ILLINOIS POLLUTION CONTROL BOARD

June 5, 2003

PEOPLE OF THE STATE OF ILLINOIS,

Complainant,

SKOKIE VALLEY ASPHALT, CO., INC.,

EDWIN L. FREDERICK, JR., individually

and as owner and president of SKOKIE

VALLEY ASPHALT, CO., INC., and

RICHARD J. FREDERICK, individually and

as owner and vice president of SKOKIE

VALLEY ASPHALT, CO., INC.

Respondents.

)

PCB 96-98

(Enforcement – Water)

ORDER OF THE BOARD (by T.E. Johnson):

On July 26, 2002, the Office of the Attorney General, on behalf of the People of the State

of Illinois, (complainant) filed a second amended complaint against Skokie Valley Asphalt Co.,

Inc., Edwin L. Frederick, Jr., and Richard J. Frederick (respondents). The complaint alleges that

respondents violated Sections 12 (a) and (f) of the Environmental Protection Act (Act) (415

ILCS 5/12(a), (f) (2002)), as well as 35 Ill. Adm. Code 302.203, 304.105, 304.106, 305.102(b),

309.102(a), and 309.104(a). The complaint alleges that the violations concern respondents’

facility at Grayslake Village, Lake County.

On April 18, 2003, the complainant filed a motion to strike or dismiss respondents’

affirmative defenses. The respondents filed a response to the motion to strike or dismiss

affirmative defenses on April 30, 2003. On April 23, 2003, Skokie Valley Asphalt Co. (Skokie

Valley) filed a motion to dismiss Edwin L. Frederick, Jr. and Richard J. Frederick (collectively

Fredericks). On May 7, 2003, the complainant filed a motion for leave to file a reply to the

response to the motion to strike or dismiss affirmative defenses, along with a reply. Also on

May 7, 2003, the complainant filed a motion to strike Skokie Valley’s motion to dismiss or, in

the alternative, a response to the motion to dismiss.

For the reasons articulated below, the Board strikes the first and second affirmative

defenses, but will allow the third affirmative defense to stand. Further, the Board denies Skokie

Valley’s motion to dismiss Edwin L. Frederick, Jr. and Richard J. Frederick from the complaint.

BACKGROUND

On July 26, 2002, the complainant filed a second amended complaint. That complaint

added the Fredericks as respondents. The second amended complaint alleged that the Fredericks

violated Sections 12(a) and (f) of the Environmental Protection Act (Act) (415 ILCS 5/12(a), (f)

(2002)), as well as Sections 302.203, 304.105, 304.106, 305.102(b), 309.102(a), and 309.104(a)

of the Board’s regulations. The complaint alleged that the Fredericks falsified discharge

monitoring reports, submitted a late application for a National Pollutant Discharge Elimination

System (NPDES) permit, failed to comply with sampling and reporting requirements in their

NPDES permits, discharged oil into a drainage ditch, and violated NPDES permit effluent limits.

On October 17, 2002, the Board accepted the People’s second amended complaint.

People v. Skokie Valley Asphalt, Co., PCB 96-98, slip op. at 3 (Oct. 17, 2002). The final

sentence of that order read: “The respondents may file an answer as provided in Section

103.204(d) of the Board’s rules using October 17, 2002 as the date the complaint was received.”

People v. Skokie Valley Asphalt, Co., PCB 96-98, slip op. at 3 (Oct. 17, 2002). The respondents

hand-delivered their answer to the second amended complaint, including the affirmative defenses

in question, on December 20, 2002. On that same day, the complainant filed a motion to deem

facts admitted and for summary judgment. On January 3, 2003, the respondents filed a response

to the motion to deem facts admitted and for summary judgment. The complainant filed a reply

on January 17, 2003.

On March 20, 2003, the Board issued an order that denied the complainant’s motion for

summary judgment, accepted the respondents’ answer into the record, and directed the hearing

officer to proceed to hearing. People v. Skokie Valley Asphalt, Co., PCB 96-98 (Mar. 20, 2003).

Complainant’s April 18, 2003 motion to strike or dismiss respondents’ affirmative defenses was

filed within 30 days after the Board accepted the respondents’ answer and affirmative defenses,

and was, therefore, timely pursuant to Section 101.506 of the Board’s procedural rules.

See

Ill. Adm. Code 101.506.

The affirmative defenses to the second amended complaint in question are:

1. The complainant was not diligent in pursuing the filing of a claim against

respondents Edwin L. Frederick, Jr. and Richard J. Frederick.

2. The respondents Edwin W. Frederick, Jr. and Richard J. Frederick have been

misled and prejudiced in their ability to respond to the complaint by the

complainant’s unjustifiable delay in adding them as respondents.

