10 ELR 20387 | Environmental Law Reporter | copyright © 1980 | All rights reserved


Ohio v. Chem Dyne, Inc.

No. CV76-09-0834 (Ohio C.P. February 1, 1980)

The court rules that a receiver shall be appointed to supervise the payment of a civil fine and the removal of thousands of drums of hazardous waste from defendants' property. After chemicals had leaked from defendants' waste storage facility into nearby waters, resulting in substantial losses of fish and wildlife, defendants and the state entered into a court-approved stipulation providing for the payment of a fine and the progressive removal of all hazardous waste from the site. After a hearing the court concludes that defendants have failed to comply with the stipulation. Noting that defendants' waste processing company is to be distinguished from most enterprises in that its operations conceivably affect the natural environment of the entire region, the court concludes that the appointment of a receiver is necessary to supervise defendants' compliance with the terms of the stipulation.

Counsel for Plaintiffs
Dennis Muchnicki, Ass't Attorney General
30 E. Broad St., Columbus OH 43215
(614) 466-3376

Lester W. Koehler
Dollar Bldg., Hamilton OH 45011
(513) 893-5871

Counsel for Defendants
R. T. Rogers
Holbrock, Jonson, Bressler & Houser
315 S. Monument Ave., Hamilton OH 45011
(513) 868-7600

Louis F. Gilligan
Keating, Muething & Klekamp
Provident Tower, One E. 4th St., Cincinnati OH 45202
(513) 381-11560

[10 ELR 20387]

Marrs, J.:

This matter coming on this day for hearing to the Court upon the application of the State of Ohio for an appointment of a Receiver after a consent judgment had been filed in this cause. Evidence was presented, a number of exhibits introduced, and arguments were made by counsel.

On the 18th day of July 1979, a consent decree was filed in this cause and a Stipulation and Judgment Entry signed by Defendant Bruce Whitten, William L. Kovacs, Defendant, and Louis F. Gilligan, their attorney; Dennis Muchnicki, Assistant Attorney General for the State of Ohio and Lester W. Koehler, Law Director for the City of Hamilton. It is Stipulated by this entry that Chem Dyne Corporation, also a defendant in this action, would be bound by its terms and the entry further provided that if Defendants Whitten or Kovacs sell their interest in Chem Dyne Corporation, that the Stipulation and liability would be assumed by Defendants Whitten, Kovacs, or Chem Dyne Corporation. (See 9 of Stipulation and Judgment Entry.)

The Stipulation and Judgment Entry has two major thrusts, namely the payment of a money judgment in the sum of $75,000 in scheduled payments (see 8), and the second thrust being in the nature of a mandatory orderly removal and disposal of "all industrial waste as described in Finding No. 7." The removal was to be systematic subject to a quarterly inventory so that ultimately the premises would be free and clear of the objectionable material.

The evidence offered by the State of Ohio clearly showed that with regard to the money judgment, the terms of the Stipulation were not complied with by the respective Defendants. Evidence was offered by the Defendant Kovacs to show that attempts were made by the respective Defendants to satisfy the terms of the Stipulation but names appeared upon the checks after there had been a change in ownership and officers of the Corporation and said checks were not honored. However, it is to be noted that no attempt was made by the Defendant Kovacs or the Chem Dyne Corporation to properly issue the checks that had not been honored, thus the default in the payments.

It is the finding of this Court that the Defendants have violated the agreement and Stipulation by not paying the State of Ohio the sums of money due under the Judgment Decree.

Considering the second alleged violation with regard to the removal and disposal of the waste materials, the Court heard evidence from the State showing the from the inventory as initially furnished, with the tallying of additional incoming and outgoing material, that there was very little change, if any, in the beginning inventory of July 19th, 1979 and that of November 19, 1979 and January 22, 1980. Evidence offered by the Defendants indicated that the original estimates of inventory were nothing more than "guesstimates" and were not accurate. Additional estimates were offered in the form of pictures (see exhibits) showing that materials were removed. The State claims that the inventory areas merely reflect removal from one area to another area or that the drums were piled higher in order to clear a specific location.

The Court would find that with regard to the alleged violations with regard to the disposal and removal of the waste material, that there has likewise been a gross abuse by the Defendants of not properly recording the initial inventory and the allowance of additional disposal material (objectionable waste) to enter the premises and the continued operation of the business was a flagrant disregard to the Stipulation and Judgment Decree.

Having found the Defendants in violation of both phases of this Stipulation and Judgment Entry, the Court is faced with the serious matter or question as to whether a Receiver should be appointed under § 2935.01 of the Revised Code to carry out the July 18th, 1979 entry.

Mr. William Kovacs, as the evidence that was initially heard by this Court in 1976 and again reiterated throughout this proceeding,is indeed an entrepreneur, hard working, and a believer in the free enterprise system. His efforts have produced several corporations that furnish a service to a great number of other corporations in the removal and disposal of corporate waste. These endeavors have apparently been quite profitable and the corporate empires he has built deal in large sums of money. The chemical engineering expertise of Mr. Kovacs is likewise a great factor in the disposal of the various chemical waste with which his companies are intricately involved. Counsel for the Defendant has reminded the Court that "Receivership is Dictatorship" and would take away from Defendant Kovacs his right to deal in his corporate capacity with that subject matter which he has devoted all of his time and his life.

The Court in disposing of the issue of Receivership would note the differences between the type of business in which the respective Defendants are involved and that of the ordinary private corporation or enterprise. The Court would note that the Defendants in this case are engaged in a business that definitely affects this entire community had conceivably the water for this entire area as well as the wildlife, natural resources of the area, and the fish in the streams. Mr. Kovacs is engaged in businesses that very definitely have a widespread effect on community life and its daily operation and is affected with a public interest which invokes the equity powers of the Court.

This Court has found that the Defendants have failed in their agreement to cooperate with the Environmental Protection Agencies and have likewise failed to pay to the State of Ohio money [10 ELR 20388] which they have acknowledged due for the killing of wildlife, the pollution of the local streams, and the killing of fish.

This Court would further feel that proper supervision is definitely in order and that the companies owned and operated by the Chem Dyne chain must be supervised and controlled to the extent of the Judgment Entry and Stipulations of July 18th, 1979 and to that end this Court would order that a Receiver be appointed to accomplish what was agreed upon between the parties.

A formal entry may be presented in accordance herewith and the appointment of a Receiver be effected after conference on Monday, February 4th, 1980 at 10:00 a.m.


10 ELR 20387 | Environmental Law Reporter | copyright © 1980 | All rights reserved