PADGETT BROTHERS LLC v. A.L. ROSS & SONS, INC.
FINDINGS OF FACT AND CONCLUSIONS OF LAW. Ross has not carried the burden to show there is a reasonable basis for apportionment; thus, joint and several liability is appropriate for Ross. Padgett Brothers is not a responsible party for the contaminat ion and should not be allocated any of the harm. All costs already incurred by Padgett Brothers have been necessary and reasonable. The court grants Padgett Brothers declaratory relief as to future costs that are recoverable under CERCLA and the ELA. Signed by Judge Richard L. Young on 7/17/2014.(PG)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
PADGETT BROTHERS LLC,
A.L. ROSS & SONS, INC.,
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Padgett Brothers LLC (“Padgett Brothers”) is the owner of property contaminated
by the type of chlorinated solvents typically used in dry cleaning. Padgett Brothers filed
the present lawsuit against A.L. Ross & Sons, Inc. (“Ross”), the prior owner of the
property that operated such a business, under the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. § 9601 et seq., (“CERCLA”) and
the Indiana Environmental Legal Action Statute, Indiana Code §§ 13-30-9-1 et seq.
(“ELA”), for response costs incurred and to be incurred by Padgett Brothers. Ross
asserted a counterclaim against Padgett Brothers under 42 U.S.C. § 9613. On September
3, 2013, the court granted summary judgment in favor of Padgett Brothers on Ross’s
liability under both CERCLA § 107 and the ELA. (Docket # 90). On November 19,
2013, the court held a hearing to determine the appropriate damages that Ross owed to
Padgett Brothers. Being duly advised, the court now enters its Findings of Fact and
Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
I. FINDINGS OF FACT
A. Ownership and Use of Property
1. On February 7, 1963, Richard E. Ellison and Janet L. Ellison acquired the property at
issue, located at 1803 West Purdue Road, Muncie, Indiana (the “Site”), by Warranty
Deed from Alfred E. Ellison and Mary M. Ellison. (Trial Ex. 37).
2. Richard Ellison, now deceased, operated Norge Village Laundry & Cleaners (“Norge
Dry Cleaning”) at the Site from at least some time in 1964. (Joint Stipulations of
Facts (“Joint Stip.”) ¶ 4; Trial Ex. 20 at 11). The city directories of Muncie listed
Norge Dry Cleaning at the Site from 1962 to 1974. (Transcript of the Damages
Hearing (“Trial Tr.”) at 118). In contrast, other directories, including the EDR City
Directory, stated that Norge Dry Cleaning began operations at the Site starting in at
least 1964. (Trial Ex. 4 at 2; Trial Ex. 20 at 11).
3. The Ellisons sold Norge Dry Cleaning’s assets and the Site to Ross on December 21,
1970. (Joint Stip. ¶ 4).
4. Ross inspected the machines and the inside of the building before purchasing it.
(Trial Tr. at 140-41). When Ross purchased the property, it was not aware of any
environmental issues at the Site. (Id. at 143).
5. Ross continued to operate Norge Dry Cleaning at the Site from December 21, 1970
until approximately 1974 or 1975. (Joint Stip. ¶ 3).
6. Ross continued to use the same Norge Dry Cleaning name, signage, equipment,
chemicals (perchloroethylene (“PCE”)), employee, and building configuration as the
prior owner. (Id. at ¶ 5; Trial Tr. at 145).
7. Ross and its employees conducted general maintenance on the dry cleaners and
inspected them on a regular basis. (Trial Tr. at 143). Ross did not conduct any
preventative maintenance with the machines, nor was any formal protocol in place
for reporting any PCE spills. (Id. at 146).
8. After closing Norge Dry Cleaning, Ross continued to operate other businesses at the
Site, including a pharmacy and hardware store. (Id. at 118, 142).
9. When Ross owned the Site, it did not investigate and/or address the PCE and its
breakdown compounds in soil and groundwater. (Joint Stip. ¶ 8). The first time Ross
investigated the PCE and the breakdown compounds in the soil and groundwater
occurred in February 2012. (Id. at ¶ 9).
10. Ross owned the property located at the Site until December 27, 2007, when he sold it
and a contiguous parcel that totaled approximately 4.79 acres for $385,000 to an
unrelated non-party. (Id. at ¶¶ 1, 10).
3. Padgett Brothers
11. In May 2008, an unrelated non-party sold the Site and the contiguous parcel to
Padgett Brothers for $590,000 in cash. (Id. at ¶ 11; Trial Tr. at 10). Padgett Brothers
still owns this land. (Joint Stip. ¶ 2).
12. Padgett Brothers did not have actual knowledge that the Site was contaminated when
it purchased it, nor were any reductions in price made for environmental concerns.
(Trial Tr. at 11-12).
13. Padgett Brothers leases the land to an operating company, Small Engine Warehouse
(“SEW”). (Id. at 6).
14. SEW started operating at the Site in 2009. (Id. at 18). SEW is a lawn-and-garden
retailer that sells lawnmowers, snow blowers, gas, and other equipment. (Id. at 10).
SEW also rents and repairs equipment, but it does not manufacture any equipment or
products. (Id. at 10, 18).
15. Neither Padgett Brothers nor SEW has ever operated a dry cleaning business at the
Site or used any PCE at the Site. (Id. at 19; Joint Stip. ¶¶ 6, 12).
