Bob's Beverage, Inc. v. Acme, Inc., 1:97CV650.

169 F.Supp.2d 695

BOB'S BEVERAGE, INC., et al., Plaintiffs, v. ACME, INC., et al., Defendants.

No. 1:97CV650.

United States District Court, N.D. Ohio, Eastern Division.

January 29, 1999.

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Charles P. Royer, Frank J. Cumberland, Jr., Edda S. Post, Kaufman & Cumberland, David B. Webster, Webster & Webster, Cleveland, OH, for Plaintiffs.

David W. Herrington, Wegman, Hessler, & Vanderburg, Thomas M. Stickney, Collins & Scanlon, John Rogers Jewitt, Jr., Carter E. Strang, Arter & Hadden, Lee A. Chilcote, Jr., Hahn, Loeser & Parks, Carter E. Strang, Arter & Hadden, Cleveland, OH, for Defendants.

MEMORANDUM AND OPINION

HEMANN, United States Magistrate Judge.

OUTLINE OF MEMORANDUM AND OPINION
  I. Background ...................................................................703
     A. Development of the site ...................................................703
     B. Tenantship at the site by Acme ............................................704
        1. Operations .............................................................704
        2. Drum storage ...........................................................706
     C. Tenantship at the site by Albatross .......................................707
        1. Drum storage ...........................................................707
        2. Drains and septic disposal .............................................708
        3. Oil contamination ......................................................709
     D. Ownership of the site by Bob's Beverage ...................................709
     E. Contamination by CVOCs ....................................................710
 II. Summary judgment standard ....................................................711
III. Plaintiffs' motion for summary judgment ......................................712
     A. Claim under 42 U.S.C. § 9607(a) ......................................712
        1. The two causes of action ...............................................712
        2. PRPs, the third party defense, and availability of action under
            § 9607(a) ........................................................713
        3. Plaintiffs and the third party defense .................................714
           a. Third party sole cause of the release ...............................714
           b. Release not in connection with a contractual relationship ...........714
           c. Precautions against foreseeable acts or omissions of third party ....715
           d. Exercise of due care with respect to hazardous substance ............715
     B. Elements of a cause of action authorized by 42 U.S.C. § 9613(f) ......717
     C. Summary judgment as to issues raised under § 9613(f) .................717
        1. Whether the properties at 9810 and 9812 East Washington Street
            and contiguous properties contaminated by CVOCs are a "facility" ......717
        2. Whether the CVOCs found at the site are hazardous substances ...........717
        3. Whether the defendants are "persons" for purposes of liability under
            § 9607(a) ........................................................718
        4. Whether a release or threatened release has occurred ...................719
        5. Whether the release caused plaintiffs to incur response costs ..........720
        6. Whether the incurred response costs are necessary and consistent
            with the NCP ..........................................................720

        7. Whether all defendants are liable for contribution under § 9613(f)
            because they fall within a category of persons who are liable under
            § 9607(a) ........................................................721
           a. "Owner or operator" .................................................721
           b. "Disposal" ..........................................................722
           c. Liability of defendants as owners or operators at the time that
                hazardous substances were disposed of .............................722
              1. Liability of defendant Acme .............................722
              2. Liability of defendant Bares ............................723
                 a. Direct liability as operator .........................723
                 b. Derivative liability as corporate officer ............723
              3. Liability of defendants B. Merkel and H. Merkel .........724
                  a. Direct liability as owners ..........................724
                  b. Derivative liability as partners ....................725
 IV. Defendants Acme and Bares' joint motion for summary judgment .................725
     A. Whether the court should "pierce the corporate veil" of Acme to find
         Bares indirectly liable for Acme's acts under CERCLA .....................725
     B. Whether Acme is a viable party in this litigation .........................726
     C. Whether Bares violated Ohio Rev.Code § 1701.88(A) or § 1701.97...727
     D. Whether Acme and Bares violated CERCLA as operators of the facility .......728
  V. Joint motion for summary judgment of defendants Albatross and the Merkels ....729
     A. Whether defendants are not liable because only active conduct which
          causes contamination can trigger CERCLA liability for response costs ....729
        1. Liability under § 9701(a)(1) ......................................729
           a. Liability as owners of the site as set forth in § 9607(a)(1) ...729
           b. Liability as operators of the site as set forth in § 9607(a)(1).729
        2. Liability under § 9607(a)(2) ......................................730
           a. Liability as owners of the site as set forth in § 9607(a)(2) ...730
           b. Liability as operators of the site as set forth in § 9607(a)(2).731
     B. Whether Albatross is not liable for response costs under CERCLA
         because Albatross did not dispose of any hazardous substance or
         hazardous waste ..........................................................732
 VI. Conclusion ...................................................................732

