Dickerson, Inc. v. Holloway

• Decision Date: 27 April 1987
• Docket Number: No. 82-244-Civ-3-14.,82-244-Civ-3-14.
• Citation: 685 F. Supp. 1555
• Parties: DICKERSON, INC., et al., Plaintiffs, v. Floyd C. HOLLOWAY, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

685 F. Supp. 1555

DICKERSON, INC., et al., Plaintiffs, v. Floyd C. HOLLOWAY, et al., Defendants.

No. 82-244-Civ-3-14.

United States District Court, M.D. Florida, Jacksonville Division.

April 27, 1987.

Richard G. Rumrell, Geoffrey S. Welch, Alan B. Vlcek, Rumrell & Vlcek, Jacksonville, Fla., for plaintiffs.

Dorothea Beane, Asst. U.S. Atty., Jacksonville, Fla., Roberta T. Eaton, Sharron J. Philo, Defense Reutilization and Marketing

Services, Federal Center, Office of Counsel, Battle Creek, Mich., for U.S.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

DAVID S. PORTER, Senior District Judge, sitting by designation^*:

Plaintiffs, Dickerson, Inc., Dickerson Florida, Inc., and Dickerson Realty Florida (hereinafter referred to in the singular as plaintiff) brought this negligence action against the United States pursuant to the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 2671-2680. Jurisdiction is based on 28 U.S.C. § 1346. Plaintiff alleges that the United States was negligent in the selection and supervision of American Electric Corporation (AEC) as a contractor for the disposal of polychlorinated biphenyls (PCBs), a highly toxic and extremely persistent substance, from U.S. military bases around the country. Plaintiff contends that as a result of the government's breach of duty, PCB contaminated plaintiff's fuel storage tanks causing significant damage. The United States contends that it is immune from liability in this suit pursuant to the FTCA, and, if we find there is no immunity, that plaintiff has not sufficiently proved that the government's breach was the direct and proximate cause of plaintiff's damages.

The Court denied the government's motion for summary judgment, and the matter came on for trial in Ocala, Florida on January 5, 1987. The parties have submitted proposed Findings of Fact and Conclusions of Law, as well as post-trial briefs on the issue of chain of custody of the PCB contaminated oil. Having carefully considered the exhibits, the testimony adduced at trial, the considerable deposition testimony, and the submissions of the parties, we issue the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

1. Plaintiff, Dickerson, Inc. (Dickerson), was and is a corporation organized and incorporated under the laws of the State of North Carolina, with its principal place of business in the State of North Carolina. Dickerson is engaged in road paving and other asphalt work in Jacksonville, Florida.

2. The successors-in-interest of Dickerson, Inc. are Dickerson Florida, Inc. (Dickerson Florida), and Dickerson Realty Florida, Inc. These companies were formed on or about April 1, 1982 and are incorporated under the laws of Florida, and have their principal place of business in Duval County, Florida.

3. Defendant, United States Government, through the Defense Property Disposal Service (DPDS) (now the Defense Reutilization and Marketing Service (DRMS)), is an agency within the Department of Defense (DOD).

4. Dickerson had three asphalt facilities in Jacksonville, Florida. Those facilities were located at Plant 19 on Sommers Road, Plant 33 on Edwards Street, and Plant 28 on Shad Road in Jacksonville, Florida.

5. At all material times before April 1, 1982, Thomas C. Lillard was Executive Vice President of Dickerson, Inc. and was in charge of each of the three Jacksonville facilities.¹

6. The operations at each asphalt plant included heating the asphalt so that the asphalt could be transported to locations where asphalt was needed.

7. Dickerson utilized No. 2 diesel fuel oil and waste fuel oil for the sole purpose of heating the asphalt. Dickerson commenced using waste oil during the oil shortage in 1978 because it was cheaper than other comparable fuel sources (Tr. at 37; Deposition of Lillard, Vol. I at 44-45).

8. Sometime after 1980 Dickerson applied for a modification of its state permit in order to burn waste oil without violating the permit provisions (Tr. 514). Wayne E. Tutt from the City of Jacksonville Bio-Environmental Services sent a letter dated May 8, 1981 to Dickerson, which states in pertinent part:

A review of your annual report submitted for calendar year 1980 indicates that your asphalt batch plant located at 8708 Sommers Road used 439,430 gallons of waste oil. Your Air Pollution Operating Permit # A016-28762 indicates that # 2 diesel fuel is the only fuel in use at the Sommer Road facility. The use of waste oil would represent a violation of permit conditions pursuant to Chapter 403.161 Florida Statutes.

Plaintiffs Exhibit 24.

