United States v. Northernaire Plating Co.

No. G84-1113 CA7 (W.D. Mich. September 18, 1989)

The court holds, in ruling on motions for contribution in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) removal action case, that the landowner of the contaminated site is liable for one-third of the cleanup costs and the generators are liable for two-thirds. Relying on CERCLA § 113(f)(1) as authority to apply equitable factors in apportioning the damages, the court observed that the landowner was liable beyond merely owning the land. The landowner failed to properly construct and maintain a sewer line while fully aware of the nature of the manufacturing (metal electroplating) to be conducted on the site, failed to notify the tenant that the sewer line might not be suitable for its diposal needs, and failed to assist or cooperate with Environmental Protection Agency officials. Using the same equitable factors, the court observed that the tenant manufacturing company that generated the hazardous substances carelessly and negligently left substantial amounts of contaminated wastes in the abandoned facility, took no corrective action when the city shut off its sewer line, and failed to cooperate with federal and state officials.

[Previous cases in this litigation are published at 18 ELR 20712 and 21338.]

Counsel for Plaintiff
Tom Gezon, Ass't U.S. Attorney
399 Federal Bldg., 110 Michigan NW, Grand Rapids MI 49503
(616) 456-2404

Counsel for Defendants
Miles Murphy
Cholette, Perkins & Buchanan
900 Campau Sq. Plaza Bldg., 99 Monroe Ave. NW, Grand Rapids MI 49503
(616) 774-2131

Gary Rentrop
Siudara, Rentrop, Martin & Morrison
74 East Long Lake Rd., 2d Fl., Bloomfield Hills MI 48013
(313) 644-6970

[20 ELR 20200]

Hillman, J.:

Opinion

This matter stems from a suit brought by the United States against Northernaire Plating Company ("Northernaire") for recovery of its costs in conducting an "Immediate Removal Action" pursuant to the Comprehensive Environmental Response, Compensation & Liability Act (hereinafter, "CERCLA"), 42 U.S.C. § 9601, et seq. Northernaire owned and operated a metal electroplating business in Cadillac, Michigan. Beginning in 1972, it operated under a 10-year lease on property owned by R. W. Meyer, Inc. ("Meyer"). Northernaire continued operations until mid-1981 when its assets were sold to Toplocker Enterprises, Inc. ("Toplocker"). From July of 1975 until this sale, Willard S. Garwood was the president and sole shareholder of Northernaire. He personally oversaw and managed the day-to-day operations of the company.

Acting upon inspection reports from the Michigan Department of Natural Resources ("MDNR"), the United States Environmental Protection Agency ("EPA") conducted an Immediate Removal Action at the Northernaire site from July 5 until August 3, 1983. Cleanup of the site required neutralization of caustic acids, bulking and shipment of liquid acids, neutralization of caustic and acid sludges, excavation and removal of a contaminated sewer line, and decontamination of the inside of the building. All of the hazardous substances found at the site were chemicals and by-products of metal electroplating operations.

In an earlier opinion and order dated May 6, 1988, this court found the defendants Garwood, Northernaire, and Meyer jointly and severally liable to plaintiff for the costs of the Immediate Removal Action under Section 107(a) of CERCLA. 42 U.S.C. § 9607(a). United States v. Northernaire Plating Co., 670 F. Supp. 742 [18 ELR 20712] (W.D. Mich. 1987). The court awarded plaintiff $ 268,818.25 plus prejudgment interest. The court later determined the prejudgment interest due to be $ 74,004.97, making the total award to plaintiff $ 342,823.22.

Each defendant, (Northernaire and Garwood moving together) has brought cross-claims for contribution against the other. Currently before the court are the summary judgment motions on these cross-claims.

CERCLA specifically allows actions for contribution among parties who have been held jointly and severally liable:

(1) Contribution

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 or section 9607 of this title.

42 U.S.C. § 9613(f)(1).

As the statute clearly indicates, it is within the court's discretion to apply equitable factors in apportioning damages between parties held jointly and severally liable under CERCLA. Other courts have looked to, and adopted, portions of the legislative history of CERCLA setting criteria to guide the court in making this determination. Amoco Oil Co. v. Dingwell, 690 F. Supp. 78, 86 (D. Me. 1988); U.S. v. A & F Materials Co., Inc., 578 F. Supp. 1249, 1256 [14 ELR 20105] (S.D. Ill. 1984). This criteria includes [sic]:

(1) the ability of the parties to demonstrate that their contribution to a discharge release or disposal of a hazardous waste can be distinguished;

(2) the amount of the hazardous waste involved;

(3) the degree of toxicity of the hazardous waste involved;

(4) the degree of involvement by the parties in the generation, transportation, treatment, storage, or disposal of the hazardous waste;

(5) the degree of care exercised by the parties with respect to the hazardous waste concerned, taking into account the characteristics of such hazardous waste; and

(6) the degree of cooperation by the parties with Federal, State, or local officials to prevent any harm to the public health or the environment.

H.R. Rep. No. 253, 99th Cong., 1st Session 19 (1985), reprinted in 1989 U.S. Code Cong. & Admin. News at 2835, 3024. I likewise find these criteria useful in determining the proportionate share each party is entitled to in contribution from the other.

Meyer has attempted to distinguish its contribution to the conditions resulting in the Immediate Removal Action by conceding responsibility for the installation of the defective sewer line. The record shows that the costs of excavating and decontaminating the sewer line plus the pro rata share of indirect costs and prejudgment interest total $ 1,709.03. Meyer asserts in his motion for summary judgment on his cross-claim that his liability in contribution should be limited to this amount. I find, however, after applying the equitable considerations outlined above, that this is not the full extent of Meyer's involvement, and therefore deny his motion.

