Martignetti v. Haigh-Farr Inc.

• Decision Date: 24 June 1997
• Docket Number: HAIGH-FARR
• Citation: 425 Mass. 294,680 N.E.2d 1131
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: C. Anthony MARTIGNETTI & others, 1 trustees, 2 v.INC., & another. 3

Page 1131

680 N.E.2d 1131

425 Mass. 294

C. Anthony MARTIGNETTI & others, ¹ trustees,² v. HAIGH-FARR INC., & another. ³

Supreme Judicial Court of Massachusetts Middlesex.

Argued April 8, 1997.

Decided June 24, 1997.

Robert H. Greene, Brockton, for Haigh-Farr, Inc.

Charles E. Blumsack, Woburn (Richard M. Canzano, with him) for Charles E. Farr.

Arthur P. Kreiger, Cambridge, for plaintiffs.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY and FRIED, JJ.

GREANEY, Justice.

The plaintiffs brought an action in the Superior Court against the defendants, Haigh-Farr, Inc. (Haigh-Farr), and Charles E. Farr (Farr), for damages and costs resulting from the release of hazardous materials on property owned by the plaintiffs in Cambridge. ⁴ The complaint stated claims under the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601-9675 (1994), and the Massachusetts Oil and Hazardous Material Release Prevention Act, G.L. c. 21E, as well as common law claims for nuisance, strict liability, and negligence. On the defendants' motions for summary judgment, the CERCLA claim was dismissed for lack of jurisdiction, and the common law claims, and a claim for property damages under G.L. c. 21E, § 5, were dismissed as barred by the statute of limitations. Summary judgment was denied for the claim brought under G.L. c. 21E, § 4, and the action proceeded to trial on that claim. In their answers to special verdict questions, the jury found that each defendant had been an operator of the business at the site. The jury determined that in responding to the release of hazardous wastes, the plaintiffs had incurred reasonable costs of $385,698.60, and that payment of the costs should be allocated in equitable shares: 30% to the plaintiffs, 35% to Haigh-Farr, and 35% to Farr. In response to posttrial motions, the judge deducted $18,000 from the total costs to reflect settlements that had been reached with other defendants, see note 4, supra, and entered judgment for the balance against the defendants severally, according to the percentages set by the jury (i.e., $128,694.51, plus $72,302.69 for prejudgment interest, against each defendant). The judge also approved the plaintiffs' motion to award attorney's fees and costs under G.L. c. 21E, § 15, in the amount of $290,400.47, and ordered payment of that amount by the defendants, jointly and severally. The defendants appealed, and the plaintiffs cross-appealed. We transferred the appeals to this court on our motion. We vacate the verdict and the judgment, and remand for a new trial.

The property at issue, consisting of land and a building, has been owned by the plaintiffs since May, 1982, when they purchased it from the Concord Turnpike Realty Trust (the principals of which were the plaintiffs' father and two uncles). Farr had been a tenant at the site since 1973, when he began to operate a furniture stripping business. The stripping process involved applying chemicals to the furniture and rinsing the chemicals off with water. The resulting mixture drained into an underground concrete storage tank. ⁵ Periodically, Farr hired a contractor to remove and dispose of the liquid and sludge in the tank. The parties agree that the chemicals used in the stripping process were hazardous materials as defined by G.L. c. 21E. Farr was aided in the financing and conduct of his business by Haigh-Farr, one of whose principals was Farr's brother, George.

In 1986, the plaintiffs contemplated an exchange of properties with a neighboring owner, Arthur D. Little, Inc., which hired an environmental consultant to investigate the site. After a preliminary assessment of the site revealed soil contamination, the plaintiffs terminated Farr's tenancy, and he vacated the building on July 1. Following further investigation by a second consultant, the plaintiffs reported the contamination to the Department of Environmental Quality Engineering (DEQE), ⁶ and were notified on November 5, 1986, that they were responsible for the removal of the hazardous materials. This action was not brought until November 17, 1989.

With this background in mind, we proceed to consider the issues raised on appeal by the defendants, and on cross appeal by the plaintiffs.

(a) Interaction of G.L. c. 21E, §§ 4 and 5. As mentioned above, summary judgment had been granted to the defendants on the plaintiffs' claims for property damages brought under G.L. c. 21E, § 5. Farr argues that he must prevail on the claim for reimbursement brought under G.L. c. 21E, § 4, because (he contends) liability under § 4 is predicated on a showing of liability under § 5, a determination that was never made. We reject this argument. From the structure of the statute and the outcomes of previous cases, it is clear that a plaintiff is not required to establish liability under a § 5 claim in order to succeed on a § 4 claim.

