Town of Munster, Ind. v. Sherwin-Williams Co., Inc.

• Decision Date: 27 June 1994
• Docket Number: No. 93-2751,SHERWIN-WILLIAMS,93-2751
• Citation: 27 F.3d 1268
• Parties: 24 Envtl. L. Rep. 21,108 TOWN OF MUNSTER, INDIANA, Plaintiff-Appellant, v.CO., INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1268

27 F.3d 1268

24 Envtl. L. Rep. 21,108

TOWN OF MUNSTER, INDIANA, Plaintiff-Appellant, v. SHERWIN-WILLIAMS CO., INC., Defendant-Appellee.

No. 93-2751.

United States Court of Appeals Seventh Circuit.

Argued Jan. 7, 1994.

Decided June 27, 1994.

Eugene M. Feingold (argued), Steven P. Kennedy, Munster, IN, for plaintiff-appellant.

Paul A. Leonard, Jr., Joseph S. Van Bokkelen, Jane B. Amdahl (argued), Goodman, Ball & Van Bokkelen, Highland, IN, for defendant-appellee.

Deborah A. Lawrence, Jacqueline A. Simmons, Ice, Miller, Donadio & Ryan, Indianapolis, IN, for amici curiae Indiana Mun. Lawyer's Ass'n, Indiana Ass'n of Cities and Towns.

Before COFFEY, FLAUM, and MANION, Circuit Judges.

FLAUM, Circuit Judge.

The Town of Munster, Indiana, ("Munster") brought a private cost recovery action against Sherwin-Williams Co., Inc. ("Sherwin-Williams") under Sec. 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Sec. 9607, seeking contribution for the cost of cleaning up hazardous waste on a tract of land owned by Munster. The parties tried the case to a magistrate who concluded that the equitable defense of laches barred Munster's claim. 825 F.Supp. 197. We vacate the judgment.

I.

In 1969, the Town of Munster acquired a 140-acre parcel of undeveloped land adjacent to what is now the municipal landfill. Prior to that time, the land was owned by the National Brick Company, and a portion of the land (the "drum site") had been used for unauthorized dumping by National Brick and others. In February, 1985, the United States Environmental Protection Agency ("EPA") informed James Mandon, Munster's Director of Public Works, that drums suspected of containing hazardous materials had been found on the town's property. The EPA then retained Weston Sper Company ("Weston") to perform a site assessment and draft a report of their findings. Weston's tests revealed the presence of numerous hazardous substances that presented a danger to public health and safety. In November, 1985, the EPA delivered to Munster a copy of the Weston report and informed Munster of its obligation, as a Potentially Responsible Party ("PRP") under CERCLA, to prepare a plan for the removal of the dangerous materials from the site.

For over a year thereafter Munster attempted to negotiate a consent decree that would have allowed it to conduct an independent investigation of the site. The EPA declined to enter into such a decree, and on January 5, 1987, issued an Administrative Order under Sec. 106 of CERCLA, 42 U.S.C. Sec. 9606, requiring Munster to submit both a work plan and a safety plan, along with bid specifications for cleaning up the drum site. Munster then commenced a competitive bidding process and awarded the contract to Maecorp on June 1, 1987. Maecorp completed the bulk of the clean-up in September and October, 1987. On July 27, 1988, Munster received final approval from the EPA, indicating that the town had complied fully with the Sec. 106 clean-up Order.

Even before the clean-up, Munster suspected that Sherwin-Williams may have been involved in some of the dumping. The actual removal of approximately fourteen or fifteen of the drums bearing either the name "Sherwin-Williams" or the name "F. Fischer", identified as a manager in Sherwin-Williams' flush color department, confirmed this impression. On March 24, 1989, almost eight months after receiving final approval from the EPA, Munster notified Sherwin-Williams of its potential liability under CERCLA as a generator, transporter, and/or disposer of hazardous waste materials found at the drum site.

A year and a half later, on September 25, 1990, Munster filed suit against Sherwin-Williams seeking contribution for the clean-up costs. ¹ By consent of the parties, the action was tried before a magistrate. On June 23, 1993, after a four-day trial, the magistrate entered judgment for Sherwin-Williams on the ground that the doctrine of laches barred Munster's suit. Munster appeals from this judgment.

II.

