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ALLIED CORP. v. FROLA

December 13, 1988

ALLIED CORPORATION, Plaintiff,
v.
JAMES V. FROLA, et al., Defendants and Third Party Plaintiffs, v. BASF WYANDOTTE CORP., et al., Third Party Defendants. and EXXON COMPANY, U.S.A., et al., Third Party Defendants and Fourth Party Plaintiffs, v. ALCAN ALUMINUM CORP., et al., Fourth Party Defendants



The opinion of the court was delivered by: WOLIN

 Currently before the Court is a motion to dismiss the first amended third-party complaint of third-party plaintiffs James Frola and Albert Von Dohln as against three of over a score of third-party defendants: Quanta Holding Corp., Waste Recovery, Inc. and Becker Paribas Inc. Another potential third-party defendant, Quanta Resources Corp., has not been formally joined as a third-party defendant because of its bankruptcy. Quanta Resources is a wholly owned subsidiary of Quanta Holding, which is a wholly owned subsidiary of Waste Recovery, which, in turn, is a wholly owned subsidiary of Becker Paribas.

 The Court will grant the motion to dismiss with respect to seven counts of the third-party complaint, with leave to replead those counts. The Court will grant the motion in part and deny it in part with respect to three other counts, without leave to replead; the Court will sua sponte apply the latter ruling to the claims against all the third-party defendants (not just the three movants).

 INTRODUCTION

 The instant litigation is the most recent chapter in a long history of legal disputes over the cleanup of real property owned by third-party plaintiffs and located at One River Road (also known as 163 River Road) in Edgewater, New Jersey. On March 29, 1985, the Environmental Protection Agency (EPA) notified approximately 91 parties that it had assumed the chief responsibility for control and cleanup of the site under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675. The EPA offered the notified parties an opportunity to enter into a consent order by which the parties themselves, rather than the EPA, would perform the cleanup, in exchange for an EPA covenant not to sue. Many of the parties, including plaintiff Allied Corp. and third-party defendant Becker Paribas, took the EPA up on its offer, either by undertaking to conduct the cleanup (in the case of Allied) or by contributing to a $ 5 million trust fund to partially reimburse Allied (in the case of Becker Paribas). Third-party plaintiffs Frola and Von Dohln did not take part in the EPA settlement. On October 16, 1985, the EPA issued an order under § 106 of CERCLA, 42 U.S.C. § 9606, ordering that Frola, Von Dohln and approximately 45 other non-settling parties perform certain cleanup, sampling and maintenance activities at the site.

 Frola and Von Dohln initiated a civil action in the New Jersey Superior Court on November 18, 1985 against 123 parties (including settlers and non-settlers) seeking relief on various contractual and other common law causes of action. On February 5, 1987, while that action was pending, Allied filed the instant action against Frola and Von Dohln seeking recovery of its cleanup costs under CERCLA consistent with the EPA consent order; Allied also seeks to recover the appreciation in fair market value of the property resulting from its "remediation" efforts and seeks to impose an equitable lien upon the property. As a result of the initiation of this action, the state court dismissed Frola and Von Dohln's claims without prejudice on May 15, 1987.

 Frola and Von Dohln filed a third-party complaint in the instant action on April 26, 1988, which they amended on June 15, 1988. Ten of the 17 counts in the amended third-party complaint allege causes of action against Quanta Holding, Waste Recovery and Becker Paribas. Counts 7 through 12 allege various common law theories, including breach of contract, intentional and negligent misrepresentation, strict liability, gross negligence, and negligent supervision. Counts 13, 14 and 16 allege liability under the New Jersey Spill Compensation and Control Act ("Spill Act"), N.J.S.A. § 58:10-23.11 et seq. Count 17 seeks indemnification and contribution under the New Jersey Joint Tortfeasors Contribution Act, N.J.S.A. § 2A:53A-1 et seq.

 The third-party complaint alleges liability on the part of Quanta Resources based directly on its activities associated with the contaminated site. With respect to Quanta Holding, Waste Recovery and Becker Paribas, the complaint seeks to impose liability based on the nature of their relationship with Quanta Resources. Specifically, the third-party complaint alleges:

 
11. Quanta [Resources] was a wholly owned subsidiary of Quanta Holding, a wholly owned subsidiary of Waste Recovery, a wholly owned subsidiary of Becker.
 
12. At all relevant times, Becker, Waste Recovery, Quanta Holding and Quanta [Resources] were a single economic enterprise, directed, controlled and dominated by Becker.
 
13. Becker created and used Waste Recovery, Quanta Holding and Quanta [Resources] as corporate shells in an effort to shield Becker from accountability and responsibility for [Quanta Resource's] acts or omissions at the site. Becker, Waste Recovery and Quanta Holding are responsible for [Quanta Resource's] acts and omissions at the site and the acts and omissions of its employees, agents and contractors.
 
14. At all relevant times, Becker so dominated Waste Recovery, Quanta Holding and Quanta [Resources], that these corporations had no separate existence but were mere instrumentalities or conduits, one for the others.
 
15. As a result, Becker, Quanta Holding and Waste Recovery are liable for the acts and omissions of Quanta [Resources].

 First-Amended Third-Party Complaint, Count 7, paras. 11-15 (incorporated by reference into all subsequent counts). Elsewhere the third-party complaint alleges:

 
2. Becker, Waste Recovery and Quanta Holding were in a position to be, and were, knowledgeable of [Quanta Resource's] bringing into tanks at the site and discharging on the site surface and to the site subsurface oils and chemicals and waste materials.
 
3. Becker, Waste Recovery and Quanta Holding dominated and controlled Quanta [Resources] and had the capacity and were in a position to control and to stop [its] bringing to the site, and discharging on the site surface and subsurface, oils and chemicals and waste materials.

 Id. Count 16, paras. 2-4 (incorporated by reference into Count 17).

 Third-party defendants Becker Paribas, Waste Recovery and Quanta Holding have now moved to dismiss the ...


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