Massachusetts Law Review

Environmental Law: 21E Limitations on Actions

Taygeta Corporation v. Varian Associates, Inc.

In Taygeta Corporation v. Varian Associates, Inc.1 the Supreme Judicial Court adopted a unique rule for the commencement of the tolling period applicable to property-damage claims under chapter 21E of the Massachusetts General Laws. The court determined that the statute of limitations for a property-damage claim under chapter 21E begins to run when a plaintiff receives actual knowledge of subsurface contamination even though the statutory language recites that the tolling period commences when the potential plaintiff "should have reasonably discovered" that a responsible party is liable under chapter 21E. A plaintiff generally can await the development of such knowledge by the responsible party for such contamination as it complies with the statutorily required assessment process. This interpretive ruling of chapter 21E, section 11A (4) departs from the traditional "discovery rule" in tort actions and provides plaintiffs with added protection in determining when it "should have reasonably discovered" that a responsible party is liable under chapter 21E for property damage claims.

Facts

Varian Associates, Inc. ("Varian") purchased property in Beverly in 1959 ("Varian property"). Varian and its predecessor in title both were in the business of manufacturing electronic equipment, which involved the use of industrial chemicals. Over a period of 23 years (1950-1973), thousands of gallons of untreated waste chemicals, including volatile organic compounds (VOCs) were discharged onto the Varian property and into a stream that ran through the Varian property. In 1970, Taygeta Corporation's ("Taygeta") predecessor purchased property nearby the Varian property from Varian and constructed a tennis club ("site").2

In 1985, the removal of an underground storage tank on the Varian property led to the discovery of contaminated soil. Monitoring wells were installed and VOCs were detected in Varian's groundwater. Varian hired environmental consultants to assist in assessing the contamination and possible remediation.3

The Massachusetts Department of Environmental Protection (DEP) placed the Varian property on its list of confirmed disposal sites and locations to be investigated in 1987. Varian's environmental consultants filed reports with the DEP between 1987 and 1989 regarding the nature and extent of the contamination including the southwest direction of the flow of groundwater. Varian had a treatment system operating on its property by May 1992.4

In the early 1990s, Taygeta hired its own environmental consultants, GZA GeoEnvironmental, Inc. ("GZA") to conduct an investigation on the environmental conditions on the site. Taygeta met with representatives of GZA on Jan. 19, 1993, to discuss a proposed scope of work. GZA was hired on April 28, 1993, and collected samples from the site on May 18, 1993. GZA detected the presence of VOCs in the groundwater below the site and sent the lab analysis to Taygeta on June 10, 1993.5 On Sept. 30, 1996, Taygeta filed its complaint against Varian asserting claims for:

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(1) property damage pursuant to chapter 21E, section 5;6

(2) negligence due to the release of hazardous materials, its subsequent migration and the failure to expeditiously remediate the contamination; and

(3) nuisance.

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Pursuant to chapter 21E, §11A "[a]ctions by persons other than the commonwealth to recover for damage to real or personal property shall be commenced within three years after the date that the person seeking recovery first suffers the damage or within three years after the date the person seeking recovery of such damage discovers or reasonably should have discovered that the person against whom the action is being brought is a person liable pursuant to this chapter for the release or threat of release that caused the damage, whichever is later."7 Chapter 260, §2A provides a three-year statute of limitations for tort actions.8 The parties entered into an agreement that tolled the statute of limitations and agreed the complaint was filed by May 24, 1996.9

The Superior Court bifurcated the case into a damage component and liability component with damages to be tried first. Varian filed a motion for summary judgment claiming Taygeta's causes of action were beyond the statute of limitations, but the motion was denied. The damages component of the case was then tried and a jury found for Taygeta, awarding it damages of $2.3 million (which was subject to a remittitur).10 An order of the Superior Court set forth as uncontroverted that Taygeta was aware, or reasonably should have been aware, that it had suffered actionable harm as of March 3, 1993, but also specified that the actual date Taygeta suffered harm was in question.11

