Franklin County Convention v. American Underwriters

• Decision Date: 26 October 2000
• Docket Number: No. 99-4095,99-4095
• Citation: 240 F.3d 534
• Parties: (6th Cir. 2001) Franklin County Convention Facilities Authority, Plaintiff-Appellee, v. American Premier Underwriters, Inc., Defendant-Appellant, Consolidated Rail Corporation, et al., Defendants, United States of America, Intervenor-Appellee. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 534

240 F.3d 534 (6th Cir. 2001)

Franklin County Convention Facilities Authority, Plaintiff-Appellee, v. American Premier Underwriters, Inc., Defendant-Appellant, Consolidated Rail Corporation, et al., Defendants, United States of America, Intervenor-Appellee.

No. 99-4095

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: October 26, 2000

Decided and Filed: February 13, 2001

Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 94-01050, Edmund A. Sargus, Jr., District Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] John A. Gleason, BENESCH, FRIEDLANDER, COPLAN & ARONOFF, Richard A. Frye, CHESTER, WILLCOX & SAXBE, Columbus, Ohio, for Franklin County Convention Facilities Authority.

Thomas H. Stewart, PIERCE E. CUNNINGHAM COMPANY, Jonathan A. Conte, Pierce Edward Cunningham, Cincinnati, Ohio, for Appellant.

Louise F. Milkman, UNITED STATES DEPARTMENT OF JUSTICE, ENVIRONMENT & NATURAL RESOURCES DIVISION, Washington, D.C., for United States.

Before: SUHRHEINRICH and MOORE , Circuit Judges; EDMUNDS, District Judge^*.

OPINION

SUHRHEINRICH, Circuit Judge.

Defendant American Premier Underwriters, Inc. ("APU"), appeals the judgment for Plaintiff Franklin County Convention Facilities Authority ("CFA") following a bench trial in this cost-recovery action under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601- 9675, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 100 Stat. 1613. APU makes eight arguments: (1) the material released at the site was never conclusively identified as a hazardous substance; (2) CFA did not incur response costs in a manner consistent with the National Oil and Hazardous Substances Pollution Contingency Plan ("NCP"), 40 C.F.R. Part 300, as required by CERCLA; (3) the hazardous material was not placed on the property while it was owned by a predecessor of APU; (4) CFA is not an innocent land owner under CERCLA; (5) even if the district court properly allowed CFA to include a contribution action, the district court abused its discretion by allocating 100% of the liability to APU under § 113; (6) the district court improperly allowed CFA to include a contribution action when it had only pleaded a response cost recovery action; (7) CFA's attorney fee award, totaling $10,818, was not a necessary response cost, as required by CERCLA; and (8) applying CERCLA retroactively to this case violates the Due Process and Takings Clauses. We AFFIRM for reasons slightly different than those given by the district court.

I.

Defendant APU is the surviving corporate successor of several railroad companies, including Penn Central, the Cleveland, Columbus and Cincinnati Railroad Company ("CCC"), the Columbus and Xenia Railroad Company ("C&X"), and the Union Depot Company, all of which operated in Columbus, Ohio, beginning in the mid-nineteenth century. CFA is a public agency operating pursuant to Chapter 351 of the Ohio Revised Code.

Sometime prior to 1901, a wooden box filled with creosote and benzene,¹ measuring thirty-one feet by sixty-one feet by eleven feet, was buried near a railroad depot in Columbus. The box straddled two tracts of land that had been purchased by CCC and C&X in 1864, and had most likely been used as a tank for soaking wooden railroad ties, bridge timbers, and other materials. Records of the box disappeared over time, if they existed at all.

In 1973, the City of Columbus ("City") exercised its eminent domain authority over a parcel of property, which included the land upon which the box had been buried. By purchase agreement following an independent appraisal, the City paid Penn Central and other predecessors of APU the fair market value of $5,490,998.27 for the land. The portion of the land containing the box was acquired to the "Ohio Center Authority," one of the parties to the purchase agreement. Among other things, the railroad companies agreed to remain responsible for any "claims which may affect . . . any portion of the premises."

In October 1989, CFA commissioned a private consultant to conduct three environmental assessments for the property. These assessments attempted in part to identify storage tanks and hazardous substances using soil sampling, groundwater monitoring, examination of records, and other tests. None of the tests revealed the presence of the box. At the conclusion of the testing, CFA subleased the property from the City for the purpose of constructing a new convention facility.