3. Under the doctrines of

laches

and equitable estoppel, the complainants should not

be allowed to amend its complaint to include respondents Edwin L. Frederick, Jr.

and Richard J. Frederick, as respondents and these respondents should not be

required to respond to said complaint.

All three affirmative defenses have been challenged by the complainant in its motion to

strike. On March 28, 2003, the hearing officer set a discovery schedule that ends on

September 22, 2003. No hearing is currently scheduled.

PRELIMINARY MATTERS

On May 7, 2003, the complainant filed a motion for leave to file reply to respondents’

response to the motion to strike or dismiss. The complainant contends that it will suffer material

prejudice if the Board does not grant it leave to file a reply. However, the complainant does not

indicate how it will be prejudiced if not granted leave to file a reply. No response to the motion

for leave to file a reply has been received by the Board.

The Board’s procedural rules provide that a movant will not have the right to reply except

as permitted by the Board in order to prevent material prejudice. 35 Ill. Adm. Code 101.500(e).

The complainant asserts that material prejudice will result if the motion for leave to file is not

granted, but provides no further information. A bald assertion that material prejudice will result

is not sufficient for the Board to grant a motion for leave to file. Accordingly, the motion is

denied, and the reply will not be accepted.

MOTION TO STRIKE AFFIRMATIVE DEFENSES

Complainant’s Arguments

In its motion, the complainant asserts that the second amended complaint differs from the

first only in the addition of the Fredericks as respondents. Mot. at 2. The complainant argues

the first two affirmative defenses do not raise new matters that would defeat the second amended

complaint, and should be stricken. Mot. at 7. The complainant asserts that the Fredericks were

added in order to hold the proper parties responsible, and that its diligence in adding the

Fredericks as respondents does not constitute an affirmative defense. Mot. at 6. The

complainant contends that no description of how or why the Fredericks were misled and

prejudiced in their ability to respond to the complaint was made.

. The complainant asserts

that a hearing date in this matter has not been set and that a hearing is not anticipated until the

fall of 2003. Mot. at 7.

The complainant argues that respondents have not pled facts sufficient to establish the

affirmative defense of estoppel. Mot. at 7. Specifically, the complainant argues that respondents

have not shown how the complainant has benefited or how the Fredericks have changed their

position to their detriment based on complainant’s conduct. Mot. at 7-8. The complainant

contends that no extraordinary circumstances exist in this matter, so the defense of

laches

applied to a governmental entity performing its function correctly must be stricken. Mot. at 8-9.

Respondents’ Arguments

The respondents argue that the rules and case law cited by the complainant are not

relevant to this matter and the respondents cannot be held to such standards. Resp. at 2. Further,

the respondents assert that the failure of the complainant to state a relevant legal basis for its

motion results in a motion that need not be countered by the respondents nor granted by the

Board.

. The respondents contend that Section 103.204(d) of the Board’s rules provides that

any affirmative defenses must be plainly set forth prior to hearing in the answer or in a

supplemental answer, and that the affirmative defenses in question are sufficiently presented

under this standard.

. Finally, the respondents contend that they have alleged new facts

sufficient to defeat the claims of the complainants.

Discussion

A motion to strike an affirmative

defense admits well-pled facts constituting the defense,

only attacking the legal sufficiency of the facts. International Insurance Company v. Sargent and

Lundy, 242 Ill. App. 3d 614, 630-31, 609 N.E.2d 842, 853-54 (1st Dist. 1993),

citing

Raprager v.

Allstate Insurance Co., 183 Ill. App. 3d 847, 854, 539 N.E.2d 787 (1989). “Where the well-

pleaded facts of an affirmative defense raise the possibility that the party asserting them will

prevail, the defense should not be stricken.” International Insurance, 242 Ill. App. 3d at 631, 609

N.E.2d at 854 (citation omitted).

The Board has addressed

laches

as an affirmative defense in the past, both striking the

affirmative defense (

see, e.g.

, People v. Big O, Inc., PCB 97-130, slip op. at 1.), (Apr. 17, 1997)

and allowing the affirmative defense (

see

State Oil and Royster-Clark, PCB 02-08, slip op. at 5-6

(Jan. 24, 2002)).

Laches

is an equitable doctrine that bars relief where a defendant has been misled or

prejudiced because of a plaintiff's delay in asserting a right. City of Rochelle v. Suski, 206 Ill.

App. 3d 497, 501, 564 N.E.2d 933, 936 (2nd Dist. 1990). There are two principal elements of

laches:

“lack of due diligence by the party asserting the claim and prejudice to the opposing

party.” Van Milligan v. Board of Fire and Police Commissioners, 158 Ill. 2d 85, 89, 630 N.E.2d

830, 833 (1994).

