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Muncie v. Weiseman

Court of Appeals of Kentucky

April 21, 2017



          BRIEFS FOR APPELLANTS: Joseph E. Conley, Jr. Florence, Kentucky.

          BRIEF FOR APPELLEE: Kenneth A. Bohnert Bradley R. Palmer Louisville, Kentucky.



          LAMBERT, J., JUDGE.

         Cindy and Jim Muncie have appealed from the order of the Oldham Circuit Court granting summary judgment to Patricia Wiesemann[1] on their claim for stigma damages arising from an oil leak on Wiesemann's property that caused damage to the Muncies' property. Finding no error, we affirm.

         The underlying facts of this case are briefly set forth in a series of correspondence between and from Kentucky officials in the Energy and Environment Cabinet. A memorandum dated January 13, 2011, from Environmental Response Branch Manager Robert Francis to Energy and Environment Cabinet Secretary Leonard K. Peters provided in relevant part as follows:

On December 2, 2010, the Energy and Environment Cabinet's Environmental Response Branch responded to a release of 1000 gallons of #2 Fuel Oil (aka Home Heating Oil) from a failed underground storage tank. The tank is an "unregulated" home heating oil tank at an unoccupied house owned by the Martha Magel Estate. The oil migrated several hundred feet through the subsurface and began entering the basement sump pump at the home of Jim and Cindy Muncie. The executrix of the Martha Magel Estate hired an environmental contractor to remove the failed tank, and to prevent the entry of petroleum into the Muncie residence. However, as of December 8, petroleum continued to enter the Muncie residence. Additionally, the sump pump failed, causing the basement to be flooded with petroleum contaminated water.
Based on the continued impacts to an off-site residence, it was necessary that our agency implement emergency abatement procedures at the Muncie residence to limit any human health or environmental impacts. In accordance with the statutory authority stipulated in KRS 224.46 580 (3), the Department is requesting that an environmental emergency be declared to expedite the efforts that occurred to limit any human health or environmental impacts.

         The memorandum went on to request funds from the Hazardous Waste Assessment Account to fund the abatement actions; the estimated cost of the emergency phase of the cleanup of the site was not expected to exceed $70, 000.00. In a letter to Wiesemann dated January 3, 2012, Ron Lovitt, a supervisor from the Petroleum Cleanup Section of the Superfund Branch, provided the following information:

The Kentucky Division of Waste Management (KDWM) has reviewed the final sampling data taken December 15, 2011 to confirm the results of remedial activities preformed [sic] on the Muncie property to remediate the contaminated soil and groundwater. The data documents that the soil and groundwater has been remediated and no further action is needed at both the Magel Estate and Muncie properties. The analytical results document that the previously impacted areas are all below regulated levels. Therefore, KDWM concludes that no further action is required at this time. This site has met the Option C (Clean Closure-Restored) cleanup requirements.
This closure brings this site into compliance with 401 KAR 100:030 and KRS 224.01-405. This compliance extends only to the known aspects of this release and any additional information on this release or other releases may require additional work.

         Auto-Owners Insurance Company provided liability insurance for Wiesemann, and in May 2011, Auto-Owners filed an Interpleader Complaint in the United States District Court for the Western District of Kentucky in Louisville against Wiesemann, the Muncies, Samuel and Bonnie Dunkle, Shield Environmental Associates, Inc., and the Kentucky Department for Environmental Protection (specifically, its Environmental Response Team and the division of Waste Management, Superfund Branch). Auto-Owners had $300, 000.00 in liability coverage for claims made against Wiesemann related to the oil leak in November 2010 or the cleanup of the leak.

         The parties in the federal action entered into a partial settlement and partial release agreement in September 2013. Auto-Owners had already paid $112, 221.30 to parties for cleanup costs, leaving a remaining balance of $187, 778.61, which it paid into the Clerk's registry account. Doing so discharged Auto-Owners' obligation to any claims from third parties. From those funds, the Muncies received $60, 000.00, the Dunkles received $7, 000.00, Shield Environmental Associates received $70, 000.00, and the Kentucky Department for Environmental Protection received $50, 778.61. The parties also agreed to a dismissal of all claims upon the effective date of the agreement, with the following the exceptions:

The Agreed Order shall provide for dismissal of all claims by all parties against Wiesemann and the Estate of Magel, with prejudice, except for (i) claims by the Muncies asserting the diminution of the value of their real estate due to the stigma resulting from the contamination, and (ii) for claims asserted by the Muncies for personal injuries. The Agreed Order shall further provide for dismissal with prejudice of all other claims, except the Muncie's [sic] claims against Shield for basement interior damage (including any floor covering or other fixtures affixed to that part of the real estate) arising out of performance of the cleanup services, generally set forth in Count 5 of the Muncie's [sic] Amended Cross-Claim, Exhibit 3 to document No. 40 in the Action. . . . All claims by the Muncies for contamination and/or damage to the exterior of their home and surrounding grounds, including but not limited to, the pool liner, driveway, landscaping, and/or septic tank, arising from either or both the leak or clean-up activities, are not within the scope of this reservation of claims, and thus are fully released and discharged.

         The federal action was dismissed shortly thereafter pursuant to the terms of the agreement.

         In October 2013, the month after the parties entered into the agreement in the federal action, the Muncies filed a state claim in Oldham Circuit Court against Wiesemann and Shield Environmental Associates.[2] They alleged 1) that Wiesemann negligently maintained or operated the fuel tank at the property, which resulted in the oil discharge and damage at the Muncies' residence; 2) that Wiesemann caused a trespass on their land through the negligent or reckless introduction of oil from her property; and 3) that Wiesemann's actions created a permanent nuisance on their property. In her answer, Wiesemann opposed the Muncies' allegations in the complaint and raised several affirmative defenses, including that the complaint failed ...

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