Arkansas Deq v. Brighton Corp.

• Decision Date: 03 April 2003
• Docket Number: No. 02-321.,02-321.
• Citation: 102 S.W.3d 458
• Parties: ARKANSAS DEPARTMENT OF ENVIRONMENTAL QUALITY v. BRIGHTON CORPORATION; Coltec Industries, Inc.; Entergy Arkansas, Inc.; First Electric Cooperative Corporation; Kamo Electric Cooperative, Inc.; Kuhlmen Corporation, On Behalf of Kulhman Electric Corporation; Magnetic Electric Company; Missouri Public Service; Pirelli Cable Corporation; Reed & McClain Electrical Works, Inc.; Reynolds Metals Company; San Angelo Electric Service Company; Southern Cotton Oil Co.; T&N Electric Company, Inc.; Texas Eastern Transmission Corporation.
• Court: Arkansas Supreme Court

Page 458

102 S.W.3d 458

ARKANSAS DEPARTMENT OF ENVIRONMENTAL QUALITY v. BRIGHTON CORPORATION; Coltec Industries, Inc.; Entergy Arkansas, Inc.; First Electric Cooperative Corporation; Kamo Electric Cooperative, Inc.; Kuhlmen Corporation, On Behalf of Kulhman Electric Corporation; Magnetic Electric Company; Missouri Public Service; Pirelli Cable Corporation; Reed & McClain Electrical Works, Inc.; Reynolds Metals Company; San Angelo Electric Service Company; Southern Cotton Oil Co.; T&N Electric Company, Inc.; Texas Eastern Transmission Corporation.

No. 02-321.

Supreme Court of Arkansas.

April 3, 2003.

COPYRIGHT MATERIAL OMITTED

Hill, Gilstrap, Perkins & Trotter, PC, by: G. Alan Perkins and Julie D. Greathouse, Little Rock, for appellee.

Mark Pryor, Att'y Gen., by: Eric B. Estes and Charles L. Moulton, Ass't Att'ys Gen., Little Rock, for appellant.

TOM GLAZE, Justice.

The Arkansas Department of Environmental Quality ("DEQ") appeals from an order of the Jefferson County Circuit Court dismissing its complaint with prejudice. This appeal requires us to construe Ark.Code Ann. § 8-7-501 et seq. (Repl. 2000), the Remedial Action Trust Fund Act ("RATFA"), and jurisdiction is therefore proper in this court under Ark. Sup. Ct. R. 1-2(b)(6).

On March 15, 2001, DEQ filed a lawsuit against fifteen separate defendants,¹ seeking a declaratory judgment. The fifteen defendants were alleged to be customers of a defunct corporation called Utility Services, Inc. ("USI"), a company that, from 1975 until 1984 or 1985, had operated on a thirty-acre site in Jefferson County. According to DEQ's complaint, USI engaged in the repair and maintenance of various electrical equipment and components. One of the activities conducted by USI was the treating and filtering of spent oil containing polychlorinated biphenyls, or PCBs, from electrical transformers and other electrical equipment at the site for the purpose of reclaiming the oil or restoring it to or near its original properties. USI also bought or otherwise acquired used PCB-containing oil from other facilities that wished to dispose of the oil and treated or filtered it, as described above, to use in its operations or to sell to other facilities. The treating, filtering, and reclaiming process removed hazardous substances and hazardous wastes from the oil, which was then disposed of at the site. USI additionally operated a wood treating operation at the site; in that process, the PCB-containing oil was used to preserve wood products.

The complaint further alleged that the defendants, who were individual USI customers, generated and/or transported hazardous substances and hazardous wastes, including PCB-containing oil, to the site for disposal. DEQ alleged that the disposal of the hazardous substances and hazardous wastes was conducted in such a manner as to constitute unsound disposal and management practices. DEQ claimed that USI used oil disposed of by the defendants at the site to conduct its wood-treating operations, and as a result of these processes, hazardous substances and hazardous wastes were spilled on the ground, thereby contaminating surface and subsurface waters around the site.

In November of 1990, according to the complaint, DEQ personnel conducted an investigation on the USI property. The investigation revealed a number of drums and tanks, some of which were deteriorating, and which contained high levels of PCB-containing oils, trichloroethene, and tetrachloroethene. In addition, the investigation revealed that the soil in and around the site was contaminated with oil, PCBs, and pentachlorophenol. DEQ asserted that its investigation was limited, but other hazardous wastes were also likely to be present at the site.

On February 21, 1991, DEQ entered into a Consent Administrative Order with Entergy Arkansas, Inc., one of the named defendants, to perform certain preliminary actions to stabilize and secure the site and to reduce the potential for further release of hazardous substances and hazardous wastes. The Consent Administrative Order further provided that the stabilization actions undertaken by Entergy would not constitute final action at the site and that a final remedial action would be negotiated.

