JANET T. NEFF, District Judge.
This putative class action lawsuit stems from a decades-long effort to resolve water run-off problems in Lansing Township and is the culmination of a long-running disagreement over apportioned costs for a $12 million drain project among the affected governmental entities and landowners. Plaintiffs Lansing Charter Township and Lansing Township Downtown Development Authority contend that a large portion of the multi-million project cost is attributable to Defendant Lansing Board of Water and Light's actions to remedy environmental contamination on their property, which necessitated the extensive drain project. After failing to obtain satisfactory relief in the administrative process and state court appeals related to the drain project assessment, Plaintiffs filed this suit seeking separate recovery of environmental response costs under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a), and the Michigan Natural Resources and Environmental Protection Act ("NREPA"), MICH. COMP. LAWS § 324.101 et seq. Defendant Lansing Board of Water and Light ("LBWL" or "BWL") has filed a motion to dismiss or in the alternative, for summary judgment (Dkt. 33). Plaintiffs have filed a Response in opposition (Dkt. 36); Defendant has filed a Reply (Dkt 37). Having fully considered the parties' submissions, the Court concludes that oral argument would not assist in the disposition of the issues presented. See W.D. Mich. LCivR 7.2(d). Defendant's Motion is denied.
This case has its genesis in groundwater contamination linked to Defendant's North Lansing Landfill #2 (NLL) beginning in 1993 and plans for a storm drain in the Groesbeck Drain District encompassing the landfill, which evolved from a $600,000 plan in 1995 to a 2013 plan at an estimated cost of $12.595 million.
Pursuant to this Court's dispositive motion procedures, the parties have stipulated to the following Joint Statement of Material Facts (JSMF) (Dkt 38) for purposes of the motion.
Plaintiffs' Complaint alleges nine counts:
Defendant seeks dismissal and/or summary judgment of all counts.
Defendant moves to dismiss Plaintiffs' Complaint under Federal Rule of Civil Procedure Rule 12(b)(6) or 12(c).
Rule 12(b)(6) authorizes the court to dismiss a complaint if it "fail[s] to state a claim upon which relief can be granted." In deciding a motion to dismiss for failure to state a claim, the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded factual allegations in the complaint as true. Thompson v. Bank of Am., N.A., 773 F.3d 741, 750 (6th Cir. 2014). However, a court "need not ... accept as true legal conclusions or unwarranted factual inferences." Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006). The complaint must present "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Zaluski v. United Am. Healthcare Corp., 527 F.3d 564, 570 (6th Cir. 2008).
"The complaint should give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." German Free State of Bavaria v. Toyobo Co, Ltd., 480 F.Supp.2d 958, 963 (W.D. Mich. 2007); see also Twombly, 550 U.S. at 555 (citing FED. R. CIV. P. 8(a)(2)). Accordingly, the "`complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.'" Bavaria, 480 F. Supp. 2d at 963 (quoting Lillard v. Shelby Cty. Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996) (citation and quotations omitted)). Further, "a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do...." Twombly, 550 U.S. at 555.
A Rule 12(c) motion may be brought "[a]fter the pleadings are closed — but early enough not to delay trial." FED. R. CIV. P. 12(c). The standards applicable to a Rule 12(c) motion are the same as those for Rule 12(b)(6). Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 403 (6th Cir. 2012); Lindsay v. Yates, 498 F.3d 434, 438 (6th Cir. 2007).
Defendant moves in the alternative for summary judgment. Summary judgment is proper "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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The court must consider the evidence and all reasonable inferences in favor of the nonmoving party. Burgess v. Fischer, 735 F.3d 462, 471 (6th Cir. 2013); U.S. S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013) (citation omitted).
The moving party has the initial burden of showing the absence of a genuine issue of material fact. Jakubowski v. Christ Hosp., Inc., 627 F.3d 195, 200 (6th Cir. 2010). The burden then "shifts to the nonmoving party, who must present some `specific facts showing that there is a genuine issue for trial.'" Id. (quoting Anderson, 477 U.S. at 248).
"A dispute is genuine if there is evidence `upon which a reasonable jury could return a verdict in favor of the non-moving party.' A factual dispute is material only if it could affect the outcome of the suit under the governing law." Smith v. Erie Cty. Sheriff's Dep't, 603 F. App'x 414, 418 (6th Cir. 2015) (quoting Tysinger v. Police Dep't of City of Zanesville, 463 F.3d 569, 572 (6th Cir. 2006)). "The ultimate question is `whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Back v. Nestlé USA, Inc., 694 F.3d 571, 575 (6th Cir. 2012) (quoting Anderson, 477 U.S. at 251-52).