16. The court previously concluded that during the operations of Norge Dry Cleaning –
by both the Ellisons and Ross – PCE was released on-site as a result of, inter alia, the
design of the Norge PCE water separator and the vapors which were given off from
the opening and closings of the dry cleaner during its operation. (Entry on Summary
Judgment 7-8). Moreover, when the PCE was released, it went into the sewer line
and ultimately into the environment through cracks or joint separations in the sewer
17. PCE is a hazardous substance under CERCLA and the ELA. (Joint Stip. ¶ 7). The
United States Environmental Protection Agency (“EPA”) considers PCE to be a
likely carcinogen to humans. (Trial Tr. at 96).
18. Potential issues with PCE contamination include vapor intrusion. Vapor intrusion is
the process where contaminants that are present in groundwater can migrate from the
groundwater up through the soil and into nearby structures, homes, or businesses
through cracks or defects in the basement flooring and into the indoor air. (Id. at 54,
94-95). The EPA stated breathing PCE vapor intrusion over long periods of time
could cause negative health effects in humans. (Id. at 95; Trial Ex. 19). The primary
effects are neurological, including impaired cognitive and motor neurobehavioral
performance; in addition, studies of persons exposed to PCE in the workplace have
found associations with several types of cancer, including bladder cancer, nonHodgkin lymphoma, and multiple myeloma. (Trial Ex. 19).
19. Another potential hazard relates to a PCE plume’s ability to migrate long distances
over time. (Trial Tr. at 113). A plume is an area of groundwater contamination
underneath a site. (Id. at 53). The movement of a plume is very important because it
can stay on the property or migrate off the property boundaries. (Id.). Several
factors determine how long it takes for a PCE plume to stabilize, including the
subsurface soil conditions, the extent of sand and gravel through which the PCE is
moving, the size of the original source, and whether it is an active source. (Id. at
20. PCE breaks down during a process called dechlorination. This occurs when chlorine
atoms jump off the PCE molecule; the PCE molecule then breaks down into other
chemicals and, ultimately, into lesser nontoxic forms beyond vinyl chloride. (Id. at
96). This can be a slow process. Indeed, PCE remains in the ground at the Site
almost 40 years after dry cleaning operations have ceased because the amount
released at the Site has not broken down fast enough. (Id. at 97). Thus, active
remediation is needed to reduce the levels of human health risk at the Site to
acceptable levels. (Id.).
C. Initial Environmental Assessment of Site
1. May 2006: Phase I Assessment by Environ
21. At the time of purchase, Padgett Brothers had a Phase I Environmental Site
Assessment conducted by Environ in May 2006. (Id. at 12-13; Trial Ex. 3). Environ
also created a significantly more in-depth report, but Padgett Brothers only had the
first 30 pages of the report prior to purchasing the Site. (Trial Tr. at 13; compare
Trial Ex. 3 with Trial Ex. 4). Padgett Brothers and its business attorney reviewed the
Phase I report, but found “there didn’t appear to be anything to be concerned about”
because the report did not affirmatively state that the Site was contaminated. (Trial
Tr. at 14).
22. Specifically, the report states:
Norge Village Laundry and Dry Cleaning facility operated out of the
secondary building on the site from at least 1964 to 1979. No
further information is available regarding this business. Although
ENVIRON’s review did not identify information or documentation
that would suggest that a release of hazardous materials has occurred
at the site, the aforementioned dry cleaning establishment operated
during a time period when there were limited environmental
regulations governing the proper management and disposal of
hazardous materials. Given that these historic dry cleaning activities
likely involved the use of significant quantities of hazardous
materials (chlorinated solvents), the potential for soil/ground water
(Trial Ex. 3 at 12; see also id. at 2 (same)).
23. After reviewing the Phase I report, Padgett Brothers did not conduct any further
investigation as to any potential contamination on the Site. (Trial Tr. at 38).
24. Padgett Brothers did not know that the presence of a dry cleaner created the
possibility of contamination. (Id. at 15). If Padgett Brothers knew about the
contamination, it would not have purchased the Site for any price. (Id. at 15-16).
2. July 2008: Phase II Assessment by August Mack
25. When Padgett Brothers later sought financing from its bank for renovations, the bank
requested a Phase II environmental assessment from August Mack. (Id. at 37-38). A
Phase II assessment is an environmental investigation where one undertakes sitesampling activities to actually determine whether contamination is present on the site,
and, if present, to determine to some degree the type, severity, and extent of the
impacts. (Id. at 70).
26. In July 2008, Padgett Brothers received the Phase II Report and discovered for the
first time that the Site was contaminated. (Id. at 16-17, 37-38; Trial Ex. 5).
Specifically, August Mack determined there were chlorinated solvent impacts on the
Site, including PCE. (Trial Tr. at 70).
27. The Phase II Report did not, however, delineate the contamination. (Id. at 74).
Delineation involves investigating both horizontally and vertically the extent of
contamination. (Id. at 73). This involves determining the source of the
contamination and then stepping out in each direction to determine where the soil and
groundwater are no longer impacted. (Id.). As a result, Padgett Brothers did not
know of any off-site contamination when it received the Phase II Report. (Id. at 43).
28. The bank denied Padgett Brothers financing because it refused to use the
contaminated property as collateral. (Id. at 17).
29. Upon discovery of contamination on the Site, Padgett Brothers did not report the
contamination to IDEM, EPA, or any governmental authority, nor did it request
August Mack to perform additional analysis. (Id. at 39-40). Padgett Brothers instead
sought counsel to locate the responsible parties to clean up the Site. (Id. at 26).
