State of Idaho v. Bunker Hill Co.

• Decision Date: 22 May 1986
• Docket Number: 84-1155 and 84-3071.,No. 83-3161,83-3161
• Citation: 635 F. Supp. 665
• Court: U.S. District Court — District of Idaho
• Parties: The STATE OF IDAHO, Plaintiff, v. The BUNKER HILL COMPANY, a Delaware corporation; Pintlar Corporation, a Delaware corporation; Gulf Resources & Chemical Corporation, a Delaware corporation; and John Does 1 to 500, Defendants. GULF RESOURCES & CHEMICAL CORPORATION, Third-Party Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY and The Home Indemnity Company, Third-Party Defendants. GULF RESOURCES & CHEMICAL CORPORATION, and Pintlar Corpoation, Third-Party Plaintiffs, v. The FIDELITY AND CASUALTY COMPANY OF NEW YORK; Pacific Insurance Company; Continental Re-Insurance Corporation; First State Insurance Company; Northwestern National Insurance Company, Northwestern National Casualty Company; Admiral Insurance Company; The Insurance Company of the State of Pennsylvania; and Pacific Indemnity Company (Chubb), Third-Party Defendants. PINTLAR CORPORATION, Third-Party Plaintiff, v. UNDERWRITERS AT LLOYD'S, LONDON, Third-Party Defendant. AETNA CASUALTY AND SURETY COMPANY, Third-Party Plaintiff, v. FIRST STATE INSURANCE COMPANY, Northwestern National Insurance Company, and Northwestern National Casualty Company, Third-Party Defendants. CONTINENTAL RE-INSURANCE CORPORATION, a California corporation; Pacific Insurance Company, a California corporation; and Fidelity & Casualty Company of New York, a New York corporation, Third-Party Plaintiffs, v. FIRST STATE INSURANCE COMPANY, Northwestern National Insurance Company, and Northwestern National Casualty Company, Third-Party Defendants. PINTLAR CORPORATION, Third-Party Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, Third-Party Defendant. AETNA CASUALTY & SURETY CO., a corporation, Plaintiff, v. GULF RESOURCES & CHEMICAL CORPORATION, a Delaware corporation; The Bunker Hill Company, a Delaware corporation; Pintlar Corporation, a Delaware corporation, Defendants. CONTINENTAL RE-INSURANCE CORPORATION, a California corporation; Pacific Insurance Company, a California corporation; Fidelity & Casualty Company of New York, a New York corporation; and Northbrook Insurance Company, an Illinois corporation, Plaintiffs, v. The BUNKER HILL COMPANY, a Delaware corporation; and Gulf Resources & Chemical Corporation, a Delaware corporation, Defendants.

635 F. Supp. 665

The STATE OF IDAHO, Plaintiff, v. The BUNKER HILL COMPANY, a Delaware corporation; Pintlar Corporation, a Delaware corporation; Gulf Resources & Chemical Corporation, a Delaware corporation; and John Does 1 to 500, Defendants.

GULF RESOURCES & CHEMICAL CORPORATION, Third-Party Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY and The Home Indemnity Company, Third-Party Defendants.

GULF RESOURCES & CHEMICAL CORPORATION, and Pintlar Corpoation, Third-Party Plaintiffs, v. The FIDELITY AND CASUALTY COMPANY OF NEW YORK; Pacific Insurance Company; Continental Re-Insurance Corporation; First State Insurance Company; Northwestern National Insurance Company, Northwestern National Casualty Company; Admiral Insurance Company; The Insurance Company of the State of Pennsylvania; and Pacific Indemnity Company (Chubb), Third-Party Defendants.

PINTLAR CORPORATION, Third-Party Plaintiff, v. UNDERWRITERS AT LLOYD'S, LONDON, Third-Party Defendant.

AETNA CASUALTY AND SURETY COMPANY, Third-Party Plaintiff, v. FIRST STATE INSURANCE COMPANY, Northwestern National Insurance Company, and Northwestern National Casualty Company, Third-Party Defendants.