Defendant's motion advances four arguments:
The Court has considered the arguments presented and finds no grounds on which to grant dismissal or summary judgment.
Defendant asserts that Plaintiffs' purported claims under CERCLA and NREPA "rest entirely on the faulty premise" that some unspecified portion of Plaintiffs' apportionment for the drain project cost constitutes "Response Cost" (Def. Mot. Br., Dkt 34 at PageID.172). Defendant argues that because Plaintiffs: (1) did not engage in any response activity; or (2) incur any "Response Costs" — both of which are prerequisites before filing a cost recovery action — Plaintiffs' claims under CERCLA and NREPA fail (id. at PageID.175).
"CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), is a comprehensive environmental statute principally designed to effectuate two goals: (1) the cleanup of toxic waste sites; and (2) the compensation of those who have attended to the remediation of environmental hazards." Franklin Cty. Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 549 (6th Cir. 2001) (citing Meghrig v. KFC Western, Inc., 516 U.S. 479, 483 (1996)). CERCLA provides for recovery from liable persons of "necessary costs of response ... consistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(B).
To establish a prima facie case for cost recovery under CERCLA, a plaintiff must prove that: "(1) a polluting site is a `facility' within the statute's definition; (2) the facility released or threatened to release a hazardous substance; (3) the release caused the plaintiff to incur necessary costs of response; and (4) the defendant falls within one of four categories of potentially responsible parties. Village of Milford v. K-H Holding Corp., 390 F.3d 926, 933 (6th Cir. 2004). Thus, a plaintiff must prove "`that the defendant's hazardous substances were deposited at the site from which there was a release and that the release caused the incurrence of response costs.'" Kalamazoo River Study Grp. v. Menasha Corp., 228 F.3d 648, 655 (6th Cir. 2000) (quoting United States v. Alcan Aluminum Corp., 964 F.2d 252, 266 (3d Cir. 1992)). "Response costs are considered necessary when `an actual and real threat to human health or the environment exist[s],' and are considered consistent with the [national contingency plan] `if the action, when evaluated as a whole, is in substantial compliance' with it." City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1003 (9th Cir. 2010) (citations omitted); see also 42 U.S.C. § 9607(a)(4)(B); Pierson Sand & Gravel, Inc. v. Pierson Twp., 851 F.Supp. 850, 856 (W.D. Mich. 1994), aff'd, 89 F.3d 835 (6th Cir. 1996).
Defendant argues that Plaintiffs have not incurred "necessary response costs" to maintain an action for cost recovery under CERCLA because "Plaintiffs' so-called response costs are not Response Costs at all" (Dkt 34 at PageID.173). Defendant asserts that "Response Costs" is a term of art and there are several cases analyzing what expenses do or do not qualify as "Response Costs" (id.). Defendant contends that the "drain assessment costs" are not "Response Costs" as that term is defined, and they are therefore not reimbursable CERCLA costs. Thus, because the claimed costs are not Response Costs in the first instance, the Court need not engage in the "necessary" analysis, or consider whether the costs are "consistent with the national contingency plan," or whether Plaintiff has established causation, i.e., whether the "release" or threatened release of hazardous substances from the NLL caused Plaintiffs to incur the costs.
As an initial matter, Defendant cites several cases and the statute for the proposition that to seek reimbursement under CERCLA a party must "first have engaged in some response activity" (Dkt 34 at PageID.173 n.14). However, the Court finds the cited authority inapposite. In the Court's view, the pertinent question here is not whether Plaintiff is seeking costs incurred as opposed to future costs (id.). See, e.g., Krygoski Const. Co. v. City of Menominee, No. 2:04-cv-076, 2006 WL 2092412, at *5 (W.D. Mich. July 26, 2006) ("Section 107 does not contemplate recovery for future costs, it provides recovery for costs already expended"); Jones v. Inmont Corp., 584 F.Supp. 1425, 1430 (S.D. Ohio 1984) ("some costs must be incurred prior to the filing of a suit"); 42 U.S.C. § 9613(g)(2) (authorizing a suit for recovery of costs pursuant to § 9607 "at any time after such costs have been incurred"). Here, the separate Plaintiffs have liability for the drain assessment costs pursuant to the Drain Commissioner's apportionment, which has received a final adjudication in the Michigan courts, and was upheld. Thus, Defendant's reliance on cases rejecting claims for future costs is misplaced. In any event, pursuant to the Notice filed by Plaintiffs (Dkt 41), Plaintiffs have begun paying the assessed costs, and the issue whether costs have been technically incurred or expended is moot.
