General Elec. Co. v. AAMCO Transmissions, Inc.

• Citation: 962 F.2d 281
• Decision Date: 13 May 1992
• Docket Number: D,No. 933,933
• Parties: , 60 USLW 2739, 22 Envtl. L. Rep. 20,930 GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, v. AAMCO TRANSMISSIONS, INC.; Central Albany, Inc.; Robert Fowler, (formerly doing business as A & B Avco); A & B Service Center, (successor to A & B Avco); Sylvester Brackett, doing business as Brackett's Sunoco Station; Charles Smith, doing business as Smith's Automotive and Charles H. Smith's Auto Repairing, (formerly doing business as Charlie Smith Texaco); Harry Malone, doing business as Chick's Sunoco, (formerly doing business as Chick's Auto Service and Chick's Gulf); Colonie Import Distributors Ltd.; John H. Ellsworth, doing business as Gulf Service Station; George's Mobil Mart; James Morgan, doing business as Jim's Northway Arco Service Station; Latham Auto Lab, Inc. and Latham Mobile Mart; Lehmann's Garage; Marshall's Garage, Inc.; Allan Kowsky; Park Tire Sales and Service Center; Two World Tires; Ronald J. Gizzi, doing business as Ron's Service Center; Richard B. Tullock, doing business as Tullock's Service Station; Gulf Oil Company; Shell Oil Company and Atlantic Richfield Company, Defendants, Gulf Oil Company; Shell Oil Company and Atlantic Richfield Company, Defendants-Appellees. ocket 91-7980.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 281

962 F.2d 281

34 ERC 1766, 60 USLW 2739, 22 Envtl.

L. Rep. 20,930

GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, v. AAMCO TRANSMISSIONS, INC.; Central Albany, Inc.; Robert

Fowler, (formerly doing business as A & B Avco); A & B

Service Center, (successor to A & B Avco); Sylvester

Brackett, doing business as Brackett's Sunoco Station;

Charles Smith, doing business as Smith's Automotive and

Charles H. Smith's Auto Repairing, (formerly doing business

as Charlie Smith Texaco); Harry Malone, doing business as

Chick's Sunoco, (formerly doing business as Chick's Auto

Service and Chick's Gulf); Colonie Import Distributors

Ltd.; John H. Ellsworth, doing business as Gulf Service

Station; George's Mobil Mart; James Morgan, doing business

as Jim's Northway Arco Service Station; Latham Auto Lab,

Inc. and Latham Mobile Mart; Lehmann's Garage; Marshall's

Garage, Inc.; Allan Kowsky; Park Tire Sales and Service

Center; Two World Tires; Ronald J. Gizzi, doing business

as Ron's Service Center; Richard B. Tullock, doing business

as Tullock's Service Station; Gulf Oil Company; Shell Oil

Company and Atlantic Richfield Company, Defendants,

Gulf Oil Company; Shell Oil Company and Atlantic Richfield

Company, Defendants-Appellees.

No. 933, Docket 91-7980.

United States Court of Appeals,

Second Circuit.

Argued March 3, 1992.

Decided May 13, 1992.

Daniel R. Solin, Solin & Breindel, New York City, for plaintiff-appellant.

Michael B. Smith, Chevron, Houston, Tex., for defendant-appellee Gulf Oil Co.

Scott A. Barbour, McNamee, Lochner, Titus & Williams, Albany, N.Y., for defendant-appellee Shell Oil Co.

David K. Floyd, Phillips, Lytle, Hitchcock, Blaine & Huber, Buffalo, N.Y., for defendant-appellee Atlantic Richfield Co.

Before: CARDAMONE and ALTIMARI, Circuit Judges, TELESCA, District Judge. ^*

PER CURIAM:

INTRODUCTION

Plaintiff-Appellant, General Electric Company ("General Electric"), appeals from the decision of the United States District Court for the Northern District of New York (Con. G. Cholakis, Judge ) granting summary judgment in favor of defendants-appellees, Gulf Oil Company ("Gulf"), Shell Oil Company ("Shell") and Atlantic Richfield Oil Company ("ARCO"), and from a subsequent Order, entered September 17, 1991, which directed the entry of partial final judgment in favor of Gulf, Shell and ARCO (collectively, "the oil companies"), pursuant to Fed.R.Civ.P. 54(b).

This action arose out of a previous cost recovery action in which the appellant, General Electric, was a defendant. That action, State of New York v. Wray, et al., No. 83-CZ-1621, was filed in 1983 and amended to include General Electric in 1984. In Wray, the State of New York ("the State") alleged that between 1975 and 1980, H. Eugene Wray and Albany Waste Oil (collectively, "Wray") transported various hazardous substances from General Electric's and other defendants' facilities to a storage site on Waite Road ("the Waite Road site"). The State claimed that hazardous wastes stored at the Waite Road site, which was located on freshwater wetlands, had leaked into the surrounding soil, surface water and groundwater. The State sought, through the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq., to hold the defendants liable for the response costs that had been and would be incurred in an effort to clean up the Waite Road site.

