Redwing Carriers, Inc. v. Saraland Apartments , 94 F.3d 1489 ( 1996 )

United States Court of Appeals, Eleventh Circuit.
No. 95-6198.
REDWING CARRIERS, INC., Plaintiff-Counter-defendant-Appellant,
v.
SARALAND APARTMENTS, Roar Company, Defendants-Counter-claimants-
Appellees,
Michael Coit, in his capacity as legal representative of the
Estate of Robert Coit, Christopher M. Weil, in his capacity as
legal representative of the estate of Robert Coit, Marcrum
Management Company, et al., Defendants-Appellees,
Robert Coit, Defendant-Counter-claimant.
Sept. 12, 1996.
Appeal from the United States District Court for the Southern
District of Alabama. (No. CV-91-0524-BH-S), William Brevard Hand,
Judge.
Before DUBINA and BLACK, Circuit Judges, and MARCUS*, District
Judge.
BLACK, Circuit Judge:
Redwing Carriers, Inc. (Redwing) appeals the district court's
grant of summary judgment in favor of Appellees Saraland
Apartments, Ltd., Michael Coit and Christopher Weil, Roar Company,
Hutton Advantaged Properties Ltd., H/R Special Limited Partnership,
Marcrum Management Company and Meador Contracting Company. Redwing
sued the Appellees claiming they are liable under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(CERCLA or "the Act") for response costs Redwing has incurred in
cleaning up a Superfund Site in Saraland, Alabama. Redwing argues
the district court committed numerous errors in rejecting its
CERCLA claims and allocating the entire cost of cleaning up the
*
Honorable Stanley Marcus, U.S. District Judge for the
Southern District of Florida, sitting by designation.
Site to Redwing. As discussed below, we affirm in part, reverse in
part, and remand.
I. BACKGROUND
The Redwing Carriers, Inc. (Saraland) Site is a 5.1-acre
parcel of land located within the southern Alabama community of
Saraland. From 1961 to 1972, Redwing operated a trucking terminal
on the property. Redwing was in the business of hauling materials
used in construction and other industries, and trucks passing
through the Saraland terminal carried substances such as asphalt,
tail oil, and molten sulfur. At the terminal, trucks were cleaned
out, and the waste water permitted to drain onto the property.
Redwing built levees on the Site to contain the waste water runoff
and dumped excess asphalt directly into pits dug out of the ground.
As a result of Redwing's activities, the ground at the Site became
contaminated with hazardous chemicals which have combined to form
a black, tar-like toxic substance.
In 1971, Redwing sold the Site to Harrington, Inc., which in
turn sold the property to Apartments, Inc., later that year. In
March 1973, Saraland Apartments, Ltd. ("Saraland Limited" or "the
Partnership") purchased the property from Apartments, Inc. At the
time, Ralph C. Harrington, A.B. Meador, E.L. MacDonald, and W.D.
Bolton were partners in Saraland Limited. The Partnership promptly
hired Meador Contracting Company (Meador) to build an apartment
complex on the Site.1 As part of the construction, Meador had to
grade, excavate and fill the ground on the property. During the
1
A.B. Meador was the president of Meador as well as a
general partner in Saraland Limited.
grading and excavating, Meador's subcontractor encountered patches
of contaminated soil and deposits of the tar-like substance buried
by Redwing. Meador completed construction of the Saraland
Apartments complex in May 1974.
Construction of the complex was subsidized by the United
States Department of Housing and Urban Development (HUD) to provide
low-income housing. In 1980, Saraland Limited hired Marcrum
Management Company (Marcrum) as its "management agent" for the
property. According to Marcrum, it provides administrative support
to the Partnership to assure the Partnership conforms with federal
regulations governing HUD-subsidized properties. Marcrum denies
Redwing's claim that the company is the daily, on-site manager of
the property.
Redwing further alleges that after Marcrum assumed management
of Saraland Apartments, two events caused a dispersal of
contaminated soil at the Site. In 1986, the complex's parking lot
was repaved. In 1991, contractors hired by Marcrum performed
maintenance work on an underground gas line on the property. To
access the pipeline, workers dug up soil at specific locations
along the pipeline.
Saraland Limited first became aware of tar seeping to the
surface of the property in 1977. HUD noted tar in several areas of
the complex during a July 1983 inspection. In an August 1984
inspection report, HUD again cited tar surfacing in various
locations in the complex. By this time, residents of Saraland
Apartments had been complaining about tar problems for several
years.
In October 1984, a group of investors bought out the original
2
partners in Saraland Limited. Robert Coit and Roar Company (Roar)
purchased a 1% general partnership interest in the Partnership.3
Hutton Advantaged Properties, Ltd. and H/R Special Limited
Partnership (collectively, "the Hutton partners") purchased the
remaining 99% interest and became limited partners in Saraland
Limited.
Under the amended partnership agreement signed in 1984, Coit
and Roar are responsible for managing the business of the
Partnership. The limited partners, however, possess certain rights
giving them a measure of control over the Partnership's affairs.
For example, H/R Special Partnership may force the Partnership to
sell the apartment complex and may veto any proposed sale of the
property. H/R Special Partnership must likewise consent to any
extended management contract for the complex or any change in the
managing agent.4
In 1985, Redwing entered into an "administrative order by
consent" with the Environmental Protection Agency (EPA) agreeing to
2
Robert Coit was the principal officer and shareholder in
Roar.
3
Robert Coit died while this action was pending in the
district court, and Michael Coit and Christopher Weil were
substituted as representatives of Robert Coit's estate. We shall
refer to Michael Coit and Christopher Weil, in their joint
capacity as legal representatives of Robert Coit's estate, as
"Coit."
4
Other notable powers of the Hutton partners include: (1)
H/R Special Partnership must consent to any refinancing or
prepayment of the mortgage on Saraland Apartments; (2) a general
partner must obtain the consent of H/R Special Partnership before
withdrawing from the Partnership; and (3) H/R Special
Partnership may remove a general partner in certain
circumstances.
monitor the Site for tar seeps and to remove any seeps that
appeared. Redwing bound itself in a second consent order in July
1990 to perform the remedial investigation/feasibility study for
the property. Redwing claims it has spent approximately $1.9
million in investigating and cleaning up the Site.
Redwing filed this suit seeking to recoup these costs.
Redwing alleged the Partnership, Coit, Roar, the Hutton partners,
Marcrum, and Meador were liable under §§ 113(f) and 107(a) of
CERCLA for the costs Redwing has incurred and will incur in the
future in cleaning up the Site. Redwing also sought relief under
several state law theories. The Partnership, Coit, Roar, and the
Hutton partners alleged counterclaims against Redwing for
contribution under § 113(f) of CERCLA. These defendants also
brought claims under Alabama law seeking recovery from Redwing for
property damage caused by Redwing's burial of toxic chemicals on
the Site.
In time, Redwing and the Appellees filed cross-motions for
5
summary judgment on the CERCLA and state law claims. With the
exception of Redwing's claim against Saraland Limited, the district
court denied Redwing's motion for summary judgment on its CERCLA
claims. Redwing Carriers, Inc. v. Saraland Apartments, Ltd., 875
F.Supp. 1545, 1555-67 (S.D.Ala.1995). The court granted the other
appellees' cross-motions for summary judgment on their liability
under CERCLA. Id. The Partnership, as the current owner of the
5
Other than Redwing's claims against the individual partners
predicated on partnership law, the parties have not contested the
district court's disposition of the state law counts.
Accordingly, we will not address these claims.
Site, conceded it was a "covered person" within the meaning of
subsection 107(a)(1) of CERCLA and hence potentially responsible
for response costs. Id. at 1566-67. The district court, however,
granted the Partnership's motion for summary judgment on its
contribution claim under § 113(f) of CERCLA. Id. at 1569. The
court then allocated 100% of the response costs to Redwing, thereby
absolving the Partnership of any responsibility under CERCLA. Id.
Redwing appeals the district court's denial of its motion for
summary judgment on its CERCLA claims as well as the court's
allocation of costs under § 113(f).
II. STANDARD OF REVIEW
We review a district court's grant of summary judgment de
novo. Forbus v. Sears Roebuck & Co., 30 F.3d 1402, 1404 (11th
Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 906, 130 L.Ed.2d
788 (1995). A motion for summary judgment should be granted when
"the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322,
106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Everett v. Napper,
833 F.2d 1507, 1510 (11th Cir.1987). An issue of fact is "genuine"
if the record as a whole could lead a reasonable trier of fact to
find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An
issue is "material" if it might affect the outcome of the case
under the governing law. Id.III. DISCUSSION
In its amended complaint, Redwing alleged separate claims
against the Appellees under §§ 107(a) and 113(f) of CERCLA, 42
U.S.C. §§ 9607(a) and 9613(f). As a matter of law, however,
Redwing's CERCLA claims against the Appellees are claims for
contribution governed by § 113(f). To bring a cost recovery action
based solely on § 107(a), Redwing would have to be an innocent
party to the contamination of the Saraland Site. See United
Technologies Corp. v. Browning-Ferris Indus., 33 F.3d 96, 99-100
(1st Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1176, 130
L.Ed.2d 1128 (1995); Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d
761, 764 (7th Cir.1994). Redwing cannot claim such innocence.
Although Redwing disavowed liability in its consent orders with the
EPA, Redwing cannot deny it originally disposed of most, if not
all, of the hazardous substances now contaminating the Site.
Redwing is a responsible party under CERCLA6, and therefore, its
claims against other allegedly responsible parties are claims for
contribution. See United States v. Colorado & E.R. Co., 50 F.3d
1530, 1535-36 (10th Cir.1995); Amoco Oil Co. v. Borden, Inc., 889
F.2d 664, 672 (5th Cir.1989).
