KELLEY EX REL. MICHIGAN NRC v. ARCO INDUSTRIES, K87-372-CA4.

• Decision Date: 09 February 1989
• Docket Number: No. K87-372-CA4.,K87-372-CA4.
• Citation: 721 F. Supp. 873
• Parties: Frank J. KELLEY, Attorney General of the State of Michigan, ex rel., MICHIGAN NATURAL RESOURCES COMMISSION, Michigan Water Resources Commission, and Gordon E. Guyer, Director of the Michigan Department of Natural Resources, Plaintiffs, v. ARCO INDUSTRIES CORPORATION, Frederick C. Matthaei, Jr., and Robert P. Ferguson, Defendants.
• Court: U.S. District Court — Western District of Michigan

721 F. Supp. 873

Frank J. KELLEY, Attorney General of the State of Michigan, ex rel., MICHIGAN NATURAL RESOURCES COMMISSION, Michigan Water Resources Commission, and Gordon E. Guyer, Director of the Michigan Department of Natural Resources, Plaintiffs, v. ARCO INDUSTRIES CORPORATION, Frederick C. Matthaei, Jr., and Robert P. Ferguson, Defendants.

No. K87-372-CA4.

United States District Court, W.D. Michigan.

February 9, 1989.

Frank J. Kelley, Atty. Gen. by Stanley F. Pruss, Asst. Atty. Gen., Environmental Protection Div., Lansing, Mich., for plaintiffs.

Varnum, Riddering, Schmidt & Howlet by Charles M. Denton, Grand Rapids, Mich., for Frederick C. Matthaei, Jr.

Honigman, Miller, Schwartz & Cohn by Jay E. Brant, Detroit, Mich., and Butler, Durham & Svikis by Sidney D. Durham, Parchment, Mich., for Arco Industries Corp.

Miller, Johnson, Snell & Cummiskey by Jon R. Muth, Grand Rapids, Mich., for Robert P. Ferguson.

Warner, Norcross & Judd by Douglas Wagner, Grand Rapids, Mich., for E.I. DuPont De Nemours and Co.

Early, Lennon, Fox, Thompson, Peters & Crocker by Gordon C. Miller and J. Richardson Johnson, Kalamazoo, Mich. and Quarles & Brady by Arthur A. Vogel, Jr., James F. Boyle and James Brody, Milwaukee, Wis., for Northwest Coatings Corp.

Miller, Canfield, Paddock and Stone by Robert VandeLaan, Grand Rapids, Mich., Goodwin, Proctor & Hoar by Paul F. Ware, Jr., Jeffrey Bates and Barbara Gruenthal, Boston, Mass. and Zarbock & Ford by James B. Ford, Kalamazoo, Mich., for Gen. Latex and Chemical Corp.

Landman, Latimer, Clink & Robb by Steven C. Kohl, Muskegon, Mich., for Drake's Fuel Service.

Gemrich, Moser, Bowser, Fette & Lohrmann by Alfred Gemrich, Kalamazoo, Mich., for Quality Films and Bar-Mo Metalcrafters.

Ford & Kriekard by Robert A. Soltis, Kalamazoo, Mich. and Linsey, Strain & Worsfold by Donald Worsfold, Grand Rapids, Mich., for Village of Schoolcraft.

Clary, Nantz, Wood, Hoffius by Mark R. Smith and Smith, Haughey, Rice & Roegge by Gary A. Rowe, Grand Rapids, Mich., for Grand Rapids Sash & Door.

Clark, Klein & Beaumont by Grant R. Trigger, Detroit, Mich., for Weiss Trucking Co.

Clark, Klein & Beaumont by Laurence Scoville, Detroit, Mich., for G-H Holdings of Detroit.

Touma, Watson, Nicholson, Whaling, Fletcher & Degrow by Gary A. Fletcher, Port Huron, Mich., for John A. Biewer Co.

OPINION

ENSLEN, District Judge.

This case is before the Court on defendants' motion to dismiss under Rule 12(b)(6) or in the alternative for Summary Judgment under Rule 56 of the Federal Rules of Civil Procedure. Defendants Frederick Matthaei, Jr. and Robert Ferguson ("defendants") are allegedly liable for environmental contamination as a result of conduct related to their positions as shareholders or officers and directors of defendant Arco Industries Corporation. Plaintiffs in this action are Frank J. Kelley, Attorney General of the State of Michigan, Michigan Natural Resources Commission, Michigan Water Resources Commission, and Gordon E. Guyer, Director of the Michigan Department of Natural Resources. As a matter of law, defendants argue, there is an insufficient basis upon which to impose individual liability upon defendants Matthaei and Ferguson under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") or under the other state law claims.

