United States v. Carolawn Co.

No. 83-2162-0 (D.S.C. June 15, 1984)

The court rules that a firm that acted as a conduit in the transfer of title to a hazardous waste disposal site and held legal title for one hour could be an owner and operator under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court dismisses the summary judgment motion of defendant in a CERCLA cost recovery action. It finds that the facts surrounding the transfer of the site from its bankrupt former owner, to defendant, and thence to three individuals, all of whom were employees of defendant, are not sufficiently well-established to rule out plaintiff's argument that defendant retained sufficient control over the site to qualify as an owner. Also, the facts surrounding a transfer of waste to the site ordered by company officials are not sufficiently well-established to rule out plaintiff's argument that defendant operated the site. On the same bases, the court also rejects defendant'smotion for summary judgment on cross claims against it.

Counsel are listed at 14 ELR 20696.

[14 ELR 20698]

Anderson, J.:

Order

Introduction

This action was brought by plaintiff, United States of America, on behalf of the Administrator of the United States Environmental Protection Agency (hereafter "EPA"). Plaintiff seeks recovery of all costs associated with the United States' cleanup of unsafe environmental conditions at a hazardous waste site located near Fort Lawn, South Carolina (hereafter the "Fort Lawn site" or the "site"), pursuant to Sections 104 and 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (hereafter "CERCLA"). 42 U.S.C. §§ 9604 and 9607. Defendant Columbia Organic Chemical Company, Inc. (hereafter "COCC") has moved for summary judgment on the grounds that:

(1) COCC did not purchase, obtain title to, or go into possession of the Fort Lawn site and did not assume responsibility for movement of waste materials onto the site;

(2) Actions conducted on behalf of and in the name of COCC relating to the Fort Lawn site were conducted by individuals without COCC's knowledge and without appropriate corporate authority;

(3) An October 13, 1980, order by a South Carolina state Court judge in a civil action in which COCC was dismissed as a responsible party or owner of the Fort Lawn site serves as res judicata bar to the current action by the United States; and

(4) The complaint fails to state a claim upon which relief can be granted.

The Court entertained oral argument on COCC's motion on May 22, 1984. After hearing arguments and reviewing all the pleadings and supporting papers, including those submitted in opposition to COCC's motion by cross-claimant defendants Dart Industries, Inc., General Electric Company, Inmont Corporation, Kerr Glass Manufacturing Corporation, National Starch and Chemical Corporation, Knight Publishing Company, and Stockhausen, Inc., the Court finds that the issue of COCC's liability cannot appropriately be resolved on summary judgment.Therefore, the defendant's motion is denied.

Standard of Review for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides, in pertinent part, that summary judgment:

shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The standard of review for summary judgment in this District was most cogently stated in Wessinger v. Southern Railway Co., Inc., 438 F. Supp. 1256 (D.S.C. 1977);

In a motion for summary judgment, the record will be reviewed in a light most favorable to the party opposing the motion. Poller v. Columbia Broadcasting System, 368 U.S. 464 (1962). And — summary judgment should not be granted unless the entire records shows a right to judgment so as to leave no room for controversy and establish affirmatively that the adverse party cannot prevail under any circumstances. Phoenix Savings and Loan, Inc. v. Aetna Casualty and Surety Co., 381 F.2d 25, 249 (4th Cir. 1967). Nor is summary judgment appropriate where inquiry into the facts is desirable to clarify the application of the law. Kirkpatrick v. Consolidated Underwriters, 227 F.2d 228 (4th Cir. 1955). Even though there may be no controversy over the basic facts, summary judgment should not be granted if the parties disagree as to the inferences which may properly be drawn. American Fid. & Cas. Co. v. London & Edinburgh Co., 354 F.2d 214, 216 (4th Cir. 1965). Under Rule 56 of the Federal Rules of Civil Procedure, "any doubt as to the existence of a genuine issue of fact is to be resolved against the moving party," Id. at 1259.

See also Morrison v. Nissan Motor Co., Ltd., 601 F.2d 139 (4th Cir. 1979); Salmon v. Parke, David & Co., 520 F.2d 1359 (4th Cir. 1975).