Padgett Brothers made demands on Ross in 2009 before ultimately filing this lawsuit
in 2010. (Id.).
D. Renovations by Padgett Brothers
30. After purchasing the Site, Padgett Brothers spent approximately $1.2 million on
renovations to the buildings at the Site, including a new roof, new heating and airconditioning system, and demolition of equipment inside the building. (Id. at 11, 19).
31. In 2009, Padgett Brothers installed a catch basin inside one of the buildings to aid in
cleaning the rental and customer equipment. (Id. at 19-20). This allowed mud, grass,
and dirt to fall into the catch basin instead of being sent to the city sewer. (Id. at 20).
The water would go through the catch basin and ultimately into the city sewer. (Id.).
32. This is the only subsurface work Padgett Brothers performed during its renovation of
the Site, as it required removal of soil. (Id. at 21-22).
33. Because Padgett Brothers knew the soil could be potentially contaminated, it asked
August Mack its recommendation for how to handle the soil. (Id. at 24). Based on
this advice, Padgett Brothers installed a concrete containment system on the west
side of the building to hold the soil. (Id. at 22-23). This consisted of placing the dirt
on top of a plastic sheet which covered the asphalt. (Id. at 23).
34. Padgett Brothers neither had knowledge nor did anyone tell them that the soil they
moved was actually contaminated. (Id. at 24). Nevertheless, it treated the removed
soil as if it were contaminated. (Id. at 44). Later testing on this soil revealed no
detection of contamination. (Id. at 102-03).
35. Additionally, Padgett Brothers cut into and removed concrete from the smaller
building on the Site to install a shallow trench drain about four to five inches wide.
(Id. at 22, 38). This drain is connected to the city sewer system and is used to wash
down the floors and equipment with water. (Id. at 39).
36. Data taken from soil collected beneath the building in the area of the trench drain
indicated that the soil below the building in this vicinity was impacted but only at
deeper depths than where the trench was dug. (Id. at 104, 124-25). Thus, the soil did
not show it was impacted by chlorinated solvents at any concentration for the depth
the trenching occurred. (Id. at 124-25).
E. Subsequent Environmental Assessments of Site
1. February 2012: Phase II Assessment by Environ
37. Environ first performed Phase II work in February 2012. (Id. at 76-77). Environ is
Ross’s environmental consultant. (Id. at 75).
38. Environ put in six soil borings1 along with six monitoring wells2 into these soil
borings. (Id. at 168). One of these wells, installed in July 2012, was off-site to the
northwest. (Id. at 77).
39. Environ’s stated objectives were to (1) confirm the presence of dry-cleaning-related
compounds in the soil and groundwater at the Site; and (2) delineate any soil and/or
groundwater contamination. (Id. at 75). Although Environ confirmed there were dry
cleaning compound impacts in soil and groundwater, it did not delineate the soil and
groundwater contamination. (Id. at 76, 168-69).
2. August 2012: Phase II Assessment by Mundell &
40. In August 2012, Padgett Brothers hired Mundell & Associates (“Mundell”) to
perform additional Phase II testing. (Id. at 28, 84).
41. John Mundell testified for Padgett Brothers as an expert in, among other things, soil
and groundwater contamination. (Id. at 66-68).
42. Prior to Mundell’s investigation, August Mack and Environ had completed 11
borings and five monitoring wells. (Id. at 84). Based on the data gathered as of
August 2012, Mundell determined that one could not know the extent of soil or
groundwater contamination. (Id. at 83). Indeed, Mundell determined that the
A soil boring involves hydraulically pushing a metal tube into the ground to a certain depth and
then collecting the soil to examine its composition. (Trial Tr. at 71).
A monitoring well is a vertical pipe, usually PVC, that has a screen at the bottom which allows
water to flow into the well. (Trial Tr. at 77). This well is then surveyed and available for
sampling anytime in the future by any party. (Id.).
delineation had not happened yet at the Site, as the horizontal and vertical limits of
the plume had not been determined. (Id. at 82).
43. Mundell conducted additional testing of soil and groundwater further from the Site
and off-site to determine the extent of contamination. (Id. at 29; Trial Ex. 12). In
particular, Mundell placed a total of 63 borings in the area, both on-site and off-site,
to support delineation. (Trial Tr. at 84). Based on these soil borings, Mundell was
able to delineate the soil impacts. (Id. at 89). Mundell’s investigation also focused
on sewer lines, as they are notorious for causing or distributing impacts. (Id.). This
groundwater sampling revealed high concentrations of PCE off-site, and, as a result,
Mundell needed to do further delineation. (Id. at 91-92).
44. Because of the high levels of PCE, Mundell hypothesized that the same amount of
investigation and remediation would have been required even if only a quarter of the
PCE discharged from Norge Dry Cleaning had been released at the Site. (Id. at 10607). This stems from the large problems that small amounts of chlorinated solvents
can create and thus would also require remediation. (Id.)
45. In September 2013, Mundell conducted additional off-site work, including a vapor
intrusion evaluation to determine whether off-site PCE contamination was causing
issues with indoor air for nearby residents and businesses. (Id. at 99).
46. Mundell has not been able to determine whether the PCE plume has migrated since
2008. (Id. at 126).
47. Mundell planned on going back to the off-site properties to conduct another round of
vapor investigation, including testing of the same residences along with additional
homes. (Id. at 115-16).
