City of Fresno v. NL Industries, Inc.

No. CV-F-93-5091 REC/DLB (E.D. Cal. July 13, 1995)

The court holds that under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), a city that is an admittedly responsible party is limited to bringing a § 113(f) contribution action against another potentially responsible party (PRP) to recover response costs the city incurred cleaning up a municipal solid waste landfill. The court first notes that federal courts are split on whether an action brought by one PRP against another must be characterized as one for contribution under § 113 or one for cost recovery under § 107. The court finds persuasive cases that rely on the Restatement (Second) of Torts to hold defendants jointly and severally liable in cost recovery actions and to define the scope of liability in contribution actions. Restatement § 886A provides that joint and several liability is not available in actions between joint tortfeasors. The court holds that the facts support a finding that this action is one for contribution, because plaintiff has admitted CERCLA liability, the case is pled as a civil action under § 107(a), and defendants argue that plaintiff should contribute to the cleanup operations. Also, the city is seeking reimbursement for any incurred expenses that exceed its own liability and an assurance that it will not be responsible for a disproportionate share of any future costs. The court holds that the city can assert claims against defendants to hold them severally liable for their equitable share, which the court will determine by apportioning liability in an equitable fashion. The court notes that it will consider the initiative taken by the city, which has protected public health and safety by beginning the abatement of releases of hazardous substances from the landfill. Moreover, the city does not automatically bear the full risk of the orphan shares, because the court, in its discretion, will apportion these shares equitably among the parties. The court notes that it need not resolve the possible parameters of an implied § 107 contribution action, because the parties specifically dispute the potential liability and the applicable statute of limitations, and these specific issues are the same in any type of contribution action. Regardless of how it is pled, this is an action for contribution and, thus, defendant faces several liability. Similarly, application of the CERCLA § 113(g)(3) statute of limitations does not depend on how the contribution action is pled. The court holds that CERCLA's plain meaning indicates that whether the action is time barred depends on whether the city has settled its liability with the government so as to fall within § 113(g)(3), an issue that the parties have not addressed.

Counsel for Plaintiff
Mary Peterson
City Attorney's Office
2600 Fresno St., Fresno CA 93721
(209) 498-1326

Counsel for Defendant
Joseph J. Armao
Heller, Ehrman, White & McAuliffe
333 Bush St., San Francisco CA 94104
(415) 772-6000

[25 ELR 21465]

Coyle, J.:

Order re Defendant's Motion for Summary Judgment

This Court heard defendant's motion for summary judgment on April 10, 1995. Upon consideration of the oral and written record, this Court grants defendant's motion in part for the reasons set forth herein.

I. Background

For over 50 years, the City of Fresno ("City") owned and operated a municipal solid waste landfill which now must be closed. The landfill is releasing substances, which have been deemed hazardous within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et. seq.("CERCLA"). The plaintiff, City of Fresno, brings this action to recover closing costs against nineteen defendants. It is undisputed that the City is a liable person under §§ 107(a)(1) and 107(a)(4) of CERCLA, as the owner/operator of the Landfill, and as a transporter of hazardous substances to the Landfill.

Defendants Petrolane Incorporated and Texas Eastern Overseas, Inc. moved for partial summary judgment, and the motion was heard on January 17, 1995. This Court denied the motion in its January 19, 1995 Order. Defendant McClatchy Newspapers, Inc. moved for summary judgment, and defendants Howard, Picker Parts, Welch's Cleaning, Chevron, Petrolane et al., State of California, NL Industries, California Air National Guard, Lamoure's, and Wilshire Paint joined in this motion. However, all defendants have settled except for NL Industries ("NL").

The remaining defendant, NL, asks this Court to decide whether an admittedly responsible party ("ARP") is permitted to bring a § 107 [25 ELR 21466] cost recovery action against other potentially responsible parties ("PRPs") or whether an ARP is limited to a contribution action under § 113(f) of CERCLA.

II. Defendants' Motion for Summary Judgment

A. Legal Standard

The moving party has the burden to establish that there is no genuine issue of material fact as to one or more elements of plaintiff's claim for relief, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). Where only a question of law is presented, a district court may properly resolve the issue by summary judgment. Asuncion v. District Director, INS, 427 F.2d 523, 524 (9th Cir. 1970); See also Coyote Valley Band of Pomo Ind. v. United States, 639 F. Supp. 165 (E.D. Cal. 1986).

