Bancorpsouth Bank v. Envtl. Operations, Inc.

• Decision Date: 30 September 2011
• Docket Number: Case No. 4:11CV9 HEA
• Parties: BANCORPSOUTH BANK, Plaintiff, v. ENVIRONMENTAL OPERATIONS, INC., et al., Defendants,
• Court: U.S. District Court — Eastern District of Missouri

BANCORPSOUTH BANK, Plaintiff,

v.ENVIRONMENTAL OPERATIONS, INC., et al., Defendants,

Case No. 4:11CV9 HEA

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

Dated: September 30, 2011

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Defendant The Clayton Engineering Co.'s Motion to Dismiss for Failure to State a Claim, or in the Alternative, Motion for More Definite Statement, [Doc. No. 20]; Defendant Geotechnology, Inc.'s Motion to Dismiss Counts III, IV and VI, [Doc. No. 24], and Defendant Environmental Operations, Inc.'s Motion to Dismiss Counts III, IV and VI, [Doc. No. 26]. Plaintiff opposes all of these motions. For the reasons set forth below, the motions are

Facts and Background

Plaintiff, a Mississippi state bank and successor by merger to The Signature Bank, alleges that Environmental Operations Inc., (EOI), Geotechnology, Inc.,(Geotech) and The Clayton Engineering Company, Inc., (Clayton) prepared and implemented an environmental remediation plan affecting property known as the Hazelwood Logistics Center, in which, Plaintiff holds an interest. Plaintiff claims that Defendants failed to completely remediate the site for the purpose of assisting the developer and lender with future redevelopment. Count I is a claim brought against all defendants for cost recovery and declaratory relief, alleging a violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA); Count II alleges breach of Contract against EOI; Count III alleges negligent misrepresentation brought against EOI and Geotech; Count IV alleges strict products liability for construction of an engineered cell and is brought against all defendants; Count V alleges negligence as to all defendants; and Count VI alleges strict products liability for placement of screened fines against EOI and Geotech.

Plaintiff alleges that it is the successor in interest to a bank that lent money to Hazelwood Logistics Center, LLC. It further alleges that Defendants were the remediation designers and contractors for the site. According to Plaintiff, Defendants failed to properly design and carry out construction of an engineered cell on the site, which was a layer of clay dirt put in place to contain old landfill materials, and to adequately screen materials or "fines" from the dirt on the siteprior to that dirt being spread around the site as fill.

Discussion

Standard of Review

When ruling on a motion to dismiss for failure to state a claim, the Court must take as true the alleged facts and determine whether they are sufficient to raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). The Court does not, however, accept as true any allegation that is a legal conclusion. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). The complaint must have "'a short and plain statement of the claim showing that the [plaintiff] is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (quoting Fed.R.Civ.P. 8(a)(2)) and then Conley v. Gibson, 355 U.S. 41, 47 (1957), abrogated by Twombly, supra); see also Gregory v. Dillard's Inc., 565 F.3d 464, 473 (8th Cir.) (en banc), cert. denied, 130 S.Ct. 628 (2009). While detailed factual allegations are not necessary, a complaint that contains "labels and conclusions," and "a formulaic recitation of the elements of a cause of action" is not sufficient. Twombly, 550 U.S. at 555; accord Iqbal, 129 S.Ct. at 1949. The complaint must set forth "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; accord Iqbal, 129 S.Ct. at 1949; C.N. v. Willmar Pub.Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir.2010); Zutz v. Nelson, 601 F.3d 842, 848 (8th Cir. 2010); Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. If the claims are only conceivable, not plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570; accord Iqbal, 129 S.Ct. at 1950. In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), "the complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible." Braden, 588 F.3d at 594. The issue in considering such a motion is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of the claim. See Neitzke v. Williams, 490 U.S. 319, 327 (1989).

Count I-CERCLA

Defendant Clayton moves to dismiss Count I for failure to comply with Rules 8 and 12(b)(6) of the Federal Rules of Civil Procedure. Count I is brought under the provisions of 42 U.S.C. §§ 9601-9675, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

In 1980, Congress enacted [CERCLA] in response to the serious

environmental and health risks posed by industrial pollution. See United States v. Bestfoods, 524 U.S. 51, 55, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The Act was designed to promote the "'timely cleanup of hazardous waste sites'" and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination. Consolidated Edison Co. of N.Y. v. UGI Util., Inc., 423 F.3d 90, 94 (C.A.2 2005); see also Meghrig v. KFC Western, Inc., 516 U.S. 479, 483, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (C.A.1 1986). These cases raise the questions whether and to what extent a party associated with a contaminated site may be held responsible for the full costs of remediation.

Burlington Northern and Santa Fe Ry. Co. v. U.S., ___ U.S.___, 129 S.Ct. 1870, 1874 (2009).

Clayton argues that the Complaint fails to sufficiently set forth that it is an "operator" of a facility or a "generator/arranger" of hazardous wastes. Section 9607(a) sets out the classes of persons potentially responsible under CERCLA:

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

(2) any person¹ 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 fordisposal 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 ...."

42 U.S.C. § 9607(a).

Clayton argues that the Complaint fails to allege facts sufficient to establish liability. While recognizing that CERCLA requires Plaintiff to establish that Clayton was an "operator" or "generator/arranger" of hazardous waste, Clayton claims that it had neither actual control nor the authority to control any of the environmental operations of the subject property.

Contrary to its argument, however, the Complaint alleges that all Defendants knew, since at least 2001, that there were disposed hazardous materials on the property. Plaintiff further alleges that Defendants engaged in deliberate disturbance, unearthing, spilling, moving and re-releasing all of the enumerated hazardous materials and compounds into the property. Although the Complaint does not specifically list each Defendant by name in its CERCLA Count, it alleges that all defendants engaged in the activities such that Defendant Clayton is put on notice that Plaintiff seeks recovery from Clayton for its involvement in the disturbance, etc. of hazardous materials on the property.

Liability for the release of hazardous substances may be imposed on ""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.'" Gurley, 43 F.3d at 1192 (quoting 42 U.S.C. § 9607(a)(2)). When considering an individual's liability as an operator, "'[i]t is the authority to control the handling and disposal of hazardous substances that is critical under the statutory scheme.'" Id. (quoting United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 743 (8th Cir.1986)).

K.C.1986 Ltd. Partnership v. Reade Mfg., 472 F.3d 1009, 1020 (8th Cir. 2007).

While discovery may reveal that Clayton had no authority to control the handling of the hazardous material on the property, the issue before the Court at this stage is whether the Complaint sufficiently alleges control.² Under the standards articulated herein, the Court concludes that the Complaint meets the Twombly and Iqbal standards of alleging facts sufficient to place Clayton on notice of the CERCLA claim against it.

Count III-Negligent Misrepresentation against EOI and Geotech

Plaintiff has styled Count III as a negligent misrepresentation claim against EOI and Geotech. Defendants argue that it is, in reality, a claim for negligentomission.

The elements of negligent misrepresentation are: (1) the speaker supplied information in the course of his business; (2) because of the speaker's failure to exercise reasonable care, the information was false; (3) the information was intentionally provided by the speaker for the guidance of limited persons in a particular business transaction; (4) the hearer justifiably relied on the information; and (5) due to the hearer's reliance on the information, the hearer suffered a pecuniary loss.

Renaissance Leasing, LLC v. Vermeer Mfg. Co., ...