Western Properties Service Corp. v. Shell Oil Co.
Opinion of the Court
This is a CERCLA contribution case.
FACTS
The property at issue, near Corona, in Riverside County, California, was once a ranch owned by the Wardlows. Gravel had been excavated from the property in 1938 for a nearby dam, leaving four gravel pits. For $2,000, the Wardlows sold the right to dump “acid tar” — petroleum waste consisting in substantial part of sulfuric acid — into those pits. Oil refineries, for over a decade by then, had been going farther and farther afield from their Long Beach locations for disposal sites because the stink of acid tar was notoriously offensive to neighbors. This sludge could be smelled from almost a mile away. Burning did not solve the problem, and the fumes were so bad that they killed flowers and fruit trees. Runoff from the waste made farmland useless and killed fish in nearby streams.
Among the central difficulties in this case is that it is hard to say what the facts are, as the parties could find no living person who knows what happened, and documentary evidence supports nothing more than inferences. The actions giving rise to the claim were performed (if indeed they were) in 1941 and 1942.
Elma Wardlow, who survived into this litigation, might have been a good source of information. But when plaintiff Western Properties’ attorneys attempted to talk to her in the mid '90s, “she was in an Arizona rest home, infirm, and completely unable to respond to questions (Mrs. Wardlow’s daughter was present during the efforts to talk with her).”
By the end of January 1942, the first of the four pits was full, and the neighbors were protesting the stink and the threat to
The Wardlows sold the property in 1946 to some people named Thomas, and it came to be known as Thomas Ranch. The sludge was still conspicuously present. The gravel pits had become acid filled tar pits that ate cows. One local paper reported that “[a]s the years passed a crust of varying thickness formed over the top.... Animals that ventured too far out upon this crust disappeared forever into the gooey pits and cattle were lost in that manner on a number of occasions.”
After mesne conveyances, Western Properties, the development arm of a failed savings and loan, acquired Thomas Ranch and became involved in remediation discussions with state and local authorities. In 1986, the California Department of Health Services declared the migration of hazardous substances from the pits an actual or threatened release, constituting a nuisance, and ordered Western Properties to conduct an environmental response. Western Properties eventually did so, at a cost of about $5 million.
In July 1994, Western Properties filed the complaint in this case seeking “recovery of response costs and contribution, under § 107 and § 113 respectively,” as well as declaratory relief under § 113(g)(2), of CERCLA.
In 1998, both sides moved for summary judgment. The court denied both motions and ruled that the defendants’ equitable defenses could not be asserted “under § 107 because the allowance of equitable defenses is contrary to Congress’ intent to impose strict liability.”
ANALYSIS
I. Jurisdiction.
The oil companies argue that the district court lacked jurisdiction to award damages for remediation against them, because there was no prior civil action against Western Properties pursuant to CERCLA §§ 106 or 107(a).
The Fifth Circuit original panel’s textual interpretation is plausible, but so is the interpretation of the en banc court. No doubt the Supreme Court decision in Aviall will address the varying views on
We begin our analysis of the jurisdictional question with the statutory text. Section 113(f)(1) provides, in relevant part:
Any person may seek contribution from any other person who is liable or potentially liable under section 107(a), during or following any civil action under section 106 or under section 107(a).... 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 106 or section 107.21
At first glance, these two sentences seem to conflict. They can be understood as consistent, however, both being permissive. The better reading of the second quoted sentence is that a § 106 or a § 107(a) action is not a necessary condition for bringing a § 113(f)(1) action, despite the arguably contrary implication of the phrase “during or following any civil action under section 106 or under section 107” in the first sentence. Thus read, the second sentence prevents us from reading into the first sentence a restrictive “only” before “during or following,” and expressly de-dares that contribution can be sought before a § 106 or a § 107(a) judgment.
The Seventh Circuit has made comments in passing that appear to support the argument that a pending action against the party seeking contribution is required. In Rumpke of Indiana, Inc. v. Cummins Engine Co.,
In the 1997 case of Pinal Creek Group v. Newmont Mining Corp.,
II. Findings of Fact.
The oil companies argue that the evidence is insufficient to establish that any of them arranged for waste disposal in the Wardlows’ gravel pits, or that Eli McColl or the Refiners’ Committee on Waste Disposal did so for them as their agent. The district court’s findings of fact can be reversed only if clearly erroneous, and not merely because we might have found otherwise on the same evidence.
