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Braswell v. Colonial Pipeline Co.

United States District Court, M.D. North Carolina

June 5, 2019

JACKIE BRASWELL, JUDY BRASWELL, HAROLD COLLINS, BONNIE COLLINS, Individually and as Executor of the Estate of HOMER WADE YARBROUGH, HAYMON HICKS, PENNY HICKS, GINA MYERS SHAW, JAMES SLONE, DEBBIE SLONE, JERRY SMITH, KAREN SMITH, PAMELA LOVELESS, KATHY MILLER, JOEY SMITH and SHANIA SMITH, Plaintiffs,
v.
COLONIAL PIPELINE COMPANY, and APEX COMPANIES, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          N. Carlton Tilley, Jr. Senior United States District Judge.

         This action arises from alleged damage to Plaintiffs' properties after several petroleum releases at a booster station in Lexington, North Carolina owned and operated by Defendant Colonial Pipeline Company (“Colonial”). Plaintiffs allege against Colonial a violation of North Carolina's Oil Pollution and Hazardous Substances Control Act of 1978 (“OPHSCA”) (First Claim for Relief), negligence and willful and reckless conduct (Second Claim for Relief), trespass (Third Claim for Relief), private recurrent nuisance (Fourth Claim for Relief), and strict liability for ultrahazardous activity (Fifth Claim for Relief), for which they seek punitive damages (Sixth Claim for Relief) and declaratory and injunctive relief (Seventh Claim for Relief). Before the Court is Colonial's Motion to Dismiss, [Doc. #15], pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Colonial argues that the statute of repose bars Plaintiffs' claims based on historical releases[1], Plaintiffs have failed to allege injury from the April 2013 release, North Carolina law does not recognize a strict liability claim under these circumstances, and Plaintiffs have failed to plead sufficiently the essential elements of gross negligence and punitive damages. For the reasons that follow, the motion is granted in part and denied in part.

         I.

         As alleged in the Complaint, Colonial “is the largest-volume pipeline transporter of refined petroleum products in the world, moving millions of gallons of petroleum products each day through an underground pipeline” from Texas to New Jersey passing through North Carolina, among other states. (Compl. ¶ 35.) Because “the pipeline is thousands of miles long”, “pumping stations or booster stations are positioned throughout the length of the pipeline to adjust the pressure, keep the product moving, and monitor flow and other information.” (Id. ¶¶ 43, 44.) A booster station “includes aboveground features and fixtures” and has “a greater danger of incurring mechanical damage and operator error.” (Id. ¶¶ 48, 49.) One such booster station is at 667 Helmstetler Road in Lexington, North Carolina (“the Lexington Booster Station”). (E.g., id. ¶ 50.)

         “During the pertinent times”[2], Plaintiffs “have resided on and used land in proximity to [Colonial's] Lexington Booster Station”.[3] (Id. ¶ 2.) On April 10, 2013, approximately 500 gallons of “hydraulic fluid was released to the soil in the manifold area [of the Lexington Booster Station] when an aboveground one-inch central hydraulic line failed.” (Id. ¶ 57.) Colonial retained Defendant Apex Companies LLC[4] “to engage in certain remedial and remediation efforts” and “conduct a site assessment report.” (Id. ¶¶ 58, 61.) Excavation activities were completed, but soil containing “constituents of concern” above North Carolina's regulatory standards, known as the 2L and 2B standards, remained. (Id. ¶ 61.) These constituents of concern included benzene, toluene, ethylbenzene, xylenes, and naphthalene, while dichloromethane was also measured above “Gross Contamination Levels”. (Id. ¶ 62.) Contaminants exceeded “Soil-to-Groundwater” “maximum soil contaminant concentrations” and Industrial Health Based Standards, and results from fourteen of twenty-one monitoring wells were above 2L and 2B standards. (Id.) All soil samples taken on April 24 contained “total petroleum hydrocarbon diesel range organics” exceeding the “action level” of the North Carolina Department of Environmental Quality (“NCDEQ”), as did additional samples taken from a new site on May 22. (Id. ¶¶ 63-65.)

