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Chaveriat v. Williams Pipe Line Co.

ELR Citation: 24 ELR 20217
Nos. No. 93-1652, 11 F.3d 1420/(7th Cir., 12/21/1993)

The Seventh Circuit upholds a district court's grant of summary judgment to the defendant prior owner of a petroleum carrying pipeline on plaintiffs landowners' claim for nuisance damages from a 1944 leak of unleaded gasoline. In 1986, while trying to sell the land, the landowners discovered petroleum contamination and hired a contractor to clean up the site. The contractor retained a company to take soil samples and that company retained a second company to analyze the samples. In 1989, the second company performed chromatographic analysis on the samples and reported that the contamination was unleaded gasoline, but did not give the actual chromatographs to anyone. In 1991, after finding diesel fuel in a pond, the plaintiffs ordered new soil tests, which revealed diesel fuel contamination and then obtained the 1989 chromatographs, which revealed both unleaded gasoline and diesel fuel contamination. The plaintiffs then moved to amend their complaint to add a claim of contamination based on an unspecified recent diesel fuel spill. The district court denied the motion, excluded all the chromatographs from evidence, and granted summary judgment to defendant.

The Seventh Circuit first holds that the defendant is not liable for the 1944 spill. When the original owner of the pipeline sold all its pipeline assets to the defendant in 1966, it expressly retained all liabilities not listed on its balance sheet, including actual or contingent liabilities arising from damage to land. There is no suggestion of fraud that would vitiate the retention. Moreover, even without the express retention, the default rule is that liabilities are retained unless the sale is pursuant to a corporate reorganization or merger, which was not the case here. Additionally, because plaintiffs' predecessors knew about the spill in 1944, the statute of limitations expired.

The court holds that the district court did not abuse its discretion in refusing to allow the plaintiffs to amend their complaint. The court holds unwarranted the district court's exclusion of the chromatographs from evidence as a sanction for plaintiffs' failure to produce the first set earlier. The 1989 chromatographs were not in the plaintiffs' custody or control, or even that of their contractor or the company he retained, before 1991. The court also holds unwarranted the district court's invocation of the principle of judicial estoppel to preclude plaintiffs from changing their theory. Although plaintiffs told the Illinois Environmental Protection Agency that the contamination did not contain lead and thus performed the cleanupunder less stringent standards, judicial estoppel is not an absolute bar to obtaining legal relief on the basis of new, inconsistent information where there is no issue of double recovery and the court is satisfied that the original theory was advanced in good faith. The court holds, however, that the district court's refusal to allow the plaintiffs to amend the complaint was reasonable. Amendment would be futile because the evidence that the contamination the plaintiffs cleaned up was diesel fuel was weak. Moreover, allowing amendment would have injected an entirely new and separate claim into the suit, thus causing undue delay and undue prejudice to the defendant. Additionally, neither judicial estoppel nor res judicata will prevent plaintiffs from bringing a new suit based on diesel fuel contamination.

Counsel for Plaintiffs
Percy Angelo
Mayer, Platt & Brown
190 S. La Salle St., Chicago IL 60603
(312) 782-0600

Counsel for Defendant
James Keating
542 S. Dearborn St., Chicago IL 60605
(312) 939-8282

Before POSNER, Chief Judge, MANION, Circuit Judge, and GRANT, District Judge.*