As the district court recognized, no one piece of evidence conclusively establishes liability on the part of the oil companies. We have made an extensive study of the record to determine whether the district court’s findings of fact are clearly erroneous. Many of the facts and inferences are stated quite tentatively in the findings. Each defendant operated refineries during World War II in the area of Wilmington, California, and each used sulfuric acid in the refining process of produc
As for what the Refiners’ Committee did, that is harder to say. Did it arrange for waste disposal, or just deal with political and public-relations problems arising out of waste disposal? The district court inferred that it arranged for disposal partly because of a remark made by Director Smith at a meeting of the Directors of the Orange County Water District held on December 10, 1941. The minutes reflect that “[t]he committee is trying to find a suitable location elsewhere” for the “Acid Sludge” that had been dumped “on the Wardlow property gravel pit at the East end of the Santa Ana Canyon in Riverside County.” We have carefully examined these minutes. Contrary to the finding of the district court, the reference in the minutes to “the committee” is not a reference to the Refiners’ Committee on Waste Disposal.
The minutes record that “Director Smith reported for the water conservation committee” regarding a diversion from the San Jacinto River for irrigation and domestic use. The paragraph continues,
He further reported that the dump for Acid Sludge (a petroleum product) is established on the Wardlow property gravel pit.... Engineer Bailey has made several tests as to underground percolation through the gravel beds [and has] found rapid percolation of injurious acids which may eventually find its way into our water supply. The committee is trying to find a suitable location elsewhere and is cooperating with the Truck Co. who have [sic] the contract of hauling the Sludge and the Oil Companies who are having the Sludge hauled.
It is plain from the context of the minutes that Director Smith was speaking for the “water conservation committee,” and that the reference to “[t]he committee” was to that water conservation committee, not to the Refiners’ Committee. Notably, when he spoke of those responsible for where the sludge went, he referred not to any committee, but to the “Truck Co.” hauling it and “the Oil Companies [not the Refiners’ Committee] who are having the Sludge hauled.” The finding of fact that this reference was to the Refiners’ Committee is clearly erroneous.
Despite our conclusion that the district court’s finding of fact regarding Director Smith’s report is clearly erroneous, we conclude that, on the whole, the district court’s findings of fact that the oil companies arranged for waste disposal through the Refiners’ Committee is not clearly erroneous. The evidence establishes that Eli McColl, purporting to act on behalf of the Refiners’ Committee for which he was a paid employee, spoke on its behalf to officials, applied for a permit to dispose of acid sludge in another location at about the same time, and gave Riverside County assurances that disposal would cease at the Wardlows’ property. In his testimony seeking a permit to dispose of waste at another location, McColl said that he represented seven oil companies in the Wilmington area. During that same testimony he explained various disposal alternatives, including a reference to the disposal at the Wardlows’ land. He conferred with the Riverside County Attorney, on behalf of the Refiners’ Commit
The oil companies cite a Third Circuit case, AL Tech Specialty Steel Corp. v. Allegheny International Credit Corp.,
It may well be that Allegheny Ludlum used PCB-containing materials during the relevant period, and it may be that the only reasonable explanation for the presence of PCBs in the pond sediments, based on the evidence adduced, is that Allegheny Ludlum dumped them there. But that is different from proving, by a preponderance of the evidence, that Allegheny International is responsible for at least some of the contamination. This AL Tech failed to do.38
It may well be that one or more of the defendants did not arrange for any of its acid sludge to be deposited at the Wardlow site. They so argue based on a cross-examination admission by Western Properties’ expert witness. But “beyond possibility” is not the standard of proof; all that is required is a preponderance of the evidence. The issue is close and intensely factual, and it is entirely possible that, had the district court gone the other way, we would also affirm under the liberal clearly-erroneous standard of review. What is important about AL Tech is not that the defendants prevailed despite the absence of a good explanation of how the waste got there, but rather that the appellate court, under the clearly-erroneous standard of review, affirmed facts found after trial.
We affirm the finding that each of the defendant oil companies arranged for the disposal of sludge on the Wardlow land in the four gravel pits. A reasonable jurist might have gone either way as to the preponderance of evidence, particularly for one or two of the defendants. But cases are tried in the trial court, and we cannot say that the trial court’s factual determinations were clearly erroneous. A reasonable factfinder could conclude on the evidence presented that each of the four defendants “arranged for disposal” of its acid sludge in the Wardlows’ gravel pits through the use of the Refiners’ Committee and its employee Eli McColl.
III. Full Recovery.
The oil companies argue that the district court erred in granting recovery against them jointly and severally for 100% of the cleanup expense, because
On this issue, the oil companies have the better argument. CERCLA provides that persons who are liable or potentially liable under § 107(a) may seek contribution from each other using the mechanics set forth in § 113(f). Western Properties, as the owner of Thomas Ranch, is “potentially liable under § 107(a)” and is therefore a PRP from whom the oil companies may seek contribution.
