Presque Isle Harbor v. Dow Chemical Co.

• Decision Date: 25 January 1995
• Docket Number: No. 2:92-CV-30.,2:92-CV-30.
• Citation: 875 F. Supp. 1312
• Parties: PRESQUE ISLE HARBOR DEVELOPMENT COMPANY and Bawgam, Inc., Plaintiffs, v. The DOW CHEMICAL COMPANY, Defendant.
• Court: U.S. District Court — Western District of Michigan

875 F. Supp. 1312

PRESQUE ISLE HARBOR DEVELOPMENT COMPANY and Bawgam, Inc., Plaintiffs, v. The DOW CHEMICAL COMPANY, Defendant.

No. 2:92-CV-30.

United States District Court, W.D. Michigan, Southern Division.

January 25, 1995.

Robert M. Bordeau, Kendricks, Bordeau, Adamini, Keefe, Smith, Girard & Seavoy, Marquette, MI, Scott T. Forlund, Morrison & Hecker, Kansas City, MO, for plaintiffs.

Darrell M. Grams, Wise & Marsac, P.C., Detroit, MI, Sydney Rooks, Dow Chemical Co. Legal Dept., Midland, MI, for defendant.

MEMORANDUM OPINION

McKEAGUE, District Judge.

This action is brought pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., the Michigan Environmental Response Act ("MERA"), M.C.L. 299.601 et seq., and the Michigan Environmental Protection Act ("MEPA"), M.C.L. 691.1201 et seq. Plaintiffs' complaint also states common law claims of trespass, nuisance, negligence, ultrahazardous or abnormally dangerous activities, and common law indemnity. Plaintiffs claim defendant is liable for investigation and clean-up costs. Now before the Court is defendant's motion for partial summary judgment and motion to dismiss for failure to state a claim.¹ Because adjudication of defendant's motion requires consideration of the voluminous exhibits and affidavits filed by the parties, the motion will be decided under Fed.R.Civ.P. 56.

FACTUAL BACKGROUND

In approximately 1903 the Cleveland Cliffs Iron Company established a facility at Marquette, Michigan, on the shore of Lake Superior, for the manufacture of pig iron and charcoal and the distillation of chemicals. A major waste by-product of these processes was tar, which was disposed of at various sites on the property, but primarily on the northernmost section.

In 1935, the Cliffs Dow Company was formed, with all of the stock being owned by Cleveland Cliffs and the Dow Chemical Company ("defendant" or "Dow").² For most of the time the Cliffs Dow Company was in existence, defendant owned 66% of the stock.³ Cliffs Dow continued all the operations of the Cleveland Cliffs Iron Company except the manufacture of pig iron. During its more than 30 years of operation, Cliffs Dow generated a variety of waste by-products, some of which contain or are alleged to contain hazardous substances, which were knowingly disposed of or accidently discharged on the property at issue here.⁴

In 1968, all Cliffs Dow stock was sold to the Georgia-Pacific Corporation and E.L. Bruce Company and the name of the plant was changed to Royal Oak Charcoal Company, which continued unchanged the Cliffs Dow manufacturing operations.

In October 1969, Royal Oak Charcoal sold the plant and the property to the C & W Company.⁵ At some subsequent point, C & W changed its name to Presque Isle Harbor Development Company ("Presque Isle"). Maurice Warshawsky testified that the reason for the purchase was to allow the partnership more time to salvage and liquidate equipment on the property.

The relevant parcel of real property consists of approximately 89 acres along the shore of Lake Superior in the northwest section of Marquette, Michigan. In 1970, Presque Isle decided to pursue the idea of developing the southern portion of the property. Various development plans were contemplated over the years, but none of them were implemented. In 1986, the Presque Isle partnership established Bawgam, Inc., which was wholly owned by the partnership, and conveyed to it the northernmost nine acres of the property. Mr. Warshawsky testified that this action was taken "because of the publicity about contamination; we didn't want it connected with the rest of the property." Deposition of Maurice Warshawsky, 3/25/93, p. 52.

