Tanglewood East Homeowners v. Charles-Thomas, Inc.

• Decision Date: 28 July 1988
• Docket Number: INC,No. 87-6097,CHARLES-THOMA,87-6097
• Citation: 849 F.2d 1568
• Parties: , 57 USLW 2146, 18 Envtl. L. Rep. 21,348 TANGLEWOOD EAST HOMEOWNERS; Jimmie D. Lee, Jr., et al., Plaintiffs-Appellees, v., et al., Defendants, First Federal Savings & Loan Association of Conroe, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1568

849 F.2d 1568

28 ERC 1260, 57 USLW 2146, 18 Envtl.

L. Rep. 21,348

TANGLEWOOD EAST HOMEOWNERS; Jimmie D. Lee, Jr., et al Plaintiffs-Appellees, v. CHARLES-THOMAS, INC., et al., Defendants First Federal Savings & Loan Association of Conroe Defendant-Appellant.

No. 87-6097.

United States Court of Appeals Fifth Circuit.

July 28, 1988.

Tobi A. Tabor, Mark J. Airola, Houston, Tex., for defendant-appellant.

Craig D. Ball, Timothy F. Lee, Schmidt & Matthews, Houston, Tex., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before POLITZ and JOHNSON, Circuit Judges, and BOYLE, ^* District Judge.

POLITZ, Circuit Judge:

In this cause we granted an interlocutory appeal under 28 U.S.C. Sec. 1292(b), to determine whether the district court had erred in rejecting defendants' motion to dismiss filed pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Finding no error in that ruling, for the reasons assigned we affirm.

Background

For purposes of the pending motion, we accept as true the allegations of the complaint. Appellant, First Federal Savings & Loan Association of Conroe, is a lending institution. The other defendants against whom appellees have complained are residential developers, construction companies, and real estate agents and agencies. All participated in the development of the Tanglewood East Subdivision in Montgomery County, Texas. The complainants-appellees are owners of property in that subdivision. The subdivision was built on the site upon which the United Creosoting Company operated a wood-treatment facility from 1946 to 1972. During that quarter century substantial amounts of highly-toxic waste accumulated on the property. In 1973 certain of the defendants acquired the property, filled in and graded the creosote pools, and began residential development.

In 1980, Tanglewood homeowners and residents complained to Texas authorities about toxic problems and all development ceased. In 1983 the Environmental Protection Agency placed the site on its National Priorities List for cleaning under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), commonly known as the "Superfund Act," 42 U.S.C. Secs. 9601, et seq. The cleanup, expected to cost millions of dollars, will require the demolition of six homes and the construction of bunkers to contain the hazardous materials.

The purchasers of the subdivision lots invoked CERCLA and the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Secs. 6901, et seq. and sought damages, response and cleaning costs, and injunctive relief. They also sought, but have now withdrawn, claims under the Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251.

The defendants filed a joint motion to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6). The district court denied the motion but certified its ruling under 28 U.S.C. Sec. 1292(b). First Federal sought and secured our approval of an interlocutory appeal.

Standard of Review

When a motion to dismiss challenges both the court's jurisdiction, 12(b)(1), and the existence of a federal cause of action, 12(b)(6), the Bell v. Hood ¹ standard is applied and the motion is treated "as a direct attack on the merits of the plaintiff's case." Williamson v. Tucker, 645 F.2d 404, 415 (5th Cir.1981). In reviewing such a 12(b)(6) motion, we accept as true all well-pled allegations, resolving all doubts in favor of the complainants. Such a motion will be granted only if "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). A motion to dismiss for failure to state a claim "is viewed with disfavor, and is rarely granted." Sosa v. Coleman, 646 F.2d 991, 993 (5th Cir.1981).

Analysis

A. CERCLA

Appellant contends that it and the other defendants are not covered persons under the CERCLA, which, it submits, was intended to apply only to the person responsible for introducing the toxins, in this case, the United Creosoting Company. We do not share that crabbed a reading of this statute. Although it was enacted in the waning hours of the 96th Congress, and as the product of apparent legislative compromise is not a model of clarity, the statute has an extensive legislative history.

