MARK A. GOLDSMITH, District Judge.
This matter is before the Court on Plaintiff Gould Electronics Inc.'s ("Gould") motion for partial summary judgment (Dkt. 90) and Defendant Livingston County Road Commission's ("LCRC") motion for summary judgment (Dkt. 86). Both motions have been fully briefed. Because oral argument will not assist in the decisional process, the motions will be decided based on the parties' briefing.
Gould initiated this environmental contamination case against LCRC on July 6, 2009.
On May 29, 2012, the parties stipulated to an order of dismissal without prejudice in the prior action, in accordance with a tolling agreement entered into by the parties on May 21, 2012 (the "Tolling Agreement").
Gould initiated the present case on April 11, 2017, and filed its most recent amended complaint on October 8, 2019, in which it asserted claims for (1) cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a), and (2) contribution under Michigan's Natural Resources and Environmental Protection Act ("NREPA"), Mich. Comp. Laws § 324.20129.
LCRC filed a counter-complaint on July 15, 2019, in which it brought counterclaims against Gould for (1) cost recovery under CERCLA, (2) contribution under NREPA, and (3) cost recovery under NREPA, Mich. Comp. Laws § 324.20126a. Counterclaim (Dkt. 59). However, LCRC agreed to voluntarily dismiss its cost recovery claims under both CERCLA and NREPA. Def. Resp. at 8 (Dkt. 101). With leave of the Court, 1/22/20 Order (Dkt. 117), LCRC filed an amended counter-complaint asserting counterclaims against Gould for (1) contribution under CERCLA and (2) contribution under NREPA, Am. Counter-Compl. (Dkt. 118).
Gould has now filed a motion for partial summary judgment with respect to LCRC's liability, arguing that the Court previously determined that Gould has established a prima facie case for cost recovery under CERCLA, a strict liability statute. Meanwhile, LCRC has filed a motion for summary judgment seeking dismissal of Gould's CERCLA cost recovery claim, arguing that it is exempted from liability under two statutory affirmative defenses.
A motion for summary judgment under Federal Rule of Civil Procedure 56 shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine dispute of material fact exists when there are "disputes over facts that might affect the outcome of the suit under the governing law."
Once the movant satisfies its initial burden of demonstrating the absence of any genuine issue of material fact, the burden shifts to the nonmoving party to set forth specific facts showing a triable issue of material fact.
Gould contends that it is entitled to partial summary judgment regarding LCRC's liability, as the Court previously held that Gould has established a prima facie case of cost recovery under CERCLA. Pl. Mot. at 8. Because CERCLA is a strict liability statute that imposes liability regardless of causation or fault,
Gould is mistaken in its argument, as the Court has not held that Gould established a prima facie case as a matter of law. Rather, the Court found that Gould had presented sufficient evidence supporting a prima facie case, such that summary judgment could not be awarded against it. In an opinion denying LCRC's motion for summary judgment in the prior action, the Court noted that to establish a prima facie case for cost recovery under CERCLA, a plaintiff must demonstrate the following elements:
With respect to the second element, the Court agreed with Gould that "it has met its prima facie burden of establishing that a release has occurred on LCRC's property."
With respect to the third element, the Court distinguished the present case from
Accordingly, Gould is not entitled to summary judgment on its CERCLA cost recovery claim.
LCRC asserts that it is entitled to summary judgment with respect to Gould's CERCLA cost recovery claim because it is shielded from liability under two statutory affirmative defenses: (1) the "innocent landowner" defense under 42 U.S.C. § 9607(b), and (2) the "contiguous landowner" defense under 42 U.S.C. § 9607(q). Def. Mot. at 10, 19.
As a preliminary matter, Gould contends that LCRC is barred from asserting the innocent landowner defense because it was not raised in the joint final pretrial order ("JFPO") in the prior action and because the Court has previously precluded LCRC from raising it. Pl. Resp. at 14-17 (Dkt. 100).
Gould is correct that LCRC failed to assert the innocent landowner defense in the JFPO in the prior action.
Further, the Court stated in a previous opinion that "the applicability of the innocent landowner defense is not currently at issue, as LCRC has not invoked the defense or discussed its applicability."
Under the innocent landowner defense, 42 U.S.C. § 9607(b)(3), an otherwise liable defendant is exempt from CERCLA liability if it can establish by a preponderance of the evidence "(1) that another party was the `sole cause' of the release of hazardous substances and the damages caused thereby; (2) that the other, responsible party did not cause the release in connection with a contractual, employment, or agency relationship with the defendant; and (3) that the defendant exercised due care [with respect to the hazardous substance concerned] and guarded against the foreseeable acts or omissions of the responsible party."
With respect to the causation element of the innocent landowner defense, LCRC contends that Gould is solely responsible for the release of TCE discovered on the Gould and LCRC Properties. Def. Mot. at 10. However, the evidence presented by both parties reveals there are questions of fact regarding whether LCRC contributed to the contamination.