This case requires us to resolve an additional question that Pinal Creek did not decide. While noting that its holding “that a CERCLA claim by a PRP against another PRP is necessarily for contribution” was consistent with the decisions of the Supreme Court and our sister circuits, Pi-nal Creek acknowledged the Seventh Circuit’s Akzo exception, which “excepts PRPs who have not polluted the site in any way.”
We are unable to accept the proposition that a non-polluting PRP landowner may sue under § 107(a) for full recovery, jointly and severally, without regard to the limitations of § 113.
There is some attraction, in certain circumstances, to a broad innocent-landowner rule for non-polluting landowners who are not statutorily innocent under § 101(35). The attractiveness is equitable, not textual, and the contribution statute already allows for equity to be taken into account.
Section 113 is not a contribution scheme in which each joint tortfeasor bears a pro rata share of the loss regardless of its degree of fault.
The case before us is closer to the Slaga-cre hypothetical than to the innocent-homeowner hypothetical, illustrating why the Seventh Circuit’s Akzo exception for non-polluting landowners is inconsistent with the § 113(f)(1) “equitable factors” that our circuit requires in suits between PRPs. The Wardlows sold the right to deposit .the hazardous substances on their land for $2,000 in 1941, which was then a significant sum.
We reject a non-polluting PRP landowner exception beyond the one provided by § 101(35). Western Properties, as a PRP, is limited to bringing a contribution action governed by § 113. Because the district court’s judgment did not use equitable factors as required by § 113(f)(1) in determining the respective liability of each PRP, including Western Properties, and because it imposed joint as well as several liability for the amount due, we vacate that portion of its decision and remand for further proceedings consistent with this opinion and with § 113. Each oil company is liable for its equitable share of the expense.
IV. Delay and Laches.
There was a lot of delay. The acid sludge was dumped more than half a century before this suit was filed. Informative primary sources — people as well as business records — were scarce on all sides. Most of that delay results from CERCLA, not from the parties. There will always be a problem with fairness and truth when the law makes people liable for something that was done so long ago.
On a theory of laches,
V. Amount.
The oil companies argue that Western Properties spent an unreasonable amount on the cleanup and should be limited to some lower amount as the reasonable costs of remediation. The district court found that Western Properties incurred $5,002,903 in “necessary costs of response” and that, under § 107(a), it was also entitled to recover 100% of future necessary response costs as well as pre-judgment interest.
We note that § 113(f)(1) allows the district court to allocate equitably “response costs” as it sees fit. Unlike the restrictions applicable to full-indemnity actions under § 107(a), the response costs of § 113(f)(1) are not limited to “necessary” costs “consistent with the national contingency plan.”
CONCLUSION
We reject the challenges to jurisdiction and to the district court’s findings of fact
.The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or “CERCLA,” is codified generally at 42 U.S.C.§§ 9601-9675.
. Declaration of John E. Van Vlear in Opposition to Defendant Oil Companies' Motion for Summary Judgment ¶ 17 (Oct. 29, 1997).
. Letter from Elma Wardlow to Roy H. Mann (Sept. 12, 1983).
. Acid Sludge Dump in County Opposed, Riverside Daily Press, Jan. 26, 1942, at 4.
. Memorandum from Earl Redwine, Riverside County Counsel, to the Riverside County Board of Supervisors (Feb. 14, 1942).
. Tar Pit Hazard Goes Up in Smoke, Riverside Enterprise, Apr. 5, 1955.
. Id.
. Heavy Smoke This Morning Due to Oil Sump Burning, Corona Independent, Apr. 4, 1955.
. 42 U.S.C. §§ 9607(a), 9613(f)(1), (g)(2).
. W. Props. Servs. Corp. v. Shell Oil Co., No. CV 4695 RAP (C.D.Cal. Jan. 29, 1998).
. 42 U.S.C. §§ 9606, 9607(a).
. Aviall Servs., Inc. v. Cooper Indus., Inc., 263 F.3d 134 (5th Cir. 2001).
. Id. at 137.
. Aviall Servs., Inc. v. Cooper Indus., Inc., 312 F.3d 677 (5th Cir. 2002) (en banc), cert. granted, - U.S. -, 124 S.Ct. 981, 157 L.Ed.2d 811 (Jan. 9, 2004).
. Id. at 681.
. 42 U.S.C. § 9613(f)(1).
