Montville Township v. Woodmont Builders, LLC , 244 F. App'x 514 ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
8-8-2007
Montville v. Woodmont Bldrs
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-4888
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"Montville v. Woodmont Bldrs" (2007). 2007 Decisions. Paper 604.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-4888
MONTVILLE TOWNSHIP,
Appellant
v.
WOODMONT BUILDERS, LLC;
DAVID MANDELBAUM; NATHAN MANDELBAUM;
RONALD G. TARGAN; RICHARD W. KORALEK;
POST, BUCKLEY, SCHUH & JERNIGAN, INC.
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action No. 03-cv-2680
(Honorable Dickinson R. Debevoise)
Submitted Pursuant to Third Circuit LAR 34.1(a)
April 23, 2007
Before: SCIRICA, Chief Judge, FUENTES and ALARCÓN * , Circuit Judges.
(Filed August 8, 2007 )
OPINION OF THE COURT
*
The Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Judicial
Circuit, sitting by designation.
SCIRICA, Chief Judge.
This appeal arises from an action brought by Montville Township against
Woodmont Builders, LLC, and several former owners (“the Mandelbaum Defendants”)1
of a contaminated tract of land (“the Property”) in Montville Township, N.J. The
Township sought to recover a share of the tract’s clean-up costs under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9601–9675 (CERCLA), as modified by the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613. The Township filed suit under
CERCLA § 107(a) (as well as other statutory and common law provisions), but the
District Court dismissed its claim. The Supreme Court’s recent intervening decision in
United States v. Atlantic Research Corp., 127 S. Ct. 2331 (2007), directly controls the
issue. On this basis, we will reverse in part, affirm in part, vacate in part, and remand for
proceedings consistent with that decision and this opinion.
I.
The Property is a 130-acre tract of land that was previously used for agricultural
purposes. In July 1999, the Township purchased a 100-acre parcel of the Property from
1
The former owners include David Mandelbaum and Nathan Mandelbaum, along with
Ronald G. Targan, Leslie J. Koralek, and Richard W. Koralek, co-trustees under the Anita
S. Koralek Living Trust. Montville also brought suit against the environmental
engineering firm Post, Buckley, Schuh & Jernigan, Inc., which informed this Court by
letter dated March 23, 2006, that it is not a party to this appeal (a point the Township does
not appear to have contested).
2
the Mandelbaum Defendants to use as open space. Woodmont contracted to develop the
remaining thirty acres, obtained permission to subdivide the land for residential use, and
agreed to remove debris from the Property before the transaction’s closing. In April
1998, the environmental engineering firm Post, Buckley, Schuh & Jernigan, Inc.
(“PBS&J”) had issued a report to the Township after conducting an environmental
assessment of the Property. PBS&J’s report identified areas of concern on the Property,
including above-ground storage containers and debris, and noted that, “[w]hile none of
the observed debris was considered hazardous, additional material in lower layers could
be classified as such. No sampling is recommended for this area at this time; however,
when the debris is removed, the lower layers should be carefully examined.” Prior to the
closing, the Township was told the debris had been removed from the property, but did
not take steps to investigate possible contamination in the lower levels. After the closing,
the Township discovered the debris had actually not been removed, and later also
discovered the soil was contaminated. The Township then conducted a voluntary clean-
up of the Property under the oversight of the New Jersey Department of Environmental
Protection.
The Township brought suit under CERCLA §§ 107(a) and 113(f), and also
asserted various state and common law claims in its fourteen-count complaint (filed on
3
June 5, 2003), seeking to recover the costs of its clean-up.2 Both the Mandelbaum
Defendants and PBS&J moved to dismiss the Township’s claims against them. On
September 14, 2004, the District Court partially granted the Mandelbaum Defendants’
motion, dismissing (among other claims) the CERCLA § 107(a) action because Montville
Township, as a “potentially responsible party” (“PRP”)3 that had not asserted an
“innocent owner” defense, could not sue under that provision. Montville Twp. v.
Woodmont Builders, LLC, No. 03-2680 (D.N.J. Sept. 14, 2004).4 Woodmont later moved
for summary judgment or judgment on the pleadings on all claims against it, while the
Mandelbaum Defendants moved for summary judgment on the three claims remaining
against them. On August 17, 2005, the District Court granted summary judgment in favor
of the Mandelbaum Defendants and Woodmont, as well as judgment on the pleadings in
2
Count I was brought under CERCLA § 107(a); Count II was brought under CERCLA
§ 113(f); Count III was for a declaratory judgment under CERCLA; and Count IV was
brought under the New Jersey Spill Act. The remaining counts were common law claims.
