Elementis Chromium L.P. v. Coastal States Petroleum Co. , 450 F.3d 607 ( 2006 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JUNE 8, 2006
May 26, 2006
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
_______________________
No. 04-20519
_______________________
ELEMENTIS CHROMIUM L.P., ET AL.,
Plaintiffs,
versus
COASTAL STATES PETROLEUM COMPANY, ET AL.,
Defendants,
versus
EL PASO MERCHANT ENERGY-PETROLEUM CO., Successor by merger to
COASTAL STATES CRUDE GATHERING COMPANY, formerly known as
COASTAL REFINING AND MARKETING, INC.,
Third Party Plaintiff —
Appellee-Cross-Appellant,
versus
AMERADA HESS CORPORATION,
Third Party Defendant —
Appellee,
versus
MAGELLAN TERMINALS HOLDINGS L.P.,
Third Party Defendant —
Appellant — Cross-Appellee.
On Appeal from the United States District Court
for the Southern District of Texas
Before JONES, Chief Judge, and KING and DENNIS, Circuit Judges.
EDITH H. JONES, Chief Judge:
All sides appeal the district court’s judgment appor-
tioning liability in a CERCLA cleanup case. Magellan Terminals
Holdings L.P. (“Magellan”) and Amerada Hess Corp. (“Hess”) appeal
the district court’s imposition of joint and several liability upon
them. El Paso Merchant Energy-Petroleum Co. (“El Paso”) appeals
the district court’s allocation of liability for future cleanup
costs.
Finding that Magellan preserved its objection to joint
and several liability, and that liability in contribution actions
brought under § 113(f) of the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601-9675,
is several only, we VACATE and REMAND for allocation of liability
between Magellan and Hess. With respect to the district court’s
allocation of liability to El Paso, we AFFIRM.
I. Background
Elementis Chromium L.P. and Elementis Chromium, Inc.
(collectively “Elementis”) own a manufacturing plant in Corpus
Christi that became contaminated with hydrocarbons as a result of
operations at one or more nearby properties: (1) a facility owned
by El Paso, located to the southwest of the Elementis property; and
(2) a facility formerly owned by Hess and purchased by Magellan in
1999; this property is located to the south of the Elementis
property.
2
Elementis sued El Paso for recovery and/or contribution
of response costs to clean up the hydrocarbon contamination on its
property. Elementis and El Paso ultimately settled their case, but
El Paso then brought a third-party action against Hess and
Magellan, seeking contribution for response costs at the Elementis
site. The case went to a bench trial in the Southern District of
Texas, where Magellan and Hess were represented by the same
counsel. In its findings of fact, the district court concluded
that El Paso was 89.95% responsible for the contamination at the
Elementis property, and that Magellan and Hess were 10.05%
responsible.
Treating Magellan and Hess as a collective entity for the
purposes of allocating responsibility, the district court imposed
joint and several liability upon the two companies for their share
of the cleanup costs. Magellan timely brought a Motion to Amend
Findings and Judgment in an effort to receive a specific allocation
of responsibility. The district court declined to decide the issue
whether liability under CERCLA § 113(f) was several only, and
instead denied the motion on the grounds that Magellan and Hess had
waived their argument by not presenting evidence or arguments at
trial. Magellan timely appealed both the Amended Final Judgment
and the district court’s denial of its Motion to Amend Findings and
Judgment. El Paso cross-appealed the Amended Final Judgment and
the Findings of Fact and Conclusions of Law.
3
II. Discussion
A. Waiver/Judicial Estoppel
Before addressing whether the imposition of joint and
several liability is proper for contribution actions brought under
CERCLA § 113(f), this court must first determine whether Magellan
waived its objection on this issue. This court generally reviews
a decision on a motion to alter or amend a judgment for abuse of
discretion. Ross v. Marshall, 426 F.3d 745, 763 (5th Cir. 2005).
“A trial court abuses its discretion when its ruling is based on an
erroneous view of the law or a clearly erroneous assessment of the
evidence.” Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584
(5th Cir. 2003). To the extent the ruling reconsidered a question
of law, however, the standard of review is de novo. Ross, 426 F.3d
at 763. Motions to alter or amend judgments “cannot be used to
raise arguments which could, and should, have been made before the
judgment issued” and “cannot be used to argue a case under a new
legal theory.” Simon v. United States, 891 F.2d 1154, 1159 (5th
Cir. 1990).
