Yellow Freight System, Inc. v. ACF Industries, Inc.

• Decision Date: 10 April 1995
• Docket Number: No. 4:92-CV-2585 CAS.,4:92-CV-2585 CAS.
• Citation: Yellow Freight System, Inc. v. ACF Industries, Inc., 909 F.Supp. 1290 (E.D. Mo. 1995)
• Parties: YELLOW FREIGHT SYSTEM, INC., Plaintiff, v. ACF INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

909 F. Supp. 1290

YELLOW FREIGHT SYSTEM, INC., Plaintiff, v. ACF INDUSTRIES, INC., Defendant.

No. 4:92-CV-2585 CAS.

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

April 10, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Russell W. Baker, Jr., James H. Andreasen, Samuel Price Logan, Carl H. Helmstetter, Spencer and Fane, Kansas City, MO, for plaintiff.

Eric R. Riess, Thompson and Mitchell, Belleville, IL, Kim Roger Luther, St. Louis, MO, Julie A. Emmerich, St. Louis, MO, for defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER

SHAW, District Judge.

This matter came on before the Court for trial in July 1994 on plaintiff Yellow Freight System, Inc.'s ("Yellow Freight") claims for response costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675.¹ Based upon the trial of this matter, the Court now sets forth the following findings of fact and conclusions of law on Yellow Freight's CERCLA claim.

FINDINGS OF FACT

1. Defendant ACF Industries, Inc. ("ACF") owned a 49.3-acre tract of real property located along the Mississippi River at 2800 DeKalb Street in St. Louis, Missouri (the "Site") from 1898 through June 1985. The Site is located in a heavily industrialized area.

2. Yellow Freight, which purchased the Site from ACF, asserts a claim under CERCLA for response costs it allegedly expended to investigate and remove polychlorinated biphenyls (PCBs) and asbestos located on Lot 3, an eighteen-acre portion of the Site adjacent to the Mississippi River.

3. ACF or its predecessors had owned and operated the Site as a plant to manufacture railroad cars from 1898 until 1982. From 1982 until the Site was sold, ACF used the Site primarily to manufacture component parts for railcars.

4. During its operations, ACF had used a portion of the Site to remove paint from stencils. ACF conducted a cleanup of that portion, which was listed on the Missouri Registry of Confirmed Abandoned or Uncontrolled Hazardous Waste Sites (the "Missouri Registry") in February 1984. This portion of the Site was identified as a Level 4 site, which meant that the area was properly closed, but continued management was required.

5. ACF desired to sell the Site because changing business conditions had rendered it unable to use the Site in a productive manner.

6. Since approximately 1970, Yellow Freight had maintained its main St. Louis terminal at 400 Barton Street, immediately northwest of the Site.

7. In 1983 and 1984, Yellow Freight looked into the possibility of purchasing other parcels of property in the same vicinity as its Barton Street terminal. One such parcel, commonly referred to as the "Superior Truck" facility, was located across the street from Yellow Freight's terminal. Anheuser-Busch Companies, Inc. ("A-B") purchased the Superior Truck facility.

8. Following the sale of the Superior Truck facility to A-B, Yellow Freight offered to purchase a ten-acre paved portion of the Site, on which there were no buildings. ACF rejected the offer.

9. In late 1984, A-B began negotiations with ACF to purchase the Site. In connection with the negotiations, A-B hired Environmental Science and Engineering, Inc. ("ESE"), an environmental consultant, to conduct an environmental assessment of the Site. The assessment consisted largely of a records review and visual observations made, but involved no sampling activities. ESE's report discussed the presence of thirty operational PCB-containing transformers on the Site, but did not mention asbestos. During this time, Yellow Freight discussed with A-B the possibility of Yellow Freight purchasing a portion of the Site from A-B if A-B purchased the entire Site.

10. In March 1985, while negotiations were continuing between ACF and A-B, Yellow Freight began negotiations with ACF for the purchase of the entire Site.

11. During negotiations between Yellow Freight and ACF concerning the Site, ACF offered to demolish the buildings on the Site for the additional consideration of Five Hundred Thousand Dollars ($500,000.00). Yellow Freight declined ACF's offer. ACF did not know that Yellow Freight necessarily intended to demolish the buildings on the Site if the sale was completed.

12. By an Agreement for Sale of Real Estate dated April 23, 1985 (the "Agreement"), Yellow Freight purchased the Site from ACF. The sale was closed on June 28, 1985, and the purchase price was Three Million Nine Hundred Fifty Thousand Dollars ($3,950,000).