3
“Potentially responsible party” and “PRP” are EPA-created terms of art not
specifically used in CERCLA, but the Supreme Court has used them, noting that
“CERCLA § 107(a) lists four broad categories of persons as PRPs, by definition liable to
other persons for various costs.” Atl. Research Corp., 127 S. Ct. at 2336 n.2 (citing 42
U.S.C. § 9607(a)(1)–(4)).
4
The District Court dismissed nine of the twelve counts against the Mandelbaum
Defendants, leaving only: a claim under CERCLA § 113(f); a claim for a declaratory
judgment under CERCLA; and a claim of negligent misrepresentation. The District
Court also dismissed ten of the thirteen counts against PBS&J, leaving only: a claim for
negligent misrepresentation; a claim for liability as an intended beneficiary; and a claim
for negligence. PBS&J had not yet moved to dismiss these three claims, but later did so
in September 2005. The District Court granted the motion on January 6, 2006, and the
Township did not appeal from that decision.
4
favor of Woodmont. Woodmont, No. 03-2680, 2005 WL 2000204, at *13 (D.N.J. Aug.
17, 2005).5 The District Court found the Township’s four claims under CERCLA and the
New Jersey Spill Act were barred by a January 22, 2004, settlement agreement between
the Township and Woodmont in a state court proceeding that stated the Township would
“‘make no claim of any sort under CERCLA or the New Jersey Spill Act . . . in
connection with this cleanup.’” Id. at *6 (alteration in original). Alternatively, the court
found all four claims should be dismissed on the merits: again, the court stated the
Township could not bring an action under CERCLA § 107(a) because it was a PRP; and it
also stated the Township could not seek contribution for the costs of its cleanup under
CERCLA § 113(f) because it faced no liability under CERCLA §§ 106 or 107(a). On
August 30, 2005, the Township moved for reconsideration of the court’s August 17,
2005, order, and also sought leave to amend its complaint to assert an innocent owner
defense (which would preclude its being a PRP) and thereby state a CERCLA § 107(a)
claim. The District Court denied both motions on September 30, 2005, and the Township
timely appealed.
II.
The District Court had jurisdiction under 28 U.S.C. § 1331 and we have
jurisdiction under 28 U.S.C. § 1291. Our review of a district court’s grant of a motion to
5
The District Court granted summary judgment in Woodmont’s favor on the
Township’s claims for injunctive relief and negligent misrepresentation, and judgment on
the pleadings in Woodmont’s favor on the Township’s nine remaining claims against it.
5
dismiss is plenary. Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003).
In considering whether the complaint survives a motion to dismiss, we review whether it
“contain[s] either direct or inferential allegations respecting all the material elements
necessary to sustain recovery under some viable legal theory.” Bell Atl. Corp. v.
Twombly, 127 S. Ct. 1955, 1969 (2007). We also exercise plenary review of a district
court’s grant of summary judgment and judgment on the pleadings. See Sikirica v.
Nationwide Ins. Co., 416 F.3d 214, 219–20 (3d Cir. 2005). In conducting this review, all
facts and inferences are construed in the light most favorable to the non-moving party,
and “[j]udgment will not be granted unless the movant clearly establishes there are no
material issues of fact, and he is entitled to judgment as a matter of law.” Id. at 220. We
review the denial of leave to amend a complaint for abuse of discretion. See Garvin v.
City of Phila., 354 F.3d 215, 219 (3d Cir. 2003). Our review of a denial of a motion for
reconsideration is plenary where the denial was based on “the interpretation and
application of a legal precept,” but otherwise we review such denials for abuse of
discretion. Koshatka v. Phila. Newspapers, Inc., 762 F.2d 329, 333 (3d Cir. 1985). We
exercise plenary review over questions of statutory interpretation. See United States v.
E.I. DuPont de Nemours & Co., 432 F.3d 161, 164 (3d Cir. 2005) (en banc).
6
III.
The two provisions of CERCLA at issue in this case “allow private parties to
recover expenses associated with cleaning up contaminated sites.” Atl. Research Corp.,
127 S. Ct. at 2333. Section 107(a)(4) makes PRPs liable for, among other things:
(A) all costs of removal or remedial action incurred by the United States
Government or a State or an Indian tribe not inconsistent with the national
contingency plan; [and]
(B) any other necessary costs of response incurred by any other person
consistent with the national contingency plan.
