JOHN G. HEYBURN II, Chief Judge.
The Court is called upon to construe a contract and to determine whether ProLogis has met its obligations under it. With the assistance of excellent memoranda by the parties, the Court concludes that it needs no extrinsic evidence in order to perform this task.
I.
The material facts are as follows. On September 21, 1999, Principal Life Insurance Company ("Principal") and ProLogis Development Services, Inc. ("ProLogis") agreed that Principal would purchase a warehouse/distribution facility in Louisville, Kentucky, for $9,700,000 (the "Agreement"). The Agreement provided that after certain due diligence, Principal could determine whether the property was unacceptable. If the property was unacceptable, Principal could terminate the Agreement. After an environmental report disclosed some soil and ground water contamination, Principal elected to terminate the Agreement pursuant to its terms.
Three days later, on September 30, 1999, the parties executed an Amendment to the Purchase and Sale Agreement (the "Amendment"). The Amendment provided that the purchase price be reduced to $9,450,000 and that the parties enter into an Environmental and Escrow Hold Back Agreement (the "Escrow Agreement"). Subject to conditions of the Escrow Agreement, $500,000 from the seller's proceeds for the sale was paid to an escrow account. The general purpose of the Escrow Agreement was to allow the sale to proceed and to provide Principal protection against any future liability for environmental cleanup.
The Escrow Agreement had a number of key provisions which define ProLogis' obligations and which are central to the outcome of this case. The recitals state:
B. As part of Purchaser's due diligence review of the property, a subsurface investigation of the soil and ground water at the Property was performed by American Environmental Corporation ("Engineer"). Certain contamination of the soil and ground water at the property was discovered as described in that certain Subsurface Investigation dated September 27, 1999, prepared by the Engineer ("Contamination Report").
C. (ii) During the escrow period (as defined below), Seller shall cause to be performed any additional work or actions that may be required by the Kentucky Department for Environmental Protection or such other state governmental agency with jurisdiction over the contamination in which would normally issue such letters (collectively the "KDEP") in connection with obtaining a No Action Letter (defined below). Neither Seller nor Purchaser shall receive reimbursement from the escrow deposit for the cost of such work or actions or for the cost of monitoring or reviewing such actions;
(iii) If a No Action Letter has not been obtained by the end of the Escrow Period, then the Purchaser shall receive the escrow deposit as a partial refund of the purchase price.
The Escrow Agreement defines the types of No Action Letter which would trigger release of the $500,000 escrow funds to ProLogis:
(2) Seller to seek a No Action Letter.
(a) Seller shall, at Seller's cost and expense, take all steps, including without limitation, investigation, sampling, laboratory analysis, testing, modeling, research, reporting, consultation, evacuation, remediation, disposal, well construction, well abandonment or further site work, required within the escrow period by KDEP or their governmental authority in connection with their receipt of a No Action Letter. . . .
(b) Subject to the terms of this Escrow Agreement Seller shall use its best efforts to cause the KDEP to issue either (i) a Notice of Completion or other letters stating in substance that KDEP has determined that no further action is necessary under applicable environmental laws in connection with the Contamination or other contamination of the Property discovered in the course of Seller's investigation and remediation of the Contamination, or (ii) the letter of nonresponsibility with respect to the Contamination containing no condition or future obligation imposed on any owner of the property to remediate that Contamination or install monitoring wells or cleanup, tests or monitor the Contamination (either letter being a "No Action Letter").
The Escrow Agreement also contains an indemnity provision which describes the circumstances in which ProLogis is responsible for remediation costs. The indemnity provisions are not applicable to the Court's interpretation of the "No Action Letter" provisions.
Soon after executing the Amendment and the Escrow Agreement, ProLogis asked its environmental consultant, SECOR International, to assist in obtaining the No Action Letter. On April 17, 2000, Lori S. Berry, Department of Environmental Protection for the State of Kentucky (the "Department"), sent a letter to Mr. D. Howe Gates of SECOR stating:
The Superfund Branch of the Kentucky Division of Waste Management (KDWM) has received your most recent submission concerning reported contamination on your property at 7501 Winstead Drive, in Louisville, Kentucky. The information that was submitted concerning the contamination on the subject property indicated that there might have been a release of petroleum products to the soil and groundwater from off site sources. All releases whether they are reportable or not must be remediated in accordance with KRS 224.01-400 and KRS 224.01-405. Additional, the statute (KRS 224.01-405) provides that "In the event of a release to the environment of petroleum or a petroleum product from a source other than a petroleum storage tank, any person who owns or operates the source from which the release occurred or any person who caused the release shall characterize the extent of the release as necessary to determine the effect of the release on the environment and shall perform corrective action."
