SPS Ltd. v. Sparrows Point, LLC
| Decision Date | 06 September 2017 |
| Docket Number | Civil No. JFM-14-589 |
| Parties | SPS LIMITED PARTNERSHIP LLLP, and SPS 35, LLC v. SPARROWS POINT, LLC and TRADEPOINT ATLANTIC, LLC., et al., v. BWI SPARROWS POINT, LLC |
| Court | U.S. District Court — District of Maryland |
Plaintiffs SPS Limited Partnership LLLP, and SPS 35, LLC (collectively the "Shipyard Plaintiffs"), bring this lawsuit against defendants Sparrow Point, LLC, and Tradepoint Atlantic, LLC (f/k/a Sparrow Point Terminal, LLC) (collectively the "Steel Mill Defendants"), seeking recovery under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq, and four Maryland common law claims—negligence, trespass, nuisance, and strict liability. The Shipyard Plaintiffs allege that the Steel Mill Defendants have caused an "ongoing and continuous discharge of pollutants" from their Steel Mill Property onto Plaintiffs' "Shipyard Site" in Sparrows Point, Maryland. The Steel Mill Defendants also filed counterclaims pursuant to CERCLA and Maryland law against the Shipyard Plaintiffs. Now pending is the Steel Mill Defendants' Motion for Summary Judgment [ECF No. 103], and the Shipyard Plaintiffs' Counter-Motion for Summary Judgment. [ECF No. 111]. Also pending is Tradepoint Atlantic's Motion for Summary Judgment on the sole issue of its status as a bona fide prospective purchaser [ECF No. 107], and the Steel Mill Defendants' Motion to Strike the affidavit of Dr. Peter Shanahan. [ECF No. 128]. All motions are fully briefed, and no oral argument is necessary. See Local Rule 105.6. For the reasons set forth below, the Steel Mill Defendants' Motion for Summary Judgment [ECF No. 103] is granted, and the Shipyard Plaintiffs' Counter-Motion for Summary Judgment [ECF No. 111] is denied. Tradepoint Atlantic's Motion for Summary Judgment on the sole issue of its status as a bona fide prospective purchaser [ECF No. 107] is granted, and the Steel Mill Defendants' Motion to Strike the belatedly-introduced affidavit of Dr. Peter Shanahan is denied. [ECF No. 128].
The uncontested facts are as follows. This dispute involves the alleged continuous flow of hazardous chemicals from the Steel Mill Property onto the adjacent parcel of land referred to as the Shipyard site. [ECF No. 69, p. 1]. Plaintiffs SPS LLLP and SPS 35 ("SPS") are the current owners of the former Bethlehem Steel Corporation Shipyard facility (the "Shipyard"), once part of the former Bethlehem Steel Mill ("Steel Mill Property") in Baltimore, Maryland. [ECF No. 105, p. 2; ECF No. 112, p.4]. Plaintiff SPS LLLP acquired the Shipyard in March 2004 from an entity called Baltimore Marine Industries, Inc. ("BMI"), and then sold a 35% ownership share to plaintiff SPS 35 in June 2006. [ECF No. 105, p. 2; ECF No. 112, p.4]. Operation of the Shipyard has been conducted by Third Party Defendant, BWI Sparrows Point, LLC ("BWI"), which is a related entity that has common ownership with SPS LLLP and SPS 35. [ECF No. 105, p. 2; ECF No. 112, p.4]. Collectively, plaintiffs will be referred to as "Plaintiffs," or the "Shipyard Plaintiffs."
A series of different corporations owned the Steel Mill Property between March 2004, when Plaintiff SPS purchased the Shipyard, and September 2012, when Defendant Sparrows Point, LLC ("Sparrows Point") purchased the Steel Mill Property. Sparrows Point acquired theSteel Mill Property via an order under § 363 of the Bankruptcy Code that authorized Sparrows Point to acquire the property without assuming liability for any environmental contamination that may have migrated from the Steel Mill Property prior to that date. [ECF No. 105, p. 5-6]. In September 2014, Defendant Sparrows Point sold the Steel Mill Property to co-defendant Tradepoint Atlantic ("TPA"). Collectively, defendants will be referred to as "Defendants," or the "Steel Mill Defendants."
In February 1997, the Environmental Protection Agency ("EPA") and the Maryland Department of the Environment ("MDE") sued Bethlehem Steel Corporation—the former owner of both the Steel Mill and the Shipyard—for violating federal and state environmental law by causing "a release of hazardous wastes . . . substances and/or . . . constituents into the environment at and/or from the Steel Mill Site" including benzene, naphthalene, toluene, arsenic and lead. [ECF No. 69, p. 2]. This contamination was primarily the result of "coke oven operations" and "byproduct recovery operations" that had ceased in the 1980's. [ECF No. 105, p. 14-15 & Ex. 8]. Bethlehem Steel Corporation entered into a Consent Decree with the EPA and MDE on October 8, 1997, under which it "agreed to investigate and address certain environmental conditions at the Steel Mill Property and the Shipyard Site." [Id.] The EPA removed the Shipyard site from the consent decree in June 2006, but the Steel Mill Property remains bound by it. [Id.]