F. Indiana Department of Environmental Management
48. In April 2013, Padgett Brothers entered the Site into Indiana Department of
Environmental Management’s (“IDEM”) Voluntary Remediation Program (“VRP”)
for cleaning up contamination both on- and off-site. (Joint Stip. ¶ 13; Trial Tr. at 30).
49. VRP is based on a state statute, and it allows one to address contamination on a site.
Ind. Code § 13-25-5. IDEM provides regulatory oversight for the party, and the
party gets liability protection for the cleanup or remediation they have done. (Trial
Tr. at 46).
50. IDEM requires Padgett Brothers to follow the Remediation Closure Guide in
completing its work under the VRP. (Id. at 57-58). The Remediation Closure Guide
provides applicants guidance for how contaminated sites should be investigated and
addressed. (Id. at 52). For example, it includes screening values based on the risk a
particular contaminant poses. (Id. at 52-53).
51. As part of participating in VRP, Padgett Brothers and IDEM entered into a Voluntary
Remediation Agreement (“VRA”) in July 2013. (Joint Stip. ¶ 15). According to
these terms, IDEM and Padgett Brothers “enter into this Agreement pursuant to IC
13-25-5-8 for the purposes of remediating the release of hazardous substances” at the
Site. (Id. at ¶ 16). Ross is not a party to the VRA. (Trial Tr. at 57).
52. Among other things, the VRA required Padgett Brothers to conduct a full
investigation and delineation of the extent of contamination specifically as it pertains
to contamination that migrated beyond the property boundaries and then submit a
report to IDEM within 60 days of the execution date of the agreement. (Id. at 58;
Trial Ex. 9, Ex. A).
53. Padgett Brothers must also submit to IDEM a Remediation Work Plan (“RWP”),
which lays out the remedial approach. (Trial Tr. at 50). The RWP is subject to
IDEM’s approval. (Id. at 48-50; Joint Stip. ¶ 18).
54. IDEM would not disapprove of cleanups that went above and beyond requirements in
the Remediation Closure Guide, as its main concern is that impacts to human health
and the environment are addressed appropriately. (Trial Tr. at 60-61). As such,
IDEM does not review or approve line-by-line costs of consultants. (Id. at 61).
55. Padgett Brothers must complete the RWP pursuant to a schedule proscribed by
IDEM. (Joint Stip. ¶ 18). IDEM determines whether enough investigation,
monitoring, and remediation have been completed. (Trial Tr. at 109). A Certificate
of Completion is then issued to the applicant and a covenant not to sue is signed by
the governor. (Id. at 51).
56. Under the VRA, IDEM charges Padgett Brothers for IDEM’s administrative and
oversight costs. (Id.; Joint Stip. ¶ 19). The administrative costs charged by IDEM
for VRP oversight are consistent with the National Contingency Plan (“NCP”).
(Joint Stip. ¶ 20).
57. Padgett Brothers paid $920 to build the contaminant area to store the soil removed
when creating the catch basin. (Trial Tr. at 25; Trial Ex. 7).
58. In addition, Environ’s prior investigation left drums of contaminated soil on the
property, which still require disposal. (Trial Tr. at 107). The levels of PCE in these
drums are very high, so it is not possible to just send the drums to a clean-fill site;
instead, they will likely need to go through some type of treatment and then to a
licensed facility. (Id. at 108). These actions could be very expensive. (Id.).
59. An unknown amount of additional costs will be necessary to investigate and/or
address the contamination both on- and off-site to remediate the Site and achieve the
goals of the RWP. (Joint Stip. ¶ 21; Trial Tr. at 107).
60. Ross has not paid Padgett Brothers or SEW anything in relation to expenses paid to
address the contamination on the Site. (Trial Tr. at 34).
H. Mark Flavin
61. Mark Flavin, an environmental consultant with Environ, testified as an expert for
Ross. (Id. at 150-51). Flavin assessed, among other things, whether Mundell’s
investigation costs were reasonable and necessary, whether Padgett Brothers
contributed to the spread of the contamination, and whether future costs could be
reasonably determined at this time.
62. Flavin’s opinion and all other facts necessary for this Entry will be addressed below
in the Conclusions of Law.
II. CONCLUSIONS OF LAW
63. Congress enacted CERCLA to “promote the timely cleanup of hazardous waste sites
and to ensure that the costs of such cleanup efforts were borne by those responsible
for the contamination.” Burlington Northern and Santa Fe Ry. Co. v. U.S., 556 U.S.
599, 602 (2009) (internal quotations and citations omitted).
1. Section 107(a)
64. Section 107(a) of CERCLA provides a private right of action for the recovery of
cleanup costs in certain circumstances against four classes of potentially responsible
persons (“PRP”). 42 U.S.C. § 9607; Evansville Greenway and Remediation Trust v.
Southern Indiana Gas and Electric Company, Inc., et al., 661 F.Supp.2d 989, 994
(S.D. Ind. 2009).
65. Liability under this section is strict, as the fault or innocence of the defendant is
irrelevant. Harley-Davidson, Inc. v. Ministar, Inc., 41 F.3d 341, 343 (7th Cir. 1994).
