Abbott Laboratories v. Thermo Chem, Inc.

• Decision Date: 20 August 1991
• Docket Number: No. 1:89-CV-994.,1:89-CV-994.
• Citation: 790 F. Supp. 135
• Parties: The Thermo Chem Participating Companies consisting of: ABBOTT LABORATORIES, et al., Plaintiffs, v. THERMO CHEM, INC., Thomas Solvent Company, Thomas Solvent Company of Detroit, Inc., Thomas Solvent Company of Muskegon, Inc., Thomas Solvent of Indiana, Inc., TSC Transportation, Inc., and Richard E. Thomas, Defendants.
• Court: U.S. District Court — Western District of Michigan

790 F. Supp. 135

The Thermo Chem Participating Companies consisting of: ABBOTT LABORATORIES, et al., Plaintiffs, v. THERMO CHEM, INC., Thomas Solvent Company, Thomas Solvent Company of Detroit, Inc., Thomas Solvent Company of Muskegon, Inc., Thomas Solvent of Indiana, Inc., TSC Transportation, Inc., and Richard E. Thomas, Defendants.

No. 1:89-CV-994.

United States District Court, W.D. Michigan, S.D.

August 20, 1991.

COPYRIGHT MATERIAL OMITTED

Steven C. Kohl, Landman, Latimer, Clink & Robb, Muskegon, Mich., for plaintiffs.

John L. Collins, Foster, Swift, Collins & Smith, PC, Lansing, Mich., for defendants.

OPINION

ROBERT HOLMES BELL, District Judge.

Plaintiffs filed this action to recover response costs from defendants pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. The parties have filed cross-motions for partial summary judgment. Plaintiffs seek an order adjudicating defendants jointly and severally liable for contribution for all response costs incurred or which may be incurred at the Thermo Chem NPL site in Muskegon, Michigan. Defendants seek an order striking plaintiffs' request for attorney fees.

Facts

Thomas Solvent Company owned and operated bulk industrial solvent storage and sale facilities in various locations in Michigan. Thermo Chem is a wholly owned subsidiary of Thomas Solvent Company. Thermo Chem operated an industrial waste solvent storage, recycling, incineration and disposal facility in Muskegon from 1967 through 1980. Thomas Solvent Company transported used or waste solvents to the Thermo Chem site.

The Thermo Chem site has been placed on the National Priorities List. The United States Environmental Protection Agency ("USEPA") identified plaintiffs as potentially responsible parties (PRP), and on November 7, 1987, plaintiffs entered into an administrative consent order with the USEPA to conduct a remedial investigation and feasibility study (RI/FS). Plaintiffs filed this suit seeking contribution from the defendants for costs incurred by plaintiffs in remediating the Thermo Chem site.

In Count I plaintiffs seek contribution against Thomas Solvent Company and Thermo Chem, claiming that their acts or omissions caused or contributed to the release of hazardous substances at the Thermo Chem site. In Count II, plaintiffs seek contribution against Thomas Solvent Company of Detroit, Inc., Thomas Solvent Company of Muskegon, Inc., Thomas Solvent Company of Indiana, Inc., and TSC Transportation, Inc., under theories of fraudulent conveyance and successor liability. In Count III plaintiffs seek contribution against Richard Thomas under 42 U.S.C. §§ 9607 and 9613 based upon his alleged control over the Thomas Solvent companies.

Discussion

Motions for Summary Judgment

In evaluating motions for summary judgment the Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The Court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-53, 106 S.Ct. 2505, 2511-13, 91 L.Ed.2d 202 (1986). If the moving party carries its burden of showing there is an absence of evidence to support a claim then the opposing party must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). See also, Street v. J.C. Bradford & Co., 886 F.2d 1472, 1476-80 (6th Cir.1989).

Liability of Thomas Solvent Company and Thermo Chem

Plaintiffs request judgment on the issue of the liability of Thomas Solvent Company and Thermo Chem as owners, operators and/or transporters under 42 U.S.C. § 9607(a) for all response costs incurred at the Thermo Chem site.

A prima facie case of liability under section 107 requires that:

(1) the site be a facility; (2) there be a release or threatened release of a "hazardous substance" from the site; (3) the release or threatened release caused the plaintiff to incur response costs; (4) the defendants are covered persons within Section 107(a); and (5) the responsive actions taken and costs incurred were consistent with the National Contingency Plan.

B.F. Goodrich Co. v. Murtha, 754 F.Supp. 960, 963-64 (D.Conn.1991).