This matter is before the magistrate judge pursuant to consent of the parties. Plaintiffs commenced this action pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). Before the court are the motion of plaintiffs, Bob's Beverage, Inc. ("Bob's Beverage") and Ullman Oil, Inc. ("Ullman Oil"), for summary judgment ("Pl.Mot.," Docket # 85), the motion of defendants Acme, Inc. ("Acme") and James D. Bares ("Bares") for summary judgment ("Def.Mot.," Docket # 102), and the motion of defendants Albatross, Ltd. ("Albatross"), Benjamin Merkel ("B.Merkel") and Henry H. Merkel ("H.Merkel") for summary judgment (Docket # 84). For the reasons set forth below, the court grants plaintiffs' motion in part and overrules it in part; grants the motion of defendants Acme and Bares in part and overrules it in part; and overrules the motion of defendants Albatross, B. Merkel, and H. Merkel.

I. Background

A. Development of the site

In 1960 Cleo Gastemire sold to Ray and Nancy Hitchcox undeveloped farmland which is presently property at 9810 and 9812 East Washington Street, Chagrin Falls, Ohio. The Hitchcoxes established a store on the property at 9810 East Washington Street. That store, currently known as "The Hitchin' Post," is both a convenience store and service station. Deposition of Kim A. Ullman, Def.Mot., Defendants' Joint Appendix of Exhibits ("Def.App."), Exh. F, pp. 71, 93-94. The Hitchcoxes sold the 9810 East Washington Street property in 1972 to Marilyn Ullman. The property later came into the possession of Bob's Beverage, a corporation owned by members of the Ullman family. Id. at 21, 83-84.

In approximately 1973 the Hitchcoxes erected a building ("the building") on the 9812 East Washington Street property ("the site"). The Hitchcoxes leased space in the building to various tenants in the early 1970's. The record does not describe the activities in which these tenants engaged while at the site.

The Hitchcoxes installed a septic system for the building. The system as approved consisted of four-inch pipe which ran from a drinking fountain and toilet to two 1,000-gallon septic tanks in series and then to two 1,000-gallon dry wells in series. Application of John Blazek on behalf of Ray Hitchcox for a sewerage and well permit, Plaintiff's Revised Appendix Filed in Support of Motion for Summary Judgment ("Pl.App.") (Docket # 104), Exh. 1, p. 3. The system was designed to leach effluent which reached the dry wells into the surrounding soil. Deposition of Frank Szoka ("Szoka"), Def.App., Exh. H, pp. 16-17.

B. Tenantship at the site by Acme

In 1974 Acme became a tenant in the building. Acme reconditioned automotive air conditioning equipment, and Bares was its president and sole owner. Plaintiff's First Request for Admissions Propounded to Defendant James D. Bares, Pl.App., Exh. 2, p. 3; Deposition of Bares, Def. App., Exh. K, p. 23, 24.

1. Operations

Acme altered the building when it became a tenant. The alterations included cutting drainage ditches into the concrete floor for moving chemicals, wash water, and other waste materials away from work areas. Affidavit of Paul C. Mason ("Mason"), Pl.App., Exh. 5, p. 4. According to William Burke ("Burke"), the technical director of operations for Acme at the site, the material that drained into the ditches was soapy water, harmless abrasive grit, and chemicals washed from parts taken from a caustic soda wash. Deposition of Burke, Def.App., Exh. O, pp. 27-28, 35, 37-38, 45-46. Bares admitted that the rinse water from Acme's operations was discharged into the septic system and that it had been used to...