66. Once an entity is determined to be a PRP, it is typically jointly and severally liable3
for all costs of removal or remediation by a governmental entity and for response
costs incurred by any other person. 42 U.S.C. § 9607(a)(4)(A),(B); U.S. v. Capital
Tax Corp., 545 F.3d 525, 534 (2008); see also Cooper Industries, Inc. v. Aviall
Services, Inc., 543 U.S. 157, 161 (2004). This allows the government or another
party who has incurred cleanup costs to “follow the path of least resistance by suing
Joint and several liability means “each of two or more persons whose tortious conduct is a legal
cause of a single and indivisible harm to the injured party is subject to liability to the injured
party for the entire harm.” Restatement (Second) of Torts § 875.
only one or only a few PRPs for all of the costs.” Evansville Greenway, 661
F.Supp.2d at 995.
67. Although Congress imposed a strict liability standard, it did not mandate joint and
several liability in every case. Burlington, 556 U.S. at 613. To that end, “if a liable
party can establish that the harm is divisible – that is, that there is a reasonable means
of apportioning the harm among the responsible parties – then that party is not
subject to joint and several liability.” Capital Tax, 545 F.3d at 534; see also
Burlington, 556 U.S. at 614.
68. The court conducts a two-part test to determine divisibility: (1) it determines whether
the harm at issue is theoretically capable of apportionment; and (2) if the harm is
capable of apportionment, the fact-finder must determine how actually to apportion
the damages. United States v. NCR Corp., 688 F.3d 833, 838 (7th Cir. 2012).
a. Theoretically Capable of Apportionment
69. The court looks to common law to determine whether the harm is divisible. Id. at
838. The Supreme Court and the Seventh Circuit have both largely relied on the
Restatement (Second) of Torts, which states: “[W]hen two or more persons acting
independently caus[e] a distinct or single harm for which there is a reasonable basis
for division according to the contribution of each, each is subject to liability only for
the portion of the total harm that he has himself caused.” §§ 443A, 881 (1976);
Prosser, Law of Torts, at 313-14 (4th ed. 1971). On the other hand, “where two or
more persons cause a single and indivisible harm, each is subject to liability for the
entire harm.” Restatement (Second) of Torts § 875; Prosser, at 315-17.
70. Moreover, apportionment is also improper where “either cause would have been
sufficient in itself to bring about the result, as in the case of merging fires which burn
a building.” NCR, 688 F.3d at 839 (citing Restatement (Second) of Torts § 433A(2)
at cmt. I); see also Steve C. Gold, Dis-Jointed? Several Approaches to Divisibility
After Burlington Northern, 11 VT. J. ENVT’L L. 307, 351 (2009) (stating “at
common law and under the Second Restatement, parties responsible for multiple
sufficient causes of harm faced joint and several liability for the entire resulting
71. The burden is on the party seeking apportionment to “prov[e] that a reasonable basis
for apportionment exists.” Burlington, 556 U.S. at 614; see also Restatement
(Second) of Torts § 433B(2) (“Where the tortious conduct of two or more actors has
combined to bring about harm to the plaintiff, and one or more of the actors seeks to
limit his liability on the ground that the harm is capable of apportionment among
them, the burden of proof as to the apportionment is upon each such actor.”). The
policy behind this is that “between the proved tortfeasor who has clearly caused some
harm, and the entirely innocent plaintiff, any hardship due to lack of evidence as to
the extent of the harm caused should fall upon the former.” Restatement (Second) of
Torts § 433B.
72. Divisibility may be based on a “variety of factors including volumetric,
chronological, or geographic considerations, as well as contaminant-specific
considerations.” ITT Industries, Inc., v. Borgwarner, Inc., 700 F.Supp.2d 848, 877
(W.D. Mich. 2010). The Seventh Circuit has stated that “contamination traceable to
each defendant” is a proper measure of harm. NCR, 688 F.3d at 841. That said,
“courts have refused to make an arbitrary apportionment for its own sake.”
Burlington, 556 U.S. at 614.
73. “Equitable considerations play no role in the apportionment analysis; rather
apportionment is proper only when the evidence supports the divisibility of the
damages jointly caused by the PRPs.” Id. at 615 n. 9.
74. Throughout this analysis, the court must keep in mind that divisibility is the
exception, not the rule. Capital Tax, 545 F.3d at 535; see also Metropolitan Water
Reclamation Dist. of Greater Chicago, 473 F.3d 824, 827 n.3 (7th Cir. 2007) (“The
only exception to joint liability is when the harm is divisible, but this is a rare
75. Whether the harm is capable of apportionment is a question of law, but the court’s
decision will rest on underlying findings of fact, such as the type of pollution at issue,
who contributed to the pollution, etc. NCR, 688 F.3d at 838.
76. Ross has not met its burden of showing that the harm here is theoretically capable of
apportionment. Just as the Seventh Circuit held in NCR, this is an example of
multiple sufficient causes of an environmental harm. In NCR, the government’s
expert testified that the PRP’s contributions of contaminants into a polluted river
would, alone, have required approximately the same remedial measures. Id. at 839.
The PRP did not set forth any evidence refuting this contention. Accordingly, the
Court found the underlying harm was not divisible. Id. So too here, Mundell
testified that because he found “very high levels of PCE relative to . . . acceptable
regulatory levels,” even a quarter of the PCE released from Norge Dry Cleaning
would have required the same investigation and remediation. (Trial Tr. at 106-07).