B. CERCLA

Section 107(a) of CERCLA authorizes claims for recovery of costs "incurred by any other person consistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(B). Courts have consistently recognized the right of a private party to sue a PRP for cost recovery under this section. Prior to 1986, courts recognized an implicit federal right to contribution where PRPs were subject to joint and several liability and incurred response costs in excess of their pro rata share. Mardan Corp. v. C.G.C. Music Ltd., 804 F.2d 1454, 1457 n.3 [17 ELR 20209] (9th Cir. 1986).

In 1986, Congress amended CERCLA in 1986 and added a section relating to contribution claims.¹ Section 113(f) provides:

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedures, 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).

C. The arguments

The defendants argue that as an admittedly liable party, the City, cannot maintain a cost recovery action under CERCLA § 107(a), and that liability under CERCLA § 113(f)(1) is several only, not joint and several. In opposition, the City argues that a liable party may assert a CERCLA § 107(a) cost recovery claim, and that joint and several liability should be imposed on defendants at the appropriate time in this action. The City requests the Court "to reject defendant's position that it is relegated to a § 113 contribution action . . .which in their opinion, could time bar plaintiff's Third Amended Complaint. . ." (Pl. Opp. at 1, 2).

D. Analysis

Federal courts split on the issue of whether an action brought by one PRP against another must be characterized as one for contribution under § 113. Compare Transportation Leasing Co. v. State of California, 861 F. Supp. 931 (C.D. Cal. 1993) (weight of authority supports holding that a PRP can sue for cost recovery under § 107; citing General Elec. Co. v. Litton Indus. Automation Sys. Inc., 920 F.2d 1415, 1418 [21 ELR 20453] (8th Cir. 1990), cert. denied, 499 U.S. 937 (1991); United States v. Kramer, 757 F. Supp. 397 [21 ELR 20879] (D.N.J. 1991); Sand Springs Home v. Interplastic Corp., 670 F. Supp. 913, 916 [17 ELR 20775] (N.D. Okla. 1987); Chemical Waste Management, Inc. v. Armstrong World Indus., Inc., 669 F. Supp. 1285, 1291-92 [18 ELR 20191] (E.D. Pa. 1987)); Companies for Fair Allocation v. Axil Corp., 853 F. Supp. 575 [24 ELR 21581] (D. Conn. 1994) (PRP plaintiff may maintain § 107 cost recovery action); Barton Solvents v. Southwest PetroChem, Inc., 1993 WL 382047 (D. Kan. Sept. 14, 1993) (PRP may bring § 107 cost recovery action); United States v. Kramer, 757 F. Supp. at 416 (PRP government may bring § 107 action; "sections 107 and 113 serve distinct purposes. CERCLA was enacted to facilitate cleanup of the tens of thousands of hazardous waste sites in this country . . . Practically speaking, section 107 permits a PRP, including the Government to collect all its response costs, even those that that same PRP may be required to pay back to other PRPs as its equitable share in a section 113 proceeding")' Burlington Railroad Co. v. Time Oil Co., 738 F. Supp. 1339 (W.D. Wash. 1990) (§§ 1113 and 107 represent separate and distinct causes of action, and PRP can maintain both types of action; noting differences in defenses, statute of limitations, liability, and judicial review); Allied Corp. v. ACME Solvents Reclaiming, 691 F. Supp. 1100 [19 ELR 21254] (N.D. Ill. 1988) (PRP may seek to recover response costs under either § 107 cost recovery or § 113 contribution); Chesapeake and Potomac Telephone Co. of Virginia v. Peck from Metal Co., 814 F. Supp. 1269 (E.D. Va. 1992) (§ 107(a)(4)(B) "any other persons" language applies to PRPs; PRP may seek response costs under either section); with T H Agriculture & Nutrition Co., Inc. v. Aceto Chemical Co., 884 F. Supp. 357, 360 [25 ELR 21441] (E.D. Cal. 1995) (weight of authority supports finding that a PRP/ARP may only seek contribution for response costs; quoting United Technologies Corp. v. Browning-Ferris Indus., 33 F.2d 96, 101 [24 ELR 21356] (1st Cir. 1994) ("Bearing in mind that appellants are by their own admission liable parties, their claim against Browning must be classified as an action for contribution), cert. denied, 63 U.S.L.W. 3488 (1995);. . . Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 672 [20 ELR 20281] (5th Cir. 1989) ("As an owner of a facility that continues to release a hazardous substance, Amoco shares joint and several liability for remedial actions with Borden. [Citations omitted.] When one liable party sues another to recover its equitable share of the [CERCLA] response costs, the action is one for contribution. . . .); Kaufman & Broad-South Bay v. Unisys Corp., 868 F. Supp. 1212, 1216 [25 ELR 20676] (N.D. Cal. 1994) ("While Akzo demonstrates that an innocent party is entitled to bring a suit under § 9607(a), the reality is that the vast majority of private parties will be limited to suing for contribution under § 9613(f). . . .[A] CERCLA plaintiff, other than the government, will rarely be 'innocent' and thus permitted to sue under § 9607(a)."); Folino v. Hampden Color & Chem. Co., 832 F. Supp. 757, 764 [24 ELR 20345] (D. Vt. 1993) ("This action, between two liable parties, appears to be appropriately treated as one for contribution."); City and County of Denver v. Adolph Coors Co., 829 F. Supp. 340, 346 [24 ELR 20112] (D. Colo. 1993) (citing Amoco Oil, with approval); United States v. ASARCO, Inc., 814 F. Supp. 951, 956 [23 ELR 20894] (D. Colo. 1993) ("Where a liable party has incurred response costs for which it is jointly liable, and then attempts to exercise its statutory right to recover another party's share of that common liability, the claim is one for contribution."); Transtech Indus. v. A&Z Septic Clean, 798 F. Supp. 1079, 1086 (D.N.J. 1992) (citing Amoco Oil, with approval), appeal dismissed, 5 F.2d 51 [24 ELR 20036] (3d Cir. 1993), cert. denied, 114 S. Ct. 2692 (1994)"); Avnet, Inc. v. Allied-Signal, Inc., 825 F. Supp. 1132 [23 ELR 21602] (D.R.I. 1992) (suit by PRP against another PRP to obtain reimbursement for CERCLA response costs is claim for contribution); Kamb v. U.S. Coast Guard, 869 F. Supp. 793, 799 (N.D. Cal. 1994) ("If the owners are liable under section 107, then In re Dant & Russell, Inc. dictates that this action is a contribution action, with each responsible party, including the owners, bearing its allocable share").