At the time that this action commenced, the relevant text of G.L. c. 21E, § 4, inserted by St.1983, c. 7, § 5, read as follows: ⁷

"Any person who undertakes assessment, containment or removal action regarding the release or threat of release of oil or hazardous material shall be entitled to reimbursement from any other person liable for such release or threat of release for the reasonable costs of such assessment, containment and removal. If such release resulted from the negligence of two or more persons, each shall be liable to the others for his pro rata share of the costs of assessment, containment and removal."

Persons liable for hazardous material releases are those who come within the categories listed in G.L. c. 21E, § 5 (a ) (1)-(5). ⁸ Under § 5 (a ) (1), liability applies to the "owner or operator" of a "site from or at which there is or has been a release or threat of release of oil or hazardous material"; under § 5 (a ) (2), liability extends to "any person who at the time of storage or disposal of any hazardous material owned or operated any site at or upon which such hazardous material was stored or disposed of and from which there is or has been a release or threat of release of hazardous material."

Farr contends that, to be a "person liable" for the purposes of § 4, one must have been found liable (i.e., adjudicated as such) in an action brought under § 5. This is not a correct interpretation of the interaction between the two sections. Any person who falls within one of the categories of liability listed in § 5 may be subject to an action brought under § 4, without a separate finding of liability under § 5. Often, as in this case, the defendant in a § 4 action will argue that it does not fall within one of the § 5 categories, and that issue can be readily addressed within the proceedings on the § 4 claim. If we were to adopt Farr's reasoning, a party wishing to pursue a § 4 claim would need a basis as well for a § 5 claim, and would have to bring both claims within the statutory period allowed for § 5 claims. This would not be a logical reading of the statute. ⁹ Similar conclusions have been reached in prior cases that have often involved separate § 4 actions. See Mailman's Steam Carpet Cleaning Corp. v. Lizotte, 415 Mass. 865, 873-874, 616 N.E.2d 85 (1993) (person liable for cleanup under § 5 can sue other liable parties under § 4 for reimbursement of cleanup costs already paid, but cannot sue under § 5 [a ] [iii] to recover costs not yet incurred); Griffith v. New England Tel. & Tel. Co., 414 Mass. 824, 826-829, 610 N.E.2d 944 (1993), S.C., 420 Mass. 365, 367-370, 649 N.E.2d 766 (1995) (costs not recoverable in § 4 action from defendant who does not fit within any § 5 [a ] category); Oliveira v. Pereira, 414 Mass. 66, 73-74, 605 N.E.2d 287 (1992) (causes of action for reimbursement under § 4 accrue on dates when cleanup costs paid, not when contamination discovered); Sheehy v. Lipton Indus., 24 Mass.App.Ct. 188, 197-198, 507 N.E.2d 781 (1987) (plaintiff need not wait for State to seek damages or approve corrective measures before asserting § 4 reimbursement claim against defendant).

(b) Liability of Haigh-Farr as "operator." Haigh-Farr contends that there was insufficient evidence, as matter of law, to support the jury's finding that Haigh-Farr was "an operator of the furniture stripping business at any time when the hazardous materials were stored or disposed of at this site," and that the judge therefore erred in denying its motions for directed verdict and for judgment notwithstanding the verdict. Haigh-Farr also argues that the judge erred in instructing the jury on the appropriate "test" to be applied in determining "operator" liability. We conclude that the test set forth in the jury instructions incorrectly stated the requirements for establishing operator liability under G.L. c. 21E. Because the jury's finding may have been based on an incorrect application of law, we must vacate the verdict. ¹⁰ However, we also conclude that the plaintiffs have presented sufficient evidence to obtain jury consideration of their claim against Haigh-Farr under the appropriate test, and they are therefore entitled to a new trial.

The "[o]perator" of a site is circularly defined in G.L. c. 21E, § 2, as "any person ... operating such site." It was never disputed at trial that Farr was an operator of the site; he was physically present at the site, supervised other employees, and actively managed the furniture stripping business. The degree of Haigh-Farr's involvement in the business was, by contrast, very much a matter of dispute, as were the legal implications of that involvement.

In 1973, when he decided to open a furniture stripping business, Farr had neither capital nor prior experience in managing a business. He turned for assistance to Haigh-Farr, whose officers and sole stockholders were William B. Haigh and Farr's brother, George. Haigh-Farr gave Farr the capital he needed to start the business, in the form of an undocumented loan, estimated at trial as...