The key question is whether the costs of the drain project constitute "Response Costs" for purposes of recovery under CERCLA. "Because CERCLA does not define `necessary costs of response' and defines `response' in an indirect and ambiguous manner, courts have reached varying results in determining whether the costs of various alleged response actions were cognizable as response costs pursuant to § 107(a)(4)(B)." William B. Johnson, Annotation, What are "necessary costs of response" within meaning of § 107(a)(4)(b) of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C.A. § 9607(a)(4)(b)), 113 A.L.R. Fed. 1, § 2[a] (1993) (noting that courts have split over whether medically monitoring the effects of a release of hazardous substances, attorneys' fees and other costs of litigating private cost recovery actions, and the costs of investigating and assessing contamination sites or facilities, are response costs). Courts have reached varying results in determining whether response costs incurred by potentially responsible parties were necessary under the circumstances; courts have also reached varying results as to the necessity of costs allegedly incurred by neighbors of hazardous waste sites or facilities. Id.
Neither side in this controversy cites any case or other authority that addresses costs similar to those at issue here, and the Court has found none. Consequently, whether the drain assessment costs at issue qualify as "Response Costs" is an open question. Cases cited by Defendant that consider response costs in other limited factual or legal contexts dissimilar to those presented here are unhelpful. Instead, the Court must rely on the general legal framework applied to CERCLA cost recovery actions, as Plaintiffs appropriately observe (Pls. Resp., Dkt. 36 at PageID.198-99).
In Ford Motor Co. v. Michigan Consolidated Gas Co., No. 08-CV-13503-DT, 2010 WL 3419502, at *2-3 (E.D. Mich. Aug. 27, 2010), the court set forth the framework for deciding the issue of necessary Response Costs:
CERCLA defines the terms "remove" or "removal" as:
42 U.S.C. § 9601(23) [emphasis omitted]. "[R]emedy" or "remedial action" means:
Defendant states that Plaintiffs' Complaint includes only a single conclusory allegation that Plaintiffs' Drain Assessment Costs constitute "Recovery Costs" under CERCLA and/or NREPA, which is insufficient to withstand dismissal under the standards of Twombly and Iqbal (Dkt 34 at PageID.174-75).
(Compl., Dkt 1).
Plaintiffs' contention based on these allegations is that the drain is necessary, as part of the remediation, to prevent the threatened future release that will occur if the drain is not built and water is not diverted away from the NLL, and that the drain is an essential component of Defendant's remediation plan at the Site. Without the drain, Defendant's current remediation plans at the Site will fail. Plaintiffs note that Defendant may disagree with that assertion, but that disagreement is not one that can be resolved through a motion to dismiss. Instead, lay witness and expert discovery will be necessary to resolve this dispute: "The question of `[w]hether specific response costs were `necessary' usually requires a factual determination and cannot be settled on a motion to dismiss.'" (Dkt 36 at PageID.201, quoting 113 A.L.R. Fed. 1, § 2[a]).
Contrary to Defendant's arguments, Plaintiffs have sufficiently alleged that they have incurred "Response Costs" as that term is defined in CERCLA, as part of the remediation of the site where the release occurred. Upon close review, the Court finds that Defendant's arguments rely on selective excerpts from case analyses, which are removed from their analytical context, and consequently, are of little substantive value in evaluating whether the costs sought by Plaintiffs are necessary response costs.
For instance, Defendant cites Ellis v. Gallatin Steel Co., 390 F.3d 461, 482 (6th Cir.2004), for the principle that "`only work that is closely tied to the actual cleanup ... may constitute a necessary cost of response'" (Dkt 34 at PageID.173 n. 13). Defendant then argues that "Plaintiffs do not allege, nor can they, that they spent
Defendant's quote from Ellis pertained to a claim for compensation to the plaintiffs Richard and Thomas Ellis for the time they spent observing and videotaping the operations of the "polluting companies"
The Sixth Circuit agreed that any costs "incurred" by the Ellises were not "necessary response costs," explaining:
Id. at 482. A further look at Franklin County Convention Facilities Authority, 240 F.3d 534, the case relied on for the quoted rule ("only `work that is closely tied to the actual cleanup ... may constitute a necessary cost of response'"), discloses that the statement related to an award of attorney fees, which the court ultimately found were a necessary cost of response. The court's analysis is instructive:
Franklin Cty. Convention Facilities Auth., 240 F.3d at 549-50 (emphasis added). As in Franklin County, Plaintiffs in essence contend that the drain project is necessary to render Defendant's remediation effective.