Based on the requirements of the statute, ProLogis Development Services, Incorporated is not responsible for
environmental impacts that occurred to the property at 7501 Winstead Drive, in Louisville, Kentucky, prior to ownership by ProLogis Development Services, Incorporated.
This determination extends only to known effects of this release and the requirements set forth by the Division.
Further action may be required if additional effects of the release are discovered at a later date or if other releases are reported to the Cabinet.
Sometime within the next month ProLogis faxed a copy of April 17 letter to Principal, indicating that Principal should "review and contact me to discuss at your earliest convenience." Principal responded that the April 17 letter did not satisfy the conditions of the Escrow Agreement. After some discussions with Principal, ProLogis faxed the Department requesting that the phrase "and subsequent owners" be added to the second paragraph of the April 17 letter.
On July 12, 2000, Steven W. Fields of the Department, wrote SECOR a follow-up letter. That letter stated:
This letter is to follow up our phone conversation in June concerning your fax requesting modification of the language in our April 17, 2000 letter regarding the liability of owners for contamination found on site. Specifically you requested an expansion of the statutory exclusion to "subsequent owners." As we discussed, the Commonwealth cannot grant such a blanket absolution to any future owner.
The liability of any future owner will turn on the circumstances of the facts of that situation. If the new owner has no more reason for liability than ProLogis, then they should have no more concern than ProLogis. The law is clear as to the placement of liability, as stated in the April 17, 2000 letter. As stated, ProLogis is not responsible for prior environmental impacts, but it is not possible to make a prediction as to the liability of every possible future buyer. For example, if the future owner also happened to be the "person who owns or operates the source from which the release occurred," then it is easy to grasp the reason that the legislature, when drafting this provision, did not give the Commonwealth the power to release any and all subsequent owners from any responsibility. There may also be undiscovered and unknown facts, no matter how unlikely, that could unfairly excuse a responsible party. Therefore your request for an exclusion into perpetuity for any future owner is denied.
On the same date Mr. Fields wrote Tami Otto, Principal Capital Management, a virtually identical letter.
The Escrow Period ended December 30, 2000. ProLogis says that the Department's correspondence dated April 17 and July 12 together constitute the required No Action Letter. Principal says they do not. Principal filed this suit to prevent disbursement of the $500,000 escrow account to ProLogis.
II.
The Court construes the specific material language of the Escrow Agreement as applied to the facts of this case. To do so, the Court must consider the specific and operative contractual words together with all the other contractual language. A contract is ambiguous if there is genuine doubt as to its interpretation in a given circumstance. However, simply because the parties disagree about the proper application and can make competing plausible arguments does not make a contract ambiguous. For the reasons that follow, the Court concludes that the material contract language is unambiguous. The Court can construe its meaning and apply it to these circumstances without the help of extrinsic evidence.
A.
The Escrow Agreement defines the requirements of a No Action Letter. ProLogis had two options to obtain release of escrowed funds. It could perform a complete cleanup of the soil and ground water contamination and obtain a "notice of completion" as provided in § 2(b)(i) of the Escrow Agreement. Or, it could obtain a "letter of non-responsibility" as provided in § 2(b)(ii) of the Escrow Agreement. ProLogis either was unable to cause the Department to issue a notice of completion or chose not to do so. In any event, the only question now is whether ProLogis was successful in obtaining a No Action Letter as defined in Section 2(b)(ii) of the Escrow Agreement.
The Court reads subsections (i) and (ii) of section 2(b) as designed to provide Principal with the same level of assurance. By different means, each subsection envisions Principal receiving a clean bill of health as to the property. Subsection (i) does so by requiring a cleanup or a letter that "no further action is necessary." Subsection (ii) accomplishes the same objective for Principal by requiring a letter of non-responsibility as to "any owner." Each clause, thus, has a consistent intent aimed at providing the same assurance. This is significant because the Court should consider the intent of the parties from the four corners of the Escrow Agreement. The assurance provided by either kind of No Action Letter had considerable importance to Principal, so much so that it required withholding of $500,000 from its purchase obligation as an incentive for ProLogis. Thus, receiving or providing the required assurance was not an inconsequential matter for either party.