Findings

Contrary to the assertions in COCC's pleadings, the record is replete with genuine issues of material fact relating to the liability of this defendant. The two central issues are:

(1) whether COCC was an owner of the Fort Lawn site subject to liability under CERCLA Section 107(a); and

(2) whether COCC was an operator of the Fort Lawn site subject to liability under CERCLA Section 107(a). Although there may be other issues that relate to the issue of COCC's liability,¹ it is unnecessary to go beyond these for purposes of ruling on this motion.

The parties appear to agree that on June 2, 1976, title to the Fort Lawn property passed from the Southeastern Pollution Control Company ("SEPCO"), a bankrupt company which formerly operated the site, through the trustee-in-bankruptcy under the approval of the bankruptcy court, to COCC. Within an hour of the transfer, COCC passed title to three of the individual defendants named in this case, individuals who were officials of COCC at the time: Max G. Gergel (hereafter "Gergel"), James Q.A. McClure (hereafter "McClure"), and Henry M. Tischler (hereafter "Tischler").

COCC claims that it was nothing more than a "conduit" in the transfer of title from SEPCO to Gergel, McClure, and Tischler, and that it had no true ownership interest in the property. Therefore, COCC maintains, it has no ownership liability under CERCLA Section 107(a). The government, on the other hand, asserts that, while COCC may have held title to the property in issue only briefly, COCC retained an ownership interest in the property after the transfer of the title.

The facts regarding the transfer of title to the Fort Lawn property and the degree of COCC's continuing interest and control [14 ELR 20699] are somewhat cloudy. This Court certainly cannot say that, based on the record presently before it, there is no room for controversy and that the government could not prevail under any circumstances. Phoenix Savings and Loan, Inc., supra. Possession of title, or the lack thereof, is not necessarily dispositive with respect to the questions of ownership or control. "While a certificate of title is an indicium of ownership, and may establish the person entitled to possession, such a certificate is not conclusive evidence of ownership." Justice v. Fabey, 541 F. Supp. 1019, 1023 (E.D. Pa. 1982) (citations omitted); see also Hemme v. Stein, 218 P. 853 (Okla. 1923) ("Title and rights in real property may not always be as appears by the record." Id. at 854). Thus, at the very least, further inquiry concerning whether COCC retained a legal or equitable interest in the property after the transfer is necessary before the court can determine whether COCC is liable under CERCLA Section 107(a) as an owner of the Fort Lawn site.

The parties also seem to agree that approximately 140 drums of waste materials were removed by COCC officials from a site formerly operated by SEPCO in Clover, South Carolina to the Fort Lawn site. It is unclear, however, whether COCC admits to responsibility for this transfer of drums or whether the drums contained hazardous substances. COCC's pleadings seem to suggest that Gergel, who was purportedly acting on behalf of COCC in cleaning up the Clover site and transferring drums to Fort Lawn, was not authorized to take such actions on behalf of the company. Also, COCC's pleadings suggest that the record refutes any participation by COCC in the matters alleged in the complaint. Here, again, the court finds that further inquiry into the surrounding facts is necessary before a decision can be reached on COCC's liability under CERCLA Section 107(a) as an operator of the Fort Lawn site.

As a final matter, the court notes COCC's argument that the cross-claims against COCC should be dismissed. The foregoing reasons for denying COCC's motion with respect to plaintiffs apply equally to COCC's motion on the cross-claims, the court need not address this argument further.

Conclusion

Defendant COCC, having been unable to demonstrate to the court that there is no controversy regarding any material fact and, further, having been unable to establish that it is entitled to judgment as a matter of law, must have its plea for judgment rejected.

WHEREFORE, in sum, this court holds that defendant COCC's motion for summary judgment is, hereby, in all respects, DENIED.

1. The court recognizes that while the defendant may have correctly stated the law of res judicata in this jurisdiction, it is inapposite to the instant case. The United States was never a party to the state court proceedings; it has interests distinct from those of the state at the time of that suit; the questions of law and rights are different; and there is no indication that plaintiff had a full and fair opportunity to be heard in those proceedings. Therefore, COCC's res judicata claim lacks any merit. Similarly, COCC's general claim that the complaint fails to state a claim upon which relief can be granted lacks merit and warrants no further discussion.