On May 12, 1993, DEQ entered into a second Consent Administrative Order with the "Utility Services PRP Committee," primarily for the purpose of removing drums of hazardous substances from the site. On that same day, pursuant to Ark. Code Ann. § 8-7-508(a)(1) and § 8-7-511, DEQ issued an "Administrative Notice of Liability and Request for Information" to a number of entities, including the defendants; however, none of the parties notified of responsibility accepted responsibility for final remediation of the site.

DEQ took no further action regarding this site until it filed suit in March of 2001, seeking a declaratory judgment that the defendants were liable parties under RATFA as either generators or transporters of hazardous substances. The complaint also sought a declaratory judgment that the defendants committed an unlawful act under Ark.Code Ann. § 8-7-201 et seq. (Repl.2000), the Arkansas Hazardous Waste Management Act ("AHWMA"), by storing, collecting, transporting, treating, or disposing of hazardous waste in such a manner or place as to create, or which was likely to create, a public health hazard.

In response, twelve of the defendants filed motions to dismiss under Ark. R. Civ. P. 12(b)(6), raising four primary issues: 1) DEQ's complaint failed to allege specific facts upon which relief could be granted; 2) the conduct complained of in DEQ's complaint arose before the passage of RATFA, and RATFA's provisions could not be applied retroactively; 3) the "recycling presumption" for used oil contained in DEQ Regulation 23 applied to the defendants; and 4) DEQ was precluded from initiating its action due to the three-year statute of limitations. On September 18, 2001, the trial court conducted a hearing on the defendants' motion to dismiss.

Subsequently, on November 21, 2001, the trial court issued a letter order in which it agreed with the defendants that DEQ failed to state sufficient facts in its complaint on which relief could be granted, that RATFA could not be applied retroactively to conduct that occurred before its passage, and that the recycling provision of Regulation 23 exempted the defendants' conduct at the USI hazardous substance site. However, the trial court agreed with DEQ that the case was not barred by the three-year statute of limitations. The letter order was reduced to an Order of Dismissal, filed on December 12, 2001, which dismissed DEQ's complaint without prejudice. DEQ then elected to appeal from that order.

On appeal, DEQ first contends that the trial court erred in granting the defendants' motion to dismiss, asserting that it stated sufficient facts in its complaint to make the complaint legally sufficient. In a related issue, DEQ urges that RATFA extends liability to "generators" and "transporters" who cause the disposal of hazardous substances; on this point, DEQ takes issue with the trial court's conclusion that its complaint did not sufficiently allege that any of the defendants actively "disposed" of any hazardous substances at the USI site. Because these two points are so closely linked, we treat them together.

As an initial matter, although DEQ suggests that this court should apply a de novo standard of review to its determination of the propriety of the trial court's granting the defendants' motion to dismiss, our standard of review in such appeals is well-settled. In reviewing the trial court's decision on a motion to dismiss under Ark. R. Civ. P. 12(b)(6), we treat the facts alleged in the complaint as true and view them in the light most favorable to the party who filed the complaint. Clayborn v. Bankers Standard Ins. Co., 348 Ark. 557, 75 S.W.3d 174 (2002); Martin v. Equitable Life Assurance Soc'y, 344 Ark. 177, 40 S.W.3d 733 (2001). In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. Clayborn, supra. Our rules require fact pleading, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Id.; Ark. R. Civ. P. 8(a). We look to the underlying facts supporting an alleged cause of action to determine whether the matter has been sufficiently pled. Country Corner Food & Drug, Inc. v. First State Bank & Trust Co., 332 Ark. 645, 966 S.W.2d 894 (1998).

Arkansas's rules of civil procedure make it clear that a pleading which sets forth a claim for relief "shall contain ... a statement in ordinary and concise language of facts showing that the ... pleader is entitled to relief[.]" Ark. R. Civ. P 8(a) (emphasis added). Rule 12(b)(6) provides for the dismissal of a complaint for "failure to state facts upon which relief can be granted." This court has stated many times that these two rules must be read together in testing the sufficiency of the complaint; we have stated with equal frequency that facts, not mere conclusions, must be alleged. Brown v. Arkansas Dep't of Correction, 339 Ark. 458, 6 S.W.3d 102 (1999); Malone v. Trans-States Lines, Inc., 325 Ark. 383, 926 S.W.2d 659 (1996); Hollingsworth v. First Nat'l Bank & Trust Co., 311 Ark. 637, 846 S.W.2d 176 (1993); Rabalaias v. Barnett, 284 Ark. 527, 683 S.W.2d 919 (1985). This court has specifically and deliberately rejected the theory of notice pleading. See McKinney v. City of El Dorado, 308 Ark. 284, 824 S.W.2d 826 (1992); Treat v. Kreutzer, 290 Ark. 532, 720 S.W.2d 716 (1986); Harvey v. Eastman Kodak Co., 271 Ark. 783, 610 S.W.2d 582 (1981) (noting that the Arkansas Rules of Civil Procedure contain a "significant departure from the Federal Rules of Civil Procedure" in both Rule 8 and Rule 12; the federal rule speaks only in terms of a "claim," whereas the Arkansas rules specifically...