El Paso contends, and the district court agreed, that
Magellan and Hess waived their objections to the imposition of
joint and several liability. The alleged waiver took place during
a discussion between the district court and counsel for
Magellan/Hess over whether Williams Terminals Holdings and its
4
related entities (“Williams”) were proper defendants in the CERCLA
action:
THE COURT: Just a minute. Who is the responsible party?
I mean, does it vary over time? Is that the problem?
[counsel for Magellan/Hess] MR. WILKINSON: Well, the
responsible parties would be Hess for a time period and
then the current owner is actually Magellan Terminal
Holdings, L.P., are the two parties that really belong in
this suit. Of course, they all deny liability —
THE COURT: What’s the — if I enter judgment for a
percentage of the cleanup costs, will you be able to
allocate it among them? Do you represent both —
MR. WILKINSON: I represent both of them. There’s an
indemnity agreement — there’s a defense and indemnity
agreement between Hess and Williams following the sale of
the terminal. So Hess is providing a defense and
indemnity, Your Honor.
THE COURT: So what difference does it make?
MR. WILKINSON: We have two other entities that really
aren’t owners/operators of the terminal. In the
understandable ways that lawyers work, you just get all
of the entities when you don’t understand —
THE COURT: I’ll let you-all work that out over the noon
hour.
R23:609 (emphasis added).1 In its later findings of fact, the
court imposed joint and several liability on Magellan and Hess,
prompting Magellan’s motion to alter or amend.
The district court, in its oral decision on the motion,
stated that it was
1
Later that day, counsel for Magellan/Hess stipulated that Magellan
“is the entity with legal responsibility for what we have referred to as the Hess
Terminal since the terminal was sold by Hess in 1999 and that [the Williams
companies] . . . are not proper parties, necessary parties.” R23:645. The
district court then agreed to dismiss Williams from the suit without prejudice.
5
troubled by the lateness of this motion. I did the best
I could to fairly allocate the response costs between El
Paso and Hess. Nobody ever mentioned except me what the
allocation between Mr. Wilkinson’s client[s] should be.
And the only response I got was that there’s a defense
and indemnity agreement. If you all had raised this,
Mr. Wilkinson, at trial, we could have stopped,
conducted, extended the time for evidence, reviewed the
exhibits, asked meaningful questions to some of the
witnesses, and I would be in a position to make an
informed choice. So, assuming, without deciding that
liability under Section 113 is only [several], not joint
and several, an issue that the Fifth Circuit has not yet
definitively decided, I conclude that Magellan has waived
this argument by not presenting evidence or arguments at
trial. So, I am going to deny the motion for that
reason.
R28:6-7. The existence of an indemnity agreement weighed heavily
in the district court’s conclusion that Magellan had waived its
objection to the imposition of joint and several liability. El
Paso thus argues that the district court was “entitled to rely on
statements made by counsel in open court,” and that the doctrines
of either judicial estoppel or waiver bar Magellan’s claim. Ergo
Sci., Inc. v. Martin, 73 F.3d 595, 600 (5th Cir. 1996).2
2
This court will focus its attention upon whether Magellan can be said
to have waived its objection to the implementation of joint and several
liability, as the district court viewed Magellan’s argument as having been
waived. However, to the extent that El Paso raises Ergo Science to argue in
favor of the application of judicial estoppel, such an argument must be rejected.
In Ergo Science, counsel unequivocally renounced his client’s claim to certain
funds in a pretrial hearing, and then sought to challenge a ruling of the
district court based on that waiver through a post-trial motion. Because the
district court accepted counsel’s original position, counsel was estopped from
asserting a clearly inconsistent position at a later time. Ergo Science, 73 F.3d
at 598. In the instant case, Magellan’s alleged renunciation is far from
unequivocal, and the company never took the contrary position that joint and
several liability was appropriate. See Ahrens v. Perot Sys. Corp., 205 F.3d 831,
833 (5th Cir. 2000). Thus, Magellan cannot be judicially estopped from asserting
its objection here.
6
However, it is well established that a “party has
presented an issue in the trial court if that party has raised it
in either the pleadings or the pretrial order, or if the parties
have tried the issue by consent.” Burch v. Coca-Cola Co., 119 F.3d
305, 319 (5th Cir. 1997)(quoting Portis v. First Nat’l Bank, 34
F.3d 325, 331 (5th Cir. 1994)). In the instant case, there is no
dispute that Magellan included its objection to the imposition of
joint and several liability in the pretrial order; indeed, the
district court acknowledged as much in its ruling on Magellan’s
motion to amend the judgment. An issue included in the pretrial
order may be waived where a litigant makes a “specific concession”
as to that issue at a later date. See Indus. Magromer Cueros y
Pieles S.A. v. La. Bayou Furs, Inc., 293 F.3d 912, 919 (5th Cir.
