United States v. Ward

• Decision Date: 09 September 1985
• Docket Number: No. 83-63-CIV-5.,83-63-CIV-5.
• Citation: 618 F. Supp. 884
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: UNITED STATES of America, Plaintiff, State of North Carolina, Plaintiff-Intervenor, v. Robert Earl WARD, Jr. and Ward Transformer Co., Inc., Defendants and Third Party Plaintiffs, v. NORRY ELECTRIC CORPORATION and Liberty Motor and Machinery Co., Third Party Defendants.

618 F. Supp. 884

UNITED STATES of America, Plaintiff, State of North Carolina, Plaintiff-Intervenor, v. Robert Earl WARD, Jr. and Ward Transformer Co., Inc., Defendants and Third Party Plaintiffs, v. NORRY ELECTRIC CORPORATION and Liberty Motor and Machinery Co., Third Party Defendants.

No. 83-63-CIV-5.

United States District Court, E.D. North Carolina, Raleigh Division.

September 9, 1985.

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James S. Perry, Asst. U.S. Atty., Raleigh, N.C., Jeremy Ray Akers, Washington, D.C., Anne L. Asbell, Atlanta, Ga., Douglas Greenhous, Washington, D.C., for plaintiff.

Thomas F. Moffitt, Deputy Atty. Gen., Raleigh, N.C., for plaintiff-intervenor.

Walter E. Brock, Jr., Jerry S. Alvis, Raleigh, N.C., for defendants.

Charles C. Meeker, Robert W. Spearman, Raleigh, N.C., for Norry Elec. Corp.

Ralph McDonald, Raleigh, N.C., for Liberty Motor and Machinery Co.

ORDER

BRITT, Chief Judge.

Plaintiff, the United States of America, brought this action seeking to have the defendants, Robert Earl Ward, Jr., and Ward Transformer Company, Inc. (the Ward defendants), held liable under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) for reimbursement of federal funds spent in cleaning up hazardous substances off the roadsides of Eastern North Carolina. 42 U.S.C. § 9607(a) (1982). The State of North Carolina subsequently intervened as a party plaintiff seeking restitution for the expenses it incurred in cleaning up these same spills. The Ward defendants then filed third-party complaints against Norry Electric Corporation (Norry Electric) and Liberty Motor and Machinery Company (Liberty Motor) seeking contribution and/or indemnity on any amounts the Ward defendants might be required to pay.

Currently pending before the court and now ripe for ruling are the following:

1. Motion by plaintiff, the United States of America, for partial summary judgment against the Ward defendants;

2. Motion by plaintiff-intervenor, the State of North Carolina, for partial summary judgment against the Ward defendants;

3. Motion by the Ward defendants for partial summary judgment;

4. Motion by Norry Electric for partial summary judgment against the Ward defendants on Norry's fourth counterclaim;

5. Motion by Norry Electric for summary judgment on claims asserted against it by the Ward defendants;

6. Motion by Liberty Motor for summary judgment against the Ward defendants;

7. Appeal by the Ward defendants from the magistrate's discovery order of 2 January 1985;

8. Motion by the Ward defendants for leave to file a third-party complaint against Neil Norry, president of Norry Electric, and Manny Margolis, president of Liberty Motor;

9. Joint motion by the United States of America and the State of North Carolina in opposition to defendants' demand for a jury trial;

10. Motion by the Ward defendants to separate the trial of certain counterclaims;

11. Motion by the State of North Carolina to appear as amicus curiae on the issue of the constitutionality of North Carolina General Statute § 75-1.1;

12. Motion by the State of North Carolina for leave to amend the complaint in intervention; and

13. Motion by Norry Electric to strike a memorandum submitted by the Ward defendants regarding the motions for summary judgment.

The summary judgment motions and the appeal from the magistrate's discovery order of 2 January 1985, motions one through seven listed above, came on for hearing before the court on 5 April 1985. Motions eight through ten were taken under advisement by the court pending the 5 April hearing. The three remaining motions became ready for ruling after the hearing was set. All thirteen motions will be ruled upon seriatim in this order.

I. FACTS AND PRIOR PROCEEDINGS

Defendant, Ward Transformer Company, Inc. (WTC), is a Raleigh, North Carolina, corporation which in 1978 was engaged in the business of purchasing, rebuilding and selling electrical equipment, including electrical voltage transformers. At that time the president and principal shareholder of the corporation was defendant, Robert Earl Ward, Jr. (Ward). Ward's son, Robert Earl Ward, III, owned the remaining shares. Until 1980, when he turned over control of the corporation to his son, Ward was responsible for the day-to-day business decisions, either individually or in conjunction with other corporate officers, and was actively engaged in the management and operation of the company.

