Bowen Engineering v. Estate of Reeve

• Decision Date: 17 September 1992
• Docket Number: Civ. No. 89-2649 (AET).
• Citation: 799 F. Supp. 467
• Parties: BOWEN ENGINEERING and Niro Atomizer Acquisition Co., Inc., Plaintiffs, v. The ESTATE OF Ralph T. REEVE and the Reeve Co., Defendants.
• Court: U.S. District Court — District of New Jersey

799 F. Supp. 467

BOWEN ENGINEERING and Niro Atomizer Acquisition Co., Inc., Plaintiffs, v. The ESTATE OF Ralph T. REEVE and the Reeve Co., Defendants.

Civ. No. 89-2649 (AET).

United States District Court, D. New Jersey.

September 17, 1992.

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David Sweet (Kathleen M. McLeod, on brief), Collier, Jacob & Sweet, Somerset, N.J., for plaintiffs.

William W. Lanigan, Bedminster, N.J., for defendants.

AMENDED OPINION

ANNE E. THOMPSON, District Judge.

This matter comes before the court on a motion for summary judgment by defendant, the Estate of Ralph T. Reeve, and on a cross-motion by plaintiffs for summary judgment on Counts One and Two of the complaint and defendant's counterclaim. Both parties also seek sanctions under Rule 11 of the Federal Rules of Civil Procedure.

Plaintiffs Bowen Engineering and Niro Atomizer Acquisitions Company, Inc. are former owners of a facility at North Branch, New Jersey which was used as a test laboratory. The property was purchased by Bowen Engineering in July of 1949. Def.Ex. 9; Pl.Ex. N, July 19, 1949 Minutes at 4. Until 1974, Ralph T. Reeve, now deceased, was president and a director of Bowen. He was also a director and 40% stockholder of the Reeve Company, which owned all of Bowen's stock. In May of 1974 the Reeve Company sold its shares in Bowen to Stork-InterAmerica Corp., resulting in the formation of Stork Bowen Engineering. Stork Bowen continued operations at the North Branch site until 1976, and sold the site in 1977 to an entity which is not a party to this action. Stork Bowen was purchased by Niro in 1982.

Beginning in 1982, the New Jersey Department of Environmental Protection ("DEP") made inquiries into the possibility of soil and water contamination at the North Branch facility. Tests were taken between 1982 and 1987 which proved inconclusive. In 1989 the DEP took soil, water and stream sediment samples at the site which indicated the presence of certain hazardous substances in excess of DEP limitations. In anticipation of possible future cleanup costs, plaintiffs filed this suit to obtain a declaratory judgment holding Mr. Reeve, through his estate, liable under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675¹ (Count One). Plaintiffs also seek recovery under the New Jersey Spill Compensation and Control Act ("the Spill Act"), N.J.S.A. § 58:10-23.11 to 23.11z (Count Two) and various state common law claims (Counts Three through Eight). Defendant raises a counterclaim for indemnification.

A court may enter summary judgment under Federal Rule of Civil Procedure 56(c) when the moving party demonstrates (1) that there is no genuine issue of material fact, and (2) that the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once the moving party has satisfied this initial burden, the opposing party must establish that a genuine issue exists. Jersey Central Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir.1985), cert. denied 475 U.S. 1013, 106 S.Ct. 1190, 89 L.Ed.2d 305 (1986). Not every issue of fact will be sufficient to defeat a motion for summary judgment; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Further, the opposing party cannot rest upon mere allegations; it must present actual evidence that creates a genuine issue of material fact. Id. at 249, 106 S.Ct. at 2510 (citing First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968)). The court must draw all reasonable inferences in the opposing party's favor, and must accept that party's evidence when considering the merits of the summary judgment motion. See Pollack v. American Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir.1986).

Defendant has objected to the introduction of certain certifications submitted in opposition to the Estate's motion and in support of plaintiffs' cross-motion. Def. Opposition Brief at 10-19. Since the court does not rely on any of these certifications in order to reach its conclusions, we need not consider the admissibility of this evidence.

I. PLAINTIFFS' CLAIM UNDER CERCLA

In Count One plaintiffs seek to hold defendant liable under CERCLA for any cleanup costs associated with releases or threatened releases of hazardous materials due to the activities which occurred on the North Branch site between July of 1949 and May of 1974. Both parties now seek summary judgment on this claim.

