CPC Intern., Inc. v. Aerojet-General Corp.

• Decision Date: 18 December 1989
• Docket Number: No. G89-10503 CA.,G89-10503 CA.
• Citation: 731 F. Supp. 783
• Parties: CPC INTERNATIONAL, INC., Plaintiff, v. AEROJET-GENERAL CORPORATION, Cordova Chemical Company, Cordova Chemical Company of Michigan, and Michigan Department of Natural Resources, Defendants.
• Court: U.S. District Court — Western District of Michigan

731 F. Supp. 783

CPC INTERNATIONAL, INC., Plaintiff, v. AEROJET-GENERAL CORPORATION, Cordova Chemical Company, Cordova Chemical Company of Michigan, and Michigan Department of Natural Resources, Defendants.

No. G89-10503 CA.

United States District Court, W.D. Michigan, S.D.

December 18, 1989.

COPYRIGHT MATERIAL OMITTED

Miller Johnson Snell & Cummiskey by Gordon J. Quist, J. Michael Smith, Grand Rapids, Mich., and Mott & Associates, P.C. by Randy M. Mott, Raissa Kirk, Washington, D.C. (William S. Wells, CPC Intern. Inc., Englewood Cliffs, N.J., of counsel), for plaintiff.

Warner Norcross & Judd by John D. Tully, Grand Rapids, Mich., for Aerojet-General Co., Cordova Chemical Co., and Cordova Chemical Co. of Michigan.

Frank J. Kelley, Atty. Gen. by Stewart H. Freeman, Kathleen L. Cavanaugh, Asst. Attys Gen., Environmental Protection Div., Lansing, Mich., for Michigan Dept. of Natural Resources.

OPINION

HILLMAN, Chief Judge.

I. BACKGROUND

This is an action brought under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq. Plaintiff, CPC International ("CPC"), seeks to recover its response costs incurred in connection with a hazardous waste site in Dalton Township, Muskegon County, Michigan (the "Site"). Plaintiff claims that defendants Michigan Department of Natural Resources ("MDNR"), Aerojet-General Corporation ("Aerojet"), Cordova Chemical Company ("Cordova/California"), and Cordova Chemical Company of Michigan ("Cordova/Michigan") are responsible under CERCLA for these costs. CPC further asks for a declaratory judgment that defendants shall be responsible for any future response costs at the Site, and for any liability CPC should incur as a result of its activities at the Site.

Aerojet and the Cordova defendants have filed a counterclaim against CPC and a cross-claim against MDNR claiming that they are entitled to recover their response costs related to the Site. Both the cross-claim and the counterclaim request declaratory judgment granting reimbursement for any future response costs incurred in connection with the Site.

Presently before the court is a motion by MDNR to dismiss the complaint for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). No motions are pending on either the counterclaim or the cross-claim.

II. STANDARD

The court must liberally construe the complaint, accepting all factual allegations as true and drawing all reasonable inferences in favor of the plaintiff for the purposes of a motion to dismiss under Fed. R.Civ.P. 12(b)(6). Kent v. Johnson, 821 F.2d 1220, 1223 (6th Cir.1987); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir.1976). The court need not determine whether a plaintiff will ultimately prevail, but should limit its consideration to whether the claimant is entitled to offer evidence to support the claims. Scheur v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). A complaint is sufficient if it sets forth enough information to outline the elements of the claim, or permits inferences to be drawn that these elements exist. Jenkins v. McKeithen, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969); German v. Killeen, 495 F.Supp. 822, 827 (E.D.Mich. 1980).

Although factual allegations in the complaint are presumed true, the court need not accept conclusory allegations of law. Vermilion Foam Products Co. v. General Electric Co., 386 F.Supp. 255 (E.D.Mich.1974). However, a party is entitled to pursue his claim unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Thus, if plaintiff's complaint sets forth sufficient allegations to establish a claim for relief, the motion to dismiss must be denied.

III. FACTS

CPC alleges in its complaint that the Site has been contaminated since 1959 when it was the site for Ott Chemical Company. Complaint, ¶ 13. In 1965 a subsidiary of CPC, Four Lakes Chemical Company, purchased the property and continued production at the Site under the Ott name ("Ott-II"). During the time that Ott-II was operating at the Site, 1965-1972, it undertook various measures to reduce pollution and improve waste disposal, including operating groundwater purge wells. Paragraphs 14-16.

