US v. Fleet Factors Corp.

• Decision Date: 23 April 1993
• Docket Number: Civ. A. No. CV687-070.
• Citation: 819 F. Supp. 1079
• Parties: UNITED STATES of America, Plaintiff, v. FLEET FACTORS CORPORATION, Clifford Horowitz, and Murray Newton, Defendants. FLEET FACTORS CORPORATION, Third-Party Plaintiff, v. Robert KOLODNEY, as Trustee Bankruptcy of Swainsboro Print Works, Inc., Third-Party Defendant.
• Court: U.S. District Court — Southern District of Georgia

819 F. Supp. 1079

UNITED STATES of America, Plaintiff, v. FLEET FACTORS CORPORATION, Clifford Horowitz, and Murray Newton, Defendants.

FLEET FACTORS CORPORATION, Third-Party Plaintiff, v. Robert KOLODNEY, as Trustee Bankruptcy of Swainsboro Print Works, Inc., Third-Party Defendant.

Civ. A. No. CV687-070.

United States District Court, S.D. Georgia, Statesboro Division.

April 23, 1993.

COPYRIGHT MATERIAL OMITTED

Edmund Alexander Booth, Jr., Kenneth C. Etheridge, Augusta, GA, Wilda Cobb, U.S. E.P.A., Atlanta, GA, Donald A. Carr, Anne S. Almy, U.S. Dept. of Justice, Land and Natural Resources Div., Jon A. Mueller, John C. Cruden, U.S. Dept. of Justice, Environmental Enforcement Sect., Bradley Campbell, U.S. Dept. of Justice, Environmental & Natural Resource, Policy, Legislation & Special Litigation, Myles E. Flynt, Acting Asst. Atty. Gen., Env. & Natural Resources, Washington, DC, for U.S.

Mary Jane Norville, Patricia Thrower Barmeyer, King & Spalding, Atlanta, GA, Richard Edwin Miley, Richard E. Miley, Attorney at Law, P.A., North Augusta, SC, for defendant Fleet Factors Corp.

Charles B. Merrill, Jr., Merrill, Stone & Parks, Swainsboro, GA, for defendant Clifford Horowitz.

Murray Newton, pro se.

Cecil A. Citron, Sherman, Citron & Karasik, New York City, for third-party defendant Robert Kolodney.

ORDER

BOWEN, District Judge.

Before the Court are the second Cross-Motions for Summary Judgment filed by the United States of America ("Government") and Fleet Factors Corporation ("Fleet"). The Government's Summary Judgment Motion alleges that Fleet is liable under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675, ("CERCLA") as the operator of a CERCLA facility and as a "person" that "arranged for disposal" of hazardous substances. Fleet's Motion for Summary Judgment is based on CERCLA's exemption of qualified secured creditors from operator liability. Fleet denies that CERCLA's "arranged for disposal" liability provision applies here. For the reasons stated below and as explained at the hearing on the parties' Motions for Summary Judgment, genuine issues of material fact exist and require denial of both motions.

I. BACKGROUND

The Government brought this action against Fleet to recover the cost of conducting an environmental response action at the Swainsboro Print Works ("SPW"), a textile printing plant in Swainsboro, Georgia. Clifford Horowitz served as SPW's president and Murray Newton served as vice-president; the two were SPW's sole stockholders. In 1976, Fleet entered into a standard factoring agreement with SPW.¹ Pursuant to that agreement, Fleet advanced funds against SPW's accounts receivable and took a security interest in SPW's real property, inventory, equipment, and machinery as collateral. Also, as part of its role as factor, Fleet frequently was in contact with SPW.

In August of 1979, SPW filed for debtor relief under Chapter 11 of the United States Bankruptcy Act and continued operations as a debtor in possession. With court approval, Fleet continued to advance funds to SPW. When SPW's debt to Fleet exceeded the value of its accounts receivable, Fleet discontinued advancing funds, and, on February 27, 1981, SPW ceased operations. After operations ceased, however, salable inventory, equipment, and chemicals remained at the SPW plant site. At that point, a skeleton crew was retained to pack and ship the remaining inventory and to provide site security. Fleet advanced funds during this winding-down period to pay utilities and to make payroll. On May 13, 1982, the United States Bankruptcy Court for the Southern District of New York entered a Stipulation and Order authorizing Fleet to foreclose on the SPW inventory, equipment, and machinery.

Following entry of the Stipulation and Order, Fleet arranged with Baldwin Industrial Liquidators, Inc., ("Baldwin") to conduct a public auction of the SPW equipment and machinery for the benefit of Fleet. As part of its auction preparations, Baldwin organized the salable items and arranged the site. The items were sold "as is, where is" on June 22, 1982. After the auction, Fleet contracted with Nix Rigging Company ("Nix") to remove any equipment or machinery that was not sold or not picked up by the purchasers. Nix removed some but not all of the remaining SPW equipment and machinery.

