Texaco Refining & Marketing, Inc. v. State Department of Environment & Conservation, Division of Underground Storage Tanks

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
January 6, 2005 Session

TEXACO REFINING & MARKETING, INC. v. STATE OF TENNESSEE
DEPARTMENT OF ENVIRONMENT AND CONSERVATION, DIVISION
OF UNDERGROUND STORAGE TANKS

Appeal from the Chancery Court for Davidson County
No. 02-761-I Irvin H. Kilcrease, Chancellor

No. M2004-00281-COA-R3-CV - Filed September 27, 2005

Texaco Refining & Marketing, Inc. applied for reimbursement of remediation expenses pursuant to
the Tennessee Petroleum Underground Storage Tank Act. When Texaco’s application was denied
by the Tennessee Department of Environment and Conservation, Division of Underground Storage
Tanks, Texaco filed this Declaratory Judgment action seeking a ruling that it was eligible for
reimbursement from the storage tank fund. The Chancery Court granted Texaco’s motion for
summary judgment from which the Department appeals. We reverse finding Texaco was not in
substantial compliance with the Act because it failed to timely report releases of petroleum, and it
had no vested right to reimbursement.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Reversed

FRANK G. CLEMENT , JR., J., delivered the opinion of the court, in which WILLIAM C. KOCH , JR., P.J.,
M.S., and WILLIAM B. CAIN , J., joined.

Paul G. Summers, Attorney General and Reporter; Michael E. Moore, Solicitor General; and
Elizabeth P. McCarter, Senior Counsel, for the appellant, State of Tennessee Department of
Environment and Conservation, Division of Underground Storage Tanks.

Howard E. Jarvis and Tony R. Dalton, Knoxville, Tennessee, for the appellee, Texaco Refining &
Marketing, Inc.

OPINION

Texaco filed this action seeking a ruling that it is “fund eligible” to apply for remediation
expenses from the Tennessee Petroleum Underground Storage Tank Fund for a “release” of
petroleum products that occurred prior to the enactment of the Tennessee Petroleum Underground
Storage Tank Fund Act (the “Act”), Tenn. Code Ann. 68-215-101, et seq. The trial court treated
Texaco’s request for judicial review as a petition for declaratory judgment pursuant to Tenn. Code
Ann. § 4-5-225 and summarily ruled that Texaco was “eligible” to seek reimbursement under the
Act for the remediation expenses at issue.1

The relevant facts, which are not disputed, are succinctly set forth in the trial court’s
Memorandum Opinion entered August 29, 2003. It reads in pertinent part:

1. [Texaco] was the owner of four petroleum underground storage tanks (UST’s)
located at its facility at 504 Lovell Road, Knoxville, Tennessee. In May, 1988,
[Texaco] filed an amended Notification for Underground Storage Tanks form with
TDEC, Division of Underground Storage Tanks [the Department], evidencing its
removal and destruction of these four UST’s on or about March 30, 1988.

2. The Tennessee Petroleum Underground Storage Tank Act, now codified as §§ 68-
215-101 to 68-215-204 [the Act], became effective July 1, 1988. See 1988 Tenn.
Pub. Acts, ch. 984, § 31.

3. The [Act] was amended in April, 1990, to reflect the following “[i]t is the intent
of the General Assembly that this chapter shall not apply to releases or other events
that occurred prior to July 1, 1988.” See 1990 Tenn. Pub. Acts, ch. 855, § 1.

4. In March, 1991, [Texaco] discovered a release of petroleum hydrocarbons at its
location at 504 Lovell Road, Knoxville, during the course of a routine real estate
assessment.

5. [Texaco] first reported the discovery of the release to [the Department] during a
telephone call on June 14, 1991, between project engineer, Jill Norman, and UST
Division employee, Steve Wilson. [Texaco] followed up with written notification
to [the Department] on June 20, 1991.

6. In May, 1998, [Texaco] submitted to [the Department] an application for
authorization for fund eligibility seeking reimbursement from the UST Fund for
assessment and remediation expenses incurred at the 504 Lovell Road location from
1991 forward.

7. On June 8, 1998, [the Department’s] UST Division notified [Texaco] in writing
that its application for fund coverage for contamination clean-up at this site was
denied, because the release occurred before July 1, 1988.

