Levin Metals Corp. v. Parr-Richmond Terminal Co.

No. C-85-4776 SC (N.D. Cal. December 20, 1985)

The court holds that a private party may not sue independent third parties under § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act unless it has incurred its own response costs consistent with the national contingency plan. Parr-Richmond, defendant in a state court suit for fraudulent transfer of property contaminated with hazardous substances, sought a declaration of third parties' liability under CERCLA for the current site owner's cleanup expenses. Allowance of such an action would contravene the fundamental principle that a party may assert only its own legal interests, and not those of other parties. Accordingly, the court dismisses defendant's third party complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

[A related decision appears at 15 ELR 20791.]

Counsel for Plaintiffs
William J. Bush, Malcolm Leader-Picone, Gerald D. Marcus, Stephen B. Peck
Hanson, Bridgett, Marcus, Vlahos & Rudy
23rd Fl., 333 Market St., San Francisco CA 94105
(415) 777-3200

Counsel for Defendants
Arthur R. Albrecht, Benjamin H. Ballard III, James E. Ratcliff Jr.
Thacher, Albrecht & Ratcliff
Suite 700, 300 Montgomery St., San Francisco CA 94104
(415) 981-1434

[16 ELR 20360]

Conti, J.:

Order Granting Third Party Defendants' Motion to Dismiss Third Party Complaint

This action arises out of a conveyance by defendant/third party plaintiff Parr-Richmond of certain real property located in Richmond, California (the "Property") to Levin Metals Corporation ("Levin Metals") in April 1981. After the conveyance, Levin Metals allegedly discovered that the property had previously been investigated by the California Department of Health Services ("DOHS") and had been found to be contaminated with pesticides. In February, 1984, Levin Metals sued Parr-Richmond for, inter alia, fraud in the Contra Costa County Superior Court, alleging that Parr-Richmond had known of, but had failed to disclose, the alleged contamination prior to the sale of the property.

Parr-Richmond removed the state court action to this Court in September, 1984, claiming that the action presented issues under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9657 (1984). (The removed action was assigned Case No. C-84-6273-SC.) Parr-Richmond also filed a declaratory relief complaint of its own (Case No. C 84-6324 SC), alleging that it was not liable under CERCLA for any costs resulting from the presence of hazardous wastes on the site. Parr-Richmond's declaratory relief complaint, and an identical counterclaim filed in the removed action, alleged further that certain third parties, including Prentiss and Montrose, were liable under CERCLA for any alleged contamination of the property.

Third party defendants Prentiss and Montrose moved to dismiss Parr-Richmond's complaint and counterclaim on the grounds that they failed to state a claim upon which relief could be granted. On May 17, 1985, this court granted the motion, holding that, since Parr-Richmond itself had incurred no "response costs" which were "consistent with the national contingency plan" as defined in CERCLA, it had failed to meet established requirements for maintaining a private CERCLA action. Having dismissed Parr-Richmond's federal CERCLA claim, only Levin Metal's state claims remained for consideration, and this court accordingly remanded the case back to state court. Levin Metals Corp. v. Parr-Richmond Terminal Co., 608 F. Supp. 1272 (N.D. Cal. 1985).

On July 17, 1985, while its state fraud action was awaiting trial, Levin Metals commenced the instant action against Parr-Richmond. Parr-Richmond answered and filed a third party complaint, naming numerous third party defendants in addition to those it had named in the earlier, dismissed action.

This matter is currently before the court on the third party defendants' (hereafter "Defendants") motion to dismiss the third party complaint.

Defendants' motion to dismiss is two-pronged. First, defendants contend that Parr-Richmond's present third party complaint raises the same issues as its previous third party complaint and counterclaim, which were dismissed by this court for failure to meet the statutory prerequisites for maintaining a private CERCLA action. Accordingly, defendants maintain that the present action is barred by the doctrines of res judicata and collateral estoppel. Second, defendants contend that the present complaint, like those filed in the earlier, dismissed action, should in any event be dismissed under Fed. R. Civ. P. 12(b)(6), inasmuch as it fails to allege that Parr-Richmond has incurred any "response costs" which are "consistent with the national contingency plan,"; or that Parr-Richmond has complied with the mandatory notice and claim requirements of CERCLA. Since the inclusion of such allegations is a statutory prerequisite to maintaining a private action under CERCLA, defendants contend that the present third party complaint should be dismissed for failure to state a claim.

Because the court finds that the third party complaint should be dismissed for failure to state a claim, and because it is not clear whether there is sufficient identity of issues and parties to apply the doctrines of res judicata or collateral estoppel, it does not address the question of whether the present claims are precluded under the latter doctrines.

The sole argument Parr-Richmond advances in support of its opposition to defendants' motion to dismiss is that Levin Metals has now incurred response costs consistent with the national contingency plan. Nowhere does Parr-Richmond allege, however, that it has incurred any such response costs. As this court stated in Levin Metals v. Parr-Richmond Terminal Co.,

The recent and developing caselaw construing Section 9607(a)(4)(B) requires that before a private party may seek declaratory relief or damages under this section the party must affirmatively demonstrate that it has incurred necessary costs of response.

[16 ELR 20361]

608 F. Supp. 1272, 1275 (1985) (emphasis added, extensive citations omitted).

In the present action, Parr-Richmond cites no authority, and the court knows of none, for allowing a private party such as Parr-Richmond to bring a CERCLA claim against independent third parties based upon some other party's response costs. To the contrary, allowance of such an action would violated the fundamental principle that a party may assert only his own legal interests and not those of third parties. See, e.g., Kidwell ex rel. Penfold v. Meikle, 597 F.2d 1273, 1287 (9th Cir. 1976). Accordingly, the court finds that defendants' motion to dismiss the third party complaint herein must be granted.

In accordance with the foregoing, it is hereby ordered that defendants' motion to dismiss the third party complaint pursuant to Fed. R. Civ. P. 12(b)(6) is granted. The complaint is dismissed without prejudice to any rights Parr-Richmond may have to bring a subsequent action upon satisfying the statutory prerequisites for bringing a private suit under 42 U.S.C. § 9607(a)(4)(B).