Signature Combs, Inc. v. U.S.

• Decision Date: 19 March 2003
• Docket Number: No. 98-CV-2968 D.,No. 98-CV-2777 D.,No. 00-CV-2245 D.,98-CV-2777 D.,98-CV-2968 D.,00-CV-2245 D.
• Citation: 253 F.Supp.2d 1028
• Parties: SIGNATURE COMBS, INC., et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — Western District of Tennessee

253 F.Supp.2d 1028

SIGNATURE COMBS, INC., et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants.

No. 98-CV-2777 D.

No. 98-CV-2968 D.

No. 00-CV-2245 D.

United States District Court, W.D. Tennessee, Western Division.

March 19, 2003.

William E. Norcross, Esq., Norcross Law Firm, Cordova, TN, W. C. Blanton, Thaddeus R. Lightfoot, Oppenheimer, Wolff & Donnelly, Minneapolis, MN, David Wade, Esq., Martin, Tate, Morrow & Marston, Memphis, TN, Charlotte Knight Griffin, Memphis, Light, Gas & Water, Memphis, TN, Gary P. Gengel, Morgan, Lewis & Bockius, Princeton, NJ, Nicholas E. Bragorgos, Esq., Mcnabb, Bragorgos & Burgess, PLLC, Memphis, TN, for plaintiffs.

Veronica F. Coleman, Sidney P. Alexander, U.S. Attorney's Office, Memphis, TN, Naikang Tsao, Michele L. Walter, U.S. Department of Justice, Washington, DC, Anne Foster, U.S. Environmental Protection Agency, Dallas, TX, Michael R. Dillon, Morgan, Lewis & Bockius, Philadelphia, PA, Henry T.V. Miller, McDonald Kuhn, Edward B. Ruff, III, Memphis, TN, Edmund W. Chapman, Mobil Business Resources Corporation, Kindra L. Gromelski, Exxon Mobil Law Department, Fairfax, VA, S. Walton Maurras, Smith, Maurras, Cohen, Redd & Horan PLC, Fort Smith, AR, Michael F. Rafferty, Harris, Shelton, Dunlap, Cobb & Ryder, Memphis, TN, for defendants.

Diane Vescovo, Office of Magistrate Judge, Memphis, TN, pro se.

ORDER DENYING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS

DONALD, District Judge.

This matter is before the Court on Defendant Mason and Dixon Lines, Inc. ("MDL")'s motion for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c), on Plaintiffs Signature Combs, Inc., et al. ("Plaintiffs")' Third Amended Complaint ("Complaint") seeking cost recovery under 42 U.S.C. §§ 9607(a)(3) and 96013(f)(1). MDL's Mot. For J. On The Pleadings, Doc. # 217-1, Case # 98-cv-02777. MDL contends that Plaintiffs' claims against it were discharged pursuant to MDL's Chapter 11 bankruptcy reorganization. This Court has jurisdiction over Plaintiffs' CERCLA claims pursuant to 28 U.S.C. § 1331. For the following reasons, this Court DENIES MDL's motion for judgment on the pleadings.

I. Background Facts and Procedural History

Pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., Plaintiffs seek to recover response costs allegedly incurred by Plaintiffs at the South 8th Street Landfill Superfund Site and the Gurley Pit Superfund Sites (collectively, the "Gurley Sites"). These response costs stem from remedial measures taken to alleviate hazardous waste dumped at the Gurley Sites in the 1950S-1970S.¹

On September 8,1998, the United States filed United States v. Aircraft Serv. Int'L, Inc., et al, No. J-C-98-362 (E.D.Ark.), seeking to recover from Plaintiffs in the instant case $10 million in response costs that the EPA allegedly incurred in implementing the Gurley Pit Site remedy. On September 9, 1998, the Arkansas Department of Pollution Control and Ecology ("ADPC & E") filed Arkansas Dept. of Pollution Control and Ecology v. Aircraft Serv. Int'l, Inc., et al, No. J-C-98-363 (E.D.Ark.), a virtually identical cost recovery action against Plaintiffs, to recover at least $600,000 in ADPC & E response costs incurred in connection with the Gurley Pit Site. On November 18, 1998, the EPA issued Plaintiffs in the case sub judice, along with certain additional parties, a unilateral administrative order ("UAO") pursuant to Section 106 of CERCLA, 42 U.S.C. § 9606, requiring the recipients to perform a specific remedial action for the South 8th Street Site.

On September 8, 1998, Plaintiffs brought the instant suit in an effort to recoup their anticipated expenses from Defendants. Plaintiffs filed their Third Amended Complaint on March 20, 2000. Count II, the only remaining claim in the Complaint,² asserts that Defendants are severally liable for contribution to Plaintiffs' past and future cleanup costs under CERCLA Section 113(f)(1), 42 U.S.C. § 96013(f)(1).

