Ashland Oil, Inc. v. Miller Oil Purchasing Co.

Decision Date24 June 1982
Docket NumberINC,ROLLINS-PURL,No. 81-3246,81-3246
Citation678 F.2d 1293
Parties12 Envtl. L. Rep. 20,845, 34 UCC Rep.Serv. 70 ASHLAND OIL, INC., Plaintiff, v. MILLER OIL PURCHASING CO., et al., Defendants, v., Defendant-Third-Party Plaintiff-Appellant, v. Philip Alan FROUDE, et al., Defendants-Third-Party Defendants-Appellants, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Third-Party Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Faris, Ellis, Cutrone, Gilmore & Lautenschlaeger, H. S. H. Verlander, Jr., New Orleans, La., for plaintiff.

Schumacher, McGlinchey, Stafford, Mintz & Hoffman, Dermot S. McGlinchey, New Orleans, La., for Ins. Co. of North America.

Appeal from the United States District Court for the Middle District of Louisiana.

Before GARZA, POLITZ and WILLIAMS, Circuit Judges.

PER CURIAM:

The judgment of the court below is AFFIRMED on the basis of the Findings of Fact and Conclusions of Law of the late Judge Jack M. Gordon entered June 5, 1979, as amended September 14, 1979, and attached below as appendices "A" and "B".

APPENDIX "A"

JACK M. GORDON, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This case arises out of a claim for damages by Ashland Oil, Inc., as a result of a fire at its refinery in Catlettsburg, Kentucky, and contamination of approximately 2,000,000 barrels of its crude oil stock. The damages are alleged to have been caused by a series of events and transactions which resulted in the injection of hazardous chemical waste products into Ashland's crude oil pipeline. Rollins-Purle, Inc., an industrial waste disposal company operating in Baton Rouge, Louisiana, purportedly sold certain chemical waste products to Larry Young. Thereafter, Young sold the material to Waco, Inc., a small family-owned oil reclaiming operation in the Natchez, Mississippi Trial of this case was confined to the several issues pertaining to liability, all issues as to quantum being reserved for trial at a later date, if appropriate. The status of the parties has been stipulated as follows:

area. Waco sold the material to Miller Oil Purchasing Company which subsequently sold the material to Ashland Oil Purchasing, Inc., and injected it into a pipeline owned by Ashland Pipeline Company. The material found its way to Ashland's refinery in Catlettsburg and caused substantial damage to the refinery.

Plaintiff :

Ashland Oil, Inc., a Kentucky corporation with its principal place of business in Ashland, Kentucky.

Defendants :

1. Rollins Environmental Services, Inc., successor to Rollins-Purle, Inc., a Delaware corporation with its principal place of business in Wilmington, Delaware, a subsidiary wholly owned by Rollins International, Inc.

2. Miller Oil Purchasing Company, a Mississippi corporation with its principal place of business in Jackson, Mississippi, a subsidiary wholly owned by Ergon, Inc.

3. Larry Young, a resident of the Parish of Calcasieu, Louisiana.

4. Alan Petroleum, Inc., a Louisiana corporation with its principal place of business in the Parish of Ascension.

5. Glideville L. Creech, doing business as Truck Service and Rental, a person of the full age of majority, domiciled in the Parish of East Baton Rouge, Louisiana.

6. Mrs. E. A. Waldrop, a resident of lawful age of majority of the City of Natchez, County of Adams, State of Mississippi (the said Mrs. E. A. Waldrop being substituted for the entity previously denominated as "Waco, Inc.")

7. Insurance Company of North America, a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania.

8. Continental Casualty Company, an Illinois corporation with its principal place of business in Chicago, Illinois.

Third Party Defendants :

1. Ashland Oil Purchasing Company, a corporation organized under the laws of the State of Kentucky, with its principal offices at Ashland, Kentucky, and which was and is qualified to do and doing business in the States of Louisiana and Mississippi.

2. Ashland Oil Pipeline Company, a corporation organized under the laws of the State of Kentucky, with its principal offices at Ashland, Kentucky, and which was and is qualified to do and is doing business in the States of Louisiana and Mississippi.

The Court enters the following findings of facts and conclusions of law.

FINDING OF FACTS
1.

