US v. Pretty Products, Inc.

• Decision Date: 13 December 1991
• Docket Number: No. C-2-91-74.,C-2-91-74.
• Citation: 780 F. Supp. 1488
• Parties: UNITED STATES of America, Plaintiff, v. PRETTY PRODUCTS, INC., et al., Defendants and Third-Party Plaintiffs, v. CITY OF COSHOCTON, OHIO, Third-Party Defendant.
• Court: U.S. District Court — Southern District of Ohio

780 F. Supp. 1488

UNITED STATES of America, Plaintiff, v. PRETTY PRODUCTS, INC., et al., Defendants and Third-Party Plaintiffs, v. CITY OF COSHOCTON, OHIO, Third-Party Defendant.

No. C-2-91-74.

United States District Court, S.D. Ohio, E.D.

December 13, 1991.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Richard B. Stewart, Asst. Atty. Gen., Environment and Natural Resources Div., U.S. Dept. of Justice, Leonard M. Gelman, Atty., Environmental Enforcement Section, U.S. Dept. of Justice, Washington, D.C., and Sherry L. Estes, Asst. Regional Counsel, U.S.E.P.A., Chicago, Ill., for plaintiff U.S.

David J. Young and C. Craig Woods, Squire, Sanders & Dempsey, Columbus, Ohio, for defendants and third-party plaintiffs Pretty Products, Inc. and Lancaster Colony Corp.

Keith A. Savidge and Patrick J. McIntyre, Seeley, Savidge & Aussem Co., L.P.A., Cleveland, Ohio, for third-party defendant City of Coshocton, Ohio.

OPINION AND ORDER

KINNEARY, Senior District Judge.

This matter comes before the Court to consider a variety of motions filed by the Plaintiff, United States of America ("United States" or "EPA"), and the Third-Party Defendant, City of Coshocton, Ohio ("City"). The Court will first address the City of Coshocton's motion to dismiss the Third-Party Complaint filed by Defendants Pretty Products, Inc. ("Pretty Products") and Lancaster Colony Corp. ("Lancaster").¹ Fed.R.Civ.P. 12(b). Next, the Court will consider the United States' two motions to strike various affirmative defenses of the Defendant, Pretty Products, Inc. Fed. R.Civ.P. 12(f). Finally, the Court will consider the United States' motion for partial summary judgment. Fed.R.Civ.P. 56.

BACKGROUND

This is a civil action brought pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, 100 Stat. 1613 ("SARA"), against Pretty Products and Lancaster, its parent corporation. In Count I of the two-count Complaint, the United States seeks — from Pretty Products only — the recovery costs incurred and the remaining future costs to be incurred for investigative, removal, and remedial activities in response to the release or threatened release of hazardous substances at the Coshocton City Landfill Site. 42 U.S.C. § 9607. In Count II of the Complaint, the United States seeks civil penalties and injunctive relief for both Pretty Products' and Lancaster Colony Corporation's refusal to supply certain requested information and documents pursuant to 42 U.S.C. § 9604(e).

Defendants Pretty Products and Lancaster allege in their Third-Party Complaint against the City of Coshocton that the City is liable to them for contribution under CERCLA, Ohio state law, and common law theories of indemnity, breach of express or implied contract, quasi-contract, quantum meruit, restitution, and unjust enrichment. Essentially, Pretty Products was one of several contributors of commercial and industrial solid and liquid wastes to a landfill operated by the City between 1968 and 1979. Pretty Products disputes its liability for the cleanup of the Coshocton landfill site and argues that the City's inadequate operation of the landfill renders it liable for a substantial portion of the clean-up costs.

Of great import to the decision of the Court in the case sub judice is the resolution of a related case styled United States v. City of Coshocton, No. C-2-90-165 (S.D.Ohio, filed Feb. 23, 1990) (Kinneary, J.). On July 22, 1991, this Court accepted a Consent Decree previously agreed to by the United States and every identified potentially responsible party ("PRP") except Pretty Products.² Apparently, Pretty Products withdrew from the negotiations preceding the entry of the Consent Decree because it refused to accept that it had anything other than de minimis liability for the clean-up costs in Coshocton.

