BancorpSouth Bank v. Environmental Operations, Inc. et al

Filing 169

MEMORANDUM AND ORDER re: 62 65 66 63 ORDERED that Plaintiff's Motion to Dismiss Counts I, II, III, IV, and VII of the Counterclaim filed by Environmental Operations, Inc., (EOI), [Doc. No. 62], is denied. FURTHER ORDERED that Plaintiff 's Motion to Dismiss Counts V and VI of the Counterclaim filed by EOI, [Doc. No. 63], is DENIED; FURTHER ORDERED that Defendant Geotechnology, Inc.'s Motion to Dismiss Counts I and II of EOI's Cross claim, [Doc. No. 65], is DENIED; FURTHER ORDERED that Defendant The Clayton Engineering Company's Motion to Dismiss Counts I and II of EOI's Cross claim, [Doc. No. 66], is DENIED. Signed by District Judge Henry E. Autrey on 11/7/12. (CEL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
BANCORPSOUTH BANK,
Plaintiff,
v.
ENVIRONMENTAL OPERATIONS,
INC., et al.,
Defendants,

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Case No. 4:11CV9 HEA

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Plaintiff’s Motion to Dismiss Counts I, II,
III, IV, and VII of the Counterclaim filed by Environmental Operations, Inc.,
(EOI), [Doc. No. 62]; Plaintiff’s Motion to Dismiss Counts V and VI of the
Counterclaim filed by EOI, [Doc. No. 63]; Defendant Geotechnology, Inc.’s
Motion to Dismiss Counts I and II of EOI’s Cross claim, [Doc. No. 65]; Defendant
The Clayton Engineering Company’s Motion to Dismiss Counts I and II of EOI’s
Cross claim, [Doc. No. 66]. EOI opposes the motions. For the reasons set forth
below, the motions are denied.
Facts and Background
As set forth in the Court’s previous Opinion, Memorandum and Orders,

Plaintiff, a Mississippi state bank and successor by merger to The Signature Bank,
alleges that Environmental Operations Inc., (EOI), Geotechnology, Inc., (Geotech)
and The Clayton Engineering Company, Inc., (Clayton) prepared and implemented
an environmental remediation plan affecting property known as the Hazelwood
Logistics Center, in which, Plaintiff holds an interest. Plaintiff claims that
Defendants failed to completely remediate the site for the purpose of assisting the
developer and lender with future redevelopment. EOI has brought a counterclaim
against Plaintiff and cross-claims against Co-Defendants Geotechnology, Inc. and
The Clayton Engineering Company, Inc.
Plaintiff alleges that it is the successor in interest to a bank that lent money
to Hazelwood Logistics Center, LLC. It further alleges that Defendants were the
remediation designers and contractors for the site. According to Plaintiff,
Defendants failed to properly design and carry out construction of an engineered
cell on the site, which was a layer of clay dirt put in place to contain old landfill
materials, and to adequately screen materials or "fines" from the dirt on the site
prior to that dirt being spread around the site as fill.
EOI alleges in its counterclaim that if Plaintiff is correct that it, Plaintiff, is
the real party in interest to an Environmental Services Agreement between EOI
and Hazelwood Commerce Center, LLC n/k/a Hazelwood Logistics, Plaintiff is
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obligated to pay EOI for the work performed under the Environmental Services
Agreement. EOI has brought claims against Plaintiff for: breach of contract,
quantum merit, unjust enrichment, action on account, violation of the Private
Prompt Payment Act, CERCLA contribution, and contribution and indemnity
under Missouri Law.
With respect to the cross claims, EOI alleges that these co-defendants are
responsible for CERCLA contribution and contribution and indemnity under
Missouri Law. EOI also claims Geotechnology is liable to it for breach of contract.
On June 8, 2006, Hazelwood Commerce Center, LLC n/k/a Hazelwood
Logistics and EOI entered into an Agreement Between Developer and Contractor
(“Environmental Services Agreement”). EOI agreed to perform a Remedial
Action Plan dated February 1, 2006. That same day, Hazelwood Commerce
Center, LLC n/k/a Hazelwood Logistics, EOI, and The Signature Bank n/k/a
Bancorp entered into a Collateral Assignment of Environmental Services
Agreement and Consent of Contractor (the “Collateral Assignment”) in which,
The Signature Bank, as lender, was granted an assignment and security interest in
the Environmental Services Agreement.
