Ellman v. Woo

No. 90-0718 (E.D. Pa. December 16, 1991)

The court holds that the current owner of a site, which is contaminated with perchloroethylene (PCE) and petroleum, and a tneant that operates a dry cleaning facility are each liable for 50 percent of the future Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response costs at the site. Plaintiff purchased the site from the previous owner fully aware of the existence of both petroleum hydrocarbon and PCE contamination on the property, and took the property subject to the defendant dry cleaning business' lease. The evidence shows that the defendants' dry cleaning activities caused the PCE contamination. The evidence also reveals that any effort to remove the petroleum contamination from the property will also remove the PCE contamination and vice versa.

The court first holds that the response costs that the plaintiff has incurred at the site are necessary and consistent with the CERCLA national contingency plan (NCP). That plaintiff's cleanup efforts are ongoing and not complete as required by the NCP does not mean that the portion of the cleanup that was performed was not necessary or consistent with the NCP. Moreover, that the government has not brouhgt a cost recovery action against the plaintiff does not preclude plaintiff from bringing this CERCLA contribution action against the defendants. The court holds that even though defendants have caused the PCE contamination, the defendants should be required to pay only 50 percent of all future response costs, because the petroleum contamination was caused by some party other than defendants and plaintiff purchased the property knowing of the petroleum contamination. The court next holds that although plaintiff, or some other party, must incur response costs under Pennsylvania's Clean Streams Law for the remediation of the petroleum contamination, and although both forms of contamination will be remediated by the same cleanup efforts, the equities compel an equal distribution of responsibility for future costs.

The court holds that because past costs for soil testing related to PCE contamination are capable of division, plaintiff is entitled to recover from defendants $ 7,669 spent on soil testing for PCE. However, unlike the costs expended by plaintiff for soil testing, the evidence shows that groundwater testing costs are not divisible between contaminants; thus, the $ 10,591 spent on groundwater testing must be equally divided between the parties. The court next holds that plaintiff's claim for forfeiture of defendants' lease is not warranted under the facts, because money damages are sufficient to cover the response costs that defendants are responsible for and defendants did not engage in intentional misconduct. Moreover, the court denies plaintiff's request to enjoin defendants from operating a dry cleaning business on the site because no evidence was presented to show that continued operation would hamper remedial efforts or further threaten environmental conditions. Finally, the court denies plaintiff's claims in negligence, strict liability, nuisance, and for attorneys fees.

Counsel for Plaintiff
Mark C. Schultz
Sherr, Joffe & Zuckerman
200 Four Falls Corporate Ctr., P.O. Box 800, West
Conshohocken PA 19428
(215) 941-5400

Counsel for Defendant
Barry M. Klayman
Wolf, Block, Schorr & Solis-Cohen
15th & Chestnut Sts., 12th Fl., Philadelphia PA 19102
(215) 977-2000

[22 ELR 20875]

Bechtle, J.:

Findings of Fact and Conclusions of Law

Findings of Fact:

1. Plaintiff Saul Ellman is the owner of a parcel of land located at the corner of Township Line Road and Church Road in Cheltenham, PA (this parcel shall hereinafter be referred to as "the property"). Plaintiff owns and operates a retail pharmacy on the property.

2. Before he purchased the property, plaintiff operated the pharmacy as a tenant of the property's prior owner. In August of 1987, plaintiff entered into an agreement of sale with this prior owner for the purchase of the property. After signing the agreement of sale, plaintiff attempted to obtain financing for the purchase. The bank through which plaintiff attempted to obtain financing required plaintiff to conduct an environmental study on the property.

3. Plaintiff hired Intex, Inc. ("Intex") to perform an environmental analysis of the property. Intex discovered the existence of petroleum hydrocarbons and perchloroethylene ("PCE") in the ground water and soil on the property.

4. Plaintiff proceeded to closing and purchased the property on an "as is" basis from the prior owner, despite knowledge of the contamination. Plaintiff would have lost his $ 10,000 downpayment if he had refrained from purchasing the property.

5. Intex continued to test the property for contaminants after the closing, and its involvement in issues stemming from the environmental contamination on the property is ongoing. The Pennsylvania Department of Environmental Resources has been made aware of the contamination at the property, and is continuing to monitor Intex's activities.

