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23 ELR 21487 | Environmental Law Reporter | copyright © 1993 | All rights reserved Catellus Development Corp. v. L.D. McFarland Co.No. 91-685-JE (D. Or. July 27, 1993)The court holds that material issues of fact regarding a reasonable basis for divisibility and apportionment of liability preclude summary judgment as to the joint and several nature of liability in an action in which the current owner of contaminated property and its parent corporation, a former owner, seek response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Oregon law from a successor-in-interest to a prior owner and a prior lessee that treated wood with creosote on the property. The court adopts a magistrate judge's findings and recommendations. The court denies plaintiffs' motion for a declaration that defendants are jointly and severally liable for plaintiffs' response costs, because reasonable bases for divisibility of liability exist, including testimony that contamination in tow areas have two distinct causes. The court grants a defendant summary judgment that the plaintiff-owner and its parent are liable for contamination as owner and former owner under Oregon law and are potentially liable under CERCLA as an owner and operator because the owner acquired the property with knowledge that a release had occurred and its parent had acquired the property without undertaking appropriate inquiry. The court rejects plaintiffs' argument that owners who acquire title by a deed that is not "connected with" the contamination are free from liability. The court holds that an Oregon law that authorizes the Oregon Attorney General to recover cleanup costs does not apply retroactively and does not create a private cause of action. Neither the statutory language nor legislative history suggest a contrary finding. The court holds that plaintiffs may not recover attorneys fees under CERCLA or Oregon state cleanup laws. Finally, the court holds that plaintiffs may not recover consequential damages based on an alleged lost sale of the property under CERCLA, and that the issues have not been fully briefed to enable the court to rule on any entitlement to the recovery of consequential damages under Oregon statutory and common law. Counsel for Plaintiffs John F. Barg, Mariah Baird Counsel for Defendants Daniel H. Skerritt Edward J. McGrath, Colin G. Harris Jelderks, J.: Plaintiffs Catellus Development Corporation (Catellus) and SF Pacific Properties, Inc. (SFPP) bring this action alleging that defendants L. D. McFarland Company, Ltd. (McFarland) and Southern Pacific Transportation Company (SPTC) are liable for certain environmental cleanup costs. SPTC asserts counterclaims against plaintiffs and cross claims against defendant McFarland. McFarland has filed a third-party complaint against SFPP. All parties have filed cross-motions for partial summary judgment. These motions should be granted in part and denied in part as discussed below. This action arises from the hazardous-materials contamination of a property currently owned by SFPP, a wholly-owned subsidiary of Catellus. In their second amended complaint, plaintiffs allege that SPTC's predecessor-in-interest, Southern Pacific Company (Southern Pacific), leased part of the property in question to McFarland from the 1920's until 1956, and that McFarland treated wooden poles with creosote on that site until 1953. Plaintiffs allege that Southern Pacific and SPTC merged in 1969, with SPTC, the surviving corporation, assuming all of Southern Pacific's liability. They add that a new corporation, Southern Pacific Company (Southern Pacific 2) was also created during the merger. Plaintiffs allege that SPTC conveyed part of the property in question (parcel 1) to Southern Pacific 2 in 1979, and that Southern Pacific 2 in turn conveyed that parcel to Southern Pacific Industrial Development Company (Southern Pacific Industrial). They add that, in 1980, Southern Pacific Industrial conveyed this parcel to the Lane Family Company, and that SPTC conveyed the remainder of the property (parcel 2) to the Lane Family Company at the same time. The Lane Family Company in turn allegedly conveyed both parcels to Southern Pacific Industrial in 1981. Plaintiffs further allege that Southern Pacific Industrial transferred the property to Sante Fe Pacific Realty Corporation (SFPRC) in a merger in September 1988, and that SFPRC subsequently transferred the property to SFPP, its wholly owned subsidiary, in December 1989. SFPRC subsequently changed its name to Catellus Development Corporation (Catellus) in May 1990. Plaintiffs allege that, after the property was transferred in 1989, investigations revealed that it was contaminated with creosote to a depth of 45 feet, and that some of this contamination may have reached ground water. They add that the contaminants discovered on the property are hazardous substances and wastes within the meaning of federal and state law, and assert that the contaminants have reduced the value of the property, and that they have incurred and will continue to incur substantial costs in remedying the contamination. Plaintiffs' Claims and Motions Plaintiffs bring the following claims: (1) Plaintiffs seek a declaration that defendants are liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq. for the costs of responding to the contamination. (2) Plaintiffs seek recovery, pursuant to CERCLA, of the costs that have been and will be incurred in response to the contamination. (3) Plaintiffs seek a declaration that defendants are liable for the response costs under Or. Rev. Stat. § 465.255. They assert that McFarland is liable because it caused the release of hazardous substances on the property, and that SPTC is liable because it knew of the contamination while it owned the property, but transferred the property without disclosing that information. (4) Plaintiffs seek recovery of response costs pursuant to Or. Rev. Stat. § 465.255. (5) Plaintiffs seek contribution to the response costs from all defendants pursuant to Or. Rev. Stat. § 465.325. In this claim, plaintiffs assert that defendants had actual knowledge of the release of hazardous substances on the property, and that they transferred the property without disclosing that knowledge. (6) Plaintiffs assert that defendants are liable under Or. Rev. Stat. § 466.205 for the improper storage, disposal, and treatment of hazardous waste. In this claim, plaintiffs assert that defendants "are obligated to collect