FMC Corp. v. Aero Industries, Inc.

• Decision Date: 09 July 1993
• Docket Number: 92-4048,Nos. 92-4040,s. 92-4040
• Citation: 998 F.2d 842
• Parties: , 62 USLW 2079, 23 Envtl. L. Rep. 21,312 FMC CORPORATION, a Delaware corporation; Hewlett Packard Company, a California corporation; Monsanto Company, a Delaware corporation; National Semiconductor Corporation, a Delaware corporation, Plaintiffs-Appellees-Cross-Appellants, v. AERO INDUSTRIES, INC., a Nevada corporation; Xtron Corporation, a Nevada corporation; Perry Russell, individually and as agent for defendants Aero Industries and Xtron Corporation, Defendants-Cross-Appellees, and Robert Terry, individually and as agent for defendants Aero Industries and Xtron Corporation, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 842

998 F.2d 842

37 ERC 1043, 62 USLW 2079, 23 Envtl.

L. Rep. 21,312

FMC CORPORATION, a Delaware corporation; Hewlett Packard Company, a California corporation; Monsanto Company, a Delaware corporation; National Semiconductor Corporation, a Delaware corporation, Plaintiffs-Appellees-Cross-Appellants, v. AERO INDUSTRIES, INC., a Nevada corporation; Xtron Corporation, a Nevada corporation; Perry Russell individually and as agent for defendants Aero Industries and Xtron Corporation, Defendants-Cross-Appellees and Robert Terry, individually and as agent for defendants Aero Industries and Xtron Corporation Defendant-Appellant-Cross-Appellee.

Nos. 92-4040, 92-4048.

United States Court of Appeals Tenth Circuit.

July 9, 1993.

Robert Terry, pro se.

David W. Tundermann, David G. Mangum and J. Michael Bailey of Parsons, Behle & Latimer, Salt Lake City, UT, for plaintiffs-appellees-cross-appellants.

Before SEYMOUR and TACHA, Circuit Judges, and ROGERS, ^* District Judge.

SEYMOUR, Circuit Judge.

Defendant Robert M. Terry appeals the judgment rendered against him and in favor of FMC Corporation, Hewlett Packard Company, Monsanto Company, and National Semiconductor Corporation (plaintiffs) for response costs incurred by plaintiffs in removing hazardous waste materials from a site pursuant to the requirements of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9657. Plaintiffs' cross appeal for attorneys fees incurred both in the waste removal process and in the response cost recovery litigation. We affirm in part, reverse in part, and remand for further proceedings.

I.

Defendant Aero Industries, Inc. purchased the facility at issue at a bankruptcy auction through its Chief Executive Officer Mr. Terry. The property had been used as a gallium and arsenic refining facility. Despite knowing this, Aero did not investigate the environmental condition of the property prior to the purchase. Defendants either knew or could have discovered the condition of the site because the bankruptcy file contained notices advising potential purchasers of alleged contamination on the premises and possible state and federal regulatory problems. After the purchase, the Utah Department of Health contacted Aero and indicated its concern regarding hazardous materials on the site and requested Aero's compliance with a state approved closure plan for the site. Aero repeatedly assured the State that it would comply with the closure plan. Although it had initially planned to sell the property and dispose of any hazardous substances, Aero later decided to reopen the facility.

Defendants Robert Terry and Perry Russell ¹ formed defendant Xtron Corp. as a manufacturing firm for gallium arsenide. Aero had a fifty percent interest in Xtron, and Mr. Terry served as chairman of the board for both corporations. Aero and Mr. Terry were the sole source of capital for Xtron and controlled Xtron's finances.

In order to operate the facility, defendants remodeled and made improvements to the site, purchased equipment leased by the previous owner, purchased other equipment, recontainerized and relocated hazardous materials, solicited customers to purchase planned products and hazardous material, conducted a test burn of the gallium crystal furnace, shipped some hazardous material for offsite disposal, and solicited suppliers of gallium arsenide scrap for recycling. Defendants did not, however, comply with the state-approved closure plan or transport hazardous materials offsite for recycling or otherwise properly dispose of them. Mr. Terry had authority over Aero's and Xtron's activities concerning the site.

In May 1988, the EPA notified Aero, Xtron, plaintiffs and others that they were potentially responsible parties liable for removal of hazardous materials at the site. On July 12, 1988, EPA issued a unilateral administrative order under CERCLA directing Aero, Xtron, plaintiffs and others to take action to remove hazardous substances and contaminated soil from the site and to reduce threats of exposure to such materials. Plaintiffs and defendants entered into an agreement to clean up the site. Plaintiffs and Texas Instruments agreed to do various things including removal of contaminated soil related to treater dust piles. Defendants agreed, among other things, to remove contaminated soil related to storage ponds. Plaintiffs and Aero sent the EPA a joint letter specifying the tasks which the parties had agreed to complete.