Whether Redwing brings its claims under § 107(a) or § 113(f)
6
Redwing has not denied its liability under CERCLA before
this Court. Notably, Redwing has not appealed the liability
ruling of the district court's summary judgment in favor of
Saraland Ltd., Coit, Roar, and the Hutton partners on their
counterclaims under § 113(f). Rather than challenging the
district court's finding that the company is a responsible party
under CERCLA, Redwing contests the district court's allocation of
costs between Redwing and the Appellees.
does not matter insofar as establishing the Appellees' liability.7
The elements of a claim under both sections are the same. See 42
U.S.C. § 9613(f)(1) ("Any person may seek contribution from any
other person who is liable or potentially liable under section
9607(a) [107(a) ] of this title."). Compare United States v. Alcan
Aluminum Corp., 990 F.2d 711, 719-20 (2d Cir.1993) (listing
elements of a cost recovery action under § 107(a)) with Amoco Oil,
889 F.2d at 668 (listing elements in contribution action brought by
one responsible party against another). To prevail on a claim
under CERCLA, a plaintiff must demonstrate:
1. the site in question is a "facility" as defined in § 101(9) of
CERCLA, 42 U.S.C. § 9601(9);
2. a release or threatened release of a hazardous substance has
occurred;
3. the release or threatened release has caused the plaintiff to
incur response costs consistent with the "national contingency
plan" (NCP)8; and
7
The importance of distinguishing between cost recovery
actions brought under § 107(a) and contribution claims under §
113(f) will become evident in our discussion of equitable
allocation under § 113(f) in section III(E), infra. For now, we
note a crucial difference between claims brought under these two
sections is the nature of liability imposed on defendants. In
most cases, a defendant found liable to an innocent plaintiff,
i.e., a plaintiff who is not itself liable under CERCLA for
cleaning up a site, is held jointly and severally liable under §
107(a) to the plaintiff for all of the plaintiff's response
costs. See Colorado & E.R. Co., 50 F.3d at 1535; Akzo Coatings,
30 F.3d at 764. In contrast, subsection 113(f)(1) expressly
permits courts to allocate response costs among responsible
parties—including the plaintiff—in contribution actions between
responsible parties. 42 U.S.C. § 9613(f)(1).
8
The NCP is a body of regulations governing the clean up of
hazardous waste sites under CERCLA. See 42 U.S.C. § 9605(a); 40
C.F.R. Part 300 (1995).
Courts are split on whether a CERCLA plaintiff must
demonstrate consistency with the NCP to obtain a partial
summary judgment on a defendant's "liability" under CERCLA.
4. the defendant is a "covered person" under § 107(a) of CERCLA.
Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146,
1150 (1st Cir.1989); Amoco Oil, 889 F.2d at 668; Ascon
Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1152-53 (9th
Cir.1989). The parties do not contest Redwing has established the
first three elements. The Saraland Site is a "facility" under
CERCLA, and there has been a release of hazardous substances on the
property. The Appellees furthermore do not deny Redwing's claim
that it has incurred response costs and will continue to incur
response costs in the future.
The parties focus their debate on whether some or all of the
Appellees are "covered persons" under § 107(a). This section
defines four classes of potentially responsible parties:
1) the owner and operator of a vessel or a facility,
2) any person9 who at the time of disposal of any
hazardous substance owned or operated any facility at which
Compare Alcan Aluminum, 990 F.2d at 720 (stating CERCLA
plaintiff entitled to summary judgment on issue of
liability, even when genuine issues of fact remain as to
appropriate damages) and Amoco Oil, 889 F.2d at 668 (same)
with Weyerhaeuser Corp. v. Koppers Co., 771 F.Supp. 1406,
1413-14 (D.Md.1991) (reasoning that to establish liability
under CERCLA, plaintiff must demonstrate at least some of
the costs sought are consistent with the NCP) and Artesian
Water Co. v. Government of New Castle County, 659 F.Supp.
1269, 1291-92 (D.Del.1987) (reasoning plaintiff must
demonstrate consistency with the NCP to obtain partial
summary judgment), aff'd, 851 F.2d 643 (3d Cir.1988). We
need not decide this issue here. The district court did not
address NCP consistency, and the parties have not raised the
issue on appeal.
9
CERCLA broadly defines "person" as including an
"individual, firm, corporation, association, partnership,
consortium, joint venture, commercial entity, United States
Government, State, municipality, commission, political
subdivision of a State, or any interstate body." 42 U.S.C. §
9601(21).
such hazardous substances were disposed of,
3) any person who by contract, agreement, or otherwise
arranged for disposal or treatment, or arranged with a
transporter for transport for disposal or treatment, of
hazardous substances owned or possessed by such person, by any
other party or entity, at any facility or incineration vessel
owned or operated by another party or entity and containing
such hazardous substances, and
4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by such person, from
which there is a release, or a threatened release which causes
the incurrence of response costs, of a hazardous substance.
42 U.S.C. § 9607(a). This appeal concerns CERCLA's definition of
the first three classes of persons.10
In its amended complaint, Redwing alleged all of the Appellees
except Meador were liable under subsections 107(a)(1), (2), and
(3). Redwing alleged Meador was responsible only for having
"arranged for" the disposal of hazardous substances at the Site as
defined in subsection 107(a)(3). We will review Redwing's
arguments regarding each Appellee's liability under these
subsections of § 107(a) below.
We pause, however, to address the district court's
interpretation of subsection 107(a)(1). This provision imposes
liability on any current "owner and operator" of a site. See 42
U.S.C. § 9607(a)(1) (emphasis supplied). The district court
reasoned the phrase "owner and operator" means a defendant could
only be liable under this subsection if the defendant was both the
owner and the operator of a site. See Redwing Carriers, 875
F.Supp. at 1555-56. This conclusion is contrary to the law of this
10
Redwing does not allege any of the Appellees are liable
according to subsection 107(a)(4) as parties who transported
hazardous substances to the Saraland Site.
Circuit. In United States v. Fleet Factors Corp., 901 F.2d 1550,
1554 n. 3 (11th Cir.1990), cert. denied, 498 U.S. 1046, 111 S.Ct.
752, 112 L.Ed.2d 772 (1991), we interpreted the phrase "owner and
operator" in subsection 107(a)(1) to be disjunctive, imposing
liability on any person who was either the current owner or the
current operator of a facility. The district court acknowledged
Fleet Factor 's reasoning, but suggested this view is not supported
by the statutory text and is due to be reconsidered. See Redwing
Carriers, 875 F.Supp. at 1556. The district court was not free to
disregard Fleet Factor 's reasoning, and neither are we. Absent a
supervening Supreme Court decision or a change in statutory law, we
are bound by a prior panel's decision. Myrick v. Freuhauf Corp.,
13 F.3d 1516, 1521 (11th Cir.1994), aff'd, --- U.S. ----, 115 S.Ct.
1483, 131 L.Ed.2d 385 (1995); United States v. Woodard, 938 F.2d
1255, 1258 & n. 4 (11th Cir.1991), cert. denied, 502 U.S. 1109, 112
S.Ct. 1210, 117 L.Ed.2d 449 (1992). It is therefore settled that
a person is a responsible party under subsection 107(a)(1) if they
are the current owner or operator of a facility.
The parties do not dispute Saraland Limited holds title to the
Site. The Partnership thus concedes it is a potentially
responsible party under subsection 107(a)(1) as the current owner
of the property. The primary question in this appeal is whether
Redwing carried its burden on summary judgment of showing any of
the other Appellees are also responsible parties under § 107(a).
A. The Hutton Partners
Hutton Advantaged Properties, Ltd. and H/R Special Limited
Partnership, Ltd. became limited partners in Saraland Limited when
they purchased a 99 percent interest in the Partnership. Citing
this interest together with the rights the Hutton partners have
under the amended partnership agreement, Redwing argues these
limited partners are "owners" and "operators" of the Site within
the meaning of § 107(a). Redwing further alleges the Hutton
partners are liable for having "arranged for" the disposal of
hazardous substances on the property as defined in subsection
107(a)(3). The district court found Redwing's arguments
unconvincing, Redwing Carriers, 875 F.Supp. at 1556-1559, and we
are similarly unpersuaded.
1. "Owner" Liability.
Subsection 107(a)(1) imposes liability on the current "owner"
of a facility while subsection 107(a)(2) does likewise for parties
who in the past "owned" the site at the time a hazardous substance
was disposed of at the facility. 42 U.S.C. § 9607(a)(1), (2).
"Owner" does not have any special meaning under CERCLA. The
statute defines the "owner or operator" of "an onshore facility" as
"any person owning or operating such facility." 42 U.S.C. §
9601(20)(A)(ii). This circular definition of "owner or operator"
suggests these terms have their ordinary meanings rather than any
unusual or technical meaning. Edward Hines Lumber Co. v. Vulcan
Materials Co., 861 F.2d 155, 156 (7th Cir.1988).
Redwing essentially argues that given the Hutton partners'
stake in Saraland Limited and their power to control the
Partnership, they should be deemed "owners" of the Saraland Site
under CERCLA. This argument ignores the settled principle that
property interests and rights are defined by state law. Butner v.
United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136(1979). In the absence of any unique definition of "ownership" in
CERCLA, we look to Alabama law to define the ownership interest of
the limited partners in the Site.
Title to the Site rests with the Partnership—not the limited
partners. Under Alabama's limited partnership statute, a partner's
interest in the partnership is personal property. Ala.Code § 10-
9A-120 (1994). The Hutton partners' interest in Saraland Limited
permits them to share in the profits and losses of the Partnership,
as well as receive distributions of the Partnership's assets and
any allocation of income, gain, loss, deduction, credit or similar
items. Id. § 10-9A-1(10). Neither Alabama law nor the amended
partnership agreement of 1984 suggests the Hutton partners hold
title to the Partnership's assets. Since the limited partners are
not owners of the Site under Alabama law, they are not "owners" of
the Site within the meaning of § 107(a) of CERCLA.
We reject Redwing's suggestion that limited liability
structures such as corporations and limited partnerships are
irrelevant in assessing "owner" liability under CERCLA. Nothing in
§ 107(a) or § 101(20)(A) implies that owner liability can be
imposed directly on a limited partner in disregard of the
partnership structure established according to state law. If
Congress intended for courts to ignore state law defining property
interests in assessing CERCLA owner liability, then it would have
stated so. Since the statute does not evince such an intent, we
will not interpret it in this fashion. Cf. United States v. USX
Corp., 68 F.3d 811, 824 (3d Cir.1995) (finding CERCLA's language
"fails to indicate that traditional concepts of limited liability
are to be disregarded" and refusing to hold a corporation's
shareholders and officers directly liable under subsection
107(a)(4) of CERCLA for the corporation's acts); Joslyn Mfg. Co.
v. T.L. James & Co., 893 F.2d 80, 83 (5th Cir.1990) (noting a
similar lack of any intent to extend CERCLA liability directly to
a parent corporation based on the liability of its subsidiary),
cert. denied, 498 U.S. 1108, 111 S.Ct. 1017, 112 L.Ed.2d 1098(1991).