and remove or treat the waste on the property but have failed to do so, causing plaintiffs to incur and continue to incur costs and expenses in doing so." (7) Plaintiffs assert that McFarland was negligent in handling, storing, and disposing of hazardous substances on the property. (8) Plaintiffs assert that SPTC, as successor in interest to Southern Pacific and under the terms of the 1969 merger agreement, is liable for Southern Pacific's negligent management of the property. (9) Plaintiffs assert that defendants' conduct resulted in deposit of hazardous substances constituting a nuisance within the meaning of Or. Rev. Stat. § 105.505. (10) Plaintiffs assert that McFarland did not meet the obligation, under Or. Rev. Stat. § 105.805, to prevent waste of the property. Plaintiffs now seek a partial summary judgment finding that defendants are liable on the first, third, and sixth claims, on McFarland's first and second claims for contribution, and on SPTC's first and second counterclaims. Plaintiffs also seek an entry of final judgment, pursuant to Fed. R. Civ. P. 54(b), on their sixth claim. In the conclusion of their memorandum in support of their motion for summary judgment, plaintiffs more explicitly specify the effect of the summary judgment they seek. In that conclusion, plaintiffs request that this court grant them a summary judgment: (a) declaring McFarland and Southern Pacific Transportation Company each jointly and severally liable for plaintiffs' response costs under CERCLA; (b) declaring McFarland and Southern Pacific Transportation Company each jointly and severally liable for plaintiffs' remedial action costs under ORS 465.255; (c) declaring McFarland and Southern Pacific Transportation Company [23 ELR 21489] each jointly and severally liable for plaintiffs' remedial action costs and damages under ORS 466.205; and (d) declaring that plaintiffs have no liability for contribution under either section 113 or CERCLA, 42 U.S.C. section 9613(f), or ORS 465.255; and (2) grant summary judgment on plaintiffs' cleanup claim under ORS 466.205 and enter a final judgment on that claim under Federal Rule of Civil Procedure 54(b) requiring that a Cleanup Escrow be established and that defendants make phased contributions to it consistent with their mandatory obligation to clean up the property under ORS 466.205(2) as set out [earlier in the memorandum]. SPTC's Counterclaims and Motions SPTC asserts the following counterclaims: (1) SPTC seeks contribution from plaintiffs under CERCLA in the event that it "is held jointly and severally liable or otherwise responsible for any amount or obligation in excess of its fairly allocated share of response costs. . . ." (2) If it is held "responsible for any amount or obligation in excess of its fairly allocated share of remedial action costs," SPTC seeks contribution from plaintiffs pursuant to Or. Rev. Stat. § 465.325(6)(a). (3) SPTC also seeks contribution from plaintiffs, if it incurs more than its "fairly allocated share," under Or. Rev. Stat. § 18.440. SPTC now moves for partial summary judgment on its counterclaims. It asserts that the undisputed facts demonstrate that — SFPP, as the present owner of the property, is a liable party under Or. Rev. Stat. § 465.255; — Catellus, as the former owner, is a liable party under Or. Rev. Stat. § 465.255; — SFPP, as the present owner of the property, is a liable party under 42 U.S.C. § 9607; and — Catellus, as the present operator, is a liable party under 42 U.S.C. § 9607. SPTC likewise moves for summary judgment "that as a matter of law, it is not liable to plaintiffs under O[r.] Rev. Stat. § 466.205." McFarland's Third-Party Complaint and Motions McFarland asserts two claims in its third-party complaint against SFPP. In the first claim, McFarland asserts that, as the owner of a facility at which a hazardous substance has been released, SFPP is "liable or potentially liable for response costs. . . ." McFarland seeks contribution on that claim pursuant to 42 U.S.C. § 9613(f). In its second claim, McFarland asserts a right to contribution under Or. Rev. Stat. 465.325(6)(a). McFarland now seeks summary judgment: (1) in its favor on plaintiffs' claim under Or. Rev. Stat. § 466.205 (6th claim); (2) in its favor on its "third party defense" to plaintiffs' claims under 42 U.S.C. § 9607 and Or. Rev. Stat. § 465.255 "with respect to the 1951 release of creosote caused by vandalism (partial summary judgment on plaintiffs' first, second, and fourth claims); (3) declaring that McFarland has no liability for "an alleged spill of creosote in 1937 because there are no admissible facts to establish that such a spill occurred; (4) declaring that plaintiffs are not entitled to recover attorney fees; (5) declaring that plaintiffs are not entitled to recover consequential damages based on an alleged lost sale of the property; and (6) declaring that plaintiffs are liable for response costs under U.S.C. § 9607 and Or. Rev. Stat. § 465.255. Standards for Summary Judgment Federal Rule of Civil Procedure 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving partymust show the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The moving party may discharge this burden by showing that there is an absence of evidence to support the nonmoving party's case. Id. When the moving party shows the absence of an issue of material fact, the nonmoving party must go beyond the pleadings and show that there is a genuine issue for trial. Id. at 324. The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts concerning the existence of a factual issue should be resolved against the moving party. Id. at 630-31. The evidence of the nonmoving party is to be believed, and all justifiable inferences are to be drawn in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1985). No genuine issue for trial exists, however, where the record as a whole could not lead the trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A. Potential Liability Under CERCLA The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., was enacted to provide the federal government with the means to control the spread of hazardous materials, and to assign the parties responsible for contamination with the cleanup costs. Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1340 [23 ELR 20020] (9th Cir. 1992). Under CERCLA, persons incurring response costs resulting from a release of a hazardous substance at a facility may seek contribution from others who are liable or potentially liable under that Act. 42 U.S.C. § 9613(f)(1). Under CERCLA, a court resolving contribution claims "may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Id. Courts generally treat contribution claims on a case-by-case basis, and apply "any traditional equitable defenses as mitigating factors and any other factors deemed appropriate to balance the equities in the totality of the circumstances." United States v. R. W. Meyer, Inc., 932 F.2d 568, 572-73 [21 ELR 21062] (6th Cir. 1991). CERCLA expressly provides for declaratory actions to determine liability for future response costs. 42 U.S.C. § 9613(g)(2). These CERCLA provisions envision that, before suing, CERCLA plaintiffs will spend some money responding to an environmental hazard. They can then go to court and obtain reimbursement for their initial outlays, as well as a declaration that the responsible party will have continuing liability for the cost of finishing the job. In Re Dant & Russell, Inc., 951 F.2d 246, 249-50 [22 ELR 20239] (9th Cir. 1991). Those potentially liable for cleanup costs include: (1) the owner and operator of a . . . facility, (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, (3) anyperson who by contract, agreement or otherwise arranged for disposal or treatment . . . of hazardous substances owned or possessed by such persons or by any other party or entity, at any facility . . . owned or operated by another . . . entity and containing such hazardous substances, and (4) any person who . . . accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such persons, from which there is a release or a threatened release which causes the incurrence of response costs, of a hazardous substance. . . . The following terms are important in considering the parties' potential liability under CERCLA. Facility: defined as including (A) any building, structure, installation, equipment, pipe or pipeline . . . well, pit pond, lagoon, impoundment, ditch, landfill, storage container, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise came to be located. . . . Hazardous substance: defined as any element, compound, mixture, solution, or substance designated pursuant to section 9602. . . . Disposal: defined as the discharge, deposit, injection, dumping, spilling, [23 ELR 21490] leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such . . . waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters. Release: defined as any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment. . . . Response Costs: defined as any costs incurred in a removal or remedial action undertaken by the plaintiff in responding to the contamination. Under 42 U.S.C. § 9607(b)(3), an otherwise potentially liable party may avoid liability if it can establish that the release of a hazardous substance was caused solely by an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant . . . if the defendant establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or omissions. . . . B. Oregon Statutes Concerning Hazardous Waste Under Or. Rev. Stat. § 465.255, the following persons are "Strictly liable for those remedial action costs incurred by the state or any other person that are attributable to or associated with a facility. . . .": (a) Any owner or operator at or during the time of the acts or omissions that resulted in the release. (b) Any owner or operator who became the owner or operator after the time of the acts or omissions that resulted in the release, and who knew or reasonably should have known of the release when the person first became the owner or operator. (c) Any owner or operator who obtained actual knowledge of the release at the facility during the time the person was the owner or operator of the facility and then subsequently transferred ownership or operation of the facility to another without disclosing such knowledge. (d) Any person who, by any acts or omissions, caused, contributed to or exacerbated the release, unless the acts or omissions were in material compliance with applicable laws, standards, regulations, licenses or permits. Under Or. Rev. Stat. § 465.255(a)(2), the following persons do not incur liability for the costs of remedial action. (a) Any owner or operator who became the owner or operator after the time of the acts or omissions that resulted in a release, and who did not know and reasonably should not have known of the release when the person first became the owner or operator. (b) Any owner or operator if the release at the facility was caused solely by. . . (C) Acts or omissions of a third party, other than an employee or agent of the person asserting this defense, other than a person whose acts or omissions occur in connection with a contractual relationship, existing directly or indirectly, with the person asserting this defense. . . . Under Or. Rev. Stat. § 465.325(6)(a), a person may seek contribution "from any other person who is liable or potentially liable under ORS 465.255." Oregon statutes, like CERCLA, provide that, in resolving contribution claims, a court "may allocate remedial action costs among liable parties using such equitable factors as the court determines are appropriate." Oregon Revised Statutes § 466.205(1) provides that Any person owning a facility which generates, treats, stores or disposes of and any person having the care, custody or control of a hazardous waste . . . who causes or permits any disposal of such waste or substance in violation of law or otherwise than as reasonably intended for normal use or handling of such waste substance, including but not limited to accidental spills thereof, shall be liable for the damages to person or property, public or private, caused by such disposition. C. Facts Established in the Motions for Summary Judgment The materials submitted in support of and opposition to the various cross motions for summary judgment establish the following significant facts. Defendant McFarland leased a portion of the property in question, located in east Milwaukie, Oregon, from Southern Pacific, SPTC's predecessor, and treated wooden poles with creosote on that site from the 1920's until 1953, when the plant was dismantled. No other parties stored or used creosote on the site. McFarland stored creosote in two tanks and treated poles in a large and a small vat. Creosote was delivered to the vats by underground pipes connected to the tanks. The small vat could hold less creosote than the tanks, but was nevertheless connected directly to them. During McFarland's tenancy, creosote was released on the site in