state v. bradford oil ( 2023 )

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STATE OF VERMONT
WASHINGTON COUNTY _
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State of Vermont, ) ~
Plaintiff, ) Washington Superior Cour$UPERIOR CouRT
) Docket No. 307-5-06 WnWASHINGTCH Conny y
v. )
)
Bradford Oil Company, Inc., )
Defendant. )
Decision
Five Defendants’ Motions to Dismiss
In this case, the State (Agency of Natural Resources) seeks the abatement and cleanup
(including related damages and penalties) of hazardous waste discovered on a site in Springfield
currently owned by Defendant Bradford Oil Company, Inc. Bradford, the sole defendant to the
State’s claim, has filed third-party claims against the State (Agency of Transportation, or AOT)
and eleven others for contribution. Five contribution-defendants have filed Motions to Dismiss:
the Agency of Transportation; J.S. Burgess, Inc. d/b/a Lucas Industries, Inc. (Lucas Industries);
American Water Works Company, Inc.; Envirosource, Inc. n/k/a Tube City IMS Corporation
(Envirosource); and Wellspring Capital Management, LLC. A hearing was held on April 4,
2008 on all five Motions to Dismiss.
In the complaint, the State alleges that the hazardous waste on the site, or emanating from
it, was deposited there primarily during the site’s days as a coal gasification plant, about 1900 to
1950. The site has been owned and operated for different purposes by numerous entities during
and since that time. Bradford, the current owner, purchased the site in 1997 and now operates it
as a gas station and convenience store. The State claims that, over the last several years,
Bradford performed some of the testing, monitoring, and/or cleanup activities requested of it, but
at this point has stopped cooperating, necessitating this legal action.
Bradford’s third-party claims are based on 10 V.S.A. § 6615(i), which statutorily
authorizes a party responsible for cleanup, removal, and remedial costs under § 6615 to seek
contribution from other responsible parties. To be a responsible party under § 6615, assuming a
relevant “release or threatened release” of hazardous materials, one must belong to one of several
classes of persons described at § 6615(a)(1)-(4). 10 V.S.A. § 6615(c). Those classes include:
(1) current owners or operators of the facility; (2) persons who were owners or operators at the
time of the release or threatened release; (3) persons who owned or possessed the waste and
made arrangements with third parties regarding its disposal or treatment (“‘arrangers”); and (4)
persons who have accepted hazardous materials for transport to disposal or treatment facilities.
10 V.S.A. § 6615(a); see State v. Howe Cleaners, Inc., No. 27-1-04 Wnev (Toor, J., Mar. 10,
2006) at 6-9, available at http://www.vermontjudiciary.org/tedecisionscvl/2006-3-15-2.pdf
(discussing 10 V.S.A. § 6615(a)).
Generally, there are two types of issues raised in the motions to dismiss. For different
reasons, the Agency of Transportation, Lucas Industries, Envirosource, and Wellspring argue
that Bradford’s claims against them should be dismissed because they are not responsible parties
under 10 V.S.A. § 6615(a). American Water Works, Envirosource, and Wellspring also argue
that the relevant limitations statute has run and now bars Bradford’s claims.
The purpose of a Rule 12(b)(6) motion is to test the law of the claim, not the facts that
might support it. Kane v. Lamothe, 2007 VT 91, 4 14. The Vermont Supreme Court’s recent 3-2
decision in Colby v. Umbrella, Inc., 2008 VT 20 (filed Mar. 7, 2008) (Burgess, Skoglund, JJ.,
dissenting) demonstrates how difficult and contentious the proper application of Rule 12 can be.
The Colby majority took the more cautious approach of not dismissing a complaint consisting of
questionably vague or incomplete allegations in favor of letting the evidence develop. In all
applications of the civil rules, of course, the court strives to advance the “just, speedy, and
inexpensive determination” of the case. V.R.C.P. 1. As reflected in Colby, the different goals of
Rule 1 often compete, and there is room for reasonable disagreement about the right balance in
different situations. These interests are salient in this case, where the dismissal motions focus
largely on the paucity of meaningful facts in the third-party complaint and, in opposition to
dismissal, Bradford relies heavily on the fact that Rule 8 requires only notice pleading rather than
more specifically articulating its claims.
