Von Duprin LLC v. Moran Electric Service, Inc.

          ENTRY ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on Plaintiff Von Duprin LLC's (“Von Duprin”) Motion for Partial Summary Judgment on Section 107(a) Liability (Filing No. 133), and Defendant Moran Electric Service, Inc's. (“Moran”) Cross-Motion for Partial Summary Judgment (Filing No. 138). Also pending is Major Holdings, LLC's and Major Tool and Machine, Inc.'s (collectively, “the Major Defendants”), Cross-Motion for Summary Judgment against Plaintiff and Motion for Summary Judgment against Cross-Claimant (Filing No. 141). Von Duprin alleges the Major Defendants, in their status as current owners of certain properties, are liable for damages owed to it under Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). (Filing No. 134.) Moran asks the Court to deny Von Duprin's motion for summary judgment and to issue a ruling declaring that Moran is responsible only for its proportionate share of harm. (Filing No. 139.) The Major Defendants seek summary judgment on all claims asserted against them by both Von Duprin and Moran. (Filing No. 142.) For the reasons stated below, Von Duprin's Motion for Partial Summary Judgment is denied. Moran's Motion for Partial Summary Judgment is granted. The Major Defendants' Motion for Summary Judgment against Von Duprin is granted in part and denied in part, and their Motion for Summary Judgment against cross-claimant Moran is denied.

         I. BACKGROUND

         A. Factual History

         This litigation relates to the release of hazardous substances at several properties located in Indianapolis, Indiana, including a property previously owned by Von Duprin, and 1925 Columbia Avenue, (the “Von Duprin Facility”) and several upgradient properties, owned at various times by Moran and/or the Major Defendants. Those upgradient properties are bounded by Hovey Street to the east, East 19^th Street to the south, Dr. Andrew J. Brown Avenue to the west, and East 21^st Street to the North. (Filing No. 42-1.) The parties have generally divided the upgradient lot into three components based on ownership rather than geography: the “Former Ertel Facility, ” the “Former Zimmer Paper Facility, ” (subdivided into the Zimmer Paper Facility and the Zimmer Packaging Facility) and the “Former Moran Facility.” (Filing No. 134 at 7-8; Filing No. 139 at 5-6; Filing No. 142 at 6-7.) All three of those facilities as well as the Von Duprin Facility were once owned and operated by manufacturers who released chlorinated solvents into nearby groundwater, which comingled into a plume producing negative environmental effects.

         The Major Defendants are the current owners of four of the properties at issue in this case: the Moran Property, the Zimmer Paper Parcel, the Zimmer Packaging Facility, and the Ertel Facility. While the Major Defendants themselves have not caused or contributed any contamination on any of those properties, it is undisputed that their ownership of the contaminated properties brings legal obligations. Since acquiring the properties they have participated in investigation and cleanup.

         1.The Von Duprin Facility

         Von Duprin manufactured exit devices such as door handles for commercial applications from 1955 to 1986 at 1925 Columbia Avenue in Indianapolis.^[1] (Filing No. 140-1 at 2, 5.) Its operations resulted in the release of hazardous chemicals, including trichloroethylene (“TCE”) and perchloroethylene (“PCE”), into soil and groundwater on and around the Von Duprin Facility^[2]. (Filing No. 140-2.) In 1986, Von Duprin ceased operations, and its owner at that time, Ingersoll-Rand Company, sold the facility to Threaded Rod Company, Inc. in 1987. (Filing No. 140-1 at 2.) Threaded Rod Company manufactured anchor bolts and connecting rods and did not generate hazardous waste. Id.

         2. Former Ertel Facility

         Ertel Manufacturing operated the facility from the 1890's through 2001 and it originally contained a machine shop and aluminum and iron foundries, but later was used to manufacture automotive engine parts. (Filing No. 135-1 at 5.) The property was sold to Dynagear in 1998, who used it to manufacture auto parts until 2002, when the property was abandoned, leaving behind soil and groundwater impacted with chlorinated volatile organic compounds. Id. Between 2004 and 2008, the City of Indianapolis, the Indiana Department of Environmental Management (“IDEM”), and the U.S. Environmental Protection Agency performed cleanup activities at the Former Ertel Facility site. Id. at 6. The parties agree that these cleanup activities addressed soil on the site that had been impacted by TCE, and designated evidence shows that confirmation sampling following soil excavation at the site showed elevated levels of TCE and PCE at levels that far exceed industrial default closure levels. (Filing No. 140-17 at 28-32.) The parties disagree as to whether the cleanup activities addressed TCE or PCE in the groundwater on the site.^[3] (Filing No. 134 at 7; Filing No. 139 at 6; Filing No. 142 at 6.)