CONTINENTAL RE-INSURANCE CORPORATION, a California corporation; Pacific Insurance Company, a California corporation; and Fidelity & Casualty Company of New York, a New York corporation, Third-Party Plaintiffs, v. FIRST STATE INSURANCE COMPANY, Northwestern National Insurance Company, and Northwestern National Casualty Company, Third-Party Defendants.

PINTLAR CORPORATION, Third-Party Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, Third-Party Defendant.

AETNA CASUALTY & SURETY CO., a corporation, Plaintiff, v. GULF RESOURCES & CHEMICAL CORPORATION, a Delaware corporation; The Bunker Hill Company, a Delaware corporation; Pintlar Corporation, a Delaware corporation, Defendants.

CONTINENTAL RE-INSURANCE CORPORATION, a California corporation; Pacific Insurance Company, a California corporation; Fidelity & Casualty Company of New York, a New York corporation; and Northbrook Insurance Company, an Illinois corporation, Plaintiffs, v. The BUNKER HILL COMPANY, a Delaware corporation; and Gulf Resources & Chemical Corporation, a Delaware corporation, Defendants.

Nos. 83-3161, 84-1155 and 84-3071.

United States District Court, D. Idaho.

May 22, 1986.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jim Jones, Atty. Gen., State of Idaho, P. Mark Thompson, Deputy Atty. Gen., Chief, Administrative Law & Litigation Div., Boise, Idaho, Sheila Glusco Bush, Deputy Atty. Gen., Administrative Law & Litigation Div., for State of Idaho.

William F. Boyd, Fred M. Gibler, Charles L.A. Cox, Evans, Keane, Koontz, Boyd & Ripley, Kellogg, Idaho, James P. Keane, Evans, Keane, Koontz, Boyd & Ripley, Coeur d'Alene, Idaho, for Bunker Hill, Pintlar Corp., Gulf Resources & Chemical Corp.

R.B. Kading, Jr., Scott D. Hess, Warren Jones, Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, Idaho, for Pacific Idem. Co., Aetna Cas. and Sur. Co.

R.B. Rock, Robert B. Luce, Kristi Emig-Mark, Moffatt, Thomas, Barrett & Blanton, Boise, Idaho, for Home Idem. Co.

John P. Howard, Marc A. Lyons, Quane, Smith, Howard & Hull, Boise, Idaho, for Fidelity & Cas. Co. of New York, Pacific Ins. Co., Continental Re-Ins. Corp., Northbrook Ins. Co.

Richard C. Mellon, Jr., D. Alan Kofoed, Elam, Burke & Boyd, Boise, Idaho, for First State Ins., Northwestern Nat. Ins., Northwestern Nat. Cas.

Howard Humphrey, Clemons, Cosho & Humphrey, Boise, Idaho, Frank R. Morrison, Jr., Bassett & Morrison, Seattle, Wash., for The Ins. Co. of the State of Pa.

James B. Lynch, Scott W. Marotz, Charles R. Clark, Imhoff & Lynch, Boise, Idaho, for Admiral Ins. Co.

James P. Barber, Ray L. Wong, William J. Casey, Hancock, Rothert & Bunshoft, San Francisco, Cal. Gardner W. Skinner, Jr., Robert D. Lewis, Cantrill, Skinner, Sullivan & King, Boise, Idaho, for Underwriters at Lloyd's, London-Jervois.

MEMORANDUM OPINION AND ORDER

RYAN, District Judge.

I. INTRODUCTION

May 9, 1986, the court heard oral argument on issues raised pursuant to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9657 (1984), as well as the issue of personal jurisdiction over Gulf Resources & Chemical Corporation (Gulf). All parties were represented by respective counsel at the hearing on the CERCLA issues. The court hereby enters its opinion on the personal jurisdiction issue and the issues raised pursuant to the CERCLA statute.