         “The highest levels” were found on the “southern side of the manifold area” where the soil's[5] odor was more akin to a tar-like substance. (Id. ¶¶ 66-67.) “Due to the relatively low migration characteristics of hydraulic oils, it was determined that significant, unreported historical spills had occurred at the [Lexington] Booster Station.” (Id. ¶ 67.) Yet, Apex could not identify any site reports related to those historical releases, and “[n]ever during the pertinent times did [Colonial] alert nearby Plaintiff property owners of the releases of contaminants”. (Id. ¶¶ 68, 69.) Nevertheless, “[u]pon [Plaintiffs'] information and belief, [Colonial's] documents indicate that the [Lexington] Booster Station had four prior releases dating back to 1989.” (Id. ¶ 56.)

         More recent sampling from July 2017 detected five contaminants in surface water above “laboratory detection limits”. (Id. ¶ 75.) In December 2017, two contaminants were detected in surface water above “laboratory detection limits” and fifteen constituents of concern were detected in water supply wells above 2L standards. (Id. ¶¶ 76-77.)

         Plaintiffs Pam Loveless, Kathy Miller, and Karen Smith jointly own property at 551 Helmstetler Road after inheriting it in 2017. (Id. ¶¶ 92, 98.) February 26, 2016 sampling results revealed “petroleum fuel-related contaminants” in the groundwater beneath that property. (Id. ¶¶ 93, 95.) Specifically benzene levels tested well above the “permitted level”. (Id. ¶¶ 93, 95.) March 28, 2017 sampling results similarly detected the presence of “petroleum fuel-related contaminants” in the groundwater approximately forty feet beneath the property in amounts that exceed the 2L standards. (Id. ¶¶ 93, 99.) The well water had been used for years to water the family's garden on the property. (Id. ¶ 98.)

         Plaintiffs James and Debbie Slone own property at 247 Yarborough Drive which has two wells - one active and the other abandoned due to contamination. (Id. ¶ 101.) On December 4, 2017, the Slones received a letter from Colonial informing them that sampling results from their water supply well showed “petroleum fuel-related compounds” in the groundwater approximately twenty-two feet beneath their property at levels exceeding 2L standards. (Id. ¶ 102.)

         Plaintiffs Jackie and Judy Braswell and Harold and Bonnie Collins have suffered the loss of use and value of their property as a result of Colonial's conduct. (Id. ¶¶ 85-90.) Plaintiffs Haymon and Penny Hicks' property “has existing environmental concerns, including but not limited to, deep groundwater contamination.” (Id. ¶ 91.) Similarly, Plaintiffs Joey and Shania Smith's property, which the pipeline crosses, “has existing environmental concerns, including but not limited to, shallow and deep water contamination, [and] potential vapor intrusion concerns”. (Id. ¶ 103.) Property that Plaintiff Gina Myers Shaw owns is inside “the contamination plume”. (Id. ¶ 100.)

         Plaintiffs allege that “[d]uring the pertinent times”, Colonial failed “to take adequate measures to remediate the contaminated water and soil affected by the historic spills”, “to adequately inform Plaintiffs about the migrating contamination and . . . to accurately explain the significant amounts of contaminants found in the area”, “to submit site reports to NCDEQ”, to submit “CSA Report” addenda, and “to take action” so that contaminated soils would not remain on site. (Id. ¶ 73.) Because Colonial failed “to identify and control the release sites”, there have been “recurrent[] releases”. (Id. ¶ 81.)

         II.

         To survive a Rule 12(b)(6) motion, the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556); see also McCleary-Evans v. Md. Dep't of Transp., State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015) (noting that a complaint must “contain[] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face in the sense that the complaint's factual allegations must allow a court to draw the reasonable inference that the defendant is liable for the misconduct alleged”). However, when a complaint states facts that are “'merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.''” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). When evaluating whether the complaint states a claim that is plausible on its face, the facts are construed in the light most favorable to the plaintiffs and all reasonable inferences are drawn in their favor. U.S. ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014). Nevertheless, “labels and conclusions[, ]” “a formulaic recitation of the elements of a cause of action[, ]” and “naked assertions . . . without some further factual enhancement” are insufficient. Twombly, 550 U.S. at 557. In other words, “[f]actual allegations must be enough to raise a right to relief above the speculative level”. Id. at 555. Both parties apparently presume North Carolina law applies to Plaintiffs' claims, and the Court agrees. See Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496 (1941), superseded by statute on other grounds (providing that a federal court sitting in diversity must apply the choice of law rules of the state in which it sits); Boudreau v. Baughman, 368 S.E.2d 849, 854 ( N.C. 1988) (recognizing that North Carolina's Supreme Court “has consistently adhered to the lex loci rule” and that “the state where the injury occurred is considered the situs of the claim”).

         A.