. Aviall, 312 F.3d at 688 n. 21 (citing, inter alia, Crofton Ventures Ltd. P’ship v. G&H P’ship, 258 F.3d 292 (4th Cir. 2001); Kalamazoo River Study Group v. Rockwell Int’l Corp., 274 F.3d 1043 (6th Cir. 2001); Bedford Affiliates v. Sills, 156 F.3d 416 (2d Cir. 1998); PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610 (7th Cir. 1998); Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930 (8th Cir. 1995); Amoco Oil Co. v. Borden, Inc., 889 F.2d 664 (5th Cir. 1989)).
. E.g., Cadillac Fairview/Cal., Inc. v. Dow Chem. Co., 299 F.3d 1019, 1024 (9th Cir. 2002); Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 872 (9th Cir. 2001) (en banc); Jones-Hamilton Co. v. Beazer Materials & Servs., Inc., 973 F.2d 688, 691 (9th Cir. 1992).
. Aviall Servs., Inc. v. Cooper Indus., Inc., 312 F.3d 677 (5th Cir. 2002) (en banc), cert. granted, — U.S. -, 124 S.Ct. 981, 157 L.Ed.2d 811 (Jan. 9, 2004).
. See, e.g., In re Reading Co., 115 F.3d 1111, 1119 (3d Cir. 1997); E.I. Dupont De Nemours & Co. v. United States, 297 F.Supp.2d 740 (D.N.J. 2003).
. 42 U.S.C. § 9613(f)(1).
. See Aviall, 312 F.3d at 681, 686-87.
. See 42 U.S.C. §§ 9613(f)(2)-(3), 9622.
. See, e.g., Restatement (Third) of Torts § 23(a).
. See Uniform Apportionment of Tort Responsibility Act § 7(d); Restatement (Third) of Torts § 23 cmt. b (''[A] person seeking contribution may assert a claim for contribution and obtain a contingent judgment in an action in which the person seeking contribution is sued by the plaintiff, even though the liability of the person against whom contribution is sought has not yet been extinguished.”).
. Rumpke of Ind., Inc. v. Cummins Engine Co., 107 F.3d 1235 (7th Cir. 1997).
. Id. at 1241.
. 42 U.S.C. § 9601(35).
. Id..; AM Int’l, Inc. v. Datacard Corp., 106 F.3d 1342, 1347 (7th Cir. 1997); Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764 (7th Cir. 1994); see Union Station Assocs. v. Puget Sound Energy, Inc., 238 F.Supp.2d 1218, 1222 (W.D.Wash. 2002) ("Only the Seventh Circuit appears to have officially adopted such an exception.... It is undisputed that this is an unresolved legal issue in the Ninth Circuit.”).
. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1306 (9th Cir. 1997) (holding that "a PRP cannot assert a claim against other PRPs for joint and several liability”).
. Id. at 1301.
. Id. at 1302.
. Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, § 113, 100 Stat. 1613, 1647-52 (1986).
. Pinal Creek, 118 F.3d at 1301-02, 1306.
. 42 U.S.C. § 9613(f)(1).
. Freeman v. Allstate Life Ins. Co., 253 F.3d 533, 536 (9th Cir. 2001).
. AL Tech Specialty Steel Corp. v. Allegheny Int’l Credit Corp., 104 F.3d 601 (3d Cir. 1997).
. Id. at 609.
. Id.
. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir. 1997).
. See, e.g., Rumpke of Ind.., Inc. v. Cummins Engine Co., 107 F.3d 1235 (7th Cir. 1997); AM Int'l, Inc. v. Datacard Corp., 106 F.3d 1342 (7th Cir. 1997).
. 42 U.S.C. § 9613(f)(1); see New York v. Shore Realty Corp., 759 F.2d 1032, 1043-45 (2d Cir. 1985) (current owner liable under plain meaning of § 107(a)(1) without a showing that it owned the property at the time of the release or that it contributed to the polluted conditions at the site); 42 U.S.C. § 9601(20)(A), (35)(A)-(B).
. In its brief, Western Properties states: "When it purchased the property in 1985, WPSC [Western Properties] was aware that the acid pits existed on a portion of the property.” Appellee's Br. at 6.
. 42 U.S.C. § 9607(b) provides:
Defenses. There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by—
(1) an act of God;
(2) an act of war;
(3)an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship existing directly or indirectly, with the defendant....
. Id. § 9601 (35)(A) (defining "contractual relationship” to include non-government owners who bought the property after disposal of a hazardous substance, unless they can establish "by a preponderance of the evidence:
(i) At the time [they] acquired the facili-tyfthey] did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility”).
