United States v. Maryland Bank & Trust Co.
| Decision Date | 09 April 1986 |
| Docket Number | Civ. A. No. N-84-4026. |
| Citation | 632 F. Supp. 573 |
| Court | U.S. District Court — District of Maryland |
| Parties | UNITED STATES of America v. MARYLAND BANK & TRUST COMPANY. |
F. Henry Habicht II, Asst. Atty. Gen., Land & Natural Resources Div., Washington, D.C., Breckinridge L. Willcox, and Glenda G. Gordon, Office of the U.S. Atty. for the D. Md., Ellen M. Mahan, Land & Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff U.S.; Judith A. Dorsey, U.S. Environmental Protection Agency, Philadelphia, Pa., of counsel.
Walter W. Sawyer, of Sawyer & Myerberg, Lexington Park, Md., for defendant Maryland Bank & Trust Co.
This case presents the novel question of whether a bank, which formerly held a mortgage on a parcel of land, later purchased the land at a foreclosure sale and continues to own it, must reimburse the United States for the cost of cleaning up hazardous wastes on the land, when those wastes were dumped prior to the bank's purchase of the property.
The United States instituted this action pursuant to section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9607 (1983), to recover the expenses incurred by the United States Environmental Protection Agency ("EPA") for removal of hazardous wastes from the toxic dump site known as the McLeod property or the California Maryland Drum site, located near the town of California in St. Mary's County, Maryland. Named as defendant in this suit is the Maryland Bank & Trust Company ("MB & T"), the owner of the property since May, 1982, and before that, the mortgagee of the tract beginning in December, 1980.1
Pending before the Court are defendant Maryland Bank & Trust Co.'s motion for summary judgment and plaintiff United States' motion for partial summary judgment on the issue of liability.
From July 7, 1944 to December 16, 1980, Herschel McLeod, Sr. and Nellie McLeod owned the piece of property now the subject of this litigation, a 117 acre farm located near the town of California, Maryland in St. Mary's County. The parties have dubbed this property the California Maryland Drum site or "CMD site".
During the period of the McLeod's ownership, the McLeods engaged in a business relationship with Maryland Bank & Trust Co., the contours of which are disputed by the parties. It is undisputed, however, that during the 1970's, MB & T loaned money to Herschel McLeod, Sr. for two of his businesses — Greater St. Mary's Disposal, Inc. and Waldorf Sanitation of St. Mary's, Inc. The bank knew that McLeod operated a trash and garbage business on the site, but the record does not state at what point the bank became aware of this.
During 1972 or 1973, McLeod permitted the dumping of hazardous wastes on the CMD site. The wastes included organics such as toluene, ethylbenzene and total xylenes and heavy metals such as lead, chromium, mercury, and zinc.
In 1980, Mark Wayne McLeod applied for a $335,000 loan from MB & T to purchase the CMD site from his parents. On or about September 2nd of that year, MB & T sent Farmers Home Administration a request for loan guarantees relating to the McLeod loan, pursuant to 7 C.F.R. §§ 1980.101 et seq. (1980) (Subpart B — Farmer Program Loans). FmHA issued Loan Note Guarantees for 90% of the loan on January 2, 1981.
Mark Wayne McLeod purchased the CMD site on December 16, 1980 through the MB & T loan, but soon failed to make payments on the loan. Consequently, MB & T instituted a foreclosure action against the CMD site in 1981 and purchased the property at the foreclosure sale on May 15, 1982 with a bid of $381,500. MB & T then took title to the property. From that date to the present, MB & T has been the record owner of the CMD site. FmHA continues to be a 90% guarantor of that loan.