The distinction carries significant consequences. In a cost recovery action under § 107, non-settling defendants face joint and several liability. Under § 113(f)(1) or a contribution action, such defendants face only several liability. In addition, the availability of defenses and the statute of limitations potentially differ between the two types of actions.

For the following reasons, this Court holds that the City, who is an ARP, is limited to a contribution action against NL.

The Ninth Circuit in In re Dant & Russell, Inc., 951 F.2d 246 [22 ELR 20239] (9th Cir. 1991), impliedly condoned characterizing such actions as contribution claims. There, the court construed a cost recovery § 107 claim for contribution as a § 113(f)(1) claim. The defendant argued that the contribution sought by plaintiff in bankruptcy court was barred by § 502(e)(1)(B) of the Bankruptcy Code, which disallows any claims for reimbursement or contribution. The court considered whether once the bankruptcy court upheld the CERCLA claim against the § 502 challenge, it had no choice but to ascribe [25 ELR 21467] to the defendants full liability for plaintiff's claim. The Ninth Circuit concluded that this assertion reaches to far." Id. at 249. The court decided that § 113 of CERCLA applied in this case for at least three reasons: (1) the plaintiff admitted CERCLA liability; (2) this is a civil action under § 107(a); and (3) defendant is arguing that plaintiff should contribute to the cleanup operations. Id. See Barnhizer, Joint and Several Liability and Contribution Under CERCLA, 18 Harvard Enc. [sic] L. Rev. 563, 570 n.21 (1994) (In re Dant is Ninth Circuit authority "implying that asuit between PRPs is a suit for contribution, even if it brought as a response-recovery action under CERCLA § 107); Kamb, 869 F. Supp. at 799.