several ways. Some creosote dripped from poles after they were removed from the vats, and some must have dripped when poles were occasionally painted with a brush outside the vats. In addition, creosote must have been released from the "separator." This device was used when groundwater passed through the original concrete shell of the large vat and was trapped between that shell and the steel liner that was installed later. Workers removed a plug in the liner, allowing the groundwater to flow into the vat. They then pumped the water and some of the creosote into the "separator" tank. The creosote and water were allowed time to separate, and the water, standing on top of the creosote, was pumped onto the ground. Plaintiffs have submitted the opinion of an environmental engineer who states that "solubilized creosote components would also have been discharged to the surface of the ground" during this process. Approximately 10,000 gallons of creosote were released in 1951 when two juveniles, using a long metal bar left near one of the vats, broke locks and chains around the valves of the storage tanks and opened the valves. The creosote then flowed into and over the small vat, and onto the property. The property was not fenced or guarded, and no containment structures were in place to catch the overflow. McFarland did not clean up the creosote spilled on the property, but instead simply covered some of it with rock. Some hearsay evidence indicates that another major spill had occurred in 1937. A newspaper account of the 1951 spill reported that Residents of east Milwaukie were reminded of a similar situation 14 years ago when thousands of gallons of creosote flowed from a vat at the pole plant killing hundreds of trout in the ditches, and forcing the abandonment of [a] man-made lake on the Binn Brothers property. During his deposition, Robert Dooley, foreman at McFarland's facility between 1948 and 1953, testified in apparent reliance on hearsay that someone had apparently "made a serious boo-boo" resulting in the release of a whole tank car full of creosote. There is a serious question whether a 1937 spill can be established with reliable, admissible evidence. Waste containing creosote was also apparently deposited in a mound approximately 3 to 4 feet high and about 30 feet in diameter. After laboratory tests of soil from this mound confirmed the presence of creosote, McFarland stated that Dooley believes that "on one occasion, the large storage tank was cleaned out, and sludge from the tank was placed on the cinder pile in the [area of the mound.]" Dooley added that the sludge was primarily mud, but contained creosote. Plaintiffs have submitted evidence establishing that SPTC assumed all of Southern Pacific's assets and liabilities, including those associated with the property in question, under a merger agreement concluded in 1969. They have also established that McFarland did not clean up the site when it ceased its operations on the property, and that plaintiffs have incurred and will continue to incur significant response expenses. SPTC has submitted evidence showing that an environmental consultant retained by Catellus, McFarland, and SPTC issued a report in September 1989 concluding that McFarland had operated a creosote treatment plant on the property, and that a large creosote spill had occurred there in 1951. It has also shown that, in December 1989, Catellus created SFPP as a wholly-owned subsidiary, and that [23 ELR 21491] it conveyed the property to SFPP at no cost. SFPP has acknowledged that it acquired the property with the knowledge that creosote treatment and a creosote release had occurred there. On behalf of SFPP, Catellus has entered into a "Voluntary Cleanup Agreement" with the State of Oregon pursuant to Oregon statutes. Plaintiffs have also negotiated a final "Agreement and Scope of Work" pursuant to that agreement. Under the Agreement and Scope of Work, plaintiffs were required to begin a "remedial investigation" of the site by January 19, 1993. When that investigation is completed and a report prepared, plaintiffs must perform a "feasibility study" of cleanup options for the site. D. Disposition of the Parties' Motions for Summary Judgment The legal significance and effect of granting plaintiffs' various motions are set out most fully in the conclusion of plaintiffs' supporting memorandum. Only in the conclusion is it clear that plaintiffs seek declarations that defendants are jointly and severally liable under CERCLA and Oregon law, and that plaintiffs have no liability under either federal or Oregon statutes. I therefore will analyze the motions as stated in that conclusion, rather than in the formal statement of the motions accompanying the supporting brief. In addition, I note that the parties do not dispute that, under CERCLA and relevant Oregon statutes, the property is a "facility," on which a "release" of "hazardous substances" has occurred. (a) Motion for Declaration that McFarland and SPTC are Jointly and Severally Liable for Plaintiffs' Response Costs under CERCLA. CERCLA makes no reference to imposition of joint and several liability. Some courts have attributed this silence to Congressional intent to avoid the potential unfairness of imposing such liability on those who did not contribute significantly to contamination at a facility. See United States v. Chem-Dyne Corp., 572 F. Supp. 802 [13 ELR 20986] (S.D. Ohio 1983); Idaho v. Bunker Hill Co., 635 F. Supp. 665 [16 ELR 20879] (D. Idaho 1986). Other courts have concluded that joint and several CERCLA liability may be imposed only in appropriate circumstances. See, e.g., United States v. Alcan Aluminum Corp., 964 F.2d 252, 268 [22 ELR 21124] (3d Cir. 1992); O'Neil v. Picillo, 883 F.2d 176, 181 [20 ELR 20115] (1st Cir. 1989), cert. denied, 493 U.S. 1071 (1990). Courts analyzing apportionment of damages frequently look to the Restatement (Second) of Torts for guidance. Section 433A of that Restatement provides that: (1) Damages for harm are to be apportioned among two or more causes where (a) there are distinct harms, or (b) there is a reasonable basis for determining the contribution of each cause to a single harm. (2) Damages for any other harm cannot be apportioned among two or more causes. Plaintiffs' motion for summary judgment on this issue should be denied for two reasons. First, defendants have shown the existence of material issues of fact as to the divisibility of the harms at issue. Much of the contamination on SFPP's property