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Bedford Affiliates v. Sills

ELR Citation: 29 ELR 20229
Nos. Nos. 97-9245, -9267, 156 F.3d 416/(2d Cir., 09/28/1998)

The court holds that a landowner that is a potentially responsible party (PRP) under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §107(a) cannot maintain a §107(a) action against another PRP, but can seek contribution from that PRP under CERCLA §113(f). The landowner is a PRP by virtue of its present and past ownership of the site. The other PRPs are ownersand operators of a dry cleaning establishment from which tetrachloroethylene contamination occurred on the site. The court first holds that as a PRP that is not entitled to any §107(b) defenses, the landowner cannot maintain a §107 action. One PRP can never recover 100 percent of the response costs from others similarly situated because it is a joint tortfeasor—and not an innocent party—that ultimately must bear its pro rata share of cleanup costs. To bring a derivative action to recoup the portion of costs exceeding a PRP's equitable share of the overall liability is a quintessential claim for contribution. To permit PRPs to elect recovery under either §107(a) or §113(f)(1) would render §113(f)(1) meaningless. Moreover, the landowner cannot qualify for a CERCLA §107(b) innocent landowner defense. Here, the landowner clearly shared a contractual relationship with the sublessee who contaminated the site long after the landowner acquired the property. In addition, the court holds that CERCLA preempts the landowners state-law claims for restitution and indemnification.

The court next holds that the landowner established a prima facie cause-of-action under CERCLA §113(f)(1) even though it failed to comply with the national contingency plan's (NCP's) public comment requirement. The 1990 NCP revisions reduced the standard for compliance of private-party response actions from strict to substantial. Because none of the parties to the action dispute the quality or cost of the landowner's cleanup efforts, to preclude its recovery solely because of the lack of public comment would ignore the equitable component that Congress and the U.S. Environmental Protection Agency built into cleanup cost decisions. The court further holds that the district court's apportionment of liability was not an abuse of discretion. The district court performed a comparative culpability analysis focusing on several factors, including relative fault, to apportion contribution recovery. The court, however, remands the case for the district court to decide if the landowner is entitled to recover legal fees paid to regain possession of the site and begin cleanup. Last, the court vacates the district court's ruling that the dry cleaning establishment operator must indemnify the site sublessee and remands the issue for the district court to determine whether it is appropriate to pierce the corporate veil.

Counsel for Plaintiff
Robert G. Del Gadio
Del Gadio & Tomao
EAB Plaza
W. Tower, 12th Fl., Uniondale NY 11556
(516) 683-0200

Counsel for Defendant
Richard G. Leland
Rosenman & Colin
575 Madison Ave., New York NY 10022
(212) 940-8800

Before McLaughlin and Jacobs, JJ.