Subsequent to the Superior Court's order, Taygeta and Varian filed cross motions for summary judgment. The Superior Court granted Varian's motion for summary judgment and dismissed Taygeta's complaint concluding that (1) Taygeta's claim under chapter 21E was time barred because it conceded contamination to the site occurred no later than March 3, 1993, even though Taygeta maintained it did not have actual knowledge of such contamination and (2) there was no nuisance claim because Varian was not perpetuating the contamination, the migration of the VOCs was not an abatable condition but rather a result of previous tortious conduct. Although neither party addressed the negligence claim in its memoranda or oral arguments, the Superior Court determined to the extent the negligence claim remained, its ruling pertaining to the property damage claim and nuisance claim was applicable to the negligence claim.12

On appeal, Taygeta argued that its claims were not barred by the statute of limitations because its cause of action did not accrue until it had knowledge of its actual harm and the likely cause. Taygeta's position was that such knowledge of contamination did not occur until June 10, 1993, when GZA provided Taygeta with the results of its environmental testing. Taygeta relied on the tolling agreement to conclude that the complaint was deemed to be filed by May 24, 1996, and, therefore, within the applicable statute of limitations. Taygeta also argued it was not obligated to conduct environmental testing knowing the Varian property was contaminated and that the statutory obligation to determine the extent of contamination and proceed with any remediation, rested upon Varian.13

SJC Decision

Upon a review of chapter 21E, the Supreme Judicial Court concluded that the duty to notify, investigate, assess and remediate contaminated property rests solely on the owner or operator whose property contains the source of contamination or other responsible person and not upon any landowners whose property may be affected by such contamination. 14 The court acknowledged that Varian was in compliance with its statutory obligations under chapter 21E.15

In analyzing chapter 21E, §11A(4), the court stated that the statute of limitations set forth within the applicable statutory provisions is consistent with the discovery rule followed by Massachusetts courts in negligence cases. 16 The court recalled that prior to 1992, there was no express statute of limitations set forth in chapter 21E, and, therefore, at common law, causes of action filed under chapter 21E, §5 accrued when a person discovered or reasonably should have discovered that contamination damaged property and that the defendant had caused the damage.17 The court did note that chapter 21E, §11A(4) differs from the common law discovery rule in that a plaintiff under chapter 21E is required to have actual knowledge that the defendant is a person liable under chapter 21E.18

The court noted that under the chapter 21E scheme, the owner or operator of contaminated property is legally responsible for any such hazardous release and is required to investigate and assess the contamination including its possible migration. In determining when a plaintiff "reasonably should have discovered" its cause of action, the court stated that a party who files a property damage claim pursuant to chapter 21E has no duty to investigate whether its property was contaminated by another party. 19 It concluded that the statute of limitations begins to run after the responsible party has conducted its investigation and obtained definitive information that hazardous materials have migrated off-site and contaminated another property, and the owner of such other property receives actual knowledge of such contamination.20 Notably, the court stated that even if a potential plaintiff has concerns about a known release on neighboring property that may have migrated onto the plaintiff's property, the plaintiff "may reasonably rely" on the neighboring property owner (the responsible party) to comply with the statutory obligations of chapter 21E and its corresponding regulations.21 The court acknowledged plaintiffs will be charged with the knowledge of such contamination on the occasions when environmental contamination is obvious (e.g. sight, smell and taste) and there is no controversy as to its source, even though a comprehensive site assessment has not been completed.22 Additionally, the court stated that plaintiffs will be charged with actual knowledge if it undertakes its own environmental testing of its property and discovers the existence of such contamination and its source, even though the person or party liable has not completed a comprehensive site assessment of the contamination.23

Taygeta obtained actual knowledge of its groundwater contamination on June 10, 1993, when it received GZA's test results. The Supreme Judicial Court concluded that the statute of limitations for Taygeta's cause of action began running on June 10, 1993, and its cause of action for property damage was not barred by the three-year statute of limitations as the complaint was deemed filed by May 24, 1996.24