undoubtedly occurred in the 1951 spill, while other contamination apparently resulted from sludge deposition, drips from poles, and the deposit of "water" from the separator directly onto the ground. Further investigation on the property might delineate the boundaries of the 1951 spill, and questions remain as to the relative responsibilities of McFarland, as the facilities operator, and SPTC, as successor to the entity that owned the land at the time, for both that spill and other contamination. Defendants have raised a third-party defense to liability for the 1951 spill, and the viability of that defense as to each defendant cannot be determined at this time. A declaration that defendants are jointly and severally liable for the spill is therefore not merited at this time. Summary judgment on this issue is also inappropriate because, as presented by plaintiffs' counsel, such an order is intended to preclude assignment of any liability for remediation costs to plaintiffs. Having carefully reviewed the voluminous documents submitted, I conclude that plaintiffs have not demonstrated that they are not subject to CERCLA liability. Defendants have shown evidence supporting the conclusion that Catellus's predecessor in interest, Catellus, and SFPP paid nothing for the property, that Catellus's predecessor assumed all liabilities associated with the portion of the property it acquired in 1979, and that plaintiffs acquired the property with actual or constructive knowledge that some contamination had occurred. Though plaintiffs clearly did not cause the contamination giving rise to this action, potential CERCLA liability is not limited to those who directly cause the release of hazardous substances. Under these circumstances, plaintiffs are not entitled to a summary judgment absolving them of possible CERCLA liability. (b) Motion for Declaration that McFarland and SPTC are Jointly and Severally Liable for Plaintiffs' Remedial Action Costs under Or. Rev. Stat. § 465.255 Oregon statutes relating to remediation of releases of hazardous substances include third-party defenses and contribution provisions similar to those found in CERCLA. Like the United States Congress, the Oregon legislature included no reference to joint and several liability in legislation addressing liability for remediation of contamination by hazardous substances. Oregon courts interpreting Oregon laws "in large measure drawn from a federal counterpart . . . look for guidance to federal court decisions interpreting similar federal laws. . . ." Badger v. Paulson Inv. Co., Inc., 311 Or. 14, 21, 803 P.2d 1178 (1991). I recommend denying plaintiffs' motion for summary judgment on its claim that defendants are jointly and severally liable under Or. Rev. Stat. § 465.255 for the same reason that summary judgment as to that liability is inappropriate under CERCLA. (c) Motion for Declaration that McFarland and SPTC are Jointly and Severally Liable for Remedial Action Costs and Damages under Or. Rev. Stat. § 466.205 As noted above, Or. Rev. Stat. § 466.205 provides that Any person owning a facility which generates, treats, stores or disposes of and any person having the care, custody or control of a hazardous waste . . . who causes or permits any disposal of such waste or substance in violation of law or otherwise than as reasonably intended for normal use or handling of such waste or substance, including but not limited to accidental spills thereof, shall be liable for the damages to person or property, public or private, caused by such disposition. This statute initially took effect in 1973, and was amended in 1987 to reach not only those having "care, custody or control" of hazardous wastes, but to "any person owning a facility" as well. McFarland contends that summary judgment for plaintiffs is inappropriate on their claim under this statute because the statute does not apply retroactively. Both defendants contend that this statute does not provide a private right of action. I agree with defendants, and recommend denying plaintiffs' motion for summary judgment on this claim. In Oregon, absent some indication of contrary legislative intent, legislation is presumed to apply prospectively, not retroactively. Held v. Product Mfg. Co., 286 Or. 67, 71, 592 P.2d 1005 (1979). I find no indication in the language of Or. Rev. Stat. § 466.205 that the legislature intended this section to apply retroactively. When the legislature appears to have intended to impose retroactive liability, on the other hand, it has included language specifying the liability of any "owner or operator at or during the time of the acts or omissions that resulted in the release." Or. Rev. Stat. § 465.255. I likewise find no language in Or. Rev. Stat. § 466.205 indicating that private parties may bring actions under this section. Instead, this statute authorizes the Oregon Department of Environmental Quality to "take such actions as are necessary to collect, remove or treat such waste or substance." Or. Rev. Stat. § 466.205(3). Under Or. Rev. Stat. § 466.205(6), the Oregon Attorney General is authorized to bring an action to recover cleanup expenses incurred by the state. Because plaintiffs' motion for summary judgment on its claim under Or. Rev. Stat. § 466.205 should be denied, its motion for entry of a final judgment pursuant to Fed. R. Civ. P. 54(b) requiring defendants to establish a Cleanup Escrow fund should also be denied. (d) Motion for Declaration that Plaintiffs have no Liability for Contribution under 42 U.S.C. § 9613(f) or Or. Rev. Stat. § 465.255. From the above discussion of plaintiffs' motion for a summary judgment declaring defendants jointly and severally liable for remediation costs, it is evident that I conclude that plaintiffs may be liable for contribution costs under CERCLA and related Oregon statutes. As noted above, under relevant federal and state statutes, courts treat contribution claims on a case-by-case basis, considering traditional equitable defenses and balancing the equities according to the totality of the circumstances. Plaintiffs have shown neither an absence of material issues of fact relating to their potential liability, nor that they are entitled to a judgment as a matter of law that they are not liable for contribution. 