         3. Former Zimmer Paper Facility

         The Former Zimmer Paper Facility was located at 1931 Dr. Andrew J. Brown Avenue. (Filing No. 135-1 at 4.) It had been used for chemical and equipment storage. (Filing No. 134 at 7.) Moran owned the property between 1967 and 1983, when title was conveyed to Defendant Zimmer Paper Products Incorporated (“Zimmer”). (Filing No. 135-1 at 4.) Major Holdings acquired title to the facility in 2007 and is the current owner. Id. In 2007, 7, 350 tons of chlorinated solvent-impacted-soil were removed from the site. (Filing No. 135-4 at 5.) The parties dispute whether there has been any remedial effort to address impacts to the groundwater at the Former Zimmer Paper Facility.^[4] (Filing No. 134 at 8; Filing No. 139 at 6; Filing No. 142 at 6.)

         4. Former Moran Facility

         The Former Moran Facility (Moran Motor Shop and Moran Dynamometer Building) is property addressed as 1931 Dr. Andrew J. Brown Avenue and 1436 E. 19^th Street. Moran used the site for industrial manufacturing operations from approximately 1927 to 1998. Major Holdings has owned this property since 2005.

         In April 2016, IDEM notified Moran that it was a potentially responsible party (“PRP”) under the State Cleanup Program pursuant to Indiana Code § 13-25-4, in connection with soil and gradient contamination at property located on the former Moran Facility. IDEM determined the Former Moran Facility released TCE, PCE, and other hazardous substances that aggregated with hazardous substances running off other nearby properties to create a “ground water contaminant plume.” (Filing No. 135-1 at 6.) Von Duprin attributes these hazardous substances to degreasing pits that Moran operated when it owned the property. (Filing No. 134 at 8.) Von Duprin alleges “no effort was made to address impacts to the groundwater either on the Moran site or downgradient.” Id. Moran alleges that soil samples taken from the degreasing pits just after Moran ceased operations at the site in 1996 showed either no traces of TCE or TCE concentrations “well below industrial default closure levels.” (Filing No. 139 at 5.) According to Moran, after buildings at the Former Moran Facility were demolished, soil samples detected levels of TCE and PCE below the industrial default closure levels and those samples were disposed of as non-hazardous waste. Id. The Major Defendants dispute Von Duprin's claim that no remedial efforts were undertaken at the Former Moran Facility to reduce the migration of contamination to the groundwater. (Filing No. 142 at 7.)

         5. Investigative and Remedial Efforts

          In August 2013, IDEM notified Von Duprin that it was a PRP under the State Cleanup Program pursuant to Indiana Code § 13-25-4 in connection with soil and groundwater Contamination at the Columbia Avenue Facility and may have incurred liability in connection with the release of hazardous substances from the Von Duprin Facility. (Filing No. 135-8.) At IDEM's direction, Von Duprin performed extensive sampling and investigation of the soil, soil gas, indoor air, and groundwater at the Von Duprin Facility. (Filing No. 136 at 2.) IDEM required Von Duprin to conduct downgradient groundwater and indoor air sampling to determine how far certain hazardous substances migrated. Id. Von Duprin's investigation found hazardous substances at the Von Duprin Facility and other properties near Dr. Andrew J. Brown Avenue and E. 19^th Street, including at residences. Id. Von Duprin installed mitigation systems into each affected residence that reduced contaminants to levels that meet IDEM's expectations. Id. Von Duprin continues to maintain and pay the annual cost for the operation of each residential mitigation system. Id.