Meyer was instrumental in the negotiations which brought Northernaire to Cadillac, built the building which housed the facility, and was fully aware of the nature of the manufacturing to be conducted on the site. Nonetheless, he failed to maintain the sewer or [20 ELR 20201] even notify Northernaire that the line might not be suitable for its disposal needs. Also, beyond Meyer's failure to construct or maintain an adequate sewer, as I noted in my prior opinion, the plain language of the statute places responsibility on Meyer simply by virtue of being the landowner. U.S. v. Northernaire Plating Co., 670 F. Supp. 742 [18 ELR 20712] (W.D. Mich. 1987). See also, U.S. v. South Carolina Recycling and Disposal, Inc., 20 Env't Rep. Cases (BNA) 1754, 1759 (S.C.D.C. 1984). Furthermore, the record indicates that Meyer neither assisted nor cooperated with the EPA officials during their investigation and eventual cleanup of the Northernaire site. On-scene Coordinator's Report, § 2.1.

Meyer's actions, or inactions, must be weighed against those of Northernaire and Garwood in order to determine its equitable share of responsibility. Northernaire and Garwood argue that they should be granted summary judgment on their cross-claim for contribution for the full liability, maintaining that were it not for the defective sewer installed by Meyer, the Immediate Removal Action would not have been necessary. I do not agree. In fact, I find that Northernaire and Garwood are responsible to Meyer in contribution for the vast majority of the cleanup costs. Northernaire and Garwood's motion for summary judgment is therefore denied.

The amount and toxicity of the hazardous substances left at the Northernaire site were substantial. A report prepared by Weston Sper (hereinafter, the "Sper Report") of the EPA, Region V, Technical Assistance Team, details the findings of the EPA's site inspection on March 16-17, 1983. According to the Sper Report, the building was in extreme disarray, with drums and tanks containing cyanide and acid strewn about. Though the Sper Report did not designate the site as an immediate danger, it did find the situation serious enough to require an Immediate Removal Action within six months. Sper Report, and Affidavit of Robert Bowden, P2.

Northernaire and Garwood were also the primary actors involved in the generation, transportation, treatment, storage, and disposal of the effluents. It is undisputed that the toxic substances found at the Northernaire site were solely attributable to the plating activities conducted by Garwood and Northernaire. In 1978, when the City of Cadillac shut off the sewer line due to high chromium levels, Northernaire apparently took no action to correct the problem. Although some of the waste was properly disposed of using overland means, much of the effluents was simply allowed to accumulate inside the building. Any remedy Northernaire may have been entitled to as a result of its detrimental reliance on Meyer's representations may have been proper in a suit brought under the lease agreement, but does not excuse Northernaire and Garwood for their careless and negligent containment and disposal of the hazardous wastes.

Northernaire abandoned the site in 1981, leaving behind the accumulated wastes over the prior three years. As a condition of the sale of Northernaire's assets to Top Locker, Top Locker was to assume the responsibility of disposing of the toxicants left at the site. However, Toplocker went bankrupt and vacated the premises without removing the hazardous wastes. Northernaire suggests that it met its only obligation at this point by notifying the landowner, Meyer, of the situation. While it is true that CERCLA does place some responsibility upon the landowner to dispose of wastes on its property regardless of the source, I find that, in a contribution action, the polluters, Gardwood and Northernaire, should bear the majority of the costs incurred in cleaning up their waste. Knowingly leaving substantial amounts of contaminated wastes in an abandoned facility demonstrates an extreme lack of care on the part of Northernaire and Garwood. This weighs heavily in the equitable considerations the court must apply in apportioning relative liability in a contribution action.

Finally, Northernaire and Garwood were wholly uncooperative with the federal and state officials throughout their investigation, despite ample opportunities to do so. Garwood was warned by the MDNR office that the Northernaire facility was not in compliance with federal and state discharge regulations prior to 1978. Eventually local officials revoked Northernaire's discharge permit in 1978, as it still was not in compliance with the regulations. Garwood was equally unresponsive in 1982 when the EPA notified him of his [sic] intent to conduct field investigations at the Northernaire site. According to the Sper Report, Garwood's only reply was that Northernaire was technically bankrupt. Finally, in June, 1983, the EPA received no response whatsoever to its final offer to all three defendants to voluntarily assume responsibility for the pending cleanup. These developments clearly indicate a total disregard on the part of Garwood and Northernaire for their responsibilities regarding the removal and decontamination of their own waste.

As it is well within the province of this court, I have balanced each of the defendants' behavior with respect to the equitable guidelines discussed. Northernaire was the generator of the toxic substances found at the site. The substantial majority of the cost of the Immediate Removal Action is directly attributable to the neutralization, decontamination, and removal of these hazardous wastes, which were negligently left inside and around the building by Northernaire. I find that Northernaire and Garwood cannot absolve themselves of their responsibilities to properly dispose of their own wastes simply by notifying Meyer that they have left substantial amounts of hazardous wastes on his property. However, Meyer's obligations also extend beyond those attributable to him as landowner. Meyer must assume the costs of excavating and decontaminating the defective sewer line he constructed. Fairness further dictates that he pay for part of the treatment costs of the wastes left at the site since, presumably, some of them could have properly been disposed of using the sewer, had it been adequately constructed and maintained.

Given these facts, I find that holding Garwood and Northernaire responsible for two thirds (2/3) of the costs of the Immediate Removal Action and Meyer responsible for the remaining one-third (1/3) is an equitable distribution. Therefore, Northernaire and Garwood shall be liable in contribution to Meyer for 66.67% of the total amount granted to the United States by this court, or $ 228,548.81. Meyer shall be liable to Northernaire and Garwood in contribution for 33.33% of the total judgment costs, or $ 114,274.41.