In support of its position that Gould is solely responsible for the contamination, LCRC first relies upon letters issued by the Michigan Department of Environmental Quality ("MDEQ") terminating its investigation of the LCRC Property.
LCRC contends that the Court should accord considerable deference to the MDEQ's decision regarding LCRC's CERCLA obligations, in accordance with
LCRC also relies on the conclusions drawn by its expert, Constance Travers, in arguing that Gould is solely responsible for the TCE contamination. Def. Mot. at 12-15. According to Travers, who reviewed LCRC Property site records, employee depositions, and soil and groundwater testing data, Gould's waste dumping practices were the only source of TCE contamination in soils and groundwater. Travers Report at 5, Ex. J to Def. Mot. (Dkt. 89-3). According to the depositions of two former Gould employees, Ron Galarneau and Keith Richardson, it was common practice for Gould employees to dispose of waste fluids on the ground at the Gould Property.
By contrast, based on her review of LCRC's site records describing product purchases, Travers opined that LCRC did not use or purchase TCE prior to 1985. Travers Report at 13. Between 1985 and 1986, LCRC's use of TCE on the LCRC Property was limited to a maximum of seventeen asphalt tests.
Travers also stated that the testimony of LCRC employees who handled TCE during the asphalt testing "demonstrates that they were aware of the need to containerize and properly dispose of the TCE used in these tests."
Eric Little, an LCRC technical services supervisor, testified similarly regarding LCRC's TCE disposal practices, stating that he had no knowledge of anyone disposing of chemicals on-site. Little Dep. at 14, 19, Ex. 9 to Pl. Resp. (Dkt. 100-10). Little further confirmed that TCE was used for approximately two years until the Michigan Department of Transportation required that BioAct replace TCE.
According to Travers, results of the subsurface investigations of the Gould and LCRC Properties demonstrate that the soil and groundwater contamination was caused solely by Gould's disposal of TCE. Travers Report at 5. Based on the soil testing performed on the Gould and LCRC Properties, Travers noted that "[t]he only portion of the LCRC property where TCE has been observed in soils is the northwestern corner of the LCRC property . . . adjacent to the Gould disposal area."
In stark contrast to Travers's expert opinion, Gould's expert, Stanley Feenstra, opined that "it is probable that most of the TCE contamination found on the LCRC site originated from releases on the LCRC Site itself." Feenstra Report at 6, Ex. A to Def. Mot. (Dkt. 88). Based on Feenstra's review of LCRC expense records, he believes LCRC purchased large quantities of a chlorinated solvent during the 1950s and 1960s.
Feenstra stated that until approximately 1980, disposal of waste TCE on the ground was common practice.
Based on his analysis of the topography of the contaminated areas, the pattern of groundwater flow, and locations of high levels of TCE contamination of the LCRC Property, Feenstra opined that it was highly improbable that the TCE contamination discovered on the LCRC Property could have migrated from the Gould Property.
LCRC contends that Feenstra's opinions cannot raise a material issue of fact, as they are premised on mere speculation. Def. Mot. at 18 (citing
Gould alternatively contends that the innocent landowner defense is unavailable to LCRC because it was responsible for releasing TCE on the LCRC Property when it performed a grading and construction project. Pl. Resp at 20-22. According to Travers, LCRC redistributed TCE-contaminated soils across a broader area of the northwestern portion of its property during the construction of a salt storage building in 1979.
The term "release" is defined to mean: "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment." 42 U.S.C. § 9601(22). Courts uniformly interpret the word "release" broadly to avoid frustrating CERCLA's legislative purpose of protecting and preserving public health and the environment.
Given the substantial conflicts in the evidence discussed above—including the expert reports and testimony from the parties' employees—there are questions of fact regarding LCRC's historical use and disposal of TCE, the sources of the TCE contamination in light of the soil and groundwater analyses, and whether LCRC caused a release of TCE. Accordingly, the Court cannot determine as a matter of law that Gould is solely responsible for the release of TCE.
With respect to the requirement that an innocent landowner exercise "due case with respect to the hazardous substance concerned," 42 U.S.C. § 9607(b)(3), LCRC maintains that it has conducted extensive investigation of the TCE contamination over the course of many years. Def. Mot. at 5-6. According to Travers, LCRC's consultant began conducting subsurface investigations of soils and groundwater on the LCRC Property in the 1990s. Travers Report at 49. Although the work was primarily associated with removal of underground storage tanks that did not contain TCE, monitoring wells were installed throughout the LCRC Property, and soil and groundwater were tested for TCE.
LCRC continued its collection and analysis of soil and groundwater samples between 2003 and 2015.