2. SPTC's Motions for Summary Judgment (a) Motion for Summary Judgment as to SFPP's liability under Or. Rev. Stat. § 465.255 as the present owner of the property. Under Or. Rev. Stat. § 465.255(1)(b), strict liability is imposed on the past or present owner of a facility. who became the owner or operator after the time of the acts or omissions that resulted in the release, and who knew or reasonably should have known of the release when the person first became the owner or operator. This liability can be avoided only if, at the time of acquisition, the owner "did not know and reasonably should not have known of the release when the person first became the owner or operator." Or. Rev. Stat. § 465.244(2)(a). This defense requires that the present or past owner "must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability." Or. Rev. Stat. § 465.255(6). SPTC contends that no material issues of fact exist as to SFPP's inquiry and knowledge concerning the release of hazardous substances, and that it is entitled to judgment as a matter of law on this issue. I agree. SFPP acquired the property from Catellus, its parent, in December 1989. Earlier that year, creosote contamination had been discovered on property near the site during the construction of a shopping center, and Catellus, SPTC, and McFarland had jointly performed an environmental investigation of that property. That investigation established that McFarland had operated a creosote treatment facility for decades on the property, and that a major spill had occurred in 1951, contaminating the neighboring property. Charles Sager, a Catellus employee, acknowledged in his deposition that he knew that "there would be some problems" at the site resulting from the spill. SPTC has shown that SFPP has no employees, and that its operations are performed and controlled entirely by Catellus. In addition, SFPP has acknowledged that, before it acquired the property in question, it knew that McFarland had operated the plant, and that a significant creosote release had occurred. These facts establish that SFPP is liable as an owner under Or. Rev. Stat. § 465.55, and summary judgment to that effect should be granted for SPTC. (b) Motion for Summary Judgment as to Catellus's Liability, as Former Owner, Under § 465.255 As noted above, a former owner may escape liability for a release of hazardous substances only if it establishes that it did not and reasonably could not have known of the release, and if it had undertaken "all appropriate inquiry" into the past uses before acquiring the property. SPTC has shown that Catellus cannot establish this defense. SPTC has shown that Catellus specifically assumed all the liabilities of its predecessor, Southern Pacific Industrial, when it acquired the property. Catellus therefore may establish the defense of innocent ownership only if that predecessor did not know and reasonably could not have discovered the contamination of the property. Southern Pacific Industrial acquired most of the property from SPTC in 1979, at no cost, in a "Land Transfer Program." Greg Linde, president of Southern Pacific Industrial, knew that a wood treatment facility had existed on the property, and viewed the treatment facility in the 1950's. During his deposition, Linde stated that he also saw a map of the property during the 1970's which identified the facility. In addition, Southern Pacific Industrial managed a number of SPTC-owned properties, including the one in question, for several years before it acquired the property. As the manager of the property, Southern Pacific Industrial had access to all real estate documents, and to maps and files related to the property. When Southern Pacific Industrial acquired the property, however, it did not review information and documents concerning earlier uses of the property or investigate conditions on the property. The real estate files available for review included summaries of leases which would have revealed that the property had been used as a wood treatment site. In addition SPTC and Southern Pacific Industrial shared many of the same officers and directors. Southern Pacific Industrial sold the property in 1980, and reacquired it in 1981, again without undertaking any inquiry into its condition or past uses. Catellus acquired title to the property in 1988 in a merger with Southern Pacific Industrial. It had had access to SPTC's files documenting McFarland's use of the site while it managed the property for several years before that acquisition, but took title without inquiring into the condition or past use of the property. Under these circumstances, Catellus cannot establish that it made an "appropriate inquiry" when it acquired the property, and SPTC is entitled to summary judgment as to its liability as a former owner under Or. Rev. Stat. § 465.255. [c] Motion for Summary Judgment as to Liability of SFPP and Catellus under CERCLA CERCLA, like the Oregon statutes discussed above, imposes liability on present owners and operators of a facility. 42 U.S.C. § 9607(a)(1). This section imposes remedial liability on parties who did not actively contribute to the contamination. United States v. Monsanto Co., 858 F.2d 160, 168 [19 ELR 20085] (4th Cir. 1988), cert. denied, 490 U.S. 1106 (1989). Under 42 U.S.C. § 9601(3)(B), parties may "affirmatively avoid liability if they can prove they did not know and had no reason to know that hazardous substances were disposed of on their land at the time they acquired title or possession." Monsanto, 858 F.2d at 168 n. 14 (emphasis in original). As under Oregon statutes, an owner asserting this defense must establish that it made "all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability." For the reasons discussed in the above section relating to SFPP's potential liability under Or. Rev. Stat. § 465.255, SPTC is entitled to summary judgment on its claim that SFPP is potentially liable as an owner under CERCLA. SPTC is likewise entitled to summary judgment on its claim that SFPP is potentially liable under CERCLA as an "operator." SFPP is a wholly-owned subsidiary of Catellus, and nearly all of SFPP's officers are officers of Catellus. SFPP has no employees, and employees of Catellus manage and control all SFPP accounting, property management, and environmental compliance matters. In short, SFPP is controlled and operated by Catellus. 