any way with Republic to fraudulently induce
McCabe to purchase the facility.” Id., ¶63.
{¶ 12} In response to the motion for summary judgment, plaintiffs state: “The
subsoil contamination known to the OEPA prior to the December 1997 Contract was
discovered by the McCabes for the first time in November/December 1998. 4/29/08 Tr.,
at 112:1-22. Despite McCabes’ 1998 discovery of contamination not disclosed in the
Closure Plan, it was not until January 2008 (ten (10) years later) that McCabe
discovered that the OEPA knew of the presence of this undisclosed
contamination as early as 1995. 9/16/08 Tr., at 37:21-21, 77:1-93:6, McCabe Exhibits
2 & 3. It is the 2008 discovery that the OEPA knew of the undisclosed conditions
prior to Closure Plan approval which triggers this action against the State and the
OEPA.” (Emphasis in original.)
support of the motion when no objection is raised.” Lytle v. City of Columbus (1990), 70 Ohio App.3d 99,
Case No. 2009-01476 -6- ENTRY
{¶ 13} Despite plaintiffs’ contention that they discovered alleged fraud in 2008,
the doctrine of res judicata and the adjunct principle of collateral estoppel “‘applies to
extinguish a claim by the plaintiff against the defendant even though the plaintiff is
prepared in the second action (1) To present evidence or grounds or theories of the
case not presented in the first action, or (2) To seek remedies or forms of relief not
demanded in the first action.’” Grava, supra, at 383, quoting 1 Restatement of the Law
2d, Judgments (1982) 209, Section 25.
{¶ 14} Upon review, the court finds that the facts alleged in plaintiffs’ complaint
arise out of the same transaction or occurrence that was the subject matter of the case
in the Montgomery County Court of Common Pleas; that a court of competent
jurisdiction determined that plaintiffs were bound by the Consent Order; that plaintiffs
were properly found in contempt of the Consent Order; and that plaintiffs’ claims of
fraudulent inducement and fraudulent misrepresentation were barred by the statute of
limitations. Accordingly, the court finds that the doctrine of res judicata precludes re-
litigation of the issues raised in plaintiffs’ complaint. Consequently, there are no
genuine issues of material fact and defendants are entitled to judgment as a matter of
law. Defendants’ motion for summary judgment shall be granted.
104.
Case No. 2009-01476 -7- ENTRY
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
MCCABE CORPORATION, et al.
Plaintiffs
v.
OHIO ENVIRONMENTAL PROTECTION AGENCY, et al.
Defendants
Case No. 2009-01476
Judge Joseph T. Clark
JUDGMENT ENTRY
{¶ 15} A non-oral hearing was conducted in this case upon defendants’ motion for
summary judgment. For the reasons set forth in the decision filed concurrently
herewith, defendants’ motion for summary judgment is GRANTED and judgment is
rendered in favor of defendants. Court costs are assessed against plaintiffs. The clerk
shall serve upon all parties notice of this judgment and its date of entry upon the journal.
_____________________________________
JOSEPH T. CLARK
Judge
Case No. 2009-01476 -8- ENTRY
cc:
Randall W. Knutti Norman A. Abood
Assistant Attorney General 203 Fort Industry Square
150 East Gay Street, 18th Floor 152 North Summit Street
Columbus, Ohio 43215-3130 Toledo, Ohio 43604
002
Filed February 3, 2012
To S.C. Reporter August 13, 2012