Ganton Technologies, Inc. v. Quadion Corporation, No. 89 C 6869

• Decision Date: 04 October 1993
• Docket Number: 89 C 3536.,No. 89 C 6869
• Citation: 834 F. Supp. 1018
• Parties: GANTON TECHNOLOGIES, INC., Plaintiff, v. QUADION CORPORATION and O.H. Materials Corporation, Defendants, and QUADION CORPORATION, Crossclaimant, Counterclaimant and Third Party Plaintiff, v. GANTON TECHNOLOGIES, INC., Counterclaim Defendant, O.H. Materials Corporation, Crossclaim Defendant, H.D.R. Infrastructure, Inc., Delores H. Mache, The John Mache Declaration of Trust, dated August 1, 1973, John Doe and Mary Roe as Beneficiaries of The John Mache Declaration of Trust, The First National Bank of Des Plaines, as Trustee of The John Mache Declaration of Trust, NBD Park Ridge Bank as Trustee of the John Mache Declaration of Trust, and NBD Trust Company of Illinois, as Trustee of the John Mache Declaration of Trust, Third Party Defendants.
• Court: U.S. District Court — Northern District of Illinois

834 F. Supp. 1018

GANTON TECHNOLOGIES, INC., Plaintiff, v. QUADION CORPORATION and O.H. Materials Corporation, Defendants, and QUADION CORPORATION, Crossclaimant, Counterclaimant and Third Party Plaintiff, v. GANTON TECHNOLOGIES, INC., Counterclaim Defendant, O.H. Materials Corporation, Crossclaim Defendant, H.D.R. Infrastructure, Inc., Delores H. Mache, The John Mache Declaration of Trust, dated August 1, 1973, John Doe and Mary Roe as Beneficiaries of The John Mache Declaration of Trust, The First National Bank of Des Plaines, as Trustee of The John Mache Declaration of Trust, NBD Park Ridge Bank as Trustee of the John Mache Declaration of Trust, and NBD Trust Company of Illinois, as Trustee of the John Mache Declaration of Trust, Third Party Defendants.

Nos. 89 C 6869, 89 C 3536.

United States District Court, N.D. Illinois, E.D.

October 4, 1993.

Robin Lee Roberts, Mayer, Brown & Platt, Peter J. Miller, Richard Lee Stavins, Robbins, Salomon & Patt, Ltd., Chicago, IL, for Ganton Technologies, Inc.

Nicholas Frank Esposito, Terence Michael Heuel, Mark A. Schram, Esposito, Heuel & Schramm, Chicago, IL, Byron E. Starns, Ilsley Dan Colton, Susan M. Robiner, Leonard, Street & Deinard, Minneapolis, MN, for Quadion Corp.

Paul W. Schroeder, Cheryl Lynn Urbanski, Jones, Day, Reavis & Pogue, Chicago, IL, E. Joel Wesp, James R. Vaughn, Kevin J. Osterkamp, Roetzel & Andress, LPA, Columbus, OH, for O.H. Materials Corp.

Edmund B. Moran, Jr., Chicago, IL, for John Mache Declaration of Trust, Dated August 1, 1973, John Doe and Mary Doe, as beneficiaries of the John Mache Declaration of Trust.

Robert L. Graham, Kenneth A. Kroot, Jenner & Block, Benjamin P. Beringer, Gessler, Flynn, Fleischmann, Hughes & Socol, Ltd., Chicago, IL, for NBD Park Ridge Bank, NBD Trust Co. of Illinois and Delores H. Mache.

Daniel J. Dowd, Dowd, Dowd & Mertes, Ltd., Des Plaines, IL, for First Nat. Bank of Des Plaines.

MEMORANDUM OPINION AND ORDER (VI)

HOLDERMAN, District Judge:

Third party defendant HDR Engineering, Inc. ("HDR") moves to dismiss the amended third-party complaint of Quadion Corporation ("Quadion"). HDR also moves for a protective order. Defendant and cross-claim defendant O.H. Materials Corporation ("OHM") moves to dismiss Count III, IV, V, and VI of Quadion's amended cross-claim. HDR's motion to dismiss is granted in part and denied in part. HDR's motion for a protective order is denied. OHM's motion to dismiss is granted in part and denied in part.

BACKGROUND

The facts of this complex, consolidated case were discussed in opinions dated May 17, 1990, 738 F.Supp. 270 ("Opinion I"), December 21, 1990, 755 F.Supp. 203 ("Opinion II"), June 11, 1991, 1991 WL 11170 ("Opinion III"), and March 26, 1992, 1992 WL 71658 ("Opinion IV") and will not be repeated here.

Quadion's amended cross-claim contains six counts against OHM:

1. Breach of Contract;

2. Negligence;

3. CERCLA Cost Recovery;

4. CERCLA Contribution;

5. CERCLA Declaratory Judgment;

6. Strict Liability;

7. Indemnity and/or Contribution.

(Quadion's Amended Cross-Claim, pp. 16-25).

OHM moves for dismissal of the CERCLA counts (III, IV & V) on the grounds OHM is not a "responsible party" under CERCLA, and for dismissal of Count VI on the grounds OHM's activities are not abnormally dangerous. (OHM's Motion to Dismiss, p. 2).

Quadion's amended third party complaint asserts the following claims against HDR:

1. Breach of Contract;

2. Negligence;

3. CERCLA Cost Recovery;

4. CERCLA Contribution;

5. CERCLA Declaratory Judgment;

6. Strict Liability.

(Quadion's amended third party complaint, pp. 18-28).

