The Seventh Circuit Court of Appeals recently held that the Indiana ten-year “catch-all” statute of limitations may apply to environmental legal actions filed prior to 2011.
In Bernstein v. Bankert, Nos. 11-1501, 11-1523 (7th Cir. Dec. 19, 2012), defendants are the former owners and operators of a CERCLA site called the Third Site. In October 1999, the EPA entered into an Administrative Order by Consent (“1999 AOC”) with a number of potentially responsible parties for contamination at the Third Site. The 1999 AOC required investigation and remediation at the Third Site and was complied with fully to its completion. However, in November 2002, the parties entered into a second AOC (“2002 AOC”) to perform further work at the site. A trust had also been created to finance and oversee the cleanup project at the site. The Bankerts did not meet their obligations to pay into the trust, causing the trustees to file suit on April 1, 2008. The trustees brought several environmental claims against defendants to recover cleanup costs associated with the site.
In their complaint, the plaintiffs included a count under the Indiana Environmental Legal Actions statute (“the ELA”). The Indiana General Assembly enacted the ELA statute in 1997 to provide a legal action to recover reasonable costs of a removal or remedial action involving hazardous substances or petroleum. It was not until 2011 that the ELA statute was amended to included its own statute of limitations; therefore, either the ten-year “catch-all” statute of limitations or the six-year real property damage statute of limitations may apply to an Indiana environmental legal action filed prior to 2011.
In this case, the defendants moved for summary judgment on the ELA count, arguing that such a claim was barred by the applicable statute of limitations. The district court agreed and dismissed the claim. On appeal, the Seventh Circuit reversed the trial court’s ruling. Because the ELA statute did not include its own statute of limitations at the time the case was filed, each party argued for the application of a different statute of limitations. The plaintiffs argued that Indiana’s ten-year “catch-all” statute of limitations should apply, while the defendants asserted that the six-year statute of limitations for actions to recover damages to real property should apply. To resolve this dispute, the Seventh Circuit analyzed two Indiana Supreme Court cases, Pflanz v. Foster, which explained the application of the ten-year statute of limitations, and Penial Group, Inc. v. Bannon, which explained the application of the six-year property damage statute of limitations. The court then held that the ten-year statute of limitations should apply in this case because the underlying nature of the claim is what matters in making a statute of limitations determination. Here, the plaintiffs have no proprietary interest in the property at issue and, therefore, cannot sue another party for damages to such property. Because no other Indiana statute limits the plaintiffs’ ELA claim, the court found that the ten-year “catch-all” statute of limitations applies in this case. It is important to note that this holding still leaves open the possibility that ELA claims can be limited by the six-year property damage statute of limitations if an ELA plaintiff has a proprietary interest in the property on which the cleanup is ordered.
After determining that the ten-year statute of limitations applies to the plaintiffs’ ELA claim, the court further explained that this statute of limitations begins to run “when a claimant knows or in the exercise of ordinary diligence should have known of the injury.” In environmental cases in which a party seeks to recover cleanup costs, “the damage or injury at issue is the cleanup obligation assessed by the controlling government agency, not the mere fact of contamination.” Therefore, since plaintiffs brought their action within 10 years of the cleanup order, their action was timely.
Taft has written extensively about the statute of limitations applied to the ELA. For example, one such article discusses the applicability of both the six- and ten-year statute of limitations, while another article discusses the implementation of the ELA-specific statute of limitations.