On June 19, 2007, EOI and Hazelwood Commerce Center, LLC n/k/a
Hazelwood Logistics entered into Change Order No. 1 to the Environmental
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Services Agreement, whereby the parties agreed that 80,000 cubic yards of
additional trash would be removed from the Property in exchange for an increase
in the contract price by $738,550.00.
On November 9, 2009, EOI and Hazelwood Commerce Center, LLC
n/k/a Hazelwood Logistics entered into Change Order No. 2 to the Environmental
Services Agreement, whereby the parties agreed that EOI would conduct methane
gas investigation activities at the Property in exchange for an increase in the
contract price by $310,090.99.
On or about January 26, 2010, March 18, 2010, April 21, 2010, May 19,
2010, June 25, 2010, July 31, 2010, September 10, 2010, October 18, 2010, and
November 1, 2010, EOI sent invoices to Hazelwood Logistics totaling
$309,178.15 for its methane gas investigation work pursuant to Change Order No.
2.
EOI claims that if Plaintiff is correct that it is the real party in interest to the
Environmental Services Agreement as a result of the express terms of the
Collateral Assignment, it is obligated to pay EOI for its work performed under the
Environmental Services Agreement, as amended, including Change Order No. 2.
EOI contends that if there has been a release of hazardous waste on the
property, CERCLA clean up responsibility exists as well.
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According to EOI’s counterclaim, Plaintiff and/or Hazelwood Logistics was
obligated under Change Order No. 2 to the Environmental Services Agreement to
pay EOI in the amount of $309,178.15 after EOI performed the agreed upon
methane gas investigation work it complete the methane investigation work as set
forth in Change Order No. 2 in a good and workmanlike manner, and that
Plaintiff, to the extent it is the real party in interest by virtue of the alleged
assignment, breached the obligation under the Environmental Services Agreement
by failing to pay EOI in the amount of $309,178.15.
With respect to EOI’s quantum meruit claim, EOI alleges that it provided
materials and services for the methane gas investigation on the Property, at the
request of and/or with the acquiescence of Plaintiff, if it is adjudged to be the
assignee of Hazelwood Logistics and that Plaintiff has failed and refused to pay
the reasonable value of the materials and labor provided by EOI.
Count III of the Counterclaim is styled “Unjust Enrichment” and alleges that
Plaintiff, if the alleged assignment between it and Hazelwood Logistics is
enforceable, was the real party in interest to the Property and the
Environmental Services Agreement, as amended, and that in performing the
methane gas investigation work at the Property, EOI has conferred a benefit in the
amount of $309,178.15 on Plaintiff; Plaintiff has accepted the benefit of EOI’s
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work in the amount of $309,178.15, such that retention of that amount by Plaintiff
and/or Hazelwood Logistics under the circumstances would be inequitable.
For its Action on Account claim, EOI alleges Plaintiff’s alleged assignor,
Hazelwood Logistics, requested methane gas investigation work from EOI for the
Property. EOI accepted said request and furnished methane gas investigation
work on the Property from January 2010 through November 2010. As of
November 1, 2010, Plaintiff’s account, as allegedly assigned to it by Hazelwood
Logistics, was in arrears to EOI in the amount of $309,178.15. EOI’s charges to
Plaintiff’s alleged assignor, Hazelwood Logistics, between January 2010 and
November 2010 were reasonable, as they were billed at the agreed upon rates. As a
result, EOI has been damaged in the amount of $309,178.15.
EOI’s Count V of its Counterclaim is styled Violation of the Private Prompt
Payment Act and alleges that the Environmental Services Agreement, as amended,
constitutes a valid and enforceable contract between EOI, Hazelwood Logistics,
and, if the Collateral Assignment is enforceable, Plaintiff. EOI states that the
contract calls for scheduled payments; Plaintiff was obligated under the
Environmental Services Agreement and Change Order No. 2 to pay EOI the
amount of $309,178.15 after its methane gas investigation work was completed.