On June 7, 1990, the State, General Electric and most of the other defendants agreed to settle the Wray action by entering into a Consent Judgment. The Consent Judgment provided that General Electric would undertake and fund the clean-up of the Waite Road site in accordance with a Remedial Action Plan, but permitted General Electric to pursue a subsequent contribution action against any potential defendants that did not participate in the Consent Judgment. General Electric alleges that it has spent over 1.6 million dollars in On June 18, 1990, General Electric exercised its right to seek contribution by filing this action against thirty individual service stations, which it alleges arranged for the disposal or transport of waste oil stored at the Waite Road site. On December 10, 1990, General Electric filed an amended complaint, adding Shell, ARCO and Gulf as defendants. General Electric alleges that the oil companies, who leased service station facilities and sold petroleum products to some of the service station defendants, are liable under CERCLA for response costs incurred by General Electric in the clean-up of the Waite Road site.

performing the remediation that it agreed to undertake in the Consent Judgment.

General Electric seeks to hold the oil companies liable under CERCLA as entities that arranged for the disposal or treatment of a hazardous substance, namely waste motor oil that was stored by dealers at service stations they leased from the oil companies. See 42 U.S.C. § 9607(a)(3). Following extensive discovery, the oil companies moved for summary judgment. In a decision rendered from the bench, the district court stated that

G.E. maintains the legal standard is that the party sought to be held liable need only be shown to have the opportunity or authority to control the place or manner of disposal, which apparently means if the parties could have arranged for the disposal of waste, that party may be liable as an arranger. This, in the court's judgment, is not the standard. Here, even assuming the oil companies could have directed the dealers to dispose of their wastes in a particular manner, the record is undisputed that the companies did not do so.

(A-37-38). ¹ Thus, the district court concluded that the oil companies were not liable as "arrangers" under CERCLA, and granted their motion for summary judgment. This appeal followed.

BACKGROUND

From 1953 until 1980, H. Eugene Wray owned and operated a waste oil business in the Albany, New York area. In 1977, Wray hired Scott A. Fayville, who was Wray's only employee, and together they picked up waste oil from several major corporations, including General Electric. In addition, they scavenged waste oil from over one hundred local automobile dealerships, garages and service stations. Three of the dealers that allegedly allowed Wray and Fayville to pump and carry away waste oil from their stations' storage tanks were Sylvester Brackett, Harry Malone (doing business as Chick's Service Station) and James Morgan (doing business as Jim's Northway). All three dealers are named as defendants in this action.

Each of these dealers had a relationship with one of the oil company defendants. ² Although their relationships differed somewhat in detail, they were fundamentally the same in all respects material to this action. Each of the dealers entered into a detailed lease agreement with his respective oil company, which provided for the lease of service station premises and equipment. The leased equipment included, in each case, an underground tank used for storing waste motor oil until it was disposed of. The dealers also agreed, either in lease agreements or supplemental agreements, to maintain the premises in a certain manner, keep specific minimum hours and purchase minimum amounts of their respective oil company's products. Although it appears that in some cases, the dealers were not required to purchase only those products manufactured by their respective oil companies, at least one dealer believed he was required to do so, and all three of the dealers testified that they in fact purchased petroleum products sold at their stations solely from their respective oil companies.

Each lease or supplemental agreement set forth specific lessor-dealer responsibilities In accordance with the terms of their lease and supplemental agreements, the oil companies encouraged their dealers to sell gasoline and motor oil at competitive prices and conducted periodic inspections to ensure that the station premises and equipment were clean and well-maintained. All three lease agreements did, however, contain a clause providing that the dealers remained independent businessmen. The clause in Shell's agreement with Mr. Malone typifies the language found in each of the leases. It provides that

                for the maintenance and upkeep of the dealer's service station.   For example, in its agreement with Mr. Monroe, ARCO required the dealer to perform daily or weekly maintenance and checks on the underground gasoline storage tanks.   ARCO also required that the dealer make sure that the underground tank used for storing waste oil "is emptied as required and that the piping to the tank is kept free of waste, etc."   Similarly, in a document entitled "Lessee's Maintenance Obligations," Shell required Mr. Malone to "empty [the] waste oil tank."   Gulf made no reference to the waste oil tank in its agreement with Mr. Brackett regarding their respective maintenance responsibilities
                

[n]othing in this lease shall be construed as reserving to Shell any right to exercise any control over, or to direct in any respect the conduct or management of, the business or operations of Lessee on the premises, but the entire control and direction of such business and operations shall be and remain in Lessee, subject only to Lessee's performance of the obligations in this Lease.

(A-415; A-179; A-1308).

As part of their service station operations, each of the dealers during at least some of the period covered by this action, performed oil changes and provided repair services for customers. Dirty oil from engine crank cases was removed from the automobiles and stored in underground waste oil storage tanks until it was removed from the premises by waste oil scavengers. ³ The dealers replaced the used oil with virgin motor oil manufactured by their respective oil companies. Some of the dealers purchased this oil directly from the oil companies, while others purchased it from a "jobber" or middleman. While the oil companies encouraged their dealers...