Crofton Ventures Ltd. Partnership v. G&H

• Decision Date: 02 March 2001
• Citation: 258 F.3d 292
• Parties: (4th Cir. 2001) CROFTON VENTURES LIMITED PARTNERSHIP, Plaintiff-Appellant, v. G&H; PARTNERSHIP; HARRY RATRIE; E. STEWART MITCHELL, INCORPORATED; DAHLIA RATRIE,Defendants-Appellees, and JOHN C. CYPHERS; N. W. GREENWALD CONCRETE COMPANY; NORMAN GREENWALD, JR., Defendants. 00-1517 Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 292

258 F.3d 292 (4th Cir. 2001)

CROFTON VENTURES LIMITED PARTNERSHIP, Plaintiff-Appellant, v. G&H PARTNERSHIP; HARRY RATRIE; E. STEWART MITCHELL, INCORPORATED; DAHLIA RATRIE,Defendants-Appellees and JOHN C. CYPHERS; N. W. GREENWALD CONCRETE COMPANY; NORMAN GREENWALD, JR., Defendants.

00-1517

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: March 2, 2001

Decided: July 24, 2001

Appeal from the United States District Court for the District of Maryland, at Baltimore. Marvin J. Garbis, District Judge.

(CA-96-1378-MJG)

COUNSEL ARGUED: Holly Drumheller Butler, Steven Keith Fedder, PIPER, MARBURY, RUDNICK & WOLFE, L.L.P., Baltimore, Maryland, for Appellant. Thomas M. Downs, SWIDLER, BERLIN, SHEREFF, FRIEDMAN, L.L.P., Washington, D.C.; Thomas Mark Lingan, VENABLE, BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for Appellees. ON BRIEF: John Chen, Kathleen L. Nooney, PIPER, MARBURY, RUDNICK & WOLFE, Chicago, Illinois, for Appellant. Laura A. Ford, SWIDLER, BERLIN, SHEREFF, FRIEDMAN, L.L.P., Washington, D.C.; Geoffrey R. Garinther, VENABLE, BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for Appellees.

Before NIEMEYER, MICHAEL, and KING, Circuit Judges.

Affirmed in part, vacated in part, and remanded for further proceedings by published opinion. Judge Niemeyer wrote the opinion, in which Judge King joined. Judge Michael wrote an opinion dissenting in part and concurring in part.

OPINION

NIEMEYER, Circuit Judge:

After purchasing a 32-acre parcel of land in Anne Arundel County, Maryland, Crofton Ventures Limited Partnership ("Crofton") discovered that a portion of the parcel had been used as a hazardous waste dump. After reporting its discovery to the Maryland Department of the Environment and cleaning up the site, it brought this action under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. S 9601 et seq., against former owners and operators of the land to recover its response costs. In addition to its CERCLA claim, Crofton asserted common law claims for fraudulent misrepresentation and breach of contract. Following a bench trial, the district court entered judgment for the defendants on all counts. Because we conclude, however, that the district court erroneously construed the requirements of CERCLA, we vacate its ruling on that claim and remand. We affirm the court's remaining rulings.

I

On April 9, 1987, Crofton¹ entered into a contract with G & H Partnership, of which Harry and Dahlia Ratrie were partners, (collectively hereinafter, "Ratrie"), to purchase a parcel of land to be carved from Ratrie's 55-acre tract located on Patuxent River Road in Anne Arundel County, Maryland. Crofton intended to develop the site for operation of a vehicle salvage business involving the storing and selling of motor vehicles that had been declared a total loss. As part of the contract of sale, which the parties amended from time to time, Ratrie represented:

To the best of Seller's knowledge and while the[property] was in Seller's possession, the [property] has not been used for hazardous waste disposal, and no party has transported, caused to be transported, stored or caused to be stored on the [property], in any buildings, containers, on the surface or underground, any solid, liquid, semi-solid or gaseous materials that would constitute "hazardous wastes" . . . "hazardous substances" . . . "oil, petroleum products, and their byproducts" . . . or any substance the presence of which on the [property] is prohibited or regulated by any law similar to those set forth in this section and that the [property] has not been contaminated by any of the aforementioned hazardous or toxic wastes or substances[.]"

In 1991, before closing, Ratrie subdivided the 55-acre tract and, at closing, conveyed a 32-acre parcel to Crofton pursuant to the April 1987 contract. When Crofton began to develop the site in 1995, it discovered a waste dump on the site that contained a total of 285 fully or partially buried 55-gallon drums, truck tires, household appliances, and other similar refuse. Upon testing five of the drums, Crofton found that four contained a mixture of asphalt and trichloroethylene ("TCE"), a common solvent known to be carcinogenic and constituting a hazardous substance under federal and state environmental laws. Crofton reported its finding to the Maryland Department of the Environment and, thereafter, under the Department's supervision, cleaned up the site.