         IDEM also ordered the Threaded Rod Company, the current occupant of the Von Duprin Facility, to investigate the extent of groundwater contamination and to engage in remedial actions to protect nearby residents and the public from hazardous chemicals. (Filing No. 135-9.) After undertaking an investigation, the Threaded Rod Company sued Von Duprin and Moran to recover the costs. (Filing No. 135-10.) Von Duprin reached a settlement with the Threaded Rod Company, the terms of which required Von Duprin to complete the investigation the Threaded Rod Company had started and to finance cleanup of the Von Duprin Facility and the contaminated groundwater. (Filing No. 136 at 3.) The Threaded Rod Company relinquished its work product to Von Duprin, giving Von Duprin access to sampling results and laboratory data and reports prepared by Threaded Rod Company's consultants. Id. Von Duprin has attempted to engage the Defendants in remedial efforts to mitigate the contaminated groundwater in the area, but, according to Von Duprin, the Defendants have refused. Id. at 4. Moran denies it has contributed to contamination of groundwater through TCE and PCE seepage (Filing No. 139 at 5-6), and the Major Defendants deny that they have refused to engage in remedial efforts. (Filing No. 142 at 7.) More facts will follow as necessary.

         B. Procedural History

         Von Duprin filed this action seeking a judgment against Moran, the Major Defendants and Zimmer Paper Products Incorporated (collectively, “Defendants”) under 42 U.S.C. §§ 9607(a)(4)(B) and 9613(g)(2) and Indiana Code § 13-30-9. Von Duprin's Amended Complaint, filed on January 4, 2017, alleges the same two claims against each Defendant: (1) cost recovery under section 107(a)(4)(B) of CERCLA, and (2) declaratory judgment under section 113(g)(2) of CERCLA^[5]. (Filing No. 42.) It also alleges environmental claims against Moran and Zimmer Paper under Indiana Code § 13-30-9, et seq, which allows Hoosiers to “bring an environmental legal action against a person that caused or contributed to the release [of hazardous substances or petroleum] to recover reasonable costs of a removal or remedial action.” Id.

         On January 18, 2017, the Major Defendants filed an Answer to Von Duprin's Amended Complaint and a counterclaim against Von Duprin and a cross-claim against Moran. (Filing No. 46.) On January 24, 2017, Moran filed an Answer to Von Duprin's Amended Complaint, a counterclaim against Von Duprin, and a Motion for Leave to Assert Counterclaims against the other Defendants. (Filing No. 52; Filing No. 53.)

         Pursuant to the Court's “Courtroom Procedures and Trial Practice, ” (Filing No. 67), the Major Defendants and Moran notified the Court that the parties intended to file cross-motions for summary judgment and moved to set a “summary judgment briefing schedule.” (Filing No. 129.) The Court granted that motion in part and set the following summary judgment briefing schedule:

1. Von Duprin's deadline to file its Motion for Summary Judgment and Brief in Support is July 27, 2018 (limited to 35 pages);

2. Moran, Major Holdings, and Major Tool's deadline to file their Cross-Motions for Summary Judgment, Briefs in Support, and Responses in Opposition to Von Duprin's Motion for Summary Judgment is August 17, 2018 (limited to 55 pages);

3. Von Duprin's deadline to file its Reply in Support of its Motion for Summary Judgment and Responses in Opposition to Cross-Motions for Summary Judgment is September 14, 2018 (limited to 40 pages); and

4. Moran, Major Holdings, and Major Tool's deadline to file their Replies in Support of Cross-Motions for Summary Judgment is September 28, 2018 (limited to 20 pages).

If Von Duprin believes a Surreply is appropriate under Local Rule 56-1(d), plaintiff may file a Surreply no later than seven days from the filing of Defendants' Replies in Support of Cross-Motions for summary judgment, (limited to 7 pages).

(Filing No. 132.)

         On July 27, 2018, Von Duprin filed its Motion for Partial Summary Judgment, asking only for judgment as to liability under Section 107(a) of CERCLA against all parties. (Filing No. 133.)