HDR moves for dismissal on the following grounds:

1. Count I fails because HDR had no control over OHM's activities, HDR has no duty to indemnify Quadion, and the contract contains a disclaimer of warranties;

2. Count II fails because economic losses are not recoverable in tort, and law of the case indicates HDR is not liable for negligence 3. The CERCLA counts (III, IV & V) fail because HDR is not an "owner or operator," there was no disposal during HDR's tenure, and any disposal was merely passive;

4. Count VI fails because Illinois does not impose strict liability for pollution-causing activities;

5. Quadion's request for attorney's fees fails because they are not permitted under CERCLA.

(HDR's Motion to Dismiss, pp. 1-4).

ANALYSIS

In ruling on a motion for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must presume all of the well-pleaded allegations of the complaint to be true. Miree v. De Kalb County, Georgia, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977). In addition, the court must view those allegations in the light most favorable to the plaintiff. Gomez v. Illinois State Board of Education, 811 F.2d 1030, 1039 (7th Cir.1987). Dismissal is proper only if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

A. Strict Liability

Both HDR and OHM move for dismissal of the counts based on strict liability. This court concludes that the clean up of PCB's from an industrial site is not an abnormally dangerous activity that warrants the application of strict liability.

While the parties have cited a variety of state court cases, the Seventh Circuit provides definite guidance on this matter. In Indiana Harbor Belt R. Co. v. American Cyanamid Co., 916 F.2d 1174 (7th Cir.1990), the Seventh Circuit held that a chemical manufacturer which shipped a flammable, toxic chemical in a railroad tank car through a densely populated metropolitan area was not strictly liable for the consequences of the spill. In applying Illinois law, the court listed the six factors that were typically evaluated in ascertaining whether an activity was abnormally dangerous and strict liability was warranted:

1. the risk of harm is great;

2. the harm, if any occurred, would be substantial;

3. the harm could not be prevented by the use of reasonable care.

4. the activity is not a common one;

5. the activity is inappropriate for the place it is performed;

6. the value to the community of the activity does not offset its risk.

Id. at 1177.

The Seventh Circuit in Indiana Harbor Belt focused primarily on the third factor, and concluded any risk involved in the transportation of the chemical could be eliminated by use of reasonable care. Id. The court noted that if the harm associated with any activity could be eliminated by reasonable care, there was no need for strict liability to apply. Id. Negligence was the preferred standard in those cases. Id. The court further noted that strict liability was more likely to attach to a storer of hazardous materials, due to their greater control over the materials, than a shipper. Id. at 1179. The court stated that the analysis should focus not on the substance, but on the activity which involves the substance. Id. at 1181.

As for PCBs, the Seventh Circuit has noted that no court has held the manufacture of PCB's is an abnormally dangerous activity. City of Bloomington, Ind. v. Westinghouse Elec., 891 F.2d 611, 616 n. 7 (7th Cir.1989).¹ In the context of a manufacturer, the court stated that the "risks associated with the disposal of PCB's could have been eliminated by the exercise of reasonable care." Id. at 616.

This court concludes that the PCB clean-up activities are not abnormally dangerous. There is no basis for believing any risk of harm could not be eliminated by the use of reasonable care. See Westinghouse Electric, 891 F.2d at 616. Further, focusing on the activity, rather than just the toxic substance, per Indiana Harbor, 916 F.2d at 1181, clean-up operations serve the valuable and essential social function of reducing the danger of PCBs.

B. CERCLA Liability

Both OHM and HDR seek dismissal of the CERCLA-based claims. This court concludes that the CERCLA claims against both OHM and HDR are sufficient to survive the motion to dismiss.

The cases from this jurisdiction dealing with this issue are not analogous factually. Edward Hines Lumber Co. v. Vulcan Materials Co., 861 F.2d 155 (7th Cir.1988); Brookfield-North Riverside Water Commission v. Martin Oil Marketing, Ltd., No. 90 C 5884, slip op., 1992 WL 63273 (N.D.Ill. March 12, 1992) (Judge Parsons); United States v. Petersen Sand and Gravel, Inc., No. 91 C 5835, 1992 WL 281407 (N.D.Ill. Oct. 7, 1992) (Judge Conlon).

The leading Seventh Circuit case, Edward Hines, held that a supplier of wood preserving chemicals was not liable to a lumber company owner for clean up expenses. 861 F.2d at 157-158. Section 107(a)(2) of CERCLA, 42 U.S.C. § 9607(a)(2) imposes clean up liability on "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." Id. at 156. The court concluded that the chemical supplier was not an "owner or operator", despite the fact the supplier had designed and built the plant for the lumber company, had trained the lumber company's employees, and had a right to inspect the operation. Id. at 157. The court held that even though the chemical supplier designed and built the plant, it never operated it. Id. at 158. The supplier had immediately turned over the "turnkey operation" to the owner, who actually operated the finished facility from the beginning. Id. The court noted that the "statute does not fix liability on slipshod architects, clumsy engineers, poor construction contractors, or negligent suppliers of on-the-job training ..." Id. at 157.

Hines, as do most of the cases, deals with what Quadion has called "classical contractors," rather than pollution clean-up contractors. Quadion, in essence, alleges that OHM and HDR were hired to clean up PCB contamination at Quadion's facility. Quadion further alleges that instead of cleaning up the existing contamination, they exacerbated the problem by...