BancorpSouth Bank v. Environmental Operations, Inc. et al

Filing 285

OPINION, MEMORANDUM AND ORDER re: 162 103 107 116 140 134 121 127 109 :ORDERED that Clayton Engineering Company's Motion to Dismiss Counts I and II of Paric's Cross-Claim, [Doc. No. 103], is denied; FURTHER ORDERED that Budrovich Excavating, Inc.'s Motion to Dismiss Environmental Operations Inc.'s Third Party Complaint, [Doc. No. 107], is denied; FURTHER ORDERED that Defendant Budrovich Excavating, Inc.' Motion to Dismiss Paric Corporat ion's Third Party Complaint, [Doc. No. 109], is denied; FURTHER ORDERED that Plaintiff's Motion to Dismiss Counts VI and VII of Paric Corporation's Counterclaim, [Doc. No. 116], is denied; FURTHER ORDERED that Defendant Geotechnology , Inc.'s Motion to Dismiss Counts I and II of Paric's Cross claim, [Doc. No. 121], is denied; FURTHER ORDERED that Defendant The Clayton Engineering Company's Motion to Dismiss Counts I and II of Budrovich's Cross claim, [Doc. No . 127], is denied; FURTHER ORDERED that Plaintiff's Motion to Dismiss Count I of Budrovich's Counterclaim, [Doc. No. 134], is denied; FURTHER ORDERED that Geotechnology, Inc.'s Motion to Dismiss Count I of Budrovich's Cross-Claim , [Doc. No. 140], is denied; FURTHER ORDERED that Paric's Motion for Summary Judgment as to Defendant/Third Party Plaintiff's Third Party Complaint against Budrovich and Paric Corporation, [Doc. No. 162], is denied. Signed by District Judge Henry E. Autrey on 3/31/14. (CEL)

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

)
)
)
)
)
)
)
)
)
)

Case No. 4:11CV9 HEA

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Clayton Engineering Company’s Motion
to Dismiss Counts I and II of Paric’s Cross-Claim, [Doc. No. 103]; Budrovich
Excavating, Inc.’s Motion to Dismiss Environmental Operations Inc.’s Third Party
Complaint, [Doc. No. 107]; Defendant Budrovich Excavating, Inc.’s Motion to
Dismiss Paric Corporation’s Third Party Complaint, [Doc. No. 109]; Plaintiff’s
Motion to Dismiss Counts VI and VII of Paric Corporation’s Counterclaim, [Doc.
No. 116]; Defendant Geotechnology, Inc.’s Motion to Dismiss Counts I and II of
Paric’s Cross claim, [Doc. No. 121]; Defendant The Clayton Engineering
Company’s Motion to Dismiss Counts I and II of Budrovich’s Cross claim, [Doc.
No. 127]. Plaintiff’s Motion to Dismiss Count I of Budrovich’s Counterclaim,

[Doc. No. 134]; Geotechnology, Inc.’s Motion to Dismiss Count I of Budrovich’s
Cross-Claim, [Doc. No. 140]; and Paric’s Motion for Summary Judgment as to
Defendant/Third Party Plaintiff’s Third Party Complaint against Budrovich and
Paric Corporation, [Doc. No. 162]. The respective parties oppose 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 claims to hold 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. EOI has also filed a third party complaint
against Budrovich Excavating (Budrovich) and Paric Corporation, (Paric). Paric
has filed a counterclaim against EOI, and cross claims against Plaintiff, Intervener
Hazelwood Logistics Inc., Geotechnology, Clayton and Budrovich. Budrovich
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has filed counter claims and cross-claims against Plaintiff, Intervenor Hazelwood
Logistics Center (Hazelwood Commerce Redevelopment Corp), EOI, Clayton
Geotechnology, and Paric.
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.
Discussion
Motions to Dismiss
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).
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.,
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).
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
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
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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
(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).
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