42 U.S.C. § 9607(a)(4). Section 113(f)(1), meanwhile, provides in relevant part:
Any person may seek contribution from any other person who is liable or
potentially liable under section 9607(a) of this title, during or following any
civil action under section 9606 of this title or under section 9607(a) of this
title.
Id. § 4613(f)(1).
In Atlantic Research Corp., the Supreme Court held that PRPs may avail
themselves of both §§ 107(a)(4)(B) and 113(f)(1) to recover clean-up expenses (albeit in
different circumstances). Its statement that “the plain language of [§ 107(a)(4)(B)]
authorizes cost-recovery actions by any private party, including PRPs,” Atl. Research
Corp., 127 S. Ct. at 2336, thus overruled our recent holding in E.I. DuPont de Nemours
& Co. v. United States, 460 F.3d 515 (3d Cir. 2006), that § 113(f) provides the exclusive
cause of action available to PRPs. The Court distinguished actions to recover incurred
clean-up costs under § 107(a) (which may be undertaken by any private party at any time)
with actions for contribution under § 113(f) (which may only be undertaken by a party
7
facing liability under §§ 106 6 or 107(a), and only where there has been an inequitable
distribution of common liability):
[T]he remedies available in §§ 107(a) and 113(f) complement each other by
providing causes of action to persons in different procedural circumstances.
Section 113(f)(1) authorizes a contribution action to PRPs with common
liability stemming from an action instituted under § 106 or § 107(a). And
§ 107(a) permits cost recovery (as distinct from contribution) by a private
party that has itself incurred cleanup costs. Hence, a PRP that pays money
to satisfy a settlement agreement or a court judgment may pursue § 113(f)
contribution. But by reimbursing response costs paid by other parties, the
PRP has not incurred its own costs of response and therefore cannot recover
under § 107(a). As a result, though eligible to seek contribution under
§ 113(f)(1), the PRP cannot simultaneously seek to recover the same
expenses under § 107(a).
Id. at 2338 (citing DuPont, 460 F.3d at 548 (Sloviter, J., dissenting)).
Accordingly, the District Court was correct in concluding the Township could not
sue for contribution under § 113(f) (because it faced no liability under §§ 106 or 107(a)),
but incorrect in concluding the Township could not sue to recover costs under § 107(a)
(because it was a PRP).7 On remand, the District Court should reconsider Counts I
(CERCLA § 107(a)) and III (declaratory judgment under CERCLA) of the Township’s
complaint against the Mandelbaum Defendants and Woodmont in light of Atlantic
6
Section 106 allows the government to order a PRP to take action. 42 U.S.C. § 9606.
7
Of course, we recognize the District Court’s conclusion as to § 107(a) was a correct
interpretation of the law of this Circuit at the time, and only subsequently changed by the
Supreme Court’s recent decision in Atlantic Research Corp.
8
Research Corp.8 Both the Mandelbaum Defendants and Woodmont contend that, because
the Township framed its CERCLA § 107(a) claim in its brief as an “implied right of
action for contribution,” Township Br. 22, Atlantic Research Corp. is inapposite. Indeed,
the Supreme Court carefully distinguished between § 107(a)’s right to “cost recovery”
and § 113(f)’s right to “contribution.” See Atl. Research Corp., 127 S. Ct. at 2338.
Further, the Mandelbaum Defendants and Montville contend the Township waived the
argument that it had an “implied right of action for contribution” under § 107(a), because
it had not raised that argument before the District Court, where it instead framed its §
107(a) claim as a cost recovery action under an explicitly conferred right. We reject both
of these arguments: the Township’s complaint properly sought to recover clean-up costs
under CERCLA § 107(a) in accordance with the Supreme Court’s subsequent Atlantic
Research Corp. decision, and semantic distinctions in briefing that also pre-dated Atlantic
Research Corp. should not bar us from considering and remanding those § 107(a) claims.
IV.
We will reverse the District Court’s disposition of Counts I and III of the
Township’s complaint against the Mandelbaum Defendants and Woodmont, and remand
for proceedings consistent with Atlantic Research Corp. and this opinion. We will affirm
8
Given the District Court’s focus on the merits of the CERCLA claims against the
Mandelbaum Defendants and Woodmont in its summary judgment opinion, the court
should also re-visit the question of whether the settlement agreement bars the Township’s
§ 107(a) claim against Woodmont.
9
the District Court’s disposition of Count II. The parties’ briefing did not analyze the
remaining New Jersey Spill Act and common law claims, which is not surprising because
the focus of this action is on the CERCLA claims. Nonetheless, we will vacate the
District Court’s disposition of the remaining claims for reconsideration, if necessary, in
light of this opinion.
10