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Combined Properties/Greenbriar Ltd. Partnership v. Morrow

Citation: 29 ELR 21477
No. No. CIV. A. 98-1584-A, 58 F. Supp. 2d 675/(E.D. Va., 07/30/1999)

The court holds that the U.S. Supreme Court's decision in Eastern Enterprises v. Apfel, 118 S. Ct. 2131 (1998), does not undercut the constitutionality of retroactive liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In Eastern Enterprises, the Supreme Court addressed the retroactivity of the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701-9722, and a plurality of four justices found that the Act violated the Takings Clause. In this case a shopping center brought a CERCLA suit against the former owners of a dry cleaning business for allegedly contaminating the shopping center's property. One of the companies that owned the business before CERCLA was enacted relies on Eastern Enterprises to contest its liability.

The court first holds that since the Supreme Court's decision was a plurality, no single theory of law was adopted by a majority of the Court and Eastern Enterprises is not entitled to any precedential weight. Therefore, United States v. Monsanto, 858 F.2d 160, 19 ELR 20085 (4th Cir. 1988), remains controlling. The court next holds that even if Eastern Enterprises did have precedential weight, it would not be applicable to the instant action. In Eastern Enterprises, liability was not predicated on either the company's conduct or on any agreement that could have given rise to an expectation that it might be held liable. In contrast, if the company in this case is held liable under CERCLA, it will be a result of its own conduct in disposing of toxic chemicals, creating the very harm that CERCLA is designed to remedy. The court also finds that the potential economic impact on the dry cleaning company, while substantial, is not severe and disproportionate. The relevant measuring stick is not the economic benefit received by the parties, but the harm caused by their actions. Finally, the court holds that the retroactive application of CERCLA will not significantly interfere with the company's reasonable investment-backed expectation. Although the company probably did not consider that it would be involved in this kind of an action when it disposed of toxic chemicals, it is not unfair to hold parties liable for the consequences of their actions.

Counsel for Plaintiff
Robert E. Pokusa
Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Ave, NW. Washington DC 20004
(202) 508-9500

Counsel for Defendants
Kevin B. Bedell
Collier, Shannon, Rill & Scott
3050 K St. NW, Ste. 400, Washington DC 20007
(202) 342-8400