In 1978 large quantities of transformer insulating fluid containing polychlorinated biphenyls (PCBs) were stored at WTC's facility in Wake County in 55-gallon drums, transformers and a holding tank. On 17 February 1978, the United States Environmental Protection Agency (EPA) published final administrative rules regarding the labeling, storage, and disposal of PCBs, pursuant to the Toxic Substances Control Act. 15 U.S.C. §§ 2601-2629 (1982). These rules became effective on 18 April 1978. The new rules had a major impact on the electrical transformer repair industry because of the use of PCBs in transformer insulating fluid. Their enactment made storage and disposal of PCB-laden transformer oil undesirable. Consequently, WTC adopted a policy of not buying any more transformers containing PCB oil and began to explore ways to get rid of the PCB oil then in storage at its Wake County facility.

During the first part of 1978 Ward asked his son to look into ways of disposing of the PCB oil being stored at the WTC facility. After considering price quotations from six companies who offered to dispose of the oil, Ward, his son and Fred Tucker (another member of WTC's board of directors) entered into an agreement with Robert J. Burns. Burns was a long-time acquaintance and business associate of Ward, who then owed Ward personally some $55,000. The agreement made provided that WTC was to pay Burns $1.70 per gallon plus freight costs for removal of the PCB oil from the Wake County facility. The agreement was verbal and was never reduced to writing or incorporated in a company resolution. Sometime after the oral agreement was made, Burns agreed to pay Ward 70 cents per gallon of oil he removed as repayment on the personal debt.

In the spring of 1978 Burns and his two sons, assisted by WTC employees, began removing the PCB oil. They began with the oil stored in the 55-gallon drums. After the oil was removed from the drums, Burns and his sons began removing oil from the transformers.

There were approximately forty-one PCB transformers then located at the WTC facility, containing approximately 12,850 gallons of PCB fluid. Six of the transformers, containing some 3,180 gallons of PCB fluid, belonged to WTC. One transformer, belonging to Electric World, contained about 247 gallons. Nine transformers containing 1,900 gallons belonged to Liberty Motor. Twenty-five transformers with approximately 7,500 gallons were owned by Norry Electric. After the oil had been removed, Liberty Motor and Norry Electric were informed by WTC that their oil had been disposed of by Burns.

In order to aid in disposal of the oil and at Burns' request, Robert Earl Ward, III, ordered a 750-gallon tank in which to put the oil taken from the transformers. The tank was paid for by Burns and loaded into his van-type truck. Over a period of time Burns and his sons loaded at least 9,400 gallons of PCB oil into this tank.

After the PCB fluid was removed from the WTC premises Burns and his sons dumped it from the 750-gallon tank onto the Fort Bragg Military Reservation and along various roadways in North Carolina. The first dumping of PCB oil was done at Fort Bragg during the last week of June 1978 from an enclosed yellow truck outfitted with the 750-gallon tank and piping connected to a nozzle extending from the rear right side of the truck which could be opened to allow a steady stream of oil to escape as the truck was being driven down the road.

Shortly after the Fort Bragg dumpings Burns informed Ward of his method of disposal. Ward did not report it to anyone but continued to permit Burns to remove the PCB oil from WTC. Ward claims that he received assurances from Burns that there would be no further illegal disposal. The government disputes this fact.

During the last week of July and the first few weeks of August 1978 Burns and his sons began dumping PCB oil along the road shoulders in Eastern North Carolina in the counties surrounding Raleigh. For these later dumpings the 750-gallon tank was transferred to an enclosed blue Sears "van-type truck" and the piping/nozzle configuration altered so that the nozzle extended from the rear of the passenger cab and the flow of liquid could be controlled from the cab. This allowed the person sitting on the passenger side of the van to spray the oil continuously along the highway road shoulder as the truck was being driven down the highway. To do this spraying Burns and his sons selected secluded stretches of roadway in rural areas. The valve was left open except when the truck was passing through inhabited or well-lit areas.

Both alterations to the 750-gallon tank used by Burns were done at the WTC facility with the help of WTC employees. The Ward defendants admit this but claim that neither they nor their employees had any knowledge of the purpose for the altering of the pipes.

At the end of June 1978 governmental authorities discovered areas of discolored grass and stained earth along approximately eleven miles of road shoulder on the Fort Bragg Military Reservation. Then in the last few days of July and the first days of August government authorities discovered similar discolored strips along approximately 210 miles of highway road shoulders in Alamance, Chatham, Edgecombe, Franklin, Granville, Halifax, Harnett, Johnston, Lee, Nash, Person, Wake, Warren and Wilson Counties. Chemical analysis of soil, grass and liquid oil samples collected from the...