United States v. Godley

Decision Date10 November 2021
Docket Number3:19-cv-00202-RJC-DSC
CourtU.S. District Court — Western District of North Carolina

Robert J. Conrad, Jr., United States District Judge

THIS MATTER comes before the Court on Plaintiff United States' Motion for Summary Judgment, (DE 51); Defendants Fred. D. Godley's, F.D. Godley Number Three, LLC's and 436 Cone Avenue, LLC's Motion for Summary Judgment (DE 59); Third-Party Defendant Town of Pineville's Motion for Summary Judgment, (DE 56); and Third-Party Defendants Mitchell Community College's, Mitchell Community College Foundation and Endowment for Excellence's, and Iredell County's Motion for Summary Judgment, (DE 58).

These matters have been fully briefed, and on October 19, 2021, the Court heard oral argument. In addition, the Court has reviewed the pleadings, exhibits thereto, and applicable law.

The Court's decision is provided below.

A. Procedural Background

The United States (Plaintiff or “Government”) filed this action pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9607(a), to recover response costs it incurred in cleaning up hazardous substances at two sites in North Carolina-the Pineville Site and the Old Davis Site. (DE 1). CERCLA entitles the Environmental Protection Agency (“EPA”) to recover its response costs from responsible parties, including persons who owned and operated the facility where hazardous substances were released and disposed. See 42 U.S.C. § 9607(a)(2). Defendants Fred D. Godley, Jr. (Godley), 436 Cone Ave, LLC (Cone Ave), and F.D. Godley Number Three, LLC (GNT) (collectively, Defendants) are alleged to have owned and/or operated the sites, where hazardous polychlorinated biphenyls (“PCBs”) and asbestos were released and disposed. The Government is seeking summary judgment to hold each Defendant directly liable, joint and severally, for reimbursement of response and enforcement costs.[1] Defendants do not dispute liability as it pertains to Cone Ave and GNT. However, Godley disputes any direct liability he has as the managing member of Cone Ave and GNT.[2]

In response to the Government's CERCLA claims, Defendants filed third-party claims of contribution against the Town of Pineville (Pineville) in relation to the Pineville Site and against Mitchell Community College (MCC), the Mitchell Community College Endowment for Excellence (MCCEE), and Iredell County (Iredell) (collectively, the “MCC Parties) in relation to the Old Davis Site. Defendants also filed a claim for indemnification against Pineville regarding a land donation contract. CERCLA allows for any Defendant to seek contribution from any other covered party that would also be liable under the statute. Defendants seek summary judgment on these third-party claims.

Pineville and the MCC Parties deny any liability and filed cross motions for summary judgment. Pineville seeks dismissal of the contribution and indemnification claims and the MCC Parties seek dismissal of the contribution claim.

B. Factual Background
i. Pineville Site (Government, Cone Ave, Godley, and Pineville)

The Pineville Site is 28.3 acres and is located at 436 Cone Avenue, Pineville, Mecklenburg County, North Carolina. The property includes a dilapidated cotton mill built in 1894. All milling operations have been nonexistent since 1991. (DE 1 at ¶¶23-24).

On October 27, 1995, Godley purchased the Pineville Site for $1.2 million. Id. at ¶25. Fifteen years later, on April 1, 2010, Godley formed the LLC Cone Ave, a North Carolina limited liability corporation.[3] He then transferred ownership of the Pineville Site to Cone Ave on April 29, 2010. Id. at ¶¶6, 25-27. Godley and Godley Realty Company, Inc. (Godley Realty) are the owners and members of Cone Ave. (DE 1, 18, 19 at ¶¶100(a)-(c)). Godley owns 99% of Cone Ave and Godley Realty owns the other 1%. Godley is the President and sole officer listed for Godley Realty. Godley is thus the sole person in charge of managing Cone Ave.

The original plan for the Pineville Site was to transform the property and old mill into a useful warehouse facility. But such a plan never came to fruition. Cone Ave's zoning applications were denied, which made the property more valuable with the old mill removed so that it could be developed. To perform the demolition, Cone Ave contracted with Steve Tarleton, a licensed general contractor. (DE 64 at 4). In return for performing demolition, Cone Ave allowed Tarleton to take valuable scrap materials. (DE 64 at 4). Defendants claim the contractor was in charge of day-to-day oversight and management of the demolition and bore responsibility for compliance with environmental regulations, (DE 60-49 at 88:1-4), and that Cone Ave exerted little control over the contractor, who was allowed to operate as he deemed appropriate. (DE 64 at 5).