On June 20, 1983, Mark Wayne McLeod informed Walter E. Raum, Director of Environmental Hygiene for St. Mary's County Department of Health, of the existence of the dumped wastes on the CMD site. After inspecting the site the following day, the State of Maryland contacted the EPA. Tests were conducted to identify the substances. On the basis of the test results, the EPA requested and received funding to conduct a removal action under CERCLA. The agency notified MB & T president John T. Daugherty that MB & T would be given until October 24, 1983 to initiate corrective action at the site or EPA would use its funds to clean-up the wastes. The bank declined the EPA's offer, so the agency proceeded to clean the site itself, removing two hundred thirty-seven drums of chemical material and 1180 tons of contaminated soil at a cost of approximately $551,713.50. After completing the clean-up, the EPA sent a letter to MB & T President Daugherty summarizing the costs incurred in the response action and demanding payment. To date, MB & T has not tendered payment. This action ensued.
Congress enacted CERCLA in 1980 in response to the environmental and public health hazards posed by improper disposal of hazardous wastes. S.Rep. No. 848, 96th Cong., 2d Sess. 2 (1980), U.S.Code Cong. & Admin.News 1980, p. 6119, reprinted in A Legislative History of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Vol. 1 at 305 (1983) (hereinafter "CERCLA Legislative History"). CERCLA empowers the federal government to clean-up and otherwise respond to hazardous dump sites. The EPA has been delegated primary responsibility for this task. Executive Order No. 12316, § 2, 3 C.F.R. 168 (1982).
"Response" actions undertaken by the EPA are financed primarily from the Hazardous Substance Response Trust Fund, commonly known as the "Super Fund", established by section 221 of CERCLA, 42 U.S.C. § 9631. The Act also authorizes the government to recover costs from certain "responsible parties". Section 107, 42 U.S.C. § 9607. This section extends liability to four categories of persons: 1) current owners and operators of the hazardous substance facility; 2) past owners or operators of the hazardous substance facility at the time of disposal; 3) persons who arranged for treatment or disposal of hazardous substances at the facility; and 4) persons who transported hazardous substances for treatment or disposal at the facility selected by them.
To establish liability under section 107(a) of the Act, the government must establish the following:
1) The site is a "facility";
2) A "release" or "threatened release" of any "hazardous substance" from the site has occurred;
3) The release or threatened release has caused the United States to incur "response costs"; and
4) The defendant is one of the persons designated as a party liable for costs.
Section 107 imposes strict liability, see S.Rep. No. 848, 96th Cong., 2d Sess. 34 (1980), reprinted in 1 CERCLA Legislative History at 308, 341; J.V. Peters & Co., Inc. v. Administrator, E.P.A., 767 F.2d 263, 266 (6th Cir.1985); State of New York v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir.1985), and without regard for causation, Shore Realty, 759 F.2d at 1044.
Defendant Maryland Bank & Trust does not dispute the fact that the first three elements of the prima facie case under section 107(a) have been met by the United States. See Amended Response to Requests for Admission, Responses Number 37 (facility), 36 (release or threatened release) and 38 (costs incurred by the United States). The question central to both the defendant's and the plaintiff's motions for summary judgment concerns the final element, specifically, whether Maryland Bank & Trust is an "owner and operator" within the meaning of sections 107(a)(1) and 101(20)(A).
Additionally, Maryland Bank & Trust has raised in its answer an affirmative defense based upon section 107(b)(3), the so-called "third party defense". The United States argues in its motion for partial summary judgment that the bank cannot meet its burden of proof on that defense, an assertion disputed by the defendant in its opposition memorandum.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall issue when the record before the court establishes "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The movant bears the burden "to demonstrate clearly that there is no genuine issue of fact, any doubt as to the existence of such an issue is resolved against him." Phoenix Savings & Loan v. Aetna Casualty and Surety Co., 381 F.2d 245 (4th Cir.1967). When, however, there is no genuine issue of material fact, the existence of an important, difficult or complicated question of law is not a bar to summary judgment. Carroll v. United Steelworkers of America, 498 F.Supp. 976 (D.Md.), aff'd mem., 639 F.2d 778 (4th Cir. 1980).
Section 107(a) of CERCLA provides:
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