Union Station Associates v. Puget Sound Energy

238 F.Supp.2d 1218

UNION STATION ASSOCIATES, LLC, Plaintiff, v. PUGET SOUND ENERGY, INC., Defendant.

No. C01-298P.

United States District Court, W.D. Washington at Seattle.

November 8, 2002.

Parker C Folse, III, Susman Godfrey, L.L.P., Seattle, for Union Station Associates LLC, plaintiff.

Michael Pierson, Megan E McCloskey, Riddell Williams, P.S., Seattle, for Puget Sound Energy Inc, defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

PECHMAN, District Judge.

This matter comes before the Court on defendant Puget Sound Energy's ("PSE") motion for partial summary judgment, in which PSE asserts that plaintiff Union Station Associates' ("Union") action should be limited to one for contribution, not full cost recovery, under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. Dkt. No. 57. Having considered defendant's motion and supporting papers, plaintiff's opposition and supporting papers, defendant's reply, and having heard oral argument on the issues, the Court hereby GRANTS the motion. Plaintiffs motion to strike certain materials in support of defendant's reply is likewise GRANTED.

BACKGROUND

This is a cost recovery/contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., and Washington's Model Toxics Control Act ("MTCA"). RCW 70.105D.010 et seq. The causes of action arise out of alleged contamination by PSE's corporate predecessors of a parcel of land currently owned by Union. Both parties have given long and detailed accounts of the factual background of the case. Union itself points out the only two material facts needed to decide this motion: (1) Does Union currently own the land? (2) Did Union know that the land was contaminated when Union purchased it? Union admits that the answer to both of these questions is yes. Opposition at 2. Although many other facts are in dispute, none are material to the motion before the Court. Therefore, the issue is ripe for summary judgment determination. Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The factual background is as follows.

Union Station Associates, LLC is a development company that was set up by Nitze-Stagen & Co. in 1997 to develop a plot of land in the International District of Seattle that includes Union Station and areas to the north and south of that building. The land now contains several modern office buildings with parking garages below. This is also where the Metro bus tunnel emerges at the south end of its run. Union was involved in the renovation of the Station and the construction of the parking garages. It appears that they then sold off the rights to the airspace above the garages for the construction of the office buildings.

Prior to purchase of the land, Union entered into a consent decree with the Washington State Department of Ecology that included an agreement to take on cleanup/containment of hazardous materials at the site in consideration for a covenant not to sue. The site was at the time listed on the Washington "Hazardous Sites List." Once the consent decree was entered, Union proceeded to buy the parcel (in a purchase and sale agreement holding the prior owner harmless for any responsibility related to environmental cleanup) and commenced construction. It appears from the record that the primary environmental action taken was the installation of a concrete cap over the contaminated area, not removal of contaminated soils. The vast majority of the concrete cap constituted the base of the parking garages constructed by Union.

The history of the land is discussed in detail in the parties' briefing. The site was originally waterfront property, at least at high tide, and bordered on Elliot Bay. Beginning sometime in the late 1800's, the site contained a "gas manufacturing plant," which basically distilled coal by superheating it and condensing the emitted gases. The process produced several grades of usable oil, as well as a tarry pitch substance as a waste product. This tarry substance was allegedly dumped on the ground and in the water near the plant. The site also contained other industrial entities that likely contaminated the area as well.

In the early 1900's, that extension of Elliot Bay was filled in, and the gas plant property and several adjacent plots were consolidated and purchased for use by Union Pacific Railroad, which built Union Station and laid tracks running south from the station. The Station was operational until the early 1970's, during which time some contamination of soils may also have taken place. In the mid-1980's, the Railroad began looking for development options, and eventually decided to sell the land instead. Finally, in 1997 the purchase and sale agreement was finalized and ownership transferred to Union.

Union is now suing PSE under section 107 of CERCLA under a theory of joint and several liability for the actions of PSE's alleged corporate predecessors. The causes of action at issue in this motion involve ones for cost recovery, not contribution. In other words, Union is suing PSE for the entire cost of any environmental cleanup/containment incurred at the site.

ANALYSIS

PSE moves for partial summary judgment on two causes of action, one under Section 107 of CERCLA, and one under RCW 70.105D.040 of the MTCA. Both involve actions for cost recovery under a theory of joint and several liability. PSE's contention is that both acts limit recovery among "potentially responsible persons"/ "potentially liable persons" ("PRP"/"PLP") to contribution actions. Because Union is itself is a PRP/PLP, PSE argues, it can only sue for contribution, and its cost recovery actions should be dismissed. In the CERCLA action, Union proposes a judicially-created exception for non-polluting PRPs, as recognized in the Seventh Circuit. In the MTCA action, Union claims that the act allows for joint and several liability, while PSE points to language in the statute that directs liability to be apportioned using "equitable factors." Each act will be discussed in turn.

The CERCLA claim

"CERCLA was enacted to protect and preserve public health and the environment by facilitating the expeditious and efficient cleanup of hazardous waste sites. Pritikin v. Dep't of Energy, 254 F.3d 791, 794-95 (9th Cir.2001). But CERCLA also has a secondary purpose — "assuring that "responsible" persons pay for the cleanup." Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863, 880 (9th Cir.2002). Section 107 of CERCLA defines "covered parties," otherwise know as "potentially responsible parties" ("PRPs"), as:

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment . . .

(4) any person who accepts or accepted any hazardous substances for transport . . .

shall be liable for—

(A) . . .

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan.

. . .

42 U.S.C. § 9607(a) (emphasis added). Parties in these categories are PRPs "subject only to the defenses set forth in subsection (b) of this section—" Id. (emphasis added). Subsection (b) states:

There shall be no liability under subsection (a) of this section 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 by—

(1) an act of God;

(2) an act of war;

(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 . . ., if the defendant establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance concerned, . . ., and (b) he took precautions against foreseeable acts or omissions of any such third party . . .

Id. § 9607(b). The definition of "contractual relationship:"

includes . . . land contracts, deeds, . . . 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 [one of the following is established]:

(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.

. . .

Id. § 9601(35)(A) (emphasis added). That definition goes on to include requirements for lack of constructive knowledge, requiring "all appropriate inquiries" to be undertaken prior to purchase of the land. Id. § 9601(35)(B). This statutorily defined exception to liability has become known as the "innocent owner" defense. Carson Harbor, 270 F.3d at 882.

The effect of being able to claim the innocent owner defense is substantial when it comes to recovery. An "innocent owner" is not a PRP, and therefore can sue any other existing PRP for full cost recovery under a theory of joint and several liability. But "[b]ecause all PRP's are liable under the statute, a claim by one PRP against another PRP necessarily is for contribution. A PRP's contribution liability will correspond to that party's equitable share of the total and will not be joint and several." Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1301 (9th Cir.1997). This was made clear by Congress when it enacted Section 113(f) in passing the Superfund Amendments and Reauthorization Act of 1986 ("SARA"). 42 U.S.C. §§ 9601-9675. That section codified...