Ironwood Homes Inc. v. Bowen
| Citation | 719 F.Supp.2d 1277 |
| Decision Date | 14 June 2010 |
| Docket Number | No. 08-CV-0098-BR.,08-CV-0098-BR. |
| Parties | IRONWOOD HOMES, INC., an Oregon corporation; Patrick D. Huske; and Tamara L. Huske, Plaintiffs, v. Craig E. BOWEN; Pamela A. Bowen, Michael C. Gibbons; Wells Fargo Bank, N.A.; James M. Wilson; Donald W. Nelson; Linke Enterprises; Inc. (aka Frontier Leather Company); Sterling Savings Bank; and Action Mortgage Company, Defendants. |
| Court | U.S. District Court — District of Oregon |
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Thomas R. Benke, The Environmental Compliance Organization, LLC, Portland, OR, for Plaintiffs Ironwood Homes, Inc. (hereinafter referred to as Ironwood) and Patrick D. Huske and Tamara L. Huske (hereinafter referred to collectively as the Huskes).
Daniel R. Schanz, Tom C. Spooner, Spooner Much & Amman, P.C., Salem, OR, for Defendants Craig E. Bowen and Pamela A. Bowen (hereinafter referred to collectively as the Bowens).
George Wayne McKallip, Jr., Patrick G. Rowe, Sussman Shank, LLP, Portland, OR, for Defendant Michael C. Gibbons.
Lee C. Nusich, Michael A. Nesteroff, Lane Powell, PC, Portland, OR, for Defendants Wells Fargo Bank, N.A., and James M. Wilson (Wells Fargo/Wilson when referred to collectively).
Brian D. Chenoweth, Brooks Macinnes Foster, Chenoweth Law Group, PC, Portland, OR, for Defendant Donald W. Nelson.
David C. Weber, Loren R. Dunn, Riddell Williams, Seattle, WA, for Defendant Linke Enterprises of Oregon, Inc., aka Frontier Leather Co. (hereinafter referred to as Linke).
Geanna N. Van Dessel, Leslie R. Weatherhead, Witherspoon, Kelley, Davenport & Toole, Spokane, WA, for Sterling Savings Bank and Action Mortgage Co.
This matter comes before the Court on the following Motions:
4. Sterling's Alternative Motion (# 173) to Sever, and
5. Plaintiffs' Motion (# 193) for Partial Default Judgment against Sterling's Equitable Rescission Claim.
4. DENIES as premature Sterling's Alternative Motion to Sever (# 173), and
5. DENIES Plaintiffs' Motion (# 193) for Default Judgment against Sterling's Equitable Rescission Claim.
This Court has subject-matter jurisdiction under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9613(b), as to claims, counterclaims, and crossclaims for indemnification and cost recovery asserted by the parties pursuant to 42 U.S.C. § 9607(a).
The Court also has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 as to related statutory and common-law claims, counterclaims, and crossclaims asserted by the parties pursuant to Oregon law.
Ken and Hazel Foster owned and operated a farm in Sherwood, Oregon. When the Fosters operated the farm, it was allegedly used as a disposal site for waste products generated by a nearby tannery operated by Frontier Leather Company (FLC). The Fosters are deceased and their estates are closed. After their deaths, parts of the farmland were sold.
Since 1980 the United States Environmental Protection Agency (EPA) and the Oregon Department of Environmental Quality (DEQ) have been investigating the farmland for releases of chromium, lead, and mercury allegedly emanating from FLC's waste products.
The parties are landowners, developers, and/or financial institutions who each assert they are not liable to pay the cost of cleaning up the former farmland site or, if they are liable, other parties also are liable to pay those costs. Accordingly, each party seeks either indemnity or contribution from other parties for any liability that party may have.
The Huskes are sole shareholders of Ironwood. Ironwood purchased Lot 900 in 2004 to build four single-family homes: one for Plaintiffs and three for re-sale.
Gibbons purchased Lot 900 from Hazel Foster in 1983 and sold it to the Bowens in 1987, who sold it to Ironwood in 2004.
Plaintiffs allege Gibbons and the Bowens each knew or should have known that Lot 900 was a hazardous-waste dumping site and should have disclosed that fact to Plaintiffs, but they did not do so. Accordingly, Plaintiffs allege Gibbons and the Bowens are liable to indemnify Plaintiffs or to contribute to the response costs that Plaintiffs have incurred. Plaintiffs also contend Gibbons and the Bowens are liable for damages because of their allegedly fraudulent conduct or negligence in failing to investigate, to disclose, and to contain the contamination.
