Geraghty & Miller Inc. v. Conoco Inc.

• Decision Date: 14 December 2000
• Docket Number: No. 99-20020,99-20020
• Citation: 234 F.3d 917
• Parties: (5th Cir. 2000) GERAGHTY AND MILLER, INC., Plaintiff - Counter Defendant - Appellee, v. CONOCO INC.; CONDEA VISTA CHEMICAL COMPANY, Defendants - Counter Claimants - Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

Page 917

234 F.3d 917 (5th Cir. 2000)

GERAGHTY AND MILLER, INC., Plaintiff - Counter Defendant - Appellee, v. CONOCO INC.; CONDEA VISTA CHEMICAL COMPANY, Defendants - Counter Claimants - Appellants.

No. 99-20020

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

December 14, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Southern District of Texas

Before POLITZ, GIBSON,^* and HIGGINBOTHAM, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Conoco Inc. and Condea Vista Chemical Company appeal the district court's order granting summary judgment to Geraghty and Miller, Inc. ("G&M") in this environmental clean-up action. This case includes a claim under CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act, as well as state common law claims. We affirm in part and, because a genuine issue exists as to certain material facts, we reverse in part.

The parties do agree on a sufficient number of background facts to set the stage. This dispute arises out of an environmental clean-up at the Lake Charles Chemical Complex in Westlake, Louisiana. The Complex has been owned and operated by Conoco or Vista since 1961, and in 1968 Conoco began managing ethylene dichloride at the facility. Ethylene dichloride, a feedstock in the production of vinyl chloride monomer, is a "hazardous substance" as CERCLA defines that term. As a result of historic releases and migration, ethylene dichloride contamination occurred in soil from the surface to at least twenty-five feet down and in shallow groundwater zones.

The Louisiana Department of Environmental Quality required Conoco to investigate and address the ethylene dichloride contamination under state groundwater protection laws and regulations and federal and state solid waste laws and regulations. It also required Conoco to put in place a groundwater monitoring and assessment program pursuant to the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§ 6901-6992k (1994), and its corresponding regulations and their Louisiana state counterparts. As is often the case in such clean-ups, the process was set to take place in stages. Conoco and G&M entered into a contract on March 12, 1985 under which G&M was to furnish all required services for "Ground-Water Quality Assessment, Phase 2" at the Vinyl Chloride Monomer Plant Area and Waste Water Treatment Area ("the Plant") of the Complex. Vista was a third-party beneficiary under the contract.

Under the contract, G&M was to assess possible contamination beneath several suspected source areas at the Complex. It was to perform that assessment by 1) preparing design specifications for the installation of groundwater monitor wells and piezometers used to monitor possible groundwater contamination at the Complex; 2) installing the monitor wells and piezometers; and 3) sampling the monitor wells following installation. G&M completed the installation of fifty monitor wells on July 23, 1985.

For approximately the following year, G&M sampled the monitor wells and interpreted the monitoring data to determine the nature and extent of contamination. G&M submitted quarterly reports to Conoco/Vista to advise them of the results.

Sometime before May 1988, Conoco/Vista began to suspect potentially serious technical and physical deficiencies in three of the monitor wells G&M had installed. They were concerned that such deficiencies were aggravating the contamination. Conoco/Vista received approval from the Louisiana Department in May 1988 to plug and abandon those wells. Conoco/Vista allege that they uncovered physical evidence that the three wells were not installed according to the contract specifications, and they sent a series of letters to G&M concerning the deficiencies. In December 1989, Conoco/Vista plugged and abandoned a fourth well, and they allege that this well also was not installed according to specifications.

These experiences caused Conoco/Vista to question the soundness of the remaining wells and other parts of the groundwater monitoring system. Conoco/Vista and G&M discussed who was responsible for the costs associated with these allegedly defective wells, but they were unable to resolve the issue. On August 27, 1990, the parties entered into the Groundwater Wells Interim Agreement. The Interim Agreement called for the parties to agree upon criteria for determining whether a given monitor well was "suspect" or "not suspect" of being improperly installed, and to agree upon criteria for determining whether a given well was "properly" or "not properly" installed. Once the criteria were in place, the parties would apply them to each of the wells to determine which needed to be removed and who would bear the costs. That never occurred, however, because the parties never agreed on the criteria.

