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Briggs & Stratton Corp. v. Concrete Sales & Servs.

ELR Citation: 29 ELR 20264
Nos. 5:95-cv-525-1 (WDO), 20 F. Supp. 2d 1356/(M.D. Ga., 09/28/1998) CERCLA §107(a)(2) liability for former owners of site

The court holds that under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the former owners of a contaminated site in Georgia are liable for the disposal of hazardous waste at the site. A potentially responsible party (PRP) shipped containers of hazardous waste to the site, rendering it subject to liability under CERCLA. The site at issue was owned by an individual from 1967 until 1984 when he transferred the property to a trust for the benefit of his children and grandchildren. The property was leased from 1971 to 1987 to a company that generated hazardous waste from an electroplating business. In 1987, the trust sold the property to a closely held corporation in which the trust was the sole shareholder. In 1991, the U.S. Environmental Protection Agency issued an administrative order to the former owners, the electroplating company, and the PRP, requiring certain cleanup activities at the site. The former owners failed to complete the portion of the work that it agreed to perform. The PRP completed the work for which the owners were responsible and, subsequently, sought contribution and indemnity from the owners for cleanup costs.

The court first holds that the individual who owned the property from 1967 to 1984 is not entitled to CERCLA §107(b)(3)'s third-party defense and is liable under §107(a)(2) as a former owner of the site during the disposal of hazardous substances. He owned the site during most of the years that the company generated and disposed of hazardous waste in the operation of its electroplating business, and CERCLA imposes strict liability on the former owner of a facility regardless of whether he knew or should have known about the disposal of hazardous wastes. Furthermore, leases have been held to be contractual relationships barring reliance upon the third-party defense. Thus, the lease between the owner and the company was in connection with the release of hazardous substances because the lease existed for the purpose of allowing the company to operate its business necessarily involving the use of such hazardous substances on the premises.

The court next holds that the trust is liable under §107(a)(2) as a former owner of the site during the disposal of hazardous substances. As the holder of legal title to the facility between 1984 and 1987, the trust was an owner of the property under the meaning of §107(a). It cannot be seriously disputed that the company disposed of hazardous substances when it released wastewaters during the time that the trust was the record owner of the facility and that leaching and migration of the hazardous substances continued to occur during the ownership of the trust. The trustees' ignorance over the company's disposal practices can only be interpreted as willful or negligent, which precludes reliance on CERCLA §107(b)(3)'s third-party defense.

The court then holds that the closely held corporation that owned the property from 1987 until 1992 is liable under §107(a)(1) as a former owner during the period of time that hazardous substances leaked from the containers that were abandoned on the property. The court also holds that the corporation is liable under §107(a)(2) as the owner of the facility at the time of the release of hazardous substances. The passive leaching and migration of hazardous substances that were initially discharged onto the site prior to the corporation's ownership is additional evidence of the release of hazardous substances during the period of ownership of the corporation. And like the trust, the corporation is not entitled to rely on the third-party defense.

The court further holds that the actions and omissions of the director and president of the corporation render him individually liable under §107(a)(2) as an operator of the site during the disposal of hazardous substances. It cannot be seriously disputed that he knew the property was contaminated at the time he arranged for the transfer of title from the trust to the corporation. Furthermore, his actions demonstrate that he actually exercised control over the corporation that was immediately responsible for the operation of the facility.

Next, the court holds that a consent order entered into with Georgia concerning the facility does not by its terms affect the PRP's right to pursue its claim that the former owners are liable to it under the citizen suit provision of the Resource Conservation and Recovery Act (RCRA). The court then holds that plaintiff's status as a CERCLA plaintiff seeking cost recovery does not bar it from filing a citizen suit under RCRA. The court further holds that the former owners are liable under the Georgia Hazardous Response Act for the costs of response work, including all attorney fees, with the amounts to be proven at trial. For the same reasons set forth above with respect to the CERCLA claims, the former owners are precluded from asserting the third-party defense. The court also holds that the trust and the corporation are liable under Georgia law for breach of contract. They breached their contract with plaintiffs by failing to complete the portion of the work to which they agreed. Furthermore, there is sufficient evidence that plaintiffs incurred damages by defendants' breach.

[Prior decisions in this litigation are published at 28 ELR 20063 and 20546.]

Counsel for Plaintiff
Daniel S. Reinhardt
Troutman & Sanders
5200 Nations Bank Plaza
600 Peachtree St. NE, Atlanta GA 30308
(404) 885-3000

Counsel for Defendants
L. Robert Lovett
Lovett, Cowart & Ayerbe
2904 Vineville Ave., Macon GA 31202
(912) 750-0200