Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., KERR-M

Citation14 F.3d 321
Decision Date09 February 1994
Docket NumberKERR-M,No. 92-2440,92-2440
Parties24 Envtl. L. Rep. 20,369 cGEE CHEMICAL CORPORATION, a Delaware corporation, Plaintiff-Appellant, v. LEFTON IRON & METAL COMPANY, a Missouri corporation, and Lefton Land & Development Company, Incorporated, a Missouri corporation, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Jeffrey C. Fort (argued), Stuart Altschuler, Frank H. Hackmann, Kirk M. Minckler, Sonnenschein, Nath & Rosenthal, Chicago, IL, Fred C. Prillaman, Stephen F. Hedinger, Mohan, Alewelt, Prillaman & Adami, Springfield, IL for plaintiff-appellant.

Mark G. Arnold, Husch & Eppenberger, St. Louis, MO (argued), Kevin T. McClaim, Immel, Zelle, O'Gin & McLaim, Springfield, IL, for defendants-appellees.

Before POSNER, Chief Judge, FAIRCHILD and CUMMINGS, Circuit Judges.

CUMMINGS, Circuit Judge.

In August 1990 plaintiff Kerr-McGee Chemical Corporation ("Kerr-McGee") filed this suit against Lefton Iron & Metal Company ("Lefton Iron") and Lefton Land & Development Company, Inc. ("Lefton Land") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sec. 9601 et seq., and under the diversity provision of the Judicial Code, 28 U.S.C. Sec. 1332. Kerr-McGee is a Delaware corporation whose principal place of business is Oklahoma City, Oklahoma. Lefton Iron and Lefton Land are Missouri corporations whose principal offices are located in Illinois. The defendants, sometimes referred to jointly herein as "Lefton," are both wholly owned subsidiaries of Lefton Enterprises, which is not a defendant in this action.

At the center of this dispute is a 40-acre industrial site that Lefton Iron purchased in 1972 from Moss-American, Inc., the predecessor in interest of Kerr-McGee (Moss-American merged with the plaintiff in 1974). Lefton Iron transferred ownership of the site to Lefton Land in 1984. From 1927 to 1969, the site had been used by Moss-American and its predecessor in interest to manufacture wood products such as railroad ties and utility poles, a process that involved treating the wood used with creosote and other preservatives. Although Moss-American removed over 100,000 gallons of preservatives when it ceased operating the plant, significant amounts of preservatives remained at the site. In January 1988, the State of Illinois filed a complaint against Kerr-McGee, Lefton Iron and Lefton Land alleging various pollution claims and seeking to require the parties to implement a plan for cleaning up the site. A month later Kerr-McGee entered into a consent decree that settled the state's suit against it and required it to undertake, at its expense, any and all remedial work necessary to protect public health and the environment. The defendants did not participate in the consent decree. To date Kerr-McGee has spent approximately $1.5 million on the cleanup and the total cost is likely to exceed $5 million.

In an attempt to make Lefton Iron and Lefton Land shoulder some, if not all, of the cost of cleaning the site at issue, Kerr-McGee brought the present action. Kerr-McGee makes three claims:

Count I. It seeks a declaration that the defendants are liable under Section 107(a) of CERCLA (42 U.S.C. Sec. 9607(a)) and that its response (cleanup) costs were necessary and consistent with the National Contingency Plan (40 C.F.R. part 300).

Count II. It seeks contribution under Section 113(f)(1) of CERCLA (42 U.S.C. Sec. 9613(f)(1)) from defendants for the necessary costs of removing the hazardous substances from the site.

Count III. It asserts that by virtue of an indemnification clause in the 1972 contract transferring the land from Moss-American to Lefton Iron, the defendants are liable for the costs of the cleanup.

