Differential Development-1994 v. Harkrider Distri.
| Decision Date | 09 January 2007 |
| Docket Number | Civil Action No. H-05-3375. |
| Citation | 470 F.Supp.2d 727 |
| Parties | DIFFERENTIAL DEVELOPMENT-1994, LTD and Dean Lee d/b/a Pro Cleaners, Plaintiffs, v. HARKRIDER DISTRIBUTING CO. et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Tynan Buthod, Baker Botts LLP, James R. Clark, James R. Clark & Assoc., Houston, TX, for Plaintiffs.
Britton Bryon Harris, Brett J. Sileo, Harris Hilburn & Sherer, David Lee Burgert, Jessica Lottie Averitt, Porter & Hedges, L.L.P., Daniel E. Vineyard, Connelly Baker et al., Houston, TX, Dwayne Joseph Hermes, Hermes Sargent et al., Dallas, TX, for Defendants.
Among the questions presented by the motions to dismiss in this case is the question the Supreme Court left unresolved in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004): whether a party potentially responsible for the cleanup of property contaminated by hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but not able to bring an action for contribution under section 113(f) of that statute, may bring a cost recovery or contribution action against another potentially responsible party under section 107(a).1 The Fifth Circuit has not addressed this issue since the Supreme Court decision. District court decisions in this circuit conflict.2 Since the Supreme Court's decision, the Eighth Circuit and the Second Circuit have held that a potentially responsible party may bring an action against another potentially responsible party under section 107(a).3 The Third Circuit has rejected this approach and reaffirmed its earlier precedent that a potentially responsible party may not sue another potentially responsible party for cost recovery or contribution under section 107(a) or federal common law.4 Certiorari petitions are pending, asking. the Supreme Court to resolve the circuit conflict.
The Supreme Court declined to reach the section 107 claim in Cooper Industries because the relationship between sections 107 and 113 had not been fully briefed and "merit[ed] full consideration by the courts below." 543 U.S. at 169, 125 S.Ct. 577. Deciding the pending motions to dismiss is but one step on the way to binding precedent on the issue from either the Fifth Circuit or the Supreme Court. For the reasons stated below, this court grants the motion to dismiss the CERCLA section 107(a) and section 113(f) claims. Because the only federal claims in the case are dismissed, this court declines to continue to exercise jurisdiction over the remaining state-law claims and dismisses those claims, without prejudice.
Differential Development-1994, Ltd. is a limited partnership that owned a shopping center in Houston, Texas beginning in the mid 1990s. Differential Development no longer owns the shopping center but did when this suit was filed. Dean Lee leased space in the shopping center where he operated Pro Cleaners, a dry-cleaning business, from 1999 to the present. In the fifth amended complaint, Differential and Pro Cleaners allege that dry-cleaning chemicals collectively known as "PERC" have contaminated groundwater under and around the shopping center.5 The parties do not dispute that PERC is a hazardous substance as defined in 42 U.S.C. § 9601(14).
Differential Development and Pro Cleaners allege that they began an ongoing investigation and cleanup of the surface and subsurface PERC contamination in 2003. (Id. at 3). In July 2004, Differential and Pro Cleaners entered into a Voluntary Cleanup Program (VCP) Agreement with the Texas Commission on Environmental Quality (TCEQ), in which they did not admit liability but applied to participate in a voluntary cleanup program. In the VCP Agreement, the TCEQ stated that it would not bring an enforcement action against Differential Development and Pro Cleaners during the term of the Agreement. Differential Development and Pro Cleaners reserved their right to seek contribution or "any other available remedy" against "any person ... found to be responsible or liable for contribution ... or otherwise for any amounts which have been or will be expended by the Applicant in connection with the Site." (Docket Entry No. 104, Ex. C at 7). Differential Development and Pro Cleaners claim to have incurred substantial costs implementing the Agreement and expect to incur future response costs. The VCP Agreement has not been completed.
Differential Development and Pro Cleaners have sued the City of Houston and two companies, alleging that they caused or contributed to the PERC contamination surrounding the shopping center. Differential Development and Pro Cleaners allege that wastewater containing PERC was discharged by Pro Cleaners into the City's sewer system. Differential Development and Pro Cleaners allege that the sewer lines near the shopping center had gaps and cracks from which the PERC was released. Differential Development and Pro Cleaners also allege that Pro Cleaners obtained its dry-cleaning chemicals from Harkrider Distributing Co., n/k/a/ KSB, Inc. and that spills from Harkrider's delivery trucks and/or other product containers during its operations caused or contributed to the PERC contamination. Differential Development and Pro Cleaners allege that Pro Cleaners contracted with Safety-Kleen Systems, Inc. for waste-management services and that spills from Safety-Kleen service trucks and/or other waste containers during its operations caused or contributed to the PERC contamination.
