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JERSEY CITY REDEVELOPMENT AUTH. v. PPG INDUS.

March 16, 1987

Jersey City Redevelopment Authority, Plaintiff,
v.
PPG Industries, et al., Defendants



The opinion of the court was delivered by: SAROKIN

 In this action concerning the financial responsibility for the cleanup of a contaminated site, defendants PPG Industries, A. Ambrosio & Sons Contracting, Inc., and Clif Associates and Lawrence Construction Co. move for partial summary judgment.

 The parties stipulated to the following facts in the final pretrial order filed January 6, 1987. Paragraph references are to that order.

 From 1954 through 1964, defendant PPG Industries, Inc., (PPG) owned and operated a plant which processed chromium ore, located on Garfield Avenue in Jersey City, NJ. (para. 8) The processing produced residue mud consisting primarily of a silica and iron oxide matrix, and containing amounts of aluminum, magnesium, and chromium. (para. 12) From 1954 to 1963, various contractors, including defendant Lawrence Construction Co. (Lawrence), removed waste mud from the facility for use as fill in construction projects. (para. 15)

 On July 13, 1964, defendant Clif Associates (Clif) contracted to purchase the Garfield Avenue site from PPG. (para. 24) On the same date, Lawrence and PPG entered into a contract whereby Lawrence guaranteed Clif's performance under the real estate agreement. (para. 31) At that time, Clif and Lawrence were aware of the potential presence of chemicals in containers on the subject premises. (para. 24)

 On November 25, 1974, plaintiff Jersey City Redevelopment Authority (JCRA) hired defendant A. Ambrosio & Sons Contracting, Inc. (Ambrosio) to perform excavating work on a site at Ninth Avenue in Jersey City. (para. 38, 40) On the same date, defendant International Fidelity Insurance Co. (International) issued a performance and payment bond guaranteeing Ambrosio's performance in favor of JCRA. (para. 51) Ambrosio also obtained liability insurance from defendant The Hartford naming JCRA as an insured party.

 During 1975, Ambrosio completed performance under its contract with JCRA. Most of the fill material used in completing the Ninth Street demolition was obtained from excavation of a nearby sewer project. (para. 58) Ambrosio alleges that it purchased from Lawrence approximately nine truck loads of fill material from the Garfield Avenue facility for use at the Ninth Street site. (para. 59-61)

 In 1983, the New Jersey Department of Environmental Protection notified JCRA that some of the landfill used by Ambrosio was contaminated with chromium. (para. 75) JCRA complied with the Department's cleanup order, with excavation and cleanup work being performed from December 27, 1983 to January 17, 1984. (para. 94)

 On April 25, 1985, JCRA filed a complaint against PPG, Clif, Lawrence, Ambrosio, International, and The Hartford. The complaint seeks relief from defendants PPG, Clif, Lawrence, and Ambrosio on the following bases: Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9607(a) (Count One); the New Jersey Spill Compensation and Control Act, N.J.S.A. § 58:10-23.11 et seq. (Count Two); abnormally dangerous and ultrahazardous activity (Count Three); trespass (Count Four); public nuisance (Count Five); private nuisance (Count Six); negligence (Count Seven). Additionally, JCRA seeks relief from Ambrosio for breach of contract (Count Eight), misrepresentation (Count Nine), and fraud (Count Ten). Finally, JCRA seeks relief from International and Hartford as the guarantors of Ambrosio's performance (Count Eleven), and under the New Jersey Spill Compensation and Control Act (Count Twelve).

 PPG now moves for summary judgment as to Counts One, Two, Four, Five, and Six. Clif and Lawrence now move for summary judgment as to Counts One, Two, Five, and Six. Ambrosio moves for summary judgment as to Count Two and Count Five. Furthermore, PPG, Lawrence, and Clif move for summary judgment on plaintiff's request for punitive damages as to Counts Three through Seven. Finally, Lawrence, Clif, and Ambrosio move for summary judgment as to plaintiff's request for attorney's fees as to Counts Two through Seven.

 DISCUSSION

 I. Count One -- CERCLA

 A. PPG

 PPG, the original owner of the Garfield Ave. facility and the generator of the waste, contends that plaintiff's CERCLA claim against it fails as a matter of law because PPG is not a "covered person" within the meaning of the statute.

 Section 107(a), 42 U.S.C. § 9607(a), subjects four groups of individuals to liability. Plaintiff alleges that PPG is a "covered person" under § 107(a)(3), *fn1" which holds liable

 
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 owned or operated by another party or entity and containing such hazardous substances. (Emphasis supplied)

 Plaintiff contends that PPG, by selling the Garfield Avenue property to Clif, "arranged for" the disposal of the contaminated waste mud remaining on the site. Memorandum of Law on Behalf of Plaintiff JCRA, at 21. Plaintiff conceded at argument that the PPG-Clif contract does not refer to disposal of waste. Plaintiff maintains, however, that the contract implicitly transfers PPG's obligation to dispose of the waste to Clif. Because mud was removed from the Garfield Avenue property while PPG owned it from 1954-1963, plaintiff submits, "it was clearly foreseeable that waste mud remaining at the Garfield Avenue site after its transfer to Clif Associates would continue to be put to that use." Id. at 21.

