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United States v. Manzo

December 29, 2000

UNITED STATES OF AMERICA, PLAINTIFF,
v.
DOMINICK MANZO, ET AL., DEFENDANTS/COUNTERCLAIMANTS, THIRD-PARTY PLAINTIFFS,
v.
MONSANTO COMPANY, ET AL., THIRD-PARTY DEFENDANTS.



As amended August 15, 2001.

FOR PUBLICATION

MEMORANDUM OPINION

This consolidated matter comes before the Court on the motion of plaintiff United States of America (the "United States") for partial summary judgment and to strike certain affirmative defenses; the cross-motion of defendants/ counterclaimants/third-party plaintiffs Dominick Manzo, Carmella Manzo, and Ace-Manzo, Inc. (collectively "Defendants"); and the motion of third-party-defendant Monsanto Company ("Monsanto") for dismissal of Defendants' third-party complaint and sanctions.

BACKGROUND

The United States initiated this action against Defendants under section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a). (Compl. ¶ 1.) In its Complaint, the United States seeks to recover from Defendants response costs that it has incurred in responding to alleged release or threatened release of hazardous substances at the Burnt Fly Bog Superfund Site located on sixty acres of land in the Townships of Marlboro and Old Bridge, New Jersey (the "Site"). (Id. ¶¶ 1, 7.)

Dominick and Carmella Manzo, who are husband and wife (collectively the "Manzos"), own three parcels of land on or near the Site. (Decl. of Kenneth G. Long dated 2-3-00 ("Long Decl.") Ex. K: Decl. of Thomas Porucznik, EPA Remedial Project Manager, dated 2-3-00 ("Porucznik Decl.") at ¶¶ 5-6, Ex E: Dep. of Dominick Manzo dated 3-24-99 ("1999 Dominick Manzo Dep.") at 15, 27-28, 80-82, Ex F: Dep. of Carmella Manzo dated 3-24-99 ("1999 Carmella Manzo Dep.") at 7-9, 13; Ex J: Tax Sale Certificate for Lot 43 ("Lot 43 Tax Sale Certificate"); Defs.' Br. in Opp'n to Pl.'s Mot. for Summ. J. & in Supp. of Defs.' Counter Mot. for Summ. J. ("Defs.' Br.") at 2.) The Manzos purchased the parcels during the 1960s. (See, e.g., Long Decl. Ex C: Deed dated 7-23-68 for Lot 6 ("Lot 6 Deed"), Deed dated 12-16-62 for Lot 6A ("Lot 6A Deed"), Deed dated 6-65 for Lot 43 ("Lot 43 Deed"); 1999 Dominick Manzo Dep. at 13, 21, 27; 1999 Carmella Manzo Dep. at 7-9.) The Manzos acquired the first parcel, formerly identified as Block 38, Lot 6A (the "landfill parcel" or "Lot 6A"), in 1963. (Lot 6A Deed; 1999 Dominick Manzo Dep. at 13-18, 26-27; 1999 Carmella Manzo Dep. at 7-8.) The landfill parcel had been used as a landfill prior to the Manzos' purchase, and the Manzos thereafter attempted to use it as a landfill until the issuance of a zoning injunction against this use in 1969. (See, e.g., 1999 Dominick Manzo Dep. at 51-55; 1999 Carmella Manzo Dep. at 13-18; 26-27; Defs.' Br. at 2.) The Manzos acquired the second parcel, formerly identified as Lot 43 (the "Eagle parcel" or "Lot 43"), in 1965. (See, e.g., Lot 43 Deed; 1999 Dominick Manzo Dep. at 16-21; 1999 Carmella Manzo Dep. at 8-9; Defs.' Br. at 2.) The Eagle parcel adjoined the landfill parcel and was used by Champion Chemical Company, Inc. ("Champion") *fn1 and Eagle Asphalt, Inc. ("Eagle") from the early 1950s until approximately 1963 for storage and disposal of waste oil, used filter clay, and sludge. (See, e.g., Long Decl. Ex B: Defs.' Response to Interrog. ("Defs.' Response") §§ 6, 16, Ex. G: Dep. of Martin Eckel dated 8-7-80 ("Eckel Dep.") at 3-17; Defs.' Br. at 2-3.) These materials were initially disposed of in waste oil lagoons (the "Lagoons"), a sludge pile, and in drums discarded at the Site. (See, e.g., Porucznik Decl. ¶ 10; Defs.' Response ¶¶ 6, 16; Defs.' Br. at 3.) Lot 43 was later sold to Marlboro Township at a tax sale conducted because of the Manzos' failure to pay real estate taxes, but it appears that the Manzos retain their right of redemption. (See, e.g., Lot 43 Tax Sale Certificate; 1999 Dominick Manzo Dep. at 15, 27-28, 80-82; 1999 Carmella Manzo Dep. at 8-9.) In 1968, the Manzos purchased the third parcel, formerly known as Block 38, Lot 6 (the "boarding home parcel" or "Lot 6"), on which was and remains situated a boarding home. (Lot 6 Deed; 1999 Dominick Manzo Dep. at 15, 27; 1999 Carmella Manzo Dep. at 13; Defs.' Br. at 2.)