Mundell based this conclusion on his 30 years of experience, in which he has
observed small amounts of chlorinated solvents create very large problems that
required remediation. (Id.). Though the evidence does not reflect to a reasonable
degree of certainty the time of ownership for either Ellison or Ross, this percentage is
roughly the same amount of time Ross operated Norge Dry Cleaning.4 Ross did not
present any evidence refuting this assertion. Like NCR, Ross’s contributions of PCE
alone would have required remediation to the Site. Thus, the harm is not capable of
b. Factual Basis for Apportionment
77. Assuming arguendo that the harm is theoretically capable of being divided, Ross has
not presented a reasonable factual basis for apportionment.
78. This is a question of fact for the court, and calculations for apportionment need not
be precise. NCR, 688 F.3d at 842 (citing Burlington, 556 U.S. at 617-18). Ross
relies heavily on Burlington Northern, but the Seventh Circuit acknowledged that this
did not replace an “evidence-based apportionment calculation.” NCR, 688 F.3d at
The parties stipulated that Ross operated Norge Dry Cleaning from December 21, 1970 until
approximately 1974 or 1975. (Joint Stip. ¶ 3). Thus, at minimum, Ross ran the dry cleaning
business for at least 3 years. Though there is uncertainty as to when the Ellisons opened their
business, multiple environmental assessments found the business opened at least by 1964. (Trial
Ex. 4 at 2; Trial Ex. 20 at 11). Thus, at minimum, the Ellisons operated the dry cleaning
business for at least 7 years. Accordingly, assuming PCE contamination could be determined by
the time period operating the store alone, as Ross has argued for, Ross would account for at least
30% of the PCE released into the Site.
79. Ross has not set forth any evidence for the court to make this calculation. Though it
relies on time-on-the-site apportionment, it did not produce enough evidence to
establish when Norge Dry Cleaning began operations or when it ceased. The court
cannot not make a time-based calculation without a start and end date.
80. Ross also failed to produce evidence comparing the periods of operation by Ellison
and Ross as to potential PCE leakage and use. Ross did not present any evidence
regarding the amount of PCE used, the volume of laundry cleaned, the leakage rates
or spills during these periods, or any other factual basis for the court to apportion the
damages; rather, Ross relies simply on a guesstimate of when operations were
conducted by Ross and Ellison.
81. Accordingly, Ross failed to meet its burden in presenting a reasonable factual basis
for apportionment. See PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 714 F.3d
161, 183 (4th Cir. 2013) cert. denied, 134 S. Ct. 514 (U.S. 2013) (“Denying
apportionment because a party fails to provide reliable evidence as to one of the
factors informing apportionment is in no way at odds with Burlington Northern.”)
82. The evidence here does not support the “rare” scenario where the harm is divisible.
Ross is therefore jointly and severally liable for all of Padgett Brother’s past costs
under CERCLA § 107(a).
B. Equitable Allocation Under CERCLA Section 113(f) and the ELA
a. CERCLA Section 113(f)
83. Section 113(f) of CERCLA states: “Any person may seek contribution from any
other person who is liable or potentially liable under section 9607(a) . . . In resolving
allocation claims, the court may allocate response costs among liable parties using
such equitable factors as the court determines are appropriate.” 42 U.S.C. §
9613(f)(1). In this manner, “contribution actions allow jointly and severally liable
PRPs to recover from each other on the basis of equitable considerations.”
Burlington, 556 U.S. at 615 n. 9.
84. Equitable factors a court may consider include:
(1) the relative fault of the parties;
(2) the ability of the parties to demonstrate that their contribution to
a discharge, release or disposal of a hazardous waste can be
(3) the amount of the hazardous waste involved;
(4) the degree of toxicity of the hazardous waste involved;
(5) the degree of cooperation by the parties with Federal, State or
local officials to prevent any harm to the public health or the
(6) the financial resources of the parties involved;
(7) responsible party’s degree of involvement in disposal of
hazardous waste, amount of hazardous waste involved, and
degree of care exercised by the parties;
(8) the benefits received by the parties from contaminating activities;
(9) the knowledge and/or acquiescence of the parties in the
Envtl. Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 508-10 (7th Cir. 1992).
85. Similarly, the ELA states: “In resolving an environmental legal action, a court shall
allocate the costs of the removal or remedial action in proportion to the acts or
omissions of each party, without regard to any theory of joint and several liability,
using legal and equitable factors that the court determines are appropriate, including
(1) The degree of care exercised by each party with respect to the
release of the hazardous substance or petroleum caused or
contributed to by each party.
(2) The amount and characteristics of the hazardous substance or
petroleum that was released.
(3) The risks posed by the hazardous substance or petroleum based
on the use of the site at the time the hazardous substance or
petroleum was released into the environment and the cost
effectiveness of the removal or remedial action to address the risks.
(4) Whether a party's acts or omissions violated a federal, state, or
local statute, rule, regulation, or ordinance.
(5) The extent to which each party exercised actual and direct
managerial control over the site where the hazardous substance or
petroleum was released at the time of the release.
(6) Whether an award of reasonable costs, including attorney's
fees, to a party involved in the environmental legal action is
(7) Other equitable factors, including unjust enrichment, that the
court determines are appropriate.”
Ind. Code § 13-30-9-3.
86. Padgett Brothers is not a responsible party under CERCLA §§ 107(a)(1) and
107(a)(2). Padgett Brothers never used chlorinated solvents at the Site, purchased the
Site with no actual knowledge of the contamination, and has cooperated with IDEM
in cleaning up the contamination. At bottom, Padgett Brothers’ actions have not
contributed to the contamination on the Site but have instead led to cleaning the Site.
Thus, Padgett Brothers is not subject to any contribution for the expenses.