The respondents’ third affirmative defense also contains an assertion of equitable

estoppel. A party may invoke the doctrine of equitable estoppel when it “reasonably and

detrimentally relies on the words or conduct of another.” Brown's Furniture v. Wagner, 171 Ill.

2d 410, 432, 665 N.E.2d 795, 806 (1996) (citation omitted). The doctrine of estoppel “should not

be invoked against a public body except under compelling circumstances, where such invocation

would not defeat the operation of public policy.” People v. Chemetco, PCB 96-76, slip op. at 10

(Feb. 19, 1998) (quoting Gorgess v. Daley, 256 Ill. App. 3d 143, 147, 628 N.E.2d 721, 725 (1st

Dist. 1993)). The Illinois Supreme Court is reluctant to apply the doctrine of estoppel against the

State because it “may impair the functioning of the State in the discharge of its government

functions, and that valuable public interests may be jeopardized or lost by the negligence,

mistakes or inattention of public officials.” Brown's Furniture, 171 Ill. 2d at 431-32, 665 N.E.2d

at 806 (citation omitted);

see

also

Chemetco, PCB 96-76, slip op. at 10-11(Feb. 19, 1998).

But, it has, however, been stated with frequency that the State may be estopped when

acting in a proprietary, as distinguished from its sovereign or governmental capacity and even,

under more compelling circumstances, when acting in its governmental capacity. Hickey v.

Illinois Central Railroad Co., 35 Ill. 2d 427, 447-448, 220 N.E.2d 415, 425-426 (1966) (citations

omitted). The Supreme Court reaffirmed Hickey more recently in Van Milligan.

See

Van

Milligan, 158 Ill. 2d 85, 90-91, 630 N.E.2d 830, 833.

A party seeking to estop the government must prove three factors. First, it must prove

that it relied on a government agency, its reliance was reasonable, and that it incurred some

detriment as a result of the reliance. Chemetco, PCB 96-76, slip op. at 11(Feb. 19, 1998).

Second, the party “must show that the government agency made a misrepresentation with

knowledge that the representation was untrue.”

Id.

;

see also

Medical Disposal Services v. PCB,

286 Ill. App. 3d 562, 677 N.E.2d 428 (1st Dist. 1997). Third, “the government body must have

taken some affirmative act; the unauthorized or mistaken act of a ministerial officer will not

estop the government.” Chemetco, PCB 96-76, slip op. at 11 (Feb. 19, 1998);

see also

Brown’s

Furniture, 171 Ill. 2d at 431, 665 N.E.2d at 806.

Although listed as separate affirmative defenses, affirmative defenses one and two are

essentially the basis for the third affirmative defense. Accordingly, respondents’ first two

affirmative defenses do not allege new facts or arguments that, if true, will defeat complainant’s

claim even if all allegations in the complaint are true. If the allegations in affirmative defenses

one and two are accepted as true,

laches

, as asserted in the third affirmative defense, may be a

defense available to the respondents. Accordingly, the Board will strike affirmative defenses one

and two, but will consider them solely as part of affirmative defense number three.

In its third affirmative defense

respondents invoked the doctrines of

laches

and equitable

estoppel. The complainant argues that respondents have not pled facts sufficient to establish the

affirmative defense of estoppel. Specifically, the complainant argues that respondents have not

shown how the complainant has benefited or the Fredericks have changed their position to their

detriment based on complainant’s conduct.

The Board finds that respondents have pleaded sufficient facts to raise the affirmative

defense of

laches

and equitable estoppel. Respondents have alleged, however, the Board need

not discuss the merit of the defense at this point, and concludes only that the alleged defense

should not be stricken.

MOTION TO DISMISS EDWIN L. FREDERICK, JR. AND RICHARD J. FREDERICK

Skokie Valley’s Arguments

Skokie Valley moves to dismiss the Fredericks, individually and as officers of Skokie

Valley Asphalt Co., Inc., under the doctrines of

laches

and equitable estoppel. Mot. at 1. Skokie

Valley argues that

laches

precludes the assertion of a claim by a litigant whose unreasonable

delay in raising that claim has prejudiced the opposing party. Mot. at 1-2. Skokie Valley asserts

that it is unquestionable that the complainant has not been diligent in bringing its allegation

against the Fredericks. Mot. at 3. As a result, contends Skokie Valley, the Fredericks have been

prejudiced in their ability to produce records, recall witnesses and remember events relevant to

their defense.

Skokie Valley argues that

laches

can be applied to a state under compelling

circumstances, even when the state is acting in a governmental capacity. Mot. at 4. Skokie

Valley asserts that the compelling circumstances in this matter include the fact that the

Fredericks would be required to defend themselves against charges of alleged incidents that

occurred up to 17 yeas ago, five years after the Fredericks terminated their employment with the

entity involved and three years after discovery related to the liability of the parties was

completed. Mot. at 5. Skokie Valley states further that compelling circumstances include the

fact that a party in its position should have “every right to rely on the representations and actions

of the State to conclude that it will not be required to defend itself against allegations raised well

after their retirement and after it had justifiably determined that it had completed its responses to

discovery requests.” Mot. at 5.