3. McFarland's Motions for Summary Judgment a. Motion for Summary Judgment on Plaintiffs' Claim Under O[r.] Rev. Stat. § 466.205. This motion should be granted for the reasons discussed above. b. Motion for Summary Judgment on McFarland's "third-party defense" as to the 1951 spill. As noted above, 42 U.S.C. § 9607(b)(3) provides that an otherwise potentially liable party may avoid liability if it can establish that the release of a hazardous substance was caused solely by an act or omission of a third party, and that the party exercised due care in light of all relevant facts, and took precautions against foreseeable acts or omissions of the third party. In my discussion of plaintiffs' motion for summary judgment, I noted that questions remained as to whether McFarland could establish this defense. I therefore recommend denying the motion for summary judgment on that defense. c. Motion for Summary Judgment on McFarland's assertion that it is not liable for a 1937 spill. McFarland contends that no admissible evidence of the alleged 1937 spill exists, because a newspaper article referring to that spill is inadmissible hearsay. The article in question states that "Residents of east Milwaukie were reminded of a similar situation 14 years ago when thousands of gallons of creosote flowed from a vat at the pole plant, killing hundreds of trout in the ditches and forcing the abandonment [23 ELR 21493] of [a] man-made lake on the Binn Brothers property." Plaintiffs argue that this document falls within the "ancient documents" exception to the hearsay rule under Fed. R. Evid. 803(16). I recommend denying McFarland's motion for summary judgment on this issue. The newspaper article is probably not admissible in evidence, but this is more properly an evidentiary issue to be taken up pre-trial as a motion in limine. It would be premature to assess ultimate liability or lack of liability until all admissible evidence is evaluated at the time of trial. If there is creosote in the ground I am unable to say at this time that McFarland could not be held responsible even if there is no precise evidence as to when a particular spill took place. d. Motion for Summary Judgment as to Recovery of Attorney Fees. The Ninth Circuit has recently held that attorney fees are not recoverable as "necessary response costs" in a CERCLA action. Stanton Road Associates v. Lohrey Enterprises, 984 F.2d 1015, 1019 [23 ELR 20540] (9th Cir. 1993); Key Tronic Corp. v. United States, 984 F.2d 1025, 1028 [23 ELR 20558] (9th Cir. 1993). McFarland's motion for summary judgment against plaintiffs' claim for attorney fees on the CERCLA claims should therefore be granted. Plaintiffs contend that attorney fees are recoverable on the state law claims even if they are not recoverable under CERCLA. The state statute in this regard is different from the federal statute in that Or. Rev. Stat. § 465.200(16) includes the term "legal" activities within the definition of remedial action costs. Remedial action costs are potentially recoverable pursuant to Or. Rev. Stat. § 465.255. The simple question is whether the Oregon Legislature intended the term "legal activities" to include attorney fees incurred in an action such as this. There have been no Oregon appellate decisions addressing this point. In a recent decision from this court, however, Magistrate Judge Coffin concluded that Oregon law does not allow recovery of attorney fees in a case such as this. McDonald's Corp. v. Wilson, 1993 WL 47833, (D. Or. 1993). Under Oregon law, attorney fees clearly are not recoverable absent authorization by a statute or contract. As Judge Coffin noted, the Oregon Legislature has had no problem unambiguously stating its intention that attorney fees are recoverable by a prevailing party in specific types of cases. Unlike the statute in question here, most Oregon statutes allowing recovery of attorney fees have specifically referred to the "prevailing party" and to "reasonable attorney fees." See Or. Rev. Stat. § 30.860(2); Or. Rev. Stat. § 35.346(2); Or. Rev. Stat. § 646.638; Or. Rev. Stat. § 646.770; Or. Rev. Stat. § 20.105; Or. Rev. Stat. § 107.135(7); Or. Rev. Stat. § 128.155. I conclude that Oregon, like CERCLA, does not provide for recovery of attorney fees in actions such as these. e. Motion for Summary Judgment on Plaintiff's Claim of Consequential Damages Based on Alleged Lost Sale. Consequential damages are not recoverable under CERCLA. See Artesian Water Co. v. Government of New Castle County, 851 F.2d 643, 648 [18 ELR 21012] (3d Cir. 1988). Plaintiff contends, however, that it is entitled to recover consequential damages under Or. Rev. Stat. § 466.205, and under its common law claims of negligence, nuisance, and waste. Though I agree, as discussed above, that plaintiff cannot recover under the Oregon statute cited, I recommend denying the motion for summary judgment on this claim. The common law issues have not been fully briefed on these cross motions for partial summary judgment, and McFarland has not established plaintiffs' inability to present facts supporting recovery under one or more of those claims. f. Motion for Summary Judgment on McFarland's Assertion that Plaintiffs are Liable Under CERCLA and Or. Rev. Stat. § 465.255. This motion should be granted for the reasons stated in the discussion of defendant SPTC's motion for summary judgment above. However, it is important to note that a finding of liability in an environmental clean-up case is different from a finding of liability in other types of cases. Here, a finding of "liability" does not automatically lead to a requirement to pay a portion of the clean-up expenses. The parties' cross motions for partial summary judgment should be granted in part and denied in part as follows: Plaintiffs' motion for a declaration that McFarland and SPTC are jointly and severally liable for plaintiffs' response costs under CERCLA (#59-1) should be DENIED. Plaintiffs' motion for a declaration that McFarland and SPTC are jointly and severally liable for plaintiffs' response costs under Or. Rev. Stat. § 465.255 (#59-2) should be DENIED. Plaintiffs' motion for a declaration that McFarland and SPTC are jointly and severally liable for plaintiffs' remedial action costs and damages under Or. Rev. Stat. § 465.205 (#59-3) should be DENIED. Plaintiffs' motion for a declaration that plaintiffs have no liability for contribution under 42 U.S.C. § 9613(f) or Or. Rev. Stat. § 465.255 (#59-4) should be DENIED. Plaintiffs' motion for entry of final judgment pursuant to Fed. R. Civ. P. 54(b) on its claim under Or. Rev. Stat. § 466.205 (#59-5) should be DENIED. Defendant SPTC's motion for summary judgment as to SFPP's liability under Or. Rev. Stat. § 465.255 as the present owner of the property (#78-1) should be GRANTED. Defendant SPTC's motion for summary judgment as to Catellus's liability under Or. Rev. Stat. § 465.255 