Atlantic Richfield Company v. Christian et al
ORDER ADOPTING FINDINGS AND RECOMMENDATIONS re 49 Findings and Recommendations. granting 14 Motion to Dismiss for Failure to State a Claim; denying 14 Motion to Dismiss for Lack of Jurisdiction; denying 21 Motion for Summary Judgment; denying 33 Motion for Summary Judgment. ORDER DISMISSING CASE without prejudice Signed by Judge Brian Morris on 2/15/2017. (HEG)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
ATLANTIC RICHFIELD COMPANY,
GREGORY A. CHRISTIAN, et al.,
Plaintiff Atlantic Richfield Company (ARCO) filed this action for declaratory
and injunctive relief on December 22, 2015. ARCO seeks a determination that an
environmental restoration plan proposed by the Defendant landowners
(Landowners) in a pending state court action is prohibited by Section 113(h) of the
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA), 42 U.S.C. § 9613(h). Presently before the Court are the Landowners’
motion to dismiss ARCO’s complaint, and the parties’ cross-motions for summary
United States Magistrate Judge Jeremiah C. Lynch issued Findings and
Recommendations in this matter on July 8, 2016. (Doc. 49). Judge Lynch
recommended that the Landowners’ motion to dismiss be granted, and that all other
pending motions be denied as moot. (Doc. 49 at 16).
ARCO filed objections to Judge Lynch’s Findings and Recommendations on
July 20, 2016. (Doc. 51). The Landowners filed a response to ARCO’s objections
on August 3, 2016.
STANDARD OF REVIEW
The Court reviews de novo findings and recommendations to which
objections are made. 28 U.S.C. § 636(b)(1). No review is required of proposed
findings and recommendations to which no objection is made. Thomas v. Arn, 474
U.S. 140, 149-152 (1986).
For decades ARCO and its predecessors processed copper ore at the
Anaconda Smelter located near Anaconda, Montana. The smelter’s stack emmitted
arsenic and lead during the smelting process. The arsenic and lead emissions settled
on the surrounding landscape. The Anaconda Smelter closed in 1980. The area
surrounding the Anaconda Smelter was declared a CERCLA Superfund site in
The Landowners own property near the former Anaconda Smelter in
Opportunity and Crackerville, Montana. The Landowners’ properties are located
within the exterior boundaries of the Anaconda Smelter Superfund Site. The
Anaconda Smelter Superfund Site has been the subject of a lengthy environmental
cleanup effort directed by the United States Environmental Protection Agency
The EPA has divided the Anaconda Smelter Superfund Site into five major
sections called operable units. Each operable unit relates to a different medium or
geographical area for cleanup. Each operable unit has its own record of decision
setting forth the EPA’s chosen cleanup remedy for that operable unit. Two of the
operable units and their records of decision directly affect property owned by the
Landowners. The Community Soils Operable Unit encompasses the cleanup of the
Landowners’ residential yards. The Anaconda Regional, Water, Waste, and Soils
Operable Unit encompasses the cleanup of the Landowners’ domestic wells and
ARCO, under the EPA’s direction, has been responsible for implementing the
cleanup efforts within the Anaconda Smelter Superfund Site. ARCO has sampled
soil for arsenic in approximately 1,740 residential yards within the Anaconda
Smelter Superfund Site. ARCO has found arsenic at levels that exceed the EPAestablished action level in approximately 350 residential yards. ARCO has
remediated these 350 residential yards by removing the top 18 inches of soil and
replacing it with clean soil and sod. ARCO has conducted soil tests in Opportunity
and Crackerville. ARCO has performed soil remediation work on two properties
owned by the Landowners. ARCO has conducted tests on domestic wells in
Opportunity and Crackerville. ARCO has determined that two wells owned by the
Landowners contain elevated levels of arsenic. ARCO replaced both wells.
The Landowners filed an action against ARCO in the Montana Second
Judicial District Court on April 17, 2008. That action seeks compensation for
property damage caused by pollution from the Anaconda Smelter. The Landowners
have asserted state law claims against ARCO for negligence, nuisance, trespass,
constructive fraud, unjust enrichment, and wrongful occupation of real property.
The Landowners’ damage claims include claims for restoration damages that seek
to recover the costs required to restore the soil and groundwater on their properties.
(Doc. 15-10 at 16).
The Landowners have submitted a proposed restoration plan in support of
their claims for restoration damages. The proposed restoration plan describes the
restoration work the Landowners believe is necessary to properly restore their
properties. The proposed restoration plan includes soil and groundwater restoration
work not contemplated by the EPA’s cleanup plan. The Landowners estimate that
their proposed restoration remedy will cost between $38 million and $101 million.
(Doc. 1-4 at 28, Doc. 23-4 at 5).
ARCO has challenged the Landowners’ claims for restoration damages in the
state court action via affirmative defenses and a motion for summary judgment.
(Docs. 15-3, 15-9 at 2). ARCO argues in its motion for summary judgment that
113(h) of CERCLA prohibits the Landowners’ claims for restoration damages.
(Doc. 15-3). ARCO argues that § 113(h) operates to bar the Landowners’ claims
for restoration damages because the Landowners’ proposed restoration plan
constitutes an impermissible challenge to the EPA’s selected cleanup plan for the
Anaconda Smelter Superfund Site. Id.
ARCO filed the present action on December 22, 2015, approximately 7 1/2
years after the Landowners filed their state court action against ARCO. ARCO
seeks in this action, the very same relief that it requests in its motion for summary
judgment filed in state court. ARCO requests that this Court: (1) declare that
113(h) of CERCLA prohibits the restoration plan proposed by the Landowners in
state court because it constitutes an impermissible challenge to the EPA’s selected
remedy for the Anaconda Smelter Superfund Site, and (2) enjoin the Landowners
from pursuing their proposed restoration plan in state court. (Doc. 1 at 6).