Count VI of EOI’s Counterclaim is brought against Plaintiff seeking
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CERCLA contribution. This Count alleges that Plaintiff alleges that the
Defendants in the above-captioned action, including EOI, performed all
remediation activities at the Property since November 13, 2001, including site
investigation; limited environmental testing; authoring and performing a Remedial
Action Plan; and conducting operations related to the alleged release or disposal of
alleged hazardous substances at and from the Property; and making decisions
concerning compliance with environmental regulations. Plaintiff alleges that as a
result of these alleged activities, the Defendants have been “operators” of the
Property under Section 101(20) of CERCLA, 42 U.S.C. § 9601(2). EOI
denies Plaintiff’s allegations against it. However, it claims that if the Court finds
that EOI has been an “operator” of the Property, then Plaintiff has been an
“owner” or “operator” of the Property. Further, if the Court further finds that there
has been a “release” or “threatened release” of “hazardous substances” from the
Property, as alleged in the Complaint, then Plaintiff is a person who is liable
pursuant to the provisions of Section 107 of CERCLA, 42 U.S.C. § 9607. If EOI
is required to pay the costs of any removal or remedial action or of other response
activities, then EOI will thereby incur “response” costs, including costs of
“removal” or “remedial action” as those terms are defined in Section 101 of
CERCLA, 42 U.S.C. § 9601. Such costs would be both “necessary” and
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“consistent” with the National Contingency Plan as defined in Section 101(31) of
CERCLA, 42 U.S.C. § 9601(31). In such an event, Plaintiff as an owner and/or
operator of the Property at the time of disposal of “hazardous substances,” is liable
to compensate EOI for any such response costs they may incur pursuant to the
statutory contribution requirements of Section 113 of CERCLA, 42 U.S.C. § 9613.
For its contribution and indemnification claim under Missouri Law, EOI
alleges that if Plaintiff establishes that the Property is damaged or in a condition
for which remediation is required, or that Plaintiff has been damaged as a result of
conditions at the Property, any such damage or condition was caused by the acts or
omissions of Plaintiff or its predecessors, assignors, subcontractors, lessees,
agents, or other parties for whose actions it is responsible. Plaintiff is liable to EOI
for contribution and/or indemnity under Missouri law for any expenses, costs,
damages, or expenditures, including attorneys’ fees and other costs of litigation,
incurred by or assessed against EOI.
EOI asserts Cross-Claim against Geotechnology, Inc. and The Clayton
Engineering Company, Inc. EOI claims that if the allegations of the Complaint are
correct, Geotechnology and Clayton Engineering designed, performed, and/or
constructed remediation activities and facilities at the Hazelwood Logistics
Center.
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EOI alleges that around February 2001, Geotechnology agreed to perform
for St. Louis County, Missouri a Phase I environmental report of the Property and
that on November 13, 2001, Geotechnology submitted a Phase I environmental
report of the Property to St. Louis County that did not characterize the waste
present at the Property’s landfill site in terms of biodegradation and landfill gas
generation potential. Around April 2002, Geotechnology agreed to perform for
McEagle Development, a member of or related entity to Hazelwood Commerce
Center, LLC n/k/a Hazelwood Logistics, a Phase II environmental sampling
report. Between 2002 and 2004, Geotechnology submitted various environmental
reports, pursuant to its agreement with McEagle Development, that did not
characterize the waste present at the Property’s landfill site in terms of
biodegradation and landfill gas generation potential and further did not identify
landfill areas later accidentally discovered during implementation of the
recommended remedial action. Based upon Geotechnology’s environmental
reports generated between 2001 and 2004 for St. Louis County, McEagle
Development, and/or Hazelwood Commerce Center, LLC n/k/a Hazelwood
Logistics, Geotechnology drafted a Remedial Action Plan dated February 1, 2006.
Pursuant to the Remedial Action Plan, Geotechnology Inc. proposed to excavate,
screen, and place certain organic and other materials retrieved from a landfill site
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on the Property within an onsite engineered cell.
According to those allegations, materials passing through screens of an
approximately 6 inch diameter such as soil and organic matter would be
transported to an onsite deep fill zone, compacted, and thereby reused across large
portions of the Property while waste passing through the six-inch diameter screens
was to be deposited into the onsite engineered cell.
EOI further alleges that between February and June 2006, pursuant to an
agreement with Hazelwood Commerce Center, LLC n/k/a Hazelwood Logistics
and/or its general contractor, Paric Corporation, Geotechnology designed an
engineered cell that was to be a component part of the Remedial Action Plan for
the Property. Between February and June 2006, Geotechnology and Clayton
Engineering entered into a separate subcontract, whereby Clayton Engineering
agreed to provide certain design services and site characterization to assist
Geotechnology in the design of the engineered cell that was to be a component
part of the Remedial Action Plan for the Property.
