Barclay Lofts LLC v. PPG Indus.
| Decision Date | 05 August 2021 |
| Docket Number | 20-CV-1694-JPS-JPS |
| Parties | BARCLAY LOFTS LLC, Plaintiff, v. PPG INDUSTRIES INC., WCC INC., MD FIFTH WARD PROPERTIES INC., MICHAEL DENESHA, HYDRITE CHEMICAL CO., LUMIMOVE INC. d/b/a WPC TECHNOLOGIES INC., ABC INSURANCE COMPANY, DEF INSURANCE COMPANY, GHI INSURANCE COMPANY, JKL INSURANCE COMPANY, and MNO INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
J. P Stadtmueller U.S. District Judge
On December 17, 2020, Barclay Lofts, LLC (“Barclay”), a real estate development company filed an amended complaint against the abovecaptioned defendants (collectively, “Defendants”), the former owners and operators of a property located in Milwaukee, Wisconsin (“the Property”), seeking costs, damages, and declaratory relief arising from the Property's environmental contamination. (Docket #24). The Court has jurisdiction under 28 U.S.C. § 1331 because Barclay's claims arise under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9607(a), and the Resources Conservation and Recovery Act (“RCRA”) 42 U.S.C. § 6972(a). The Court has supplemental jurisdiction over the claims arising under Wisconsin state law. 28 U.S.C. § 1367(a).
On January 22, 2021, Defendant Lumimove, Inc. (“Lumimove”)[1]filed an answer and counterclaim against Barclay. (Docket #33). That same day, Defendants PPG Industries, Inc. (“PPG”) and Hydrite Chemical Company (“Hydrite”) filed a joint motion for a more definite statement of facts in the complaint and to dismiss the state law tort claims. (Docket #31, #34). Three days later, Lumimove filed a motion for joinder to these motions. (Docket #36). For the reasons explained below, the motions for a more definite statement will be denied; the partial motions to dismiss will be granted; and Lumimove's motion for joinder will granted.[2]
1. RELEVANT FACTS
Barclay owns the Property, which consists of two tracts of land in downtown Milwaukee's former industrial sector, both of which were utilized as part of a paint manufacturing facility. One tract is a .72-acre parcel that hosts a five-story building (“Building 11”) complete with a full basement and penthouse. The other tract, right across the street, is a .877-acre parcel that contains three vacant buildings. Two of these buildings (“Building 33” and “Building 34”) are three-story structures with concrete slab-on-grade construction. The third building (“Building 35”) is a singlestory structure with a basement. All four buildings are located in the East Oregon and South Barclay Industrial Historic District and accordingly, are registered on the Wisconsin State and National Registers of Historic Places.
Between 1905 and 1975-the prime of Milwaukee's industrial past- Pittsburgh Plate Glass company (now PPG), a national paint and varnish manufacturer, owned the Property. PPG carried out its Milwaukee operations on a nine-acre tract of land that encompassed the Property at issue. On this campus, PPG made paints, dry color, insecticide, varnish, lacquer, and pigment. For example, Building 11 was used as the dry color factory. Buildings 33 and 34 were used to manufacture and store varnish and lacquers. Building 35 was a storage facility that held up to 16 chemical storage tanks. Indeed by 1940, records suggest that PPG boasted more than 25 underground storage tanks, which stored different types of chemicals including paint thinner, fuel oil, and arsenic acid. Barclay alleges that over the course of these paint operations, PPG allegedly “disposed, arranged for disposal, dumped, spilled, abandoned, and/or released pollutants, contaminants, hazardous wastes . . .thus contaminating the soil, groundwater and buildings located at the Propert[y].” (Docket #24 ¶ 83). Barclay maintains that PPG did not undertake remediation efforts despite “substantial contamination” of the soil, groundwater, and buildings. (Id. ¶ 87).
In 1975, PPG shut down its plant in Milwaukee and Hydrite entered the picture when it purchased the Property. Hydrite operated a treatment, storage, and disposal operation in Building 34 from 1976 until 1986. Hydrite's facility “repackaged, compounded, and distributed alkaline, mineral acids, inorganic salts, and chlorinated and non-chlorinated solvents.” (Id. ¶ 109). Hydrite never implemented certain environmental precautionary measures, such as dikes and secondary containments for spills. Additionally, the building's concrete floor was cracked. Hydrite did not engage in any remediation. Barclay alleges that Hydrite's practices and decisions resulted in contamination of the Property.