CPC sold the Site to Story Chemical Company ("Story") in 1972. Story repeatedly violated discharge standards set by the State of Michigan, causing numerous spills of hazardous substances between 1972 and 1977. Paragraphs 17-19. MDNR allowed Story to discontinue the groundwater purging in 1974, which caused substantial spread of effluent and contamination of nearby residential wells. MDNR did not require the resumption of the purge wells until 1977. Paragraph 20.

Story was judged bankrupt in 1977. Cordova/California purchased Story's assets, including the Site. Paragraphs 23-24. Aware of the contamination on the Site, MDNR requested each prospective buyer, including Cordova/California, to resume operation of the groundwater purge wells. Paragraphs 23-24. However, Cordova/California and MDNR instead entered into an agreement whereby Cordova/California would pay MDNR $600,000 and properly dispose of phosgene on the Site. MDNR, in return, would not hold Cordova/California responsible for any remedial actions deemed necessary as a result of the prior contamination. Further, under the agreement MDNR assumed the responsibility of operating the purge wells. Paragraph 28.

MDNR requested, and received funds from the Michigan State Legislature specifically to operate the purge wells and to provide an alternate water supply for local residents. MDNR never operated the wells nor did it spend the majority of the appropriated funds for the alternative water supply until it was required to do so under a stipulation of settlement entered by the court in Gollach v. CPC International Inc., No. G77-232 (W.D.Mich.1981). Paragraph 29.

MDNR's failure to operate the purge wells resulted in a drastic increase in the contamination of local groundwater. Paragraph 31. MDNR knew of the welling contamination yet nonetheless failed to fulfill its responsibility and operate the purge wells. It further recommended in 1985 that the United States Environmental Protection Agency not pursue corrective action under the Resource Conservation and Recovery Act ("RCRA") but instead indicated that groundwater remediation through CERCLA was sufficient. Paragraph 40.

CPC concludes that MDNR is liable as an "operator" of the Site under CERCLA. CPC also asserts that the agreement with Cordova/California additionally subjects MDNR to liability under CERCLA. CPC calculates that it incurred approximately $4,537,537.00 in response costs in connection with cleanup operations conducted at the Site.

IV. DISCUSSION

The elements of a prima facie case under CERCLA are:

(1) the Site is a "facility;"

(2) a "release" or "threatened release" occurred at the Site;

(3) the release caused plaintiff to incur response costs; and

(4) defendants are responsible persons under CERCLA, 42 U.S.C. § 9607(a).

United States v. Aceto Agr. Chemicals Corp., 872 F.2d 1373 (8th Cir.1989); United States v. Bliss, 667 F.Supp. 1298 (E.D.Mo. 1987). MDNR only disputes the fourth element, insisting that it is not included in any of the four categories circumscribed by Congress. CERCLA defines the class of potential defendants as:

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

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal 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)

Plaintiff argues that MDNR's activities at the Site qualify it as an "operator" under CERCLA, and therefore liable under either section 107(a)(1) or 107(a)(2). 42 U.S.C. § 9607(a)(1)-(2). Additionally, plaintiff alleges that the agreement with Cordova/California involving the disposal of phosgene and operation of purge wells subjects MDNR to liability under section 107(a)(3). 42 U.S.C. § 9607(a)(3). I will address each of these claims separately.

A. Liability under CERCLA section 107(a)(1):

MDNR is clearly not a responsible party under section 107(a)(1). This section applies only to current owners and operators. Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568 (5th Cir.1988); State of New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir.1985). Plaintiff fails to allege that MDNR is presently an owner or operator of the Site, nor is this a justifiable inference from the facts alleged. The complaint therefore fails to state a claim against MDNR under this section.

B. Liability under CERCLA section 107(a)(2):

Plaintiff contends that MDNR is also responsible under section 107(a)(2). 42 U.S.C. § 9607(a)(2). Prior owners and operators are liable under this section if, during the time they owned or operated the facility, there was a disposal of toxic substances. MDNR contests this claim on two grounds. First MDNR argues that it is not an "owner and operator" within the meaning of the statute. Second, MDNR submits that even if its activities at the Site were sufficient to qualify it as an operator, no disposal of hazardous substances...