87. Ross contends Padgett Brothers is a responsible party under CERCLA § 107(a)
simply for being the current owner of the contaminated Site. See 42 U.S.C. §
9607(a)(1); but see Taylor Farm Ltd. Liab. Co. v. Viacom, Inc., 234 F. Supp. 2d 950,
966 (S.D. Ind. 2002) (“being the current owner of a hazardous waste site does not
make [the owner] automatically liable for response costs under CERCLA”). As
discussed above, despite having an environmental assessment performed on the Site,
Padgett Brothers did not have actual knowledge of the contamination at the time of
purchase. In addition, none of the pollution occurred while Padgett Brothers owned
the property. See PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 616 (7th Cir.
1998) (finding district court’s decision to make previous landowner 100 percent
responsible for cleanup costs was reasonable where current landowner’s contribution
to contamination was likely too inconsequential to significantly affect the costs of
cleaning up). Accordingly, when balancing the equities, the court does not find this
factor supports contribution from Padgett Brothers.
88. Next, Ross also argues that Padgett Brothers is a responsible party under CERCLA §
107(a)(2) because it: (1) failed to perform environmental due diligence when it
learned of potential issues caused by a former dry cleaner; (2) did not report to IDEM
or evaluate the contamination when it first learned of it in 2008; and (3) exacerbated
contamination when it installed a trench drain, which allowed SEW to flush water
down the sewer pipe that was a source of PCE contamination migration.
89. Before purchasing the Site, Padgett Brothers had a Phase I Assessment done and
reviewed this with its business attorney. (Trial Tr. at 12-14; Trial Ex. 3). The report
“did not identify information or documentation that would suggest that a release of
hazardous material has occurred at the Site.” (Trial Ex. 3). To be sure, the report
also warns that a dry cleaning establishment formerly operated on the Site, so the
potential for soil/ground water contamination existed. (Id.). With the benefit of
hindsight, an additional environmental assessment of the Site would have been
invaluable to Padgett Brothers. When assessing Padgett Brothers’ actions at the time
of entering the deal, however, the court finds it reasonably relied on the statement
that no hazardous materials had been released on the Site.
90. Similarly, Padgett Brothers’ decision to locate the responsible parties for the
contamination, rather than alert the government of the contamination or conduct
further investigation, was reasonable under the circumstances. At the time Padgett
Brothers obtained the August Mack Phase II Report, Padgett Brothers had no
knowledge that the contamination was located off-site and thus, could not be held
responsible for allowing the plume to spread. (Trial Tr. at 43). In addition, Padgett
Brothers first made a demand on Ross to clean up the contamination in 2009,
approximately three years before Ross stepped in to conduct its own investigation.
(Id. at 26). On these facts, Padgett Brothers is not a responsible party.
91. Lastly, Ross failed to present admissible evidence that the trench drain installed by
Padgett Brothers exacerbated the contamination due to the flushing of water in the
sewer pipes. Specifically, Flavin testified that a large volume of water being flushed
through a sewer that is contaminated with residual PCE would exacerbate the spread
of groundwater contamination. (Id. at 165). Flavin’s conclusion, however, is based
on mere speculation and guesswork. Indeed, Flavin did not take any sampling inside
the sewer pipes; did not know if there was residual PCE inside the sewer pipe as of
2008; and did not know with any certainty whether there was residual PCE in the
backfill of the sewer after 2008. (Id. at 179-80). Moreover, Flavin did not have any
information on how the building was used, such as water usage or how often
equipment was washed. (Id. at 181). Ultimately, the court does not find Flavin’s
theory credible, as it is based almost entirely on speculation and does not have a
reliable foundation in data.
92. Ross also contends that the Ellisons are responsible parties under CERCLA 107(a)(1)
and 107(a)(2). The Ellisons are not a party to this suit, as they have since passed
away. (Id. at 131).
93. Insurance policies owned by the Ellisons, including policies related to the operation
of Norge Dry Cleaning during the period they owned the land, have not been located.
(Id. at 132).
94. In United States v. NCR. Corp., the court noted noted the dramatic increase in a
responsible party’s ultimate liability that may occur where it is found joint and
severally liable but the other responsible party is insolvent. 960 F. Supp. 2d 793, 797
(E.D. Wis. 2013). Despite this acknowledgement, the court stated that “an innocent
plaintiff should not suffer the wrong caused by an insolvent wrongdoer when another
wrongdoer is also liable.” Id. The court found this result promoted CERCLA’s
policy of ensuring that costs of cleanup efforts are borne by those responsible for that
contamination. Id. (citing Burlington, 556 U.S. at 602). The court agrees with this
rationale. Ross may still seek contribution from the Ellisons or any other responsible
party to the contamination of the Site, but the court will not decide what percent is
attributable to those non-parties at this time.
C. Past Costs
95. As to the costs Padgett Brothers have incurred to date, the court finds that all such
costs are recoverable from Ross.
96. The NCP sets guidelines and procedures for responding under CERCLA to releases
of hazardous substances, pollutants, or contaminants. Vill. of DePue, Ill. v. Exxon
Mobil Corp., 537 F.3d 775, 779 (7th Cir. 2008) (citing 42 U.S.C. § 9621(f)). To
recover some response costs under CERCLA, a plaintiff must show that it incurred
the costs in compliance with the NCP. PMC, 151 F.3d at 616 (citing 42 U.S.C. §
9607(a)(4)(B)). “The involvement of a state environmental agency in approving
cleanup plans and monitoring remediation progress satisfies the [CERCLA]
requirement of consistency with the NCP.” City of Gary v. Shafer, No. 2:07-cv-56,
2009 WL 1605136, at * 14 (N.D. Ind. June 2, 2009).
97. “The ELA requires only that the costs sought be ‘reasonable.’” Reed v. Reid, 980
N.E.2d 277, 288 (Ind. 2012).