In October 1990, a contractor hired by CFA was digging a storm sewer line with a backhoe when he accidentally split open the box. Some of the creosote and benzene mixture seeped into the ground, omitting a strong, objectionable odor. An environmental consultant was immediately called to the scene, and the Ohio Environmental Protection Agency ("Ohio EPA") was notified within several days. Chemical analyses performed by CFA's environmental consultant determined that the material was creosote mixed with benzene.

Within a week of discovering the box, CFA notified the City. Accounts of the box and its contents were published in the local newspapers, which continued coverage as significant events occurred. CFA Board meetings, which were open to the public and covered by local media, included oral and written status reports concerning the site. An executive director of CFA was designated to speak to community groups, to handle all media inquiries, and to respond to public records requests. In March 1991, the Ohio EPA prepared a detailed report on the pollution and the risks presented to the human and natural environment. CFA's environmental consultant also prepared a report with recommendations as to different methods of disposal. After considering its options, CFA tentatively chose to remove and transport the contamination to an off-site location. CFA prepared detailed job specifications, which were approved by the Ohio EPA, and consulted the United States EPA. The remediation was publicly bid to Foster Wheeler Enviresponse in August 1991.

On September 22, 1991, CFA sent a "demand" letter to APU expressly referencing CERCLA. The demand contained no dollar amount, but requested that "Penn Central . . . accept financial responsibility for remediation of the contamination." APU declined, and despite various written and oral invitations, did not request to investigate the box or comment upon the remediation.

The remediation began in October 1991. In the course of removing the creosote, Foster Wheeler discovered that it had migrated into approximately 45 feet of pea gravel surrounding a sewer line. Foster Wheeler erected a barrier to prevent further migration, excavated a significant amount of contaminated material around the box, and encapsulated the remaining contamination with compacted soil and concrete.

During the remediation, a contract dispute arose between CFA and Foster Wheeler, which had spent nearly $1 million on the cleanup - exceeding its authority by approximately $850,000. Ensuing litigation in the Ohio state courts resulted in a verdict for CFA, which ultimately paid Foster Wheeler only $239,280.07.

On October 31, 1994, CFA commenced this action to recover the response costs it incurred in the remediation. On April 15, 1998, at the close of discovery, APU moved for summary judgment. The district court denied APU's motion, but resolved several relevant issues. First, it concluded that CFA, as a statutorily created government entity, was not a "state" within the meaning of CERCLA, and therefore had the burden of proving that its response costs were incurred in a manner consistent with the NCP². Second, it ruled that the NCP standards for a remedial action, 40 C.F.R. §§ 300.430 and 300.435, applied³. Third, it ruled that CFA could proceed concurrently under both CERCLA § 107(a), for response cost recovery, and CERCLA § 113(f), for contribution, despite having only pleaded a cause of action for cost recovery.

On January 5, 1999, the United States intervened to defend the constitutionality of retroactive application of CERCLA.

After a bench trial, judgment was entered for CFA for $239,280.07, plus prejudgment interest. In a separate published memorandum and order, the court upheld the retroactive application of CERCLA to APU. See Franklin County Convention Facilities Auth. v. American Premier Underwriters, Inc., 61 F. Supp. 2d 740, 743-44 (S.D. Ohio 1999).

II.

We review de novo the district court's conclusions of law. See Carter-Jones Lumber Co. v. Dixie Distrib. Co., 166 F.3d 840, 846 (6th Cir. 1999). We similarly review mixed questions of fact and law de novo. See Wooldridge v. Marlene Indus., Corp., 875 F.2d 540, 545 (6th Cir. 1989).

The district court's factual findings are reviewed for clear error. See id. Considerable weight is afforded to findings of fact; they will be reversed only if we are left "with the definite and firm conviction that a mistake has been committed." See Stevens v. McGinnis, Inc., 82 F.3d 1353, 1355-56 (6th Cir. 1996). Where two logically permissive interpretations of the evidence exist, the trial judge's selection cannot be adjudged clearly erroneous on appeal. See Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564, 573-75 (1985). The clearly erroneous standard applies when findings are based entirely on physical or documentary evidence, as well as on inferences from other facts. See id.

III.

CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), is a comprehensive environmental statute principally designed to effectuate two goals: (1) the cleanup of toxic waste sites; and (2) the compensation of those who have attended to the remediation of environmental hazards. See Meghrig v. KFC Western, Inc., 516 U.S. 479, 483 (1996). To establish a prima facie case for cost recovery under § 107(a), a...