The Environmental Protection Agency ("EPA") evaluated the SPW site in January 1984 at the behest of the Georgia Environmental Protection Division. That inspection revealed several hundred drums and numerous vats of CERCLA hazardous chemicals plus what the Government alleges to be asbestos.² Responding to its findings, EPA conducted a CERCLA removal action and incurred the costs upon which this suit is based.

In United States v. Fleet Factors Corp., 724 F.Supp. 955 (S.D.Ga.1988), this Court denied the Government's and Fleet's Cross-Motions for Summary Judgment. Fleet appealed. The Eleventh Circuit Court of Appeals affirmed the denial of Fleet's Motion for Summary Judgment and remanded this case for trial. See United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir.1990), cert. denied, 498 U.S. 1046, 111 S.Ct. 752, 112 L.Ed.2d 772 (1991). In doing so, the Eleventh Circuit explained a standard for secured creditor liability that stirred the financial community. EPA responded by promulgating a proposed rule interpreting the CERCLA secured creditor liability exemption included in 42 U.S.C. § 9601(20)(A). I stayed this action to await the final rule. Soon after the final rule's April 29, 1992, effective date, see 57 Fed.Reg. 18344-85 (1992), I re-activated this action, and both parties filed a second round of cross-motions for summary judgment.

II. SUMMARY JUDGMENT STANDARD

The "purpose of summary judgment is to `pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986), quoting Fed.R.Civ.P. 56 Advisory Committee Note. There is no legitimate need for trial when the movant shows that under the evidence no reasonable jury could find in favor of the opposing party or that only a question of law is involved. See Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 2712 (1983). Courts often rephrase this standard by stating that a motion for summary judgment may be granted only when there is no "genuine issue of material fact." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (summary judgment warranted when no issue as to any material fact). Significantly, a dispute over a material fact is "genuine" only when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party". Id.

A court reviewing a summary judgment motion always must first consider whether the movant has met its initial burden of affirmatively showing either that no reasonable jury could find for the opposing party or that only a question of law is involved. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) ("A party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion"); Clark v. Coats & Clark, Inc., 929 F.2d 604 (11th Cir.1991) (discussing at length proper application of Celotex). When the moving party seeks to establish that no genuine issue of material fact exists, the reviewing court must view all evidence in the light most favorable to the opposing party, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).

Generally, when a moving party seeks to establish that no genuine issue of material fact exists, its initial burden is satisfied only if it refers to specific materials on file to negate a critical element of the non-movant's claim. Clark, 929 F.2d at 608. In Celotex, however, the Court created an exception applicable when the burden of proof at trial will fall on the non-movant. Clark, 929 F.2d at 608. Under this exception, the movant may meet its initial burden "without negating an element of the non-moving party's claim...." Clark, 929 F.2d at 608. Instead, the movant may point "... to materials on file that demonstrate that the party bearing the burden of proof at trial will not be able to meet that burden." Id.³ Because the Celotex exception affects only the requirement that an element of the non-movant's claim be negated; however, the movant still must support its motion by identifying specific documents on file. "Even after Celotex it is never enough simply to state that the non-moving party cannot meet its burden at trial."⁴ Id.

Once it is determined that the movant's initial burden is met, the non-moving party must then show that a genuine issue of fact exists. See Matsushita Elec. Indus. Co., 475 U.S. at 585-586, 585 n. 10, 106 S.Ct. at 1355-56, 1356 n. 10 (because movant's initial summary judgment burden met, non-movant required to establish the existence of a material issue of fact); Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566, 1583 n. 16 (11th Cir.1991), cert. denied, ___ U.S. ___, 113 S.Ct. 295, 121 L.Ed.2d 219 (1992). To do so, the non-moving party must do more than rely on the pleadings or merely repeat the conclusory allegations of the complaint. Morris v. Ross, 663 F.2d 1032, 1033 (11th Cir.1981), cert. denied, 456 U.S. 1010, 102 S.Ct. 2303, 73 L.Ed.2d 1306 (1982). The non-movant "must present affirmative evidence," Anderson, 477 U.S. at 257, 106 S.Ct. at 2515; in other words, the non-movant "must set forth specific facts showing that there is a genuine need for trial," Johns v. Jarrard, 927 F.2d 551, 555 (11th Cir.1991) (citation omitted).

The clerk has given the parties notice of the summary judgment motions, the right to file affidavits or other materials in opposition, and of the...