On December 19, 2000, Plaintiffs in the instant action entered into a Consent Decree with the United States and the ADPC & E regarding response costs for the Gurley Pit Site and remedial responsibilities for the South 8th Street Site. Without admitting liability, Plaintiffs agreed to conduct and pay for the South 8th Street Site cleanup and to reimburse the United States and the ADPC & E for their expenses incurred in cleaning the Gurley Pit Site.

On January 12, 2001, this Court entered a Case Management Order ("CMO") (Doc. # 149-1, Case # 98-cv-02777) to administer the disposition of the above-titled cases. MDL brought its motion for judgment on the pleadings on February 13, 2002. Plaintiffs filed their opposition brief on March 1, 2002, and MDL filed its reply brief on March 15, 2002.

II. Plaintiffs' Procedural Objections To MDL's Motion

Plaintiffs claim that MDL's motion is technically improper because it was filed on February 13, 2002, prior to the filing of MDL's answer on May 6, 2002. A motion for judgment on the pleadings may only be brought after the pleadings are closed. Fed.R.Civ.P. 12(c). Pleadings are deemed "closed" upon the filing of a complaint and answer, unless a counterclaim, cross-claim, or third-party claim is interposed, in which case the filing of a reply, cross-claim, or third-party answer will mark the close of the pleadings. See Fed.R.Civ.P. 7(a); 5A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1367 (2d ed.1990). Thus, MDL's motion was premature when filed. Nevertheless, MDL subsequently filed an answer on May 6, 2002. Although the Court has the discretion to deny MDL's motion without prejudice in order to allow MDL to re-file its motion on a date subsequent to May 6, 2002, no useful purpose would be served by doing so. Accordingly, the Court will construe MDL's motion as a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Such a motion applies the same analysis as a motion for judgment on the pleadings but is permissible prior to the filing of a defendant's answer.

Similar reasoning applies to Plaintiffs' contention that MDL's motion should be denied because it was filed in violation of the CMO governing the above-titled cases. Section 11(2) of the CMO states that "Defendants shall not file responsive pleadings directed to Plaintiffs' amended complaint herein. Nor shall Defendants file any motions under Fed.R.Civ.P. 12 directed to Plaintiffs' amended complaint." In an Order filed April 15, 2002 (Doc. #250-1 Case # 98-cv-02777), the Magistrate Judge relaxed Section 11(2) of the CMO to allow Defendants to file responsive pleadings, and, ostensibly, certain motions. Thus, had MDL filed its motion after the Magistrate Judge's Order, the motion would not have violated the CMO. Indeed, Rule 12 motions have been filed in the above-titled actions by various Defendantswithout objection by the Plaintiffs-since the Magistrate Judge's Order. In the interest of judicial economy, therefore, the Court will address the merits of MDL's motion without directing MDL to re-file it.

III. Analysis of MDL's Substantive Claim

A. Motion to Dismiss Standard

A party may move to dismiss a complaint for failure to state a claim upon which relief may be granted under F.R.C.P. 12(b)(6). The purpose of a motion to dismiss under F.R.C.P. 12(b)(6) is to test the formal sufficiency of the claim, not to resolve the facts or merits of the case. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A claim should not be dismissed pursuant to F.R.C.P. 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Thus, the standard to be applied when evaluating a motion to dismiss for failure to state a claim is very liberal in favor of the party opposing the motion. Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir.1976). Even if the plaintiffs chances of success are remote or unlikely, a motion to dismiss should be denied. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683.

In reviewing the complaint, the court must accept as true all factual allegations in the complaint and construe them in the light most favorable to the plaintiff. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683; Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983), cert, denied 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984). Legal conclusions or unwarranted factual inferences, however, should not be accepted as true. Lewis v. ACB Business Servs., Inc., 135 F.3d 389, 405-06 (6th Cir.1998).

B. Determining the Proper Legal Standard for Discharging CERCLA Liability Through Bankruptcy

1. CERCLA § 113 Contribution Liability Depends On MDL's Liability to the United States

MDL contends that any CERCLA § 113(f) liability it may have had to Plaintiffs was discharged by MDL's bankruptcy, which became final in 1986. Although this action was filed in 1998, MDL claims that Plaintiffs' claims were discharged because "Mason and Dixon's liability to Plaintiffs depends on whether Mason and Dixon is potentially liable to the United States," and Mason and Dixon's potential liability to the United States itself was discharged by MDL's bankruptcy. Mem. In Supp. of Def.'s Mot. For J. On The Pleadings at 3-4 (Doc. #218-1, Case # 98-cv-02777).

In response, Plaintiffs argue that their claims are not solely derivative of the United States' claims but are independent statutory claims "which clearly arose after defendant's bankruptcy in the mid-1980s." Mem. In Support of Pls.' Opp. To Def.'s Mot. For J. On The Pleadings at 4 (Doc. # 227-1, Case # 98-cv-02777).

MDL counters by stating that Plaintiffs can only sue for contribution under § 113 of CERCLA. As a result, according to In re Reading Co., 115 F.3d 1111, 44 ERC 1865 (3rd Cir.1997), Plaintiffs' claims must be derivative of those of...