United States v. Westinghouse Electric Corp.

No. IP 83-9-C (S.D. Ind. June 29, 1983)

The court rules that a manufacturer of polychlorinated biphenyls (PCBs) has no liability for indemnity or contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or the Resource Conservation and Recovery Act (RCRA) to a PCB user that faces liability for cleanup of a site containing its PCB wastes. Westinghouse Electric Corp., the PCB user, filed a third-party complaint against Monsanto Co., the manufacturer. The court first dismisses Westinghouse's claims of breach of warranty, negligence, product liability, and fraud tied to the sale of PCBs in 1971 because the statutes of limitations for these claims have run. The court then rules that Monsanto would not be liable for indemnity or contribution under § 106(a) of CERCLA or § 7003(a) of RCRA. The statutes do not create a private right of action for Westinghouse. Monsanto has not generated or disposed of any hazardous waste, and is therefore not directly liable under the statutes. The statutes do not expressly or implicitly create a right of contribution or indemnity against Monsanto; neither does equity require or empower the court to fashion such a right.

Counsel for Plaintiff
Charles Goodloe, Ass't U.S. Attorney
46 E. Ohio St., Rm. 274, Indianapolis IN 46204
(317) 269-6333

Deborah J. Schmall
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2704

Counsel for Defendant and Third-Party Plaintiff
Joseph B. Carney
Baker & Daniels
810 Fletcher Trust Bldg., Indianapolis IN 46204
(317) 636-4535

Counsel for Third-Party Defendant
Byron G. Tabler, Michael R. Fruehwald, John J. Kish, John C. Rothhair
Barnes & Thornburg
1313 Merchants Bank Bldg., Indianapolis IN 46204
(317) 638-1313

[14 ELR 20483]

Holder, J.:

Ruling on Motion to Dismiss Third-Party Complaint

The matter of the March 21, 1983 Monsanto Company's motion to dismiss the third-party complaint came on for the Court's ruling. The Court has been advised in the matter by Monsanto's briefs of March 21, 1983 and May 16, 1983, by the April 15, 1983 brief of the United States of America, and by the April 29, 1983 and June 9, 1983 briefs of Westinghouse.

The motion to dismiss the third-party complaint is SUSTAINED. The action will be DISMISSED with Prejudice after fifteen (15) days from the date of judgment if the complaint has not been amended to state a claim by that date.

The United States of America filed its six count complaint against Westinghouse Electric Corporation on January 4, 1983 [ELR PEND. LIT. 65777]. The Environmental Management Board of the State of Indiana filed its one count complaint as an intervening plaintiff on February 1, 1983.¹ The civil actions of the plaintiff, [14 ELR 20484] United States of America, and the intervening plaintiff, Environmental Management Board of the State of Indiana, seek injunctive relief and cost recovery under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§ 6901 et seq. and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601 et seq. Westinghouse filed its answer to the complaint of the United States of America which answer consists of denials of the claims in the six counts of the complaint, a motion to dismiss each of the six counts, and stated affirmative defenses to each of the six claims in the third through thirteenth defenses. Westinghouse filed its answer to the complaint of the Environmental Management Board of the State of Indiana which answer consists of a denial of the claim in the one count complaint, a motion to dismiss the complaint, and affirmative defenses in the third through fourteenth defenses. Westinghouse also filed a counterclaim in three counts against Environmental Management Board of the State of Indiana on Febuary 22, 1983 who filed its reply thereto consisting of denials of each of the claims in the three counts and an affirmative defense asserting no jurisdiction for the claims under the Eleventh Amendment of the United States Constitution.

Intervening the commencement of the January 4, 1983 action by the United States of America against Westinghouse and the February 11, 1983 action of Environmental Management Board of the State of Indiana against Westinghouse was the February 1, 1983 commencement of the third-party action by Westinghouse against Monsanto. The third-party complaint is in six counts and does not refer to the action of Environmental Management Board of the State of Indiana. The third-party complaint in each of the counts alleges that throughout the time that Westinghouse utilized polychlorinated biphenyls ("PCBs") as a dielectric fluid in electrical equipment manufactured at its facility in Bloomington, Indiana; Monsanto was the only domestic manufacturer of PCBs and Westinghouse purchased PCBs only from Monsanto; in the claims in the complaint of the United States it seeks to impose liability upon Westinghouse for alleged conditions at and adjacent to Neal's Landfill and Neal's Dump alleged caused by waste containing PCBs from Westinghouse's factory deposited in Neal's Landfill in and prior to 1968 and deposited in Neal's Dump in and prior to 1971; and if the damages, injuries and/or conditions of which the United States complains should be found to exist and caused by PCBs,² then Monsanto is liable over to Westinghouse in the amount of any judgment which may be rendered against it and for the costs of any other relief which may be ordered by the Court in the action of United States against Westinghouse. Monsanto has not filed an answer to the third-party complaint pending disposition of its motion to dismiss.