6. Defendants Howard and Susan Woo own and operate Ashbourne Cleaners, a dry cleaning facility, on the property as tenants. Defendants have been operating the dry cleaning facility on the property as tenants since 1982. Plaintiff took the property subject to the defendants' lease when he purchased the property in 1987.¹

7. The PCE contamination found in the soil and groundwater was caused by the activities of the defendants. This conclusion is supported by the following facts:

i. PCE is a solvent used regularly in the dry cleaning industry. Defendants use PCE on the property on a daily basis in order to operate the facility's dry cleaning machine.

ii. The highest levels of PCE, according to the testing conducted by Intex, were found in the surface soil in the area immediately adjacent to the Ashbourne Cleaners.

iii. The levels of PCE found in the property's soil and groundwater fluctuated greatly throughout the period during which the property was tested, indicating a continuing source of contamination.

iv. Defendants admit that PCE was spilled on the floor of the dry cleaners on two occasions.

v. On occasion, residual PCE is known to have dripped from the hose on the PCE delivery truck onto the property.

vi. Filters that may have been contaminated with PCE were placed in dumpsters on the property, and the possibility exists that PCE was present in water that was run through a garden hose on the property.

8. Petroleum hydrocarbons were found in the soil at the property. Certain types of petroleum hydrocarbons (specifically, benzene, toluene, ethylbenzene, and xylene hereinafter referred to collectively as "BTEX,") were found in the groundwater under the property, but not in the soil. Defendants were not the source of the BTEX or petroleum hydrocarbon contamination.

9. Any efforts to remove BTEX or other petroleum hydrocarbon contamination from the property would also successfully remove PCE.

10. Without regard to environmental considerations, the value of the property in its current state, as determined by an appraisal commissioned by plaintiff, is $ 483,000. According to this same appraisal, the value of the property would be $ 630,000 if it were not subject to the leasehold interest held by defendants, also without regard to environmental considerations.

11. Plaintiff has made inquiries to an adjacent property owner as to whether the adjacent owner would be interested in selling his property to plaintiff.

12. Some time after plaintiff's purchase of the property, a real estate developer expressed to plaintiff an interest in purchasing the property.

Conclusions of Law

1. This is a private action brought pursuant to Sections 107 and 113(f) of the Comprehensive Environmental Response, Compensation [22 ELR 20876] and Liability Act ("CERCLA"), as amended by the Superfund Amendments Reauthorization Act ("SARA"), 42 U.S.C. §§ 9607, 9613(f).

2. In order to establish CERCLA liability under Section 9607, a plaintiff must establish that: (1) the property is a facility as defined in the statute; (2) the defendant is a responsible party or "covered person" under § 9607(a); (3) a release or threatened release of hazardous waste has occurred; and (4) the release has caused the plaintiff to incur response costs that are necessary and consistent with the National Contingency Plan ("NCP"). Lutz v. Chromatex, Inc., 718 F. Supp. 413 [19 ELR 21368] (M.D.Pa. 1989).

i. The property is a "facility" under CERCLA, 42 U.S.C. § 9601(9)(B) since it is a "site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise came to be located. . . ."

ii. The defendants are responsible parties under 9607(a)(2) because they were "operators" on the property.

iii. Defendants are responsible for a release of PCE on the property, and PCE is a hazardous substance as defined by 40 CFR Part 261.1 et seq.

iv. Plaintiff has incurred response costs at the property that are necessary and consistent with the NCP. Defendant's arguments that the costs incurred by plaintiff to this point are not "necessary and consistent" with the NCP are not persuasive. Defendants argue, in part, that plaintiff's response effort has been incomplete. As noted, however, plaintiff's clean-up efforts are ongoing. The fact that he may not have performed, to this point, all that it is required of him under the NCP does not mean that what he has performed was not necessary or consistent under the NCP. To the extent that defendants argue that the costs incurred by plaintiff were inconsistent with the NCP because the tests performed by INTEX were unreliable, the court finds that the plaintiff has proven the reliability of the Intex tests to a point that satisfies plaintiff's burden of proof.

3. Under CERCLA, plaintiff is a "responsible party" by virtue of the fact that he is the current owner of property on which contaminants were released. 42 U.S.C. 9607(a)(1).²

4. Because plaintiff himself is a responsible party bringing an action against another responsible party, this action is one for contribution under 42 U.S.C. § 9613(f). The fact that the government has not brought a cost recovery action against plaintiff does not preclude plaintiff's CERCLA claim against defendant.³ Versatile Metals v. Union Corp., 693 F. Supp. 1563, 1571 [19 ELR 20472](E.D.Pa. 1988); City of Philadelphia v. Stepan Chem. Co., 544 F. Supp. 1135 [12 ELR 20915] (E.D.Pa. 1982). See also Artesian Water Co. v. Govern. of New Castle County, 851 F.2d 643, 647 [18 ELR 21012](3d Cir. 1988).