Under 42 U.S.C. Sec. 9607(a) (1988), CERCLA provides a private cause of action where a release or threatened release of a hazardous substance causes response costs to be incurred. The persons covered are:

(1) the owner and operator of ... 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,

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person ..., and

(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities....

1. Present Owners

Appellant maintains that under Sec. 9607(a)(1), the only owner and operator who discharged hazardous materials was the United Creosoting Company, who abandoned the site in 1972. We find nothing in the wording of Sec. 9607(a) to exclude present owners of properties previously contaminated. We join our colleagues of the Second Circuit in concluding that the structure of the statute removes any doubt. Section 9607(a)(2) expressly applies to past owners and operators who contaminate their surroundings; it is therefore manifest that Sec. 9607(a)(1) applies to current owners of adulterated sites. See New York v. Shore Realty Corp., 759 F.2d 1032 (2nd Cir.1985). We hold that Sec. 9607(a)(1) imposes strict liability on the current owners of any facility which releases or threatens to release a toxic substance.

"Facility" is defined in Sec. 9601(9) to include

(A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel. (Emphasis added.)

The statute leaves no room for doubt; the Tanglewood East development is a covered facility.

The Shore court held the developer-owners liable for the cleanup costs of their facility even though no construction or development had been undertaken. A lending institution was found to be a current owner and operator under Sec. 9607(a)(1) in United States v. Maryland Bank & Trust Co., 632 F.Supp. 573 (D.Md.1986). In that case, a bank which acquired a contaminated site by foreclosure was held accountable under CERCLA. And courts addressing the issue have rejected the argument implicit in appellant's position, that liability may be imposed upon only those persons who both own and operate polluted property. Artesian Water Co. v. Gov. of New Castle County, 659 F.Supp. 1269 (D.Del.1987); United States v. Northeastern Pharm. & Chem. Co., Inc., 579 F.Supp. 823 (W.D.Mo.1984).

2. Past Owners

Section 9607(a)(2) applies to persons who owned or operated a facility at the time of the disposal of the toxins. Appellant contends that the only person who qualifies under that section is United Creosoting Company. We do not so read the statute. Referring to 42 U.S.C. Sec. 6903(3), we find "disposal" defined to include

the discharge, deposit, injection, dumping spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.

We recognize merit in appellees' argument that this definition of disposal does not limit disposal to a one-time occurrence--there may be other disposals when hazardous materials are moved, dispersed, or released during landfill excavations and fillings.

3. Post Arrangers and Transporters

Appellant next argues that defendants neither arranged for nor transported any hazardous material for disposal or treatment under Sec. 9607(a)(3) and (4). This argument rests on the narrow interpretation of disposal, which we reject, and a like interpretation of "treatment" which is defined by Sec. 6903(34) as

any method, technique, or process, including neutralization, designed to change the physical, chemical, or biological character or composition of any hazardous waste so as to neutralize such waste or so as to render such waste nonhazardous, safer for transport, amenable for recovery, amenable for storage, or reduced in volume. Such term includes any activity or processing designed to change the physical form or chemical composition of hazardous waste so as to render it nonhazardous. (Emphasis added.)

Appellees argue that the activity of filling and grading the creosote pools constituted treatment to render the waste non-hazardous, and that those involved in that activity are covered persons under Sec. 9607(a)(3). Furthermore, since disposal may be merely the "placing of any ... hazardous waste into or on any land....," Sec. 6903(3), those who move the waste about the site may fall within the terms of the provision. Under these readings of the terms "disposal" and "treatment," relevant evidence under the complaint may establish that some of the defendants were arrangers for, or transporters of, the toxic materials.

Finally, appellant maintains that CERCLA was intended to cover only persons actually engaged in the chemical/hazardous materials industry and those engaged in businesses which generated such materials. It vigorously contends...