Seneca Meadows, Inc. v. Eci Liquidating, Inc.

• Decision Date: 20 April 2006
• Docket Number: No. 95-CV-6400L.,95-CV-6400L.
• Parties: SENECA MEADOWS, INC., et al., Plaintiffs, v. ECI LIQUIDATING, INC., et al., Defendants.
• Court: U.S. District Court — Western District of New York

427 F.Supp.2d 279

SENECA MEADOWS, INC., et al., Plaintiffs, v. ECI LIQUIDATING, INC., et al., Defendants.

No. 95-CV-6400L.

United States District Court, W.D. New York.

April 20, 2006.

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Ronald G. Hull, Underberg & Kessler LLP, Rochester, NY, David A. Munro, New York State Department of Law, Albany, NY, for Plaintiffs.

Robert E. Glanville, Kevin M. Hogan, Phillips Lytle LLP, R. William Stephens, Stephens & Stephens, Angela M. Demerle, Craig A. Slater, Harter, Secrest and Emery LLP, Buffalo, NY, Alicia Barton McDevitt, Randall E. Kromm, Robert S. Sanoff, Foley Hoag, LLP, Boston, MA, Michael G. Sterthous, Molly M.A. Brown, Philip H. Gitlen, Whiteman, Osterman & Hanna, Albany, NY, Ronald G. Hull, Underberg & Kessler LLP, Christopher J. Dow, Devorsetz, Stinziano, Gilberti, Heintz & Smith, P.C., Rochester, NY, for Defendants.

DECISION AND ORDER

LARIMER, District Judge.

I. PROCEDURAL HISTORY

This is an action commenced by plaintiff, Seneca Meadows, Inc. ("SMI") and a related company, Macedon Homes, Inc., under the Comprehensive Environmental, Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq., originally against approximately two dozen corporate defendants.¹ SMI sought to recover from those defendants some of the costs that it has incurred in cleaning up a contaminated landfill site that it owns. The contaminated site (sometimes "the Site" or the "Tantalo Site") formerly known as the Tantalo Landfill, consists of about 26 acres south of Black Brook and is part of a 533-acre parcel, parts of which SMI currently uses as the Seneca Meadows landfill near Seneca Falls, New York.²

The 26-acre site was classified by the New York State Department of Environmental Conservation ("DEC") in 1983 as a Class II Inactive Hazardous Waste Disposal Site. The Site was used by prior owners as an open dump and a landfill for decades, dating back to 1958. After a lessee, Wembley Construction, obtained a contract with the City of Rochester to dispose of municipal waste at the Site, it filled rather quickly and was closed in 1974.

In 1981, SMI obtained a permit to expand its operation and develop the landfill north of Black Brook. As part of that process, SMI was required to perform remediation at the Tantalo Site. To comply with DEC requirements, SMI entered into three different consent orders with the DEC (Exs.1-3).³ The first order, Ex. 1, was executed in 1992, and the last, Ex. 3, in December 2004. Together these consent orders set out SMI's obligations to prepare a remediation plan for the contaminated Tantalo Site. These consent orders memorialized SMI's responsibilities.

As of March 2005, SMI had incurred approximately $8 million in costs to remediate the Site, and the project is not yet complete. Plaintiff expects that, over time, it will incur about twice that amount to complete the multi-year project.

By this action, SMI seeks to recover some of those costs from the industrial entities who deposited hazardous substances at the Site during its lifetime, that is, up to 1974. SMI does not contend that all of the costs should be assumed by others. It does not dispute that it is also responsible for much of the necessary remediation. During pretrial proceedings in the case, SMI appeared to concede its own responsibility for a substantial portion of the costs of remediation. Its principal expert at trial, Dr. Kirk W. Brown, as discussed in more detail below, testified that in his opinion SMI was responsible for 50% of the remediation costs.

The originally-named defendants consist of numerous industrial entities near Seneca Falls who regularly caused refuse to be deposited at the Site prior to its closure in 1974. Because the Site had been closed for 30 years at the time this trial commenced, the parties had the difficult task of determining, with any type of precision, the identity of those depositing at the Site, the nature of the materials deposited, the nature of the hazardous substances, and the volume of refuse deposited by all generators.

By the time trial commenced, SMI's claims for contribution for response costs had been resolved through settlement or other disposition as to all defendants save one. The case proceeded to trial against a single defendant, Goulds Pumps, Inc. ("Goulds Pumps"), and the matter was tried to the Court for over ten days. The parties were granted leave to file post-trial briefs, and both sides have done so.