5. In fashioning a remedy in an action under § 9613(f), the court may use "those equitable considerations that the court deems appropriate." 42 U.S.C. § 9613(f).

6. Despite the fact that defendants have caused the PCE contamination, the court, in conducting an equitable apportionment pursuant to § 9613(f), finds that defendants should be required to pay only fifty percent (50%) of all future response costs, to the extent those costs are necessary and consistent with the HCP.

7. The court's conclusion with respect to this equitable apportionment is based on the following analysis:

i. The parties agree that the BTEX and other petroleum contamination on the property is not subject to CERCLA regulation by virtue of CERCLA's petroleum exception," 42 U.S.C. § 9601(14). Plaintiff, however, does not contest defendants' argument that the petroleum contamination is regulable under the Pennsylvania Clean Streams Law, 35 Pa.C.S.A. § 691.1 et seq. The levels of total petroleum hydrocarbons and BTEX found on the property exceed acceptable levels as established by the Clean Streams Law, and must be remediated pursuant to that statute.

ii. With respect to the petroleum contamination, plaintiff, in his proposed findings and fact and conclusions of law, argues that: 1) that he should not be responsible for response costs related to these chemicals because the petroleum contamination did not exceed acceptable levels, and 2) the contamination did not originate on the property, but rather migrated onto it from a neighboring site. The former argument is plainly not supported by the testimony given at trial. With regard to the latter argument, the court finds that it need not reach a conclusion as to the geographic source of the petroleum hydrocarbons. Even if it is true that plaintiff would be assolved from liability if the petroleum contamination originated off site,⁴ the fact remains that this contamination was caused by some party other than defendants. Keeping in mind that plaintiff was aware of the petroleum contamination at the time he purchased the property and that defendants had no involvement with that contamination, equity requires, as between the parties now before this court, a finding that plaintiff may not recover costs from this defendant to the extent those costs relate to petroleum contamination.

iii. In light of the conclusion set forth in the preceding paragraph, the court must decide the extent to which the response costs are related to petroleum contamination. As noted, remediation of such contamination will successfully remove PCE from the property. At the same time, remediation of the PCE contamination caused by defendants would remove the BTEX and other petroleum hydrocarbons. Defendants argue that, even if the court determines, as it does, that defendants are responsible for the PCE contamination, they should not bear any of the response costs because plaintiff (or, as the court notes, some other party) would be forced, under state law, to incur those same costs as a result of contamination that was unrelated to the defendants' activities. In other words, the defendants seek to absolve themselves from liability because they contend that all of the response costs are related to petroleum contamination. The court, however, under equitable considerations, cannot accept this position because it would relieve defendants of liability for a contamination which they caused. At the same time, however, plaintiff (or some other party who is responsible for petroleum hydrocarbon clean-up costs) also cannot be relieved of all of the costs he would otherwise incur simply by virtue of the "fortuitous" occurrence of defendants' activity.⁵ Given that both forms of contamination require remediation and that both will be remediated by the same clean-up efforts, the equities of the situation compel an equal distribution of responsibility for future costs between defendant and the party or parties legally responsible for the petroleum contamination.⁶

8. Other factors that support the court's conclusion regarding equitable apportionment include the facts that:

i. Plaintiff was fully aware of the existence of both petroleum hydrocarbon and PCE contamination on the property at the time he acquired title. It is conceivable that plaintiff, at the time of closing, was aware that PCE was frequently used in the dry cleaning business, and therefore assumed that he could subsequently recover cleanup costs relating to PCE from the defendants. There is no evidence, however, that plaintiff could have reasonably suspected that the defendants were the source of the petroleum hydrocarbon contamination. To at least some extent, therefore, even if he considered the possibility of future recovery actions, plaintiff would have known at the time he purchased the property that he was assuming a risk of environmental liability that could not be passed on to defendants.

ii. There is no indication that defendants engaged in conduct that they knew to be violative of environmental regulations.

iii. While the court concludes that plaintiff has proven, by a preponderance of the evidence, that defendants are the cause of the PCE contamination, that is not to say that such causation is absolutely [22 ELR 20877] certain. Indeed, defendants presented much testimony that creates a fair amount of doubt on the subject. Although not substantial enough to keep the scales from tipping in favor of defendants, this doubt operates as an equitable factor favoring the reduction of the award against defendants.