That the Hutton partners are not owners of the Site under
CERCLA does not end our analysis. This only means the limited
partners are not directly liable under the Act for cleaning up the
Site. The question remains whether the Hutton partners, by virtue
of their being limited partners in the Partnership, are accountable
indirectly for the Partnership's CERCLA liability under applicable
partnership law. As a general rule, a limited partner is not
liable for the obligations of the partnership. See, e.g., Ala.Code
§ 10-9A-42(a); Cal.Corp.Code § 15632 (West 1996); Fla.Stat.Ann.
§ 620.129(1) (West 1993). An exception arises when a limited
partner acts like a general partner in controlling the
partnership's business. In those circumstances, the limited
partner may lose its limited liability status and be held to
account for the partnership's liability. See, e.g., Ala.Code § 10-
9A-42(a); Cal.Corp.Code § 15632; Fla.Stat.Ann. § 620.129(1). The
Hutton partners' liability for the Partnership's CERCLA obligations
therefore depends on whether they crossed this line in controlling
the business of Saraland Limited.11
Neither CERCLA's text nor its legislative history address
whether state or federal law governs when a limited partner may be
held liable for the partnership's debts. As several jurists have
noted, Congress passed CERCLA in great haste and in the process
left many holes in its framework for courts to fill in. Smith Land
& Improvement Corp. v. Celotex Corp., 851 F.2d 86, 91 (3d
Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 837, 102 L.Ed.2d
969 (1989); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805
F.2d 1074, 1080 (1st Cir.1986). One of the more significant gaps
in CERCLA's scheme arises where the right to recovery created by
the Act confronts state law governing business entities like
corporations and partnerships.
Although there is a dearth of authority regarding CERCLA's
interaction with state partnership law,12 courts have been called
11
The district court concluded the question of whether the
Hutton partners were liable under partnership law was moot
because the Court ultimately allocated all the costs of cleaning
up the Site to Redwing. Redwing Carriers, 875 F.Supp. at 1557.
Since the district court on remand could arrive at a different
allocation of responsibility and assess some costs to the
Partnership, it is prudent to address whether the Hutton partners
can be held accountable for any CERCLA liability imposed on the
Partnership.
12
The parties have cited, and our research has uncovered,
only one reported decision from a federal court addressing a
limited partner's liability under CERCLA. See Soo Line R. Co. v.
B.J. Carney & Co., 797 F.Supp. 1472, 1485-86 (D.Minn.1992). In
Soo Line, the general and limited partners of a partnership moved
to dismiss the plaintiff's claim for imposing joint and several
liability against them based on the potential liability of the
partnership under CERCLA. Id. at 1485. The partners contended
they were shielded from such liability by state partnership law.
Id. at 1485-86. The limited partners in Soo Line, as the Hutton
partners have in this case, argued they were not liable under
state law for any debts of the partnership without having
controlled the partnership. Id. The district court rejected the
upon to resolve issues of CERCLA liability for corporations and
their shareholders. For example, courts in CERCLA actions have had
to determine when to "pierce the corporate veil" to hold a
corporation's shareholders liable, see United States v. Cordova
Chem. Co., 59 F.3d 584, 592 (6th Cir.), reh'g en banc granted and
judgment vacated, 67 F.3d 586 (6th Cir.1995); Lansford-Coaldale
Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1224-25 (3d
Cir.1993), whether a corporation can be held accountable as a
"successor" corporation for its predecessor's CERCLA liability, see
Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240, 1244-47 (6th
Cir.1991); Smith Land, 851 F.2d at 90-92, and whether a dissolved
corporation is subject to suit under CERCLA, see Levin Metals Corp.
v. Parr-Richmond Terminal Co., 817 F.2d 1448, 1450-51 (9th
partners' arguments reasoning:
[R]esponsible parties may be held jointly and severally
liable under CERCLA. Both individuals and partnerships
are statutorily defined "persons." ... As a general
rule, CERCLA imposes joint and several liability upon
responsible persons except where they can show that the
harm is divisible.... Accordingly, the Court will let
stand the allegations of joint and several liability
unless and until the defendants show that the harm is
divisible.
Id. at 1486 (citations omitted). Given the procedural
posture of Soo Line and the joint argument of the general
and limited partners in that case, we hesitate to read too
much into the district court's holding. Still, to the
extent the Soo Line court rested this particular holding on
the premise that CERCLA imposes liability directly on a
limited partner merely because the partnership itself is
liable, then we must respectfully disagree with this
conclusion. Such reasoning ignores the limited liability
nature of these partnerships under state law. As explained
earlier, nothing in CERCLA suggests we should disregard
traditional concepts of limited liability in the corporate
and partnership contexts in assessing owner liability under
the Act.
Cir.1987); United States v. Sharon Steel Corp., 681 F.Supp. 1492,
1494-98 (D.Utah 1987). In resolving questions of liability for
shareholders, officers and employees of corporations under CERCLA,
courts have reached different conclusions on whether state or
federal common law provides the rule of decision. Compare Anspec
Co., 922 F.2d at 1248-51 (Kennedy, J., concurring) (reasoning state
law governs the issue of corporate successor liability under
CERCLA) with Smith Land, 851 F.2d at 91-92 (stating federal common
law standard should govern successor liability) and Louisiana-
Pacific Corp. v. Asarco, Inc., 909 F.2d 1260, 1263 (9th Cir.1990)
(agreeing with Smith Land on this question).
Ultimately, federal law determines the issue of CERCLA
liability. CERCLA is a federal statute targeting a national
problem: the cleanup of hazardous waste sites. Consequently, the
rights and liabilities created by CERCLA are governed by federal
law. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 726-
28, 99 S.Ct. 1448, 1457-58, 59 L.Ed.2d 711 (1979); Clearfield
Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573,
574-75, 87 L.Ed. 838 (1943). The Supreme Court has cautioned,
however, that controversies governed by federal law "do not
inevitably require resort to uniform federal rules." Kimbell
Foods, 440 U.S. at 727-28, 99 S.Ct. at 1458 (citing Clearfield
Trust, 318 U.S. at 367, 63 S.Ct. at 575 and United States v. Little
Lake Misere Land Co., 412 U.S. 580, 594-95, 93 S.Ct. 2389, 2397-
2398, 37 L.Ed.2d 187 (1973)). Instead, "[w]hether to adopt state
law or to fashion a nationwide federal rule is a matter of judicial
policy "dependent upon a variety of considerations always relevant
to the nature of the specific governmental interests and to the
effects upon them of applying state law.' " Id. at 728, 99 S.Ct.
at 1458 (quoting United States v. Standard Oil Co., 332 U.S. 301,
310, 67 S.Ct. 1604, 1609, 91 L.Ed. 2067 (1947)).13
In Kimbell Foods, the Supreme Court fashioned a three-factor
test for determining whether, when filling a gap in a federal
statute, to craft a uniform common law rule or to adopt the
applicable state law rule as the federal standard. Under the
Kimbell Foods test, courts must consider:
1. whether there is a need for a nationally uniform body of law to
apply in situations like the one before the court;
2. whether application of the state law rule would frustrate
important federal policy; and
3. the impact a federal common law rule might have on existing
relationships under state law.
Id. at 728-29, 99 S.Ct. at 1458-59; FDIC v. Jenkins, 888 F.2d
13Subsection 113(f)(1) of CERCLA states actions for
contribution under the statute are "governed by Federal law." 42
U.S.C. § 9613(f)(1). As explained at the outset, Redwing's
CERCLA claims against the Appellees are for contribution and
hence controlled by § 113(f)(1). We do not, however, interpret §
113(f)(1)'s language as mandating a federal common law rule be
fashioned to resolve the issue of a limited partner's liability
under CERCLA for the partnership's debts.
The issue of the Hutton partners' liability under
CERCLA, as was the issue in Kimbell Foods, is unquestionably
"governed by federal law." Cf. Kimbell Foods, 440 U.S. at
726, 99 S.Ct. at 1457. Our task is to determine whether
"federal law" should be a uniform common law rule or the
applicable state law rule. In Kimbell Foods, the Supreme
Court held federal law should adopt "nondiscriminatory state
laws" as the federal decision rule in resolving the priority
of liens stemming from governmental lending programs. Id.
at 740, 99 S.Ct. at 1465. Similarly, we conclude state
partnership law should be adopted as the federal decision
rule for evaluating a limited partner's liability under
CERCLA. Thus, in resolving Redwing's contribution claims
under § 113(f), we are applying a federal law rule that is
defined by the applicable state law.
1537, 1545 (11th Cir.1989). As have other courts that have
addressed similar issues of corporate liability under CERCLA, see
Anspec Co., 922 F.2d at 1248-51 (Kennedy, J., concurring);
Atlantic Richfield Co. v. Blosenski, 847 F.Supp. 1261, 1279
(E.D.Pa.1994), we find it necessary to apply the Kimbell Foods test
to the issue of whether federal common law or state law should
govern when a limited partner can be held accountable for the
CERCLA liability of the partnership. After doing so, we conclude
this question should be answered according to the applicable state
law rule.
Initially, we are not convinced of the need for a uniform
14
federal rule governing limited partner liability under CERCLA.
14
There is significant agreement among the 50 states and the
District of Columbia on the broad outlines of a rule governing
the liability of limited partners. This is because nearly every
jurisdiction in this country has adopted a version of the Revised
Uniform Limited Partnership Act of 1976 (RULPA).
Section 303 of RULPA defines when a limited partner is
liable to a third party. See Revised Unif. Limited
Partnership Act § 303, 6A U.L.A. 144-45 (1995). As amended
in 1985, § 303 of RULPA holds a limited partner who has
"participate[d] in the control of the business" liable to:
persons who transact business with the limited
partnership reasonably believing, based upon the
limited partner's conduct, that the limited partner is
a general partner.
Id. at § 303(a), 6A U.L.A. 144. In its "safe harbor"
provisions, the model rule defines certain acts a limited
partner can take without being deemed to "participate in the
control of the business" thereby jeopardizing the partner's
limited liability. See id. at § 303(b), 6A U.L.A. 144-45.
This rule, with some modifications among the jurisdictions,
has been adopted by 39 states and the District of Columbia.