On June 8, 2006, Hazelwood Commerce Center, LLC n/k/a Hazelwood
Logistics and EOI entered into an Agreement Between Developer and Contractor
(“Environmental Services Agreement”), whereby EOI agreed to perform the
Remedial Action Plan dated February 1, 2006. That same day, on June 8, 2006,
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Hazelwood Commerce Center, LLC n/k/a Hazelwood Logistics, EOI, and The
Signature Bank n/k/a Bancorp entered into a Collateral Assignment of
Environmental Services Agreement and Consent of Contractor (the “Collateral
Assignment”) in which The Signature Bank, as lender, was granted an assignment
and security interest in the Environmental Services Agreement. To perform the
Environmental Services Agreement, on or about September 1, 2006, EOI entered
into an Agreement Between Contractor and Subcontractor with Geotechnology,
wherein Geotechnology, among other things, agreed to: 1) perform a geotechnical
investigation of the engineered cell area; 2) conduct engineered cell liner
construction oversight; 3) conduct trash screening and closure sampling
assistance, including the documentation of excavation and screening activities; 4)
perform trash compaction and cell filling oversight; and 5) conduct engineered cell
cap construction oversight.
EOI’s cross claim continues, alleging that if Plaintiff’s allegations are
correct, the Property has or had illegally disposed materials, including asbestos,
medical wastes, and leaking and empty drums that contained hazardous
substances, such as, but not limited to, waste paints, thinners, lubricants and
industrial cleaners, in the ground and groundwater, and methane gas generated
from organic and other materials buried there. If proven, these disposed materials
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and others at the Property include CERCLA “hazardous substances,” including
chemical compounds classified as volatile organic compounds (VOCs), semivolatile organic compounds (SVOCs), metals, total petroleum hydrocarbons
(TPH), pesticides, and polychlorinated biphenyls (PCBs).
If Plaintiff’s allegations are correct, EOI states that there has been a release
of hazardous substances at the Property, which have caused response costs to be
incurred consistent with the National Contingency Plan, such as investigatory and
other expense to try to understand, monitor and evaluate the conditions,
environmental releases and hazards at the Property.
EOI charges that if Plaintiff’s allegations are correct, Geotechnology and
Clayton Engineering are liable and responsible for response costs incurred at the
Property to remediate hazardous substances due to Geotechnology’s failure to
identify and address those hazardous substances in its various environmental
reports, Geotechnology’s failure to adequately perform its subcontract work while
implementing the Remedial Action Plan, and Geotechnology’s and Clayton
Engineering’s combined failure to properly design the engineered cell, which was
to be a component part of the Remedial Action Plan.
EOI seeks CERCLA contribution from Geotechnology and Clayton
Engineering based on Plaintiff’s allegations that Defendants, including
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Geotechnology and Clayton Engineering, in the above-captioned action,
performed all remediation activities at the Property since November 13, 2001,
including site investigation; limited environmental testing; authoring and
performing a Remedial Action Plan; and conducting operations related to the
alleged release or disposal of alleged hazardous substances at and from the
Property; and making decisions concerning compliance with environmental
regulations.
Plaintiff alleges that as a result of these alleged activities, the Defendants,
including Geotechnology and Clayton Engineering, have been “operators” of the
Property under Section 101(20) of CERCLA, 42 U.S.C. § 9601(2). EOI denies
Plaintiff’s allegations against it. However, if the Court finds that EOI has been an
“operator” of the Property, then Geotechnology and Clayton Engineering similarly
are “operators” and/or “arrangers” with respect to the Property.
EOI contends that if the Court further finds that there has been a “release”
or “threatened release” of “hazardous substances” from the Property, as alleged in
the Complaint, then Geotechnology and Clayton Engineering are persons who are
liable pursuant to the provisions of Section 107 of CERCLA, 42 U.S.C. § 9607
and if EOI is required to pay the costs of any removal or remedial action or of
other response activities, then EOI will thereby incur “response” costs, including
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costs of “removal” or “remedial action” as those terms are defined in Section 101
of CERCLA, 42 U.S.C. § 9601. Such costs would be both “necessary” and
“consistent” with the National Contingency Plan as defined in Section 101(31) of
CERCLA, 42 U.S.C. § 9601(31). In such an event, Geotechnology and Clayton
Engineering as operators and/or arrangers with respect to the Property at the time
of disposal of “hazardous substances,” are liable to compensate EOI for any such
response costs they may incur pursuant to the statutory contribution requirements
of Section 113 of CERCLA, 42 U.S.C. § 9613.
The Cross claim also seeks contribution and indemnification under Missouri
Law in Count II and alleges that if Plaintiff establishes that the Property is
damaged or in a condition for which remediation is required, or that Plaintiff has
been damaged as a result of conditions at the Property, any such damage or
condition was caused by the acts or omissions of Geotechnology and Clayton
Engineering. As such, EOI claims Geotechnology and Clayton Engineering are
liable to EOI for contribution and/or indemnity under Missouri law.