Under CERCLA,

(2) 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 ... shall be liable for

(A) all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan;

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; and

(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release.

§ 9607(a). CERCLA may be applied to releases which occurred prior to its enactment in 1980. Amland Properties Corp. v. Aluminum Co. of America, 711 F.Supp. 784, 790 (D.N.J.1989). "The overarching goal of CERCLA is to place the financial cost of the cleanup upon those parties responsible for creating the hazardous condition." Amland at 789 (citing, among other cases, Lone Pine Steering Comm. v. EPA, 777 F.2d 882, 886 (3d Cir.1985), cert. denied, 476 U.S. 1115, 106 S.Ct. 1970, 90 L.Ed.2d 654 (1986)).

A. Liability Under CERCLA

To establish liability under CERCLA, plaintiffs must prove the following four elements:

(1) the site is a "facility";

(2) defendant falls within at least one of the four classes of "responsible persons" listed in § 9607(a).

(3) there has been a "release" or "threatened release" of a hazardous substance from the site; and

(4) plaintiffs have incurred response costs due to the release or threatened release.

United States v. Kramer, 757 F.Supp. 397, 417 (D.N.J.1991) (citing United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373, 1378-79 (8th Cir.1989)); Southland Corp. v. Ashland Oil, Inc., 696 F.Supp. 994, 999 (D.N.J.1988); T & E Indus., Inc. v. Safety Light Corp., 680 F.Supp. 696, 708 (D.N.J. 1988); see New York v. Shore Realty Corp., 759 F.2d 1032, 1043 (2nd Cir.1985) (government entity as plaintiff). As discussed below, plaintiffs have proven liability under CERCLA.

1. The North Branch site as a "facility"

A "facility" is defined under CERCLA as "(A) any building, structure, installation, equipment, pipe or pipeline ..., well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located...." § 9601(9). It is clear that the North Branch site falls within the list of locales or items qualifying as facilities. Further, the evidence indicates that "a hazardous substance has ... come to be located" at the site. The testing which occurred at the site involved the use of solvents which included benzene, toluene, xylene and methylene chloride. Pl.Ex. J, April 17, 1989 Report of New Jersey Dept. of Environmental Protection ("DEP") at 1. These substances are all considered to be "hazardous materials" under CERCLA. 40 C.F.R. § 302.4 Table 302.4.² Further, according to the testimony of Harman DuMont, an employee at the North Branch site during the time that Mr. Reeve maintained an ownership interest in Bowen Engineering,³ some waste from the testing process performed at the facility was released into a drainage system located under the floor of the testing facility. See, e.g., Pl.Ex. M, DuMont Deposition Transcript at 83-84. Other waste water was placed into facility's septic system, id. at 65-67, and leaching pit, id. at 101. Thus the North Branch site is a "facility" within the meaning of § 9601(9).

2. Defendant as a "responsible person"

A liable person under CERCLA includes "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." § 9607(a)(2). An individual who has "the authority to control the handling and disposal of hazardous substances" is an "owner or operator" under § 9607(a)(2). United States v. Northeastern Pharm. & Chem. Co., Inc. ("NEPACCO II"), 810 F.2d 726, 743 (8th Cir.1986) (emphasis added), cert. denied, 484 U.S. 848, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987). Thus in NEPACCO II the appellate court found that a plant supervisor was liable because he "actually knew about, had immediate supervision over, and was directly responsible for arranging for the transportation and disposal of the ... plant's hazardous substances...." Id. A stockholder who does not participate in the management of the facility is not an "owner or operator." § 9601(20)(A); Shore Realty, 759 F.2d at 1052. A stockholder can be an "owner or operator," however, if he is active in the facility's management. Shore Realty at 1052; see § 9601(20)(A). Further, "a corporate officer who has direct responsibility for arranging for the disposal of hazardous waste is personally liable under the provisions of CERCLA." United States v. Northernaire Plating Co., 670 F.Supp. 742, 747 (W.D.Mich.1987), aff'd sub nom. United States v. R.W. Meyer, Inc., 889 F.2d 1497 (6th Cir.1989), cert. denied, 494 U.S. 1057, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990); cf. Mobay Corp. v. Allied-Signal, Inc., 761 F.Supp. 345, 354 (D.N.J.1991) (parent corporation actively...