2015 WL 6408191
D. Md.2015Background
- Chevron alleges ongoing petroleum releases from a 3.1-mile underground pipeline in southeast Baltimore that migrated through groundwater into a stormwater channel and thence the Harbor; Chevron claims over $30 million in remediation costs.
- Gulf originally owned the pipeline; Chevron acquired it in 1985 and sold the pipeline in 1994. The Purchase and Sale Agreement assigned pre-closing contamination to Chevron and post-closing contamination to the buyer, with notice and mitigation duties and an indemnity regime in §13.
- Chevron sued PF & T and Apex asserting 12 counts: breach of contract, contractual indemnity, OPA cost recovery/contribution, PSA injunctive relief, Maryland statutory and common-law claims, quasi-contract claims, and declaratory relief.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1) and (6). The court dismissed all claims against Apex for inconsistent pleading and lack of contractual connection; considered claims only as to PF & T.
- Court dismissed OPA claims because Chevron alleged release into groundwater (then migrating to the Harbor) and the court held groundwater discharges are not cognizable under the OPA; dismissed Maryland Environmental Article and multiple tort and quasi-contract claims for statutory or doctrinal defects.
- Court denied dismissal of the PSA injunctive claim (standing/redress) and allowed breach of contract and indemnity claims to proceed in part, subject to limitations (continuing-harm tolling limits damages to 3 years pre-suit; indemnity limited to costs after Chevron’s July 8, 2014 notice).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Apex is a proper defendant | Apex and PF & T were collectively owners/operators; identical claims against both | Group pleading fails; Apex not party to the sale agreement and no veil-piercing facts | Dismiss Apex from all counts (contradictions and lack of facts tying Apex to contract) |
| Whether OPA covers oil discharged into groundwater hydrologically connected to navigable waters | OPA applies because contamination reached the Harbor (a navigable water) | OPA does not cover groundwater releases even if hydrologically connected | Dismiss OPA claims (groundwater discharges not cognizable under OPA) |
| PSA injunctive relief — standing/redressability | Chevron seeks injunctive relief to compel safety/compliance and remediation | Defendants argue Chevron lacks redress because pipeline out of service | Denied dismissal; claimed ongoing discharges and ownership create plausible redress — claim survives to discovery |
| Contract/indemnity and limitations (continuing harm; notice condition) | Breach and indemnity claims viable; contamination ongoing so tolling applies | Many breaches predate limitations period; indemnity requires contractual notice as condition precedent | Breach claims survive but recoverable damages limited to 3 years pre-suit by continuing-harm doctrine; indemnity claim allowed only for costs after Chevron’s July 8, 2014 notice |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings under Rule 12(b)(6))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state a plausibly actionable claim)
- Rapanos v. United States, 547 U.S. 715 (2006) (restrictive guidance on the scope of "navigable waters" under the CWA)
- Rice v. Harken Exploration Co., 250 F.3d 264 (5th Cir. 2001) (groundwater not protected "waters" under OPA/CWA)
- Vill. of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962 (7th Cir. 1994) (contaminated groundwater not within CWA scope)
- Litz v. Maryland Dep’t of Env’t, 434 Md. 623 (Md. 2013) (continuing-harm doctrine tolls statute of limitations; damages limited to three years before suit)
- Lumsden v. Design Tech Builders, Inc., 358 Md. 435 (Md. 2000) (discovery rule/inquiry notice for accrual of limitations)
- Chirichella v. Erwin, 270 Md. 178 (Md. 1973) (definition and effect of contractual condition precedent)