Count III of the Cross claim is brought by EOI against Geotechnology for
an alleged breach of the Agreement Between Contractor and Subcontractor dated
September 1, 2006 constitutes a valid and enforceable contract between EOI and
Geotechnology. Further, EOI contends that if Plaintiff’s allegations are correct,
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Geotechnology breached the Agreement by failing to perform the following tasks
in accordance with the terms and conditions of that agreement and in a
workmanlike manner from the date of the agreement through December 2007: 1) a
geotechnical investigation of the engineered cell area; 2) engineered cell liner
construction oversight; 3) trash screening and closure sampling assistance,
including the documentation of excavation and screening activities; 4) trash
compaction and cell filling oversight; and 5) engineered cell cap construction
oversight.
Thus, the gravamen of the counterclaims and cross-claims is that if EOI is
found to be liable to Plaintiff, Plaintiff and the Co-Defendants are responsible for
breach of contract, CERCA liability and contribution.
Discussion
Standard of Review
When ruling on a motion to dismiss for failure to state a claim, the Court
must take as true the alleged facts and determine whether they are sufficient to
raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555-56 (2007). The Court does not, however, accept as true any allegation
that is a legal conclusion. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). The
complaint must have “‘a short and plain statement of the claim showing that the
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[plaintiff] is entitled to relief,’ in order to ‘give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests.’” Twombly, 550 U.S. at 555
(quoting Fed.R.Civ.P. 8(a)(2)) and then Conley v. Gibson, 355 U.S. 41, 47 (1957),
abrogated by Twombly, supra); see also Gregory v. Dillard’s Inc., 565 F.3d 464,
473 (8th Cir.) (en banc), cert. denied, 130 S.Ct. 628 (2009). While detailed factual
allegations are not necessary, a complaint that contains “labels and conclusions,”
and “a formulaic recitation of the elements of a cause of action” is not sufficient.
Twombly, 550 U.S. at 555; accord Iqbal, 129 S.Ct. at 1949. The complaint must
set forth “enough facts to state a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 570; accord Iqbal, 129 S.Ct. at 1949; C.N. v. Willmar Pub.
Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir.2010); Zutz v.
Nelson, 601 F.3d 842, 848 (8th Cir. 2010); Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. If
the claims are only conceivable, not plausible, the complaint must be dismissed.
Twombly, 550 U.S. at 570; accord Iqbal, 129 S.Ct. at 1950. In considering a
motion to dismiss under Fed. R. Civ. P. 12(b)(6), “the complaint should be read as
a whole, not parsed piece by piece to determine whether each allegation, in
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isolation, is plausible.” Braden, 588 F.3d at 594. The issue in considering such a
motion is not whether the plaintiff will ultimately prevail, but whether the plaintiff
is entitled to present evidence in support of the claim. See Neitzke v. Williams, 490
U.S. 319, 327 (1989).
Counterclaim Count I, II, III, IV, and VII
Plaintiff argues that because EOI has filed a mechanic’s lien action in St
Louis County, EOI is barred from bringing an action in this Court. Plaintiff
contends the mechanic’s lien case involves the claim raised by EOI in this action.
Conversely, EOI argues that Plaintiff misunderstands the nature of its
Counterclaims and its mechanic’s lien suit. EOI contends that validity the alleged
assignment claimed by Plaintiff has yet to be decided and therefore, the motion to
dismiss is premature.
EOI filed a mechanic’s lien suit in the Circuit Court of St. Louis County
against Hazelwood Logistics, an entity that is not a party to this suit, seeking to
recover the amount allegedly owed EOI under the Environmental Services
Agreement. EOI contends that because Plaintiff is seeking to be determined as the
real party in interest, Plaintiff is obligated to EOI for the amount Hazelwood has
not paid to it. EOI alleges that Plaintiff’s attempt to avoid payment, particularly in
light of the fact that there were written change orders and work performed after
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Plaintiff became the alleged real party in interest, is premature and cannot be
determined until there is a determination that Plaintiff is indeed the real party in
interest. As EOI correctly points out, a mechanic’s lien is placed on the real estate
itself. Procedurally, EOI named Plaintiff in its mechanic’s lien suit in an effort to
protect any priority it may have in the real estate of which Plaintiff is claiming it is
the real party in interest. This action is for damages from Plaintiff in the event it is
determined to be the real party in interest.
