Westfarm Associates Ltd. Partnership v. Washington Suburban Sanitary Com'n

• Decision Date: 27 September 1995
• Docket Number: No. 94-1425,94-1425
• Citation: 66 F.3d 669
• Parties: , 64 USLW 2216, 33 Fed.R.Serv.3d 579, 25 Envtl. L. Rep. 21,587 WESTFARM ASSOCIATES LIMITED PARTNERSHIP, Plaintiff-Appellee, International Fabricare Institute, Defendant & Third Party Plaintiff-Appellee, v. WASHINGTON SUBURBAN SANITARY COMMISSION, Third Party Defendant-Appellant, and Prudential Insurance Company of America, Party in Interest.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 669

66 F.3d 669

41 ERC 1321, 64 USLW 2216, 33

Fed.R.Serv.3d 579,

25 Envtl. L. Rep. 21,587

WESTFARM ASSOCIATES LIMITED PARTNERSHIP, Plaintiff-Appellee, International Fabricare Institute, Defendant & Third Party Plaintiff-Appellee, v. WASHINGTON SUBURBAN SANITARY COMMISSION, Third Party

Defendant-Appellant,

and

Prudential Insurance Company of America, Party in Interest.

No. 94-1425.

United States Court of Appeals, Fourth Circuit.

Argued April 4, 1995.

Decided Sept. 27, 1995.

ARGUED: Randall Matthew Lutz, Smith, Somerville & Case, Baltimore, Maryland, for Appellant. Jeffrey Moore Johnson, Dickstein, Shapiro & Morin, L.L.P., Washington, DC, for Appellee. ON BRIEF: Patricia McHugh Lambert, Smith, Somerville & Case, Baltimore, Maryland; Nathan J. Greenbaum, General Counsel, Joel A. Kramer, Associate Counsel, Washington Suburban Sanitary Commission, Laurel, Maryland, for Appellant. Joel A. Fischman, Angus E. Crane, Dickstein, Shapiro & Morin, L.L.P., Washington, DC, for Appellee.

Before MURNAGHAN and NIEMEYER, Circuit Judges, and BUTZNER, Senior Circuit Judge.

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge NIEMEYER and Senior Judge BUTZNER joined.

OPINION

MURNAGHAN, Circuit Judge:

Defendant-appellant Washington Suburban Sanitary Commission ("WSSC") operates a sewer system for Montgomery County, Maryland and Prince George's County, Maryland. Plaintiff-appellee Westfarm Associates Limited Partnership ("Westfarm"), a developer of property, owns land adjacent to one of WSSC's sewers. The sewer carries wastes from, among other places, the International Fabricare Institute ("IFI"), a trade association of dry cleaners and co-defendant below. Westfarm discovered on its property a trace of a hazardous substance, tetrachloroethylene (also known as perchloroethylene, perc, or "PCE"), which, Westfarm concluded, was flowing from IFI through leaks in the sewer system and contaminating the Westfarm property.

Westfarm sued IFI and WSSC as joint co-defendants for, inter alia, costs of response under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA," popularly known as Superfund), 42 U.S.C. Sec. 9607(a), and economic damages under a common law theory of negligence. The district court granted summary judgment for Westfarm on the CERCLA liability claim, and a jury found for Westfarm on the common law negligence claim.

WSSC now appeals on a variety of grounds, including, most prominently, public policy arguments for exempting sewer operators from liability for damage caused by wastes dumped in the sewers by third parties. Finding no abuse of discretion or legal errors by the district court, and finding that this Court is not the appropriate forum for WSSC's public policy arguments, we affirm in all respects.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1991, Westfarm engaged in negotiations to sell a particular parcel of property to a buyer. Just prior to closing the sale, an environmental audit uncovered the presence of PCE in the groundwater beneath the parcel. ¹ 1] PCE is a toxic organic solvent that is widely used in the dry cleaning business. As a result of the PCE contamination, the buyer terminated the contract to purchase the property. Further testing by Westfarm's environmental consultants traced the PCE to IFI, an adjacent landowner that had been conducting laboratory research with PCE to explore the efficacy of various dry cleaning techniques. On January 2, 1992, Westfarm filed suit against IFI. Westfarm has since cleaned up its property.

IFI and its predecessor had operated a commercial drycleaning facility at a site abutting Westfarm's parcel until 1974, at which time IFI began conducting research at the site. IFI's research department analyzed hundreds of PCE samples each year. At the conclusion of each analysis, the remnants of the samples were poured down a sink drain into the connected sewer line. Each test remnant typically included ten milliliters of PCE. From 1974 to early 1992, IFI annually disposed of at least three gallons of PCE into the sewer line in this manner. IFI also placed trash contaminated with PCE into a dumpster located on IFI's land.