         On August 17, 2018, Moran filed a response and Cross-Motion for Summary Judgment asking the Court to determine that it is liable only for its proportionate share of the harm caused under Section 107(a) of CERCLA. (Filing No. 138.) Also, on August 17, 2018, the Major Defendants filed their response and Cross-Motion for Summary Judgment, asking for judgment against all parties as to all claims. (Filing No. 141.)

         On August 21, 2018, Moran moved to strike the Major Defendants' Motion for Summary Judgment, arguing the Court's Summary Judgment Briefing Schedule did not contemplate a Motion for Summary Judgment against a cross-claimant, and thus the Major Defendants should have filed their Motion for Summary Judgment against Moran by the July 27, 2018 original deadline for dispositive motions. (Filing No. 144.) The Major Defendants responded that the briefing schedule did not specify when it should file its Motion for Summary Judgment against Moran, but that it had acted in good faith and Moran had not suffered any prejudice. (Filing No. 145.) Before the Court ruled on that Motion to Strike, Von Duprin filed a Reply in support of its Motion for Partial Summary Judgment (Filing No. 149; Filing No. 150), and Moran filed a Response in Opposition to Major Defendants' Cross-Motion for Summary Judgment. (Filing No. 152.) On December 10, 2018, the Court denied Moran's Motion to Strike, finding the Major Defendants had committed excusable neglect by filing their Cross-Motion for Summary Judgment after the Court's original dispositive motions deadline. (Filing No. 164.)

         II. STANDARD OF REVIEW

         The purpose of summary judgment is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate 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.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews “the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor.” Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted). “However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion.” Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Hemsworth, 476 F.3d at 490 (citation omitted). “The opposing party cannot meet this burden with conclusory statements or speculation but only with appropriate citations to relevant admissible evidence.” Sink v. Knox County Hosp., 900 F.Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted).

         “In much the same way that a court is not required to scour the record in search of evidence to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits of [the] claim.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (citations and quotation marks omitted). “[N]either the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment.” Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and quotation marks omitted).

         These same standards apply even when each side files a motion for summary judgment. The existence of cross-motions for summary judgment does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Serv., LLC v. Int'l Union of Operating Eng'rs., 335 F.3d 643, 647 (7th Cir. 2003). The process of taking the facts in the light most favorable to the non-moving party, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. “With cross-motions, [the Court's] review of the record requires that [the Court] construe all inferences in favor of the party against whom the motion under consideration is made.” O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (citation and quotation marks omitted).

         III. DISCUSSION

         In response to the serious environmental and health risks posed by industrial pollution, Congress enacted CERCLA in December of 1980. See 42 U.S.C. § 9601-9675. Burlington Northern and Santa Fe Ry. Co. v. United States, 556 U.S. 599, 602 (2009). CERCLA is designed to encourage private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others. Id. at 602. In 1986, Congress passed the Superfund Amendments and Reauthorization Act (SARA), which amended CERCLA. Among the SARA amendments: Congress created an express cause of action for contribution for certain parties liable or potentially liable under Section 107(a), codified as CERCLA § 113(f)(1), and an express right of contribution for those parties who resolved their liability to the United States or the State in an approved settlement, codified as CERCLA § 113(f)(3)(B). See Bernstein v. Bankert, 733 F.3d 190, 206 (7^thCir. 2013).

         Section 107(a)(2) CERCLA liability attaches to any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were released. The elements of a CERCLA claim are: (1) the Site in question is a “facility”; (2) a release or threatened release of a hazardous substance at or from the facility has occurred; (3) the release or threatened release has resulted in necessary response costs being incurred consistent with the “national contingency plan”; and (4) the defendant is a “covered person” under §107(a) of CERCLA. 42 U.S.C. § 9607(a); Sycamore Indus. Park Assocs. v. Ericsson, Inc., 546 F.3d 847, 850 (7th Cir. 2008); NutraSweet Co. v. X-L Eng'g Co., 227 F.3d 776, 791 (7th Cir. 2000). A “covered person” includes the following: (1) the current owner and operator of the 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 the disposal or treatment of hazardous substances at the facility; and (4) persons who transported hazardous substances to the facility. See, 42 U.S.C. § 9607(a)(1)-(4). In its Amended Complaint, Von Duprin has asserted a claim for cost recovery under Section 107(a) of CERCLA against each of the Defendants.

