922 F.2d 1240 (6th Cir. 1991), 89-2393, Anspec Co., Inc. v. Johnson Controls, Inc.

Docket Nº:89-2393.
Citation:922 F.2d 1240
Party Name:The ANSPEC COMPANY, INC. and Hugh Montgomery, Plaintiffs-Appellants, v. JOHNSON CONTROLS, INC., Hoover Universal, Inc., Hoover Group, Inc. and Ultraspherics, Inc., Defendants-Appellees.
Case Date:January 04, 1991
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 1240

922 F.2d 1240 (6th Cir. 1991)

The ANSPEC COMPANY, INC. and Hugh Montgomery, Plaintiffs-Appellants,

v.

JOHNSON CONTROLS, INC., Hoover Universal, Inc., Hoover

Group, Inc. and Ultraspherics, Inc., Defendants-Appellees.

No. 89-2393.

United States Court of Appeals, Sixth Circuit

January 4, 1991

Argued Oct. 3, 1990.

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Ann F. Goodman, Louis B. Reinwasser, Miller, Canfield, Paddock & Stone, Lansing, Mich., Allyn D. Kantor (argued), Miller, Canfield, Paddock & Stone, Ann Arbor, Mich., for plaintiffs-appellants.

Jeffrey O. Cerar, Washington, D.C., Mary K. Kator, Clark, Klein & Beaumont, Detroit, Mich., Paul E. Gutermann (argued), Squire, Sanders & Dempsey, Washington, D.C., for defendants-appellees.

Ellen J. Durkee (argued), U.S. Dept. of Justice, Washington, D.C., for amicus curiae U.S.

Before KENNEDY and GUY, Circuit Judges, and LIVELY, Senior Circuit Judge.

LIVELY, Senior Circuit Judge.

The question in this case is whether a successor corporation resulting from a merger with a corporation that had released hazardous waste materials on a previously owned site can be held liable for cleanup costs incurred by the present owner of the polluted property under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601 et seq. (1988) (CERCLA). The district court found that CERCLA creates no such liability, and granted the successor corporations' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (6). Anspec Co. v. Johnson Controls, Inc., 734 F.Supp. 793 (E.D.Mich.1989). In an unpublished order, the district court also dismissed the predecessor corporation, which caused the soil and groundwater pollution that the plaintiffs were required to clean up, on the theory that this corporation no longer existed. We reverse.

I.

CERCLA was intended to provide for the cleanup of hazardous waste sites and spills. We described the purpose and operation of CERCLA in United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1500 (6th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990):

CERCLA, 42 U.S.C. Sec. 9601, et. seq., was enacted in December 1980 "to initiate and establish a comprehensive response and financing mechanism to abate and control the vast problems associated with abandoned and inactive hazardous waste disposal sites." H.R.Rep. No. 1016(I), 96th Cong., 2d Sess. 22, reprinted in 1980 U.S. CODE CONG. & ADMIN. NEWS 6119, 6125. In Walls v. Waste Resources Corp., 823 F.2d 977 (6th Cir.1987), we noted that CERCLA was intended " 'primarily to facilitate the prompt cleanup of hazardous waste sites by placing the ultimate financial responsibility for cleanup on those responsible

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for hazardous wastes.' " Id. at 981 (citation omitted). CERCLA was reauthorized and amended in 1986 by SARA, [Superfund Amendments and Reauthorization Act of 1986] Pub.L. 99-499, 100 Stat. 1613 (1986). CERCLA, when originally enacted, established the Hazardous Substance Response Trust Fund, 42 U.S.C. Sec. 9631, to be utilized in connection with the cleanup of releases of hazardous substances into the environment. Section 9631 was repealed by SARA provisions establishing the Hazardous Substance Superfund (Superfund), 26 U.S.C. Sec. 9507. Among other things, the Superfund finances the government's response to actual or threatened releases of hazardous materials. The Superfund's funding sources include general revenue appropriations, certain environmental taxes, monies recovered under CERCLA on behalf of the Superfund, and CERCLA-authorized penalties and punitive damages.