 Plaintiff's interpretation of Section 107(a)(3) is unconvincing. Case law interpreting Section 107(a)(3) holds that the responsible party must affirmatively act to dispose of the waste itself -- liability under the provision ends with the party who "made the crucial decision" how the hazardous substances would be disposed of or treated. United States v. A & F Materials Co., 582 F. Supp. 842, 845 (S.D. Ill. 1984); see Allied Towing v. Great Eastern Petroleum Corp., 642 F. Supp. 1339, 1350 (E.D. Va. 1986). Section 107(a)(3) requires that, in some manner, the defendant "dumped" his waste on the site at issue. See United States v. Conservation Chemical Co., 619 F. Supp. 162, 190 (W.D. Mo. 1985); United States v. Wade, 577 F. Supp. 1326, 1333 (E.D. Pa. 1983). PPG, by conveying the entire property to Clif in 1964 while foreseeing that waste mud might be sold as landfill by the future owner, did not "arrange for" the disposal of that mud onto the Ninth Avenue site in 1974. Clif contracted independently with Ambrosio to remove the mud from the Garfield Avenue facility. See United States v. Westinghouse Elec. Corp., 14 Envtl. L. Rep. (Envtl. L. Inst.) 20, 483, 20,484 (S.D. Ind. 1983).

 Plaintiff mistakenly relies on case law prohibiting a person from avoiding Section 107(a)(3) coverage by characterizing the arrangement for disposal as a "sale" of the hazardous substances. See, e.g., United States v. Ward, 618 F. Supp. 884, 893-894 (E.D.N.C. 1985); United States v. A & F Materials Co., 582 F. Supp. 842, 845 (S.D. Ill. 1984). In those cases, the defendant engaged in a specific transaction concerning the hazardous substance. In contrast, PPG did not specifically transact with regard to the waste mud. Of course, PPG, in conveying the entire property to Clif, also sold whatever waste existed on the Garfield Ave. site at that time. Such a sale, though, did not constitute an "arrangement" to dispose of the waste according to the 1974 Ambrosio-Lawrence/Clif agreement.

 The court reaches this conclusion reluctantly. PPG plainly would be liable under CERCLA if the responsibility for cleanup of the Garfield Avenue site were being determined. The fortuity that Clif transferred the waste to Ninth Street immunizes PPG, the generator, from CERCLA liability. The court, though uncertain as to the wisdom of this as a matter of federal environmental policy, is compelled to abide by the language of the statute.

 The court concludes that PPG did not contract, agree, or otherwise arrange for the disposal of waste mud from the Garfield Ave. facility to the Ninth Street site. PPG, therefore, is not a "covered person" under Section 107(a)(3). The court grants PPG's motion for summary judgment as to Count One of plaintiff's complaint.

 B. Lawrence Construction/Clif Associates

 Lawrence/Clif contends that plaintiff's CERCLA § 107 claim against it fails as a matter of law. Lawrence/Clif argue first that it is not a "covered person" within the meaning of § 107(a). Second, Lawrence/Clif argues that it is entitled, as a matter of law, to the affirmative defense offered by § 107(b)(3).

 Initially, the court finds that, construing the facts most favorably for the plaintiff, Lawrence/Clif is a covered person within the meaning of § 107(a)(3). The elements of this section are satisfied -- Lawrence/Clif contracted with Ambrosio for the disposal of hazardous substances owned by Lawrence/Clif *fn2" at a facility owned by JCRA. Lawrence/Clif contends that the sale of fill, without knowledge that it was hazardous, does not constitute an arrangement for disposal of a hazardous substance. This contention fails for two reasons. First, as a matter of fact, a triable issue exists as to whether Lawrence/Clif had actual or imputed knowledge of the hazardous nature of the waste before the Ambrosio contract in 1974. See infra pp. slip op. at 9-10. Second, as a matter of law, defendant's lack of knowledge, though perhaps the basis for an affirmative defense, cannot remove defendant from the coverage of § 107(a)(3). For purposes of this motion, then, the court considers Lawrence/Clif to be a covered person under § 107(a)(3).

 Lawrence/Clif principally argues that it is an "innocent landowner" and thus not liable under Section 107. In terms of CERCLA, defendant's argument is by way of the affirmative defense offered in § 107(b)(3), 42 U.S.C. § 9607(b)(3), which reads in relevant part:

 
There shall be no liability under [section 107(a)] 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 . . . . *fn3"

 Lawrence/Clif argues that the acts of Ambrosio and plaintiff JCRA solely caused the placement of hazardous substances on the Ninth Street site. The statute ostensibly precludes this argument, however, because Ambrosio is an "agent . . . whose act or omission occurs in connection with a contractual relationship . . with [Lawrence/Clif]" is therefore not an acceptable third party under § 107(b)(3). Lawrence/Clif counters that the recently added statutory definition of "contractual relationship" permits it to employ the defense.

 
The term "contractual relationship," for the purpose of section 107(b)(3), includes, but is not limited to, land contracts, . . . unless the real property on which the facility concerned is located was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the facility, and . . . (i) at the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility.

 42 U.S.C. § 101(35)(A)(i) (as added by the Superfund Amendment and Reauthorization Act of 1986, Pub. L. 99-499, 100 Stat. 1613, 1616 (1986).

 Without deciding whether the effective date of the amendments permits their application to this case, and without deciding whether the statutory language applies to these facts, *fn4" the court recognizes that a triable issue exists as to whether Lawrence/Clif knew or had reason to know that the Garfield Avenue fill was contaminated. Lawrence proffers the deposition testimony of an employee involved in the 1964 purchase of the Garfield Ave. site, who states that PPG never advised her that the fill posed a health hazard. The employee testified that if the environmental hazard had been known, Lawrence/Clif would not have purchased the property. Plaintiff and defendant PPG present evidence indicating that Lawrence/Clif knew of the presence of chromium in the fill at the time of purchase and prior to the Ambrosio contract. Lawrence counters that none of this evidence ...


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