Plaintiffs have come forward with sufficient evidence to make out a prima facie case of liability against Thomas Solvent Company and Thermo Chem under 42 U.S.C. § 9607(a).

Defendants Thomas Solvent Company and Thermo Chem have not come forward with any evidence that would indicate that there is a genuine issue of material fact for trial on the issue of Thomas Solvent Company and Thermo Chem's liability as owner operators or transporters. The only defense raised by these defendants is that they cannot be held liable under CERCLA because application of CERCLA in this case would constitute an impermissible retroactive application of law in violation of their right to due process of law.

The Sixth Circuit has already determined that retroactive application of CERCLA is not unconstitutional in United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1506 (6th Cir.1989), cert. denied, 494 U.S. 1057, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990).

There being no genuine issue of material fact as to the liability of Thomas Solvent Company and Thermo Chem as owner operators and/or transporters, they are liable to plaintiffs for contribution as a matter of law.

Offensive Collateral Estoppel

Plaintiffs request summary judgment as to the liability of defendants Thomas Solvent Company of Detroit, Inc., Thomas Solvent Company of Muskegon, Inc., Thomas Solvent of Indiana, Inc., and TSC Transportation, Inc. (the "spinoff corporations") and Richard E. Thomas on grounds of fraudulent conveyance and successor liability. Plaintiffs contend that offensive collateral estoppel should be applied to estop defendants from relitigating the liability issues already decided in an earlier case, Kelley v. Thomas Solvent Co., 725 F.Supp. 1446 (W.D.Mich.1988).

Defendants contend that Richard E. Thomas should not be treated the same as the spinoff corporations for purposes of the collateral estoppel analysis. The Court will address the liability of Richard E. Thomas below. This portion of the opinion is limited to the spinoff corporations.

"Offensive use of collateral estoppel occurs when a plaintiff seeks to foreclose a defendant from relitigating an issue the defendant previously litigated unsuccessfully in another action against the same or a different party." United States v. Mendoza, 464 U.S. 154, 159 n. 4, 104 S.Ct. 568, 571 n. 4, 78 L.Ed.2d 379 (1984).

The doctrine of collateral estoppel may be applied only if the following criteria have been satisfied:

1. the precise issue raised in the present case must have been raised and actually litigated in the prior proceeding;

2. determination of the issue must have been necessary to the outcome of the prior proceeding;

3. the prior proceeding must have resulted in a final judgment on the merits; and

4. the party against whom estoppel is sought must have had full and fair opportunity to litigate the issue in the prior proceeding.

Detroit Police Officers Association v. Young, 824 F.2d 512, 515 (6th Cir.1987) (quoted in United States v. Sandoz Pharmaceuticals Corp., 894 F.2d 825, 826-27 (6th Cir.1990)).

Defendants contend that collateral estoppel is inappropriate in this case because the first and third criteria have not been met.

1. Identical Issues

In the prior case the court held that Thomas Solvent Company created the spinoff corporations to avoid potential liability related to existing groundwater contamination in Battle Creek, and in so doing violated the Michigan Fraudulent Conveyance Act, MCL § 566.17. 725 F.Supp. at 1452-56. The court also held that the spinoff corporations were corporate successors and were liable for contribution under theories of successor liability. Id. at 1456-59.

In Count II of the instant complaint plaintiffs seek contribution from the same spinoff corporations under theories of fraudulent conveyance and successor liability.

Defendants claim that the present case does not raise the "precise issue" which was decided in the prior case because the prior ruling was that the transfer of assets was made to avoid liability arising from the alleged contamination of the Verona Well field in Battle Creek and had nothing to do with the alleged contamination at the Thermo Chem site in Muskegon.

The difference is illusory. The Michigan fraudulent conveyance act under which liability in the prior action was premised provides:

Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors.

M.C.L.A. § 566.17. The elements of the claim, as found in the prior action, were that Thomas Solvent Company is a person under the Michigan Act; that it made a conveyance; that it did so with actual intent to hinder, delay, or defraud creditors; and that plaintiffs are creditors under the Act. 725 F.Supp. at 1452.

The first three elements are precisely the same as the issues presented in the instant case. As to the fourth element, this court has already determined above that there is no question that plaintiffs are creditors of Thomas Solvent Company. Since the statute confers liability for fraud as to both present and future creditors, the precise issue of fraudulent conveyance raised in the present case was raised and actually litigated in the prior proceeding.

Moreover, ...