When the Manzos acquired title to the Eagle parcel, Dominick Manzo knew that the Lagoons contained waste oil and sludge from the operations of Eagle and Champion. (See, e.g., 1980 Dominick Manzo Dep. at 71-72; Defs.' Br. at 4-5.) At the time of purchase, the walls surrounding the Lagoons were intact. (See, e.g., 1980 Dominick Manzo Dep. at 79, 128.) In addition, the walls had valved pipes through them, which valves allowed excess water to drain from the Lagoons. (Id. at 95-96.) Dominick Manzo also knew at that time that there were many old reused drums filled with oil and tar scattered around the Eagle parcel. (See, e.g., id. at 70, 83-85; Defs.' Br. at 4-5.) Some of these drums were open with the oily contents spilling out. (See, e.g., 1980 Dominick Manzo Dep. at 85.)

After the Manzos acquired the Eagle parcel, Dominick Manzo and employees of Ace-Manzo, Inc. ("Ace-Manzo") *fn2 broke through and leveled the walls surrounding four of the Lagoons after mixing the contents with sand and gravel. (1980 Dominick Manzo Dep. at 78-80, 127-130; Defs.' Br. at 5.) Dominick Manzo and employees of Ace-Manzo used some of the oily mixed material from the leveled Lagoons to build a road from the Eagle parcel to the part of the landfill parcel being used as a landfill. (1980 Dominick Manzo Dep. at 80-81; Defs.' Br. at 5.) Dominick Manzo and employees of Ace-Manzo also spread some of the oily mixed material from the leveled Lagoons as cover on top of the landfill that the Manzos operated on the landfill parcel. (1980 Dominick Manzo Dep. at 81-82, 129-30; Defs.' Br. at 5.) Dominick Manzo and employees of Ace-Manzo also moved some of the oil and tar filled drums, possibly with a bulldozer, during the excavation, and some of the drums may have been punctured during this movement. (1980 Dominick Manzo Dep. at 127-28.) Ace-Manzo also placed creosote on Lot 43. (Decl. of Dominick Manzo dated 3-21-00 ("Manzo Decl.") ¶ 3; Decl. of Lee W. Shelly, Esq. dated 3-22-00 ("Shelly Decl.") Ex. C: Dep. of Dominick Manzo dated 8-7-80 at 123.) This creosote, however, was in the form of logs or telephone poles, and Defendants claim that it was never identified or listed as a hazardous substance and was never released into the environment and does not pose a threat of such a release. (Manzo Decl. ¶ 3; Shelly Decl. Ex. H: Monmouth County Department of Health Continuation Sheet ("Monmouth County Health Continuation Sheet"); Defs.' Br. at 11.)

In 1979, Dominick Manzo observed water or liquid escaping from one of the remaining Lagoons through a breach in the wall and flowing down to the boarding home parcel, although he claims that the liquid did not contain any sludge. (1980 Dominick Manzo Dep. at 100-02, 104-05.) Dominick Manzo made no attempt to repair the breach. (Id. at 104-05.)