See id. at 6A U.L.A. 1-2 (table) (listing statutory
citations to state law adaptations of the model act).
Seven states—Alabama, Iowa, Michigan, Montana, New
Jersey, North Carolina and South Carolina—have adopted the
Adopting a uniform rule would, perhaps, expedite enforcement of
CERCLA by decreasing uncertainty in assessing liability under the
statute. But this argument could be made for adopting a uniform
rule in the context of just about any federal statute. If this
interest was sufficient in every case, then the Supreme Court would
not, as it did in Kimbell Foods, have sanctioned adopting state law
as the federal rule of decision. Absent a showing that state
partnership law is inadequate to achieve the goals of CERCLA, "we
discern no imperative need to develop a general body of federal
common law to decide cases such as this." Wilson v. Omaha Indian
Tribe, 442 U.S. 653, 673, 99 S.Ct. 2529, 2541, 61 L.Ed.2d 153(1979); cf. Anspec Co., 922 F.2d at 1249 (Kennedy, J., concurring)
(citing Wilson in support of adopting state corporate law on
"successor" liability in a CERCLA action).
Nor do we view state rules governing the liability of limited
partners as being in conflict with CERCLA's goals. "An essential
purpose of CERCLA is to place the ultimate responsibility for the
test for limited partner liability set forth in § 303(a) of
RULPA prior to the 1985 amendments. See id. Under this
standard, a limited partner is liable if:
in addition to the exercise of his [or her] rights and
powers as a limited partner, he [or she] takes part in
the control of the business. However, if the limited
partner's participation in the control of the business
is not substantially the same as the exercise of the
powers of a general partner, he [or she] is liable only
to persons who transact business with the limited
partnership with actual knowledge of his participation
in control.
Revised Unif. Limited Partnership Act § 303(a), 6A U.L.A.
144 (1995). With 47 jurisdictions having based their rule
of limited partner liability on either the amended or
unamended version of § 303 of RULPA, the need for a federal
common law standard diminishes.
clean up of hazardous waste on "those responsible for problems
caused by the disposal of chemical poison.' " Florida Power &
Light Co. v. Allis Chalmers Corp., 893 F.2d 1313, 1317 (11th
Cir.1990) (quoting United States v. Aceto Agric. Chems. Corp., 872
F.2d 1373, 1377 (8th Cir.1989)). CERCLA, however, does not purport
to be a source of partnership law. Thus, CERCLA does not require
federal law displace state laws governing the liability of limited
partners unless these laws permit action prohibited by the Act, or
unless "their application would be inconsistent with the federal
policy underlying the cause of action." Anspec Co., 922 F.2d at
1249-50 (Kennedy, J., concurring) (quoting Johnson v. Railway
Express Agency, 421 U.S. 454, 465, 95 S.Ct. 1716, 1722, 44 L.Ed.2d
295 (1975)).
In Anspec Co., Judge Kennedy of the Sixth Circuit made the
following observation regarding the adoption of state law on
corporate dissolution and merger as the federal decision rule under
CERCLA:
Any fears that states will engage in a "race to the bottom" in
their effort to attract corporate business and enact laws that
limit vicarious liability are in my opinion groundless.
States have a substantial interest in protecting their
citizens and state resources. Most states have their own
counterparts to CERCLA and the EPA and they share a
complementary interest with the United States in enforcement
of laws like CERCLA that are used to remedy environmental
contamination. I see no necessity to create federal common
law in this area to guard against the risk that states will
create safe havens for polluters.
Id. at 1250. This observation applies with equal force in the
context of state partnership rules governing the liability of
limited partners. At present, state rules permit plaintiffs to
hold limited partners accountable for a partnership's CERCLA
liability under certain circumstances. We do not foresee states
enacting more protective statutes in an effort to defeat CERCLA's
goal of having the polluter pay.
The third factor in the Kimbell Foods analysis, the
potentially unsettling effect of a federal common law rule on
relations grounded on state law, offers the strongest support for
adopting state law on limited partner liability. What makes
partnerships such as Saraland Limited attractive to investors is
the very concept of limited liability: as limited partners,
investors can participate in the partnership's profits without
exposing themselves to liability for the partnership's debts. When
determining whether to enter a limited partnership, however,
investors naturally evaluate their ability to control their risk by
participating in the management of the partnership. Existing state
limited-partnership statutes define how far a limited partner can
go in managing the partnership's business without losing its
limited liability status. Given the popularity of the
limited-partnership structure as a means of organizing businesses
and attracting investment in this country, we hesitate to upset the
expectations investors have under current state law rules by
adopting a federal common law rule.
The Kimbell Foods factors weigh against crafting a common law
rule in this case. Consequently federal law governing liability
under CERCLA should incorporate the applicable state law rule for
determining when a limited partner loses its limited liability
status so as to become accountable for the CERCLA liability of the
partnership. Having reached this conclusion, we turn to Alabama
law and the evidence of the Hutton partners' participation in
Saraland Limited.
Section 10-9A-42(a) of the Alabama Code provides:
A limited partner is not liable for the obligations of a
limited partnership unless he is also a general partner or, in
addition to the exercise of his rights and powers as a limited
partner, he takes part in the control of the business.
However, if the limited partner's participation in the control
of the business is not substantially the same as the exercise
of the powers of a general partner, he is liable only to
persons who, with actual knowledge of his participation in
control and in reasonable reliance thereon, transact business
with the partnership.
Ala.Code § 10-9A-42(a) (1994). In subsection (b), the statute
lists certain acts a limited partner can take without being deemed
to have "participate[d] in the control of the [partnership's]
business" thus subjecting the partner to liability for the
partnership's obligations under subsection (a). Id. § 10-9A-
42(b).15 The statute further clarifies that the listing of certain
15
Section 10-9A-42(b) of the Alabama Code states in full:
A limited partner does not participate in the control
of the business within the meaning of subsection (a) solely
by doing one or more of the following:
(1) Being a contractor for or an agent,
attorney-at-law, or employee of the limited partnership
or of a general partner, or an officer, director, or
shareholder of a general partner;
(2) Consulting with and advising a general partner
with respect to the business of the limited partnership
or examining into the state and progress of the
partnership business;
(3) Acting as surety or guarantor for any
liabilities for the limited partnership;
(4) Approving or disapproving an amendment to the
partnership agreement; or
(5) Voting on one or more of the following
matters:
"safe harbor" provisions in subsection (b) "does not mean that the
possession or exercise of any other powers by a limited partner
constitutes participation by him in the business of the limited
partnership." Id. § 10-9A-42(c).
Under this standard, any effort to hold the Hutton partners
liable must fail. While the Hutton partners possess rights under
the amended partnership agreement to control important decisions in
the Partnership's business, nothing in the record indicates the
Hutton partners have ever exercised any of these rights. At most,
the record reveals the Hutton partners have monitored their
investment and implemented certain bookkeeping practices for the
Partnership. Merely having the authority to control certain
aspects of a partnership's business without actually using that
authority does not amount to "tak[ing] part in the control of the
[partnership's] business."
Since the Hutton partners have not lost their limited
liability status under § 10-9A-42 of the Alabama Code, they cannot
be held accountable for Saraland Limited's CERCLA liability based
(i) The dissolution and winding up of the limited
partnership;
(ii) The sale, exchange, lease, mortgage, pledge,
or other transfer of all or substantially all of
the assets of the limited partnership other than
in the ordinary course of its business;
(iii) The incurrence of indebtedness by the
limited partnership other than in the ordinary
course of its business;
(iv) A change in the nature of the business; or
(v) The removal of a general partner.
Ala.Code § 10-9A-42(b).
on the Partnership's ownership of the Site.16
2. "Operator" Liability.
Whereas the Hutton partners can only be held indirectly
liable under CERCLA and Alabama law based on the Partnership's
ownership of Saraland Apartments, they can be held directly liable
as operators of the Site. In the corporate context, courts have
reasoned that an officer or a shareholder in a corporation may be
directly liable under CERCLA if the officer or shareholder in fact
operated the facility at issue. Sidney S. Arst Co. v. Pipefitters
Welfare Educ. Fund, 25 F.3d 417, 420-21 (7th Cir.1994); United
States v. Kayser-Roth Corp., 910 F.2d 24, 26-27 (1st Cir.1990),
cert. denied, 498 U.S. 1084, 111 S.Ct. 957, 112 L.Ed.2d 1045(1991). This is so despite the traditional corporate law principle
that officers, shareholders, and employees are not liable for the
acts of a corporation. Schiavone v. Pearce, 79 F.3d 248, 253-54
(2d Cir.1996); Riverside Mkt. Dev. Corp. v. International Building
16
Redwing argues the Hutton partners, as well as Coit and
Roar, are liable as "successors" to Saraland Limited's CERCLA
liability because the partners purchased interests in the
partnership. Redwing relies on cases applying the corporate law
doctrine of successor liability to hold a succeeding corporation
liable under CERCLA for the acts of a predecessor corporation.
See e.g., United States v. Carolina Transformer Co., 978 F.2d
832, 837-38 (4th Cir.1992) (applying doctrine in CERCLA action).
Redwing misconstrues the nature of successor liability.
In 1984, the Hutton partners, Coit, and Roar bought
interests in an on-going partnership. Although the current
Saraland Limited partnership could perhaps be considered a
"successor" to the partnership formed in 1973 given an
amended partnership agreement was executed in 1984, the
current partners themselves are not "successors" to any
partnership. Rather, they own an interest in the potential
"successor" partnership. Holding an interest in a
partnership, even a 99% interest, does not make a partner a
"successor" to any partnership debts.
Prods., 931 F.2d 327, 330 (5th Cir.), cert. denied, 502 U.S. 1004,
112 S.Ct. 636, 116 L.Ed.2d 654 (1991). We implicitly recognized
the direct nature of operator liability in Jacksonville Elec. Auth.
v. Bernuth Corp., 996 F.2d 1107, 1109-11 (11th Cir.1993)
[hereinafter "Jacksonville Elec."].17 The Hutton partners may
therefore be held accountable for cleaning up the Saraland Site,
despite the fact the Partnership owns the property, if the limited
partners themselves were operators of the Site.