. Id. § 9601(35)(B)(i). In determining whether "all appropriate inquiries” have been carried out with respect to property bought before May 31, 1997,
a court shall take into account—
(aa) any specialized knowledge or experience on the part of the defendant;
(bb) the relationship of the purchase price to the value of the property, if the property was not contaminated;
(cc) commonly known or reasonably ascertainable information about the property;
*689 (dd) the obviousness of the presence or likely presence of contamination at the property; and
(ee) the ability of the defendant to detect the contamination by appropriate inspection.
Id. § 9601(35)(B)(iv).
. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir. 1997).
. Id. at 1301.
. Id. at 1303 & n. 5 (citing Rumpke, 107 F.3d at 1241).
. Rumpke of Ind., Inc. v. Cummins Engine Co., 107 F.3d 1235 (7th Cir. 1997). The Rumpke court did not analyze whether the purchaser should be imputed to have had constructive knowledge under § 101(35)(A)-(B).
. Rumpke, 107 F.3d at 1241-42.
. We note that Pinal Creek restricted its definition of a PRP, expressly excluding "those personfs] otherwise liable’ under § 107(a) who can establish they are not liable by virtue of the defenses set forth in § 107(b).” Pinal Creek, 118 F.3d at 1300 n. 1 (quoting 42 U.S.C. § 9607(b)). Under the Pinal Creek definition, which we adopt in this case, a statuto
. 42 U.S.C. § 9601(35).
. Cf. Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 883 (9th Cir. 2001) (en banc) ("[N]either a logician nor a grammarian will find comfort in the world of CERC-LA.”).
. 42 U.S.C. § 9613(f)(1).
. See In re Reading Co., 115 F.3d 1111, 1117 (3d Cir. 1997) (concluding that § 113(f) preempts state common law contribution claims).
. Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1187 (9th Cir. 2000).
. See Pinal Creek, 118 F.3d at 1301 n. 3 (noting that it did "not foreclose the possibility that a court could find, after balancing the equities as required by § 113, that a particular PRP's equitable share of the total liability should be zero”).
. Boeing, 207 F.3d at 1189 (noting the prohibition in 42 U.S.C. § 9614(b) against double recovery).
. Corrected to the current value of the dollar, $2,000 in 1941 is equivalent to roughly $25,000 in 2003. See http://eh.net/hmit/ ppowerusd/;' http://www.minneapolisfed.org/ Research/data/us/calc/.
. Cf. Cadillac Fairview/Cal., Inc. v. Dow Chem. Co., 299 F.3d 1019, 1029-30 (9th Cir. 2002) (rejecting tire government’s argument that theoretically, under CERCLA, tire government could hold liable American soldiers who liberated two islands in Alaska from Japanese possession during World War II for having deposited lead bullets into the ground).
. See Danjaq LLC v. Sony Corp., 263 F.3d 942, 950-59 (9th Cir. 2001) (delineating the requirements of a laches defense: delay that is unreasonable and prejudicial).
. 42 U.S.C. § 9607(a) (providing that § 107(a) liability is “subject only to the defenses set forth in subsection (b),” which are acts of God, acts of war, and acts or omissions of third parties other than by employees, agents, or parties to a contractual relationship).
. E.g., id. § 9607(i) (registered pesticides); id. § 9613(f)(2) (settlement with government); id. § 9613(g) (statute of limitations).
. Blasland, Bouck & Lee, Inc. v. City of N. Miami, 283 F.3d 1286, 1303-04 (11th Cir. 2002) (equitable pay-when-paid clause); Town of Munster v. Sherwin-Williams Co., 27 F.3d 1268, 1271-73 (7th Cir. 1994) (laches); Velsicol Chem. Corp. v. Enenco, Inc., 9 F.3d 524, 530 (6th Cir. 1993) (laches); Gen. Elec. Co. v. Litton Indus. Automation Sys., Inc., 920 F.2d 1415, 1418 (8th Cir. 1990); abrogated on other grounds by Key Tronic Corp. v. United States, 511 U.S. 809, 814, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) (unclean hands); Smith Land & Improvement Corp. v. Celotex Cotp., 851 F.2d 86, 89-91 (3d Cir. 1988) (caveat emptor).
. 42 U.S.C. § 9613(f)(1).
. See Town of Munster v. Sherwin-Williams Co., 27 F.3d 1268, 1273 (7th Cir. 1994).
. 42 U.S.C. § 9607(a)(4)(B).
. Id.
. Id. § 9601(23), (25).
Reference
- Full Case Name
- WESTERN PROPERTIES SERVICE CORPORATION, an Arizona corporation v. SHELL OIL COMPANY, a Delaware corporation Union Oil Company, a California corporation Texaco, Inc., a Delaware corporation Atlantic Richfield Company, a Delaware corporation
- Cited By
- 7 cases
- Status
- Published