of a State, or any interstate body.” 42 U.S.C. § 9601(21).
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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.
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.,
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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).”).
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
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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.
Keeping in mind the purposes of Rule 12(b)(6), i.e., to test the sufficiency
of the Complaint, the Counterclaims and cross claims withstand challenge. The
various Defendants and third party defendants each seek contribution from each
other for any costs for which they may be found liable. While there has yet to be a
determination of who is responsible for any clean up costs under CERCLA, the
parties all attempt to recover from each other. While the counter claims and cross
claims are not the models of clarity, to be sure, each party is attempting to include
the other parties involved herein in contributing to the clean up costs. All parties
herein are aware of what each Plaintiff, Defendant, Third Party Plaintiff, cross
claimant and counter claimant is contending against the other, to wit, “if this entity
is responsible for any clean up costs, then others involved are likewise responsible
for contribution to the clean up fund.” As such, the claims satisfy the Twombly
and Iqbal standards. Unnecessary repetition of the same allegations on the same
set of operative facts is not necessary. The parties are fully apprised of the claims
for which they seek recovery. Indeed, most of the parties with counter claims and
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cross claims are filing the claims because of the allegations by the Plaintiff that
these parties are responsible for the alleged hazardous material spread.
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).
Under the standards articulated herein, the Court concludes that the
Counterclaim and Cross-Claims meet the Twombly and Iqbal standards of alleging
facts sufficient to place the parties on notice of the CERCLA claim against them..
Motion for Summary Judgment
Third Party Defendant Paric Corporation filed its Motion for Summary
Judgment as to Defendant/Third Party Plaintiff Environmental Operations, Inc’s
Third Party Complaint against it and Budrovich seeking judgment as a matter of
law based on certain settlements and releases obtained in a state court.
Summary Judgment Standard
The standards for summary judgment are well settled. In determining
whether summary judgment should issue, the Court must view the facts and
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inferences from the facts in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005). The moving
party has the burden to establish both the absence of a genuine dispute of material
fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Enter. Bank, 92 F.3d at 747. Once the moving
party has met this burden, the nonmoving party may not rest on the allegations in
his pleadings but by affidavit or other evidence must set forth specific facts
showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e); Anderson
477 U.S. at 256; Krenik v. Le Sueur 47 F.3d 953, 957 (8th Cir. 1995). “‘Only
disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment.’ Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986).” Hitt v. Harsco Corp., 356 F.3d 920, 923
(8th Cir. 2004). An issue of fact is genuine when “a reasonable jury could return a
verdict for the nonmoving party” on the question. Anderson, 477 U.S. at 248;
Woods v. DaimlerChrysler Corp., 409 F.3d at 990. To survive a motion for
summary judgment, the “nonmoving party must ‘substantiate his allegations with
sufficient probative evidence [that] would permit a finding in [his] favor based on
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more than mere speculation, conjecture, or fantasy.’ Wilson v. Int’l Bus. Maces.
Corp., 62 F.3d 237, 241 (8th Cir. 1995)(quotation omitted).” Putman v. Unity
Health System, 348 F.3d 732, 733-34 (8th Cir. 2003). “[A] complete failure of
proof concerning an essential element of the nonmoving party’s case necessarily
renders all other facts immaterial.” Celotex, 477 U.S. at 323. The Court will
review the facts in this case with the stated standards in mind.
Paric argues that it is entitled to summary judgment because of a settlement
agreement it entered into in which Plaintiff and Intervenor Hazelwood Logistics
released all claims arising directly or indirectly from any fact, condition, or
occurrence related directly or indirectly to the Construction Contracts. EOI was
not a party to the mechanics lien case in the state court from which the settlement
resulted.
Several cases have approved settlements between private parties when
those settlements barred contribution claims of parties who did not join the
settlements. See United States v. Mallinckrodt, Inc., No. 4:02CV01488, 2006 WL
3331220, at *3 (E.D.Mo. Nov.15, 2006) (“The Court believes that it would be
contrary to CERCLA's objective of encouraging settlement not to grant private
parties the same protection from suits for contribution that the United States or a
State enjoys.”); United States v. SCA Servs. of Ind., Inc., 827 F.Supp. 526, 532
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(N.D.Ind.1993); Allied Corp. v. ACME Solvent Reclaiming, Inc., 771 F.Supp. 219,
222 (N.D.Ill.1990) (“It is hard to imagine that any defendant in a CERCLA action
would be willing to settle if, after the settlement, it would remain open to
contribution claims from other defendants.”); Lyncott Corp. v. Chem. Waste
Mgmt., Inc., 690 F.Supp. 1409, 1418-19 (E.D.Pa.1988). In all of those cases,
however, the nonsettlors challenging the application of the contribution bar were
parties to the suit in which the settlement was being entered and had an
opportunity to be heard before the Court decided whether to approve the
settlement. Whether this Court would approve of a settlement between private
parties under those circumstances is not an issue presented in this case.
EOI was not a party to the mechanics lien litigation in the state court and
had no opportunity to participate in or object to the settlement. Applying the
contribution bar would be inconsistent with the plain language of § 113(f)(2) as
well as basic principles of fairness. Paric is therefore not entitled to summary
judgment at this time.
Conclusion
Based upon the forgoing, the motions to dismiss and the motion for
summary judgment will be denied.
Accordingly,
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IT IS HEREBY ORDERED that Clayton Engineering Company’s Motion
to Dismiss Counts I and II of Paric’s Cross-Claim, [Doc. No. 103], is denied;
IT IS FURTHER ORDERED that Budrovich Excavating, Inc.’s Motion to
Dismiss Environmental Operations Inc.’s Third Party Complaint, [Doc. No. 107],
is denied;
IT IS FURTHER ORDERED that Defendant Budrovich Excavating,
Inc.’s Motion to Dismiss Paric Corporation’s Third Party Complaint, [Doc. No.
109], is denied;
IT IS FURTHER ORDERED that Plaintiff’s Motion to Dismiss Counts VI
and VII of Paric Corporation’s Counterclaim, [Doc. No. 116], is denied;
IT IS FURTHER ORDERED that Defendant Geotechnology, Inc.’s
Motion to Dismiss Counts I and II of Paric’s Cross claim, [Doc. No. 121], is
denied;
IT IS FURTHER ORDERED that Defendant The Clayton Engineering
Company’s Motion to Dismiss Counts I and II of Budrovich’s Cross claim, [Doc.
No. 127], is denied;
IT IS FURTHER ORDERED that Plaintiff’s Motion to Dismiss Count I of
Budrovich’s Counterclaim, [Doc. No. 134], is denied;
IT IS FURTHER ORDERED that Geotechnology, Inc.’s Motion to
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Dismiss Count I of Budrovich’s Cross-Claim, [Doc. No. 140], is denied;
IT IS FURTHER ORDERED that Paric’s Motion for Summary Judgment
as to Defendant/Third Party Plaintiff’s Third Party Complaint against Budrovich
and Paric Corporation, [Doc. No. 162], is denied.
Dated this 31st day of March, 2014.

_______________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE

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