In Jacksonville Elec., we reviewed the standard for assessing
operator liability under CERCLA. In that case, the owner of
property that was formerly the site of a wood treatment facility
sued Tufts University to recover costs the property owner had
17
Panels from two circuits have suggested that operator
liability under § 107(a) may only be imposed derivatively against
officers and shareholders in a corporation through "piercing the
corporate veil." In Joslyn Mfg. Co. v. T.L. James & Co., 893
F.2d 80, 82-83 (5th Cir.1990), cert. denied, 498 U.S. 1108, 111
S.Ct. 1017, 112 L.Ed.2d 1098 (1991), a Fifth Circuit panel
rejected any "control test" in assessing "owner or operator"
liability under § 107(a)(2). Without distinguishing between
"owner" and "operator" liability, the Joslyn Mfg. panel concluded
a shareholder could only be held liable under this provision in
circumstances justifying the piercing of the corporation's veil.
Joslyn Mfg., 893 F.2d at 83. A subsequent panel from the same
circuit, however, has reasoned "CERCLA prevents individuals from
hiding behind the corporate shield when, as "operators,' they
themselves actually participate in the wrongful conduct
prohibited by the Act." Riverside Mkt. Dev. Corp., 931 F.2d at
330. Riverside Mkt. suggests Joslyn Mfg.'s reasoning has been
limited to "owner" liability.
A panel of the Sixth Circuit likewise concluded in a
case involving a parent corporation being sued for the
conduct of its subsidiary that "a parent corporation incurs
operator liability pursuant to section 107(a)(2) of CERCLA
... only when the requirements necessary to pierce the
corporate veil are met." United States v. Cordova Chem.
Co., 59 F.3d 584, 590 (6th Cir.1995). This decision was
subsequently vacated for en banc rehearing by the Sixth
Circuit. See United States v. Cordova Chem. Co., 67 F.3d
586 (6th Cir.1995).
incurred in cleaning up creosote and arsenic contamination.
Jacksonville Elec., 996 F.2d at 1108. From 1926 to 1942, Tufts
University held most and eventually all of the stock of Eppinger &
Russell, the company that owned the wood treatment facility. Id.The property owner alleged the University was liable under
subsection 107(a)(2) of CERCLA as a party who operated the wood
treatment plant at the time creosote and arsenic were disposed of
on the property. Id. at 1109-11.
In upholding summary judgment for the University, we reasoned
that because "CERCLA contemplates "operator' liability based only
on a person's actions," mere ownership of stock in a corporation
that disposed of hazardous waste was not sufficient to hold a
shareholder liable. Id. at 1110. (citing Kayser-Roth, 910 F.2d at
27). Instead, shareholders are "operators" under the statute only
when "they themselves actually participate in the wrongful conduct
prohibited by the Act." Id. (quoting Riverside Mkt. Dev. Corp.,
931 F.2d at 330). We concluded:
[A] person is liable as an "operator" when that person
actually supervises the activities of the facility. That is,
the person must play an active role in the actual management
of the enterprise.
Id.
Citing Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d
837 (4th Cir.), cert. denied, 506 U.S. 940, 113 S.Ct. 377, 121
L.Ed.2d 288 (1992), Redwing argues the Hutton partners are
operators of the Saraland Site because they have the authority to
control the property. In Nurad, the Fourth Circuit reasoned
subsection 107(a)(2) imposes operator liability on a party who had
the "authority to control" a hazardous waste site regardless of
whether they exercised "actual control" of the site. Nurad, 966
F.2d at 842; see also United States v. Carolina Transformer Co.,
978 F.2d 832, 836-37 (4th Cir.1992) (interpreting Nurad as
requiring only "authority to control" site).18 Redwing contends the
Hutton partners have the authority to control the Saraland Site
because they own a 99% interest in the Partnership, retained
significant control over the Partnership's business through rights
secured in the amended partnership agreement, and agreed to remove
the tar seeps on the property.
Redwing's argument fails on both the law and the evidence.
The Fourth Circuit's "authority to control" test is simply
incompatible with our reasoning in Jacksonville Elec. In
Jacksonville Elec., we adopted the "actual control" standard for
operator liability. See Jacksonville Elec., 996 F.2d at 1110;
accord Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d
1209, 1222 (3d Cir.1993); Kayser-Roth, 910 F.2d at 27 (1st Cir.).19
18
The Ninth Circuit has suggested the "authority to control"
standard applies in that circuit as well. See Kaiser Aluminum &
Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1341-42 (9th
Cir.1992) (citing Nurad ).
19
The Eighth Circuit has rejected the "authority to control"
test articulated by the Fourth Circuit in Nurad in favor of the
following standard:
[A]n individual may not be held liable as an "operator"
under § 9607(a)(2) unless he or she (1) had authority
to determine whether hazardous wastes would be disposed
of and to determine the method of disposal and (2)
actually exercised that authority, either by personally
performing the tasks necessary to dispose of the
hazardous wastes or by directing others to perform
those tasks.
United States v. Gurley, 43 F.3d 1188, 1193 (8th Cir.1994),
cert. denied, --- U.S. ----, 116 S.Ct. 73, 133 L.Ed.2d 33(1995).
Under this standard, it is not enough that the Hutton partners hold
a 99% interest in Saraland Limited. Nor is it sufficient that the
limited partners have the authority under the partnership agreement
to control important decisions for the Partnership. Rather,
Redwing must demonstrate the Hutton partners either (1) actually
participated in operating the Site or in the activities resulting
in the disposal of hazardous substances, or (2) "actually exercised
control over, or [were] otherwise intimately involved in the
operations of" the Partnership. See Jacksonville Elec., 996 F.2d
at 1110 (quoting Levin Metals Corp. v. Parr-Richmond Terminal Co.,
781 F.Supp. 1454, 1456-57 & n. 9 (N.D.Cal.1991)).
Redwing has failed to show the Hutton partners actually
controlled the Partnership or the Site itself. As noted earlier,
there is no evidence the limited partners have invoked their rights
under the partnership agreement to control the Partnership's
affairs. Moreover, the record lacks any significantly probative
The Eighth Circuit's rule in Gurley goes beyond our
reasoning in Jacksonville Elec. in protecting officers,
shareholders and employees from operator liability. Under
Gurley, an officer or shareholder of a corporation can only
be found liable as an operator when they actually controlled
the disposal of hazardous substances at a facility. See id.In contrast, we stated in Jacksonville Elec. that "[a]ctual
involvement in decisions regarding the disposal of hazardous
substances is a sufficient, but not a necessary, condition
to the imposition of operator liability." Jacksonville
Elec., 996 F.2d at 1110 (quoting Jacksonville Elec. Auth. v.
Eppinger & Russell Co., 776 F.Supp. 1542, 1547-48
(M.D.Fla.1991)) (emphasis added). Under this Circuit's
standard, an individual need not have actually controlled
the specific decision to dispose of hazardous substances.
Rather, it is enough if the individual "actually
participated in the operations of the facility ... [or]
actually exercised control over, or was otherwise intimately
involved in the operations of, the corporation immediately
responsible for the operation of the facility." Id.(citation and quotation marks omitted).
evidence that the Hutton partners controlled the Saraland Site
itself or had any connection with the alleged disposals occurring
after they bought their interest in 1984.20 Redwing has therefore
failed to carry its burden on summary judgment of showing the
Hutton partners are operators of the Site.21
3. "Arranger" Liability.
Subsection 107(a)(3) imposes liability on "any person who by
contract, agreement, or otherwise arranged for disposal or
treatment ... of hazardous substances ... at any facility." 42
U.S.C. § 9607(a)(3).22 Redwing contends the Hutton partners have
"arranged for" the disposal of hazardous substances at the Saraland
20
Redwing claims the repaving of the apartment complex's
parking lot in 1986 and repair work on the gas line in 1991
resulted in "disposals" of contaminated dirt at the Site.
21
Redwing contends the Hutton partners agreed in 1984 to
remedy the tar seep problem at Saraland Apartments in exchange
for a $15,000 reduction in the purchase price of their
partnership interest. Redwing further claims HUD conditioned the
transfer of interests in Saraland Limited on the Hutton partners
assuming responsibility for the tar seep problem.
Even viewed in a light most favorable to Redwing, the
record does not reveal the Hutton partners received a
reduced price for assuming the duty of repairing the tar
seep problem or that HUD conditioned the 1984 deal on the
partners taking on this task. Assuming the record did
support Redwing's factual claims, we fail to appreciate how
this evidence supports finding the Hutton partners operated
the Site within the meaning of CERCLA. At best, this
evidence shows the Hutton partners agreed to rectify the tar
seeps noted in the 1984 HUD report. It does not suggest the
limited partners have assumed control over the Partnership
or the Site itself. And it does not link the partners to
the alleged disposals resulting from the parking lot
repaving in 1986 and the gas line work in 1991.
22
This liability, like that of an "operator" under
subsection 107(a)(1) and (a)(2), is direct. See United States v.
TIC Inv. Corp., 68 F.3d 1082, 1092 (8th Cir.1995), pet. for cert.
filed, 64 U.S.L.W. 3727 (U.S. Apr. 2, 1996) (No. 95-1698).
Site since they purchased their interests in the Partnership. In
particular, Redwing points to two events occurring after October
1984 that allegedly resulted in "disposals" on the property: the
repaving of the apartment complex's parking lot in 1986 and the gas
line repairs in 1991. Redwing also argues the Hutton partners
"arranged for" a disposal when they agreed to remove the tar seeps
as part of the 1984 deal, yet failed to do so.
The district court rejected Redwing's subsection 107(a)(3)
claim against the Hutton partners based on its finding the parking
lot and gas line repairs did not result in "disposals" of hazardous
substances as that term is used in CERCLA. See Redwing Carriers,
875 F.Supp. at 1559. In the alternative, the district court
reasoned the Hutton partners could not have "arranged for" a
disposal because the partners lacked the intent to dispose in
connection with the repairs in 1986 and 1991, and did not make any
of the "crucial decisions" regarding how, when, and where the
alleged disposals were to occur. See id. We agree with the
district court's disposition of this arranger claim, but for
different reasons.
Initially, Redwing fails to explain how the Hutton partners'
alleged inaction in cleaning up the tar seeps amounts to an
"arrangement" for disposal. Even assuming the record supported
Redwing's position that the partners agreed to clean up the tar
seeps, this demonstrates only that the partners agreed to remove
the tar-like substance from the Site and dispose of it elsewhere.
