7th Circuit: Marathon owes more for abandoned locations

Owners who leased properties in Michigan and Indiana that were used as Marathon gas stations – some of which were neglected, abandoned and condemned while Marathon leased them – will be paid more than the $269,000 a District judge in Fort Wayne awarded.

The 7th Circuit Court of Appeals opened the door for a greater judgment against Marathon for claims that began with its environmental cleanup of underground gas storage tanks at fewer than a dozen locations where it did business. Contract terms called for Marathon to remove underground tanks and return the properties as near as possible to their prior condition.

But Circuit Judge Richard Posner wrote for the panel that locations in Adrian and Michigan Center, Mich., were abandoned and ordered condemned while Marathon was still paying the lease. District Judge Theresa Springmann of the Northern District of Indiana wrongly denied double damages permitted under Michigan law governing the doctrine of waste and erred in dismissing other claims, the panel ruled.

The “contract and waste claims concerning these buildings should not
have been dismissed,” Posner wrote for the panel in Bitler Investment Venture II, LLC, et al. v. Marathon Petroleum Company LP, et al., 12-3722.

“So the judgment awarding damages for waste regarding the four Michigan properties is vacated with directions to the district court to double those damages,” Posner wrote, which would result in an award of $538,000. “(T)he dismissal of the contract and waste claims relating to the buildings on the properties in Adrian and Michigan Center is reversed and that aspect of the case is remanded for trial.”
 
The plaintiffs argued Marathon’s breach of lease and committing waste on the properties were guided by anti-competitive motives. Plaintiffs sought damages in excess of $9 million in litigation that also included a commercial property in Angola, Ind.