Powell Duffryn Terminals v. CJR PROCESSING, 92 C 5348.

• Decision Date: 30 November 1992
• Docket Number: No. 92 C 5348.,92 C 5348.
• Citation: Powell Duffryn Terminals v. CJR PROCESSING, 808 F.Supp. 652 (N.D. Ill. 1992)
• Court: U.S. District Court — Northern District of Illinois
• Parties: POWELL DUFFRYN TERMINALS, INC., an Illinois corporation, Plaintiff, v. CJR PROCESSING, INC., an Illinois corporation; Curtis Appel; Effluent Technology, Inc., a Wisconsin corporation; Louis Filosa; and Amber Oils, Inc., a Wisconsin corporation, Defendants.

808 F. Supp. 652

POWELL DUFFRYN TERMINALS, INC., an Illinois corporation, Plaintiff, v. CJR PROCESSING, INC., an Illinois corporation; Curtis Appel; Effluent Technology, Inc., a Wisconsin corporation; Louis Filosa; and Amber Oils, Inc., a Wisconsin corporation, Defendants.

No. 92 C 5348.

United States District Court, N.D. Illinois, E.D.

November 30, 1992.

J. Timothy Ramsey, Rudnick & Wolfe, Don E. Glickman, Don E. Glickman, Ltd., Chicago, IL, for plaintiff.

Martin Norman Preiser, River Forest, IL, for defendant.

Curtis Appel, pro se.

Effluent Technology, Inc., pro se.

Louis Filosa, pro se.

ORDER

NORGLE, District Judge.

Before the court are the motions of defendants CJR Processing, Inc. ("CJR") and Curtis H. Appel ("Appel") to dismiss pursuant to Rules 12(b)(1), 12(b)(6), and 9(b) of the Federal Rules of Civil Procedure. For reasons that follow, the court grants the motions pursuant to Rule 12(b)(6) as to Count I, without prejudice, and grants plaintiff Powell Duffryn Terminals, Inc. ("Powell Duffryn") leave to file an amended complaint consistent with this opinion within ten days. The court defers ruling on the remaining motions.

FACTS

The complaint establishes that Powell Duffryn owns and operates a public storage tank facility for the storage of various liquids. CJR leased two tanks and stored 1,135,383 gallons of a liquid mixture of ethylene glycol, lube oil, and water. Appel is the president of CJR and allegedly directed the operations of CJR.

On November 13, 1991, CJR shipped approximately 920,000 gallons of the liquid solution from the storage tanks. Shortly after the shipment, the Illinois Environmental Protection Agency ("IEPA") informed Powell Duffryn that the liquid solution in both of CJR's leased tanks contained elevated concentrations of carbon tetrachloride and other substances causing the entire content of the tanks to be classified as hazardous waste under federal and state environmental laws. Powell Duffryn claims that it was never informed prior to November 13, 1991 that the liquid stored at the facility contained hazardous substances.

At the request of the IEPA, Powell Duffryn took samples of the stored solution and sent them to various laboratories for analysis. Every test result confirmed that the tanks contained concentrations of hazardous substances. The IEPA then directed Powell Duffryn to remove the solution in CJR's tanks by February 23, 1992 lest it take legal action against Powell Duffryn for violation of the Illinois Environmental Protection Act. On November 27, 1991, Powell Duffryn terminated the lease agreement with CJR and demanded CJR to remove and dispose of the remaining liquid in the tanks in accordance with the applicable environmental laws.

On January 22, 1992 Powell Duffryn and CJR entered into a settlement agreement which provided that Powell Duffryn would remove and dispose of the liquid and would pay the appropriate costs and expenses, and provided that CJR would pay tank rental fees through December 31, 1991 and would reimburse Powell Duffryn for all of the costs and expenses in connection with the removal, transportation, and disposal of the liquid. The agreement further provided that CJR would make monthly payments to Powell Duffryn in the amount of $20,000 until all amounts were paid.

Powell Duffryn engaged the services of environmental consulting firms to remove and dispose of the liquid solution and incurred various expenses. This was done successfully and in conformance with all relevant regulations and requirements. Powell Duffryn's total cost and expense in connection with this project amounted to $393,911.28. CJR paid four monthly installments totalling $80,000, but then refused to make any further payments.

Powell Duffryn filed suit under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. to recover its costs in removing the contaminated liquid materials from the tanks CJR leased. Powell Duffryn also raises claims based on common law theories of breach of contract, fraud, and piercing the corporate veil, asserting jurisdiction over these claims based on this court's supplemental jurisdiction. See 28 U.S.C. § 1367(a).