Redwing's proof fails to show the 1984 deal involved any
arrangement for the disposal of hazardous substances at the
Saraland Site. And this is the only facility at issue here.
Furthermore, we do not accept Redwing's premise that under the
circumstances of this case, the Hutton partners' alleged failure to
remove the tar seeps qualifies as an arrangement to dispose of a
hazardous substance. By failing to excavate the tar seeps, the
Hutton partners merely left the hazardous substances in the ground.
They took no "affirmative act" to dispose of the tar-like
substances. See South Fla. Water Management Dist. v. Montalvo, 84
F.3d 402, 407 (11th Cir.1996). While this inaction on the
partners' part may amount to a breach of an alleged contractual
duty, it does not amount to an "arrangement" for disposal within
the meaning of CERCLA.23
The record also fails to support an arranger claim based on
the parking lot repaving and gas line work. Simply put, Redwing
has failed to establish any link between the Hutton partners and
these events. Again, there is no proof the Hutton partners
participated in the management of the apartment complex, or
otherwise approved of the repairs. Indeed, there is no evidence
the partners even knew about these events at the time they were
occurring. Absent some evidence linking the Hutton partners to the
23
In holding Redwing has failed to demonstrate a subsection
107(a)(3) claim against the Hutton partners in this case, we are
not stating it is impossible for an arranger claim to be based on
a defendant's failure to take action. Whether a party has
"arranged for" the disposal of a hazardous substance within the
meaning of subsection 107(a)(3) depends on the particular facts
of the case. South Fla. Water Management Dist., 84 F.3d at 407.
Here, the record fails to demonstrate the Hutton partners made
any "arrangement to dispose" by simply failing to rectify the tar
problems at the Saraland Apartments complex. It is possible that
under different factual circumstances, a plaintiff could
predicate a claim under subsection 107(a)(3) on a defendant's
failure to act.
decisions to make these repairs, Redwing's arranger claims must
fail.
Under the circumstances, we conclude the district court
properly granted summary judgment to the Hutton partners on
Redwing's claims under subsection 107(a)(3). Since we also find
the district court did not err in granting judgment for the limited
partners on Redwing's owner and operator claims under subsections
107(a)(1) and (a)(2), we affirm the court's grant of summary
judgment in favor of the Hutton partners in all respects.24
24
In its 1993 unilateral administrative order (UAO), the EPA
concluded the Hutton partners, as well as the other Appellees,
were responsible parties under § 107(a) of CERCLA. Redwing
repeatedly refers to the EPA's UAO as proof the Appellees are
liable under the Act and should be forced to bear part or all of
the clean up costs at the Site. Redwing suggests this Court must
defer to the EPA's findings in its UAO because Congress has
entrusted the agency to interpret and administer CERCLA.
Redwing mischaracterizes the nature of the EPA's
findings in its UAO. The EPA issued this order pursuant to
its authority under § 106(a) of CERCLA to issue "such orders
as may be necessary to protect public health and welfare and
the environment." See 42 U.S.C. § 9606(a). When the EPA
issues a § 106 order to a party, the agency is not
interpreting the statute or otherwise engaging in rulemaking
authorized by Congress. Instead, the EPA is acting in its
role as prosecutor in enforcing a federal environmental
statute. Any findings made in such orders are therefore not
entitled to deference under the reasoning of Chevron U.S.A.,
Inc. v. Natural Resources Defense Counsel, Inc., 467 U.S.
837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) or our decision
in Borden v. Meese, 803 F.2d 1530, 1535 (11th Cir.1986).
Rather than being authoritative interpretations of a
statute, these findings are merely the agency's conclusions
regarding who is liable under CERCLA given the facts of a
particular case. Although the EPA's view of who is liable
for cleaning up the Saraland Site may support Redwing's
case, neither the district court nor this Court are obliged
to defer to the agency's conclusions on this issue. Courts,
not the EPA, are the adjudicators of the scope of CERCLA
liability. See Kelley v. Environmental Protection Agency,
15 F.3d 1100, 1107-08 (D.C.Cir.1994), cert. denied, --- U.S.
----, 115 S.Ct. 900, 130 L.Ed.2d 784 (1995).
B. Robert Coit and Roar Company
At the same time the Hutton partners invested in Saraland
Limited, Robert Coit and Roar Company became general partners in
the Partnership. Redwing alleges the general partners, like the
limited partners, are liable as owners and operators of the
Saraland Site. Redwing further asserts Coit and Roar have on
several occasions "arranged for" the disposal of hazardous
substances on the property. Coit and Roar initially deny being
responsible parties as defined in § 107(a). Assuming they are
responsible under § 107(a), Coit and Roar contend the "third-party"
defense of subsection 107(b)(3) shields them from liability.
The district court concluded Coit and Roar were entitled to
summary judgment on both grounds. See Redwing Carriers, 875
F.Supp. at 1566-67. Since we agree with the district court's
finding that Coit and Roar have carried their burden of proving
their affirmative defense, we affirm summary judgment in their
favor on Redwing's CERCLA claims brought directly against these
partners. For the purposes of this appeal, we assume Coit and Roar
are responsible parties under § 107(a) of CERCLA.25
Persons who are responsible under § 107(a) may escape CERCLA
liability if they can prove one of the three affirmative defenses
set forth in § 107(b). See 42 U.S.C. § 9607(a). The first two
defenses, barring liability if a release or threat of release
resulted solely from an "act of God" or an "act of war," are rarely
invoked and not applicable here. See id. § 9607(b)(1), (2). The
25
We express no opinion regarding the district court's
finding that Coit and Roar are not responsible parties within the
meaning of § 107(a).
final defense, referred to as the "third-party" defense, is cited
most often by litigants. See id. § 9607(b)(3). Subsection
107(b)(3) provides in relevant part:
"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—
....
(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 ... if the
defendant establishes by a preponderance of the evidence that
(a) he exercised due care with respect to the hazardous
substance concerned, taking into consideration the
characteristics of such hazardous substance, in light of all
relevant facts and circumstances, and (b) he took precautions
against foreseeable acts or omissions of any such third party
and the consequences that could foreseeably result from such
acts or omissions ..."
Id. § 107(b)(3).
Coit and Roar have satisfied all the elements of this defense.
The general partners have never had a direct or indirect
contractual relationship with either Redwing or Meador Contracting
Company—the only two parties whose conduct potentially caused the
release or threat of release of hazardous substances at the
Saraland Site.26 Redwing closed its trucking terminal on the
26
The general partners and the district court point to
Redwing as being the only "third party" at issue here. See
Redwing Carriers, 875 F.Supp. at 1567. Although it was Redwing
who originally disposed of the toxic substances now seeping to
the surface of the Site, Meador is another party who may be
guilty of causing a release or threat of release on the property.
As explained in section III(D), infra, we reverse the district
court's summary judgment in favor of Meador after concluding that
in grading and filling the land while constructing the apartment
complex, Meador's subcontractor may have dispersed contaminated
soil throughout the Site. Meador therefore must be considered a
"third party" potentially responsible for the release or threat
property in 1972. Approximately two years later, Meador graded and
filled the property while building the apartment complex. Coit and
Roar had no contact with these parties when they purchased their
partnership interest in Saraland Limited in 1984—12 years after
Redwing last buried toxic substances on the Site. It is plain that
the environmental damage to this property was done long before Coit
and Roar ever became partners in Saraland Limited.
The record indicates that since 1984, the general partners
have exercised due care towards the hazardous substances
contaminating the property. A HUD report identified tar seeps on
the property in August 1984, and three months later Coit approved
a maintenance plan to remove the seeps. In April and May of 1985,
the EPA conducted its preliminary investigation of the Site. Two
months later, the EPA entered into its first consent order with
Redwing requiring Redwing to, among other things, periodically
remove tar-like material from the surface of the property. Thus,
less than a year after Coit and Roar became general partners, a
program was in place to remedy the tar seeps on the property.
Meanwhile, Coit and Roar have demonstrated they did nothing to
exacerbate conditions at the Site. Redwing has identified only two
events after 1984—the repaving of the parking lot and the
maintenance work on the gas line—that allegedly increased the
amount of contaminated soil on the property. As general partners,
Coit and Roar approved these projects. Nothing suggests, however,
that in repaving the parking lot and repairing the gas line,
workers disturbed contaminated soil or otherwise disposed of
of release of hazardous substances at the Site.
hazardous substances on the Site. The record supports the general
partners' position that they have taken all necessary precautions
in addressing a toxic waste problem created almost entirely by
Redwing.
Regardless of their liability under § 107(a), Coit and Roar
have carried their burden of demonstrating they are entitled to
summary judgment on their third-party defense under § 107(b). This
defense relieves the general partners of any direct liability under
CERCLA.
We note, however, that whether Coit and Roar are accountable
for the Partnership's CERCLA liability remains an open issue.27
Although the parties debated this question on summary judgment, the
district court did not grant or deny judgment on this claim.
Instead, the court dismissed all "partnership law" claims as being
moot. Redwing Carriers, 875 F.Supp. at 1571. This holding is
27
It is widely accepted that general partners are liable for
a partnership's debts. Every state except Louisiana has adopted
a version of either the Uniform Partnership Act of 1914 (1914
Act) or Uniform Partnership Act of 1994 ("Revised Act"). See
Unif. Partnership Act (1994), 6 U.L.A. 1 (1995) (table) and Unif.
Partnership Act (1914), 6 U.L.A. 125-26 (1995) (table). Section
15 of the 1914 Act makes general partners jointly liable for the
obligations of the partnership. Unif. Partnership Act (1914) §
15, 6 U.L.A. 456. Among the states that have adopted the 1914
Act, there is a split between those who have retained the joint
liability standard proposed by the drafters and those who
modified the uniform rule to impose joint and several liability.
See id. (comment). The Revised Act, which has been adopted in
seven states, modifies the 1914 Act to impose joint and several
liability. See Unif. Partnership Act (1994) § 306, 6 U.L.A. 45.