In the process of cleaning up the site, Crofton found a few corrugated drums of World War II vintage. The remainder of the drums, however, were of a type manufactured during the period "in [the] late '70s through the '80s and to today." They were discovered in a broad array of disrepair, described variously as "rusted," "crushed," "split open," "leaking," and "broken." Two hundred forty-six of these drums contained observable asphalt, and most smelled of TCE. Two sets of 10 drums containing asphalt were sampled and tested to determine whether they contained hazardous substances, and the tests from each of the two composite samples indicated high concentrations of TCE. "High levels" of TCE were also found in the soil and groundwater at the site.

After cleaning up the site, Crofton commenced this action under CERCLA to recover all or part of its cleanup costs. It also alleged state common law counts for fraudulent misrepresentation and breach of warranty.

The evidence at trial established that the 55-acre tract had been used from the 1930s to 1977 by its owner Alan E. Barton and various tenants for the production of hot-mix asphalt, ready-mix concrete, and sand and gravel. After Barton's death, the tract was conveyed to E. Stewart Mitchell, Inc. ("Mitchell"), a Maryland corporation, which owned it until 1985. Mitchell operated an asphalt plant on the tract during the early part of that period -from 1977-1980 -and thereafter sold the business to Ratrie, leasing to him the property with an option to purchase. In 1985, Ratrie exercised the option and bought the tract from Mitchell. Ratrie subsequently leased it to an operator who continued to produce asphalt on the tract. Both Mitchell and Ratrie concede that, as defined by CERCLA, they were owners during the relevant periods, 1977-85 and 1985-1991, respectively, and that Mitchell was an operator from 1977-1980.

The evidence in the record indicates that TCE was used at the site beginning in 1979, when Mitchell began using TCE in testing hot-mix asphalt as required by the State of Maryland. In 1980, when Mitchell ceased operating the plant and leased the property to Ratrie, Ratrie continued to produce asphalt at the site and test it in the same manner. From 1979 until the late 1980s, waste material from asphalt testing on the site -consisting of a mixture of liquid asphalt, aggregates, and TCE -was placed in 55-gallon drums of the type found at the site by Crofton. No evidence could be uncovered, however, as to how Mitchell or Ratrie, or indeed the State of Maryland, disposed of those waste-filled drums. Mitchell retained no records of the drums' disposition, and no witness recalled how the drums were disposed of.

Upon Crofton's purchase of the site in 1991, no further operations were conducted there, and it remained unused until Crofton began its development of the property in 1995, at which time Crofton discovered the hazardous waste.

Following a four-day bench trial, the district court made findings of fact, upon which it entered judgment dismissing all of the claims with prejudice, concluding generally that Crofton had failed to meet its burden of proof on each of the three counts. On Crofton's CERCLA claim, the district court found that hazardous wastes had been released on the site, causing Crofton to incur response costs. It concluded, however, that the evidence failed to establish that either Mitchell or Ratrie "placed any TCE on the Site." The court observed that if Crofton "could so prove, [Mitchell] would be a responsible person from 1981 to 1985 and [Ratrie] would be a responsible person starting in 1985." The district court acknowledged that prior to 1995, when Crofton discovered the partially buried drums,"one or more persons . . . placed TCE on the Site." But the court stated that the dispositive question was "whether [Crofton] has proven that some, if not all, of the drums containing TCE were placed on the Site by the [defendants] from 1977 on." And it repeated that statement of the issue in its discussion: "The question before this Court is whether the Court can find, by a preponderance of the evidence, that the [defendants] dumped their TCE waste on the Site." The court then summarized its findings, concluding that Crofton "has presented no direct evidence of dumping by the [defendants], the alleged perpetrators." (Emphasis added). Acknowledging that Crofton could also satisfy its burden through circumstantial evidence, the court concluded that the circumstantial evidence was likewise insufficient:

[Crofton] has, at most, presented evidence to raise a mere suspicion that the [defendants] (or one of them) might be responsible for placing some drums containing TCE at some improper location. [Crofton] has not proven by a preponderance of the evidence that the [defendants] placed any TCE on the Site.

On the fraud claim, the court found that Crofton failed to prove that Ratrie knew that hazardous waste was buried on the property when he represented in the contract of sale that it was not. And on the breach of contract claim based on Ratrie's express warranty that "to the best of [his] knowledge," the site had not been used for waste disposal, the court likewise found that Ratrie did not have knowledge of any hazardous waste disposal and therefore did not breach that express warranty.

Crofton filed this appeal, which challenges the legal and factual bases for the court's findings on the CERCLA claim and the factual bases for its findings on the...