9. In light of the foregoing, the court concludes that plaintiff and defendants must each pay fifty (50) percent of all future response costs that are necessary and consistent under CERCLA. Pursuant to 42 U.S.C. § 9613(g)(2), declaratory relief to this effect will be issued.⁷

10. As noted, the uncontroverted testimony with regard to future costs was that any amount expended would be effective as to both PCE and petroleum hydrocarbons. In contrast, the parties have agreed that the costs already incurred by plaintiff for soil testing are capable of division. At trial, the parties agreed that of the amounts plaintiff has expended for soil testing, $ 7,669.00 is directly attributable to testing solely related to PCE, as opposed to BTEX and other contaminants. Accordingly, the amounts expended for soil testing are divisible as between plaintiff and defendant, and must be apportioned according to that division. United States v. Kramer, 757 Supp. 397 [21 ELR 20879] (D.N.J. 1991). The court will, therefore, award plaintiff the full $ 7,699.00, representing the amount of costs known to be related solely to PCE.

11. Plaintiff has already expended $ 21,183.20 in groundwater testing. Unlike the costs expended for soil testing, however, plaintiff's expert stated that the groundwater testing costs are not divisible between contaminants. The court will, therefore, for the reasons stated above, divide this amount equally between the parties, and award plaintiff $ 10,591.60.

12. Plaintiff's total monetary damage recovery for expenses already incurred will be $ 18,260.60 (representing $ 7,669.00 for soil testing costs plus $ 10,591.60 for groundwater testing costs).⁸

13. Plaintiff also seeks forfeiture of defendants' lease. Forfeitures of leases are odious to the law, and must be looked upon with disfavor. Langley v. Tiberi, 364 Pa. Super. 378, 528 A.2d 207 (1987). In order to demonstrate the right to forfeiture of a lease, a party must show, inter alia, that the right to forfeiture is clearly reserved and defined by the lease and that the result is not unconscionable. Cleveland v. Salwen, 292 Pa. 427, 141 A. 155 (1928); Langley, supra.

14. Lease forfeiture is not warranted under the facts of this case. Plaintiff cannot claim an entitlement to the extraordinary equitable relief of forfeiture when money damages are sufficient to cover those response costs for which defendants should be held responsible. Moreover, given the fact that defendants have built business goodwill associated with their dry-cleaning business, forfeiture of the lease is precluded because it is unconscionable. Finally, there is evidence to suggest that plaintiff's motivation in seeking forfeiture of the lease stems from his desire to sell the property at the increase price that would result if the property were not subject to defendants' lease. In the context of lease forfeiture, such economic motivations are not looked upon favorably. Cleveland, supra.

15. Plaintiff's complaint requests injunctive relief in the form of an Order precluding defendants form operating a dry cleaning business on the premises. This request will be denied. Plaintiff has offered almost no technical evidence in support of the position that an injunction is required; the record makes only vague references to whether continued use of the dry cleaning facility on the premises will hamperremedial efforts.⁹ No evidence has been presented with respect to the issue of what effect continued operation of the dry cleaner on the site would have on environmental considerations. The court stresses, however, that its ruling regarding an injunction is based solely on lack of evidence. Nothing in this ruling shall operate to preclude either state or federal agencies, when presented with enough evidence to satisfy them that continued use of the dry cleaners is inconsistent with environmental goals, from taking any action at the site that is authorized by law, including preclusion of dry cleaning activities under appropriate circumstances.¹⁰

16. Plaintiff's claim against defendants based on negligence must fail. Plaintiff presented absolutely no evidence at trial regarding the appropriate standard of care to be used by a dry cleaner in the handling of PCE.

17. Plaintiff's claim against defendants based on "strict liability" must fail. Plaintiff presented absolutely no evidence at trial regarding the "ultrahazardous" or "abnormally dangerous" nature of PCE.¹¹

18. Plaintiff's claim against defendants based on "nuisance" must fail. Section 822 of the Restatement (Second) of Torts states that liability can be found only where a defendant's invasion of another's interest is "(a) intentional and unreasonable, or (b) unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities." See Waschak v. Moffet, 379 Pa. 441, 109 A.2d 310 (1954) (incorporating Section 822 into Pennsylvania law); Folmer v. Elliott Coal Mining Co., 441 Pa. 592, 272 A.2d 910 [1 ELR 20182] (1971). As noted above, defendant's conduct was not intentional, and there was no evidence presented with respect to the applicable standard of care or the abnormally dangerous nature of the conduct at issue.