1
Texaco entitled its initial pleading as a Petition for Judicial Review of Administrative Decision pursuant to
Tenn. Code Ann. 4-5-322. The Chancellor determined the procedure was only applicable to a person aggrieved by a
final decision in a contested case and Texaco was not appealing a ruling from a contested case. Thereafter, Texaco
amended its petition to seek a declaratory judgment.

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 8. In July, 1998, [Texaco] filed a Petition to Contested [sic] Case Hearing and
Declaratory Order before the UST Board.

9. On January 10, 2002, [the Department] notified [Texaco’s] counsel in writing that
it had re-evaluated [Texaco]’s fund eligibility status and determined that [Texaco]
was still ineligible for Fund reimbursement because the release was not reported to
the Division before April 11, 1990.

The issue presented to the trial court was the applicability of the Act, Tenn. Code Ann. § 68-
215-101, et seq., to Texaco’s application for fund reimbursement eligibility. The trial court found
it significant that the Act was amended in April of 1990, to state: “It is the intent of the general
assembly that this chapter shall not apply retroactively to releases or other events that occurred prior
to July 1, 1988." Tenn. Code Ann. § 68-215-102(c). It also found, “[t]he construction of the . . . Act
has been determined by the Court of Appeals in Memphis Publishing Co. v. Tennessee Petroleum
Underground, 1993 WL 476292 (Tenn. Ct. App. 1993).” With that conclusion, the trial court went
on to find:

The facts in Memphis Publishing Company, (“MPC”) are similar to the facts
in the instant case. MPC discovered contamination on its property in August 1987.

The Division denied MPC’s application for fund eligibility based on the
restriction in Tenn. Code Ann. § 68-215-102 (c), which barred the application of the
Act for releases or events occurring prior to July 1, 1988.
...

Finally, the Memphis Court held that the original Act was intended to cover,
for fund reimbursement, all releases, regardless of date. Id. 6

Based upon the foregoing findings of fact and conclusions of law, the trial court declared that
Texaco was “entitled to have its application for fund eligibility regarding its site at [Texaco] No. 2-
471174, 504 Lovell Road, Knoxville, considered by [the Department], without regard to the dates
of releases of the contamination.” Thus, the motion for summary judgment filed by Texaco was
granted, and the motion for summary judgment filed by the Department was denied.2

The Department appealed and contends the trial court erred in three ways: one, finding
Memphis Publishing Co. v. Tennessee Petroleum Underground Storage Tank Board, No. 01A01-
9305-CH-00202, 1993 WL 476292 (Tenn. Ct. App. Nov. 19, 1993), the “law of the case” with
respect to Texaco’s release and application for fund reimbursement; two, finding that Texaco had
a “vested right to reimbursement”; and, three, finding Texaco in “substantial compliance” with the

2
The chancellor additionally remanded the case to the Division for reconsideration of Texaco’s application for
fund eligibility, in accordance with this Memorandum Opinion.

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Act. The Department also contends Texaco was not in “substantial compliance” with the Act, based
upon its failure to timely report; therefore, Texaco was not “eligible” for reimbursement.

STANDARD OF REVIEW

The issues were resolved in the trial court upon summary judgment. Summary judgments
do not enjoy a presumption of correctness on appeal. BellSouth Advertising & Publishing Co. v.
Johnson, 100 S.W.3d 202, 205 (Tenn. 2003). This court must make a fresh determination that the
requirements of Tenn. R. Civ. P. 56 have been satisfied. Hunter v. Brown, 955 S.W.2d 49, 50-51
(Tenn. 1997). We consider the evidence in the light most favorable to the non-moving party and
resolve all inferences in that party's favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). When
reviewing the evidence, we first determine whether factual disputes exist. If a factual dispute exists,
we then determine whether the fact is material to the claim or defense upon which the summary
judgment is predicated and whether the disputed fact creates a genuine issue for trial. Byrd v. Hall,
847 S.W.2d 208, 214 (Tenn. 1993); Rutherford v. Polar Tank Trailer, Inc., 978 S.W.2d 102, 104
(Tenn. Ct. App. 1998).