Responsible party status—the Agency of Transportation
Bradford’s claim against the Agency of Transportation is based on AOT’s involvement in
a road project conducted by the Town of Springfield. Bradford alleges that in about 1964—long
before pollution at the site had become a contentious issue—the Town purchased a narrow strip
of the site that was contiguous to a public road to widen that road. Bradford alleges that the strip
of land is highly likely to have been polluted at the time and that the Town’s project may have
caused additional releases of hazardous waste. The actual construction work was performed for
the Town by AOT. Bradford alleges that in performing this work, AOT inevitably would have
disturbed the soil and possibly transported some of it offsite. Bradford does not allege that AOT
had any other connection to the site or any more direct connection to the waste on the site, or that
the road project otherwise added contaminants to the soil. Bradford explains the claim as
follows:
As such, Bradford contends that, by virtue of its construction activities on the
facility, AOT has incurred liability as a former operator and arranger under 10
V.S.A. § 6615(a)(2). Specifically, Bradford alleges that, in undertaking
construction, AOT disrupted, moved and transported soils contaminated by coal
tar, a known hazardous waste. The disruption, disbursement and transporting of
surface soils containing hazardous waste would, once established, constitute a
release or threatened release under the Statute. Assuming the proof of these
factual allegations, AOT would be strictly liable under the Statute.
Bradford’s Response to AOT’s Motion at 2 (filed Dec. 11, 2006). That is, Bradford claims that
the mere fact of disturbing or moving polluted soil is enough to classify one as an operator or
arranger under the Act.
AOT, relying on United States v. Bestfoods, 524 U.S. 51 (1998), a CERCLA case, argues
that there is more to operator liability than this. In Bestfoods, the Court examined whether a
corporate parent has operator liability due to its subsidiary’s operations on a site. The Court
concluded that, absent veil-piercing circumstances, as an ordinary incident of corporate law, the
parent, a mere stockholder, would have no liability unless it “actively participated in, and
exercised control over, the operations of the facility itself . . . [making it] directly liable in its
own right as an operator of the facility.” Jd. at 55. In other words, the parent is not immune
from CERCLA liability merely because its subsidiary has liability. The issue turns to whether
the parent has its own direct liability regardless of its relationship to its subsidiary.
The Court thus examined the meaning of operator liability:
This much is easy to say: the difficulty comes in defining actions sufficient to
constitute direct parental “operation.” Here of course we may again rue the
uselessness of CERCLA’s definition of a facility’s “operator” as “any person. . .
operating” the facility, which leaves us to do the best we can to give the term its
“ordinary or natural meaning.” In a mechanical sense, to “operate” ordinarily
means “[t]o control the functioning of; run: operate a sewing machine.” And in
the organizational sense more obviously intended by CERCLA, the word
ordinarily means “[t]o conduct the affairs of; manage: operate a business.” So,
under CERCLA, an operator is simply someone who directs the workings of,
manages, or conducts the affairs ofa facility. To sharpen the definition for
purposes of CERCLA’s concern with environmental contamination, an operator
must manage, direct, or conduct operations specifically related to pollution, that
is, operations having to do with the leakage or disposal of hazardous waste, or
decisions about compliance with environmental regulations.
Bestfoods, 524 U.S. at 67 (citations omitted) (original emphasis removed; new emphasis added).
Bestfoods reveals the deficiency in Bradford’s claim against AOT: AOT is not reasonably
known, suspected, or alleged to have had any responsibility for “operations specifically related to
pollution.” Its role was to move the dirt to widen the road. The broad interpretation that
Bradford (as contribution-plaintiff) advances would impose “operator” liability on a local handy
man or woman with a rototiller who is hired to till a garden plot in soil later determined to
contain pollutants. This is stretching “operator” liability too far.
Bradford opposes dismissal substantially on two grounds: that the court should not follow
Bestfoods under the Vermont statute, and that, in any event, the allegations should be minimally
sufficient to permit discovery to proceed. Neither argument is persuasive in the context of this
claim.