Moreover, the First, Fifth, Seventh, and Tenth Circuits have limited a PRP to a contribution action. See United Technologies v. Browning-Ferris Industries, 33 F.2d 96, 99 [24 ELR 21356] (1st Cir.), cert. denied, 115 S. Ct. 1176 (1995); Amoco Oil Co. v. Borden, Inc., 889 F.2d 664 [20 ELR 20281] (5th Cir. 1989); Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764 [24 ELR 21254] (7th Cir. 1994); United States v. Colorado & Eastern Railroad Company, 50 F.3d 1530 [25 ELR 20309](10th Cir. 1995), 1995 WL 115720. The cases relying on the Restatement of Torts are persuasive. Section 107 does not provide for joint and several liability. Rather, federal courts have concluded that Congress refrained from expressly addressing the scope of liability under CERCLA so that courts could "determine, in accordance with common law principles, whether such liability is proper under the circumstances." [United States v.] Alcan Aluminum Corp., 964 F.2d 252, 268 [22 ELR 21124] (3d Cir. 1992). Accordingly, courts have relied upon the Restatement of Torts (Second) to hold defendants jointly and severally liable in cost recovery actions. See Akzo Coatings, Inc., 30 F.2d at 764. Similarly, courts have relied upon the Restatement to define the scope of liability in contribution actions. Section 886A of the Restatement of Torts provides that joint and several liability is not available in actions between joint tortfeasors.² Where two parties are both "wrongdoers," each is severally liable only for its own equitable share of the liability. For instance, the Seventh Circuit, in Azko Coatings, Inc., succictly reasoned:

Akzo has experienced no injury of the kind that would typically give rise to a direct claim under section 107(a)—it is not, for example, a landowner forced to clean up hazardous materials that a third party spilled onto its property or that migrated there from adjacent lands. Instead, Akzo itself is a party liable in some measure for the contamination at the Fisher-Calco site, and the gist of Akzo's claim is that the costs it has incurred should be apportioned equitably amongst itself and the others responsible. . . .That is a quintessential claim for contribution. See Restatement (Second) of Torts § 866A (1979); see also Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 672 [20 ELR 20281] (5th Cir. 1989) [holding that actions in which one party sues another to recover its equitable share of response costs are contribution actions]; In re Dant & Russell, Inc., 951 F.2d 246, 249 [22 ELR 20239] (9th Cir. 1991). Section 113(f)(1) confirms as much by permitting a firm to seek contribution from "any other" party liable under section 106 or 107. Whatever label Akzo may wish to use, its claim remains one by and between jointly and severally liable parties for an appropriate division of the payment one of them has been compelled to make.

Azko Coatings, Inc., 30 F.2d at 764.

Here, the facts support a finding that this action is one for contribution: (1) the plaintiff has admitted CERCLA liability; (2) this is a civil action under § 107(a), as plead inter alia; and (3) defendants argue that plaintiff should contribute to the cleanup operations. See In re Dant, 951 F.2d at 249 (enumerating these three factors as determinative). The defendants persuasively argue that the City is not an "injured party" analogous to a tort plaintiff. Instead, the City is one of the parties responsible for the injury; i.e., the purported threat to human health and to the environment posed by hazardous substances at the landfill. Regardless of how it is drafted, the complaint's gravamen is that the City has and will incur costs for which the City contends the defendant is also responsible. Thus, the City is seeking reimbursement for any incurred expenses which exceed its own liability and an assurance that it will not be responsible for a disproportionate share of any future costs. This is a quintessential contribution claim.

The implications of such a holding are not inconsistent with the policy behind CERCLA to encourage and implement cleanup operations. Rather, this holding simply does not benefit an ARP palintiff who starts the cleanup operation and is "first to the courthouse door to sue its confederates in environmental misbehavior." Chesapeake, 814 F. Supp. at 1277; T H Agriculture & Nutrition Co., Inc., 884 F. Supp. at 361-62. Section 113(f)(1) provides that "in resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Here, the City can assert claims against defendants in this action to hold them severally liable for their equitable share. Each "share" will not necessarily mean a pro rata share. Rather, the Court in its discretion will apportion liability in an equitable fashion, considering numerous factors. The Court will not be blind to the initiative taken by the City, which has protected the public health and safety by beginning the abatement of release of hazardous substances from the Landfill. Likewise, the City, as an APR plaintiff, does not automatically bear the full risk of the orphan shares because the Court, in its discretion, will apportion these shares equitably among the parties.