In addressing the negligence claim, the court reiterated the rule that a party is not required to know the full extent of its injury for a cause of action to accrue and for the statute of limitations to begin running. 25 Concluding that a jury should determine whether Taygeta knew or reasonably should have known of its cause of action for negligence at an earlier date, the court said the jury will decide whether Taygeta's claim was time barred.26

Additionally, the Supreme Judicial Court concluded that the continuing nuisance claim was not time barred. Relying upon Carpenter v. Texaco, Inc.27 the court concluded where a property owner's rights are continuously interfered with based upon recurring tortious conduct, a continuing trespass or nuisance claim is established.28

Taygeta Corporation v. Varian Associates, Inc. is noteworthy for several reasons. The court applied the "discovery rule" in a unique way based on the statutory scheme of chapter 21E, which obliges a responsible party to investigate the nature and extent of its contamination. The court declared that plaintiffs who file claims under chapter 21E, §5 do not have an independent duty to investigate whether another party may have contaminated its property. In the absence of confirmed knowledge of the existence of contamination on their property, plaintiffs may rely on the responsible party to comply with the steps set forth in chapter 21E prior to making a property damage claim.

The court's approach delays the commencement of the statutory tolling period and thus invigorates claims that some have thought were time barred. Situations involving multiple downgradient properties will no doubt will be the source of future litigation and decisions.

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Leyla F. Kimball

1. 436 Mass. 217 (2002).[back]

2. Id. at 219.[back]

3. Id.[back]

4. Id.[back]

5. Id. at 220.[back]

6. Mass. Gen Laws ch. 21E, § 5 (2003) provides in pertinent part as follows: "(a) Except as otherwise provided in this Section, (1) the owner or operator of a É site from or at which there is or has been a release or threat of release of oil or hazardous material; (2) any person who at the time of storage or disposal of any hazardous material owned or operated any site at or upon which such hazardous material was stored or disposed of and from which there is or has been a release or threat of release of hazardous materialÉ and (5) any person who otherwise caused or is legally responsible for a release or threat of release of oil or hazardous material from a vessel or site, shall be liable, without regard to fault, É (iii) to any person for damage to his real or personal property incurred or suffered as a result of such release or threat of release É."[back]

7. Mass. Gen. Laws ch. 21E, § 11A(4) (2003).[back]

8. Mass. Gen. Laws ch. 260, § 2A (2003).[back]

9. Taygeta, 436 Mass. at 220. [back]

10. Id. at 221. [back]

11. Id. The Superior Court chose March 3, 1993, by concluding Taygeta was on inquiry notice on Jan. 19, 1993, the date Taygeta met with GZA representatives. Due to the fact that 43 days passed between the time testing was ordered (April 28, 1993) and the time Taygeta received the results (June 10, 1993), the Superior Court counted 43 days ahead from Jan. 19, 1993, and determined lab results would have been reported to Taygeta by March 3, 1993, if analysis was performed on Jan. 19, 1993. Id. at 221 n.5.[back]

12. Id. at 221-22. [back]

13. Id. at 222-23. [back]

14. Id. at 225. [back]

15. Id.[back]

16. Id. at 226.[back]

17. Id. citing One Wheeler Rd. Assocs. v. Foxboro Co., 843 F. Supp. 792, 797-98 (D. Mass. 1994).[back]

18. Taygeta, 436 Mass. at 226.[back]

19. Id. at 227. [back]

20. Id. at 227-28.[back]

21. Id. at 227.[back]

22. Id.[back]

23. Id. at 228. [back]

24. Id.[back]

25. Id. at 229.[back]

26. Id. at 230. [back]

27. 419 Mass. 581, 583 (1995).[back]

28. Taygeta, 436 Mass. at 231-32.[back]

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