During 1970 and 1971, E. I. DuPont deNemours & Company, hereinafter referred to as "DuPont," manufactured chemical products at its Pontchartrain Works plant in the Parish of St. Charles, Louisiana. The process utilized by DuPont at its Pontchartrain Works plant produced a by-product of chemical substances identified as dichlorobutadiene, which contained heavy concentrations of organic chlorides. These virulent substances, identified by the symbols BR50 and BR68, are generally inimical to the environment: specifically, they are toxic and harmful to persons on touch or inhalation, corrosive to metals and other materials, noxiously malodorous, and pollutants of ground and surface water and plant and animal life. Prior to 1970, DuPont used a variety of methods to dispose of this industrial waste including deep-sea disposal, deep-well injection and on-site incineration.

2.

In November, 1971, Rollins-Purle, Inc., hereinafter referred to as "Rollins," was operating a waste disposal facility in Baton Rouge, Louisiana, for the purpose of disposing of numerous waste materials received from the several oil and chemical plants in the area. Rollins represents itself as an expert in the handling and disposal of chemical waste. 1 Rollins contacted and solicited a contract from DuPont to obtain and dispose of chemical waste products, including BR50 and BR68. Melvin L. Ruthrauff, the DuPont executive in charge of disposing of the waste, informed Rollins' personnel of the chemical components and propensities of the waste and supplied Rollins with a copy of the chemical breakdown of BR50 and BR68. Ruthrauff warned Rollins that these substances were corrosive and should be disposed of by incineration. 2

3.

Between October, 1970 and April, 1971, Rollins received from DuPont 16,344.27 barrels of BR50 and BR68. The parties to this agreement intended the chemical waste to be disposed of by incineration; 3 however, Rollins encountered difficulty in this respect due to the corrosive effect of the BR50 and BR68 on its incinerator. In March of 1971, the corrosion rendered the incinerator inoperative. Peter Miller, a Rollins employee, testified that of all the waste it handled, the BR50 and BR68 were the "bear of the bunch." This colloquialism appears appropriate in light of the fact that the corrosive potential of BR50 and BR68 becomes more manifest through the application of heat to these substances. Heat accelerates the chemical breakdown of these substances and creates, among other things, hydrochloric acid.

4.

As a consequence of the operational failure of the Rollins incinerator, large quantities of various kinds of unburned industrial waste began to accumulate. To ameliorate this situation, Rollins purchased railroad tank cars within which to store the swelling amount of industrial waste upon its premises, including the large quantities of BR50 and BR68. This was but a stopgap measure for as Cliff Rogers testified, "The waste was coming out at Rollins' seams." 4

5.

In order to maintain its lucrative business contact with DuPont, and to resolve this exigent situation, Rollins dispatched its Vice President, Harry A. Alsentzer, from its home office to its Baton Rouge facility. As Mr. Alsentzer admitted at trial, his stratagem was to "sell" Larry Young on the idea of relieving Rollins of the waste. He accomplished his objective for Larry Young agreed to take the BR50 and BR68. 5 Aware of the dangerous properties of the material that it was passing on to Larry Rollins took additional precautions to assure that this material, if discovered, would not be traced to its Baton Rouge facility. It deviated from routine business procedures in that invoices were not prepared; it did not object to Young's not paying for the bulk of the material; of the few payments it did receive, Rollins allocated the money to petty cash; and none of the Young transactions were recorded in its financial books or records. Rollins did not conduct an investigation or background check of Young to ascertain whether he had the necessary expertise to handle the disposal of these chemical waste products.

Young and that it was breaching its obligation to DuPont, Rollins required Young to assure it in writing that the material sold would "not be traced back to its original origin." 6

Although Young characterized himself in his deposition testimony as one having been involved from his youth in the fringe areas of the petrochemical industry, the salient fact deduced from this testimony is that he was not qualified, by education or experience, to responsibly handle the disposal of the BR50 and BR68. Mr. Alsentzer testified that it was "immoral" and "wrong" for him to sell the dangerous material to Young and that he was "negligent" in so doing. It is neither the duty nor function of the Court to render an opinion as to the morality of the conduct in question. Nor does the Court attribute probative value to the legal parlance with which the witness chose to assess his conduct. However, the Court notes that Mr. Alsentzer's description of his conduct as "negligent" was inaccurate, 7 for documents drafted contemporaneously with the Young-Rollins transaction indicate that Rollins intended the consequences of its action. An interoffice memorandum prepared by Alsentzer the day the agreement with Young was consummated, and issued to Cliff Rogers, transportation manager, Peter Miller, local sales manager, and H. L. Scott, with carbon copies sent to R. C. Gregory and G. E. Brooking, Jr., the president of Rollins, provided:

1. This is for intercompany use only.

2. Beginning today, at least one truck per day will be removed from the...

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