United States District Court, N.D. Indiana, South Bend Division
OPINION AND ORDER
PHILIP P. SIMON, Chief District Judge.
The United States brought this suit against ARG and Norbert Toubes seeking to recover costs the Environmental Protection Agency incurred cleaning up a property formerly owned by ARG. In turn, ARG has sought to shift liability onto the property's current owner, the City of South Bend. This is ARG's second attempt to do so. ARG's first third-party complaint against South Bend was dismissed for failing to state a claim. Before the Court now is its amended third-party complaint, which South Bend has moved to dismiss (DE 72). For the following reasons, South Bend's motion is DENIED.
I'll start with the facts as alleged in the Government's amended complaint and ARG's amended third-party complaint, which at this point I must accept as true. From 2000 to 2006, ARG owned the South Bend Lathe site, a 440, 000 square-foot industrial site in South Bend, Indiana (DE 99 ¶¶ 19, 23-25). On December 15, 2006, ARG sold the property to the City of South Bend. Id. at ¶ 25. Days after the sale, South Bend notified the Environmental Protection Agency that hazardous substances on the property could pose a danger to the public's health. Id. at ¶ 26. The EPA investigated the property on January 18, 2007 and determined that the site did indeed present an imminent danger to the public. Id. at ¶¶ 27-32. The EPA ordered ARG to address the hazardous conditions, but ARG refused. Id. at ¶¶ 34-36. As a result, the EPA conducted the removal action itself, expending over $841, 310.46 in the process. Id. at ¶¶ 34-38.
The Government then brought this case in December 2011 alleging ARG was liable for the response costs under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") (DE 1). It also included a claim against Toubes as a distributee of ARG's assets. Id. In response, ARG filed a third-party complaint against South Bend alleging that the contract between ARG and
South Bend allocated responsibility for any clean-up costs to South Bend (DE 12). claim, and, in August 2011, I found in favor of South Bend, dismissing the complaint (DE 30). I held that the contract of sale between ARG and South Bend unambiguously provided that ARG was solely responsible for remediating hazardous substances on the property arising from its ownership, use or operation. Id. at 6-8.
In June 2013, the Government sought leave to amend its complaint to add a piercing the corporate veil claim against Norbert Toubes (DE 51). I ended up allowing the amendment, which had the effect of dramatically increasing Toubes's potential liability (DE 61). In light of this change, I thought it was only fair to grant ARG leave to file an amended third-party complaint against South Bend. ARG filed the amended complaint in September 2013 (DE 64). This time, ARG is asserting a claim against South Bend under 42 U.S.C. 9613(f), which provides that a party that is potentially liable under section 9607(a) of CERCLA can seek contribution from any other potentially liable party. South Bend moved to dismiss the complaint. In the alternative, South Bend seeks reconsideration of my decision to allow ARG leave to amend (DE 72).
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for failure to state a claim. To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Determining whether a complaint states a plausible claim for relief requires me to draw on my judicial experience and common sense. Id. at 1950. And although at this stage I must accept all allegations as true and draw all reasonable inferences in the complainant's favor, I don't need to accept threadbare legal conclusions supported by mere conclusory statements. Id. at 1949-50.
In addition, to recover against a third-party defendant, the third-party plaintiff must meet the demands of Federal Rule of Civil Procedure 14. This rule states that "[a] defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." Fed.R.Civ.P. 14(a). This means that "the third-party defendant [must] be potentially liable for the original plaintiff's claim." West Bend Mut. Ins. Co. v. Willmez Plumbing, Inc., 2011 WL 1706833, at *2 (S.D. Ind. May 5, 2011) (citing U.S. Gen., Inc. v. City of Joliet, 598 F.2d 1050, 1053 (7th Cir. 1979) (holding that secondary liability "is a plain condition on the face of Rule 14").
ARG has stated a plausible contribution claim. Section 113(f) of CERCLA provides:
"[a]ny person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title..."
42 U.S.C. § 9613(f). Here, the United States has instigated a civil action against ARG under section 9607(a) (DE 64 ¶ 1). ARG, in turn, alleges that the City of South Bend is potentially liable for the Government's claim under section 9607(a)(1), which provides that "the owner or operator of a vessel of facility" is liable for "all costs of removal or remedial action incurred by the United States Government... not inconsistent with the national contingency plan." 42 U.S.C. § 9607(a)(1)-(4)(a). South Bend owned the South Bend Lathe site when the Government conducted the removal (DE 64 at ¶¶ 11-12). Therefore, under the Section 113(f) of CERCLA, ARG is entitled to seek contribution from the City of South Bend. Bernstein v. Bankert, 733 F.3d 190, 202 (7th Cir. 2013), cert denied, 134 S.Ct. 1024 (2014) ("Where a person has been subjected to a civil action under 42 U.S.C. §§ 9606 or 9607(a), he may attempt to recover his expenditures through a contribution suit...").
The contribution claim against South Bend is, of course, collateral to the Government's claim against ARG. In other words, if the Government fails to obtain a judgment against ARG, ARG's contribution claim against South Bend becomes moot. Section 113(f) authorizes a party to seek contribution "during or following" a suit under § 9607, so ARG can bring the claim now, even though there isn't anything to contribute to yet. 42 U.S.C. § 9613(f); U.S. v. Atlantic Research Corp., 551 U.S. 128, 138 (2007); Appleton Papers Inc. v. George A. Whiting Paper Co., 572 F.Supp.2d 1034, 1044 (E.D. Wis. 2008) ...