In this case, Plaintiffs have sufficiently alleged that the drain is necessary, as part of the remediation, to prevent the threatened future release that will occur if the drain is not built and water is not diverted away from the NLL, and that the drain is an essential component of Defendant's remediation plan at the Site. As Plaintiffs note, Defendant may disagree with that assertion, but that disagreement is not one that can be resolved on a motion to dismiss. See Village of Milford, 390 F.3d at 933 (whether response costs were necessary is a mixed question of law and fact). Defendants are not entitled to the dismissal of Plaintiffs' Complaint on the ground that Plaintiffs' claimed costs were not "necessary costs of response."
Defendant argues that Plaintiffs' claims are barred by res judicata or collateral estoppel because the issues in this case have been litigated already, and resolved in Defendant's favor, in the State Court Proceedings. Defendant asserts that this case is merely an attempt by Plaintiffs to rephrase and relitigate these issues yet again, which this Court "should not countenance" (Dkt 34 at PageID.176).
Res judicata (claim preclusion) is a judicially created doctrine to "`relieve parties of the cost and vexation of multiple lawsuits....'" Adair v. Michigan, 680 N.W.2d 386, 397 n.14 (Mich. 2004) (citations and quotations omitted). "The doctrine of res judicata bars a successive action in Michigan if `(1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first.'" Young v. Twp. of Green Oak, 471 F.3d 674, 680 (6th Cir. 2006) (quoting Adair, 680 N.W.2d at 396). Michigan courts take a broad view of the res judicata doctrine, "holding that it bars not only claims already litigated, but also every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not." Adair, 680 N.W.2d at 396. Defendant bears the burden of proving the applicability of the doctrine of res judicata. See McCoy v. Michigan, 369 F. App'x 646, 649 (6th Cir. 2010).
The Court is not persuaded that res judicata bars the instant action under the circumstances presented. The parties in this suit are not the same as those in the State Court Proceedings. While Defendant correctly notes that the privity element does not require that the parties be identical in the two actions, there must be a "substantial identity of interests" and a "working functional relationship" such that the interests of the nonparty are presented and protected by the party in the earlier litigation. See Adair, 680 N.W.2d at 396. "To be in privity is to be so identified in interest with another party that the first litigant represents the same legal right that the later litigant is trying to assert." Id.
Defendant argues that the Township and the DDA satisfy this test because they are essentially one in the same: the Township created the DDA and completely controls it, and they have the same interests in relitigating the merits of the State Court Proceedings. Defendant emphasizes that the DDA's Executive Director was the Township's chief witness in the Board of Review proceedings. However, Plaintiffs point out that the DDA is a separate "public body corporate," which is not controlled by the municipality. Moreover, the Township, the DDA, and the putative class members do not share interests identical to those litigated in the state proceedings. Given the distinct nature of the state administrative proceedings, and the varying interests and apportionment of the drain project costs among the class-plaintiffs, the Court cannot conclude that the Township's interest in the earlier proceedings is identical to the various, numerous parties in this suit.
But even if the privity element were satisfied, the Court would find the third res judicata element lacking. The issues in this lawsuit were not, and could not have been raised in the prior proceedings. Defendant emphasizes that the Township raises the same issues in both actions, i.e., that Defendant altered the natural flow of storm water and caused the need for the Drain improvements, both of which were resolved in the state proceedings. However, the Court finds this assertion, even if accurate, of little import in the res judicata analysis because the prior consideration of those issues was confined to the limited nature of the drain apportionment proceedings and appeals, and the narrow legal standards applicable thereto.
Plaintiffs point out that the state proceedings originated as an administrative decision rendered by the Groesbeck Park Drain Board of Review, and, were limited to apportionment of the costs for the Groesbeck Park Drain. The Drain Commissioner's apportionment must be based on "the benefit to the public health, convenience or welfare, or as the means of improving any highway under the control of such township, city or village." MICH. COMP. LAWS § 280.151. Plaintiffs assert, and Defendant does not dispute, that the Board of Review "may only determine whether `there is a manifest error or inequality in the apportionments,' and `order and make the changes in the apportionment as they may consider just and equitable'" (Dkt 36 at PageID.207). Plaintiffs state that, in fact, the state courts rebuffed the Township's attempt to introduce evidence relating to the release and evidence that the drain was being constructed to remediate the release, essentially as "immaterial considerations," in the narrow context of the drain apportionment appeals. Further, the state court appeals were limited to considering whether the Board of Review apportionment decision was constitutional and supported by substantial evidence.