Gould, however, contends that LCRC cannot demonstrate that it exercised due care because it failed to take reasonable steps to prevent the continued release of TCE. Pl. Resp. at 22-23. In support of its position, Gould submits various letters from the MDEQ noting the inadequacy of LCRC's investigation and remediation efforts.
In a letter dated January 8, 2015, the MDEQ noted that while LCRC completed a portion of the response activities requested by the MDEQ, it had not performed all activities necessary to discharge its obligations under NREPA. 1/8/15 Letter at 1, 3. A September 29, 2015, activity report documents LCRC's reluctance to comply with the MDEQ's request to install a monitoring well, although LCRC had not installed a single monitoring well on the LCRC Property since the 1980s. Activity Report at 1-2, Ex. 22 to Pl. Resp. (Dkt. 100-23). And on September 7, 2016, the MDEQ denied LCRC's proposed response activity plan because "[t]hey do not propose to complete meaningful response activities to address releases of hazardous substances the LCRC are and may be responsible for and do not provide schedules for site investigation work." 9/7/16 Letter, Ex. 23 to Pl. Resp. (Dkt. 100-24).
Moreover, Gould contends that LCRC refused to provide Gould with access to the LCRC Property to conduct remediation. Pl. Resp. at 23. Consequently, Gould was required to defer response activities for months while it filed a motion to compel with the Court. See generally Pl. Mot. to Compel (Dkt. 75). In response to the motion to compel, however, LCRC clearly stated that it did not oppose the proposed testing for the purpose of developing and executing a remedial action plan, but rather that it objected to the use of belated testing for purposes of the litigation. Def. Resp. to Mot. to Compel at 3, 6 (Dkt. 78). There is no other indication in the record that LCRC refused to provide access to the LCRC Property for remediation.
Taken as a whole, while some of the evidence suggests that LCRC has made reasonably diligent efforts since the 1990s to investigate the TCE contamination, other evidence demonstrates that LCRC did not fulfill certain obligations as promptly or as thoroughly as the MDEQ requested. In light of this conflicting evidence, whether LCRC exercised due care with respect to the TCE contamination will require resolution of several questions of fact.
Given the factual questions presented regarding whether Gould was the sole cause of the contamination and whether LCRC exercised due care with respect to the contamination, this Court cannot determine as a matter of law that LCRC is exempted from liability for CERCLA cost recovery under the innocent landowner defense.
LCRC alternatively contends that it is entitled to summary judgment with respect to Gould's CERCLA cost recovery claim because it is shielded from liability under the contiguous landowner defense. Def. Mot. at 19-22. Under 42 U.S.C. § 9607(q), a property owner is not liable under § 9607(a) if he "owns real property that is contiguous to . . . and that is or may be contaminated by a release or threatened release of a hazardous substance from, real property that is not owned by that person," if certain rigorous qualifications are met.
One of the qualifications a defendant must establish to successfully invoke the contiguous landowner defense is that, at the time at which the defendant acquired the contaminated property, it (1) "conducted all appropriate inquiry . . . with respect to the property," and (2) "did not know or have reason to know that the property was or could be contaminated by a release or threatened release of one or more hazardous substances from other real property not owned or operated by the person." 42 U.S.C. § 9607(q)(1)(A)(viii).
According to Gould, LCRC cannot establish this qualification because it was aware of the TCE contamination when it purchased the LCRC Property. Pl. Resp. at 24. Although LCRC owned and operated from the LCRC Property since the 1930s, it sold the property to Livingston County in 2002. Property Purchase Agreement, Ex. 28 to Pl. Resp. (Dkt. 100-29). In 2007, LCRC received formal notice from the MDEQ that the LCRC Property was contaminated with TCE. Facility Notification Letter, Ex. 29 to Pl. Resp. (Dkt. 100-30). LCRC later purchased the LCRC Property back from Livingston County in 2011. Agreement to Purchase Real Estate, Ex. 30 to Pl. Resp. (Dkt. 100-31). According to the purchase agreement, the purchase price was "equal to the sums expended in attorney's fees and costs" by Livingston County in litigating the prior action.
LCRC contends that this element of the contiguous landowner defense is inapplicable because LCRC owned the LCRC Property before the TCE contamination occurred. Def. Mot. at 21-22. However, LCRC does not explain the legal significance of this fact, let alone provide any authority in support of its argument. Because the evidence clearly establishes that LCRC had actual knowledge of the TCE contamination at the time it repurchased the LCRC Property from Livingston County, it cannot establish this necessary element of the contiguous landowner defense.
Because there are questions of fact regarding the application of the innocent landowner defense and because LCRC cannot establish a necessary element of the contiguous landowner defense, LCRC is not entitled to summary judgment with respect to Gould's CERCLA cost recovery claim.
For the reasons stated above, Gould's motion for partial summary judgment (Dkt. 90) and LCRC's motion for summary judgment (Dkt. 90) are both denied.
SO ORDERED.