Section 9604(a) of CERCLA authorizes the President of the United States to respond with "remedial" or other "removal" action against any threatened or actual release of any hazardous substance that may pose an imminent and substantial public health threat. Essentially, Congress has authorized the government to utilize Superfund money to take direct response actions that are consistent with the NCP and to recover all response costs from all persons responsible for the release of a hazardous substance. 42 U.S.C. Sec. 9607(a). (footnotes omitted).

The Superfund provides money for cleanup costs of sites that have been abandoned and in cases where a responsible party cannot be identified or if private resources are inadequate. When responsible parties are identified, however, they are liable for cleanup costs. The categories of liable parties and the costs for which they are liable are listed in section 107(a) of CERCLA, 42 U.S.C. Sec. 9607(a):

Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section--

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(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 for--

(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan;

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan;

(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release; and

(D) the costs of any health assessment or health effects study carried out under section 9604(i) of this title.

In its definition section CERCLA defines "person" as "an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity...." 42 U.S.C. Sec. 9601(21). The plaintiffs, Anspec and Montgomery, are respectively the operator and the owner of a "facility"--here the previous site of a manufacturing business--where hazardous substances have contaminated the soil and groundwater. They paid for an investigation and the

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cleanup of the site when notified by a state agency that soil and groundwater at the premises were contaminated. The plaintiffs then brought this action in the district court to recover these costs, alleging that the defendants, as prior owners of the facility, "discharged hazardous substances into the soil and groundwater which caused the environmental contamination at the site." They also sought recovery from the defendants for "any other necessary costs of response incurred by any other person...." 42 U.S.C. Sec. 9607(a)(2)(B). The plaintiff sued under CERCLA and asserted three pendent claims under state law.

After concluding that the complaint failed to state a claim for relief under CERCLA, the district court also dismissed the pendent state law claims.

II.

Following dismissal pursuant to Rule 12(b)(6) for failure to state a claim, we accept as true the factual allegations of the complaint. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983), cert. denied, 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984). Thus we state the facts as pled in the complaint.

A.

Anspec purchased a parcel of land with improvements in Washtenaw County, Michigan from the defendant Ultraspherics in 1978. Anspec later sold the property to the plaintiff Montgomery, and now leases it from him. Ultraspherics went through a series of mergers after the sale of the property to Anspec, culminating on December 31, 1987, when Ultraspherics merged into Hoover Group, which was designated as the surviving corporation. As the surviving corporation, Hoover Group assumed all assets and liabilities of Ultraspherics. Johnson Controls is the sole shareholder of Hoover Group, and of Hoover Universal, which was the sole shareholder of Ultraspherics as the result of an earlier merger.

Prior to the sale of the property to Anspec, Ultraspherics buried an underground storage tank on the site "into which was disposed hazardous sludge and liquids from the grinding process of metal and plastic balls and degreaser ..." used by Ultraspherics in its business of manufacturing metal and plastic precision balls. After the underground tank was filled to capacity, two above-ground storage tanks were placed on the property and filled with the same hazardous substances. Ultraspherics' disposal of hazardous sludge and liquids caused these materials "to be routinely released into the soil and groundwater" at the site. Ultraspherics further contaminated the soil and groundwater through leaks and spills of toxic cleaning solvents used at the site.

After the Michigan Department of Natural Resources notified Anspec that it had found contamination in the groundwater beneath the site, Anspec caused tests to be made of the underground storage tank and surrounding soil. These tests included analysis of groundwater samples from four observation wells. The firm that conducted these tests identified a number of hazardous substances in three of the observation wells downgrade from the underground storage tank.

Anspec then caused the storage tank to be removed and its contents disposed of at a licensed disposal facility. The soil directly beneath the tank was then tested and water samples from the same location were tested. Analysis of these soil and water samples again revealed the presence...

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