I. CITY OF COSHOCTON'S MOTION TO DISMISS THIRD-PARTY COMPLAINT

With respect to the City's motion to dismiss, this Court is faced with a situation in which the government has reached an accord with eight of the nine identified PRP's. The Consent Decree — accepted by this Court — directs that the eight settling parties shall take numerous remedial actions at the Coshocton site and shall be responsible for two-thirds of the E.P.A.'s oversight costs associated with the cleanup of the site. The United States now seeks to hold Pretty Products liable for the remaining costs, and Pretty Products in turn seeks contribution, indemnification, and restitution in various forms from the City for its role as the allegedly negligent owner and operator of the site. The instant motion, filed by the City, seeks dismissal of the Third-Party Complaint on the grounds that Pretty Product's contribution claims are barred by CERCLA and the Ohio Contribution Among Joint Tortfeasors Act, Ohio Rev.Code § 2307.31 et seq.

STANDARD OF REVIEW

A motion to dismiss under Fed. R.Civ.P. 12 will be granted only when it appears to a legal certainty that no relief could be granted under any set of facts that could be proved. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984); Neal v. Bergland, 646 F.2d 1178, 1184 (6th Cir.1981), aff'd sub nom. Block v. Neal, 460 U.S. 289, 103 S.Ct. 1089, 75 L.Ed.2d 67 (1983); Dann v. Studebaker-Packard Corp., 288 F.2d 201 (6th Cir.1961). Thus, this Court must determine whether the claimant is entitled to offer evidence on the claim, not whether the claim will succeed on its merits. McDaniel v. Rhodes, 512 F.Supp. 117, 120 (S.D.Ohio 1981). As such, extrinsic evidence may not be considered by this Court. Minatsis v. Brown, 713 F.Supp. 1056 (S.D.Ohio 1989).

DISCUSSION

Generally, CERCLA provides a financial scheme whereby persons who are found to be responsible for generating, handling, and/or transporting hazardous materials can be held liable for the cleanup and disposal of such waste. Under this scheme, CERCLA provides for joint and several liability for persons found to be responsible for the existence of hazardous materials in the environment.

In order to encourage settlements and expedite the cleanup of hazardous waste sites, Congress specifically addressed the issue of claims for contribution and the effect of settlements on such claims:

(1) Contribution

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 or section 9607 of this title.

(2) Settlement

A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.

(3) Persons Not Party to Settlement

(A) If the United States or a State has obtained less than complete relief from a person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement, the United States or the State may bring an action against any person who has not so resolved its liability.

(B) A person who has resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement may seek contribution from any person who is not party to a settlement referred to in paragraph (2).

(C) In an action under this paragraph, the rights of any person who has resolved its liability to the United States or a State shall be subordinate to the rights of the United States or the State. Any contribution action brought under this paragraph shall be governed by Federal law.

42 U.S.C. § 9613(f). Thus, a PRP that has entered into a settlement with the United States may not be held liable for contribution to another PRP who has elected not to settle its CERCLA liability. The result in such situations, although perhaps somewhat Draconian, is explicitly required by the clear statutory language:

Congress's goal of achieving expeditious settlements was furthered through Section 9613(f)(2), which places non-settling CERCLA Defendants at a disadvantage in two ways. First, it leaves them open to contribution claims from settling Defendants who have paid more than their proportionate share of liability. Second, if the settling Defendants have paid less than their proportionate share of liability, Section 113(f)(2) apparently compels the non-settlers to absorb the short fall.

Central Illinois Pub. Serv. Co. v. Industrial Oil Tank & Line Cleaning Serv., 730 F.Supp. 1498, 1504 (W.D.Mo.1990) (quoting City of New York v. Exxon Corp., 697 F.Supp. 677 (S.D.N.Y.1988)). This interpretation is consistent with the vast majority of federal court decisions. See, e.g., United States v. Cannons Eng'g Corp., 899 F.2d 79, 91 (1st Cir.1990) ("The statute immunizes settling parties from liability for contribution and provides that only the amount of the settlement — not the pro rata share attributable to the settling party — shall be subtracted from the liability of the nonsettlors. This can prove to be a substantial benefit to settling PRPs — and a corresponding...