Both the 1914 Act and the Revised Act limit the liability of
incoming partners for pre-existing partnership obligations. See
id.; Unif. Partnership Act (1914) § 17, 6 U.L.A. 519. Although
the nature of liability varies, the 49 jurisdictions that have
patterned their partnership law on one of the uniform acts all
impose liability on general partners for the obligations of the
partnership.
apparently premised on the court's absolving the Partnership of any
liability by allocating the entire cost of cleaning up the Site to
Redwing. As explained below, we must reverse and remand the
district court's equitable allocation of costs in light of our
conclusion the court erred in granting summary judgment in favor of
Marcrum and Meador. Should the district court on remand find
Saraland Limited must bear some of the response costs, the question
of Coit and Roar's liability for these costs would again be before
the court. Since the record in regard to Redwing's partnership law
claims against Coit and Roar is poorly developed, we leave it to
the district court to address the legal and factual issues raised
by Redwing's derivative claims against the general partners.
C. Marcrum Management Co.
The 1984 partnership agreement between Coit, Roar, and the
Hutton partners calls for a "management agent" to carry out the
general partners' duty of managing Saraland Apartments. Since
1980, Marcrum Management Co. has served as the Partnership's
management agent. An agreement between Marcrum and the Partnership
details the company's duties.28 Marcrum characterizes its role as
providing "administrative" assistance and "consulting" with the
Partnership on how the complex should be managed.
Redwing asserts Marcrum is not a mere consultant, but is
28
Marcrum must perform the following services, among others,
at the complex: (1) show the premises to prospective tenants, as
well as process rental applications, screen applicants, and lease
apartments; (2) collect rents; (3) enforce leases; and (4)
maintain and repair the complex. Although the management
agreement designates the residential manager an employee of the
Partnership, the agreement holds Marcrum responsible for hiring,
supervising, and firing the resident manager.
instead responsible for the daily management of the complex.
Consequently, Redwing alleges Marcrum is liable as the current and
past operator of the Site under subsections 107(a)(1) and (a)(2).
The district court granted Marcrum's motion for summary judgment on
these claims after finding Marcrum was not an "operator" of the
Site based on the reasoning of Jacksonville Elec. Redwing Carriers,
875 F.Supp. at 1559-60. The court further reasoned Marcrum could
not be liable under subsection 107(a)(2) because there were no
"disposals" on the property after Marcrum became involved with the
Site in 1980. Id. at 1560-63.29
Contrary to Marcrum's claim, there is evidence the management
company has done more than "consult" or give "administrative"
assistance in managing the complex. The record indicates Marcrum
has done the following in its role as managing agent for the
complex:
1. prepared annual budgets for the complex and required the
resident manager to regularly report expenses to Marcrum and
seek approval from Marcrum of any expenses exceeding the
budget;
2. regularly inspected the complex, and required the resident
manager to perform quarterly inspections and report on these
inspections to Marcrum;
3. ordered the resident manager to implement major improvement and
repair programs for the complex as a whole;
4. ordered the resident manager to make specific repairs to
particular units by certain deadlines;
5. received complaints from tenants, and forwarded these complaints
29
In its amended complaint, Redwing also charged Marcrum
with having "arranged for" the disposal of hazardous substances
at the Site according to subsection 107(a)(3). The district
court granted summary judgment in favor of Marcrum on this
arranger claim, see Redwing Carriers, 875 F.Supp. at 1563, but
Redwing has not appealed this holding.
to the resident manager with instructions as to how and by
when to respond to the complaints; and
6. prepared proposed rent increases for approval by the Partnership
and HUD.
In addition to having a hand in these routine operations of the
complex, the record also suggests Marcrum has, in the past, been
partly responsible for remedying tar seeps as they appeared on the
property.
Taken as a whole, this evidence could support a claim that
Marcrum is an operator of the Saraland Site. Unlike the case
against Tufts University in Jacksonville Elec., it is evident
Marcrum is "actively involved in ... [the] occupational business
affairs" of Saraland Apartments. This supports finding Marcrum has
"actually participated in the operations of the facility" so as to
be an "operator" within the meaning of § 107(a). Jacksonville
Elec., 996 F.2d at 1110. We therefore reverse the district court's
grant of summary judgment on Redwing's claim under subsection
107(a)(1) based on Marcrum being a current operator of the Site.
While demonstrating Marcrum is currently an operator of the
Site may establish a claim under subsection (a)(1), this does not
support an operator claim under subsection (a)(2). Subsection
(a)(2) covers only persons who were operators of a facility "at the
time of disposal of any hazardous substance." 42 U.S.C. §
9607(a)(2). Under this provision, Marcrum is only accountable if
a "disposal" occurred during the time it has operated the facility,
i.e., since 1980. Again, the only two events occurring after 1980
that could possibly be deemed "disposals" are the gas line repair
work and the repaving of the complex's parking lot. Redwing's
subsection 107(a)(2) claim against Marcrum is based on the belief
that during these activities, workers disturbed and disbursed
contaminated soil at the Site.
The district court did not dispute Redwing's premise that the
dispersal of hazardous substances already deposited at a facility
could amount to a "disposal" under CERCLA. See Redwing Carriers,
875 F.Supp. at 1561. Instead, the court crafted a test for when
such a dispersal results in a "second-hand disposal." Id. at 1561-
63. Applying this test, the district court concluded neither the
gas line repair work nor the parking lot repaving qualified as a
"disposal" within the meaning of CERCLA. Id. at 1563.
While we arrive at the same conclusion, we must reject the
district court's "second-hand disposal" standard and its analysis.
According to CERCLA, a "disposal" occurs whenever a party
"deposit[s] ... or plac[es] ... any solid waste or hazardous waste
into or on any land or water so that such solid waste or hazardous
waste or any constituent thereof may enter the environment or be
emitted into the air or discharged into any waters, including
ground waters." 42 U.S.C. §§ 9601(29), 6903(3). Instead of
parsing the language of this definition to arrive at a rigid rule
for when conduct results in a "disposal," courts should look at the
definition of "disposal" in its entirety in ascertaining whether a
particular event qualifies as such.
Viewed in this fashion, we do not read CERCLA's definition of
"disposal" as being limited to instances where a hazardous
substance is initially introduced into the environment at a
facility. See Kaiser Aluminum & Chem. Corp. v. Catellus Dev.
Corp., 976 F.2d 1338, 1342 (9th Cir.1992). Rather, CERCLA's
definition of "disposal" should be read broadly to include the
subsequent movement and dispersal of hazardous substances within a
facility. Id. (citing Tanglewood E. Homeowners v. Charles-Thomas,
Inc., 849 F.2d 1568, 1573 (5th Cir.1988)).
As noted earlier, however, the record lacks any evidence that
either the repaving of the parking lot in 1986 or the gas line work
in 1991 resulted in a movement of contaminated soil. As to the
repaving of the parking lot, the record reveals only that this task
was performed. Nothing suggests that during the course of the
repaving any contaminated soil was moved or dispersed on the Site.
Likewise, the record does not indicate soil was "disposed of" while
servicing the gas line in 1991. While this maintenance
necessitated digging through soil to reach the gas line, there is
no indication the soil was contaminated. Furthermore, the only
reasonable inference is that any soil dug up during the process was
returned from whence it came. No matter how broadly the term is
defined, this conduct did not amount to a "disposal."
Redwing has therefore failed to carry its burden of
demonstrating there is a genuine issue of fact as to whether either
the gas line work or the parking lot repaving resulted in a
"disposal" as defined in CERCLA. The district court thus properly
granted summary judgment against Redwing on its operator claim
against Marcrum based on subsection 107(a)(2).
D. Meador Contracting Company
Meador's only connection with the Site was back in 1973 and
1974 when, as the Partnership's contractor, Meador constructed the
Saraland Apartments complex. In preparing to build the complex,
Meador had to excavate, grade, and fill the land over much of the
five-acre site. Meador apparently subcontracted part or all of
this excavation work to another party. Meador hired another
subcontractor to apply the pesticides chlordane and dieldrin to the
ground and foundations of the buildings as termite treatment.
Tests reveal these two hazardous substances are present in the soil
at the Site.
Based on the excavation and pesticide treatment, Redwing
alleges Meador "arranged for" the disposal of hazardous substances
on the property.30 Redwing contends that in grading and filling the
land, Meador and its subcontractor dug up and dispersed throughout
the property the tar-like substances Redwing had earlier buried on
the Site. According to Redwing, this dispersal amounted to a
"disposal" under CERCLA. Redwing further argues the application of
chlordane and dieldrin was a separate disposal of hazardous
substances for which Meador can be held accountable under
subsection 107(a)(3).
The district court rejected Redwing's arguments and granted
summary judgment to Meador. Redwing Carriers, 875 F.Supp. at 1564-
30
Redwing also asserts Meador was an "operator" of the Site
under subsection 107(a)(2). Redwing neither pled this claim in
its amended complaint nor argued it before the district court in
summary judgment proceedings. As a general rule, we will not
address claims or arguments not fairly presented to the district
court. RTC v. Dunmar Corp., 43 F.3d 587, 598 (11th Cir.) (en
banc), cert. denied, --- U.S. ----, 116 S.Ct. 74, 133 L.Ed.2d 33(1995). We therefore refuse to review Redwing's claim that
Meador is an "operator" under CERCLA. For the same reason, we
decline to address Meador's defense that holding it liable under
CERCLA would amount to an unconstitutional extension of Congress'
Commerce Clause powers according to United States v. Lopez, ---
U.S. ----, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995).
65. Relying on its "second-hand disposal" analysis, the court
concluded the grading and filling of the Site in 1973 and 1974 did
not result in a "disposal." Id. at 1564. The court further
reasoned Meador was insulated from liability for the termite
treatment by subsection 107(i) of the Act.31 Id. at 1564-65.
Two other circuits have interpreted CERCLA's definition of
"disposal" to include the dispersal of contaminated soil during the
excavation and grading of a construction site. See Kaiser Aluminum
& Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1342 (9th
Cir.1992); Tanglewood E. Homeowners v. Charles-Thomas, Inc., 849
F.2d 1568, 1573 (5th Cir.1988). In Kaiser, it was alleged a
contractor had excavated tainted soil during the construction of a
housing development at the former site of a shipbuilding plant.
976 F.2d at 1339-40. The contractor allegedly spread this soil
over uncontaminated portions of the property. Id. at 1342.
31
This provision states in relevant part:
No person (including the United States or any State or
Indian tribe) may recover under the authority of this
section for any response costs or damages resulting
from the application of a pesticide product registered
under the Federal Insecticide, Fungicide, and
Rodenticide Act [FIFRA].