The Court agrees with EOI that it is premature at this stage to dismiss
Counts I, II, III, IV, and VII of the Counterclaim. Keeping in mind the purposes
of Rule 12(b)(6), i.e., to test the sufficiency of the Complaint, EOI’s Counterclaim
withstands challenge. EOI has set forth the facts necessary for Plaintiff to
ascertain what claim is being made against it. Pleading in an “if/then” manner
does not render the Counterclaim subject to dismissal. Because Plaintiff claims in
its Complaint that it is entitled to “real party in interest,” status, EOI contends it is
entitled to seek recovery under the Collateral Assignment of Environmental
Services Agreement and Consent of Contractor of The Signature Bank. Plaintiff
also recognizes the change orders to EOI and Hazelwood Commerce Center LLC’s
contract.
Count V
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For its Motion to Dismiss the Counterclaim, Plaintiff argues that EOI has
failed to sufficiently state a claim under the Missouri Private Prompt Payment Act.
The Missouri Private Prompt Payment Act, V.A.M.S. 431.180, provides:
431.180. Contract for private design or construction work, scheduled
payments–action for failure to pay, interest--arbitration--application
1. All persons who enter into a contract for private design or
construction work after August 28, 1995, shall make all scheduled
payments pursuant to the terms of the contract.
2. Any person who has not been paid in accordance with subsection 1
of this section may bring an action in a court of competent
jurisdiction against a person who has failed to pay. The court may in
addition to any other award for damages, award interest at the rate of
up to one and one- half percent per month from the date payment was due
pursuant to the terms of the contract, and reasonable attorney fees, to the
prevailing party. If the parties elect to resolve the dispute by arbitration
pursuant to section 435.350, RSMo, the arbitrator may award any
remedy that a court is authorized to award hereunder.
3. The provisions of this section shall not apply to contracts for
private construction work for the building, improvement, repair
or remodeling of owner-occupied residential property of four units or less.
4. For purposes of this section, design or construction work shall
include design, construction, alteration, repair or maintenance of any
building, roadway or other structure or improvement to real
property, or demolition or excavation connected therewith, and shall
include the furnishing of surveying, architectural, engineering or
landscape design, planning or management services, labor or
materials, in connection with such work.
Plaintiff argues that EOI cannot state a claim under the Missouri Private
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Prompt Payment Act because Plaintiff contends it did not assume any liabilities
under the Collateral Agreement, and therefore, it is not obligated to EOI for the
payment due. EOI, on the other hand, contends that because of the Change
Orders, which occurred after Plaintiff allegedly became the real party in interest,
Plaintiff is obligated to the amount owed to EOI for the work it performed.
Under the standards articulated in Twombly and Iqbal, EOI’s counterclaim
withstands challenge at this stage of the proceedings. EOI has alleged an
agreement with Hazelwood. The alleged non-payment by Hazelwood occurred
after the Collateral Agreement, and further that the change orders occurred after
Plaintiff claims it was the real party in interest.
Count VI and Counts I and II of the Cross-claims
Count VI of the Counterclaim and Count I of the Cross-claim against
Geotechnology, Inc. and Clayton Engineering Company, Inc. is brought under the
provisions of 42 U.S.C. §§ 9601-9675, the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), for contribution.
In 1980, Congress enacted [CERCLA] in response to the serious
environmental and health risks posed by industrial pollution. See
United States v. Bestfoods, 524 U.S. 51, 55, 118 S.Ct. 1876, 141
L.Ed.2d 43 (1998). The Act was designed 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. Consolidated Edison Co. of N.Y. v. UGI Util., Inc.,
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423 F.3d 90, 94 (C.A.2 2005); see also Meghrig v. KFC Western,
Inc., 516 U.S. 479, 483, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996);
Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074,
1081 (C.A.1 1986). These cases raise the questions whether and to
what extent a party associated with a contaminated site may be held
responsible for the full costs of remediation.
Burlington Northern and Santa Fe Ry. Co. v. U.S., ___ U.S. ___, 129 S.Ct. 1870,
1874 (2009).
Plaintiff and Defendants Geotechnology and Clayton argue that the
Counterclaim and Cross-claim fail to sufficiently set forth that these entities are
"operators" of a facility or "generators/arrangers" of hazardous wastes. Section
9607(a) sets out the classes of persons potentially responsible under CERCLA:
(1) the owner and operator of a vessel or a facility,
(2) any person1 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
disposal or treatment, or arranged with a transporter for transport for
disposal or treatment, of hazardous substances owned or possessed by
such person, by any other party or entity, at any facility or
incineration vessel owned or operated by another party or entity and
containing such hazardous substances, and

1

For purposes of the statute, a “person” is defined as “an individual, firm,
corporation, association, partnership, consortium, joint venture, commercial entity,
United States Government, State, municipality, commission, political subdivision
of a State, or any interstate body.” 42 U.S.C. § 9601(21).