The parties entered into the Interim Agreement to allocate responsibility between them for the costs of plugging and abandoning additional wells that they were to agree upon as being "suspect." G&M maintains that there was no other purpose for entering into the deal, but Conoco/Vista insist that the Interim Agreement gave the parties time to investigate the integrity of the wells while not allowing the statute of limitations to run on any defect claims that remained unresolved. Conoco/Vista assert that G&M received, as consideration for the deal, a release from approximately $250,000 in monitor well plugging and abandonment costs.

Conoco/Vista retained other environmental consulting firms to continue the groundwater assessment program. Upon the recommendation of one such consultant, Conoco/Vista plugged and abandoned the remaining G&M-installed wells in 1993 and replaced them.

In April 1993, Conoco/Vista filed suit against G&M in Texas state court, alleging state common law causes of action. During the course of that litigation, the Texas Court of Appeals held that the language in the Interim Agreement concerning a possible tolling and extension of the statute of limitations was ambiguous as a matter of law.

In April 1997, with the state court lawsuit still pending, G&M filed the instant CERCLA action, seeking reimbursement from Conoco/Vista for G&M's past and future response costs. Conoco/Vista filed a counterclaim two months later, also seeking relief under sections 107 and 113 of CERCLA. Meanwhile, the state court case was trifurcated for trial, with the first phase focused on whether the Interim Agreement tolled the statutes of limitations. Trial began in phase one in November 1997 and, while the jury was deliberating, Conoco/Vista took a voluntary non-suit and the state court judge dismissed the lawsuit.

After the district court granted partial summary judgment to G&M, Conoco/Vista amended their counterclaim to omit their section 107 CERCLA claim and to add the state common law claims. Ultimately, G&M voluntarily dismissed its complaint, leaving only Conoco/Vista's CERCLA section 113 and state common law counterclaims at issue.

Less than a month before this case was to begin trial, G&M unsuccessfully sought leave to file a partial summary judgment motion on the basis that Conoco/Vista's CERCLA counterclaim was time-barred. When the parties appeared for trial on the scheduled date, the district court discussed the case with counsel and suspended the start of the trial. Less than a week later, the district court granted summary judgment to G&M on several grounds including that the CERCLA claim was time-barred.

The district court held that Conoco/Vista's state common law claims were barred by Texas statutes of limitations; that G&M was not liable for contribution because it was not a "covered person" under CERCLA as an operator, arranger, or transporter of hazardous materials; and that the six-year limitation period of 42 U.S.C. § 9613(g)(2) (1994) barred Conoco/Vista's CERCLA claim. We address each of these issues, along with Conoco/Vista's complaint that the district court entered summary judgment without giving them notice and an opportunity to respond.

I.

The district court entered summary judgment for G&M without providing the notice required by Rule 56(c) of the Federal Rules of Civil Procedure. Conoco/Vista argue that they were unfairly prejudiced because they did not have notice that the district court was contemplating entering a dispositive order, nor did they have an opportunity to respond or to present evidence. We review under the harmless error standard. See Nowlin v. Resolution Trust Corp., 33 F.3d 498, 504 (5th Cir. 1994).

By the time this case reached its trial date, G&M had filed three motions for partial summary judgment and had attempted to file a fourth. The district court had granted G&M's motion that Conoco/Vista be declared "covered persons" under CERCLA, had denied G&M's motion that it be declared not to be a "covered person", and had yet to rule on G&M's motion seeking summary judgment on Conoco/Vista's state common law claims. Conoco/Vista had filed briefs and affidavits in opposition to those three motions. G&M had sought leave to file a motion that the remaining CERCLA claim be declared barred by the statute of limitations, but the district court denied leave because the motion was untimely. Thus, all of the issues except the CERCLA statute of limitations had been fully briefed by the time the case was ready for trial.

When the district court entered its order granting complete summary judgment to G&M, the parties expected to be in the midst of a non-jury trial. When they arrived for trial on the appointed day, the district court announced the view that it would be beneficial to take some time to narrow the issues so that the evidence could be streamlined. The court indicated that it would review the file and directed the parties to return the following day to begin trial. After its review, the district court concluded that all of the claims were amenable to judgment as a matter of law.

While ...