42 U.S.C. § 9607(i).
We affirm the district court's finding that Meador
cannot be held liable for the alleged disposal of chlordane
and dieldrin. Redwing has not produced any evidence
refuting Meador's proof that these pesticides were properly
applied to treat the property for termites. Although
chlordane and dieldrin have since lost their registration
under FIFRA, the record indicates these pesticides were
registered under FIFRA at the time they were applied at the
Site. Subsection 107(I) thus protects Meador from liability
under CERCLA for this application. See 42 U.S.C. § 9607(i).
Likewise, developers in Tanglewood allegedly filled and graded
creosote pools on the grounds of a former wood treatment facility.
849 F.2d at 1573. The courts in Kaiser and Tanglewood held these
allegations stated the developers had disposed of hazardous
substances for CERCLA purposes even though they had not introduced
the substances to the sites. See Kaiser, 976 F.2d at 1342;
Tanglewood, 849 F.2d at 1573. We agree with the Fifth and Ninth
circuits, and hold that a "disposal" may occur when a party
disperses contaminated soil during the course of grading and
filling a construction site.
In the district court, Redwing supported its motion for
summary judgment with evidence showing contaminated soil was
dispersed during the construction of Saraland Apartments.
Redwing's expert testified that soil borings revealing seams of the
tar-like substance are located in fill material placed on the Site
during construction. Moreover, contaminated soil has been found in
an area of the Site that was inaccessible during Redwing's
occupation of the property. This evidence contradicts Meador's
position that any contaminated soil encountered during the
preparation of the Site was dug up and disposed of off the
property.
Unable to prevail on its disposal argument, Meador contends
it still cannot be held liable under subsection 107(a)(3) because
it never intended to dispose of hazardous substances when it built
the complex and did not make the "crucial decisions" regarding how,
where, and when to dispose of contaminated soil at the Site. A
CERCLA plaintiff, however, need not demonstrate a party acted with
the specific intent to dispose of hazardous substances or made
certain "crucial decisions" regarding the disposal of those
substances in order to establish a defendant has "arranged for" a
disposal. South Fla. Water Management Dist. v. Montalvo, 84 F.3d
402, 407 (11th Cir.1996); United States v. TIC Inv. Corp., 68 F.3d
1082, 1088-89 (8th Cir.1995) (rejecting argument that subsection
107(a)(3) incorporates a specific intent requirement). While these
factors are certainly relevant in assessing arranger liability,
they are not required to establish liability under subsection
107(a)(3) in every case. See South Fla. Water Management Dist., 84
F.3d at 407.
Since the district court erred in finding as a matter of law
that the grading and filling of the Site could not have resulted in
a disposal of hazardous substances, we reverse on this claim.
E. Equitable Allocation of Costs under § 113(f)
Of the Appellees, the district court found only Saraland
Limited was a responsible party under § 107(a). The court,
however, granted summary judgment to the Partnership and the
partners on their counterclaims against Redwing for contribution
under § 113(f). This section provides that a court "may allocate
response costs among liable parties using such equitable factors as
the court determines are appropriate." 42 U.S.C. § 9613(f). The
court concluded that between Redwing and Saraland Limited, Redwing
should bear all of the costs of cleaning up the Saraland Site.
Redwing Carriers, 875 F.Supp. at 1569.
Having determined the district court erred in granting summary
judgment in favor of Marcrum and Meador, we must reverse the
district court's allocation of costs under § 113(f). On remand,
Marcrum and Meador could be found responsible parties under §
107(a) thus requiring the court to evaluate whether they should
share liability with Redwing and Saraland Limited. In reversing
the district court's allocation under § 113(f), we express no
opinion on the court's decision to hold Redwing entirely
responsible for cleaning up the property. Although the parties
debate the equity of this holding, we need not review it at this
time.
Our attention is instead drawn to the district court's
underlying legal analysis which illustrates how courts and
practitioners often misinterpret the nature of liability under §
113(f). The court reasoned that prior to allocating costs based on
"such equitable factors as the court determines are appropriate,"
it first had to find the harm at the Saraland Site was "divisible."
In finding the harm at the Site was divisible, the court relied on
United States v. Monsanto Co., 858 F.2d 160, 171-72 (4th Cir.1988),
cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019(1989), where the Fourth Circuit adopted the rule of § 433A of the
Restatement (Second) of Torts for determining when to impose joint
and several liability on parties found liable to federal and state
governments under § 107(a) of CERCLA. Redwing Carriers, 875
F.Supp. at 1568. Through its reliance on Monsanto and other cases
involving governmental plaintiffs, the district court improperly
imported the "divisibility" defense to joint and several liability
under § 107(a) into the analysis for equitable allocation under §
113(f).
CERCLA creates two avenues of recovery for two types of
plaintiffs. Parties who are not themselves liable or potentially
liable for response costs under § 107(a) of CERCLA can bring a cost
recovery action directly under § 107(a) against potentially
responsible parties. See United Technologies Corp. v. Browning-
Ferris Indus., 33 F.3d 96, 99-100 (1st Cir.1994), cert. denied, ---
U.S. ----, 115 S.Ct. 1176, 130 L.Ed.2d 1128 (1995); Akzo Coatings,
Inc. v. Aigner Corp., 30 F.3d 761, 764 (7th Cir.1994). Although it
possible that a private party may qualify as an "innocent"
plaintiff enabling it to bring a cost recovery action based on §
107(a) alone, the typical § 107(a) action is brought by a
governmental plaintiff that has expended taxpayer dollars in
cleaning up a facility. In most of these cases, where the focus is
on allowing state and federal governments to recoup their expenses,
defendants are held jointly and severally liable. See, e.g.,
O'Neil v. Picillo, 883 F.2d 176, 183 (1st Cir.1989), cert. denied,
493 U.S. 1071, 110 S.Ct. 1115, 107 L.Ed.2d 1022 (1990); Monsanto,
858 F.2d at 171-73.
Joint and several liability under § 107(a) is not automatic,
however. Recognizing Congress' intent that "traditional and
evolving common law principles" should define the scope of
liability under CERCLA, courts have looked to the Restatement
(Second) of Torts, particularly § 433A, for guidance. In re Bell
Petroleum Servs., Inc., 3 F.3d 889, 895 (5th Cir.1993); accord
United States v. Alcan Aluminum Corp., 964 F.2d 252, 268 (3d
Cir.1992); Monsanto, 858 F.2d at 172. This section provides:
(1) Damages for harm are to be apportioned among two or more
causes where
(a) there are distinct harms, or
(b) there is a reasonable basis for determining the
contribution of each cause to a single harm.
(2) Damages for any other harm cannot be apportioned among two
or more causes.
Restatement (Second) of Torts § 433A (1965). Consequently, courts
will not hold a defendant jointly and severally liable to a
governmental or non-liable private plaintiff where the defendant
can demonstrate the harm at a given site is "divisible," i.e.,
there are distinct harms or a reasonable basis for determining the
contribution of each cause to a single harm. Bell Petroleum, 3
F.3d at 904; Alcan Aluminum, 964 F.2d at 268-69; United States v.
Chem-Dyne Corp., 572 F.Supp. 802, 810 (S.D.Ohio 1983). When a
defendant successfully demonstrates the harm at the site is
divisible, it will only be held liable for that portion of the
cleanup costs attributable to its conduct. Alcan Aluminum, 964
F.2d at 269; Chem-Dyne, 572 F.Supp. at 810.
While the "divisibility" defense to joint and several
liability is frequently invoked in cost recovery actions brought
under § 107(a), it is not a defense to a contribution action under
§ 113(f). In contrast to a § 107(a) action, a contribution claim
under § 113(f) is a means of equitably allocating response costs
among responsible or potentially responsible parties. See S.Rep.
No. 11, 99th Cong., 1st Sess. 44 (1985). Thus, when one liable
party sues another liable party under CERCLA, the action is not a
cost recovery action under § 107(a). Rather, it is a claim for
contribution under § 113(f). See United States v. Colorado & E.R.
Co., 50 F.3d 1530, 1535-36 (10th Cir.1995); Amoco Oil Co. v.
Borden, Inc., 889 F.2d 664, 672 (5th Cir.1989). Whereas joint and
several liability is the rule for defendants in actions under §
107(a), courts in contribution cases may "allocate response costs
among liable parties." See 42 U.S.C. § 9613(f)(1). This could
include allocating some response costs to the plaintiff. Since
there is no joint and several liability among defendants in a
contribution action, the divisibility defense has no relevance as
a "defense" in these cases.32
As we noted at the outset of our discussion, Redwing's CERCLA
claims against the Appellees are claims for contribution governed
by § 113(f). This is true as well for the Appellees' CERCLA
counterclaims. The divisibility defense is therefore not at issue
in this case. Once the district court determines who are
responsible parties under § 107(a), the next step under § 113(f) is
to equitably allocate responsibility among the parties.
Divisibility of the harm at the Saraland Site is not a prerequisite
to making this allocation.
IV. CONCLUSION
Noting "the essential policy underlying CERCLA is to place the
ultimate responsibility for cleaning up hazardous waste on those
responsible for [the] problems cause by the disposal of chemical
poison," the district court held Redwing responsible for the entire
cost of cleaning up the Saraland Site. Redwing Carriers, 875
32
This is not to say the ability of the court, with the
assistance of the parties, to distinguish among separate harms
caused by different parties at a site is irrelevant in allocating
response costs under § 113(f). This is unquestionably an
"appropriate" factor for a court to consider in making a fair
division of liability.
F.Supp. at 1569 (citations and quotation marks omitted). While we
agree Redwing must bear its fair share of the cost of remedying a
condition it largely created, the district's court's holding was
premature. We affirm the court's grant of summary judgment in
favor of the Hutton partners. And with the exception of Redwing's
partnership law claims against Coit and Roar, we affirm summary
judgment for the general partners as well. As to Marcrum, we
affirm summary judgment on Redwing's claims premised on subsections
107(a)(2) and (a)(3). We reverse, however, on Redwing's operator
claim against Marcrum based on subsection 107(a)(1). We likewise
find there are genuine issues of material fact precluding summary
judgment on Redwing's arranger claim against Meador. If Marcrum
and/or Meador are found to be responsible parties under § 107(a) of
CERCLA, then the district court must consider their roles and
circumstances in allocating costs under § 113(f).
AFFIRMED in part, REVERSED in part, and REMANDED.