The City's argument that Key Tronic Corp. v. United States, 114 S. Ct. 1960 [24 ELR 20955] (1994) stands for the proposition that an ARP can still bring an action for cost recovery under § 107, is rejected. Rather, Key Tronic sheds light on whether an APR plaintiff may bring a § 107 action for contribution. The court stated in dictium: "Thus the statute [CERCLA] now expressly authorizes a cause of action for contribution in § 113 and impliedly authorizes a similar and somewhat overlapping remedy in § 107." Key Tronic Corp., 114 S. Ct. at 1965-66. Key Tronic indicates that CERCLA still authorizes an implied right to contribution in § 107.³ However, the parameters or applicability of such a cause of action are unclear.⁴

In this case, the Court need not resolve the possible parameters of an implied § 107 contribution action because the parties specifically dispute the potential liability and the applicable statute of limitations. These specific issues are the same in any type of contribution action. As discussed supra, this Court finds that regardless of how it is plead, this action is one for contribution, and consequently, defendant faces several liability. Likewise, the statute of limitations does not depend upon how this contribution action is plead. According to § 113(g)(3), "no action for contribution for any response costs or damages may be commenced more than 3 years after: (1) a judgment for recovery costs has been entered; (2) a de minimis settlement under § 9622(g) or § 9622(h) (relating to cost recovery settlements) has been entered, or; (3) a judicially approved settlement with respect to such costs or damages has been entered. Thus, in this particular situations, the APR/PRP must seek contribution costs from other PRPs within three years—no matter which section is plead to seek contribution. The plain meaning of the statute indicates that whether this action is time-barred depends upon whether the City has settled its liability with the government so as to fall within § 113(g)(3). This issue has not been addressedby the parties.

ACCORDINGLY, IT IS ORDERED THAT defendant's motion for summary judgment is granted in part, and the Court hereby finds that the City, who is admittedly responsible party, is limited to an action for contribution under CERCLA.

1. The 1986 amendments are known as the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, § 101 et seq., 100 Stat. 1613 (1986) ("SARA").

2. Section 886A, of the Restatement of Torts (Second) provides:

The right of contribution exists only in favor of a tortfeasor who has discharged the entire claim for the harm by paying more than his equitable share of the common liability and is limited to the amount paid by him in excess of his share. No tortfeasor can be required to make contribution beyond his own equitable share of the liability.

3. In contrast, some federal courts have held that a PRP may only seek recovery from another PRP through § 113 for contribution. See Azko Coatings, Inc., 30 F.2d at 764; United States v. Colorado & Eastern Railroad Company, 50 F.3d 1530 [25 ELR 20309] (10th Cir. 1995); United Technologies v. Browning-Ferris Industries, 33 F.3d at 99; But see Companies for Fair Allocation v. Axil Corp., 853 F. Supp. 575, 580 [24 ELR 21581] (D. Conn. 1994); Charter Township of Oshtemo v. American Cyanamid Co., File No. 92cv843 (W.D. Mich. May 3, 1995) (CERCLA does not preclude a PRP, who could have sued for contribution under § 113, to seek recovery under § 107).

4. For instance, in United Technologies, 33 F.3d at 99-100, n.8, the court noted that "a PRP who spontaneously initiates a cleanup without governmental prodding might be able to pursue an implied right of action for contribution under 42 U.S.C. § 9607(c). See Key Tronic Corp. v. United States, U.S. , 114 S. Ct. 1960, 1966. . .[24 ELR 20955] (1994). . .cf. In re Hemingway Transp., Inc., 993 F.2d 915, 931 [23 ELR 20953] (1st Cir.) (stating in dictum that "in the event the private-action plaintiff is potentially 'liable' to the EPA for response costs, and this is akin to a joint 'tortfeasor,' section 9607(a)(4)(B) serves as the pre-enforcement analog to the 'impleader' contribution action permitted under section 9613(f)"), "cert. denied, 114 S. Ct. 303 (1993).