Hydrite is alleged to be the alter ego of Defendant Wayne Chemical Company (“WCC”), which was spun off from Hydrite to deal with the facility's robust “chrome operation.” (Id. ¶ 119). WCC and Hydrite were run by the same group of managers who worked out of the same office. WCC operated on the Property in conjunction with Hydrite from 1975 to 1985, conducting similar chemical processing, storing, and generating waste. Barclay alleges that WCC also contributed to the contamination of the Property during this time. In 1982, for example, “WCC was found to be in violation of waste handling regulations with regard to over 450 55-gallon drums of spent pigment dust and sludge” on the Property, though the details of the violation are unclear (e.g., which regulations were violated, and who found WCC in violation). (Id. ¶ 94).
In 1985, Hydrite decided to wind down its operations. It asked the Wisconsin Department of National Resources (the “WDNR”) to approve closure of its facility in Building 34. Between 1985 and 1986, Hydrite and WCC conveyed the Property to Defendant MD Fifth Ward Properties, Inc. (“MD Fifth Ward”). (Id. ¶ 160). In 1988, the WDNR sent Hydrite a comfort letter regarding Building 34, which explained that while further corrective measures were not warranted at the time, future entities, including the U.S. Environmental Protection Agency (the “EPA”), might instruct differently. (Id. ¶ 116). That same year, WCC dissolved.
Despite conveying the Property to MD Fifth Ward, Hydrite was allegedly involved with “MD Fifth Ward's environmental compliance matters [discussed below] as late as 2011 and possibly later.” (Id. ¶ 124). Indeed, Hydrite is alleged to be the alter ego of MD Fifth Ward. (Id. ¶¶ 117, 124). As it happened, MD Fifth Ward was also a chemical processing company. (It is unclear if MD Fifth Ward likewise engaged in paint manufacturing.) Similar to its predecessors, MD Fifth Ward did not take precautions against or remediate the waste. For example, in 1993, MD Fifth Ward “was found to be in violation of hazardous waste management and material handling regulations for over 400 pigment drums and 12 [abovestorage tanks].” (Id. ¶ 95). Again, the terms of this violation are unclear.
Defendant Michael Denesha (“Denesha”) served in various leadership roles for WWC and MD Fifth Ward from 1986 through 2012, including as Vice President of Operations, Vice President of Engineering, and, from 2006 to 2012, as President. In those capacities, he was involved in decision-making that led to the contamination and failed remediation of the Property. Barclay claims that Denesha was an alter ego of WCC and MD Fifth Ward.
In 2012, MD Fifth Ward divested its business operations to Lumimove, a company that resumed paint manufacturing operations at the Property until 2015. Like its predecessors, Lumimove's activities contributed to the Property's contamination, and Lumimove did not conduct any remediation. To illustrate the persisting contamination, when Lumimove's operations ended in 2015, the buildings on the Property were all contaminated with a hazardous compound called strontium chromate.
In April 2006, MD Fifth Ward, which owned the properties at the time, conducted an environmental investigation known as a “Phase II Environmental Site Assessment Report.”[3] As a result of this investigation, MD Fifth Ward discovered petroleum discharge leaking from an underground storage tank on the Property. The Phase II investigation also revealed soil and groundwater contaminants, including high concentrations of trichloroethylene (“TCE”), a paint thinner that was used pre-1980, as well as arsenic, cadmium, barium chromium, mercury, and lead. On June 6, 2006, MD Fifth Ward informed the WDNR of the storage tank leak.
The WDNR opened a Bureau for Remediation and Redevelopment Tracking System number for the leak, and ordered MD Fifth Ward to investigate the scope of the contamination and remediate as much as possible. However, Barclay alleges that MD Fifth Ward “took only limited action with respect to investigating or remediating the site until 2009.” (Id. ¶ 41). Meanwhile, the WDNR opened another Tracking System number for the Property (though it is unclear why).
In 2009, MD Fifth Ward asked the WDNR to “close” the site, which theoretically would end any further investigation and remediation requirements. The WDNR declined the request because the original source of the contamination had not been “sufficiently identified, ” and because the “degree and extent of contamination” in the soil and groundwater was still unclear. Efforts to close the site in 2011 were similarly denied. (Id. ¶¶ 43- 44). After some back-and-forth, in 2012, the WDNR provided MD Fifth Ward with a list of various shortcomings of its investigative efforts: first, it remained unknown whether the “contaminant plume was stable”; second, there were no evaluations of contaminant trends; and third, there was minimal information regarding the vapor intrusions into the Property. (Id. ¶ 46).
Nevertheless in 2013, MD Fifth Ward told the WDNR that it would cease work on the...
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