Type: Law Bulletins
Date: 08/25/2016

Indiana Court of Appeals Clarifies Limits on Claims Brought under Two Environmental Statutes

In Schuchman/Samberg Investments, Inc. v. Hoosier Penn Oil Co. Inc, et al., the Indiana Court of Appeals recently held that a landowner’s claim under Indiana’s Environmental Legal Action Statute (“ELA”), Ind. Code § 13-30-9-1 et seq., is subject to the six-year statute of limitations applicable to property damage claims and that Indiana’s Petroleum Releases Statute (“PRS”), Ind. Code § 13-24-1-1 et seq., does not create a private right of action.

The plaintiff, Schuchman/Samberg Investments (“SSI”), owns an environmentally contaminated piece of property on the southeast side of Indianapolis (the “Site”) that it purchased in early 1998. In November 2009, SSI brought several claims, including those pursuant to the ELA and PRS, against four former owners and/or operators of the Site. Three of the four defendants moved for partial summary judgment on SSI’s ELA and PRS claims.

With respect to the ELA claim, the trial court held that the six-year statute of limitations applied, reasoning that SSI’s claim was one for real property damage rather than contribution. The trial court then held that the statute of limitations was triggered at the earliest in 1994 when SSI’s predecessor-in-interest received a Corrective Action Plan indicating that the Site was contaminated and at the latest in 1998 when SSI received a July 1998 Phase I listing a recognized environmental condition. Because SSI did not bring its ELA claim for 11 years after it knew or reasonably should have known the Site was contaminated, the trial court granted summary judgment for the defendants.

The Court of Appeals affirmed the application of the six-year statute of limitations, holding that because SSI sought recovery of costs incurred to remediate its own property, “[n]o amount of careful wording or clever analysis can transform what is so plainly a claim for damage to real property into one for contribution.” The Court of Appeals also affirmed the trial court’s determination that SSI knew or reasonably should have known that the Site was contaminated in July 1998. In holding July 1998 as the latest trigger date, the court focused on SSI’s excavation of two-feet of soil prior to purchasing the Site, SSI’s statement that the soil then “looked clean” after that excavation without performing any testing and SSI’s receipt of a July 1998 Phase I indicating that the Site’s historical use as a bulk oil storage facility was a recognized environmental condition. The court held that by July 1998 at the latest, and under the reasonable person standard, “SSI had knowledge sufficient to trigger its duty to inquire further in order to determine whether a legal wrong had occurred.” As a result, SSI’s ELA claim, which was brought 11 years later, was time-barred.

Notably, in 2011, the General Assembly enacted Indiana Code § 34-11-2-11.5, which provides that a person bringing an ELA claim may recover “costs incurred not more than ten (10) years before the date the action is brought.” The court of Appeals stated, however, that this provision “says nothing of the time frame within which an ELA claim must be brought or the events that trigger the running of that period” and, instead, “imposes a limitation on the types of damages recoverable in an ELA claim in the form of a ten-year look-back period.” The court has seemingly left the door open for a determination of whether the six-year statute of limitations would work in conjunction with the ten-year look-back. As a result, plaintiffs and defendants in an ELA action should be mindful of both when pursuing or defending against those claims.

With respect to the PRS claim, the trial court held that the circumstances of this case did not provide SSI with a private right of recovery for its costs incurred in remediating contamination arising from a release of petroleum and, therefore, granted summary judgment in favor of the defendants. The Court of Appeals affirmed, explaining that “the PRS extends a limited right of recovery to private parties” and “allows an owner, operator, or responsible party to recover from another responsible party where the State has incurred remediation costs … and passed those costs on to the owner, operator, or responsible party seeking recovery.” In this case, the state (i.e., IDEM) did not incur remedial costs pursuant to the PRS and, consequently, passed no costs on to SSI. Accordingly, the court held that, under the facts of this case, SSI did not have a private right of action pursuant to the PRS to recover costs from the defendants.

The court’s analysis of the PRS is helpful because it is the first published Indiana appellate court case to interpret the PRS and evaluate when a party may have a private right of action.

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