Wilson Rd. Dev. Corp. v. Fronabarger Concreters, Inc.

• Decision Date: 16 September 2016
• Docket Number: Case No. 1:11–CV–84–CEJ
• Citation: 209 F.Supp.3d 1093
• Parties: WILSON ROAD DEVELOPMENT CORPORATION, et al., Plaintiffs, v. FRONABARGER CONCRETERS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

209 F.Supp.3d 1093

WILSON ROAD DEVELOPMENT CORPORATION, et al., Plaintiffs,

v.FRONABARGER CONCRETERS, INC., et al., Defendants.

Case No. 1:11–CV–84–CEJ

United States District Court, E.D. Missouri, Southeastern Division.

Signed September 16, 2016

Leah J. Knowlton, Taylor English Duma LLP, Keisha O. Coleman, Ballard Spahr, LLP, Alanta, GA, Jason A. Flower, Joseph G. Nassif, Husch Blackwell, LLP, St. Louis, MO, Tom K. O'Loughlin, II, O'Loughlin and O'Loughlin, Cape Girardeau, MO, for Plaintiffs.

John F. Cowling, Scott K.G. Kozak, Stephen N. Limbaugh, Sr., Armstrong Teasdale, LLP, St. Louis, MO, for Defendants.

MEMORANDUM

CAROL E. JACKSON, UNITED STATES DISTRICT JUDGE

Plaintiffs Wilson Road Development Corporation (WRDC), Brenda Dumey, Daniel Dumey, and the Brenda Kay Dumey and Daniel E. Dumey Revocable Living Trusts initiated this action on May 11, 2011, seeking monetary and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as amended, 42 U.S.C. §§ 9601 et seq. The defendants, Union Electric Company d/b/a Ameren Missouri and Citizens Electric Corporation (collectively, "the utility defendants"), have filed counterclaims. The lawsuit stems from the discovery of polychlorinated biphenyls (PCBs) on the Dumeys' 43.5 acre tract of land (hereinafter, "the Dumey property") located downhill from and downgradient to property owned by Missouri Electric Works, Inc., in Cape Girardeau, Missouri (hereinafter, "the MEW site").¹

Plaintiffs assert the following CERCLA claims against the utility defendants: First, the utility defendants are strictly, jointly, and severally liable as "arrangers" for the PCB contamination on the Dumey property, pursuant to 42 U.S.C. § 9607(a)(3). Second, because they are such arrangers, the utility defendants are jointly and severally liable to plaintiffs for $100,796.04 in necessary response costs plaintiffs have thus far incurred, consistent with the National Contingency Plan (NCP), to address the contamination, pursuant to § 9607(a)(3)(B). Third, because the utility defendants are liable for plaintiffs' incurred response costs, plaintiffs are automatically entitled to a declaration that the utility defendants are strictly, jointly, and severally liable for all future necessary response costs plaintiffs incur consistent with the NCP, pursuant to 42 U.S.C. § 9613(g)(2).

The utility defendants bring identical, interrelated counterclaims against plaintiffs: First, that plaintiffs are also liable as arrangers under § 9607(a)(3), which entitles the utility defendants to recover jointly and severally from plaintiffs in contribution, pursuant to § 9613(f)(1). Second, because plaintiffs are liable as arrangers under § 9607(a)(3), the utility defendants alternatively are entitled to contribution from plaintiffs under Missouri law. See Mo. Rev. Stat. § 537.060.

On August 17 and 18, 2015, the case was tried to the Court, sitting without a jury. Having reviewed the testimony and documentary evidence, the relevant pleadings, and the parties' arguments, the Court now makes findings of fact and conclusions of law as required by Rule 52(a)(1) of the Federal Rules of Civil Procedure.

I. FINDINGS OF FACT

On March 17, 1989, Brenda Dumey acquired the Dumey property from Six–Thirty Corporation in satisfaction of a debt. On March 24, 2009, she placed the property into the Brenda Kay Dumey Revocable Living Trust and the Daniel E. Dumey Revocable Living Trust, and she and her husband, Daniel Dumey, took title as trustees. In February 2011, the Dumeys formed WRDC. [Doc. #348 at ¶ 16] Mrs. Dumey is the secretary, treasurer, and sole board member of WRDC, while Mr. Dumey serves as its president.

From 1952 to 1982, near what would become the Dumey property, MEW operated a business "performing repairs and scrapping of transformers, capacitors[,] and other electrical equipment containing" PCBs "in oils." [Doc. #269–2 at 6] MEW "repaired or scrapped more than 16,000 transformers at the MEW [s]ite." United States v. Union Elec. Co. , 132 F.3d 422, 429 (8th Cir.1997) ; see [Doc. #269–2 at 6] (same). Many operations MEW performed involved draining and changing the oil inside of those transformers, some of which contained PCBs. The manufacture and use of PCBs was banned in the late 1970s under the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq. , and PCBs are identified as a hazardous substance under CERCLA. 42 U.S.C. § 9601(14) ; 40 C.F.R. § 302.4.