9. Dickerson received the fuel oil and waste fuel oil from three suppliers, Floyd C. Holloway, doing business as Holloway Waste Oil ("Holloway"), Bill John's Oil Company, and C & C Bulk and Liquid Transfer Company. At no time did Dickerson use the waste oil for any other purpose other than as a fuel source; i.e., it was never used as a sealant, coating, or dust control agent. Holloway supplied more than eighty (80%) percent of all the waste oil received by Dickerson during the period from March, 1981 until January 6, 1982 (Tr. at 20, 154).

10. It is unclear what percentage of Holloway's waste oil came from AEC during the relevant time period. Ken Graden, a long-time Holloway employee primarily charged with the job of making local pickups, estimated he personally picked up 5% of Holloway's total waste oil from AEC (Tr. at 176).

11. Several types of fuel oil storage tanks were located at each of the three facilities of Dickerson, Inc. (Edwards Street, Shad Road, and Sommers Road). The Edwards Street storage tank also included a 250,000 gallon tank which was built at the direction of T.C. Lillard. This storage tank was constructed between March and August 1981, and was used solely for storage in August, 1981.

12. Holloway was in the business of selling waste fuel oil to various customers, including Dickerson. Holloway owned several trucks including a red tanker truck that he used to haul waste fuel oil to his customers. He parked the red tanker in the AEC yard. (See Deposition of Quackenbush at 31.) His primary assistant for the hauling of waste oil was Kenneth W. Graden.

13. Holloway permitted AEC, a company engaged in the business of removing, storing, and disposing of PCB contaminated material and transformers to store its transformers and other equipment on several parcels of property owned by Holloway.² Those facilities were located on Guthrie Street, Raiford Street, and Lane Avenue in Jacksonville, Florida.

14. AEC conducted its operations from its main facility on Ellis Road in Jacksonville, Florida. The company was, however, also affiliated with American Environmental Protection Corporation ("AEPC") located in Greensboro, Alabama, and American Environmental Energy Corporation ("AEEC") located on Swann Avenue in Jacksonville. Maxwell Cobb's father-in-law was President of AEPC, and Michael Hamm was President of AEEC. The property located in Greensboro, Alabama was owned by Michael Hamm.³ At the AEC facility in Jacksonville were both above-ground and underground storage tanks for PCB liquids.

15. Pursuant to Defense Environmental Quality Program and Policy Memoranda 80-5 and 80-9, DPDS assumed responsibility for the disposal of PCBs from military installations throughout the United States.

16. In 1981, DPDS entered into contracts with private contractors to package, transport, and dispose PCBs from various military installations. These contracts required that PCBs be packaged, transported and disposed of in accordance with all applicable laws and regulations, and that PCB materials containing more than 50 parts per million be disposed of at facilities permitted by the United States Environmental Protection Agency.

17. In 1981, defendant, United States Government, through the Defense Property Disposal Service (DPDS) awarded and administered two contracts to AEC, a former defendant in this case, for the disposal of PCBs.

18. The first contract, known as the "Ogden I" contract, was awarded and administered by Ernest L. Bertagnolli, an employee of DPDS's Regional Office in Ogden, Utah. This contract covered the disposal of PCBs from several military installations in the states of Utah and California.

19. The other contract, known as the "Battle Creek I" contract, was awarded and administered by Ronald W. Wagner, an employee of DPDS, located at DPDS's headquarters in Battle Creek, Michigan. The Battle Creek I contract covered the disposal of PCBs from various military installations in the northeastern and southern states.

20. Both Bertagnolli and Wagner were contract specialists who had no prior background or training with PCB material or other hazardous waste. (See Deposition of Bertagnolli, Vol. I at 23.)

21. DPDS adhered to an internal policy and rule of being responsible for the ultimate disposal of PCB contaminated contents from the point of its generator until final disposal. This policy is commonly referred to as "cradle to grave" responsibility. (See plaintiffs' exhibit 36.)

22. In order to encourage small businesses to participate in the disposal of PCBs from DOD facilities in the western and eastern United States, the DPDS subdivided the Ogden I and Battle Creek I contracts into separate line-item bids. The separate line items enabled a large number of small companies to bid competitively for each of the jobs. Moreover, DPDS believed the overall contract prices could be reduced by increasing the number of bidders. AEC was the lowest bidder on a significant portion of the contracts. See Review of Hazardous Waste Disposal Practices at Federal Facilities, 98th Cong., 1st Sess. 6-9 (1983) (Defendant's Exhibit 41).

23. At the time of the letting of the first contract Ogden I, only two places in the United States could legally incinerate PCBs in excess of 500 ppm. Those facilities were Rollins and ENSCO.

24. In accordance with the Defense Acquisition...