Count one of the third-party complaint sounds in contract and alleges Monsanto breached express or implied product warranties. The law of Indiana is applicable under the facts pleaded. The Indiana version of the Uniform Commercial Code is codified at Indiana Code §§ 26-1-1-101 et seq. (1982). The claim in count one is barred by the statute of limitations of such code, pertinent parts of which are quoted from Indiana Code § 26-1-2-725 (1982):

(1) An action for breach of any contract for sale must be commenced within four (4) years after the cause of action has accrued.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.

The third-party complaint contains all of the facts to bring the claim in count one within the statute. The latest possible delivery by Monsanto of the PCBs to Westinghouse was 1971. No explicit extension of a warranty, express or implied, was made by Monsanto as none has been alleged. Count one of the complaint is also deficient in that it fails to allege that Westinghouse notified Monsanto of a breach of warranty within a reasonable time as provided by such Uniform Commerical Code. Indiana Code § 26-1-2-607(3)(a) (1982). The filing of the third-party complaint on February 1, 1983 more than ten years after the last delivery of PCBs by Monsanto to Westinghouse is not notice within a reasonable time as contemplated by such statute. Westinghouse is barred from all remedies under Indiana Code §§ 26-1-1-101 et seq. against Monsanto by its failure to give such reasonable notice.

Count two of the third-party complaint sounds in tort and alleges Monsanto was negligent in testing, labeling, and instructing Westinghouse concerning PCBs. Westinghouse's claim in count two was filed February 1, 1983 and is barred by Indiana Code §§ 33-1-1.5-5 (1982). The law of Indiana is applicable under the facts pleaded. The product in issue was delivered to Westinghouse by Monsanto, no later that 1971, and the ten-year limitation of action is applicable to Westinghouse's claim in count two irrespective of the date of injury to Westinghouse. The third-party complaint contains all of the facts to bring the claim in count two within the statute.

Count three of the third-party complaint sounds in tort. Westinghouse's claim in count three was filed February 1, 1983 and is barred by Indiana Code § 33-1-1.5-5 (1982). The law of Indiana is applicable under the facts pleaded. The product in issue was delivered to Westinghouse by Monsanto, no later than 1971, and the ten-year limitation of action is applicable to Westinghouse's claim in count three irrespective of the date of injury to Westinghouse. The third-party complaint contains all of the facts to bring the claim in count three within the statute.

Count four of the third-party complaint sounds in tort and alleges Monsanto breached a duty to Westinghouse and others in connection with its manufacture and sale of PCBs not to misrepresent, by omission or commission, the safety and environmental effects of PCBs. The claim in count four is barred by the six-year statute of limitations of Indiana Code § 34-1-2-1 (1982). The law of Indiana is applicable under the facts pleaded. The alleged fraud could not have occurred later than 1971 and the claim has been barred since 1977 as count three was not filed until February 1, 1983. The fraud statute of limitations accrues upon the date the fraud occurred. The Court assumes count four does not sound in contract as count one is barred on such contractual theory. The third-party complaint contains all of the facts to bring the claim in count four within the statute.

Count five of the third-party complaint sounds in tort and alleges that if Westinghouse is liable for damages, injuries and/or conditions which the United States alleges were caused by PCBs, then each of the alleged acts and omissions in counts one through five of the third-party complaint of Monsanto in an alleged breach of Monsanto's duties was a cause thereof and constitutes conduct on the part of Monsanto for which equities of the claim in count five made Monsanto responsible pursuant to 42 U.S.C. § 9606(a). Count six of the third-party complaint sounds in tort and alleges that if Westinghouse is liable for damages, injuries and/or conditions which the United States alleges were caused by PCBs, then each of the alleged acts and omissions in counts one through six of the third-party complaint of Monsanto in an alleged breach of Monsanto's duties was a cause thereof and constitutes conduct on the part of Monsanto for which equities of the claim in count six made Monsanto responsible pursuant to 42 U.S.C. § 6973(a). The federal statutes in issue in both counts five and six do not create private rights of actions in favor of Westinghouse. The relevant objectives of the acts under the facts alleged are: the prohibiting of open dumping of hazardous waste; the converting of existing open dumps to non hazardous dumps; and regulating the treatment, storage, transportation and disposal of hazardous wastes. The goal of the acts is to insure present and future hazardous waste activities be carried out safely and without risk to the environment. The claims of the United States are not based on its control of the manufactured product of Monsanto as sold to Westinghouse but are based on Westinghouse's waste product disposition in issue. Monsanto did not generate or dispose of any hazardous waste and did not contract for disposal of waste and, therefore, Monsanto is not, under the facts alleged in the complaint of the United States and the third-party complaint, liable to Westinghouse.