Summary judgments are proper in virtually all civil cases that can be resolved on the basis
of legal issues alone, Byrd v. Hall, 847 S.W.2d at 210; Pendleton v. Mills, 73 S.W.3d 115, 121
(Tenn. Ct. App. 2001); however, they are not appropriate when genuine disputes regarding material
facts exist. Tenn. R. Civ. P. 56.04. The party seeking a summary judgment bears the burden of
demonstrating that no genuine disputes of material fact exist and that party is entitled to judgment
as a matter of law. Godfrey v. Ruiz, 90 S.W.3d at 695. Summary judgment should be granted at the
trial court level when the undisputed facts, and the inferences reasonably drawn from the undisputed
facts, support one conclusion, which is the party seeking the summary judgment is entitled to a
judgment as a matter of law. Pero's Steak & Spaghetti House v. Lee, 90 S.W.3d 614, 620 (Tenn.
2002); Webber v. State Farm Mutual Automobile Ins. Co., 49 S.W.3d 265, 269 (Tenn. 2001). The
court must take the strongest legitimate view of the evidence in favor of the non-moving party, allow
all reasonable inferences in favor of that party, discard all countervailing evidence, and, if there is
a dispute as to any material fact or if there is any doubt as to the existence of a material fact,
summary judgment cannot be granted. Byrd v. Hall, 847 S.W.2d at 210; EVCO Corp. v. Ross, 528
S.W.2d 20 (Tenn. 1975). The moving party must affirmatively negate an essential element of the
non-moving party's claim or establish an affirmative defense that conclusively defeats the
non-moving party's claim. Cherry v. Williams, 36 S.W.3d 78, 82-83 (Tenn. Ct. App. 2000).

THE MEMPHIS PUBLISHING OPINION

The trial court’s decision was based in part on the conclusion the “construction of the . . . Act
has been determined” in Memphis Publishing Co. v. Tennessee Petroleum Underground Storage

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Tank Board, No. 01A01-9305-CH-00202, 1993 WL 476292 (Tenn. Ct. App. Nov. 19, 1993)
(hereinafter Memphis Publishing I).3 We find this conclusion erroneous.

Memphis Publishing I, the opinion upon which the Chancellor relied, was appealed to the
Tennessee Supreme Court. On May 9, 1994, the Supreme Court denied the appeal with the notation
it was “concurring in results only.” Id. Tenn. S. Ct. R. 4(F)(1) and (3) combine to render such
opinions of no precedential value.4 If an application for permission to appeal is denied with the
notation “concurring in results only,” the opinion has “no precedential value.” Id. Since Memphis
Publishing I has no precedential value, the legal conclusion by the trial court that “the construction
of the questioned Act” was “determined by the Court of Appeals” in Memphis Publishing I was
erroneous.

The Department additionally contends the construction of the Act by this court in Memphis
Publishing I has no bearing on the parties at bar because the ruling served only as the law of the case,
the Memphis Publishing case, and Texaco was not a party to that case.5

3
There are two other appeals with the same name. The opinion the Chancellor relied on was the first of the three
Memphis Publishing opinions.

4
The Supreme Court further explained:

[W ]hen we deny discretionary review, this Court is not necessarily committed to all the views
expressed in the opinion of the intermediate appellate court. Meadows v. State, 849 S.W .2d 748, 752
(Tenn.1993); Adams v. State, 547 S.W .2d 553, 556 (Tenn.1977); Street v. Calvert, 541 S.W .2d 576,
587 (Tenn.1976); Bryan v. Aetna Life Ins. Co., 174 Tenn. 602, 611, 130 S.W .2d 85, 88 (1939). W e
discussed in Meadows the practical reasons for this rule.

This Court's use of the denial with concurrence in results only designation has been founded
upon similar considerations. For example, simply because of the sheer volume of applications for
appeal, this Court does not have the ability to grant review and write an opinion in every case in which
it disagrees with some portion of the intermediate appellate court decision. In addition, the problematic
portion of the intermediate appellate decision is not always raised as an issue by the parties in their
applications for review. Occasionally, the issue is raised, but the record is deficient. On other
occasions, the troubling rationale of the intermediate appellate court relates to a well-settled area of
the law, so there is no need for another decision of this Court. In all these circumstances our ability
to deny review with concurrence in results only precludes publication of the intermediate appellate
court decision, Pairamore v. Pairamore, 547 S.W .2d 545, 548 (Tenn.1977); see also Rule 4.4, Rules
of Tenn. Sup. Ct.

Memphis Publishing Co. v. Tennessee Petroleum Underground Storage Tank Board, 975 S.W.2d 303, 307 (Tenn. 1998).

