U.S. v. Domenic Lombardi Realty, Inc.

• Decision Date: 07 June 2002
• Docket Number: C.A. No. 98-591L.
• Citation: 204 F.Supp.2d 318
• Parties: UNITED STATES of America, Plaintiff, v. DOMENIC LOMBARDI REALTY, INC., Defendant.
• Court: U.S. District Court — District of Rhode Island

204 F.Supp.2d 318

UNITED STATES of America, Plaintiff, v. DOMENIC LOMBARDI REALTY, INC., Defendant.

C.A. No. 98-591L.

United States District Court, D. Rhode Island.

June 7, 2002.

COPYRIGHT MATERIAL OMITTED

Michael P. Iannotti, U.S. Attorney's Office, Providence, RI, Norman O. Hemming, U.S. Dept. of Justice, Environmental Natural Resource Division, Washington, DC, for Plaintiff.

Perry D. Wheeler, Cranston, RI, Richard E. Gardiner, Fairfax, VA, for Defendant.

Decision and Order

LAGUEUX, Senior District Judge.

This matter is before the Court on the objection of defendant Domenic Lombardi Realty, Inc. to a Report and Recommendation issued by United States Magistrate Judge David Martin. The Report and Recommendation concludes that this Court should grant plaintiff United States Environmental Protection Agency's ("EPA") Motion for Summary Judgment on the issue of defendant's liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), which is contained in 42 U.S.C. § 9607. There are three underlying issues presented in this matter: (1) whether CERCLA is a constitutional congressional enactment under the Commerce Clause; (2) whether the presence of PCB-contaminated soil on the property involved constitutes a "release" or "threatened release" as defined in CERCLA; and (3) whether defendant may properly avail itself of the protection afforded by the innocent landowner defense, which is contained in CERCLA's third party defense. For the reasons set forth below, this Court adopts the Report and Recommendation insofar as it concludes that CERCLA is a constitutional enactment under the Commerce Clause. This Court further adopts the Report and Recommendation insofar as it concludes that the presence of PCB-contaminated soil on the property constitutes a "release" as defined by CERCLA. The Court, however, declines to adopt the Report and Recommendation's suggestion to grant EPA's Motion for Summary Judgment because there are disputed issues of material fact regarding whether the innocent landowner defense affords defendant protection from CERCLA liability.

I. BACKGROUND

Defendant is a residential and commercial property management company incorporated under the laws of Rhode Island, with a principal place of business in West Warwick, Rhode Island.

In 1986, defendant purchased from Armand Allen ("Allen") 31 acres of residential property located in West Greenwich, Rhode Island ("the Site"). A house is located on the Site, and the Site is surrounded by other residential properties. Shortly after defendant purchased the property, however, it became the focus of investigations conducted by both the Rhode Island Department of Environmental Management ("RIDEM") and EPA.

RIDEM and EPA Investigations of the Site

The Years 1987-1988

On November 9, 1987, and May 27, 1988, RIDEM sent Notices of Violation and Order to defendant. These Notices charged defendant with, inter alia, disposing of solid waste without a license and ordered defendant to perform certain cleanup activities.

RIDEM officials also inspected the Site on a number of different occasions. On May 12, 1988, RIDEM officials inspected the Site at which time they observed an area on the property that was visibly stained with oil. RIDEM officials took samples of the soil, which were sent to a laboratory for analysis. On December 17, 1988, RIDEM officials conducted another inspection of the Site, during which time they took another sample of the soil. This sample was also sent to the laboratory for analysis. The laboratory's test results indicated that the soil samples taken from the Site on May 12, 1988, and December 17, 1988, contained hazardous levels of Polychlorinated Biphenyls ("PCBs") as defined by the State of Rhode Island Rules and Regulations for Hazardous Waste Generation, Transportation, Treatment, Storage and Disposal.

On August 17, 1988, in between the time of the May 1988 and December 1988 inspections, RIDEM received a letter from Domenic J. Lombardi, Jr. ("Lombardi"), the President of the defendant corporation, regarding the May 1988 Notice of Violation and Order. In his letter, Lombardi stated that he had never dumped hazardous material on the Site and suggested that the previous owner, Allen, had dumped the waste materials and, therefore, RIDEM should contact Allen about this problem.

The Year 1989

On February 17, 1989, RIDEM officials sent a third Notice of Violation and Order to defendant. Similar to the past two Notices, the February 1989 Notice ordered defendant to conduct cleanup activities to remove the PCB-contaminated soil from the Site.