The court adopts the Bestfoods analysis for the definition of “operator” under the Waste
Management Act. The court acknowledges that while the Act “parallels CERCLA in many
relevant respects,” they are not the same. Hardwick Recycling & Salvage, Inc. v. Acadia Ins.
Co., 2004 VT 124, | 28, 177 Vt. 421. Nevertheless, Bradford has not brought to light any
distinction that makes a difference in this context, and the Bestfoods analysis 1s compelling.
Bradford’s proposed alternative—that the mere disturbance of contaminated soil for any reason
qualifies one as an operator—would result in strict liability for countless persons having nothing
to do with the generation of or responsibility for hazardous waste, or control over contaminated
property.
Bradford’s “arranger” liability claim fares no better against AOT. Among other things,
arranger liability requires that the potentially responsible party “arranged for disposal or
treatment .. . of hazardous materials .. . by any other person or entity, at any facility owned or
operated by another person or entity and containing such hazardous materials.” 10 V.S.A. §
6615(a)(3). Nothing in the allegations against AOT suggests that it ever did any of these things.
The plain language of § 6615(a)(3) is dramatically narrower than Bradford’s interpretation,
which apparently is that anyone who moves or instructs others to move soil that is later found to
be contaminated with hazardous waste is an arranger. .
Bradford cautions the court against striking too soon, urging that it has met Rule 8
requirements and should be entitled to discovery in an effort to develop relevant facts that will
show that it may have a claim against AOT. As against AOT, the deficiency in Bradford’s
pleading is not merely technical; Bradford is not simply missing one allegation or another that,
once added, would fill out an otherwise sufficient statement of the claim. Rather, the allegations,
along with the briefing, imply no promise of any showing that AOT is a responsible party or, in
other words, that there is any real claim against AOT. Bradford effectively is trying to skip to
discovery without giving AOT any fair notice, even under minimal Rule 8 standards, of the
factual basis for a claim. AOT’s Motion to Dismiss is granted.
Responsible party status—Lucas Industries, Envirosource, and Wellspring
Bradford has identified, however minimally, sufficient facts to claim that the other
moving third-party defendants may be responsible parties. Thus, Bradford’s allegations are
sufficient to avoid dismissal at this time.
Lucas Industries
Bradford alleges that at one point Defendants Dennis G. and Concetta McGuinness
owned a portion of the site. Dennis McGuinness is alleged to have been the president of Lucas
Industries, which is alleged to have owned a contiguous property. It is alleged that the
McGuinnesses intended to use the site for the benefit of their Lucas Industries business until a
site assessment, performed by a third party, revealed the contamination. Bradford alleges that, in
violation of statute, the discovery of contamination was not reported to the state. The
McGuinnesses then sold the site to Bradford. The claims against Lucas Industries are vaguely
alleged. Bradford appears to claim that Lucas Industries was an owner or operator, either
directly or due to circumstances warranting an application of the alter ego doctrine or reverse-
piercing.
Lucas Industries essentially seeks dismissal relying on its corporate separateness and the
lack of any allegations that it directly operated the facility. While the allegations regarding direct
operator liability are non-specific, circumstances described in the facts encompass a possible
claim that Lucas Industries held an interest in the property sufficient to support responsible party
status. Discovery of more specific facts is needed in order for the court to make a ruling on the
proper disposition of the claim against Lucas Industries.
Envirosource and Wellspring
Bradford alleges that Envirosource and Wellspring may have liability as parent
corporations of or successor entities to American Equities Company. American Equities is
alleged to have owned Vermont Lighting Corporation, which owned and operated the polluting
coal gasification plant, from 1931 to 1936. Both Envirosource and Wellspring object that the
third-party complaint is devoid of any allegations that might warrant direct operator liability,
successor liability, or veil-piercing. Though the allegations are generalized, the court concludes
that the basic notice function of Rule 8 is minimally satisfied in these instances. Bradford is
entitled to reasonable discovery so that these claims may be evaluated on the evidence.