         First, Colonial argues that North Carolina's applicable statute of repose bars Plaintiffs' claims based on the historical releases, which Colonial defines as the “Prior Releases”. (Mem. of Law in Supp. of Mot. to Dismiss (“Def.'s Br. in Supp.”) at 5-9.) A statute of limitation creates “'a time limit for suing in a civil case, based on the date when the claim accrued'”, but a statute of repose “puts an outer limit on the right to bring a civil action . . . measured . . . from the date of the last culpable act or omission of the defendant.” CTS Corp. v. Waldburger, 573 U.S. 1, 7, 8 (2014) (quoting Black's Law Dictionary 1546 (9th ed. 2009)). It “'bar[s] any suit that is brought after a specified time since the defendant acted . . ., even if this period ends before the plaintiff has suffered a resulting injury.'” Id. (quoting Black's 1546) (alteration in original). In other words, a statute of repose is “'a cutoff'” or “'absolute bar' on a defendant's temporal liability”. Id. (quoting Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 363 (1991) & 54 C.J.S., Limitations of Actions § 7, p. 24 (2010)).

         North Carolina law provides that “no cause of action [for physical damage to claimant's property] shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action.” N.C. Gen. Stat. § 1-52(16). This statute of repose, which applies to Plaintiffs' claims, Wilson v. McLeod Oil Co., Inc., 398 S.E.2d 586, 513-14 ( N.C. 1990), “defines substantive rights to bring an action”, Colony Hill Condo. I Ass'n v. Colony Co., 320 S.E.2d 273, 276 ( N.C. Ct. App. 1984). “Failure to file within that period gives the defendant a vested right not to be sued.” Id.

         Effective June 20, 2014, the General Assembly amended this statute to create an exception for injury “caused or contributed to by groundwater contaminated by a hazardous substance, pollutant, or contaminant”, which means that “the concentration of the hazardous substance, pollutant, or contaminant exceeds a groundwater quality standard set forth in” North Carolina regulations. N.C. Gen. Stat. § 130A-26.3. This exception applies to actions “filed, arising, or pending” on or after June 20, 2014. 2014 N.C. Sess. Laws 2014-44, § 1(c) (amending 2014 N.C. Sess. Laws 2014-17, § 4). However, because a statute of repose is substantive in nature, § 130A-26.3 does not apply retroactively; to do so would “divest [Colonial] of a vested right, ” Bryant v. United States, 768 F.3d 1378, 1385 (11th Cir. 2014) (applying North Carolina law to multi-district litigation arising from alleged exposure to toxic substances in drinking water at Marine Corps Base Camp Lejeune). See also Colony Hill Condo. I Ass'n, 320 S.E.2d at 276 (“Once the . . . statute of repose barred the plaintiffs' suit, . . . a subsequent statute could not revive it” because “a vested right cannot be impaired by the retroactive effect of a later statute.”).

         “While equitable doctrines may toll statutes of limitations, they do not toll substantive rights created by statutes of repose.” Monson v. Paramount Homes, Inc., 515 S.E.2d 445, 449 ( N.C. Ct. App. 1999). Stated another way, a statute of repose like that in § 1-52(16) containing “'no action' language” bars “all claims, including claims seeking to extend liability for subsequent repairs or remedial measures.” Hodge v. Harkey, 631 S.E.2d 143, 146 ( N.C. Ct. App. 2006). “To allow the statute of repose to toll or start running anew each time a repair is made would subject a defendant to potential open-ended liability for an indefinite period of time, defeating the very purpose of statutes of repose”. Monson, 515 S.E.2d at 449.

         In support of its motion to dismiss, Colonial attaches an Interim Comprehensive Site Assessment Report from Apex Companies LLC to NCDEQ dated March 7, 2016 as evidence of the dates of the Prior Releases. (See Ex. A to Def.'s Br. in Supp.) Colonial argues that the report is integral to and expressly referenced in the Complaint such that it may be considered. (Def.'s Br. in Supp. at 7 n.3 (citing Compl. ¶¶ 9, 64).) A document is integral to the complaint when “its very existence, and not the mere information it contains, gives rise to the legal rights asserted.” Walker v. S.W.I.F.T. SCRL, 517 F.Supp.2d 801, 806 (E.D. Va. 2007). Integral documents include those containing alleged material misrepresentations in a fraud action, an article reporting alleged fraudulent statements in a securities fraud action, and an alleged libelous magazine article in a libel action based on that article. Id. ...


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