Gopher Oil Co. v. Bunker, s. 95-1309

• Decision Date: 21 June 1996
• Docket Number: Nos. 95-1309,95-1338,s. 95-1309
• Citation: 84 F.3d 1047
• Parties: , 26 Envtl. L. Rep. 21,464 GOPHER OIL CO., a Minnesota corporation, Plaintiff-Appellant/Cross Appellee, v. Roger E. BUNKER, Personal Representative of the Estate of Germaine S. Romness, Defendant-Appellee/Cross Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1047

84 F.3d 1047

43 ERC 1186, 26 Envtl. L. Rep. 21,464

GOPHER OIL CO., a Minnesota corporation Plaintiff-Appellant/Cross Appellee, v. Roger E. BUNKER, Personal Representative of the Estate of Germaine S. Romness, Defendant-Appellee/Cross Appellant.

Nos. 95-1309, 95-1338.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 13, 1995.

Decided May 29, 1996.

As Amended June 21, 1996.

Keith J. Broady, Minneapolis, MN, argued, Timothy C. Matson Minneapolis, MN, briefed, for appellant/cross-appellee Gopher Oil.

James Beitz, Minneapolis, MN, argued, Michael C. Hagerty, Minneapolis, MN, briefed, for appellee/cross-appellant Robert Bunker.

Before HANSEN, GIBSON, and MURPHY, Circuit Judges.

HANSEN, Circuit Judge.

Gopher Oil brought this declaratory judgment action seeking a declaration that the Germaine Romness estate (the estate) is liable for a release of hazardous substances to the extent of Gopher Oil's liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as amended, 42 U.S.C. §§ 9601-9675; the Minnesota Environmental Response and Liability Act (MERLA), Minn.Stat. Ann. §§ 115B.01-115B.24 (West 1987 & Supp.1994-95); and Minnesota common law principles of tort and contract. The district court granted the estate's motion to dismiss for lack of subject matter jurisdiction, concluding that the claims were not yet ripe. We affirm in part and reverse and remand in part.

I. BACKGROUND

The United States Environmental Protection Agency (EPA) determined that a release of hazardous substances occurred at a dump site in Brooklyn Park, Minnesota, and expended response costs of over $1,373,000 to clean up the area. As authorized by CERCLA, in January 1994, the EPA demanded reimbursement for the entire cost of the cleanup from each of ten potentially responsible parties (PRPs), a list including Gopher Oil but not the defendant in this suit. A representative of the EPA informed Gopher Oil that the EPA anticipated referring this matter to the Department of Justice and expected a CERCLA suit to be brought during the first quarter of 1995.

Gopher Oil brought this declaratory judgment suit in September 1994, seeking a declaration that the now-deceased owner of a predecessor corporation actually caused the release and that the deceased owner's estate is liable for the sum demanded by the EPA. Specifically, Gopher Oil's complaint asserts that when the release occurred in the 1960's, the Brooklyn Park dump site was owned and operated by a corporation known as Gopher State Oil, whose sole shareholders were Charles and Germaine Romness. In 1973, Bame Oil acquired Gopher State from the Romnesses through a stock acquisition. As part of the stock transfer, the Romnesses agreed to indemnify Bame with respect to any of Gopher State's liabilities existing at closing. Shortly thereafter, Bame Oil distributed Gopher State's assets to itself, assuming all liabilities, known or unknown. Bame Oil then changed its own name to Gopher Oil.

Gopher State's owners, the Romnesses, have both died. The Germaine Romness estate remains open, however, pending this litigation which follows the litigation of a third-party complaint by Gopher Oil against the estate in state court. The state court litigation involved a dump site near Stillwater, Minnesota, which was owned by third parties who alleged that Gopher State Oil deposited waste oil sludge on the site. The third-party owners and operators of the dump site obtained a ruling that Gopher Oil is liable as a successor corporation for the acts of Gopher State. See State v. Gopher Oil Co., Nos. C1-95-738 & C2-95-733, 1995 WL 687688 (unpublished). In the same litigation, Gopher Oil brought a third-party complaint against the Romness estate, which the state district court dismissed due to limitation periods set forth in the probate code. The Minnesota Court of Appeals affirmed the dismissal of the third-party complaint on a different ground, concluding that the Romnesses' agreement to indemnify Gopher Oil did not contemplate liability under later-enacted environmental statutes, thus precluding Gopher Oil's indemnification claim. See State v. Gopher Oil Co., No. C8-94-225, 1994 WL 328631 (Minn.Ct.App. July 12, 1994) (unpublished). The Minnesota Supreme Court denied further review.