5
The trial court did not expressly find Memphis Publishing I to be the law of the case relative to the case at bar;
however, the holding in Memphis Publishing III was based on the Supreme Court’s finding that Memphis Publishing
Company had a vested right due to a ruling in Memphis Publishing I that constituted the law of the Memphis Publishing
case.

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 The phrase "law of the case" refers to a legal doctrine which generally prohibits
reconsideration of issues that have already been decided in a prior appeal of the same
case. 5 AM .JUR.2D APPELLATE REVIEW § 605 (1995). In other words, under the law
of the case doctrine, an appellate court's decision on an issue of law is binding in later
trials and appeals of the same case if the facts on the second trial or appeal are
substantially the same as the facts in the first trial or appeal. Life & Casualty Ins. Co.
v. Jett, 175 Tenn. 295, 299, 133 S.W.2d 997, 998-99 (1939); Ladd v. Honda Motor
Co., Ltd., 939 S.W.2d 83, 90 (Tenn. Ct. App. 1996).

Memphis Publishing Co. v. Tennessee Petroleum Underground Storage Tank Board, 975 S.W.2d
303, 306 (Tenn. 1998) (hereinafter Memphis Publishing III).

The law of the case doctrine is based on the common sense recognition that issues previously
litigated and decided by a court ordinarily need not be revisited in that case. Id., 975 S.W.2d at 306
(citing Ladd, 939 S.W.2d at 90; see also 5 AM .JUR.2D APPELLATE REVIEW § 605 (1995)). “[W]hen
an initial appeal results in a remand to the trial court, the decision of the appellate court establishes
the law of the case which generally must be followed upon remand by the trial court. . . .” Memphis
Publishing III, 975 S.W.2d at 306 (citing 1B JAMES W. MOORE , MOORE 'S FEDERAL PRACTICE ¶
0.404[1] (2d ed.1995)). Stated another way, the decision of the appellate court establishes the law
of the case, meaning the case appealed.6 However, the case at bar is not a remand of the Memphis
Publishing case and Texaco was not a party to that case. Therefore, while the construction of the
Act as determined in Memphis Publishing I remained the law of that case, it has no applicability to
the case at bar.7

SUBSTANTIAL COMPLIANCE

The Department contends Texaco’s eligibility, if any,8 to seek reimbursement of its
remediation expenses from the Fund is vitiated by its failure to comply with the Underground
Storage Tank Board’s regulations governing the reporting of petroleum releases.

6
There are limited circumstances which may justify reconsideration of an issue – the law of the case – decided
in a prior appeal of the case: “(1) the evidence offered at a trial . . . after remand was substantially different from the
evidence in the initial proceeding; (2) the prior ruling was clearly erroneous and would result in a manifest injustice if
allowed to stand; or (3) the prior decision is contrary to a change in the controlling law which has occurred between the
first and second appeal. (citations omitted)” Memphis Publishing III, 975 S.W .2d at 306.

7
Though Memphis Publishing I has no precedential value, the decision of this court in the first appeal remained
controlling as the law of the Memphis Publishing case despite the Supreme Court’s denial of review with concurrence
in results only. See Memphis Publishing III, 975 S.W .2d at 307 (holding denial of review with concurrence in results
only does not abrogate the law of the case effect of that decision.)

8
The Department does not concede eligibility. This argument is asserted in the alternative, if Texaco’s pre-Act
release is eligible for fund reimbursement.

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 Texaco discovered the release in March of 1991 and reported the release to the Department
three months later. Tenn. Comp. R. & Reg., ch. 1200-1-15-.05(1)-(4) requires owners and operators
of underground storage tanks to report suspected releases within seventy-two hours. The Rule
defines an “eligible” owner of underground storage tanks as “an owner or operator that is in
‘substantial compliance’ as defined in subparagraph (hh) of this paragraph.” Rule 1200-1-15-
.09(2)(k). Subparagraph (hh) provides: “‘substantial compliance’ shall mean that an owner or
operator . . . has complied with the requirement of Rule 1200-1-15-.02(1) through Rule 1200-1-15-
.07(5).” Rule 1200-1-15-.09(2)(hh).