This Decision and Order constitutes my findings of fact and conclusions of law, as required by FED.R.CIV.P. 52. The principal issues are whether SMI does have a valid cause of action against Goulds Pumps under CERCLA and, if so, what percentage, if any, of the response costs should be allocated to Goulds Pumps.

II. JURISDICTION UNDER CERCLA

SMI commenced this litigation to recoup money spent on remediation at and near the Site, which is allegedly contaminated with pollutants. Goulds Pumps suggests that this Court lacks jurisdiction since SMI fails to meet the requirements for such an action under CERCLA. The dispute centers on whether SMI may bring an action under § 107(a) or 113(b) of the Act. Goulds Pumps contends that plaintiff may not proceed under either section.

This Court has addressed this issue in prior decisions, most recently just prior to trial when Goulds Pumps moved to dismiss for lack of jurisdiction and SMI sought leave to amend its complaint to reinstate a previously-dismissed claim under § 107(a). One would think that jurisdictional issues would have been resolved sooner rather than later, but there have been three recent, important court decisions concerning jurisdiction that were decided during the pendency of this action. One was the United States Supreme Court decision in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004). The second is Bedford Affiliates v. Sills, 156 F.3d 416 (2d Cir.1998), and the third was decided by the Second Circuit subsequent to the trial in this case, Consolidated Edison Co. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir.2005) ("Con Ed"). Cooper Industries changed the landscape concerning contribution claims and the Con Ed case clarified, to some extent, the interplay between a § 107(a) action and an action for contribution under § 113(f), in the wake of Cooper Industries and Bedford Affiliates.

In my August 6, 1998 Decision and Order dismissing SMI's cause of action under CERCLA § 107, I stated that "[a]lthough the Second Circuit has not yet addressed this issue, every other circuit that has examined the issue has concluded that only an innocent party, who has undertaken a cleanup, may bring a § 107 cost recovery action to recover all of its response costs. A potentially responsible party ["PRP"], on the other hand, is limited to a § 113 contribution claim to recover only those response costs that exceed its equitable share." 16 F.Supp.2d 255, 258 (citing cases). I "agree[d] with the holding of these courts that a potentially responsible party, such as SMI, may not proceed against defendants under § 107, but that the nature of SMI's claim is for contribution under § 113." Id. The premise was that a party determined to be "responsible" could not recover all costs but only its fair share.

The following month, the Second Circuit joined those other circuits by holding that "an innocent party [may] sue for full recovery of its costs, i.e., indemnity under § 107(a), while a party that is itself liable may recover only those costs exceeding its pro rata share of the entire cleanup expenditure, i.e., contribution under § 113(f)(1)." Bedford Affiliates, 156 F.3d at 424. The court also stated that "a potentially responsible person under § 107(a) that is not entitled to any of the defenses enumerated under § 107(b) . . . cannot maintain a § 107(a) action against another potentially responsible person," but "instead must rely on a claim for contribution provided for in CERCLA § 113(f)(1)."⁴ That decision supported my prior ruling that SMI could only pursue a contribution claim under § 113.

In 2004, however, the Supreme Court held in Cooper Industries, that "to assert a contribution claim under § 113(f), a party must satisfy the conditions of either § 113(f)(1) or § 113(f)(3)(B)," i.e., the party must either (1) have been sued under § 106 (which authorizes the federal government to compel responsible parties to clean up contaminated areas) or § 107, see 42 U.S.C. § 9613(f)(1), or (2) have "resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement." 42 U.S.C. § 9613(f)(3)(B). That decision, then, narrowed the circumstances in which a party may bring a contribution action under § 113. Cf. Bedford Affiliates, 156 F.3d at 425 (holding that party that had not been sued under § 106 or § 107 could seek contribution under § 113(f)(1)). The Court expressly declined, however, to decide whether a PRP that is foreclosed from bringing suit under § 113(f) may nonetheless seek some cost recovery or contribution under § 107. Cooper Industries, 543 U.S. at 170, 125 S.Ct. 577.

The following year, after trial of this case, the Second Circuit held in Con Ed, that § 113(f)(3)(B) "create[s] a contribution right only when liability for CERCLA claims, rather than some broader category of legal claims, is resolved." 423 F.3d at 95. In Con Ed, the Second Circuit held that although the plaintiff utility company, which had voluntarily taken measures to clean up certain hazardous waste sites, could not, under the Supreme Court's holding in Cooper Industries, seek contribution from another PRP pursuant to § 113(f), it could "pursue its suit under section 107(a) because, in light of Cooper Industries, Con Ed's costs to clean up the sites . . . are `costs of response' within the meaning of that section."...