This case presents a straight-forward question of law--whether CERCLA permits the assertion of the equitable defense of laches to bar recovery in a private party cost recovery or contribution action--which we review de novo. Ambrosino v. Rodman & Renshaw, 972 F.2d 776, 786 (7th Cir.1992). Under the CERCLA statutory scheme, Sec. 107 (codified at 42 U.S.C. Sec. 9607) governs liability, while Sec. 113(f) creates a mechanism for apportioning that liability among responsible parties. See Kerr-McGee Chemical v. Lefton Iron & Metal, 14 F.3d 321, 325-26 (7th Cir.1994); United States v. ASARCO, Inc., 814 F.Supp. 951, 956 (D.Colo.1993). Section 107(a) states in relevant part:

Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section--

* * * * * *

(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, by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances, ... [shall be liable for]

* * * * * *

(A) all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan;

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; ...

42 U.S.C. Sec. 9607(a) (emphasis supplied). Section 107(b) further states:

There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by--

(1) an act of God;

(2) an act of war;

(3) an act or omission of a third party other than an employee or agent of the defendant, ...; or

(4) any combination of the foregoing paragraphs.

42 U.S.C. Sec. 9607(b). Under Sec. 113(f), any party found liable for clean-up costs may seek contribution from other liable or potentially liable parties and "[i]n resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate...." 42 U.S.C. Sec. 9613(f)(1) (emphasis supplied).

In filing this private party contribution action under both Secs. 107 and 113, Munster asserted that CERCLA imposes strict liability on responsible parties, subject only to the short and exclusive list of defenses in Sec. 107(b). Sherwin-Williams raised the equitable doctrine of laches as an affirmative defense. The magistrate noted the split of authority on the availability of equitable defenses in a CERCLA private recovery action, but concluded that the arguments in favor of allowing such defenses were "more persuasive" than the admittedly "strong" counter-arguments. Findings of Fact and Conclusions of Law at 6. We disagree, and therefore join the majority of courts, including the Third, Sixth, and Eighth Circuits, in holding that CERCLA does not permit equitable defenses to Sec. 107 liability, although we do conclude that equitable factors may be considered in the allocation of contribution shares. See Velsicol Chemical Corp. v. Enenco, Inc., 9 F.3d 524, 530 (6th Cir.1993) (holding that the doctrine of laches may not bar CERCLA cost recovery action); General Electric v. Litton Indus. Automation Systems, 920 F.2d 1415, 1418 (8th Cir.1990) (holding that CERCLA does not provide for an unclean hands defense to liability), cert. denied, 499 U.S. 937, 111 S.Ct. 1390, 113 L.Ed.2d 446 (1991); Smith Land & Imp. Corp. v. Celotex Corp., 851 F.2d 86, 90 (3d Cir.1988) (concluding that under CERCLA the doctrine of caveat emptor is not a defense to liability for contribution but may be considered in mitigation of the amount due), cert. denied, 488 U.S. 1029, 109 S.Ct. 837, 102 L.Ed.2d 969 (1989).

In concluding that the district court erred in applying the doctrine of laches, we recognize that a cost recovery action is equitable in nature, Velsicol, 9 F.3d at 530, and that ordinarily "all the inherent equitable powers of the District Court are available for the proper and complete exercise of [its equitable] jurisdiction." Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332 (1946). Of course, Congress "may intervene and guide or control the exercise of the courts' discretion," but the Supreme Court has taught that we should not "lightly assume that Congress has intended to depart from established principles." Weinberger v. Romero-Barcelo, 456 U.S. 305, 313, 102 S.Ct. 1798, 1803, 72 L.Ed.2d 91 (1982). As the Court stated in Porter,

[T]he comprehensiveness of this equitable jurisdiction is not to be denied or limited in the absence of a clear and valid legislative command. Unless a statute in so many words or by a necessary and inescapable inference, restricts the court's jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied.

328 U.S. at 398, 66 S.Ct. at 1089.

Here the clear and unambiguous language of Sec. 107(a) imposes liability "notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b)." 42 U.S.C. Sec. 9607(a) (emphasis supplied). Subsection (b) then establishes "the universe of defenses to section 107 liability," Litton, 920 F.2d at 1418, with no mention whatsoever of equitable defenses. 42 U.S.C. Sec. 9607(b). Sections 107(a) and (b), read together, plainly evince the exercise of Congress' authority to restrict the equitable powers of the federal courts. As we know, when the words of a statute are unambiguous, the "judicial inquiry is complete." Connecticut National Bank v. Germain, --- U.S. ----, ----, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) (citations omitted...