B.
The Court finds the "letter of non-responsibility" subsection of the Escrow Agreement unambiguous: it requires that ProLogis procure a letter containing no condition or future obligation. The Department's April 17 letter has a number of qualifications, extending its protections only to "known effects of this release" and noting that "further action may be required if additional effects of the release are discovered at a later date or if other releases are reported to the Cabinet." Because the letter reserves the right to make future conditions on the cleanup of the unknown effects of the known contamination, it does not comply with the plain language of the Escrow Agreement.
One could say that the April 17 letter does not affirmatively impose conditions on Principal or ProLogis. However, by omitting language which relieves Principal as well as any other owners of all responsibility and by stating certain qualifications to its releases, the April 17 letter effectively imposes or leaves open the potential of future liability. These omissions are significant enough to defeat the purpose of the Escrow Agreement. The reservations and qualifications contained in the April 17 are too extensive and open ended to provide the kind of assurance which the plain reading and intent of the Escrow Agreement requires. The Court must find in favor of Principal.
The Court simply does not agree with ProLogis' argument that because the April 17 letter lists no express conditions or liability of Principal and other owners that, therefore, none exists.
The Court is aware that Principal claims extrinsic evidence establishes that the Escrow Agreement entitles it to a "clean" property. However, the Court has not considered the parties' arguments using evidence outside the four corners of the contract.
C.
In view of the prior discussion, it is not essential that the Court answer the question whether the letter of non-responsibility must apply to "any owner of the property." ProLogis makes a strenuous argument that the term "any owners" does not mean all future owners. However, the Court must find otherwise based on a reading of the entire document. "Any" as used here is an expansive, rather than a limiting term. The Court sees little reason for imposing a limiting interpretation on "any owner" nor does the Court find exceptions to such an inclusive term. Moreover, for "any owners" to mean "all owners, past and future" makes sense in the specific and overall context of the Escrow Agreement. The April 17 letter does not specifically apply to Principal or any other owners. Consequently, it does meet neither Principal's needs nor the reasonable and unambiguous purpose of the Escrow Agreement.
D.
ProLogis' argument seems entirely premised on the assumption that the April 17 letter is sufficient. ProLogis supports the inescapability of this conclusion by observing that the Department issued no other form of a No Action Letter and that to do so would be beyond the Department powers. Neither argument is very convincing.
Simply because the Department has a certain format which it uses for No Action Letters does not mean that its particular form meets definition set out in the Escrow Agreement. The Escrow Agreement, not the Department's normal operating procedures, defines the obligations of these parties. It is quite immaterial that the Department may not issue No Action Letters which satisfy the particular conditions of the Escrow Agreement.
ProLogis says that the Department will not issue the kind of letter which Principal requires because that might give a free pass to the actual source of the contamination. Therefore, the letter is impossible to obtain. The Court does not need to inquire whether that is so. Whether the Department would under any circumstances provide such a letter is not material to the enforcement of the Escrow Agreement. ProLogis promised to obtain the letter as described and defined in the Escrow Agreement. The interpretation of the Escrow Agreement is governed by its terms, irrespective of the form of letters which the Department usually provides. Besides, ProLogis could have complied with the Escrow Agreement in a number of ways. If the Department would not provide the appropriate letter, ProLogis could have obtained a notice of completion by remediating the soil and surface contamination to the Department's satisfaction. This might have cost considerably less than $500,000. However, ProLogis chose not to seek other means available to obtain a No Action Letter as defined in the Escrow Agreement.
For all these reasons, the Court concludes that ProLogis has not satisfied its obligations pursuant to the Escrow Agreement. The Court will enter an order consistent with this Memorandum Opinion.
ORDER
ProLogis has moved for summary judgment on the claim of declaratory judgment by Principal. The parties have submitted memoranda in support of their opinions and the Court has discussed the case with counsel in conference. A Memorandum Opinion sets forth the Court's conclusions. Being otherwise sufficiently advised,
IT IS HEREBY ORDERED that the motion for summary judgment of ProLogis Development Services, Inc. is DENIED.
IT IS FURTHER ORDERED that because the contract is plain and unambiguous and ProLogis has failed to comply with its provisions, Principal is entitled to a declaratory judgment that ProLogis has breached the Escrow Agreement, which is contained in the First Amendment to the Purchase and Sale Agreement.