Shortly after receiving the February 1989 Notice, defendant initiated cleanup activities at the Site. On August 22, 1989, RIDEM officials met with an engineer retained by defendant at the property to point out the location of the soil that contained PCBs. Defendant subsequently hired a contractor to excavate the contaminated soil.

On October 12, 1989, under RIDEM supervision, defendant's contractor, Robert Boyer, excavated the PCB-contaminated soil and consolidated it into two piles, which were placed on polyplastic and covered with the same. A few months after the excavation was completed, Lombardi informed RIDEM that defendant had hired James Smith ("Smith") to remove the contaminated soil. RIDEM, however, informed Lombardi that Smith was not a licensed hazardous waste transporter and, consequently, was ineligible to perform the job.

After receiving notice of Smith's inability to perform the removal, defendant failed to hire a licensed hazardous waste transporter and, the contaminated soil remained on the Site.

The Years 1990-1995

On July 17, 1990, almost two years after their last inspection, RIDEM officials conducted another inspection of the Site. During the July 1990 inspection, RIDEM officials observed that the "PCB contaminated soil pile appeared to be untouched; however, the polyplastic covering the material [had] blown off leaving the pile uncovered." That same day, RIDEM sent a letter to defendant's counsel advising him of defendant's noncompliance with the February 1989 Notice of Violation and Order.

Shortly thereafter, RIDEM conducted follow-up inspections of the Site on July 23, 1991, and September 17, 1991; but, the condition of the soil remained the same: "[T]he piles of PCB-contaminated soil remained uncovered." Consequently, on July 11, 1994, RIDEM requested assistance from EPA to address the issue of the PCB-contaminated soil.

On November 21, 1994, after conducting its own inspection of the Site, EPA sent a letter to defendant notifying defendant of its potential liability under CERCLA and requesting defendant to perform or finance cleanup activities at the Site. However, by a letter to EPA dated December 2, 1994, Lombardi declined to have defendant perform or finance the removal of the PCB-contaminated soil. In his letter he stated that since defendant had not placed the material on the property, he believed that defendant had no duty to remove the contaminated soil.

As a result of defendant's refusal to finance the cleanup of the Site, EPA hired a contractor, O.H. Materials, Inc. ("OHM"), to remove the contaminated soil from defendant's property. From February 1995 to April 1995, OHM excavated approximately nine hundred tons of PCB-contaminated soil, which included the seventy tons of soil previously excavated and placed in two piles on polyplastic, and disposed of the soil at an off-site landfill that was licensed to accept PCBs for disposal. To date, EPA claims it has incurred $346,129.92 in costs related to the Removal Action in addition to $17,703.14 in interest on those costs.

Domenic Lombardi's Knowledge Regarding the Previous Owner of the Site

In a letter dated July 30, 1998, to EPA attorney, Audrey Zucker, Lombardi stated that prior to purchasing the West Greenwich property, he was aware that the previous owner of the property, Allen, had been operating a junkyard on the premises. According to Lombardi, Allen had separated metals on the Site and sold them to a scrap yard. Lombardi also noted that the State and Local police had given Allen "a problem" because of his activities in connection with the junkyard.

In the July 1998 letter, Lombardi also stated that his investigation of Allen's activities on the Site revealed that Allen had received "contaminated transformers" from Narragansett Electric Company, which Allen "displace[d] into the ground." Lombardi explained that had he known before defendant purchased the property that the Site had "environmental problems," he never would have purchased it on behalf of defendant.

He blamed his lack of knowledge regarding the Site's hazardous waste problem on his real estate agent, Ray Walsh ("Walsh"). In his July 1998 letter, Lombardi stated that he was puzzled as to why Walsh did not inspect the Site prior to defendant's agreement to purchase it.¹ He also stated that the sale of the property occurred in "record time": The purchase and sale of the property took only seventeen days to complete. In his letter to EPA, Lombardi agreed to pay $50,000 to $60,000² towards EPA's removal costs but asked that the "guilty culprit," Allen, be held liable for the balance of the costs.

EPA's Lawsuit

On December 10, 1998, EPA initiated this action against defendant, seeking recovery of the costs of the Removal Action under 42 U.S.C. § 9607(a), commonly known as CERCLA.³ On March 29, 1999, Domenic Lombardi, in his capacity as President of Domenic Lombardi Realty Inc., attempted to answer the Complaint on behalf of the corporation by filing a Motion to Dismiss and Motion for Leave to File a Cross-Complaint. United States Magistrate Judge Robert W. Lovegreen, however, denied Lombardi permission to represent the defendant realty company.⁴ On April 30, 1999, however, this writer, in the interest of justice, granted Lombardi time to refile certain documents as pleadings. On the same day, EPA...