II. ISSUE ANALYSIS

A. Personal Jurisdiction

Under the personal jurisdiction analysis set out in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny, the court must analyze the contacts of the non-resident defendant with the forum in order to satisfy a conclusion that the contacts of the nonresident defendant with the forum warrant subjecting that defendant to the forum court's jurisdiction. The court must find that in relying upon the established contacts, traditional notions of fair play and substantial justice would not be offended by subjecting the nonresident defendant to the forum court's jurisdiction.

The Idaho Legislature has adopted a long-arm jurisdiction statute, Idaho Code § 5-514 (1979). The Idaho long-arm statute, as it relates to this case, recognizes personal jurisdiction over a nonresident defendant where it can be said that the defendant is doing business in the state or has committed a tortious act within the state. Id. Rule 4(c)(2)(C) of the Federal Rules of Civil Procedure allows service in a federal action as authorized by state law.

It is undisputed that when a subsidiary of a foreign corporation is carrying on business in the forum state, the parent is not automatically subjected to jurisdiction in the state. If the subsidiary is carrying on its own business and the corporate formalities have been observed, personal jurisdiction may not be acquired over the parent solely on the basis of the local activities of the subsidiary. Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925); Idaho Potato Commission and the State of Idaho v. Washington Potato Commission, 410 F.Supp. 171 (D.Idaho 1975). Gulf is the parent company of Bunker Hill Company. Gulf and Bunker Hill merged in May 1968 and Bunker Hill became the wholly owned subsidiary of Gulf. Bunker Hill later changed its name to Pintlar Corporation. Under traditional personal jurisdiction analysis, the question then is whether the activities of Gulf with respect to its subsidiary and further contacts with the State of Idaho warrant a finding of personal jurisdiction.

The affidavits and documents submitted by the State establish that during the years 1968 through 1982, Gulf and Bunker Hill were so intertwined, and Gulf so controlled the management and operations of Bunker Hill, that subjecting Gulf to this court's jurisdiction would neither offend due process considerations nor traditional notions of fair play and substantial justice. The court has considered all of the evidence in the record in making this determination. Significant to the court's decision, however, are the following: Gulf at times controlled a majority of Bunker Hill's board of directors; in matters dealing with pollution problems, Bunker Hill was not allowed to spend more than Five Hundred Dollars ($500) without approval of Gulf; Bunker Hill's authorized capital was a mere Eleven Hundred Dollars ($1100) while Gulf received Twenty-seven Million Dollars ($27,000,000) in dividends from Bunker Hill between 1968 and 1974; Bunker Hill's federal tax returns were consolidated with Gulf's; all capital expenditures were to be approved by Gulf; and Gulf could overrule a transaction or decision regarding management made by Bunker Hill. Gulf's activities with respect to Bunker Hill, its control of management and operations and its overall contacts with this State render it personally subject to the jurisdiction of this court.

This court found personal jurisdiction over Gulf in Prindiville v. Gulf Resources, Civil No. 81-2086 (D.Idaho September 21, 1982). The State asserts that Gulf is now estopped to deny personal jurisdiction in Idaho. Offensive use of collateral estoppel has been approved by the United States Supreme Court. Parklane Hosiery Company, Inc. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). Essentially, the court must find that the issue was necessarily decided in the prior action, the parties to the current action were parties or privy to the first action, and that the interests of fairness will be served by holding the issue estopped in the current action.

Prindiville dealt with personal injury due to the pollution caused by Bunker Hill and Gulf. Gulf is the interested party in both actions. While Prindiville was a personal injury action, it arose out of the same activities of Gulf as are challenged in this action. It would not, therefore, be unfair to estop Gulf from denying that this court has personal jurisdiction over it, as decided in Prindiville. As an alternative to this court's finding that personal jurisdiction exists over Gulf under a traditional analysis, Gulf is estopped to deny personal jurisdiction in this instance.

B. "Owner or Operator"

CERCLA Section 107(a)(1) and (2) confer liability upon the following parties:

(1) the owner or operator of a vessel ... or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of....

The phrase "owner or operator" is defined in Section 101(20)(A) as follows:

"owner or operator" means ... (ii) in the case of an onshore facility or an offshore facility, any person owning or operating such facility, and (iii) in the case of any abandoned facility, any person who

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