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M & M REALTY CO. v. EBERTON TERMINAL CORP.

September 12, 1997

M & M REALTY COMPANY, Plaintiff
v.
EBERTON TERMINAL CORPORATION, SERVICE SUPPLY COMPANY, INC., H. J. WILLIAMS COMPANY, INC., JENKINS PROFESSIONALS, INC., Defendants



The opinion of the court was delivered by: CALDWELL

MEMORANDUM

 In this civil action, Plaintiff, M&M Realty Co. ("M&M"), seeks to recover the costs associated with the removal of hazardous wastes from certain real property. Named as defendants are Eberton Terminal Corp. ("Eberton"), Underwood Services Co. ("Underwood"), H.J. Williams Co., Inc. ("Williams"), and Jenkins Professionals, Inc. ("Jenkins"). Before us is a motion to dismiss, filed by Eberton.

 I. Background

 This case concerns a 6.9 acre parcel of industrial property on Hokes Mill Road, in West Manchester Township, York County, Pennsylvania (the "Property"). M&M purchased the Property from Eberton on March 27, 1995; Eberton had originally acquired the Property in two parcels from Underwood and Williams in the 1940s. In August of 1995, M&M discovered that the soil and water on the property were contaminated with petroleum and various hazardous chemicals.

 The Eberton-M&M sale was conducted pursuant to an agreement executed on September 7, 1994 (the "Purchase Agreement"). The Purchase Agreement contained an "Environmental Contingency" clause, in which the parties addressed the possibility of environmental contamination on the Property. The Environmental Contingency provided that:

 
BUYER, at BUYER's expense, shall obtain a Phase I Environmental Audit and conduct such other testing as it determines acceptable to BUYER. BUYER's obligation to purchase hereunder shall be subject to BUYER's approval of the aforementioned audit and BUYER's acceptance and approval of any hazardous waste conditions, oil and gasoline products, asbestos, or other environmental problems existing at the site, including, but not limited to, underground gasoline or oil storage tanks and wetlands. BUYER shall have the right to declare this Agreement null and void if the subject premises do not meet all Local, State, Regional and Federal environmental standards. . . . If BUYER closes on this Agreement, it acknowledges and represents (which shall survive closing hereunder) that it does so based on its own investigation and not on reliance of any statement or representation of or through SELLER regarding any matter or condition, including without limitation, any environmental condition, and BUYER accepts the property in "AS IS" condition.

 (Am. Compl., Ex. B, at 4-5, P 2(c)). In the Environmental Contingency, M&M also acknowledged the receipt of a copy of a Phase I audit performed by Jenkins for Eberton in 1991.

 Rather than perform a new audit, M&M elected to hire Jenkins to conduct a re-inspection of the Property. After receiving a positive report from Jenkins, M&M purchased the property from Eberton.

 After discovering the contamination of the property, M&M commenced this action. In an amended complaint, M&M advances claims against Eberton, Underwood, Williams, and Jenkins under Sections 107(a) and 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9607(a) & 9613(f), Sections 701(a), 702, 1101, and 705 of Pennsylvania's Hazardous Sites Cleanup Act, 35 Pa. Stat. Ann. §§ 6020.701(a), 6020.702, 6020.1101, & 6020.705, and under a variety of common-law theories. Eberton now moves for the dismissal of all claims against it.

 II. Standard of Review

 When considering a motion to dismiss under Rule 12(b)(6) "all facts alleged in the complaint and all reasonable inferences that can be drawn from them must be accepted as true." Malia v. General Elec. Co., 23 F.3d 828, 830 (3d Cir. 1994). The motion must be denied unless the plaintiff cannot prove any facts in support of the claim which would entitle it to relief. Rocks v. Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989).

 III. Discussion

 A. Standing Under CERCLA Section 107 (Count I)

 Count I of the complaint asserts a cost recovery claim under Section 107(a) of CERCLA, 42 U.S.C. § 9607(a). Eberton argues that M&M is a potentially responsible party ("PRP") under CERCLA, and therefore lacks standing to bring a cost recovery action.

 1. Standing of a PRP to Bring a Cost Recovery Action

 As a general matter, a PRP's CERCLA remedies are limited to contribution actions under Section 113, 42 U.S.C. § 9613; Section 107 cost recovery actions are available only to innocent parties. New Castle County v. Halliburton NUS Corp., 111 F.3d 1116 (3d Cir. 1997).

 We conclude that, under the circumstances alleged in this case, if M&M can establish that it is an innocent landowner under Section 107(b)(3), it will be entitled to bring a cost recovery action. This conclusion is supported by every decision which we have found which considers the question. Rumpke, 107 F.3d at 1239-42; Akzo Coatings, 30 F.3d at 764; Redwing Carriers, Inc. v. Saraland Apartments., 94 F.3d 1489, 1496 (11th Cir.1996); Boyce v. Bumb, 944 F. Supp. 807, 812 (N.D. Cal. 1996); Wolf, Inc. v. L&W Serv. Ctr., Inc., 1997 U.S. Dist. LEXIS 3758, 1997 WL 141685 at *8 (D. Neb. March 27, 1997); see also United Tech., 33 F.3d at 99 n.8. While the Third Circuit expressly deferred ruling on this question in New Castle, 111 F.3d at 1123-24, dicta in In re Reading Co. seems to suggest that the court believes that an innocent owner may, at least in some circumstances, have standing to bring a cost recovery action under Section 107(a). 115 F.3d 1111, 1120 (3d Cir. 1997) (discussing the Supreme Court's statement in Key Tronic Corp. v. United Sates, 511 U.S. 809, 816, 114 S. Ct. 1960, 1966, 128 L. Ed. 2d 797, 805 (1994), that CERCLA "impliedly authorizes" overlapping remedies in Sections 113 and 107).

 2. M&M's Status as an Innocent Landowner

 Eberton argues, however, that M&M has failed to sufficiently assert its status as an innocent landowner. Analysis of this question requires an examination of the relevant sections of CERCLA.

 CERCLA's "third party" defense provides that a PRP shall not be liable if it

 
can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting ...

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