as a former owner (#78-2) should be GRANTED. Defendant SPTC's motion for summary judgment as to plaintiffs' liability under CERCLA (#78-3) should be GRANTED. Defendant McFarland's motion for summary judgment against plaintiffs' claim under Or. Rev. Stat. § 466.205 (#82-1) should be GRANTED. Defendant McFarland's motion for summary judgment on its third-party defense to liability for the 1951 spill (#82-2) should be DENIED. Defendant McFarland's motion for summary judgment on its assertion that it is not liable for a 1937 spill (#82-3) should be DENIED. Defendant McFarland's motion for summary judgment denying Plaintiffs' claim for attorney fees (#82-4) should be GRANTED. Defendant McFarland's motion for summary judgment on plaintiffs' claim for consequential damages based on an alleged lost sale of the property (#82-5) should be DENIED. Defendant McFarland's motion for summary judgment on its claim that plaintiffs are potentially liable parties under CERCLA and Or. Rev. Stat. § 465.255 (#82-6) should be GRANTED. Magistrate Judge Jelderks filed his Findings and Recommendation regarding the parties' motions and cross-motions for summary judgment 14 May 1993. Plaintiffs subsequently filed objections. The matter is now before me pursuant to 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P. 72(b). When a party objects to any portion of the Magistrate's Findings and Recommendation, the district court must make a de novo determination of that portion of the Magistrate's report. 28 U.S.C. § 636(b)(1)(B); McDonnell Douglas Corp. v. Commodore Business Machines, 656 F.2d 1309, 1313 (9th Cir. 1981), cert. denied 455 U.S. 920 (1982). Plaintiffs have filed objections in a timely manner. I have, therefore, given the file of this case a de novo review. Plaintiffs object to nine of Judge Jelderks' specific recommendations, and the objections amount to three major issues: (1) did the Magistrate correctly recommend denying plaintiffs' motion for a declaration that defendants are jointly and severally liable for plaintiffs' response costs, (2) did the Magistrate correctly recommend denying plaintiffs' motion for a declaration that plaintiffs have no liability for response costs, and (3) did the Magistrate correctly recommend granting defendants' motion for summary judgment denying plaintiffs' any attorney fees? I adopt the Magistrate's Finding and Recommendation on each of these issues. A. The Magistrate correctly recommended denying plaintiffs' motion for a declaration that defendants are jointly and severally liable for plaintiffs' response costs. Plaintiffs' first set of objections challenge Judge Jelderks' recommendations that defendants should not be declared jointly and severally liable. The Magistrate recognized that defendants established the existence of material issues of fact as to the divisibility of the harms at issue, reasoning that investigation on the property might delineate the boundaries of contaminating releases. I agree that the viability of certain defenses as to each defendant cannot be determined at this time. A declaration that defendants are jointly and severally liable for the spill is therefore not merited at this time. Defendants' uncontroverted expert testimony is that one waste has been deposited in two geographically distinct areas, and that these areas of contamination have two distinct causes. This establishes enough of a question of divisible liability as to preclude — at this time — plaintiffs' motion to have joint and several liability declared. As recently recognized in the Second Circuit, to defeat a motion for summary judgment on the issue of divisibility, a defendant "need only show that there are genuine issues of material fact regarding a reasonable basis for apportionment of liability. As other courts have noted, apportionment itself is an intensely factual determination." United States v. Alcan Aluminum Corp., 990 F.2d 711, 722 (2d Cir. 1993). B. The Magistrate correctly recommended denying plaintiffs' motion for a declaration that plaintiffs have no liability for response costs. Plaintiffs' next objection is that Magistrate erred in recommending that the plaintiffs remain potentially liable in this case. The Magistrate found no issue of fact under either CERCLA or the state law regarding Catellus' knowledge of the contamination when it acquired the site from its parent in 1989. Plaintiffs object to these recommendations, raising what defendants describe as a new argument that the "contractual relationship" under CERCLA requires that the contracting parties be somehow "connected with" the release of waste before being considered potentially liable, and that plaintiffs are not connected with the creosote releases. Plaintiffs cite Westwood Pharmaceutical v. Nat. Fuel Gas Dist., 964 F.2d 85 [22 ELR 20813] (2d Cir. 1992), in which the Second Circuit ruled that a former owner's § 107(b)(3) third party defense is not negated by an existing deed between the former owner and the new owner, unless the deed is "connected with" activities causing the pollution. The Magistrate's reasoning and conclusions are well-supported and adopted. Plaintiffs' subsequent contention that parties can be declared free of liability under CERCLA and Oregon's related statutes by extending the chain of title to owners who are not "connected with" the contamination is rejected. See Chesapeake & Potomac Tel. v. Peck Iron & Metal, 814 F. Supp. 1269 (E.D. Va. 1992), New York v. Shore Realty Corp., 759 F.2d 1032 [15 ELR 20358] (2d Cir. 1985). C. The Magistrate correctly recommended granting defendants' motion for summary judgment denying plaintiffs' any attorney fees. Plaintiffs' final objection is that Judge Jelderks erred in recommending that attorney fees are not recoverable under the Oregon cleanup laws. Fees are not recoverable under CERCLA, Stanton Road Assoc. v. Lohrey Enterprises, 984 F.2d 1015 [23 ELR 20540] (9th Cir. 1993), but plaintiffs argue that the Oregon statute includes in its definition of remedial costs "the costs . . . of legal or enforcement activities." ORS 465.200(16). Judge Jelderks followed a ruling in which Magistrate Coffin recently concluded that fees are not included in cases like this. McDonald's Corp. v. Wilson, 1993 WL 47833 (D. Or. 1993). The recommendation is adopted. Plaintiffs' objections (doc. #130) are rejected, and the Magistrate's Findings and Recommendation (doc. #129) is adopted. IT IS SO ORDERED. 23 ELR 21487 | Environmental Law Reporter | copyright © 1993 | All rights reserved |