2002). Here, however, the exchange between Magellan/Hess’s counsel
and the district court is at best ambiguous and appears to be an
example of two parties talking past each other, not a specific
concession by counsel on the issue of joint and several liability.
Magellan should not be deprived of its right to argue an issue
properly included in the pretrial order on the basis of a single
passing reference to an indemnity agreement.
Nor will this court deem Magellan’s objections waived due
to its failure to present evidence. The district court expressed
frustration with the fact that Magellan did not prominently argue
the issue of joint and several liability at trial, but the
company’s failure to do so is understandable, given that its
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position at trial was that it was not liable for any of the
contamination at the Elementis site.3 It is El Paso, as the party
bringing an action for contribution, that bore “the burden of
proving the defendant is a responsible party under § 107(a) of
CERCLA and also the burden of proving the defendant’s equitable
share of costs.” Centerior Serv. Co. v. Acme Scrap Iron & Metal
Corp., 153 F.3d 344, 348 (6th Cir. 1998); see also Minyard Enters.,
Inc. v. Se. Chem. & Solv. Co., 184 F.3d 373, 385 (4th Cir.
1999)(same). El Paso argues that it does not have to prove
liability as to individual defendants in a CERCLA contribution
action, but it cites no case law in support of this proposition.
This court therefore declines to relieve El Paso of its burden of
proof.4 Magellan cannot be faulted for inadequate presentation of
evidence as to the proper allocation of costs when it never bore
the burden of proof in the first place. As such, we find that the
district court abused its discretion in its determination that
Magellan waived its objections to the imposition of joint and
several liability against it, and we proceed to the merits of
Magellan’s and Hess’s claim.
B. Joint and Several Liability
3
Because El Paso offered no evidence against Magellan, Magellan
requested as a finding of fact that “[t]he [Hess] terminal did not handle benzene
at any time it was owned by [Magellan].” R7:1260.
4
It should be noted that such burden shifting would be contrary to our
holding, infra, that liability under CERCLA § 113(f) is several only.
8
The standard of review “for a bench trial is well
established: findings of fact are reviewed for clear error and
legal issues are reviewed de novo.” In re Mid-South Towing Co.,
418 F.3d 526, 531 (5th Cir. 2005). The district court’s imposition
of joint and several liability is a matter of law, which we review
de novo.
With respect to contribution actions, CERCLA § 113(f)(1),
42 U.S.C. § 9613(f)(1), provides that “any person may seek
contribution from any other person who is liable or potentially
liable under [CERCLA] § 107(a). . . . In resolving contribution
claims, the court may allocate response costs among liable parties
using such equitable factors as the court determines are
appropriate.” Section § 113(f) is thus intended to provide a
liable party under CERCLA with a cause of action to “mitigate the
harsh effects of joint and several liability” imposed under
§ 107(a). OHM Remediation Servs. v. Evans Cooperage Co., 116 F.3d
1574, 1582 (5th Cir. 1997).
The two parties disagree over whether liability is joint
and several, or several only, in § 113(f) contribution actions.
Although this issue is one of first impression in this circuit, the
overwhelming majority of our sister circuits have concluded that
liability is merely several under § 113(f). See, e.g., United
States v. Davis, 261 F.3d 1, 29 (1st Cir. 2001); Kalamazoo River
Study Group v. Menasha Corp., 228 F.3d 648, 653 (6th Cir. 2000);
Minyard, 184 F.3d at 385; Pinal Creek Group v. Newmont Mining
9
Corp., 118 F.3d 1298, 1301 (9th Cir. 1997); Sun Co., Inc. v.
Browning-Ferris, Inc., 124 F.3d 1187, 1193 (10th Cir. 1997);
Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1514
(11th Cir. 1996). As the Ninth Circuit noted in Pinal Creek, a
“contrary [i.e., joint and several] approach is not supported by
CERCLA’s text, is inconsistent with the traditional doctrine of
contribution, and runs the risk of creating procedural chaos.”
