Reheis v. Baxley Creosoting & Osmose Wood Preserving Co.

• Decision Date: 01 July 2004
• Docket Number: No. A04A0170.,A04A0170.
• Citation: 601 S.E.2d 781,268 Ga. App. 256
• Court: Georgia Court of Appeals
• Parties: REHEIS et al. v. BAXLEY CREOSOTING & OSMOSE WOOD PRESERVING COMPANY et al.

601 S.E.2d 781

268 Ga. App. 256

REHEIS et al. v. BAXLEY CREOSOTING & OSMOSE WOOD PRESERVING COMPANY et al.

No. A04A0170.

Court of Appeals of Georgia.

July 1, 2004.

Thurbert Baker, Attorney General, Isaac Byrd, Deputy Attorney General, John Hennelly, Assistant Attorney General, Timothy Ritzka, Assistant Attorney General, W. Hewitt, N.E. Atlanta, for Appellant.

John Croley, Fitzgerald, John Reinhardt, Reinhardt & Whitley, Tifton, Keith Morris, Baxley, for Appellee.

MIKELL, Judge.

OCGA § 12-8-96.1(a) of the Georgia Hazardous Site Response Act ("HSRA") permits the state to recover the reasonable costs incurred in cleaning up hazardous waste sites, as well as attorney fees and punitive damages. In this case of first impression, we hold that defendants sued under OCGA § 12-8-96.1(a) have no right to a jury trial on the issue of whether the actual costs were reasonable, but they may demand a jury trial on the issue of punitive damages. We further conclude that cost recovery determinations made by the Environmental Protection Division ("EPD") of the Department of Natural Resources are entitled to deference. In addition, we affirm the grant of summary judgment to defendant Lawton M. Morris. Finally, for reasons that will be clarified below, we remand for the trial court to consider certain issues raised in the motion for summary judgment filed by EPD director Harold F. Reheis (the "Director"). The relevant facts follow. On April 27, 1995, the EPD entered into a consent order with Baxley Creosoting & Osmose Wood Preserving Company ("Baxley"), whereby Baxley agreed to remove hazardous waste that had leaked from five steel tanks located on its Appling County property. Morris executed the order in his capacity as Baxley's president. The order imposed penalties of $5,000 per day for noncompliance. However, the order also provided that if Baxley was unwilling or unable to comply with the conditions specified therein, the company could notify the Director, and no additional penalties would accrue from the date of notification.

On August 16, 1995, the Director notified Baxley that it had violated the order by discharging 35,000 gallons of waste water on June 30, 1995. The Director indicated that if Baxley committed any additional violations of the order, the EPD would take necessary corrective action to clean up the site and would pursue an action under OCGA § 12-8-96.1(a) to recoup the costs and recover punitive damages. Shortly thereafter, Baxley notified the Director of its inability to comply with the order, and the Director completed all corrective action at the site utilizing monies from the hazardous waste trust fund, as provided in OCGA § 12-8-96(b).

On June 16, 2000, the Director filed suit against Baxley and Morris, jointly, severally, and individually, seeking to recover cleanup costs of $2.24 million, punitive damages of $6.725 million, and attorney fees. The Director moved for summary judgment, asserting that (a) the site was a "facility" as defined in OCGA § 12-8-92(3); (b) there was a "release" of hazardous constituents at the site within the meaning of OCGA § 12-8-92(11); (c) both Baxley and Morris were responsible parties under OCGA § 12-8-96.1(a); and (d) the state incurred costs associated with cleaning up the environmental hazards at the site due to the defendants' failure to comply with the consent order. In opposing summary judgment, Baxley and Morris contended, inter alia, that they were entitled to a jury trial on the issue of the reasonableness of the costs incurred by the state. In addition, Morris moved for summary judgment, arguing that he could not be held personally liable because he signed the consent order in his representative capacity.

The trial court denied the Director's motion and granted Morris's motion, concluding that the legislature intended to provide entities sued under OCGA § 12-8-96.1(a) with the right to trial by a jury and that Morris could not be held personally liable. However, the court did not rule on issues (a), (b), and (d) of the Director's motion. The Director appeals.

1. The Director first assigns error to the trial court's holding that Morris could not be held individually liable for the cleanup costs. We agree with the trial court.