Beginning in 1979, the United States Environmental Protection Agency ("EPA") and the New Jersey Department of Environmental Protection ("NJDEP") conducted investigations of the Site. (Porucznik Decl. ¶ 11; Defs.' Br. at 6.) These investigations revealed hazardous substances, including but not limited to polychlorinated bi-phenyls ("PCBs"), lead, methylene chloride, trichloroethylene, chloroform, and benzene at the Site. (See, e.g., Porucznik Decl. Ex. 4: Record of Decision ("ROD1"); Porucznik Decl. ¶ 17.) EPA issued General Notice letters to Defendants on February 8, 1982, informing Defendants of their potential liability under section 107 of CERCLA, 42 U.S.C. § 9607, for contamination at the Site. (See, e.g., Porucznik Decl. ¶ 14.) EPA placed the Site on the National Priorities List on September 1, 1983. (Id. ¶ 13.)

EPA and the State of New Jersey entered into a cooperative agreement, pursuant to section 104(d) of CERCLA, which provided Superfund monies to NJDEP for work at the Site. (Id. ¶ 15.) Under this cooperative agreement, NJDEP was assigned responsibility as the lead agency for the Site and EPA was assigned responsibility as the support agency for the Site. (Id.) EPA and NJDEP have coordinated response actions at the Site. (Id.) It appears that spills occurred during the cleanup process. (Manzo Decl. Ex A: Letter from Lee W. Shelly, Esq. to Lawrence G. Moncher, Esq. dated 12-23-81 ("12-23-81 Moncher Letter"), Ex B: Letter from Lee W. Shelly, Esq. to Lawrence G. Moncher, Esq. dated 3-30-82 ("3-30-82 Moncher Letter"); Decl. of Lee W. Shelly, Esq. dated 3-22-00 Ex. K: Burnt Fly Bog Site Report ("Burnt Fly Bog Site Report").)

The agencies divided the Site into different areas or sections. The Site was divided into: (1) the Uplands Area, (2) the Tar Patch Area, (3) the Contaminated Soils Area, (4) the Northerly Wetlands, (5) the Westerly Wetlands, (6) the Downstream Area. (Id. at ¶ 7; Porucznik Decl. Ex. 2: Site Map ("Site Map").) The Uplands Area, the Tar Patch Area, and the Northerly Wetlands Area are located on Lots 6A, 6, and 43. (Porucznik Decl. ¶ 9.) It appears from the Site Map that the Contaminated Soils Area is located, at least in part, on Lot 6A. (Site Map.) *fn3 It also appears that the Westerly Wetlands and the Downstream Area are not owned by the Manzos. (Site Map; Defs.' Br. at 10.) The Uplands Area includes the Lagoons, sludge pile, and drums. (Porucznik Decl. ¶ 7.) EPA and NJDEP investigations revealed extensive PCB and lead contamination in the Uplands Area, including the Lagoons. (Porucznik Decl. ¶ 17.) The Westerly Wetlands, Downstream Area, Tar Patch Area, and Northerly Wetlands are down gradient from the Uplands Area, and NJDEP and EPA investigations have found that the contamination in these areas is the result of uncontrolled runoff and discharges from the Uplands Area. (Id.) The Manzos' landfill, located on the landfill parcel, is not a part of the Site. (Manzo Decl. ¶ 2; Pl.'s Mem. in Reply to Defs.' Opp'n to Pl.'s Mot. for Partial Summ. J. & in Opp'n to Defs.' Cross-Mot. for Summ. J. ("Pl.'s Reply Br.") at 35.)

EPA and NJDEP have divided the Site remediation into three separate operable units. (See, e.g., Porucznik Decl. ¶ 16) A separate record of decision ("ROD"), which documents EPA's selection of a remedial action, has been issued by EPA for each operable unit. (Id.)

On November 16, 1983, EPA issued Record of Decision 1 ("ROD1") for Operable Unit 1 ("OU1"), which selected a remedy to address the contamination in the Uplands Area, Tar Patch Area, Northerly Wetlands, and the Contaminated Soils Area. (Id. ¶ 50; ROD1 at 500001-02.) The remedy selected for OU1 included the following response actions: (1) excavating and disposing of hazardous substances in the Lagoons, the sludge pile area, the Tar Patch Area, and the drummed waste area; (2) excavating and disposing of hazardous substances in the Northerly Wetlands and the Contaminated Soils Area; (3) restoring the original Site contours and replanting the excavated areas; and (4) studying the Westerly Wetlands further to determine the extent of contamination in this area. (Id. ¶ 50; ROD1 at 500001-02.)