[14 ELR 20485]

Westinghouse labels its claims as being "for indemnity and/or contribution by operation of law." The federal statutes have not created a private right of action claimed by Westinghouse in its counts five and six of the third-party complaint for indemnity and/or contribution for Westinghouse against Monsanto. Westinghouse believes the evidence at trial will demonstrate that the "endangerment" at the Neal sites alleged by the United States is nonexistent, nevertheless, Westinghouse has impleaded Monsanto in order to assert its rights of indemnity and contribution. Westinghouse contends that under the allegations of counts five and six of its third-party complaint that the Court should follow the standard that if it can reasonably be conceived that the plaintiff can make a case upon trial which would entitle Westinghouse to some relief the fifth and sixth counts of the third-party complaint should not be dismissed. Westinghouse disclaims that it is claiming that it is contending that § 7003 or § 106(a) provides a private right of action to Westinghouse. The standard has been followed even though Westinghouse disclaims such theory. Instead, Westinghouse alleges that counts five and six of the third-party complaint invoke the equity power of the Court to require Monsanto indemnify or make contribution to Westinghouse, if Westinghouse is found liable for conditions for which Monsanto is responsible. Westinghouse then contends that this limited right over exists as a matter of FEDERAL LAW — such a right, Westinghouse continues to argue, may fairly be inferred from the federal statutory provisions at issue and in any event may be developed by the Court pursuant to the equity powers invested in it by those provisions. Any other result, Westinghouse contends, would render it a target of selective enforcement entirely dependent upon the vagaries of state law in asserting rights over, even though Monsanto is responsible for the federal claims asserted by United States against Westinghouse, Westinghouse asserts that the traditional equitable powers of the federal court have never been so narrowly construed and there is nothing in § 7003(a) or § 106(a) which compels such a niggardly construction. Westinghouse, in summary, contends that this Court has the power, pursuant to the equitable powers invested in it by § 7003 and § 106(a) to fashion a remedy which, if liability is imposed upon Westinghouse, will fairly apportion that liability between Westinghouse and Monsanto, as the parties responsible for the endangerment claimed by the United States.

It is clear that Westinghouse is asserting in counts four and five of the third-party complaint that it is entitled to money damages against Monsanto under the federal statutes. Westinghouse has not cited any statutory language, legislative history or cases that disclose the existence of a claim on its behalf under the statutory sections pleaded. Westinghouse cites the case of Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630 (1981) in support of its claim of a right of contribution or indemnity against Monsanto as being inferred by the sections of the federal statute in issue or developed from the Court's equitable powers.In Texas Industries, the Supreme Court held that in a federal antitrust action that there was no implied right to contribution between co-conspirators in an unlawful conspiracy. Federal courts have repeatedly refused to expand statutory remedies sought by Westinghouse in this case. Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77 (1981). Section 107(e) of CERCLA allows indemnity agreementsand subrogation actions but does not create such a right of actions. Maddlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1 [11 ELR 20684] (1981), holds that there is no right of action under the Federal Water Pollution Control Act because of the existence of a savings clause preserving remedies under other laws did not create a private right of action. Westinghouse cites United States v. Outboard Marine Corp., No. 78-C-1004 [12 ELR 21158] (N.D. Ill., August 15, 1980). This case did not deal with a right to indemnity implied under a federal statute. The case dealt with only state indemnity claims, not rights under the Federal Water Pollution Control Act. The case does not support Westinghouse contentions in its fifth and sixth counts of the third-party complaint.

Monsanto contends that the first four counts of the third-party complaint make direct claims for damages aganst Monsanto due to alleged breaches of duty alleged to be owed by Monsanto to Westinghouse, with this contention the Court agrees. Furthermore, the first four counts do not refer to indemnity or contribution nor do they allege facts which give rise to indemnity or contribution claimed against Monsanto by Westinghouse. Indiana recognizes contribution only with respect to joint contractual obligations and not obligations arising from tort or other sources. Indiana bars any action for contribution among joint tort-feasors. Indiana law also concludes that indemnity is based on contract and the claims in counts two, three and four sound in tort with count one based on contractual express or implied warranty.

The limitations of the actions in counts one through four of the third-party complaint asserted by Monsanto do not run from the time of damage to Westinghouse but from a statutorily defined event or from an accrual date defined to be independent of the time damages are suffered.

1. Westinghouse sought to have Environmental Management Board of the State of Indiana joined as a party defendant which was mooted by the magistrate granting on February 3, 1983 the Environmental Management Board of the State of Indiana's request to intervene as a plaintiff in the action against Westinghouse.

2. The complaint of the United States alleges that in addition to the waste containing PCBs that Westinghouse also deposited other waste material containing other organic chemical compounds, including toluene. No specific allegation in the third-party complaint involves Monsanto with these other wastes.