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U.S. v. USX Corp.

October 23, 1995

UNITED STATES OF AMERICA,

v.

HUGHES, HUBBARD & REED, INTERVENOR-PLAINTIFF

v.

USX CORPORATION; ATLANTIC DISPOSAL SERVICE, INC.; EASTERN SOLID WASTE EQUIPMENT COMPANY, INC.; A.C. REALTY; CHURCHDALE LEASING INC.; PAUL C. MURPHY, INC.; ATTWOODS, INC.; ALVIN WHITE; AVE MARIA CARITE, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; STEPHEN MINER, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE,

DEFENDANTS

AND

ALVIN WHITE; A.C. REALTY; ANTHONY CARITE, JR., AVE MARIA CARITE, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; STEPHEN MINER, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; ATLANTIC DISPOSAL SERVICE, INC.; USX CORPORATION; THE HARLEYSVILLE MUTUAL INSURANCE COMPANY,

THIRD-PARTY PLAINTIFFS

v.

CHUBB GROUP OF INSURANCE COMPANIES; FIRST STATE INSURANCE COMPANY; THE HARLEYSVILLE MUTUAL INSURANCE COMPANY; INTERSTATE FIRE AND CASUALTY COMPANY; PENNSYLVANIA MANUFACTURERS INSURANCE COMPANY; SAFETY MUTUAL CASUALTY CORPORATION; WYLE LABORATORIES, INC.; EASTERN SOLID WASTE EQUIPMENT COMPANY, INC.; CHURCHDALE LEASING INC.; A.C. REALTY; ATTWOODS, INC.; PAUL C. MURPHY, INC.; ALVIN H. WHITE; AVE MARIA CARITE, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; STEPHEN MINER, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; ANTHONY CARITE, JR.; UTICA MUTUAL INSURANCE COMPANY,

THIRD-PARTY DEFENDANTS

ATLANTIC DISPOSAL SERVICE, INC., ALVIN WHITE, A.C. REALTY, AVE MARIE CARITE, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE, AND STEPHEN MINER, AS EXECUTOR OF THE ESTATE OF CHARLES CARITE,

APPELLANTS



On Appeal from the United States District Court for the District of New Jersey

(D.C. Civil No. 90-3068)

Before: BECKER and ALITO, Circuit Judges, VANASKIE, District Judge *fn*

VANASKIE, District Judge

Argued July 26, 1995

Filed October 23, 1995)

OPINION OF THE COURT

This is an appeal from a declaratory judgment in favor of the United States and against defendants/appellants Atlantic Disposal Service, Inc. ("ADS"), the principal shareholders of ADS, Alvin White ("White") and Charles Carite ("Carite"), and A.C. Realty, decreeing that each is jointly and severally liable under Section(s) 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C.A. Section(s) 9601-75 (1995), for any future response costs incurred by the United States at a hazardous waste site located in Tabernacle, New Jersey (the "Tabernacle Site"). The district court held, on summary judgment motions, that each appellant was liable under CERCLA as a "person who . . . accepted . . . hazardous substances for transport to disposal or treatment facilities . . . or sites selected by such person." 42 U.S.C.A. Section(s) 9607(a)(4)(1995). ADS was held liable based upon evidence that its employees had transported approximately 200 drums of hazardous waste to the Tabernacle Site pursuant to an arrangement negotiated by a representative of ADS with the lessees of the Tabernacle Site. White and Carite were held liable based upon the district court's finding that they exercised control over the activities of ADS in 1976 and 1977, when the drums were deposited at the Tabernacle Site. *fn1 A.C. Realty, a partnership formed by Carite and White which owned the land and buildings occupied by ADS, was held liable on the ground that it was a joint venturer of ADS at the time of the disposal activities at issue here.

Although we agree that the record before the district court established, as a matter of law, the liability of ADS as a "transporter" under Section(s) 107(a)(4) of CERCLA, 42 U.S.C.A. Section(s) 9607(a)(4), we find that there are genuine issues of material fact pertaining to the potential liability of White, Carite and A.C. Realty. Specifically, as to White and Carite, the district court erred in assessing liability on the basis of day-to-day control of the affairs of ADS, as opposed to whether White and/or Carite actually participated in the decision to dump drums of hazardous waste at the Tabernacle Site. Because there are genuine disputes pertaining to the knowledge and participation of White and Carite in the Tabernacle Site dumping, summary judgment on their liability is inappropriate. As to A.C. Realty, we find that there are genuine issues concerning the intent of the parties to establish a joint venture relationship, thereby precluding summary judgment on this issue as well. Accordingly, we will affirm the declaratory judgment against ADS, but will vacate the declaratory judgment against White, Carite and A.C. Realty and remand to the district court for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

