Mathews v. Dow Chemical Co., 96-WY-1368-CB.

• Decision Date: 02 December 1996
• Docket Number: No. 96-WY-1368-CB.,96-WY-1368-CB.
• Citation: 947 F.Supp. 1517
• Parties: William H. MATHEWS; and Vintage Sales, L.L.C., Plaintiffs, v. DOW CHEMICAL COMPANY, a Delaware corporation; Parks Corporation, a Massachusetts corporation; Thoro Products Company, a suspended Colorado corporation, Richard Edwin Newman, an individual; Richard Earnest Newman, an individual; and Earl D. Quinnell, an individual, Defendants.
• Court: U.S. District Court — District of Colorado

947 F.Supp. 1517

William H. MATHEWS; and Vintage Sales, L.L.C., Plaintiffs, v. DOW CHEMICAL COMPANY, a Delaware corporation; Parks Corporation, a Massachusetts corporation; Thoro Products Company, a suspended Colorado corporation, Richard Edwin Newman, an individual; Richard Earnest Newman, an individual; and Earl D. Quinnell, an individual, Defendants.

No. 96-WY-1368-CB.

United States District Court, D. Colorado.

December 2, 1996.

COPYRIGHT MATERIAL OMITTED

Timothy R. Gablehouse, Don Calkins, Gablehouse & Epel, Denver, CO, for William H. Mathews, Vintage Sales, L.L.C.

C. Michael Montgomery, Colleen Belak, Montgomery, Green, Jarvis, Kolodny & Markusson, P.C., Denver, CO, Brent Schindler (Staff Counsel), Midland, MI, for Dow Chemical Company.

Michael R. Hope, Patton Boggs, L.L.P., Denver, CO, for Thoro Products Company, Richard Edwin Newman, Richard Ernest Newman, and Earl D. Quinnell.

Terence C. Gill, Mark J. Mathews, Brownstein Hyatt Farber & Strickland, P.C., Denver, CO, for Parks Corporation.

ORDER ON MOTIONS TO DISMISS

BRIMMER, District Judge.^*

Defendants, Thoro Products Company, Richard Edwin Newman, Richard Earnest Newman, and Earl D. Quinnell (collectively referred to as the "Thoro Defendants"), filed a Motion to Dismiss or in the Alternative, Motion to Strike. Defendant Parks Corporation ("Parks") also filed a Motion to Dismiss. The Court, having reviewed the parties' briefs and being fully advised in the premises, FINDS and ORDERS as follows:

Background

This case arises out of the discovery of chlorinated hydrocarbon contamination beneath the property of Plaintiffs, William H. Mathews and Vintage Sales, L.L.C.. Plaintiff William Mathews purchased the property located in Arvada, Colorado, in 1993. Prior to purchasing the property, Mathews conducted a prepurchase inquiry into the environmental conditions on the property, which did not disclose any contamination.

In 1994, Mathews conveyed the property to Plaintiff Vintage Sales, L.L.C. Mathews is manager and part owner of Vintage Sales, L.L.C. In 1995, the U.S. Environmental Protection Agency ("EPA") informed Plaintiffs that EPA had detected a groundwater contaminate "plume" of chlorinated hydrocarbons under Plaintiffs' property. EPA indicated the contaminant plume had originated from an adjacent property owned by Defendant Thoro Products Company ("Thoro").

As a result of the contamination, Plaintiffs have filed suit against various defendants. Defendants Richard Edwin Newman, Richard Earnest Newman, and Earl Quinnell were officers and/or directors of Thoro Products Company. The Thoro property was used as a terminal facility for the packaging, storing, and shipping of various cleaning solvents, antifreeze materials, paint thinner, and other hazardous substances. Defendant DOW Chemical Company ("DOW") contracted with Thoro from the mid 1970s until the mid to late 1980s to use the Thoro site as a storage facility for many of its chemical products. Defendant Parks contracted with Thoro during the mid to late 1970s to package paint thinner and other products for Parks on the Thoro site.

Plaintiffs allege that as a result of the activities conducted by the Thoro Defendants, Dow, and Parks, numerous hazardous chemical products were allowed to spill and leak onto the ground at the Thoro site. Plaintiffs allege that these spills and leaks caused the contamination of their property.

Plaintiffs raise ten separate claims under their complaint. The first six claims arise under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., while the last four claims arise under state law:

(1) Claim One is for a declaration of liability under CERCLA § 107(a) for past and future response costs against DOW and Parks;

(2) Claim Two also seeks a declaration of liability under CERCLA § 107(a) but it is against the Thoro Defendants;

(3) Claim Three is for cost recovery under CERCLA § 107 against DOW and Parks (4) Claim Four is for cost recovery under CERCLA § 107 against the Thoro Defendants;

(5) Claim Five is for a declaration of liability for contribution under CERCLA § 113(f) for past and future response costs against all Defendants;

(6) Claim Six is for contribution under CERCLA § 113(f) against all Defendants;

(7) Claim Seven is for negligence against Dow and Parks;

(8) Claim Eight is for negligence against the Thoro Defendants;

(9) Claim Nine is for negligence per se against all Defendants; and

(10) Claim Ten is for continuing trespass against all Defendants.