Skokie Valley argues that the complainant’s amendment of the complaint to include the

Fredericks without adding allegations is an attempt to extend discovery in this matter, increase

the respondents’ cost and effort in countering the complainant’s procedural maneuvering, and

further delay the hearing and final determination by the Board. Mot. at 5. Skokie Valley

attaches separate affidavits by the Fredericks to support its position.

Complainant’s Arguments

The complainant moves to strike or, in the alternative, dismiss Skokie Valley’s motion.

The complainant argues that the Board’s procedural rules provide that all motions to dismiss any

pleading filed with the Board must be filed within 30 days after the service of the challenged

document, and that Skokie Valley should have filed the motion to dismiss by November 18,

2002, instead of April 23, 2003. Mot. at 2.

Next, the complainant contends that nothing in the Board’s rules bars the complainant

from adding additional respondents in an emended complaint, and that no statute of limitations

on adding respondents exists. Mot. at 3. Further, the complainant asserts that this matter is still

in the midst of discovery, and that a hearing date has not been set.

. The complainant notes

that only the Fredericks supplied information for the responses to interrogatories on Skokie

Valley; only the Fredericks were identified as officers or members of Skokie Valley’s Board of

Directors; and only the Fredericks are listed to testify for Skokie Valley in this matter. Mot. at 4.

Further, the complainant asserts that the response to interrogatories indicates that the Fredericks

are “responsible for the entire [Skokie Valley] operation.” Mot. at 4.

The complainant contends that as corporate officers responsible for the entire operation

of the facility in question, and as those listed as witnesses to contest the alleged violations,

neither of the Fredericks have been misled by being named as respondents in this cause.

Mot. at 4.

The complainant argues that it is a public body attempting to perform its governmental

function of protecting the environment, and that no compelling circumstances exist in this matter

to invoke

laches

and estop the complainant from performing its function. Mot. at 7.

Discussion

For purposes of ruling on a motion to dismiss, all well pled facts contained in the

pleading must be taken as true and all inferences from them must be drawn in favor of the

nonmovant. People v. Stein Steel Mills Services, Inc., PCB 02-1 (Nov. 15, 2001). A complaint

should not be dismissed for failure to state a claim unless it clearly appears that no set of facts

could be proven under the pleadings that would entitle complainant to relief. Shelton v. Crown,

PCB 96-53 (May 2, 1996).

Skokie Valley’s motion was untimely filed. In its October 17, 2002 order, the Board

accepted the People’s second amended complaint, and directed the respondents to file an answer

as provided in Section 103.204(d) of the Board’s rules using October 17, 2002 as the date the

complaint was received. People v. Skokie Valley Asphalt, Co., PCB 96-98, slip op. at 3

(Oct. 17, 2002). The respondents properly filed their answer to the second amended complaint

on December 20, 2002.

Section 101.506 of the Board’s procedural rules provide that all motions to strike, dismiss

or challenge the sufficiency of any pleading filed with the Board must be filed within 30 days

after the service of the challenged document. 35 Ill. Adm. Code 101.506. In this case, the Board

specifically ordered that October 17, 2002 be used as the date on which the complaint was

received. Accordingly, any motion to dismiss should have been filed on or before November 18,

2002. The motion is, therefore, not timely and will not be accepted.

Furthermore, even if the motion were properly before the Board, the motion to dismiss

would be denied. Considering the facts in the complaint as true and drawing all inferences from

them in favor of the complainant, Skokie Valley has not proved the elements of

laches

estoppel. Skokie Valley has not shown that the Fredericks reasonably and detrimentally relied

on the words or conduct of the State, nor been misled or prejudiced because of the delay in

adding the Frederick’s to the complaint, nor has Skokie Valley provided the Board with any

compelling circumstances in this matter.

As the complainant asserts, the response to interrogatories indicates that the Fredericks

are responsible for the entire Skokie Valley operation. Only the Fredericks are identified as

officers of Skokie Valley, and only the Fredericks are supplied information for the responses to

interrogatories on Skokie Valley.

CONCLUSION

The Board denies the complainant’s motion for leave to file a reply to respondents’

response to the motion to strike or dismiss. The complainant’s motion to strike affirmative

defenses is granted in part. The first two affirmative defenses are stricken, but the third

affirmative defense remains. Skokie Valley’s motion to dismiss the Fredericks from this cause is

denied.

IT IS SO ORDERED.

I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board

adopted the above order on June 5, 2003, by a vote of 6-0.

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board