13. Yellow Freight did not inspect the Site prior to signing the Agreement.

14. Yellow Freight received a copy of the ESE environmental report at the time the Agreement was signed or shortly thereafter.

15. The Agreement provided that "all machinery and equipment used for manufacturing on the premises" was excluded from the sale, but "all machinery and equipment used to operate the buildings, (i.e., HVAC, sprinkler systems, plumbing, underground tanks, electrical, etc.)" was included in the sale. See Schedule A to the Agreement.

16. The transformers on the Site were part of the electrical system and were not machinery or equipment used for manufacturing.

17. The Agreement provided in part as follows:

Seller ACF represents that it has no knowledge of any abandoned or uncontrolled hazardous waste site, as defined in Section 260.435 of the Missouri Hazardous Waste Management Law, on the property, except as stated in Schedule B attached hereto. Seller represents that it has no knowledge of any violation on or with respect to said property, of any Federal, State or Local environmental laws. Seller and Buyer Yellow Freight each agree to promptly take such action as may be necessary and appropriate to obtain Missouri Department of Natural Resources approval of the within sale pursuant to Section 260.465 of the Missouri Hazardous Waste Management Law.

18. An internal Yellow Freight memorandum dated June 28, 1985 and approved by Yellow Freight's Board of Directors stated that Yellow Freight was purchasing the Site "on an `as-is' basis".

19. Yellow Freight officials conducted a walk-through inspection of the Site after the Agreement was signed, but before the closing. The inspection lasted between one and two hours. Yellow Freight's personnel saw the asbestos and transformers during this inspection.

20. The buildings on Lot 3 contained electrical transformers, capacitors and switch boxes used to operate ACF's manufacturing equipment. Some of the transformers were eight feet tall. Many of the transformers, capacitors and switch boxes contained oils used to transfer heat. The transformers were operational at the time the Agreement was signed.

21. The buildings on Lot 3 also contained insulation and roofing materials, which ACF suspected included asbestos.

22. On June 25, 1985, three days prior to the closing, ACF held an auction of manufacturing equipment and machinery from the plant. Some of the auctioned equipment was never picked up by the purchasers, and as a result, equipment remained on the Site after the sale.

23. In September 1985, Yellow Freight proposed to A-B an exchange of part or all of the Site in return for the Superior Truck facility. A-B rejected the offer.

24. Beginning in 1986, Yellow Freight subdivided the Site into three parcels. Lot 1 consists of the portion of property listed on the Missouri Registry. Lot 2 consists of approximately thirty acres west of the Missouri Pacific Railroad tracks. Lot 3 consists of approximately eighteen acres east of the railroad tracks and along the Mississippi River.

25. Between June 1985 and 1988, Yellow Freight used a small portion of the Site for parking, but did not utilize the rest of the Site for any purpose. The remainder of the Site was virtually abandoned for this period of time.

26. In 1988, Yellow Freight began to demolish buildings on Lot 2. During the demolition, Yellow Freight removed asbestos-containing materials and transformers containing PCBs from the buildings. Yellow Freight did not demand at any time that ACF reimburse it for costs incurred in the removal of the asbestos-containing materials and transformers from Lot 2.

27. Between 1985 and 1990, Yellow Freight had performed no maintenance on the buildings on the Site. During this period, the buildings were vandalized, holes developed in roofs and windows, and doors were not secured, allowing rain and wind to enter. Vandals also removed materials from the buildings, including copper from transformers.

28. Between 1985 and 1990, Yellow Freight attempted to sell Lots 2 and 3 in an "as is" condition, and advertised Lot 3 as an "excellent industrial site" with buildings on it.

29. In January 1990, Yellow Freight began steps to demolish the buildings on Lot 3. This was the first activity Yellow Freight had undertaken with regard to Lot 3 since its purchase of the Site in 1985.

30. Yellow Freight hired IT Corporation ("IT") to assist in conducting a two-day environmental investigation and sampling at the Site. During the investigation, IT personnel observed at least one transformer that had been tipped over onto the floor of a building, and several transformers from which the tops had been removed.

31. During the on-site investigation, IT personnel obtained samples of fluids suspected to contain PCBs, which were taken from transformers, capacitors, switch boxes, sumps and "pit" areas. The pit areas contained a substantial amount of debris. Yellow Freight also took samples of certain soils underneath outdoor transformers, and "soils" from the floor areas within buildings, which were actually layers of dirt that had accumulated over the concrete floors. The samples were sent to an IT lab in Knoxville, Tennessee and analyzed there.

32. The same IT sampling team also conducted sampling of insulation, floor tiles, bricks, roofing materials and materials covering outdoor pipes, suspected to contain asbestos. The samples were sent to an IT lab in...