The Plaintiffs' Shipyard contains a "graving dock," which is used for the "repair or scrapping of ships under dry conditions." [ECF No. 112, p. 3]. Ships enter the graving dock when it is inundated with water, via the Patapsco River, and then the gate is closed and water is pumped out. [ECF No. 112, p. 3]. The central feature of the graving dock at issue in this case is the "underdrain pumping system." [ECF No. 105, p. 3]. This "underdrain pumping system"collects groundwater and then pumps the water via pipes into the Patapsco River. [ECF No. 105, p. 3]. The Shipyard's pumping system "causes groundwater from the coke oven area [at the Steel Mill Property] to flow towards the dock and thereby to cause contaminated groundwater from the coke oven area to flow to the graving dock." [Shanahan Dep., ECF No. 103-39, Ex. 37, p. 139-40]. The discharge of the water from the underdrain pumps to the Patapsco River is regulated by the Clean Water Act; specifically, it is regulated by a National Pollutant Discharge Elimination System ("NPDES") discharge permit issued by the Maryland Department of the Environment ("MDE"). [ECF No. 105, p. 4]. When SPS LLLP first acquired the Shipyard in 2004, there was a pre-existing NPDES permit in effect; this permit was renewed and transferred to BWI in 2006. [ECF No. 105, p. 4].
Because of sampling performed by MDE in 2005, which detected high levels of benzene in the discharge, the 2006 renewal included a new discharge limit of 0.51 mg/l on benzene in certain graving dock discharges. [ECF No. 105, p. 4]. This 0.51 mg/l limit applied, however, only to "dewatering/trim pumps," and not to the "underdrain pumping system." [ECF No. 105, p. 4; ECF No. 112, p. 3]. MDE eventually realized that benzene discharge data was not being collected from the underdrain pumps, and had discussions in 2007 with the Shipyard about the issue. [ECF No. 105, p. 4]. Eventually, in January 2009, MDE revised its permit to impose the same 0.51 mg/l limit to the underdrain pump discharge, and this revision was to go in effect in February 2010. [ECF No. 105, p. 4-5]. A fact sheet that accompanied the modification noted that: 1 [ECF No. 112, p. 3]. To comply with this new benzene limitation, the Shipyard Plaintiffs installed a benzene treatment system that removes benzene from the groundwater. [ECF No. 112, p. 4]. Since 2012, Plaintiffs allege to have incurred over $1 million in costs to BWI for its operations and maintenance of the benzene treatment system. [ECF No. 112, p. 5].
The Shipyard Plaintiffs instituted this action by filing a Complaint on February 28, 2014. [ECF No. 1]. They filed an Amended Complaint on May 21, 2014 [ECF No. 7], and a Second Amended Complaint ("SAC") on January 15, 2015. [ECF No. 35]. The Shipyard Plaintiffs' SAC alleges: (1) recovery of costs under CERCLA; (2) a declaratory judgment pursuant to CERCLA holding defendants liable for their share of all response costs; (3) negligence; (4) trespass; (5) nuisance; and (6) strict liability. [ECF No. 35]. The Steel Mill Defendants later filed counterclaims pursuant to CERCLA and Maryland law against the Shipyard Plaintiffs. [ECF No. 52 & 61]. The Steel Mill Defendants filed a Motion to Dismiss for Failure to State a Claim [ECF No. 42], which this court denied on August 7, 2015. [ECF No. 69]. The Steel Mill Defendants filed the instant Motion for Summary Judgment on April 7, 2017. [ECF No. 103]. In response, the Shipyard Plaintiffs filed a Counter-Motion for Summary Judgment on May 9, 2017. [ECF No. 111]. TPA also filed a separate Motion for Summary Judgment on the sole issue of its status as a Bona Fide Prospective Purchaser on April 7, 2017. [ECF No. 107]. The Steel Mill Defendants filed a Motion to Strike the affidavit of Dr. Peter Shanahan on July 13, 2017. [ECF No. 128]. All motions are fully briefed.
Rule 56(a) of the Federal Rules of Civil Procedure provides the "court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material factand the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Supreme Court has clarified this does not mean that any factual dispute will defeat the motion. "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." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A genuine issue of material fact exists where, "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 247. The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine dispute of material...
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