After the state trial court had dismissed Gopher Oil's third-party complaint in the Stillwater dump site litigation on the basis of probate limitations, Gopher Oil brought the present federal declaratory judgment action against the estate relating to the Brooklyn Park dump site. ¹ Count one of this suit alleges that the estate is a responsible party under CERCLA to the extent of Gopher Oil's CERCLA liability, and count two sets forth the same claim under MERLA. Count three seeks a declaration that the estate has primary tort liability to the extent of Gopher Oil's liability to the EPA or any other party because the Romnesses were the active owners at the time of the release. Count four alleges that Gopher Oil is entitled to indemnity based upon the indemnity agreement executed by the Romnesses in the 1970's when Bame Oil acquired Gopher State. Thus, this declaratory judgment action involves the same parties, the same indemnification agreement, and most of the same claims as the third-party complaint in the Stillwater dump site litigation.

The district court granted the estate's motion to dismiss all four counts for lack of subject matter jurisdiction, concluding that the claims were not ripe because there was no actual controversy. Specifically, the court stated as follows:

It is apparently clear that the plaintiff did receive the letter almost a full year ago which warned it that it would be a potentially liable party. The plaintiff then commenced this suit in expectation that it would be named a defendant based on approximately ten months later a telephone call warning it again. In order to bring its claims in this court, however, the plaintiff must allege an actual controversy.

The mere possibility of being named a defendant as responsible party does not constitute the actual controversy which is required. This Court recognizes that the EPA, and the United States on its behalf, for any number of reasons, may well and yet decline to sue Gopher Oil, or they may select yet another among the ten, or others beyond those listed as potential defendants. They may also defer simply on the fact that this case is too small or any one of a number of reasons, which they seem to be able to come up with at a moment's notice and somehow the cases do not get sued. In the event they are to be sued, those are another issue, but this Court at this time cannot find the requisite immediacy, and in this Court's view there is little hardship to the plaintiff in withholding the Court's consideration.

(Tr. on Def.'s Mot. to Dismiss, Appellant's Addend. at 26-27.)

During the hearing, the district court also alternatively granted partial summary judgment to the estate on the ground that the doctrine of collateral estoppel bars the MERLA claim, the tort claim, and the indemnity claim due to the prior state court litigation. However, the district court explicitly declined to rule alternatively on the CERCLA claim, which was not litigated in the Minnesota state court suit.

Gopher Oil appeals the dismissal of its complaint for lack of jurisdiction. The estate cross appeals, arguing that the complaint also should have been dismissed because Gopher Oil's assumption of Gopher State's liabilities bars the claims and the complaint fails to state a cause of action under CERCLA, MERLA, or principles of contractual indemnity. At oral argument before this court, the parties disclosed that Gopher Oil had entered into a tolling agreement with the Department of Justice to facilitate discussions and possible settlement of the government's demand for reimbursement. The agreement states that "the United States may terminate settlement negotiations and commence suit at any time." (Tolling Agreement at 3.) More recently, we received notice that on March 25, 1996, the government filed a CERCLA cost-recovery suit against Gopher Oil and four other potentially responsible parties, but not including the Romness estate.

II. DISCUSSION

We review de novo a dismissal for lack of subject matter jurisdiction. Christopher Lake Dev. Co. v. St. Louis County, 35 F.3d 1269, 1273 (8th Cir.1994). The Declaratory Judgment Act provides that when an "actual controversy" exists, any federal court may declare the rights and other legal relations of any interested party. 28 U.S.C. § 2201. Thus, to seek a declaratory judgment, the plaintiff's claim must be ripe. The doctrine of ripeness is basically a matter of timing, which requires (1) "a sufficiently concrete case or controversy within the meaning of Article III of the Constitution," and also, (2) "prudential considerations must justify the present exercise of judicial power." Christopher Lake Dev. Co., 35 F.3d at 1272-73. In other words, to satisfy the actual controversy requirement of the Declaratory Judgment Act, there must exist " 'a substantial controversy between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.' " Caldwell v. Gurley Refining Co., 755 F.2d 645, 649 (8th Cir.1985) (quoting Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941)) (other citation omitted). "A live dispute must exist between the parties at the time of the court's hearing." Id. at 650.

The district court concluded that the government's threat of suit in this case was too speculative to create an actual controversy between Gopher Oil and the estate and that withholding a decision at this time would result in little hardship to Gopher Oil. We agree with the district court's assessment that the MERLA and the tort liability claims (counts II and III) are not...