In 1990, at a public hearing before the Marquette Planning Commission on a planned unit development (PUD) submitted by Presque Isle, an attorney representing Dow stated that the property was contaminated. Plaintiffs allege that this statement "was widely publicized, and development of the property was thereby rendered impossible." Plaintiffs' Response Br., p. 2. Subsequently, plaintiffs filed their complaint alleging Dow's liability for all investigation and clean-up costs under CERCLA, MERA, and MEPA, and under common law theories of trespass, nuisance, negligence, ultrahazardous activities, and common law indemnity.⁶ Plaintiffs also seek damages under the common law theories for unreasonable interference with their use and enjoyment of their property. The Court has read the pleadings and exhibits submitted by the parties, heard their oral arguments, and now considers this matter ready for disposition.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the record reveals that there are no issues as to any material fact in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The standard for determining whether summary judgment is appropriate is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Liberty Lobby, 477 U.S. at 251-52, 106 S.Ct. at 2511-12. "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id., 477 U.S. at 247-48, 106 S.Ct. at 2509-10 (emphasis in original).

The Court must consider all pleadings, depositions, affidavits, and admissions on file, and draw all justifiable inferences in favor of the party opposing the motion. Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). However, the moving party is not required to expressly negate the opponent's claim. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. The movant satisfies its initial burden merely "by pointing out to the court that the respondent, having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case." Street v. J.C. Bradford Co., 886 F.2d 1472, 1479 (6th Cir.1989).

Once the movant makes a sufficient showing of an absence of evidence to support the non-moving party's case, the non-moving party then assumes the burden of coming forward with evidence demonstrating a genuine issue of material fact. Celotex, 477 U.S. at 324-25, 106 S.Ct. at 2553. The non-moving party may not rest on the mere allegations contained in the pleadings, but, rather, must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). "The mere existence of a scintilla of evidence in support of the non-moving party's position will be insufficient." Liberty Lobby, 477 U.S. at 252, 106 S.Ct. at 2512. The non-moving party "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must present affirmative evidence in order to defeat a properly supported motion for summary judgment." Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1389 (6th Cir. 1993).

"As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Liberty Lobby, 477 U.S. at 248, 106 S.Ct. at 2510. And an issue of material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355.

This Court has at least some discretion in evaluating the non-moving party's evidence and in determining whether that party's claim is plausible. Barnhart, 12 F.3d at 1389. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims." Celotex, 477 U.S. at 323-24, 106 S.Ct. at 2552-53.

ANALYSIS

A. CERCLA CLAIM⁷

1. Standard of Liability

Plaintiffs claim defendant is liable under CERCLA as an "operator." 42 U.S.C. § 9607(a)(2). In support of its motion for partial summary judgment, defendant claims the proper standard for CERCLA liability in this case is the "piercing the corporate veil" test, and that plaintiffs cannot satisfy the elements of this test. This argument is based on defendant's assertion, relying on the opinion of the Sixth Circuit in Anspec Co., Inc. v. Johnson Controls, Inc., 922 F.2d 1240 (6th Cir.1991), that Michigan law must be applied to determine whether defendant is liable as an owner or operator. Defendant simply misreads the Anspec opinion.

In Anspec, the relevant issue was whether successor corporations incurred the liability of their predecessors. After determining as a matter of statutory interpretation that successor corporations could indeed be liable under CERCLA, the Sixth Circuit concluded that on remand the "district court will follow Michigan law in its application of successor liability." Anspec, 922 F.2d at 1248. Defendant relies on this language for its assertion that Michigan law will control its liability in the instant case. However, as is clear from the Sixth Circuit's prior discussion, id. at 1244-45, this language refers solely to what liabilities of a predecessor are in fact assumed by a successor corporation. State law has no relevance to the actual existence of any liability as an operator under CERCLA, which...