After a two-day bench trial, the district judge ruled against the plaintiff on all three counts of the complaint. Having reviewed the district court's determinations of law de novo, Ambrosino v. Rodman & Renshaw, Inc., 972 F.2d 776, 786 (7th Cir.1992), and its findings of fact under a "clearly erroneous" standard, Oddi v. Ayco Corp., 947 F.2d 257, 263 (7th Cir.1991), we reverse on all counts. CERCLA Liability (Count I)

Kerr-McGee seeks a declaratory judgment that Lefton Iron and Lefton Land are liable under CERCLA Sec. 107(a) (42 U.S.C. Sec. 9607(a)) for all cleanup costs that are necessary and consistent with the National Contingency Plan (40 C.F.R. part 300). The district court rejected this claim. 1 However since Kerr-McGee can establish each of the elements on which CERCLA liability is based and the defendants cannot establish the applicability of any defense listed in the statute, Kerr-McGee was entitled to judgment in its favor. See Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 668 (5th Cir.1989).

Liability is established under CERCLA Sec. 107(a) if:

(1) the site in question is a "facility" as defined in Sec. 101(9);

(2) the defendant is a responsible person under Sec. 107(a);

(3) a release or a threatened release of a hazardous substance has occurred; and

(4) the release or the threatened release has caused the plaintiff to incur response costs.

See Environmental Transportation Systems v. Ensco, Inc., 969 F.2d 503, 507 (7th Cir.1992); Amoco Oil Co., 889 F.2d at 668; New York v. Shore Realty Corp., 759 F.2d 1032, 1043 (2d Cir.1985). Three elements are undisputed. Lefton does not deny (1) that the site falls within the definition of "facility" set out in Sec. 101(9); (2) that a release or threatened release of hazardous substances occurred; and (3) that response (cleanup) costs have been incurred. At issue is whether the defendants are "responsible persons" under Sec. 107(a). A responsible person includes the current owner and any person who formerly owned or operated the facility in question at a time of actual or threatened release of a hazardous substance. 42 U.S.C. Sec. 9607(a)(1)-(2). As current owner of the land Lefton Land is liable, unless it demonstrates that a statutory defense is applicable to it. Amoco Oil Co., 889 F.2d at 668; Shore Realty Corp., 759 F.2d at 1042. Lefton Land presented evidence attempting to show that it was an "innocent landowner" under CERCLA Sec. 107(b) (42 U.S.C. Sec. 9607(b)). Section 107(b) requires that Lefton Land demonstrate, among other things, that it took precautions to prevent the "threat of release" or other foreseeable consequences arising from the pollution on the site. Lefton Land failed to make such a showing: the evidence at trial showed that although Lefton Land was aware of the wood preservatives on the site, 2 it made no attempt to remove those substances or to take any other positive steps to reduce the threat posed by the creosote. Lefton Land is, therefore, subject to CERCLA liability. Lefton Iron is also liable. Lefton Iron was also aware of the wood preservatives on the site and made no attempt to remove the polluting chemicals, 3 and this is sufficient to impose CERCLA liability.

The district court's determination is, therefore, reversed and the case is remanded so that the district court may enter judgment for the plaintiff on Count I of the amended complaint. In doing so, the district court should determine whether plaintiff's response costs were consistent with the National Contingency Plan and whether any future cleanup costs are appropriate under CERCLA.

Contribution Under CERCLA (Count II)

Since Lefton Iron and Lefton Land are strictly liable under CERCLA Sec. 107 (42 U.S.C. Sec. 9607(a)), they are liable for any response costs that are consistent with the National Contingency Plan. Amoco Oil Co., 889 F.2d at 668; Shore Realty Corp., 759 F.2d at 1042. However, under CERCLA Sec. 113 (42 U.S.C. Sec. 9613(f)), a party may seek contribution from another person who is liable or potentially liable under Sec. 107. In allocating response costs among the liable parties, a court should employ such equitable factors as it determines are appropriate. 42 U.S.C. Sec. 9613(f)(1). Factors which may be considered include the relative fault of the parties, Environmental Transportation Systems v. Ensco, Inc., 969 F.2d at 508-509 (a court has "power to weigh and consider relevant factors, including [relative] fault" of the parties); relevant "Gore factors," 4 id. at 509 (noting that the "Gore factors are neither an exhaustive or exclusive list" of the factors to be considered); and any contracts between the parties bearing on the allocation of cleanup costs, United States v. R.W. Meyer, Inc., 932 F.2d 568, 571-572 (6th Cir.1991). Since the district court did not believe the indemnification agreement applied to the cleanup costs at issue, the court ignored the agreement when allocating responsibility for cleanup costs. This was an error. Although contractual arrangements between parties are not necessarily determinative of statutory liability, Lefton's intent to indemnify Kerr-McGee should be considered in the allocation of cleanup costs. In determining the relative contribution of the parties, courts must look to the "totality of the circumstances." Environmental Transportation Systems, 969 F.2d at 509. That Lefton--with knowledge of the creosote on the site--agreed that it took the property "as is" and would assume all future liabilities resulting from that pollution is certainly a significant circumstance. The fact that Kerr-McGee's predecessor Moss-American was the source of most of the pollution at the site may also weigh in the court's analysis; this, however, is not reason to ignore other relevant considerations.

