Anspec Co., Inc. v. Johnson Controls, Inc.
| Decision Date | 25 September 1989 |
| Docket Number | No. 89-CV-71165-DT.,89-CV-71165-DT. |
| Parties | The ANSPEC COMPANY, INC., a Michigan corporation, and Hugh J. Montgomery, Plaintiffs, v. JOHNSON CONTROLS, INC., a Wisconsin corporation, Hoover Universal, Inc., a Michigan corporation, Hoover Group, Inc., a Delaware corporation, and Ultrasperics, Inc., formerly a Michigan corporation, now merged with Hoover Group, Inc., Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Allyn D. Kantor, Ann F. Goodman, Miller, Canfield, Paddock and Stone, Ann Arbor, Mich., for plaintiffs.
Robert A. Fineman, Joseph M. Polito, Honigman, Miller, Schwartz & Cohn, Ann Arbor, Mich., Jeffrey O. Cerar, Paul E. Gutermann, John B. Bulgozdy, Squire, Sanders & Dempsey, Washington, D.C., W. Robert Chandler, Cross Wrock, Detroit, Mich., for defendants.
This case is currently before the Court on the motion of defendants Johnson Controls, Inc., Hoover Universal, Inc. and Hoover Group, Inc., to dismiss plaintiffs' complaint on two separate grounds. First, defendants claim that plaintiffs have failed to state a federal claim upon which relief can be granted. Secondly, defendants allege that this court lacks subject matter jurisdiction over plaintiffs' state law claims.
Plaintiffs' First Amended Complaint seeks recovery for costs incurred by plaintiffs in order to clean up chemical substances at 122 Enterprise Drive, Scio Township, County of Washtenaw, State of Michigan. Plaintiffs allege that defendant, Ultraspherics, Inc., (hereafter Ultraspherics), released certain chemicals into the soil as a result of manufacturing operations carried out on the property. According to plaintiff, chemicals were released when Ultraspherics owned and operated the property prior to selling the land in 1978. (Plaintiffs' First Amended Complaint, pg. 10). On July 7, 1978, defendant Ultraspherics then sold the property to plaintiff, Anspec Company, Inc. Anspec subsequently sold the property to plaintiff, Hugh J. Montgomery and Anspec continues to lease the property from Montgomery. Plaintiffs have owned and operated the land since purchasing it from Ultraspherics in 1978.
Five years after Ultraspherics sold the property to plaintiffs, the following transactions occurred. On July 22, 1983, Ultraspherics merged with defendant Hoover Universal Inc., (hereafter Hoover Universal), a Michigan corporation. According to plaintiffs, Ultraspherics was the "surviving" corporation with 100 percent of the outstanding shares of common stock of Hoover Universal. In February of 1985, defendant Johnson Controls, Inc., (hereafter JCI), a Wisconsin corporation, obtained 100 percent of the shares of Hoover Universal. On December 31, 1987, Ultraspherics merged into defendant Hoover Group Inc. (hereafter Hoover). After this merger, Hoover became the surviving corporation and assumed all assets and liabilities of Ultraspherics.
Plaintiffs' complaint seeks recovery under the Comprehensive Environmental Response, Compensation, and Liability Act. 42 U.S.C. § 9607(a) (). Plaintiffs submit that under CERCLA, defendants are responsible for the costs of clean-up because they were either owners or operators of the facility at 122 Enterprise Drive when the hazardous substances were disposed of, or the defendants are successor corporations of owners and operators and are therefore strictly liable. (Plaintiffs' First Amended Complaint, pg. 10).
Defendants JCI, Hoover Universal and Hoover never owned, occupied or stored chemicals at the 122 Enterprise Drive property. Therefore these moving defendants claim they are not within the classes of persons potentially liable under CERCLA. (Defendants' Brief in Support of Motion to Dismiss, pg. 4). Defendants also assert that since the CERCLA claim does not apply to them, the plaintiffs' state law claims are not within the pendent jurisdiction of the court, and therefore must be dismissed.
Congress passed CERCLA in 1980 in order to clean up unsafe hazardous waste sites which threatened public health and the environment. The Act also established the Hazardous Substance Response Trust Fund, (hereafter Superfund), which Congress reauthorized in 1986. 42 U.S.C. § 9607(a). The Superfund provides the resources to the federal government to insure the clean up of hazardous waste sites. The Superfund is financed through excise taxes on chemical and petroleum products. Excise taxes are also assessed against certain corporations.
The Superfund is not the sole means of financing the clean-up of hazardous waste sites. CERCLA specifically provides a list of parties potentially liable for the clean-up costs of a hazardous waste site. The list includes:
(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and
(4) any person who accepts or accepted any hazardous substances for transport, to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable ... 42 U.S.C. § 9607(a).
Defendants JCI, Hoover Universal and Hoover submit that they are not potentially liable parties under CERCLA because they never owned or operated the property at 122 Enterprise Drive. These defendants are also not generators or transporters of hazardous wastes.
Plaintiffs allege that hazardous substances were disposed of at 122 Enterprise Drive during the time Ultraspherics owned the property. As a result of corporate mergers or transformations, plaintiffs claim that the liability of Ultraspherics has now passed on to defendants JCI, Hoover Universal and Hoover as successor corporations of Ultraspherics. (Plaintiffs' Response to Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction and for Failure to State a Claim Upon Which Relief Can Be Granted, pg. 2).
Plaintiffs rely on Smith Land & Improvement Corporation v. Celotex Corp., 851 F.2d 86 (3rd Cir.1988) to submit that liability for environmental clean-up can be imposed on successor corporations. In Smith Land, the court studied CERCLA and held that, "Congress intended to impose successor liability on corporations which either have merged with or have consolidated with a corporation that is a responsible party as defined in the Act." Id. at 92. According to plaintiffs, successor corporation liability is obviously needed to prevent corporations from constantly rearranging themselves in order to avoid liability under CERCLA.
Even though this Court may agree that successor liability is desirable, that is a legislative policy decision to be made by Congress. Congress specifically limited liability under CERCLA to past and present owners or operators in addition to generators and transporters. Defendants JCI, Hoover Universal and Hoover are not generators or transporters of hazardous wastes. These defendants are also not currently, nor have they previously been, owners or operators of the 122 Enterprise Drive property. Successor corporations are not listed as one of the potentially responsible parties under CERCLA.
The court in Smith Land recognized the fact that CERCLA did not address corporate successor liability. Id. at 91. However, the court referred to CERCLA as a "hastily conceived and briefly debated piece of legislation ..." and therefore concluded that, "Congress expected the courts to develop a federal common law to supplement the statute." Id.
Congress did...
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