19. The claims raised in the complaint pursuant to Pennsylvania's Hazardous Sites Clean Up Act ("HSCA"), 35 P.S. §§ 6020.101, et seq., as well as those for relief stemming from any action other than environmental contamination, have been dismissed by stipulation.

20. Plaintiff's claim for attorney's fees must fail. The court recognizes the division of authority on the recoverability of attorney's fees in private party CERCLA litigation. In the absence of guidance from the United States Third Circuit Court of Appeals, however, this court will follow the weight of authority and the opinions rendered by the District Courts of this Circuit, holding that attorneys fees are not available as "response costs" under CERCLA. See Fallowfield Development Corp. v. Strunk, 766 F. Supp. 335 [21 ELR 21404] (E.D.Pa. 1991); T&E Industries v. Safety Light Corp., 680 F. Supp. 696 [18 ELR 20926] (D.N.J. 1988); and BCW Associates Ltd. v. Occidental Chemical Corp., 1988 Hazardous Waste Lit. R. 13606 (E.D.Pa. 1988). These opinions cogently demonstrate how the legislative history of SARA precludes an award of attorneys' fees under CERCLA. Contra General Electric Co. v. Litton, 920 F.2d 1415 [21 ELR 20453] (8th Cir. 1990), cert. den., 111 S. Ct. 1390 (1991) (holding attorney's fees recoverable under CERCLA).

An appropriate Order will be entered.

1. It was disclosed at trial that there is apparently an issue, not directly relevant to this action, as to the duration of defendants' lease. Defendants maintain that they have the option to renew the lease so that it will expire, if renewed, in the year 2002. Plaintiff contests the validity of the renewal option, and maintains that the lease expires sometime in 1992. N.T. 2: 9.

2. Plaintiff cannot avail himself of CERCLA's "third party defense," set forth in 42 U.S.C. § 9607(b)(3), because, pursuant to 42 U.S.C. § 9601(35)(A)(i), the defense does not apply to one who is aware of the environmental contamination at the time the property at issue is purchased.

3. The trial testimony indicates that the DER is continuing to monitor the site. It is unclear from the testimony whether there has been any official "approval" of plaintiff's response efforts.

4. The court notes that plaintiff has offered absolutely no legal support for the position that liability under state law will depend upon whether the petroleum contaminants originated on or off site.

5. The fact that the petroleum contamination is regulable only under state law does not preclude the court from considering it in this CERCLA action. Section 9613(f) of CERCLA permits the court to use equitable considerations in appointing liability in a CERCLA contribution claim. Under the principles of fairness inherent in equity actions, the court certainly cannot ignore the fact that a state law clean-up will be required at the site.

6. To reiterate, the court does not find that plaintiff is "liable" for half of the response costs to be incurred at the property in the future. Rather, under equitable considerations, the court holds that plaintiff may only recover half of such costs from defendants. To the extent permissible by law, plaintiff remains free to seek additional remedies from parties that he feels may be liable to him for the petroleum contamination.

7. Plaintiff did not plead a specific request for declaratory relief in his complaint, but, instead, attempted to introduce at trial hypothetical evidence of the amount of response costs that would be incurred in the future. The court declared this testimony speculative in light of plaintiff's expert's admission that remedial measures have yet to be selected for the site. N.T. 2:66-67, 71-73. The court will, however, construe plaintiff's attempts to establish forecasted costs as a request for a declaration regarding apportionment of future liability and damages pursuant to 42 U.S.C. § 9613(9)(2), and will grant such a declaration. United States v. Shaner, 1990 U.S.Dist. LEXIS 6893 (section 9613(g)(2) "expressly authorizes a court to enter declaratory judgment on a [potentially responsible party] for [future] response costs.").

8. These environmental testing costs are recoverable in a CERCLA action under the law of this Circuit. Artesian Water, supra.

9. Plaintiff's expert testified only that a remediation plan at the property could not be fashioned unless the source of the contamination was "eliminated." There is nothing in the testimony, however, to indicate that proper operation of the dry cleaning facility would not result in elimination of the contamination.

10. The decision to refrain from issuing an injunction should not be cause for too much celebration by the defendants. The court hopes today's finding of liability against the defendants will induce them to be more careful in their use of the facility, to the extent that fastidiousness can avoid future environmental problems. The defendants' incentive in this regard should be heightened by the prospect of administrative closure of the facility by state or federal environmental authorities.

11. Of course, this type of common law strict liability must be distinguished from the strict liability imposed by CERCLA, under which, as the court has noted, plaintiff can recover.