The authority of the UST Board to limit Fund eligibility through the promulgation of rules
was upheld by this court in Christian v. Tennessee Petroleum Underground Storage Tank Board,
928 S.W.2d 927 (Tenn. Ct. App. 1995).9

The Tennessee Petroleum Underground Storage Tank Act (Act) authorizes
the Board to "promulgate and adopt such rules and regulations in accordance with the
provisions of the [UAPA]." T.C.A. § 68-215-107(f). In addition, the Act provides
that any person seeking review of an order for correction may file a written petition
with the Commissioner, requesting a hearing before the Board. The hearing is to be
conducted by the Board in accordance with the UAPA. T.C.A. § 68-215-119(a)(1)
and (b).
...

We find that under the foregoing rule, it is within TDEC's discretion to
impose a site check requirement to ascertain whether a release has occurred during
a period of fund ineligibility. The rule clearly prohibits the application of fund
monies for corrective action costs due to a release occurring during the time of fund
ineligibility. Without the site check requirement, how else could "a release which
occurred during the time of fund ineligibility" be discovered? Further, we do not find
the record to suggest that the Board has inconsistently or arbitrarily imposed such
requirement.

We conclude that the determination of the Board requiring Christian to
undergo a site check to reestablish fund eligibility comports with T.C.A. § 4-5-
322(h). The judgment of the trial court upholding the Board's decision is affirmed.

Christian, 928 S.W.2d at 930-931.

Texaco did not report the release within seventy-two hours. To the contrary, it waited some
three months to report the release. By failing to comply with the seventy-two hour time constraint
under Rule 1200-1-15-.05(1)-(4),Texaco was not in substantial compliance. Therefore, it was not

9
See also the companion case of Christian v. Tennessee Petroleum Underground Storage Tank Board, 1995
W L 241331 (Tenn. Ct. App. April 26, 1995).

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eligible – not an eligible owner – pursuant to Rule 1200-1-15-.09(2)(k). Thus, Texaco is not eligible
for reimbursement from the Fund of the remediation costs at issue.

JUSTIFIABLE RELIANCE ON THE 1988 ACT

The Department contends Texaco had no vested right before passage of the 1990 amendment
to the Act that restricted the Fund to releases occurring after 1988 because Texaco did not incur an
obligation or expend funds at a time it could have justifiably relied on the Act.

Memphis Publishing Company was found to have a vested right to claim reimbursement from
the fund. Memphis Publishing I, 1993 WL 476292 at *7. The relevant part of the ruling centered on
timing. Significant facts the court considered were when Memphis Publishing Company incurred
the remediation expenses, when the Act went into effect, and when the restrictive amendment went
into effect. Id. Significantly, the court found that Memphis Publishing Company incurred $800,000
in remediation expenses and applied for reimbursement before the amendment. Id.

Unlike Memphis Publishing Company, Texaco did not incur remediation expenses prior to
the enactment of the restrictive amendment in 1990. Texaco removed the underground storage tanks
in March of 1988. Any release from those tanks therefore occurred before March of 1988. The Act
went into effect after their removal on July 1, 1988. The Act was amended in 1990 so that the Fund
was not available to releases occurring prior to July 1, 1988. Texaco discovered the release in March
of 1991, after the 1990 amendment went into effect. Moreover, Texaco did not incur remediation
expenses until after the restrictive amendment went into effect.

Justifiable reliance relates to the making of an obligation “in reliance upon the law then in
effect, with consequences that cannot be justly ignored when that law is overruled.” Townsend v.
Clover Bottom Hospital and School, 560 S.W.2d 623, 626 (Tenn. 1978); see also Robertson County
v. Browning-Ferris Industries of Tennessee, Inc., 799 S.W.2d 662, 667 (Tenn. Ct. App. 1990)
(holding a company did not have a "vested right" on the sole basis of its investment). All of the
underground storage tanks were removed and destroyed before the effective date of the Act. Texaco
was on notice of the 1990 amendment before it discovered the release. Moreover, Texaco was on
notice of the amendment before it incurred the remediation expenses. Therefore, as the Department
contends, Texaco did not justifiably rely on the expectation it would be reimbursed from the Fund
when it incurred its remediation expenses. Accordingly, Texaco did not have a vested right when
it incurred the remediation expenses in 1991 and thereafter.

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 IN CONCLUSION

The judgment of the trial court is reversed and this matter is remanded for entry of judgment
consistent with this opinion. Costs of appeal are assessed against Appellee, Texaco Refining and
Marketing, Inc.

___________________________________
FRANK G. CLEMENT, JR., JUDGE

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