CJR and Appel contend that the court should dismiss Count I of Powell Duffryn's complaint because it fails to state a CERCLA claim. Consequently, they assert that the pendent state law claims should also be dismissed once the federal claim is dismissed because the court's continuing jurisdiction over those counts depends on the CERCLA claim. Last, CJR and Appel request the court to dismiss Count II for failure to plead fraud with particularity.

DISCUSSION

On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the court accepts all well-pleaded factual allegations as true, Johnson v. Martin, 943 F.2d 15, 16 (7th Cir.1991), as well as all reasonable inferences drawn from those allegations, Nelson v. Monroe Regional Medical Center, 925 F.2d 1555, 1558 (7th Cir.1991). Because federal courts simply require "notice pleading," a complaint need not specify the correct legal theory nor point to the right statute to survive a motion to dismiss. Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1134-35 (7th Cir.1992) (citing Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir.1992)). A party need only "outline or adumbrate" a violation of a statute. Brownlee v. Conine, 957 F.2d 353 (7th Cir.1992). The court must construe the pleadings liberally,¹ and mere vagueness or lack of detail alone does not constitute sufficient grounds to dismiss a complaint. Strauss v. City of Chicago, 760 F.2d 765, 767 (7th Cir.1985). Accordingly, a party fails to state a claim upon which relief may be granted only if that party can prove no set of facts upon which to grant legal relief. Ross v. Creighton Univ., 957 F.2d 410, 413 (7th Cir.1992).

To state a claim under 42 U.S.C. § 9607(a), Powell Duffryn must allege that CJR and Appel are responsible for a release or threatened release of a hazardous substance from a facility and caused Powell Duffryn to incur response costs. 42 U.S.C. § 9607; U.S. Steel Supply, Inc. v. Alco Standard Corp., No. 89 C 20241, 1992 WL 229252, at *6, 1992 U.S.Dist. LEXIS 13722, at *17 (N.D.Ill. Sept. 9, 1992); Amcast Indus. Corp. v. Detrex Corp., 779 F.Supp. 1519, 1534-35 (N.D.Ind.1991). Although CERCLA defines a release as "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment," 42 U.S.C. § 9601(22), the court possesses little guidance regarding what constitutes a "threatened" release. CERCLA simply fails to define that term.

So the question is, just how certain must a court be that a spill, leak, discharge, or escape will occur to find that a threat exists? Powell Duffryn's allegation as to a threatened release of hazardous material reads as follows:

There was a threatened release of the liquid solution into the environment in that it was not properly labeled or identified as hazardous. Powell Duffryn does not treat, store or dispose of hazardous substances and is not equipped to do so, and, until mid-November 1991, the liquid solution was not handled or labeled in a manner appropriate for hazardous substances.

CJR and Appel contend that this allegation fails to properly allege a threatened release of a hazardous substance. They further assert that the complaint merely establishes that the expenses incurred were for the avoidance of legal and financial risks emanating from the IEPA and not because of an actual or threatened release of hazardous materials into the environment. Essentially, they claim that the removal of the contaminated liquid from the tanks under the circumstances alleged is distinguishable from a removal to prevent a threatened release.

The court agrees. Powell Duffryn's complaint does not sufficiently allege a CERCLA claim. Nowhere is there an allegation that the liquid solution stored in the tanks was capable of escaping into the environment. Powell Duffryn has not alleged that the liquid was contained in improper or unsuitable containers or that the storage tanks were corroded, cracked, unsealed, unenclosed, or otherwise exposing the environment to the probability that the mixture would escape. Cf. Fertilizer Inst. v. United States Envtl. Protection Agency, 935 F.2d 1303, 1309-10 (D.C.Cir.1991) (exposure of substance to environment such that it may be allowed to escape into air is not a release of hazardous substance, although it may be a threatened release). The complaint does not establish that immediate short-term action was necessitated by the presence of the liquid in the storage tanks on Powell Duffryn's premises. See Carlyle Piermont Corp. v. Federal Paper Bd. Co., 742 F.Supp. 814, 819-20 (S.D.N.Y. 1990) (discussing factors to determine when removal action is necessary under 40 C.F.R. § 300.65(b)(2) (1989)).

The court further finds that the case law supports this conclusion. Powell Duffryn, in response to the motion, points to a Ninth Circuit opinion stating that response costs under CERCLA can include the costs of investigation or testing for the presence of hazardous wastes and one can conceivably recover for these costs even before the potential means of release have been identified. See Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1153 (9th Cir.1989). Nonetheless, the Ninth Circuit merely held that a complaint need not contain a specific allegation of the manner in which a threatened release has occurred. Id. By contrast, Powell Duffryn specifically alleged the manner in which it claims a threatened release has occurred, and it is that allegation which the court finds legally insufficient. Furthermore, the case Ascon cited in support of its position, Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887 (9th Cir.1986), merely discussed what constitutes "costs in response" to a release or threatened...