Fearing penalties under the EPA order, plaintiffs alone commenced cleanup work in September 1988. Due to a lack of funds, defendants did not perform any of the cleanup they had agreed to perform. In August 1989, the EPA accepted plaintiffs' cleanup and certified that their response costs for the removal were necessary and not inconsistent with the National Contingency Plan.

Plaintiffs incurred $970,605.20 in response costs in conducting the removal action. They also incurred $244,287.89 for nonlitigation removal-related attorney's fees and costs, and a substantial amount of litigation fees and costs.

Plaintiffs filed suit for cost recovery against defendants. Defendants filed a motion to dismiss and a demand for a jury trial. The district court granted plaintiffs' motion for partial summary judgment on the issue of liability, holding defendants jointly and severally liable as owners and operators for response costs. The remaining issues concerning allocation of the response costs were to be tried. The parties' pretrial order and two modified pretrial orders specified that the trial would be to the court without a jury. After the bench trial, the district court entered findings of fact and conclusions of law allocating to defendants jointly and severally twenty-five percent of plaintiffs' total response costs. The district court denied plaintiffs' request for litigation and nonlitigation attorneys fees and costs as part of the response costs. The court concluded as a matter of law that attorneys fees do not constitute response costs under CERCLA. The court entered judgment in favor of plaintiffs for $311,368.03. Only Mr. Terry appealed. Plaintiffs cross-appealed, objecting to the portion of the judgment denying attorneys fees and costs as not constituting recoverable response costs.

II.

On appeal, Mr. Terry first argues that the CERCLA cost recovery action should have been tried to a jury. He and the other defendants did request trial by jury. However, the pretrial order, which was signed by Mr. Terry, and modified pretrial orders stated there would be a bench trial. Moreover, Mr. Terry did not object to the bench trial. We hold that Mr. Terry waived any right he may have had to a jury trial by signing the pretrial order and participating in the bench trial. ² See White v. McGinnis, 903 F.2d 699, 703 (9th Cir.) (en banc), cert. denied, 498 U.S. 903, 111 S.Ct. 266, 112 L.Ed.2d 223 (1990); Royal Am. Managers, Inc. v. IRC Holding Corp., 885 F.2d 1011, 1018 (2d Cir.1989); Lovelace v. Dall, 820 F.2d 223, 227 (7th Cir.1987) (pro se); United States v. 1966 Beechcraft Aircraft Model King Air A90 Cream with Burg & Gold Stripes SN:LJ-129, FAA Reg: 333GG, Equipt, 777 F.2d 947, 950-51 (4th Cir.1985); Southland Reship, Inc. v. Flegel, 534 F.2d 639, 644 (5th Cir.1976). See generally 9 Charles A. Wright & Arthur P. Miller, Federal Practice & Procedure § 2321 (1971) ("right to jury trial may ... be waived by conduct or agreement of the parties.").

III.

Mr. Terry's second argument on appeal is that he is not liable because he did not contribute to the dumping of hazardous waste on the site and he is not an operator and not in control of Aero or Xtron. He maintains that various nonparties should instead be held liable for their portion of any cleanup costs.

The district court entered partial summary judgment for plaintiffs determining that all defendants were jointly and severally liable for response costs. The court specifically held Mr. Terry liable as an operator. This court reviews the grant of summary judgment de novo, applying the same legal standard used by the district court under Fed.R.Civ.P. 56(c). Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). "Summary judgment is appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law." Russillo v. Scarborough, 935 F.2d 1167, 1170 (10th Cir.1991). This court must view the record in the light most favorable to the nonmoving party. Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991).

To establish a prima facie case of liability in a CERCLA cost recovery action, a plaintiff must prove (1) the site is a facility as defined in 42 U.S.C. § 9601(9), (2) defendant is a responsible person as defined in 42 U.S.C. § 9607(a), (3) the release or threatened release of a hazardous substance has occurred, and (4) the release or threatened release has caused the plaintiff to incur response costs. Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 668 (5th Cir.1989). Only the second element is at issue in this case.

Section 9607(a)(1) defines a responsible party as any owner or operator of a facility. An owner or operator is defined as a person who participates in the management of a facility and who is not merely a stockholder. 42 U.S.C. § 9601(20)(A). In determining whether a person is an operator, some courts do not require the defendant to have exercised actual control in order to qualify as operators under section 9607(a) as long as the authority to control was present. See United States v. Carolina Transformer Co., 978 F.2d 832, 837 (4th Cir.1992); Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 842 (4th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 377, 121 L.Ed.2d 288 (1992). In United States v. Kayser-Roth Corp., 910 F.2d 24, 27 (1st Cir.1990), cert. denied, 498 U.S. 1804, 111 S.Ct. 957, ...