The statute of limitations—American Water Works, Envirosource, and Wellspring
- American Water Works, Envirosource, and Wellspring all argue that Bradford’s claims
against them are barred by the applicable statute of limitations. Bradford and these defendants
agree that the six-year limitations period at 12 V.S.A. § 511 applies to these claims. Defendants
and Bradford also apparently agree that the date of accrual is controlled by 10 V.S.A. § 6615(),
quoted in pertinent part below. Based on the language of § 6615(i), Bradford concludes that the
date of accrual is the date that the State filed this lawsuit against it. Defendants conclude the
date of accrual is the date that ANR first took administrative action against Bradford, or when
Bradford spent the first dollar in response; either date is more than six years before ANR’s
complaint or the third-party complaint was filed. Both supplement their statutory interpretations
with competing policy justifications for earlier or later dates of accrual.
The general statute of limitations applicable to civil actions provides:
A civil action, except one brought upon the judgment or decree of a court
of record of the United States or of this or some other state, and except as
otherwise provided, shall be commenced within six years after the cause of action
accrues and not thereafter.
12 V.S.A. § 511.
The relevant portion of 10 V.S.A. § 6615(i) provides: “In an action brought by the
secretary under this section, a responsible person may implead, or in a separate action a
responsible person may sue, another responsible person or persons and may obtain contribution
or indemnification.” Bradford argues that the term “action” in § 6615(i) means “lawsuit,” and
thus the contribution claim does not accrue until ANR files its lawsuit. Defendants argue that the
use of the term “action” in § 6615(i) should be construed more broadly to include administrative
action, and thus the contribution claim accrued when ANR first took administrative action
against Bradford.
The court has reviewed the cases cited by the parties, among them Hardwick Recycling &
Salvage, Inc. v. Acadia Ins. Co., 177 Vt. 421, 2004 VT 124 (concluding that ANR’s potentially
responsible party letter is a claim for “damages” under that party’s CGL policy); State v. Carroll,
175 Vt. 571, 2003 VT 57 (concluding that the State’s recoupment claim under 10 V.S.A. § 6615
accrues separately for investigation, remediation, and removal costs, assuming without deciding
that 12 V.S.A. § 511 applies to the claim at all); and State v. Carroll, 171 Vt. 395 (2000)
(Carroll I). In Carroll I, the Vermont Supreme Court ruled that the contribution-plaintiff s
contribution claim was not barred by the claim-preclusion doctrine for failure to raise it as a
compulsory counterclaim in an earlier case against the contribution-defendant because the State
had not taken any action against the contribution-plaintiff at that time, and hence there was no
basis for a contribution claim at the time of the earlier lawsuit. Carroll I, 171 Vt. at 399. These
cases do not offer any obvious answer to the accrual issue in this case.
The parties also cite the trial court opinion in Windsor Sch. Dist. v. State of Vermont, No.
536-10-96 Wncv, 7 Vt. Tr. Ct. Rep. 99 (Vt. Super. Ct. Feb. 15, 2002) (Bryan, J.). In that case,
the court addressed a similar issue regarding a 10 V.S.A. § 6615(i) contribution claim. The
contribution-defendant argued that the contribution claim was not “triggered” until ANR filed a
lawsuit under 10 V.S.A. § 6615 by operation of the terms of § 6615(i). The court analyzed the
issue as framed by the counterclaim-defendant, and concluded that such a contribution claim is
“enabled” by administrative action and does not require a lawsuit; the court said no more on the
matter. See Windsor Sch. Dist., 7 Vt. Tr. Ct. Rep. at 103. This case also provides no obvious
answer to the accrual issue in this case.
The terms of § 6615(i) do not explicitly or implicitly identify any standards for
determining the time of accrual of contribution claims for limitations purposes.
Section 6615 expressly treats responsible parties as having joint and several liability to
the State for most purposes. See 10 V.S.A. § 6615(c). Under the common law, polluting
tortfeasors, in private actions, typically would not be treated as joint tortfeasors. See
Restatement (Second) of Torts § 433A cmt. d, illustration 5. That is, even if their actions caused
a combined harm, their individual liabilities would be apportioned according to causation. See
id. § 881. Their liability would not be “joint” in the classic sense because the combined harm
could be allocated among them. With no joint liability, under the common law, there would be
no basis or need for contribution, which is equitable in nature. See id. § 886A cmt. b, c. Section
6615 essentially turns tortfeasors who would not have joint and several liability under the
common law into tortfeasors who do have joint and several liability to the State.