Pinal Creek, 118 F.3d at 1303.5
We agree: “[W]hen one liable party sues another liable
party under CERCLA, the action is not a cost recovery action under
§ 107(a),” and the imposition of joint and several liability is
inappropriate. Redwing Carriers, 94 F.3d at 1513. The plain
language of § 113(f)(1) directs the courts to “allocate response
costs among liable parties” in an equitable manner, 42 U.S.C.
§ 9613(f)(1), and it is clear that under the principle of
contribution, a liable party is entitled to recover only
“proportional shares of judgment from other tort-feasors whose
negligence contributed to the injury and who were also liable to
5
The imposition of joint and several liability in the instant case
would also be inconsistent with the earlier decisions of the district court. On
October 15, 2003, the district court granted El Paso's motions for partial
summary judgment as to Hess's and Williams's claims under § 107(a). R6:1217.
In arguing that Hess and Williams, as potentially responsible persons under
CERCLA, could not maintain § 107(a) actions against it, El Paso stated the proper
claim against it was under § 113(f), and that it could not be held “jointly and
severally liable as a matter of law.” R6:1014. The district court accepted this
argument and granted El Paso’s motions for partial summary judgment. Moreover,
all parties were in agreement on liability under § 113(f), as Hess and Williams
concurred in El Paso’s analysis of CERCLA, noting that the same reasoning was
applicable to El Paso’s claims against them. R6:1045, 1060.
10
the plaintiff.” OHM, 116 F.3d at 1582. Finally, to allow for the
imposition of joint and several liability in contribution actions
under CERCLA is to invite “inefficiency, potential duplication, and
prolongation of the litigation process.” Pinal Creek, 118 F.3d at
1303.6 As liability is several only in CERCLA contribution
actions, the district court erred in imposing joint and several
liability upon Hess and Magellan. Therefore, the judgment of the
district court must be vacated and remanded to determine the proper
division of liability between Magellan and Hess.7
C. Allocation of Liability
Finally, El Paso argues that the district court erred in
allocating only 10.05% of future response costs to Hess and
Magellan. We review the district court’s findings of fact only for
clear error. A finding of fact is not clearly erroneous “if it is
plausible in the light of the record read as a whole.” Baker
6
El Paso relies upon Browning-Ferris Industries of Illinois, Inc. v.
Ter Maat, 195 F.3d 953 (7th Cir. 1999) for the proposition that the imposition
of joint and several liability is within the equitable powers of the district
court under § 113(f). The actual holding in Ter Maat was, inter alia, that a
district court erred in believing that it was “constrained to allocate liability
equally among joint polluters.” Ter Maat 195 F.3d at 957. To the extent that
Ter Maat also suggested that § 113(f) did not contain a bright line prohibition
against the imposition of joint liability, such a position is at odds with the
overwhelming majority of circuit courts that have addressed the issue of
liability under § 113(f). Moreover, none of the hypothetical concerns over
several liability raised in Ter Maat (e.g., one responsible party is insolvent,
rendering the others responsible for a larger share of cleanup costs than is
equitable) is present in the instant case. See id.
7
The district court has an adequate factual basis in the record to
properly allocate responsibility between Magellan and Hess. For example, it may
allocate responsibility based upon years of ownership. Alternatively, it may
simply conclude, based upon evidence in the record that the hydrocarbon
contamination of the Elementis property took place in the 1970s and 80s, decades
prior to Magellan’s purchase of the Hess property in 1999, that Hess should be
held responsible for all 10.05% of the remaining CERCLA liability.
11
Hughes Oilfield Operations, Inc. v. Cage (In re Ramba), 416 F.3d
394, 402 (5th Cir. 2005). As Magellan and Hess correctly argue,
there is a great deal of evidence on the record regarding the age
and type of contamination found on the Elementis property that
directly implicates El Paso. We find no evidence sufficient to
produce “the definite and firm conviction that a mistake has been
committed” by the district court, and as such, the court did not
clearly err in its allocation of response costs to El Paso. United
States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542
(1948).
III. Conclusion
Magellan did not waive its objection to the imposition of
joint and several liability against it; we REVERSE the district
court’s holding to the contrary. Because liability under CERCLA
§ 113(f) is several only, the decision of the district court is
VACATED and REMANDED. As we AFFIRM the district court’s allocation
of future response costs to El Paso, on remand, the district court
need only determine the proper allocation of Magellan and Hess’s
10.05% share of response costs.
REVERSED, VACATED and REMANDED IN PART; and AFFIRMED IN
PART.
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