901 F.2d 1550 (11th Cir. 1990), 89-8094, United States v. Fleet Factors Corp.

Docket Nº:89-8094.
Citation:901 F.2d 1550
Party Name:20 Envtl. UNITED STATES of America, Plaintiff-Appellee, v. FLEET FACTORS CORP., Defendant-Third Party Plaintiff-Appellant, Clifford Horowitz and Murray Newton, Defendants, Robert Kolodney, Esq., as Trustee of Swainsboro Print Works, Inc., Debtor, Third Party-Defendant.
Case Date:May 23, 1990
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1550

901 F.2d 1550 (11th Cir. 1990)

20 Envtl.

UNITED STATES of America, Plaintiff-Appellee,

v.

FLEET FACTORS CORP., Defendant-Third Party Plaintiff-Appellant,

Clifford Horowitz and Murray Newton, Defendants,

Robert Kolodney, Esq., as Trustee of Swainsboro Print Works,

Inc., Debtor, Third Party-Defendant.

No. 89-8094.

United States Court of Appeals, Eleventh Circuit

May 23, 1990

As Amended May 29, 1990.

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[Copyrighted Material Omitted]

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Richard E. Miley, Nixon, Yow, Waller & Capers, Augusta, Ga., Douglas J. Good, Laurice Firenze, Ruskin, Schlissel, Moscou, Evans & Faltischek, Mineola, N.Y., for Fleet Factors Corp.

Donald A. Carr, Acting Asst. Atty. Gen., Anne S. Almy, Jennifer A. Haverkamp, Land & Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

Appeal from the United States District Court for the Southern District of Georgia.

Before VANCE [*] and KRAVITCH, Circuit Judges, and LYNNE [**], Senior District Judge.

KRAVITCH, Circuit Judge:

Fleet Factors Corporation ("Fleet") brought an interlocutory appeal 1 from the district court's denial of its motion for summary judgment in this suit by the United States to recover the cost of removing hazardous waste from a bankrupt textile facility. The district court denied summary judgment because it concluded that Fleet's activities at the facility might rise to the level of participation in management sufficient to impose liability under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), 42 U.S.C. Secs. 9601-57 (1982 & West Supp.1988), despite the statutory exemption from liability for holders of a security interest. We agree with the district court that material questions of fact remain as to the extent of Fleet's participation in the management of the facility; therefore, we affirm the denial of Fleet's summary judgment motion.

FACTS

In 1976, Swainsboro Print Works ("SPW"), a cloth printing facility, entered into a "factoring" agreement with Fleet in which Fleet agreed to advance funds against the assignment of SPW's accounts receivable. As collateral for these advances, Fleet also obtained a security interest in SPW's textile facility and all of its equipment, inventory, and fixtures. In August, 1979, SPW filed for bankruptcy under Chapter 11. The factoring agreement between SPW and Fleet continued with court approval. In early 1981, Fleet ceased advancing funds to SPW because SPW's debt to Fleet exceeded Fleet's estimate of the value of SPW's accounts receivable. On February 27, 1981, SPW ceased operations and began to liquidate its inventory. Fleet continued to collect on the accounts receivable assigned to it under the Chapter 11 factoring agreement. In December 1981, SPW was adjudicated a bankrupt under Chapter 7 and a trustee assumed title and control of the facility.

In May 1982, Fleet foreclosed on its security interest in some of SPW's inventory and equipment, and contracted with Baldwin Industrial Liquidators ("Baldwin") to conduct an auction of the collateral. Baldwin sold the material "as is" and "in place" on June 22, 1982; the removal of the items

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was the responsibility of the purchasers. On August 31, 1982, Fleet allegedly contracted with Nix Riggers ("Nix") to remove the unsold equipment in consideration for leaving the premises "broom clean." Nix testified in deposition that he understood that he had been given a "free hand" by Fleet or Baldwin to do whatever was necessary at the facility to remove the machinery and equipment. Nix left the facility by the end of December, 1983.

On January 20, 1984, the Environmental Protection Agency ("EPA") inspected the facility and found 700 fifty-five gallon drums containing toxic chemicals and forty-four truckloads of material containing asbestos. The EPA incurred costs of nearly $400,000 in responding to the environmental threat at SPW. On July 7, 1987, the facility was conveyed to Emanuel County, Georgia, at a foreclosure sale resulting from SPW's failure to pay state and county taxes.

The government sued Horowitz and Newton, the two principal officers and stockholders of SPW, and Fleet to recover the cost of cleaning up the hazardous waste. The district court granted the government's summary judgment motion with respect to the liability of Horowitz and Newton for the cost of removing the hazardous waste in the drums. The government's motion with respect to Fleet's liability, and the liability of Horowitz and Newton for the asbestos removal costs was denied. Fleet's motion for summary judgment was also denied. The district court, sua sponte, certified the summary judgment issues for interlocutory appeal and stayed the remaining proceedings in the case. Fleet subsequently brought this appeal challenging the court's denial of its motion for summary judgment.