Gibbons and the Bowens separately deny Plaintiffs' allegations and assert numerous affirmative defenses.
Linke is the successor-in-interest to FLC. Nelson was Linke's Plant Manager. Wells Fargo Bank, as successor of First Interstate Bank, acted as trustee for the Emanuel J. Linke Trust and the Christina S. Linke Trust and managed the affairs of Linke in that capacity. Wilson was Wells Fargo Bank's Trustee Representative for Linke.
Plaintiffs allege these parties are statutorily liable for the response costs incurred by Plaintiffs arising from FLC's transportation of contaminated waste products to the farmland that ultimately became Lot 900.
Wells Fargo/Wilson and Nelson deny Plaintiffs' allegations and assert affirmative defenses, counterclaims, and crossclaims.
Sterling is a bank headquartered in Spokane, Washington. Action Mortgage is a subsidiary of Sterling and originates commercial and residential loans issued by Sterling. Plaintiffs allege they had a special relationship with Sterling based on previous loan transactions. As a result, Ironwood entered into a Construction Loan Agreement with Sterling to purchase and to develop Lot 900. Ironwood also executed a Hazardous Substance Warranty and Indemnification Agreement in which it agreed to indemnify Sterling against any costs, damages, or losses arising from hazardous substances found on the property.
Plaintiffs allege Les Miller, a Sterling loan officer, reviewed a “Veracheck” analysis of environmental issues in the vicinity of Lot 900 that was obtained for Sterling by Action Mortgage. The analysis revealed possible environmental contamination in the area. Nevertheless, Miller allegedly represented to Plaintiffs that the contamination risk on Lot 900 was low. Plaintiffs allege they purchased Lot 900 based on the information provided by Sterling and now find themselves potentially liable for paying substantial environmental response costs as a result of Sterling's misrepresentations and omissions.
The following facts are drawn from undisputed allegations in Plaintiffs' Fourth Amended Complaint; Defendants' Answers, Counterclaims, and Cross-Claims; and undisputed facts drawn from the parties' Concise Statements of Material Fact and Responses filed in support or in opposition to Sterling's Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). As noted, Sterling's Motion to Dismiss purports to incorporate a motion for summary judgment under Federal Rule of Civil Procedure 56 as to some of Plaintiffs' claims even though the legal standards differ as to motions brought under Rule 12 and Rule 56.
From 1947 to 1988 FLC operated a tannery in Sherwood, Oregon. Wells Fargo Bank was Trustee of the Emanuel J. Linke Trust beginning in April 1969 and Trustee of the Christine S. Linke Trust beginning in September 6, 1973. In June 1988 FLC changed its name to Linke Enterprises of Oregon, Inc. (Linke).
From about 1962 to 1971 FLC sold and transported toxic waste products from its tannery operations to Ken and Hazel Foster, who owned and operated the Ken Foster Farm. After Ken Foster died, the farm was subdivided for residential development.
In May 1983 Gibbons purchased Lot 900 from Hazel Foster and sold it to the Bowens in 1987. The Bowens sold it and other parcels of land on the old Ken Foster Farm to Plaintiffs in 2004. Plaintiffs intended to subdivide the land, to remodel the Bowens' residence, and to build three more single-family homes.
As they had done with other properties, Ironwood obtained a loan of more than $792,000 from Sterling to purchase Lot 900, and the Huskes guaranteed the loan. In September 2004 before making the loan, Sterling reviewed a Veracheck analysis obtained by Action Mortgage to identify any environmental risks that might affect Lot 900. The analysis referred to the “adjacent” Ken Foster Farm as a “suspect [environmental cleanup] site requiring further investigation.” The analysis included statements that “[t]he subject site and/or nearby properties may pose an unacceptable amount of risk” and that steps should be taken “to understand further or mitigate the potential risks” including obtaining documentation that either “[t]he cleanup is complete and the case has been assigned a ‘no further action’ status” or “[t]he contamination has been delineated and the subject site is not involved.” The analysis also included statements that the “risk posed by the subject site itself” was “low” because it was not a...
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