98. Additionally, the amounts recoverable in a CERCLA action shall include interest. 42
U.S.C. § 9607(a). Similarly, prejudgment interest is recoverable under Indiana law.
See, e.g., Ind. Code § 34-51-4-1.
99. Based on the testimony and evidence presented at the hearing, the costs incurred by
or on behalf of Padgett Brothers are consistent with the provisions of CERCLA and
the ELA for recoverability. Thus far, Padgett Brothers has incurred costs related to
dirt removal, Site investigation, environmental consulting, IDEM oversight, legal
fees, and litigation expenses. This work will continue to be done under IDEM’s
supervision and pursuant to the terms of the VRA between IDEM and Padgett
Ross contends that $5,400 of Padgett Brothers’ costs is not reasonable or
necessary and thus, is not recoverable. (Trial Tr. at 160). In support, Flavin
reviewed Mundell’s investigation, soil borings, and monitoring wells and submitted a
supplemental expert disclosure regarding whether Mundell’s actions were reasonable
and necessary pursuant to IDEM’s Remediation Closure Guide. (Id. at 159-60; Trial
Ex. 26). Flavin opined that the on-site work did not appear to be done correctly in
terms of assessing the vapor intrusion risk, though he did agree that it needed to
occur. (Trial Tr. at 167). In particular, Flavin questioned the need for additional
wells at various locations on- and off-site.
Though Flavin criticized their usefulness in conducting a risk-based assessment of
the Site, he did not consider whether those wells could be helpful and necessary in
the future when assessing a remedy. (Id. at 173-74). Moreover, Flavin admitted that
he has “evaluated hundreds of sites with chlorinated and volatile organic compounds
before, and . . . [he] has never seen a setup . . . where there was unexpectedly
contamination going through a fairly small area as this.” (Id. at 187). Flavin even
agreed that Mundell needed at least some of the wells to determine the extent of the
contamination. (Id.) (“Q: That’s why Mundell had to put the wells in he had to put
in, right, because he had to find out if it was there? A: Some of the wells, yes.”). At
bottom, the court finds Flavin’s arguments unconvincing.
The disputed costs are reasonable and necessary and thus recoverable under
CERCLA and the ELA.
Accordingly, Ross is required to pay the following past costs:
August Mack Environmental
Delaware Construction and Landscape
(Trial Ex. 6)
(Trial Ex. 7)
(Trial Ex. 8)
(Trial Ex. 11)
(Trial Ex. 11)
Mundell & Associates, Inc.
Mundell & Associates, Inc.
Mundell & Associates, Inc.
Mundell & Associates, Inc.
Mundell & Associates, Inc.
Mundell & Associates, Inc.
Mundell & Associates, Inc.
(Trial Ex. 14)
(Trial Ex. 14)
(Trial Ex. 14)
(Trial Ex. 14)
(Trial Ex. 14)
(Trial Ex. 14)
(Trial Ex. 14)
The total of these costs is $117,257.72. In addition, the court finds Ross is liable
for interest on Padgett Brothers’ past costs. Ross must pay Padgett Brothers interest
on the past costs listed above in accordance with CERCLA and the ELA.
D. Future Costs
Padgett Brothers anticipates additional costs as the investigation and cleanup
continue. This work will continue to be done under IDEM’s supervision and
pursuant to the terms of the VRA between IDEM and Padgett Brothers. Padgett
Brothers thus seeks a declaratory judgment against Ross for all of Padgett Brothers’
future, reasonable and necessary costs of investigation and remediation.
Flavin testified that it is not possible to determine whether future costs to
remediate the Site are reasonable and necessary because (1) they have not yet been
incurred; (2) the Site is not “fully characterized yet”; and (3) a Remediation Work
Plan has not been developed. (Trial Tr. at 163).
Padgett Brothers seeks declaratory relief to recover all reasonable and necessary
future costs, which are recoverable under CERCLA and the ELA. To that end, the
court grants Padgett Brothers declaratory relief as to future costs that meet these
standards. See PMC, 151 F.3d at 616 (finding allocation of cleanup costs before they
have occurred is proper, as it economizes on judicial time and lets the parties know at
the earliest opportunity where they stand).
If a dispute arises between the parties as to whether future costs incurred by
Padgett are recoverable under the ELA and/or CERCLA, the court maintains
continuing jurisdiction to resolve such issues.
E. Attorneys’ Fees
Parties have agreed to determine the reasonableness of attorney’s fees in later
Ross has not carried the burden to show there is a reasonable basis for
apportionment; thus, joint and several liability is appropriate for Ross. Padgett Brothers
is not a responsible party for the contamination and should not be allocated any of the
harm. All costs already incurred by Padgett Brothers have been necessary and
reasonable. The court grants Padgett Brothers declaratory relief as to future costs that are
recoverable under CERCLA and the ELA.
SO ORDERED this 17th day of July 2014.
RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
United States District Court
Southern District of Indiana
Southern District of Indiana
Distributed Electronically to Registered Counsel of Record.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?