On March 27, 2008, the Morrill defendants acquired the MEW site through a foreclosure sale. On November 12, 2009, Fronabarger became the owner of the MEW site and later constructed a self-storage facility there.

A. Investigation and Action by the Environmental Protection Agency

According to the Environmental Protection Agency (EPA), "[t]he salvaged transformer oil was filtered through Fuller's earth," which is also called "diatomaceous earth," "for reuse," and an "estimated 90% of the transformer oil was recycled." [Doc. #269–2 at 6] Though the process of filtering used transformer oil through Fuller's earth allowed much of the oil to be recycled, the filtering process itself generated waste. A portion of the oil was absorbed into the diatomaceous earth during the filtering process. Each batch of Fuller's earth thus became contaminated with oil (and therefore with PCBs); it was eventually so impregnated with oil that it was no longer suitable as a filtering mechanism. MEW disposed of PCB-contaminated diatomaceous earth on the MEW site.

Transformer oil cannot be filtered and recycled ad infinitum . Recycled transformer oil can be used to lubricate and insulate a transformer, as with new oil. However, though filtering used transformer oil rids it of impurities, the filtering process does not alter the inevitable chemical progression whereby the combination of wear and time renders all such oil unrecyclable. That is so because all transformer oil eventually loses its dielectric properties—among the vital qualities of such oil—leaving it unfit for use in transformers. MEW's operation is estimated to have generated "28,000 gallons of oil" "that was not recycled," "the majority" of which MEW disposed of onsite. Id. ; see Union Elec. , 934 F.Supp. 326–27.

The EPA began investigating MEW in the mid–1980s. On October 25, 1984, the EPA discovered over 100 55–gallon drums of transformer oil at the MEW site, all of which contained PCBs. Some of those drums were leaking oil. In 1986, an EPA investigation found soil on the MEW site was contaminated with PCBs. The EPA's "action level" or "remediation standard" for PCB contamination in soils such as those on the MEW site is 10 parts per million (ppm). The surface soil on the MEW site was contaminated with PCBs in concentrations of up to 58,000 ppm.

The investigation also raised concerns regarding the possible spread of PCB contamination beyond the MEW site. By 1987, the EPA's Field Investigation Team discovered PCB contamination in the ravine that drains onto the Dumey property. In 1988, the EPA forbid MEW from accepting any electrical equipment containing PCBs at concentration levels higher than 1 ppm. In 1989, the EPA discovered groundwater contamination, and it found surface soil contamination on over 70% of the MEW site, including over four acres of highly contaminated surface soil. B & D Elec. , 2007 WL 1395468, at *1. All transfers of transformers to MEW ceased the same year. The MEW site was designated a "Superfund" site and placed on the National Priorities List (NPL)² on February 21, 1990, shortly after Mrs. Dumey acquired the Dumey property.³

The EPA delineated the Superfund site into three operable units (OUs), which, in short, include the soils on MEW site (OU–1), groundwater (OU–2), and a wetlands south of and downgradient to the MEW site (OU–3) that encompasses, in part, portions of the Dumey property. Though over the years they have often been referred to interchangeably, the Dumey property and OU–3 are not precisely coextensive. Eastern sections of the Dumey property are not wetland areas covered by OU–3, and the OU–3 wetlands also extend in several directions beyond the borders of the Dumey property. In any event, the contaminated areas of the Dumey property at issue here are part of OU–3.

From 1988 to 1991, the EPA sent notices to potentially responsible parties (PRPs), inviting them to participate in settlement negotiations regarding the Superfund site. The negotiations resulted in the entry of a consent decree between the United States, the State of Missouri, and a group of forty-two PRPs. The PRPs who signed the consent decree were and are legally obligated to perform the work under the consent decree regardless of the cost.

Though by signing the consent decree the PRPs did not admit liability under CERCLA, the PRPs acknowledged that they had sent particular transformers to MEW during its operation. Those transformers and the responsibility units derived therefrom in turn determined each PRP's share of response costs for the removal and remediation efforts at the Superfund site. See Union Elec. , 132 F.3d at 429. Among the settling PRPs were the utility defendants.

The settling PRPs were later known as the Missouri Electric Works Steering Committee (MEWSC) or the MEW Trust. The consent decree required the MEWSC to perform soil remediation and a groundwater study, and to reimburse the EPA for oversight costs. Union Elec. , 934 F.Supp. at 332. The MEW Trust conducted remediation, including thermal treatment of contaminated soil on the MEW site at OU–1, and sued MEW and other PRPs for contribution. Soil remediation was completed in 2000, and approved of by the EPA in its First and Second Five–Year Review Reports, in 2004 and 2009 respectively.

The EPA issued a certificate of completion for the soil remediation at OU–1. In March of 2014, "surface soil sampling" conducted by the EPA "detected PCBs above the 10 ppm cleanup standard" "near the former MEW building," which "represents a...