Between 1985 and 1990, NJDEP conducted remedial actions in accordance with ROD1, including removal of the asphalt pile, removal of lagoon liquids, excavation and off-site disposal of approximately 85,000 tons of contaminated soil, and installation of a clay cap over the former lagoon area. (Porucznik Decl. ¶ 17.) About 600 cubic yards of PCB-contaminated soil was removed in 1992 for off-site incineration. (Id.)

During the performance of OU1, NJDEP and EPA determined that the Northerly Wetlands and Contaminated Soils Area should be remediated along with the Westerly Wetlands in a later operable unit because of their similar topographical and hydrogeological characteristics. (Id. ¶ 52; Porucznik Decl. Ex. 5: Record of Decision 2 ("ROD2") at 500010.) NJDEP contracted for the performance of a supplemental remedial investigation/feasibility study for the Westerly Wetlands and the Downstream Area, which was completed in 1983. (Porucznik Decl. Ex. ¶ 19; ROD2 at 500011.) This investigation confirmed the presence of high concentrations of lead and PCBs in the soils of the Westerly Wetlands and the Downstream Area. (Porucznik Decl. ¶ 21; ROD2 at 500012-14)

On September 29, 1988, EPA issued Record of Decision 2 ("ROD2") for Operable Unit 2 ("OU2"), which was to be an "Interim Remedy" for the Westerly Wetlands and Downstream Area. (Porucznik Decl. ¶ 20.) OU2 included the following response actions: (1) excavating and disposing of contaminated soil in the Downstream Area; (2) containing the contaminated soil in the Westerly Wetlands by means of a sedimentation basin and appropriate diversion controls to prevent further migration; (3) building security fencing and an access road in the Westerly Wetlands; and (4) conducting a study on treatment alternatives for the Westerly Wetlands, the Northerly Wetlands, and the Contaminated Soils Area. (Id. ¶ 22; ROD2 at 500002.)

Construction of the security fencing along Spring Valley Road began on January 15, 1991 and was completed on February 15, 1991. (Porucznik Decl. ¶ 23.) NJDEP hired a contractor in August 1992 to perform the remedial design for the removal of the contaminated soil in the Downstream Area and for construction of the sedimentation basin. (Id.) As part of the design investigation, the contractor also delineated the Tar Patch Area. (Id.) This remedial design was completed by May 1994. (Porucznik Decl. Ex. 6: Record of Decision 3 ("ROD3") at 5.) Removal of the contaminated soil in the Downstream Area and construction of the sedimentation basin commenced on November 7, 1995, and the work was completed by the end of 1996. (Id.)

EPA performed an ecological assessment of the Westerly Wetlands based on the results of a field study conducted in 1991. (Id. ¶ 24.) In 1993, NJDEP hired a contractor to perform a separate feasibility study of the remaining contaminated areas: the Westerly Wetlands, Northerly Wetlands, and Tar Patch Area. (Id.) NJDEP performed soil sampling in the Northerly Wetlands in 1995 and in the Westerly Wetlands in 1996 to delineate, and then confirm, the level of contamination in these portions of the Site. (Id.)

On September 30, 1998, EPA issued Record of Decision 3 ("ROD3") for Operable Unit 3 ("OU3"), which selected a remedy for the contamination in the Westerly Wetlands, the Northerly Wetlands, and the Tar Patch Area, previously known as the Tar Patch and Contaminated Soils Area. (Id. ¶ 25; ROD3 at 34-37.) The major components of OU3 include: excavation and off-site disposal of contaminated soil from the Northerly Wetlands and the Tar Patch Area; backfilling of the excavated areas and reestablishing or creating wetlands; security fencing around the Westerly Wetlands; recording a Deed Notice for the Westerly Wetlands, Northerly Wetlands, and Tar Patch Area; and monitoring of the Westerly Wetlands, Downstream Area, and Burnt Fly Brook. (Porucznik Decl. ¶ 25; ROD3 at 34-37.) NJDEP is currently in the process of selecting a remedial design contractor for OU3. (Porucznik Decl. ¶ 26.)

The United States has incurred at least $8 million of response costs in connection with OU2 and OU3 response actions at the Site through December 1999, including the costs it has paid the State of New Jersey through the cooperative agreement with NJDEP. (Id. ¶ 27; Long Decl. Ex. I: Decl. of Jo-Ann Velez, EPA Financial Systems Specialist, dated 3-25-99 ("Velez Decl.") ¶ 9.) The United States expects to incur significantly more costs in the future for OU3. (Pls.' Br. at 13.)