The court below should have considered the indemnity agreement in its equitable balancing under Count II. However, since we hold below that Lefton must indemnify Kerr-McGee for its cleanup costs it does not appear to this Court that a reallocation of contribution will be necessary on remand. If, however, the district court determines that reallocation is necessary because, for...

To continue reading

Request your trial
115 cases
  • Foster v. US
    • United States
    • U.S. District Court — District of Columbia
    • March 29, 1996
    ...he took necessary steps to prevent foreseeable adverse consequences arising from the contamination. Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 325 & n. 3 (7th Cir.1994) (due care not established when PRP took no affirmative measures to clean site); United States v. DiBi......
  • Carson Harbor Village, Ltd. v. Unocal Corporation, Case No. CV 96-3281 MMM (RCx) (C.D. Cal. 10/29/2003)
    • United States
    • U.S. District Court — Central District of California
    • October 29, 2003
    ...Harbor's activities at the site prior to remediation exacerbated the contamination in any way.253 See Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 325 (7th Cir. 1994) (denying a property owner innocent landowner status because it did not take adequate steps to remove c......
  • GJ Leasing Co., Inc. v. Union Elec. Co., Civ. No. 91-158-JPG.
    • United States
    • U.S. District Court — Southern District of Illinois
    • June 6, 1994
    ...release caused the plaintiff to incur necessary costs consistent with the NCP. 42 U.S.C. § 9607(a). See Kerr-McGee Chemical Corp. v. Lefton Iron & Metal, 14 F.3d 321 (7th Cir.1994). In a private CERCLA action, the plaintiff bears the burden of establishing that each of the prima facie eleme......
  • Acme Printing Ink Co. v. Menard, Inc.
    • United States
    • U.S. District Court — Eastern District of Wisconsin
    • December 5, 1994
    ...and (4) the release or threatened release has caused the plaintiff to incur response costs. Kerr-McGee Chemical Corp. v. Lefton Iron and Metal Co., 14 F.3d 321, 325 (7th Cir.1994). That Acme has satisfied these elements of liability is not in dispute. First, section 101(9) defines "facility......
  • Request a trial to view additional results
3 books & journal articles
  • Brief for natural resources defense council as amici curiae supporting respondent, United States V. Atlantic Research Corp., No. 06-562 (U.S. Apr. 5, 2007).
    • United States
    • Environmental Law Vol. 37 No. 2, March 2007
    • March 22, 2007
    ...429 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) 426, 427 Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 325 (7th Cir. 1994) 421 Key Tronic Corp. V. United States, 511 U.S. 809 (1994) 418, 419, 422, 431 Metropolitan Water Reclamation District of G......
  • 1998 - the year in review.
    • United States
    • Environmental Law Vol. 29 No. 1, March 1999
    • March 22, 1999
    ...under [sections] 107(a)(1) and (2) is imposed without regard to causation. See Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 325 (7th Cir. 1994) (current owner); Tanglewood East Homeowners v. Charles Thomas, Inc., 849 F.2d 1568, 1572 (5th Cir. 1988) (current owner); Ne......
  • CERCLA: convey to a pauper and avoid cost recovery under section 107(a) (1)?
    • United States
    • Environmental Law Vol. 33 No. 2, March 2003
    • March 22, 2003
    ...supra note 184, [section] 3 at 484 (providing a sample release by buyer and citing Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 326-27 (7th Cir. 1994)); see also id. at 485-86 (discussing the use of an "as is" clause). Some states have specific statutes requiring disc......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT