In 2014, a storage facility owned and operated by Freedom Industries was discovered to have leaked numerous toxic chemicals into the Elk River. The leak greatly affected individuals in the area surrounding the Elk River, since it infiltrated water processing plants and resulted in thousands of West Virginia residents having to boil or purchase water until the leak could be addressed. As a result of the leak and the negative publicity that surrounded it, Freedom Industries was forced into Chapter 11 bankruptcy. As part of the bankruptcy resolution, Freedom Industries retained the right to any claims it had against other parties resulting from the chemical leak. In 2016, Freedom brought claims, including negligence and product liability, against Eastman Chemical Company, which manufactured and sold the chemicals stored at Freedom Industries’ storage facility. Freedom alleged that Eastman knew that the chemicals it produced were hazardous and had the ability to corrode through steel, making them predisposed to leaks. Freedom further argued that Eastman failed to share these facts with Freedom, Freedom stored Eastman’s chemicals in steel tanks, and this contributed to the ultimate chemical leak.
In March 2016, Eastman moved to dismiss Freedom’s claims. It argued that Freedom’s claims were barred by the statute of limitations and that Freedom had failed to allege sufficient facts to support many of its claims. On March 31, 2017, the Southern District of West Virginia weighed in on Freedom’s claims, finding that most of them survived the motion to dismiss.
The District Court first addressed Eastman’s claim that Freedom’s lawsuit was barred by West Virginia’s statute of limitations. It noted that in West Virginia, claims for fraud, negligence, and products liability have a two-year statute of limitations. When a party enters into bankruptcy before the statute of limitations has run, the party may later bring claims up to two years after the date the party filed for bankruptcy. Here, Freedom Industries filed its claims on January 19, 2016. Freedom’s bankruptcy was completed on January 17, 2016. However, the District Court noted that January 17 was a Sunday, and January 18 was a federal holiday, so it determined that Freedom’s claims were not outside the statute of limitations.
The court then turned to consider the sufficiency of Freedom’s claims. The court determined that Freedom sufficiently alleged breach of contract and breach of implied warranty claims because it alleged that Eastman had failed to disclose relevant facts to Freedom and failed to warn Freedom of the potency and dangerous nature of the chemicals it was producing. However, turning to Freedom’s fraud claims, the District Court noted that the federal rules require that fraud be pled with very specific particularity, including the contents, dates, and nature of the fraud. While Freedom alleged generally that Eastman failed to disclose important facts to Freedom, it did not allege the particularities of when such information was not disclosed or was misrepresented to Freedom. Accordingly, the District Court held that Eastman was entitled to dismiss Freedom’s fraud claims, although it granted Freedom the opportunity to attempt to amend such claims and refile them at a later date.
Based on the District Court’s order, many of Freedom’s claims against Eastman will continue to proceed, and the parties will likely enter discovery proceedings shortly to better determine the substance of Freedom’s contract claims, as well as to evaluate any misrepresentations or omissions that Eastman might have made. Additionally, Freedom may take the opportunity to gather more facts and specifics and amend its fraud claims to meet the particularity requirements of the federal rules. In either instance, the question of who is liable for the tragic Elk River spill is likely to continue to be litigated for quite some time.
At the Wolfe Law Firm, our West Virginia personal injury attorneys regularly assist clients in negligence, product liability, and wrongful death claims against individuals and corporations throughout the state, and we have been doing so for more than 25 years. Located in Elkins, West Virginia, the firm represents clients in a wide range of injury matters. Call us at 1-877-637-5756 or contact us online for a free consultation.
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