RELEVANT PROCEDURAL HISTORY

The United States filed this action against Defendants on January 14, 1997. On April 1, 1997, the Defendants filed cross claims and a third-party Complaint for contribution against numerous other parties, including Monsanto. The Defendants' original third-party Complaint alleged, among other things, that the manufacturing of PCBs and products containing PCBs constituted an abnormally dangerous activity and that Monsanto, General Electric, and Westinghouse were strictly liable to Defendants. In response, Monsanto, General Electric, and Westinghouse filed a joint motion to dismiss the third-party Complaint as to them for failure to state a claim upon which relief could be granted. Defendants filed a cross-motion to amend their third-party Complaint to allege liability against Monsanto, General Electric, and Westinghouse for "CERCLA Arranger Liability" (42 U.S.C. § 9607(a)(3)) and "Restitution/Unjust Enrichment." The Court dismissed the third-party Complaint against Monsanto, General Electric, and Westinghouse and denied the Defendants' cross-motion as being futile on April 24, 1998. Defendants' motions for reconsideration of, and for certification to appeal, the Court's April 24, 1998 decision were both denied.

Defendants then filed a motion for leave to file an amended complaint against Monsanto for strict product liability and negligence for the manufacture and sale of PCBs. Monsanto opposed the motion. The magistrate judge denied Defendants' motion, finding that (1) the statute of limitations for a direct claim had expired, and (2) any indirect claims against Monsanto based on contribution or indemnification were futile because Monsanto and Defendants were not joint tortfeasors. Defendants' motion for reconsideration, and appeal to this Court, were both denied.

The Court bifurcated this action into separate liability and damages phases. Discovery on liability issues ended in 1999. Discovery on damages, including the amount of recoverable response costs, has not yet begun.

On April 12, 1999, the State of New Jersey, on behalf of NJDEP, filed a separate action against Defendants in the Superior Court of New Jersey (the "State Court") to recover its response costs at the Site pursuant to the New Jersey Spill Compensation and Control Act (the "Spill Act"), 58 N.J. Stat. Ann. § 10-23.11 et seq. Defendants impleaded numerous third-party defendants in that action. Among other things, Defendants' third-party Complaint seeks contribution and indemnification from Monsanto based on strict product liability and negligence for the manufacture and sale of PCBs, and that it is involved in the waste oil business, an allegedly abnormally dangerous activity. *fn4 On August 19, 1999, the State Court action was removed to this Court, and was subsequently consolidated with this case.

Before us now are five motions: (1) the United States' motion for partial summary judgment against Defendants seeking to establish Defendants' liability under Section 107 of CERCLA, (2) the United States' motion to strike the affirmative defenses raised by Defendants, (3) the cross-motion for summary judgment by Defendants against the United States seeking dismissal of the United States' Complaint, *fn5 (4) Monsanto's motion to strike Defendants' third-party Complaint as to it for failure to state a claim upon which relief can be granted, and (5) Monsanto's motion for sanctions.

DISCUSSION

I. Standards of Review

A. Motion for Summary Judgment

Federal Rule of Civil Procedure 56(c) provides that summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The party moving for summary judgment bears the initial burden of showing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its initial burden, the non-moving party must present evidence that establishes that a genuine issue of material fact exists, making it necessary to resolve the difference at trial. Id. at 324; Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). A non-moving party may not rely on mere allegations; it must present actual evidence that creates a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

In deciding a motion for summary judgment, the Court must view the evidence in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The role of the judge at the summary judgment stage is not to weigh the evidence, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. "By its very terms, the standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48. Material facts are only those facts that might affect the outcome of the action under governing law. Id. at 248; Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir. 1991). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citation omitted). *fn6

B. Motion to Dismiss Complaint

A court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) "only if, accepting all alleged facts as true, the plaintiff is not entitled to relief." Bartholomew v. Fischl, 782 F.2d 1148, 1152 (3d Cir. 1986) (citations omitted). Further, all reasonable inferences that can be drawn from the plaintiff's allegations "must be accepted as true and viewed in the light most favorable to the non-moving party." Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987) (citations omitted). This Court may not dismiss a complaint unless the plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "The issue is ...


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