Given these circumstances, the Court cannot conclude that the distinct claims Plaintiffs now raise were, or could have been, raised and resolved in the state proceedings. Accordingly, the doctrine of res judicata does not apply.
Defendant's related collateral estoppel argument fails for the same reasons. "Collateral estoppel, or issue preclusion, precludes relitigation of an issue in a subsequent, different cause of action between the same parties or their privies when the prior proceeding culminated in a valid final judgment and the issue was actually and necessarily determined in the prior proceeding." Ditmore v. Michalik, 623 N.W.2d 462, 467 (Mich. Ct. App. 2001). Contrary to Defendant's arguments, this lawsuit is not simply a relitigation of the above two essential questions of fact: (1) Defendant did not interfere with the natural flow of storm water; and (2) Defendant is not contractually bound to accept storm water from adjoining properties. The nature of the proceedings is substantively different, and the consideration of the evidence, as well as the issues and outcome, hinge on different legal standards.
Defendant briefly argues that Plaintiffs' tort claims (Counts V, VI, and IX) fail because Defendant is a governmental entity, entitled to immunity under MICH. COMP. LAWS § 691.1407(1).
Finally, Defendant argues that Plaintiffs' state-law nuisance claims (Counts V and VI) are time-barred. Defendant states that the statute of limitations for nuisance claims in Michigan is three years, MICH. COMP. LAWS § 600.5805(10). See Marilyn Froling Revocable Living Trust v. Bloomfield Hills Country Club, 769 N.W.2d 234, 249 (Mich. Ct. App. 2009). Defendant argues that according to Plaintiffs' own allegations, the construction of the slurry wall caused the interference with the natural drainage of water. Thus, because the construction of the slurry wall was "completed in 2010" (Compl. at ¶ 47), and this action was not filed until May 8, 2014, it is time-barred.
Plaintiffs respond that while a three-year limitations period applies to private nuisance claims and the construction of the slurry wall occurred more than three years prior to the filing of the Complaint, the costs to construct the drain as a result of Defendant's release at the Site also interfere with Plaintiffs' property rights, privileges and use and enjoyment of their properties. Thus, because the drain assessment was incurred after all state court remedies were exhausted, only recently, Plaintiff's private nuisance claim is not barred by the statute of limitations.
Because Plaintiffs' Complaint alleges a tort based on the occurrence of interference within three years of filing, the Court finds that the private nuisance claim is not subject to dismissal at this stage of the proceedings. However, should development of the record warrant further consideration of the statute of limitations issues, Defendant may request that the Court revisit the issue upon a proper showing that further consideration is warranted.
Plaintiffs assert that with regard to their public nuisance claim, the release and the subsequent building of the slurry wall interfered with the public's health, safety, peace, comfort or convenience and constituted an unreasonable interference with a common right enjoyed by the general public. Plaintiffs contend that the statute of limitations for their public nuisance claim is six years since they are seeking injunctive relief. See Dep't of Envtl. Quality v. Waterous Co., 760 N.W.2d 856, 876 (Mich. Ct. App. 2008) (observing that because the nuisance claim sought injunctive relief, the period of limitations was six years); see MICH. COMP. LAWS § 600.5813. Plaintiffs' public nuisance claim seeks "entry of a Judgment ordering LBWL to restore the Site to its previous state, so that the Site can receive surface water run-on and so that natural drainage can occur" (Compl., Dkt 1 at PageID.19).
Although Defendant appears to dispute, in a footnote, that Plaintiffs' public nuisance claim is subject to a six-year limitation period, Defendant fails to provide any supporting argument, and particularly fails to address that Plaintiffs seek injunctive relief (see Reply, Dkt 37 at PageID.226 n. 27). Accordingly, Defendant is not entitled to dismissal of this claim. However, as discussed above with respect to the private nuisance claim, should development of the record subsequently establish that this claim may be time-barred, Defendant may request that the Court revisit this issue upon a proper showing that further consideration is warranted.
On the record presented, Defendant's motion to dismiss or in the alternative, for summary judgment (Dkt 33), is properly denied. An Order will enter consistent with this Opinion.