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(4) any person who accepts or accepted any hazardous substances for
transport to disposal or treatment facilities, incineration vessels or
sites selected by such person, from which there is a release, or a
threatened release which causes the incurrence of response costs, of a
hazardous substance ....”
42 U.S.C. § 9607(a).
Plaintiff and Cross-Defendants argue that EOI has failed to satisfy the
pleading requirements of Twombly and Iqbal.
Two provisions of [CERCLA]—§§ 107(a) and 113(f)—allow private
parties to recover expenses associated with cleaning up contaminated
sites.” United States v. Atl. Research Corp., 551 U.S. 128, 131, 127
S.Ct. 2331, 168 L.Ed.2d 28 (2007). Though complementary, “§§
107(a) and 113(f) provide two ‘clearly distinct’ remedies,” id. at 138,
127 S.Ct. 2331, “to persons in different procedural circumstances,”
id. at 139, 127 S.Ct. 2331 (quotation omitted). Section 107(a)(4)(B)
permits a private party who has voluntarily incurred costs cleaning up
a site for which it may be held liable to recover necessary response
costs from another liable party through a direct recovery action. See
id. at 133–34, 127 S.Ct. 2331, aff'g Atl. Research Corp. v. United
States, 459 F.3d 827 (8th Cir.2006).
Section 113(f), enacted after § 107 as part of the Superfund
Amendments and Reauthorization Act of 1986 (SARA), Pub.L. No.
99–499, 100 Stat. 1613 (1986), “authorizes one [potentially
responsible party] to sue another for contribution in certain
circumstances.” Id. at 132, 127 S.Ct. 2331. Section 113(f)(1) allows a
person to seek contribution from any other person who is liable or
potentially liable under § 107(a) during or following a civil action
under §§ 106 or 107. Section 113(f)(3)(B) authorizes “[a] person who
has resolved its liability to the United States or a State for some or all
of a response action or for some or all of the costs of such action in an
administrative or judicially approved settlement” to seek contribution
from any person who has not so resolved its liability.
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The term “contribution” has its traditional meaning of a “tortfeasor's
right to collect from others responsible for the same tort after the
tortfeasor has paid more than his or her proportionate share, the
shares being determined as a percentage of fault.” Atl. Research, 551
U.S. at 138, 127 S.Ct. 2331 (quoting Black's Law Dictionary 353 (8th
ed.2004)). The “right to contribution under § 113(f)(1) is contingent
upon an inequitable distribution of common liability among liable
parties.” Id. at 139, 127 S.Ct. 2331.
The right to contribution under § 113(f) is more limited than the right
to recover costs under § 107(a). See Atl. Research, 459 F.3d at 832. A
person seeking contribution under § 113(f) may be subject to the
equitable allocation of response costs, see § 113(f)(1), and may not
recover from previously settling parties, see § 113(f)(2). Such claims
are also subordinate to the rights of the United States or a State, see §
113(f)(3)(C), and subject to a shorter limitation period than costrecovery claims, see § 113(g)(2)-(3).
To ensure the continued vitality of the precise and limited right to
contribution Congress set forth in § 113, we have held the right to
bring a cost-recovery action under § 107 “is available to parties who
have incurred necessary costs of response, but have neither been sued
nor settled their liability under §§ 106 or 107.” Atl. Research, 459
F.3d at 835. “[L]iable parties which have been subject to §§ 106 or
107 enforcement actions are still required to use § 113.” Id. at
836–37. See also, Niagara Mohawk Power Corp. v. Chevron U.S.A.,
Inc., 596 F.3d 112, 128 (2d Cir.2010) (holding that allowing a liable
party whose claims fit § 113(f) “to proceed under § 107(a) would in
effect nullify the SARA amendment and abrogate the requirements
Congress placed on contribution claims under § 113”); ITT Indus.,
Inc. v. BorgWarner, Inc., 506 F.3d 452, 458 (6th Cir.2007) (“To
maintain the vitality of § 113(f), however, [potentially responsible
parties] who have been subject to a civil action pursuant to §§ 106 or
107 or who have entered into a judicially or administratively
approved settlement must seek contribution under § 113(f).”).
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In affirming our decision in Atlantic Research, the Supreme Court
noted the potential for overlap between §§ 107(a) and 113(f), but
declined to decide whether a liable party sustaining expenses
pursuant to a consent decree following a suit under §§ 106 or 107(a)
could recover such compelled costs under § 107(a), § 113(f), or both.
