City of Toledo v. Beazer Materials and Services, Inc., 3:90 CV 7344.

• Decision Date: 25 May 1993
• Docket Number: No. 3:90 CV 7344.,3:90 CV 7344.
• Citation: 833 F. Supp. 646
• Parties: CITY OF TOLEDO, Plaintiff, v. BEAZER MATERIALS AND SERVICES, INC., et al., Defendant.
• Court: U.S. District Court — Northern District of Ohio

833 F. Supp. 646

CITY OF TOLEDO, Plaintiff, v. BEAZER MATERIALS AND SERVICES, INC., et al., Defendant.

No. 3:90 CV 7344.

United States District Court, N.D. Ohio, W.D.

May 25, 1993.

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John D. Scouten, Toledo, OH, D. David Altman, Stephen P. Calardo, Altman & Calardo, Cincinnati, OH, for City of Toledo.

Joseph A. Gregg, Eastman & Smith, Peter J. McCabe, Fuller & Henry, Toledo, OH, Chester R. Babst, III, Mindy J. Shreve, Babst, Calland, Clements & Zomnir, Pittsburgh, PA, for Beazer Materials and Services, Inc. and Beazer East, Inc.

Paul W. Schroeder, Katherine W. Delahunt, Jones, Day, Reavis & Pogue, Chicago, IL, for Interlake Corp., Interlake Companies, Inc. and Acme Steel Co.

MEMORANDUM OPINION

DOWD, District Judge.

I. INTRODUCTION

This action is before the Court on the motions to dismiss of defendants Beazer East, Inc. ("Beazer") and The Interlake Corporation, The Interlake Companies, Inc. and Acme Steel Company (collectively referred to as "Interlake"), plaintiff's opposition thereto, and Beazer's and Interlake's replies. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331.

This case is brought by the City of Toledo ("the City") for declaratory and injunctive relief and recovery of past and future costs and damages associated with alleged releases by defendants Beazer, Interlake, and the Toledo Coke Corporation ("Toledo Coke")¹ into the environment of hazardous substances, hazardous wastes, solid wastes, industrial waste, or other wastes from the Toledo Coke facility on Front Street in Toledo, Ohio ("the Site"). The City has included federal claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601, et seq., and the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. § 6901, et seq., as well as state law claims for environmental violations under Ohio Rev.Code § 3734.101, nuisance, and fraudulent conveyance.²

II. FACTUAL BACKGROUND

The Site at issue in this lawsuit is located on the Front Street in Toledo. Since approximately 1902, a coke producing plant has been located on the Site. Interlake and related companies owned the Site and operated the plant from 1905 until 1978, when it sold the Site and the plant to Koppers Company, Inc., for which Beazer is the successor-in-interest. Beazer owned and operated the plant from 1978 through 1987, when Toledo Coke bought both the land and the plant.

On May 9, 1988, the City purchased from Toledo Coke a small portion of the Site ("the right-of-way property") for the purpose of widening and improving Front Street. The City alleges that, prior to its acquisition by the City, the Site had been used by defendants in the production of coke, benzene, and such chemical by-products as xylene, toluene, naphthalene. The City further alleges that environmental testing on the portion of the right-of-way property acquired by the City has confirmed high levels of subsurface contamination by benzene and other hazardous substances, and that this contamination has brought the Front Street road improvement project to a halt.

The City claims to have incurred environmental response costs of approximately $400,000 in response to the contamination. Moreover, the City alleges that it will continue to incur such response costs in the future, and that natural resources have been and will continue to be injured or destroyed as a result of the releases. Accordingly, the City brought this six-count amended complaint against Interlake, Beazer, and Toledo Coke to compel the defendants to bear the financial burden for the investigation and remediation of the contamination of the right-of-way property and at the plant itself, which, the City alleges, unless remediated, will continue to cause or threaten to cause releases to the environment and the right-of-way property.

III. THE MOTION TO DISMISS STANDARD

In deciding a motion to dismiss under Fed.R.Civ.P. 12(b), the function of the Court is to test the legal sufficiency of the complaint. In scrutinizing the complaint, the Court is required to accept the allegations stated in the complaint as true, Hishon v. King & Spalding, 467 U.S. 69, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984), while viewing the complaint in a light most favorable to the plaintiffs. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); West-lake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). The Court is without authority to dismiss the claims unless it can be demonstrated beyond a doubt that the plaintiff can prove no set of facts that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Westlake, supra, at 858. See generally 2A J. Moore, W. Taggert & J. Wicker, Federal Practice, 12.08 (2d ed. 1985).