Background

Plaintiffs filed the underlying complaint on October 14, 1987. The complaint alleged that defendants have caused the release of hazardous substances, including carcinogens into the environment through a variety of means, both known and unknown (Complaint, ¶¶ 33-37). Plaintiffs have alleged that defendant Matthaei is the controlling stockholder and Chairman of the Board of Directors of co-defendant Arco Industries Corporation and that in this capacity, defendant Matthaei had the overall responsibility for the operation and management of the ARCO plant (Complaint, ¶ 11). Plaintiffs have also alleged that defendant Ferguson, as President and a shareholder of Arco, directly oversaw the daily management and operation of the plant (Complaint at ¶ 12).

On July 18, 1988, plaintiffs noticed the depositions of defendant Ferguson for August 29, 1988, and defendant Matthaei for September 8, 1988. On August 22, 1988, counsel for plaintiffs sought to confirm the time and place of the deposition of Ferguson. At that time, counsel was informed that defendants planned to seek a protective order from this Court.

On August 24, 1988, counsel for plaintiffs received defendants Matthaei and Ferguson's motion and brief for a protective order. The basis for seeking the protective order was a "motion to dismiss" which had not yet been filed. This motion for a protective order is pending. To date, plaintiffs have been unable to depose either Ferguson or Matthaei.¹

Standard

Rule 12(b)(6) Motion to Dismiss.

A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the pleading. Elliot Co., Inc. v. Caribbean Util. Co., 513 F.2d 1176 (6th Cir.1975). Technically, of course, the 12(b)(6) motion does not attack the merits of the case — it merely challenges the pleader's failure to state a claim properly. 5 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1364, at 340 (Supp.1987). In deciding a 12(b)(6) motion, the court must determine whether plaintiff's complaint sets forth sufficient allegations to establish a claim for relief. The court must accept all allegations in the complaint at "face value" and construe them in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983); Amersbach v. City of Cleveland, 598 F.2d 1033, 1034-35 (6th Cir.1979); Davis v. Elliot Co. v. Caribbean Utilities Co., 513 F.2d 1176 (6th Cir.1975).

The complaint must in essence set forth enough information to outline the elements of a claim or to permit inferences to be drawn that these elements exist. Jenkins v. McKeithan, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969); German v. Killeen, 495 F.Supp. 822, 827 (E.D.Mich.1980). Conclusory allegations are not acceptable, however, where no facts are alleged to support the conclusion or where the allegations are contradicted by the facts themselves. Vermilion Foam Products Co. v. General Electric Co., 386 F.Supp. 255 (E.D.Mich. 1974). The court cannot dismiss plaintiff's complaint unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

Rule 56 Motion for Summary Judgment.

In considering a motion for summary judgment, the narrow questions presented to this Court are whether there is "no genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law." F.R.Civ. Proc. 56(c). The Court cannot try issues of fact on a Rule 56 motion, but is empowered to determine only whether there are issues to be tried. In re Atlas Concrete Pipe, Inc., 668 F.2d 905, 908 (6th Cir.1982).

The moving party has a right to summary judgment where that party is able to demonstrate, prior to trial, that the claims of the plaintiff have no factual basis. Celotex Corporation v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As the Supreme Court held in Celotex, "... the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. 477 U.S. at 322, 106 S.Ct. at 2250, 91 L.Ed.2d at 273. Moreover, the Court must read the allegations of the complaint in the light most favorable to the non-moving party, Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983).

The standard for granting a motion for summary judgment is essentially the same as that for granting a motion for a directed verdict. "The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict...." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party is not entitled to summary judgment where there is sufficient evidence to allow a reasonable jury to return a verdict for the non-moving party. Id. 477 U.S. at 247-249, 106 S.Ct. at 2509-10, 91 L.Ed.2d at 211-12. "The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. 477 U.S. at 255-256, 106 S.Ct. at 2513-14, 91 L.Ed.2d at 216.

Discussion

Defendants make the following objections in support of dismissal of the complaint against defendants Matthaei and Ferguson. The only specific allegation in plaintiffs' complaint as to defendant Matthaei is at paragraph 11, which sets forth his relationship to defendant Arco as a shareholder and Chairman of the Board. Plaintiffs allege that: "In his capacity as Chairman, Matthaei had overall responsibility for operation and management of the facility and derived personal financial gain from such operations." Defendant Matthaei, in response to paragraph 11 of the complaint, admits his residency in Oakland County, Michigan, and that his business office is in Bloomfield Hills, Michigan, and that he is a shareholder and Chairman of the Board of co-defendant Arco. Defendant Matthaei also asserted that plaintiffs' allegations fail to state a valid claim for relief as he had no responsibility for the day-to-day operations or management of defendant Arco, nor was he personally involved in the corporation's waste management activities at issue. Finally, defendant Matthaei answered that he has received no dividends as a shareholder of defendant Arco and denied receiving any improper compensation...