Atl. Research, 551 U.S. at 139 n. 6, 127 S.Ct. 2331. We necessarily
reach that issue in these appeals, and hold that § 113(f) provides the
exclusive remedy for a liable party compelled to incur response costs
pursuant to an administrative or judicially approved settlement under
§§ 106 or 107. See Atl. Research, 459 F.3d at 830 n. 4 (explaining our
holding in Dico, Inc. v. Amoco Oil Co., 340 F.3d 525, 531 (8th
Cir.2003), that a liable party cannot bring an action under § 107
“remains viable for those parties which still have recourse to relief
under § 113”).
Morrison Enterprises, LLC v. Dravo Corp., 638 F.3d 594, 602 -604 (8th Cir.2011).
This Court has previously held that Plaintiff has stated a claim against
Defendants under CERCLA. The Complaint alleges that all Defendants knew,
since at least 2001, that there were disposed hazardous materials on the property.
Plaintiff further alleges that Defendants engaged in deliberate disturbance,
unearthing, spilling, moving and re-releasing all of the enumerated hazardous
materials and compounds into the property. Although the Complaint did not
specifically list each Defendant by name in its CERCLA Count, it alleges that all
defendants engaged in the activities such that Defendants were put on notice that
Plaintiff seeks recovery for their involvement in the disturbance, etc. of hazardous
materials on the property.
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Liability for the release of hazardous substances may be imposed on ""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.'" Gurley, 43 F.3d at 1192 (quoting 42 U.S.C. §
9607(a)(2)). When considering an individual's liability as an
operator, "'[i]t is the authority to control the handling and disposal of
hazardous substances that is critical under the statutory scheme.'" Id.
(quoting United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 743
(8th Cir.1986)).
K.C.1986 Ltd. Partnership v. Reade Mfg., 472 F.3d 1009, 1020 (8th Cir. 2007).
EOI seeks recovery from Plaintiff and Cross-Defendants for contribution for
any responsibility they may have for the dissemination of hazardous materials and
the resulting elimination thereof.
At this stage of the proceedings, whether or not the parties are responsible is
not the issue. Rather, the Court’s task is to determine whether a cause of action
has been stated. While Plaintiff argues that it is entitled to be dismissed because
of the Lender Liability Act, and therefore would have no CERCLA liability, EOI
contends that Plaintiff may be responsible by reason of the subsequent actions it
took with respect to the property. While discovery may reveal that Plaintiff and
Cross-Defendants had no authority to control the handling of the hazardous
material on the property, the issue before the Court at this stage is whether the
Complaint sufficiently alleges control. Under the standards articulated herein, the
Court concludes that the Counterclaim and Cross-Claims meet the Twombly and
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Iqbal standards of alleging facts sufficient to place the parties on notice of the
CERCLA claim against them..
Count II-Missouri Contribution and Indemnity against Plaintiff, Clayton and
Geotechnology
As EOI correctly observes, Plaintiff, Clayton and Geotechnology have
failed to provide any basis upon which the Court should dismiss the Missouri
Contribution Count in the Counterclaim and Cross-Claim. Under the pleading
standards discussed herein, these counts sufficiently notify Plaintiff and the CrossDefendants of the claims against them such that they can respond. These counts
set out, through incorporation, the factual basis upon which EOI claims the parties
are responsible for contribution and/or indemnification. Under Twombly and
Iqbal, these counts pass scrutiny.
Conclusion
The Counterclaims and Cross-Claims sufficiently allege the claims EOI
makes against Plaintiff and Cross-Defendants. The motions to dismiss these
claims will be denied.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion to Dismiss Counts I,
II, III, IV, and VII of the Counterclaim filed by Environmental Operations, Inc.,

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(EOI), [Doc. No. 62], is denied.
IT IS FURTHER ORDERED that Plaintiff’s Motion to Dismiss Counts V
and VI of the Counterclaim filed by EOI, [Doc. No. 63], is DENIED;
IT IS FURTHER ORDERED that Defendant Geotechnology, Inc.’s
Motion to Dismiss Counts I and II of EOI’s Cross claim, [Doc. No. 65], is
DENIED;
IT IS FURTHER ORDERED that Defendant The Clayton Engineering
Company’s Motion to Dismiss Counts I and II of EOI’s Cross claim, [Doc. No.
66], is DENIED.
Dated this7th day of November, 2012.

_______________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE

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