IV. LAW AND DISCUSSION

A. Count One — Response Cost Under CERCLA Section 107

1. Natural Resources Harm

Count One of the City's first amended complaint alleges a cause of action under section 107 of CERCLA, 42 U.S.C. § 9607. The City claims that the releases and threatened releases of defendants' hazardous substances at and from the Site have caused the City to incur response costs. Included in the City's claim for response costs is a claim for damages to natural resources, assessment of which the City claims is ongoing. Beazer and Interlake move to dismiss the City's claim for natural resources damages.

Section 107(a)(4)(C) states:

(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, shall be liable for —

* * * * * *

(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.

42 U.S.C. § 9607(a)(4)(C) (emphasis added).

Further, section 107(f)(1) provides:

In the case of an injury to, or destruction of, or loss of natural resources under 107(1)(4)(C) liability shall be to the United States Government and to any State for natural resources within the State or belonging to, managed by, controlled by or appertaining to such State.... The President, or the authorized representative of any State, shall act on behalf of the public as trustee of such natural resources to recover for such damages.

42 U.S.C. § 9607(f)(1) (emphasis added).

Section 107(f)(2) allows the President of the United States or the Governor of a State to designate officials to act on behalf of the public as trustees for natural resources. The terms "United States" and "State," as defined by section 101(27), include "the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Marianas, and any other territory or possession over which the United States has jurisdiction."

Defendants Interlake and Beazer argue that the City's claim for natural resources damages should be dismissed because section 107(f)(1) limits recovery for such harm to either the United States Government or the State in which the resources lie. Defendants argue that the City is excluded from the definition of "State," and has not been designated a trustee for the natural resources. Thus, the defendants contend, the City cannot bring this claim for harm to natural resources.

Whether a political subdivision can in fact bring an action pursuant to section 107 of CERCLA for harm to natural resources is a question that has been addressed by a number of district courts in other circuits, but not in the Sixth Circuit. The City urges this Court to accept the holdings of the district courts in New York v. Exxon Corp., 633 F.Supp. 609 (S.D.N.Y.1986) and Boonton v. Drew Chemical Corp., 621 F.Supp. 663 (D.N.J.1985).

In Boonton, Judge Ackerman held that governmental subdivisions, such as municipalities, are encompassed within the meaning of "state." The Boonton court observed that, while the definition of "state" in CERCLA does not expressly mention local governments, the definition was not an inclusive definition. Judge Ackerman deemed it appropriate to expand the list of entities set forth in 101(27) in order to effectuate the remedial purpose of CERCLA. Id. at 666.

Judge Ackerman pointed out that the definition of "natural resources" in CERCLA included natural resources belonging to local governments. It would, therefore, be anomalous to deny relief to local governments under section 107 when natural resources owned by the local governments are expressly included within the protected coverage of section 107(a)(4)(C). Thus, Judge Ackerman concluded that a municipality is a "state" within the meaning of section 107(a)(4)(C), or, alternatively, that a municipality is an "authorized representative of a state" under section 107(f), and is entitled to bring an action for natural resource damages. Id. at 667-68.

The holding of the Boonton court, and the rationale therefor, were echoed in New York v. Exxon Corp., 633 F.Supp. 609, where the court held that the City of New York could bring an action for natural resource damages under section 107(a)(4)(C).

Interlake and Beazer argue that this Court should reject the holdings of Boonton and New York, and instead follow the holdings in Philadelphia v. Stepan Chemical Co., 713 F.Supp. 1484 (E.D.Pa.1989) and Bedford v. Raytheon Co., 755 F.Supp. 469 (D.Mass. 1991). In Philadelphia, the court relied primarily on the plain meaning of the statute, and held that the term "state" does not include "municipality," stating that the court cannot allow a municipality to proceed as a state when there is no support in either the statutory language or the legislative history of CERCLA for such a result. Id. at 1488. The Phi...