Whenever IFI poured PCE down the drain, the PCE entered a sewer lateral connecting IFI's building with a main sewer line running along Tech Road (the "Tech Road sewer"), which is owned and operated by WSSC. Most of the sewer lateral is owned and operated by IFI, but WSSC owns and operates a part of the sewer lateral (the "sewerhouse connection") which extends from WSSC's Tech Road sewer to the IFI property line, and which contains a manhole through which the sewer lateral can be reached. The sewerhouse connection meets the terminal end of the Tech Road sewer, which runs beside the portion of Westfarm's property abutting Tech Road.

In July of 1992, environmental consultants conducted a joint groundwater survey and eliminated other surrounding landowners as a potential source of the PCE on Westfarm's property; groundwater in the area flows to the southeast, and whereas groundwater just north of the sewer lateral contained no PCE, groundwater to the southeast of the sewer lateral contained high concentrations of PCE. In August of 1992, Westfarm conducted a video camera inspection of IFI's sewer lateral. In order to do so, Westfarm served a subpoena upon WSSC to gain access to the sewer lateral through WSSC's sewerhouse connection, which cameras could enter through the manhole. That inspection revealed a number of flaws in IFI's sewer lateral. Water samples taken within WSSC's manhole contained PCE.

On November 16, 1992, IFI sought leave to file a third-party complaint against WSSC asserting both Maryland common law claims and federal statutory claims under CERCLA. WSSC was informed of IFI's motion by Westfarm's counsel on December 14, 1993 at IFI's deposition of one of WSSC's employees. The motion was granted on January 12, 1993, and WSSC became a party to the suit. Westfarm subsequently amended its complaint by adding WSSC as a direct defendant as well.

On April 9, 1993, a video camera inspection of WSSC's Tech Road Sewer was conducted, revealing numerous flaws along the length of the line, including open joints, improper alignment resulting in sags in the line and offset joints, cracks, broken pipes, improperly installed gaskets and improper manhole construction. Although IFI had stopped its practice of dumping PCE several months earlier, water and sediment samples taken within the Tech Road Sewer revealed elevated levels of PCE, including the highest level found in any sample at the site--110,000 parts per billion (ppb) PCE in the sediment at WSSC's manhole. ² One of Westfarm's experts, George Frigon, opined that the Tech Road Sewer was neither built in a workmanlike manner nor properly repaired.

WSSC's Tech Road Sewer was constructed in 1968. In 1969, IFI's predecessor applied to WSSC to connect its facility to the sewer, indicating to WSSC that it intended to operate a drycleaning plant at the site. In mid-1974, IFI informed WSSC that it intended to operate a laboratory at the site. IFI wrote to WSSC describing, among other things, the quantities and types of chemicals that would be going down the drain at IFI's laboratory, including many hazardous substances, but not including PCE. WSSC received and approved both plumbing permit applications.

WSSC initiated a survey of its sewer system in 1977. The survey was intended to identify those portions of the lines within the system that exhibited excessive infiltration, i.e., leakage of groundwater or surface waters into the sewer system (which results in added costs of transporting and treating the extraneous flows). During the survey, the Tech Road sewer segment closest to IFI was identified as exhibiting excessive flow, and the final report from the survey indicated that ten internal grouting repairs were needed, and supposedly were made, in the segment. However, neither Westfarm's nor IFI's sewer experts found any evidence in their 1993 video inspection that such repairs had been made.

In 1977, the EPA issued a report to Congress detailing waste disposal practices (including sewers) and their effects on groundwater. The EPA stated that "[t]he major cause of ground-water contamination from sanitary sewer systems (if above the water table ³) is through outflow leakage (exfiltration) from gravity sewers." Common factors causing such leakage include poor workmanship, cracked or defective pipe and poorly constructed manholes. In response, in 1978, Congress amended the Clean Water Act to regulate toxic pollutants (including PCE) discharged into sewer systems.

In 1979, WSSC hired environmental consultants to develop a pretreatment program to respond to the amendments to the Clean Water Act. In 1980, the consultants prepared a booklet containing guidelines for industrial users about the program. Toxic pollutants such as PCE were identified specifically as objects of the program. The booklet, along with a questionnaire demanding information about discharges to WSSC's sewer system, were designed to be sent to industrial users, such as IFI. WSSC's industry file on IFI, however, included no such questionnaire and no evidence that IFI had even received the booklet.

In 1981 and again in 1984, two industrial investigation reports on IFI were conducted by WSSC or its consultants. The reports noted that gallons of PCE were stored next to floor drains on the premises, that commercial size drycleaning machines were in use, and that IFI's labs were performing tests on solvents. Neither report listed PCE wastes as one of the types of waste being disposed down the sewer.

Prior to 1983, WSSC's regulations placed no clear limit on the concentrations of toxic organics like PCE that could be disposed into the sewer. In 1983, WSSC, for the first time, limited the total toxic organics ("TTOs") permitted to be discharged to the sewer system to 0.58...