The HSRA imposes certain procedural due process requirements with which the Director must comply in order to recover costs and punitive damages thereunder. Pertinently, OCGA § 12-8-96(a) provides:

Whenever the director has reason to believe that there is or has been a release of hazardous wastes ... into the environment,... the director shall make a reasonable effort to identify each person who has contributed or who is contributing to such a release. The director shall then notify each such person in writing of the opportunity to perform voluntarily corrective action in accordance with an administrative consent order entered into with the director within such period of time as may be specified by the director in written correspondence to the person.

Section 12-8-96.1(a), in turn, states in relevant part:

Each and every person who contributed to a release of a hazardous waste ... shall be jointly, severally, and strictly liable to the State of Georgia for the reasonable costs of activities associated with the cleanup of environmental hazards, including legal expenses incurred by the state pursuant to subsection (a) of Code Section 12-8-96, as a result of the failure of such person to comply with an order issued by the director.... The person may, in addition, be liable for punitive damages in an amount at least equal to the costs incurred by the state and not more than three times the costs incurred by the state for activities associated with the cleanup of environmental hazards.¹

It is clear from this statutory scheme that an order issued by the director providing each person the opportunity to perform corrective action is a prerequisite to the imposition of individual liability. The record reflects, however, that Morris was not a party to the order that formed the basis of the action in the case at bar. The Director filed suit based on alleged violations of the terms of Consent Order EPD-HW-HSR-009. The order identifies Baxley as "Respondent." Morris, and three other individuals surnamed Morris, are identified as Respondent's corporate officers. The only two parties on the signature page are the EPD and Baxley. The director signed on behalf of the EPD, and Morris signed on behalf of Baxley as its president. Based on the statutory scheme, Morris cannot be held personally liable for violating an order to which he was not made a party. Nor has the Director alleged that Morris can be held individually liable as the "alter ego" of Baxley. As the trial court held, absent piercing the corporate veil, Morris is shielded from liability.²

The Director urges that we construe the procedural due process requirements liberally because the HSRA is remedial in nature. The Director cites the principle that remedial statutes "are to receive an equitable interpretation, by which the letter of the Act is sometimes restrained and sometimes enlarged, so as more effectually to meet the beneficial end in view, and prevent a failure of the remedy. They are to be construed liberally and ultra, but not contra to the strict letter."³ However, as noted in the decision cited by the Director, "uncertainties or ambiguities in remedial statutes should be resolved in favor of a liberal interpretation. But there is no uncertainty or ambiguity here."⁴ The same is true in this case. Construed together, OCGA §§ 12-8-96(a) and 12-8-96.1(a) plainly mandate, with certain exceptions inapplicable here, that unless a person has failed to comply with an administrative consent order entered into with the Director after notice and an opportunity to perform corrective action voluntarily, such person cannot be held liable for costs associated with the cleanup of environmental hazards. "Where the language of a statute is plain and unambiguous, judicial construction is not only unnecessary but forbidden."⁵

Moreover, it is axiomatic that "when a statute imposes a fine or penalty, strict construction is required in favor of the person penalized."⁶ OCGA § 12-8-96.1(a) imposes punitive damages in an amount from one to three times the cleanup costs. A strict construction of this Code section does not permit the Director to negotiate consent corrective action orders with corporate officers and ignore the statutorily-mandated due process requirements for subjecting those officers to personal liability for the discharge of hazardous waste.

Further, we reject the Director's reliance upon authority decided under the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 USC §§ 9601-9675. While there are certain similarities between CERCLA and the HSRA, CERCLA does not afford the same procedural due process protections as the HSRA.⁷ It follows that cases cited under CERCLA are inapplicable.

Finally, the Director argues that Morris can be held personally liable for a violation of the consent order because he had "actual notice" thereof, citing The Bootery v. Cumberland Creek Properties.⁸ In that case, our Supreme Court held that a lender who was not party to a consent judgment that incorporated a settlement agreement concerning litigation over golf course property and who was not in privity with the contemnor could not be held in contempt for violating the judgment.⁹ The outcome turned on the fact that the lender did not have actual notice of the judgment, by personal service or otherwise.¹⁰ In this case, the Director argues that because Morris negotiated the order on Baxley's behalf, he had "actual notice" of its terms within the meaning of The Bootery. We disagree. As outlined above, the HSRA requires the Director to adhere to specific procedural guidelines prior to instituting suit to recover remediation...