Differential Development and Pro Cleaners assert that they are not "responsible parties" under CERCLA because they did not own or operate a "facility" from which PERC "releases" to the environment occurred. Differential Development and Pro Cleaners assert that the "releases" occurred from the City sewer lines and/or the Harkrider and Safety-Kleen trucks or containers, not the drycleaning establishment. (Docket Entry No. 84 at 6-12). They assert that Harkrider, Safety-Kleen, and the City of Houston are liable under sections 107(a) and 113(f) for the response costs. Differential Development and Pro Cleaners alternatively assert that even if they are potentially responsible parties under CERCLA, they nonetheless have the right to recover response costs from the City, Harkrider, and Safety-Kleen under sections 107(a) and 113(1) of CERCLA. Differential Development and Pro Cleaners also seek a declaratory judgment that the City of Houston, Harkrider, and Safety-Clean are jointly and severally liable or each liable fora proportionate share of past and future costs to clean up the PERC contamination under and around the shopping center.
The fifth amended complaint also asserts claims for contribution under the Texas Solid Waste Disposal Act, TSWDA, Tex. Health & Safety Code § 361.344. The TSWDA contribution claims are asserted against Harkrider and Safety-Kleen. (Docket Entry No. 84 at15-16). Differential Development and Pro Cleaners also assert state-law negligence claims against Harkrider and Safely—Kleen for their alleged failure to use reasonable care in delivering dry-cleaning chemicals and providing waste-management services to Pro Cleaners. The fifth amended complaint also. asserts state-law claims against CB Richard Ellis, Inc. (CBRE), the property' manager of the shopping center that Differential Development owned and where Pro Cleaners leased space. Differential Development alleges that CBRE breached its management contract by not using reasonable efforts to ensure that Pro Cleaners complied with the lease provisions prohibiting it from disposing of contaminants and requiring that it maintain $1 million in environmental insurance coverage. Differential Development alleges that CBRE is liable for failing to disclose that Pro Cleaners had allowed its environmental insurance coverage to lapse for two years. Differential Development also allege that CBRE is liable for failing to provide environmental insurance for the shopping center. Differential alleges that CBRE also failed to collect rent from other tenants in the shopping center. The claims against CBRE are state common-law claims for negligence, breach of contract, breach of fiduciary duty, and fraud.
Harkrider and Safety-Kleen moved under Rule 12(b)(6) to dismiss the CERCLA claims asserted in the various amended complaints. (Docket Entry Nos. 7, 9, 12, 97). CBRE moved under Rule 12(b)(1) to dismiss the CERCLA claims against the City, Harkrider, and Safety-Kleen and to dismiss the state-law claims against CBRE once the federal claims are dismissed. (Docket Entry No. 92). Differential Development and Pro Cleaners have responded, (Docket Entry No. 22, 101, 104).
The City of Houston filed cross-claims after the fifth amended complaint. (Docket Entry No. 91). Differential Development filed motions to dismiss the cross-claims for lack of subject-matter jurisdiction and for failure to state a claim under the Texas Water Code. (Docket Entry Nos. 100, 101). The City of Houston has responded. (Docket Entry No. 105).
Based on the pleadings, the motions, responses, and replies, the parties' submissions, and the applicable law, this court dismisses the CERCLA claims and declines to continue to exercise supplemental jurisdiction over the remaining state-law claims. The reasons are set out below.
The parties dispute whether this court should apply Rule 12(b) (6) or Rule 12(b)(1) to the motions to dismiss. Harkrider and Safety-Kleen moved under Rule 12(b)(6) to dismiss the CERCLA claims, (Docket Entry Nos. 7, 9, 12, 97), and CBRE moved to dismiss under Rule 12(b)(1), (Docket Entry No. 92) Differential Development and Pro Cleaners argue that Rule 12(b)(6) is the appropriate standard.
A motion to dismiss filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges the subject-matter jurisdiction of...
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Table of Cases
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