Demolition activities began in 2013. (DE 19 at ¶30). As part of the demolition activities, the contractor drained transformer oil into drums and removed insulation. (DE 52-4 (Godley 9/10/20 Depo) at 242:6-243:12).

In the spring of 2014, the Town of Pineville issued notices of violation for windblown debris resulting from the demolition, including fiberglass insulation and metal. Around this same time, Mecklenburg County issued a Stop Work Order to halt demolition. Officials from the North Carolina Department of Environment and Natural Resources (“NCDENR”) met with Godley, as manager of Cone Ave, and Tarleton, as contractor for the demolition activities. (DE 19 at ¶¶35- 37). NCDENR then issued a letter to correct the violation of solid waste rules resulting from the demolition.

On August 28, 2014, NCDENR contacted the EPA and requested support responding to the Pineville Site. (DE 1 at ¶42). When EPA personnel were onsite, they observed 40 to 50 drums and containers around the property. The EPA also observed asbestos in demolition debris disposed in various locations on the property. (DE 53-1 (Action Memo) at PDF 1-4). The EPA confirmed through sampling that exposed pipe insulation on the floor of the old mill contained asbestos. (DE 53-3 (Removal Site Evaluation) at PDF 7, 48).

After the EPA became involved, Godley, as the manager of Cone Ave, provided oversight of the demolition, environmental concerns, and cleanup activities, and took actions to protect the interests of the LLC. In that capacity, Godley worked with environmental contractors, like HAZ MAT, and EPA, Pineville, and NCDENR personnel. Godley also responded to information requests from the EPA to avoid daily fines. (DE 64 at 5).

After the property became mired in environmental violation notices from Pineville, the North Carolina Department of Environmental Quality (“NCDEQ”), and the EPA, and it became apparent the property faced expensive clean up and remediation costs, Cone Ave began looking for options to protect its interests by transferring the property. (DE 64 at 5). On December 21, 2015, Cone Ave transferred the Pineville Site to the Town of Pineville via a contractual arrangement (hereinafter referred to as the “Donor Agreement”). In exchange for the land, Pineville agreed to provide the following consideration:

The Town agrees to pay the balance due on the deed of trust amount encumbering the Property in favor of the Carter Bank ($1, 750, 000), back taxes in the approximate amount of $89, 582 (2012), $5, 266.20 (2013), $57, 396.64 (2014), $1, 170.80 (2012), $1, 109.83 (2013), and $1, 024.17 (2014), including any taxes attributable to the tax year of closing. In addition the Town will assume the estimated cost and fees, and environmental cleanup costs in the approximate amount of $80, 000 and any other action required by the federal EPA or the NC Department of Environmental Resources. Donor acknowledges that while the Town has agreed to assume the environmental cleanup costs and fees, Donor is not being released by the EPA or the NC Department of Environmental Resources for any such obligations.

(DE 60-19).

Drums containing PCBs and asbestos ladened debris were still visibly present on the property when Pineville took ownership. To complete the cleanup, after Pineville took ownership, it paid a contractor $287, 565.60 to bring the facility into compliance with all local, state, and federal laws. (DE 57-1 at ¶14). The EPA did not complete its onsite removal activities until May 1, 2016, five months after Pineville took ownership. (DE 53-2 at PDF 7-8).

As of March 31, 2019, the EPA incurred at least $304, 060.60 in removal costs for the Pineville Site. (DE 51 at 21).

ii. Old Davis Site (Government, GNT, Godley, and MCC Parties)

GNT is a North Carolina limited liability corporation that Godley formed on June 19, 1997. (DE 1 at ¶¶9, 57; DE 20 at ¶57). Godley and Godley Realty are the owners and members of GNT. (DE 1, 18, 19 at ¶¶107(a)-(c)). Godley owns 99% of GNT and Godley Realty owns the other 1%. Godley is the president and sole officer listed for Godley Realty. Godley is thus the sole person in charge of managing GNT.

On July 1, 1997, GNT purchased an eight-acre parcel of property that included the five-acre Old Davis Site for $25, 000. (DEs 1 19, 20 at ¶¶56, 58). The Old Davis Site is located on West End Avenue, Statesville, Iredell County, North Carolina. It included the former Statesville Hospital, which operated from 1920 until it was...

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