The opinion of the court was delivered by: CAHN
This action was brought under the liability provisions of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9657 (1982).
Plaintiff, Chemical Waste Management, Inc. ("Chem Waste"), seeks to recover "response costs"
incurred or to be incurred as a result of the release or threatened release
of hazardous substances
at the Lyncott Landfill in New Milford, Pennsylvania (the "Lyncott facility"). Defendants have moved for summary judgment, arguing that they cannot be responsible for Chem Waste's response costs.
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); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). Movant bears the initial burden of informing the court of the basis for its motion, and indicating the absence of genuine issues of material fact. The nonmoving party must set forth specific facts showing that there is a genuine issue for trial; there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, , 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986). In deciding a motion for summary judgment, the court must construe the facts and inferences therefrom in the light most favorable to the nonmoving party. Pollock v. American Telephone & Telegraph, 794 F.2d 860, 864 (3d Cir. 1986).
Chem Waste, its parent, Waste Management, Inc. ("Waste Management"), and several of Waste Management's wholly owned subsidiaries are engaged in the industrial, hazardous and chemical waste disposal business. Defendants, generators of hazardous waste, contracted with plaintiff and plaintiff's predecessor, the Stabatrol Corporation ("Old Stabatrol"), for the disposal of industrial waste material.
On November 14, 1980, Waste Management of Pennsylvania, Inc. ("WMPA"), a subsidiary of Waste Management, entered into an asset purchase agreement (the "Purchase Agreement") with Old Stabatrol, the owner and operator ("owner/operator")
of the Lyncott facility, and the individual shareholders (the "Metzval parties") of 1533 North Fletcher Corporation, the sole shareholder of Old Stabatrol. WMPA acquired all the assets, rights, properties, and business of Old Stabatrol. These comprised, inter alia, all of the waste disposal contracts of Old Stabatrol, including those with the defendant generators, the business and trade name of "Stabatrol Corporation," all waste disposal facility permits and licenses, and all subsidiary corporations. After the sale, the Stabatrol Corporation became a wholly owned subsidiary ("New Stabatrol") of Chem Waste. Old Stabatrol changed its name to the Metzval Corporation and subsequently was dissolved.
The Purchase Agreement expressly provided that "Buyer shall not be liable for any of [Old Stabatrol's] past, present or future debts, obligations or liabilities of any kind, whether accrued, absolute, contingent, or otherwise," except for:
a. All liabilities set forth on [Old Stabatrol's] Consolidating Balance Sheet dated August 31, 1980 . . . .
b. All liabilities of [Old Stabatrol] arising in the ordinary course of business since August 31, 1980 through the date of closing hereof, all of which in the aggregate are not material [sic] adverse to [Old Stabatrol].
c. Tax liability incurred through depreciation recapture caused by this transaction.
d. Tax liability incurred through investment credit recomputation caused by this transaction.
Exhibit 1 at 5 and Schedule H, Appendix of Documents in Support of the Motion for Summary Judgment by the Coalition Defendants and Vineland Chemical Company ("Defendants' Exhibits").
During the negotiations and in the Purchase Agreement, Old Stabatrol represented that the Lyncott facility was operating in full compliance with state and federal laws. In addition, prior to the acquisition, Waste Management examined the waste disposal permits and engineering plans of the facility and conducted several on-site inspections. At the time of the purchase, construction on two of the three disposal vaults had not been completed, and substantial work remained to be completed on all vaults. Defendants' Exhibit 6 at 8-10. The engineers of Waste Management concluded that, although there were some problems that might contribute to the operating costs, the design and construction of the facility appeared to be adequate.
Shortly after the acquisition, inspectors from the Pennsylvania Department of Environmental Resources ("DER") identified several violations of the DER permit and Pennsylvania environmental laws, including:
(1) On November 21, 1980, the DER observed damaged drums containing arsenic salts being placed in Vault 1, and observed arsenic waste spilled on the floor;
(2) On November 21, 1980, the DER observed that waste material in Vault 3 had been permitted to mix with water and flow from the vault over the surface soils;
(3) On December 4, 1980, the DER inspectors observed water in monitoring sumps; and
(4) On December 15, 1981 [sic], Chem Waste accepted wastes from Rockwell International, contrary to the DER's conditions of approval.
Defendants' Exhibit 2 at 1-2.
In March of 1981, the DER suspended the Lyncott facility's permit and ordered corrective action. Following the March order, DER inspectors continued to observe violations at the site, including Chem Waste's failure to implement all of the corrective actions ordered by the DER. The inspectors later concluded that the vaults were not constructed in accordance with the designs approved by the DER. The DER therefore issued a second order on September 4, 1981, which prescribed removal of all wastes from the site and submission of a Closure/Post-Closure Plan for the site. Chem Waste continued to refuse to comply with the DER orders. As a result, the DER suspended Chem Waste's hazardous waste transporter license and refused to approve permits and licenses for other Chem Waste waste disposal businesses in Pennsylvania. In August of 1982, the DER filed an action in state court to enforce its September 4, 1981 order. On September 28, 1984, Chem Waste entered into a settlement agreement with the DER whereby the DER agreed to discontinue denying permits and licenses to Chem Waste's other facilities if Chem Waste implemented the DER orders.
In June 1981, New Stabatrol commenced an action in the United States District Court for the Middle District of Pennsylvania against Old Stabatrol and the Metzval parties to rescind the Purchase Agreement on the grounds of fraud and misrepresentation. When this action failed to proceed quickly, Waste Management and Chem Waste commenced a second action in state court. The parties eventually settled all pending and potential claims. Although Waste Management rescinded the Purchase Agreement, the settlement agreement provided for, inter alia, Waste Management's maintenance of the Lyncott facility in compliance with the DER stipulation between Chem Waste and the DER (the "Maintenance Agreement").
In March of 1985, Chem Waste commenced this action against defendants.
Section 107 of CERCLA provides in pertinent part:
(a) Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section - -
(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 ...