         A. Count I - Cost Recovery Under Section 107(a) of CERCLA 1.Von Duprin's Motion For Partial Summary Judgment (Filing No. 133)

         Von Duprin asserts three premises in its motion for partial summary judgment. First, that the Former Ertel Facility, the Former Zimmer Paper Facility, and the Former Moran Facility are all facilities that released or threatened to release hazardous substances under CERCLA. (Filing No. 134 at 12-17.) Second, Moran operated the Former Moran Facility while it released or threatened to release hazardous substances, and the Major Defendants currently own and operate the Former Ertel Facility and the Former Zimmer Paper Facility. Id. at 17-19. Third, Von Duprin incurred response costs due to release or threatened release of hazardous substances from those facilities, and at least some of those response costs were necessary and incurred consistent with the National Contingency Plan (“NCP”) as required for recovery under CERCLA. Id. at 19-25.

         Moran urges the Court to deny Von Duprin's Motion for Partial Summary Judgment, arguing Von Duprin has not met its burden of showing that its expenditures were necessary or incurred in compliance with the NCP, as required by Section 107(a).^[6] (Filing No. 139 at 12-21.) The Major Defendants join that argument and make six others in opposition to Von Duprin's Motion.^[7] (Filing No. 142 at 25-42.) First, they argue that Von Duprin waived its claims by failing to file the State of Claims and Defenses required by the Second Revised Case Management Plan. Id. at 19-20. They argue Von Duprin has failed to show that contamination from any site owned by the Major Defendants caused Von Duprin to incur any costs. Id. at 24-25. They argue Von Duprin's claims are barred because as Bona Fide Prospective Purchasers, the Major Defendants are exempted from CERCLA. Id. at 42-50. They argue Von Duprin's claims are barred by the “third party” defense set forth in Section 107(b)(3) of CERCLA, which exempts current owners or operators who can show that the release of hazardous substance was solely caused by a third party, among other things. Id. at 50-52. And last, the Major Defendants argue Von Duprin failed to state a claim against Major Holdings under Section 107(a)(2) of CERCLA. Id. at 52-54. The Major Defendants also seek summary judgment against Moran which the Court will addresses below.

         2. Waiver

         As an initial matter, the Court must determine whether Von Duprin has waived its claims against the Major Defendants. The Second Revised Case Management Plan states “… consistent with the certification provisions of Fed. R. Civ. Proc. 11(b) the party with the burden of proof shall file a statement of the claims or defenses it intends to prove at trial, stating specifically the legal theories upon which the claims or defenses are based.” (Filing No. 98 at 3, ¶ E.) The parties agree that Von Duprin never filed a Statement of Claims and Defenses. The Major Defendants argue that by failing to file a Statement of Claims and Defenses, Von Duprin “waived its claims against the Major Defendants under Section 107 and Section 113 and its defenses to the Major Defendants' claims under Section 113(f).” (Filing No. 142 at 20.) In support, the Major Defendants cite four cases in which this Court granted summary judgment on a claim that a party had omitted from its Statement of Claims and Defenses. Id.

         In lieu of filing a statement that it considered redundant, “superfluous and unnecessary, ” Von Duprin's counsel informed defense counsel that all of Von Duprin's claims were set forth in its Amended Complaint and he inquired of the parties to see whether there was an objection to his decision to stand on that complaint. Von Duprin cites an e-mail its counsel sent to counsel for Moran and the Major Defendants on July 16, 2018, which reads:

Von Duprin's claims were fully set forth in its Amended Complaint [Dkt. 42] and there has been no change in its position in the intervening 18 months. Also, we do not believe that Von Duprin has asserted any defenses on which it bears the burden of proof. We believe that repeating Von Duprin's claims in yet another docket filing is superfluous and unnecessary.

That said, Von Duprin is willing to participate in this exercise if the Defendants see any benefit to having Von Duprin repeat its claims again. We would appreciate having the Defendants' view on this issue.

Also, we will check with the Court staff who may want to maintain the symmetry of the docket by having a statement from each party even if that submission merely repeats the party's previous claims. If so, we ...