Early American courts adopted the English rule against contribution among intentional
tortfeasors and allowed it to be extended to negligent tortfeasors, erroneously severing an
equitable doctrine from its equitable rationale. Restatement (Second) of Torts § 886A cmt. a
(noting that equity should not benefit intentional tortfeasors). Whether by legislation or further
development of the common law, this historical quirk of early American common law has now
been corrected in nearly all states. D. Dobbs, The Law of Torts § 386, at 1078 (2001) (“[E]ither
by statute or judicial decision, a right of contribution is now a generally accepted part of the joint
and several liability system ... .”); accord Restatement § 886A cmt. a. This is consistent with
the development of the principle of allocation of tort liability proportionate to wrongdoing that is
reflected in the enactment of comparative negligence statutes as a gloss on the common law.
In Vermont, however, the Vermont Supreme Court ruled in 1974 that only the legislature
should alter the old rule against contribution among joint tortfeasors. See generally Howard v.
Spafford, 132 Vt. 434 (1974) (declining to modify the rule against contribution without
legislative action, without distinguishing between intentional and negligent tortfeasors). The
legislature has never acted, and the Vermont Supreme Court has never overruled Howard v.
Spafford. See, e.g., Levine v. Wyeth, 2006 VT 107, J 39 (relying on Howard v. Spafford for the
rule against contribution); Chapman v. Sparta, 167 Vt. 157, 159 (1997) (same); Swett v. Haig’s,
Inc., 164 Vt. 1, 5 (1995) (same); D’Arc Turcotte v. Estate of La Rose, 153 Vt. 196, 200 (1989)
(same); Murray y. J & B Int'l Trucks, 146 Vt. 458, 468 (1986) (same); Hiltz v. John Deere Indus.
Equip. Co., 146 Vt. 12, 15-16 (1985) (same); Gilwee v. Barre, 138 Vt. 109, 111 (1980) (same);
Zaleski v. Joyce, 133 Vt. 150, 158 (1975) (same).
Thus, in Vermont, if nowhere else, there is no general right of contribution among joint
negligent tortfeasors because there is no statute specifically authorizing such a contribution
claim. Section 6615(i) specifically authorizes such a claim in the context of pollution abatement
cases. It specifies that the contribution-plaintiff may bring the claim in the State’s § 6615
lawsuit itself, or in a separate lawsuit, and says little else about it. It does not express any
preference for a particular accrual method, and because neither common law nor statutory law in
Vermont has recognized contribution clatms, we have not developed a jurisprudence in this area.
The issue is: when, or how, does the sort of contribution claim authorized by § 6615(i)
accrue? The Restatement wams:
The statute of limitations may offer some difficulty, since the cause of
action for contribution cannot arise until full payment has been made, which may
be a great deal later than the original injury. The contribution suit should
therefore be made subject to its own statute of limitations, sufficiently short to
afford protection against undue extension of the tortfeasor’s liability. These
questions are for the legislature and not within the scope of this Restatement.
Restatement § 886A cmt. g. Those unresolved “questions” present a difficult issue in this case.
Vermont has no limitations statute that is tailored to contribution claims, and contribution claims
can accrue in different ways. See 18 Am.Jur.2d Contribution § 93 (describing numerous
different approaches to the accrual of contribution claims); see also id. § 94 (discussing a rolling
accrual method appropriate when partial payments are made on an underlying obligation).
The parties’ arguments did not analyze the accrual issue within the framework identified
above, as they focused more narrowly on the language of § 6615(i). The court declines to rule as
a matter of law on when a contribution claim accrues without the benefit of both a specific
factual context upon which to base a ruling of law, and further briefing. In a complex case like
this, Rule 12(b)(6) is not an effective mechanism for sorting out this issue, as neither the facts
nor the law are sufficiently developed to support a well-reasoned analysis.
ORDER
For the foregoing reasons,
1) The Agency of Transportation’s Motion to Dismiss is granted, and
2) The Motions to Dismiss of Lucas Industries, American Waterworks,
Envirosource, and Wellspring are denied.
fry
Dated at Montpelier, Vermont this IG day of May 2008.
Mary Miles Teachout
Presiding Judge