IT IS FURTHER ORDERED that on or before May 17, 2002, Principal shall submit a proposed judgment and appropriate memorandum in support of it. By the same date ProLogis should submit any motions for a reconsideration. On or before June 3, 2002, each party shall respond to those motions.
This is not a final order. The Court will enter a final order if appropriate.
MILLER v. FIRSTAR BANK, (W.D.Ky. 2002)
LOTTIE J. MILLER, PLAINTIFF v. FIRSTAR BANK, N.A. and, DEFENDANTS FIRSTAR CORPORATION. CIVIL ACTION NO. 4:00CV-14-S United States District Court, W.D. Kentucky At Owensboro. No Date Available
MEMORANDUM OPINION AND ORDER
CHARLES R. SIMPSON III, JUDGE
This matter is before the court on plaintiff's Motion to Alter or Amend Judgment. For the reasons stated below, plaintiff's motion will be DENIED.
BACKGROUND
The facts relevant to this motion are set out in our earlier opinion, dated January 29, 2002.
DISCUSSION
Plaintiff moves under Fed.R.Civ.P. 59(e) for this court to alter or amend its January 29, 2002 grant of summary judgment to defendant Firstar Bank, N.A. ("Firstar"). A motion to alter or amend a judgment "is granted only in limited circumstances, and . . . is within the informed discretion of the district court." Shivers v. Grubbs, 747 F. Supp. 434, 436 (S.D.Ohio 1990) (citing United States Labor Party v. Oremus, 619 F.2d 683, 692 (7th Cir. 1980)). "Motions made under [Rule 59(e)] are not intended to be utilized to relitigate old matters nor to allow a party to present his case under a new theory; these motions are designed to correct manifest errors of fact or law or as vehicles to present newly discovered evidence." Milwee v. Peachtree Cypress Investment Co., 510 F. Supp. 284, 289-90 (E.D.Tenn. 1978); see also Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998).
Plaintiff first contends we erred in finding she was unqualified for her position and thus failed to establish a prima facie case under Title VII. As most of plaintiff's argument is merely an attempt to relitigate her response to Firstar's summary judgment motion, we will only address plaintiff's perceived error of law.
Citing Cline v. Catholic Diocese of Toledo, 206 F.3d 651, 660-66 (6th Cir. 2000), plaintiff argues we misapplied the McDonnell Douglas testfn1 because we considered Firstar's non-discriminatory reason for terminating her in concluding she was unqualified for her position. We disagree. In Cline a teacher was terminated after her employer, a Catholic school, discovered she was pregnant. She alleged the termination constituted illegal sex and pregnancy discrimination. Her employer claimed she was terminated because her pregnancy evidenced she engaged in premarital sex, which was against the Catholic church's values. The district court granted the employer summary judgment. The court found the teacher had not established a prima facie case because her engaging in premarital sex rendered her unqualified for her position. The Sixth Circuit reversed, holding the district court's analysis "improperly imported the later stages of the McDonnell Douglas inquiry into the initial prima facie stage." Id. at 660. The court stated:
[Defendant] alleges it did not renew [plaintiff's] contract because she violated its premarital sex policy, which constituted part of the broader ministerial requirements of being a [Catholic school] teacher; conversely, [plaintiff] argues that this rebuttal is a pretext for discrimination. Rather than resolve this debate at the prima facie stage,
McDonnell Douglas requires that the district court consider this dispute at the inquiry's third stage, when its role is to decide the "ultimate question" of discrimination.
Id. Thus, a court may not use the alleged basis for discrimination, e.g., the teacher's pregnancy in
Cline, as grounds for determining a plaintiff is unqualified for her position.
Here, in contrast, we did not determine the alleged basis for discrimination, plaintiff's race and gender, rendered her unqualified for her position. Rather, we based our decision on Firstar's evidence that she was not meeting its legitimate expectations.
Next, plaintiff argues we erred in concluding her 1993 branch assignment did not constitute a continuing violation for purposes of assessing the timeliness of her related Equal Employment Opportunity Commission charge. Plaintiff, however, fails to establish any factual or legal error and her motion will therefore be denied regarding this issue.
CONCLUSION
For the reasons stated above, plaintiff's Motion to Alter or Amend Judgment will be DENIED.
ORDER
For the reasons set forth in the memorandum opinion entered this date and the Court being otherwise sufficiently advised, IT IS HEREBY ORDERED AND ADJUDGED that plaintiff's Motion to Alter or Amend Judgment is DENIED.