The Thoro Defendants and Parks now seek to have these claims dismissed. The Court will address each of the Defendants' arguments in turn.

I. Standard of Review

The Federal Rules of Civil Procedure erect a powerful presumption against rejecting pleadings for failure to state a claim. Maez v. Mountain States Telephone and Telegraph, Inc., 54 F.3d 1488, 1496 (10th Cir. 1995). A court should not dismiss a cause of action under Fed.R.Civ.P. Rule 12(b)(6) unless the court determines that beyond doubt, plaintiff can prove no set of facts that would entitle it to relief. Federal Deposit Ins. Corp. v. Wise, 758 F.Supp. 1414, 1416 (D.Colo.1991). "The Court must accept all factual allegations as true and must draw all reasonable inferences in favor of the plaintiff." Id. "So long as the plaintiff offers evidence in support of a legally recognized claim for relief, a motion to dismiss must be denied." Id.

II. The Thoro Defendants' Motion to Dismiss, or, in the Alternative, Motion to Strike

The Thoro Defendants move the Court pursuant to Fed.R.Civ.P. Rule 12(b)(6) to dismiss Plaintiffs' six CERCLA claims. In addition, the Thoro Defendants move the Court pursuant to Fed.R.Civ.P. Rule 12(b)(1) to dismiss Plaintiffs' state law claims. Alternatively, the Thoro Defendants move the Court to strike Plaintiffs' demands for recovery of punitive damages and attorneys' fees as set forth in Plaintiffs' state law claims.

A. CERCLA Section 107 Claims — Plaintiffs' First Through Fourth Claims for Relief

The Thoro Defendants first contend that Plaintiffs are not entitled to bring CERCLA section 107 claims because Plaintiffs are potentially responsible parties ("PRPs"). Plaintiffs counter that dismissal of their CERCLA section 107 claims would be improper because they have properly pled an affirmative defense to PRP liability — the "innocent landowner" defense. The Court agrees with Plaintiffs.

In the Tenth Circuit, PRPs may not pursue CERCLA section 107 actions and are limited to actions for contribution under CERCLA section 113. United States v. Colorado & Eastern R.R., 50 F.3d 1530, 1534-35 (10th Cir.1995) ("CERC"). CERC does not address whether a party with a valid affirmative defense to PRP liability may bring a claim under CERCLA section 107. It seems evident, however, that such a party would be entitled to bring a CERCLA section 107 claim since the affirmative defense would absolve them of potential liability. As a result, the Court holds that a party with a valid affirmative defense to PRP liability is not limited to actions for contribution under CERCLA section 113 and may bring claims under CERCLA section 107. See United Technologies Corp. v. Browning-Ferris Industries, Inc., 33 F.3d 96, 100 (1st Cir.1994) (stating that innocent parties are permitted full recovery of costs under CERCLA section 107).

The "innocent landowner" defense is a valid affirmative defense to PRP liability. 42 U.S.C. § 9607(b)(3). The elements of this defense are: (1) "that another party was the `sole cause' of the release of hazardous substances and the damages caused thereby;" (2) "that the other, responsible party did not cause the release in connection with a contractual, employment, or agency relationship with the defendant;" and (3) "that the defendant exercised due care and guarded against the foreseeable acts or omissions of the responsible party." Westfarm Associates Limited Partnership v. Washington Suburban Sanitary Commission, 66 F.3d 669, 682 (4th Cir.1995) (quoting 42 U.S.C. § 9607(b)(3)). In this case, the Court finds that Plaintiffs' Complaint has alleged sufficient facts as to each of these elements.

The Thoro Defendants contend that Plaintiffs' Complaint fails to satisfy the third element of the innocent landowner defense in that Plaintiffs failed to conduct a commercially-reasonable environmental inspection prior to the purchase of the property in 1993, which would have revealed to Plaintiffs that the property was contaminated. The Court rejects Defendants' contention. The Court finds that Plaintiffs have alleged that they engaged in a commercially-reasonable inspection and that this issue involves factual issues that are not appropriately resolved in a motion to dismiss. For this reason, the Court refuses to dismiss Plaintiffs' CERCLA section 107 claims.

B. CERCLA Section 113 Claims — Plaintiffs' Fifth and Sixth Claims for Relief

The Thoro Defendants next contend that Plaintiffs have failed to sufficiently plead the response costs that they allegedly have incurred and that Plaintiffs' CERCLA section 113 claims must therefore be dismissed. Plaintiffs contend that the response costs alleged in their Complaint are sufficient to satisfy the notice pleading standard of Fed. R.Civ.P. Rule 8(a). The Court once again agrees with Plaintiffs.

To maintain a CERCLA claim, a plaintiff's complaint "must identify at least one prefiling response cost cognizable under CERCLA." Cook v. Rockwell International Corp., 755 F.Supp. 1468, 1475 (D.Colo.1991). In their Complaint, Plaintiffs allege that "[r]esponse costs to date include ... investigative costs, technical consultants' fees, and reasonable pre-litigation attorneys' fees and costs." Both investigative costs and technical consultants' fees are recoverable under CERCLA. City of New York v. Chemical Waste Disposal Corp., 836 F.Supp. 968, 980 (E.D.N.Y.1993). The Court therefore finds that Plaintiffs have satisfied...