STANDARD OF REVIEW

The district court's disposition of the summary judgment motion is reviewable de novo because it involves legal questions of statutory interpretation. See Florida Power & Light Co. v. Allis Chalmers Corp., 893 F.2d 1313, 1315-16 (11th Cir.1990); Hiram Walker & Sons v. Kirk Line, Inc., 877 F.2d 1508, 1513 (11th Cir.1989); Clemens v. Dougherty County, Ga., 684 F.2d 1365, 1368 (11th Cir.1982). Under Fed.R.Civ.P. 56(c), summary judgment is only appropriate when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Allis Chalmers, 893 F.2d at 1318. In evaluating a summary judgment motion, the burden of establishing the absence of a material dispute of fact is on the moving party; the court must view all evidence in the light most favorable to the non-movant and resolve all reasonable doubts about the facts in favor of the non-movant. Id.; WBS-TV v. Lee, 842 F.2d 1266, 1269 (11th Cir.1988); Warrior Tombigbee Transportation Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir.1983); see Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

DISCUSSION

The Comprehensive Environmental Response Compensation and Liability Act was enacted by Congress in response to the environmental and public health hazards caused by the improper disposal of hazardous wastes. United States v. Maryland Bank & Trust Co., 632 F.Supp. 573, 576 (D.Md.1986); S.Rep. No. 848, 96th Cong., 2d Sess. 2 (1980), U.S.Code Cong. & Admin.News 1980, p. 6119. The essential policy underlying CERCLA is to place the ultimate responsibility for cleaning up hazardous waste on "those responsible for problems caused by the disposal of chemical poison." Allis Chalmers, 893 F.2d at 1316; United States v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373, 1377 (8th Cir.1989); Dedham Water Co. v. Cumberland Farms Dairy, 805 F.2d 1074, 1081 (1st Cir.1986). Accordingly, CERCLA authorizes the federal government to clean up hazardous waste dump sites and recover the cost of the effort from certain categories of responsible parties. Maryland Bank & Trust Co., 632 F.Supp. at 576.

The parties liable for costs incurred by the government in responding to an environmental hazard are: 1) the present owners and operators of a facility where hazardous

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wastes were released or are in danger of being released; 2) the owners or operators of a facility at the time the hazardous wastes were disposed; 3) the person or entity that arranged for the treatment or disposal of substances at the facility; and 4) the person or entity that transported the substances to the facility. Allis Chalmers, 893 F.2d at 1317; 42 U.S.C. Sec. 9607(a) (1982 & West Supp.1988). The government contends that Fleet is liable for the response costs associated with the waste at the SPW facility as either a present owner and operator of the facility, see 42 U.S.C. Sec. 9607(a)(1), or the owner or operator of the facility at the time the wastes were disposed, see 42 U.S.C. Sec. 9607(a)(2).

The district court, as a matter of law, rejected the government's claim that Fleet was a present owner of the facility. The court, however, found a sufficient issue of fact as to whether Fleet was an owner or operator of the SPW facility at the time the wastes were disposed to warrant the denial of Fleet's motion for summary judgment. On appeal each party contests that portion of the district court's order adverse to their respective interests.

  1. Fleet's Liability Under Section 9607(a)(1) 2

    CERCLA holds the owner or operator of a facility containing hazardous waste strictly liable to the United States for expenses incurred in responding to the environmental and health hazards posed by the waste in that facility. See 42 U.S.C. Sec. 9607(a)(1); S.Rep. No. 848, 96th Cong., 2d Sess. 34 (1980). This provision of the statute targets those individuals presently "owning or operating such facilit[ies]." See 42 U.S.C. Sec. 9601(20)(A)(ii). In order to effectuate the goals of the statute, we will construe the present owner and operator of a facility as that individual or entity owning or operating the facility at the time the plaintiff initiated the lawsuit by filing a complaint. 3

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    On July 9, 1987, the date this litigation commenced, the owner of the SPW facility was Emanuel County, Georgia. Under CERCLA, however, a state or local government that has involuntarily acquired title to a facility is generally not held liable as the owner or operator of the facility. 4 Rather, the statute provides that

    in the case of any facility, title or control of which was conveyed due to bankruptcy, foreclosure, tax delinquency, abandonment, or similar means to a unit of State or local government, [its owner or operator is] any person who owned, operated or otherwise controlled activities at such facility immediately beforehand.

    42 U.S.C. Sec....

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