A. The Statutory Liability Scheme

"Congress enacted CERCLA to facilitate the cleanup of potentially dangerous hazardous waste sites, with a view to the preservation of the environment and human health." Tippins, Inc. v. USX Corp., 37 F.3d 87, 92 (3rd Cir. 1994). One of the principal purposes of CERCLA is "to force polluters to pay for costs associated with remedying their pollution." United States v. Alcan Aluminum Corp., 964 F.2d 252, 259-60 (3rd Cir. 1992).

CERCLA imposes liability for the costs of cleaning up a polluted site on four separate categories of parties:

(1) The owner and operator of a facility from which there has been a release or threatened release of hazardous substances necessitating responsive action, Section(s) 107(a)(1);

(2) A person who owned or operated such a facility at the time hazardous substances were deposited there, Section(s) 107(a)(2);

(3) A person who arranged for the transportation, disposal or treatment of hazardous substances at such a facility, Section(s) 107(a)(3); and

(4) A person who had accepted hazardous substances for transportation to a facility selected by that person, Section(s) 107(a)(4). *fn2

Potentially responsible parties described by subsections (1) and (2) are generally known as "owners" and "operators"; those who fall under subsection (3) are generally known as "generators" and sometimes referred to as "arrangers"; and those who fall under subsection (4) are commonly known as "transporters." *fn3 See Atlantic Richfield Co. v. Blosenski, 847 F.Supp. 1261, 1271 (E.D. Pa. 1994). Liability of responsible parties is strict, i.e., not dependent on a finding of fault. See Tippins, 37 F.3d at 92. *fn4 This appeal involves the question of whether the record before the district court established that ADS, White, Carite and/or A.C. Realty should be held liable as "transporters" of hazardous substances to the Tabernacle Site. *fn5

B. The Potentially Responsible "Transporter" Parties

White and Carite formed ADS in 1963. ADS was engaged in the business of hauling waste from commercial and industrial establishments. At the time of incorporation, Carite owned 50 percent of ADS' stock, White owned 49 percent of the stock, and the remaining one percent was owned by White's spouse. *fn6 From its incorporation until 1991, when its assets were sold, White and Carite were the sole officers and directors of ADS. White was the President of ADS; Carite was its Secretary/Treasurer.

As business expanded, White and Carite formed other corporations and partnerships. In 1971, they incorporated Eastern Solid Waste Equipment Company, Inc. ("ESWECO"). Although initially intended to operate as a distributor of refuse collection equipment, ESWECO essentially served as a maintenance company for the equipment used and buildings occupied by ADS. ESWECO was owned by relatives of White and Carite, but White and Carite served as the sole officers of that corporation.

Carite and White were also the sole partners in A.C. Realty, which was the owner of approximately 8.5 acres of land located in Mt. Laurel, New Jersey. Facilities constructed on a three-acre section of this parcel were leased to ADS. In the late 1970's, A.C. Realty leased another acre of land to Atlantic Recovery and Transfer Systems, Inc. ("ARTS"), which operated a waste transfer station adjacent to ADS. *fn7

Also in the late 1970's, White and Carite established A.C. Enterprises, a partnership that leased containers and trucks to ADS. In 1982, A.C. Enterprises sold its assets to Churchdale Leasing, Inc., a Subchapter S corporation owned by White and Carite, who were its sole officers and directors. Churchdale Leasing continued to lease rolling stock and containers to ADS.

ESWECO, A.C. Realty, and A.C. Enterprises dealt solely with ADS and other companies established by White and Carite. Neither A.C. Realty nor A.C. Enterprises had any employees; ADS employees performed the work of these partnerships. *fn8

C. The Tabernacle Site

One of the ADS industrial accounts during the 1970's was a plant operated by USX Corporation in Camden, New Jersey. ADS hauled 55-gallon drums of liquid waste from the USX facility to a landfill in Gloucester County. When the Gloucester County landfill refused to accept the USX drums, arrangements were made to dispose of the drums on a 1-acre wooded parcel in Tabernacle, New Jersey, leased by Robert Ware, an ADS mechanic. ...


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