The Landowners have moved to dismiss ARCO’s claims for declaratory and
injunctive relief on several grounds. First, the Landowners argue that ARCO’s
claims should be dismissed for lack of subject matter jurisdiction. Second, the
Landowners argue that even if the Court possesses subject matter jurisdiction, the
Court should abstain from exercising jurisdiction under Brillhart v. Excess Ins. Co.
of America, 316 U.S. 491, 495 (1942), in light of the parallel proceedings in state
court. Third, the Landowners argue that ARCO’s claims are barred by the
applicable statute of limitations. Fourth, the Landowners argue that ARCO’s
complaint fails to state a claim upon which relief may be granted.
The parties also have filed cross-motions for summary judgment. The crossmotions for summary judgment address a single issue. The parties request the
Court to determine as a matter of law whether § 113(h) of CERCLA bars the
restoration plan proposed by the Landowners in state court.
Defendants’ Motion to Dismiss for Lack of Subject Matter
ARCO alleges that this Court possesses federal question jurisdiction under
28 U.S.C. § 1331, and diversity jurisdiction under 28 U.S.C. § 1332. (Doc. 1 at 67). The Landowners argue that no subject matter jurisdiction exists.
Federal Question Jurisdiction
ARCO presents its claim for declaratory relief as a defense to the
Landowners’ claims for restoration damages in state court. ARCO urges this Court
to declare that CERCLA bars the Landowners’ claims for restoration damages.
When a plaintiff asserts a claim for declaratory relief in federal court “that is
in the nature of a defense to a . . . pending [state court] action, the character of the .
. . pending [state court] action determines whether federal question jurisdiction
exists with regard to the declaratory judgment action.” Levin Metals Corp. v. ParrRichmond Terminal Co., 799 F.2d 1312, 1315 (9th Cir. 1986). If a federal question
appears in the complaint of the pending state court action, federal jurisdiction exists
over the declaratory judgment action. Chase Bank USA, N.A. v. City of Cleveland,
695 F.3d 548, 554 (6th Cir. 2012). If no federal question appears in the complaint
of the pending state court action, no federal question exists over the declaratory
judgment action. Id; Alton Box Bd. Co. v. Esprit De Corp., 682 F.2d 1267, 1274
(9th Cir. 1982) (no federal question exists over declaratory judgment action where
the declaratory judgment plaintiff seeks to “preclude the declaratory judgment
defendant from successfully litigating against the declaratory plaintiff a claim
arising under state law”).
State common law governs the Landowners’ claims for restoration damages
in the state court action. The Landowners assert Montana law based claims for
negligence, nuisance, trespass, constructive fraud, unjust enrichment, and wrongful
occupation of real property. Given that the Landowners’ state court complaint
seeks no relief under federal law, no federal question exists in this case with respect
to ARCO’s claims for defensive declaratory relief. See Dave v. Crowell & Moring
LLP, 2010 WL 1848147 *9-10 (C.D. Cal. May 4, 2010). Judge Lynch properly
determined that no federal question jurisdiction exists in this case.
The diversity statute, 28 U.S.C. § 1332, gives federal courts original
jurisdiction exists over “all civil actions” where the matter in controversy exceeds
the sum of $75,000, and complete diversity of citizenship exists between the parties.
28 U.S.C. § 1332(a). The diversity jurisdiction applies generally to any claim,
whether created by state or federal law, so long as the requirements of Section 1332
are satisfied, and the claim is cognizable in state court. Gottlieb v. Carnival
Corporation, 436 F.3d 335, 340 (2nd Cir. 2006); Landsman & Funk PC v. SkinderStrauss Associates, 640 F.3d 72, 79-80 (3rd Cir. 2011); Radil v. Sanborn Western
Camps, Inc., 384 F.3d 1220, 1225 (10th Cir. 2004) (a federal court may not exercise
diversity jurisdiction over a claim that is not cognizable in state court); see also
McKenzie v. Hawaii Permanente Medical Group, 29 F. Supp. 2d 1174, 1177 (D.
Here, it is undisputed that the parties are of diverse citizenship, and that the
amount in controversy exceeds $75,000. The Court is aware of no legal authority
that would make ARCO’s claim for declaratory relief non-cognizable in state court.
The Landowners have presented no such authority. The Landowners concede that
ARCO’s claim for declaratory relief could be brought in state court as a
counterclaim to their claim for restoration damages. (Doc. 52 at 12). For these
reasons, the Court concludes that it does possess diversity jurisdiction in this matter.
The Landowners argue that this Court nevertheless should decline to exercise
jurisdiction based upon the factors set forth in Brillhart. Federal district courts
possess discretion to dismiss a declaratory judgment action, even if the action
otherwise satisfies the requirements for subject matter jurisdiction. Wilton v. Seven
Falls Co., 515 U.S. 277, 281 (1995).
The Supreme Court in Brillhart identified three factors to be considered by a
federal court in determining whether to accept a declaratory judgment action:
the federal court should avoid needless determination of state law issues; (2) the
federal court should discourage litigants from filing declaratory actions as a means
of forum shopping; and (3) the federal court should avoid duplicative litigation. See
R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir. 2011).
The factors gleaned from Brillhart are not exhaustive. Wilton, 515 U.S. at
282. The Ninth Circuit has identified other factors that may be considered: whether
the declaratory action will settle all aspects of the controversy; whether the
declaratory action will serve a useful purpose in clarifying the legal relations at
issue; whether the declaratory action is being sought merely for the purposes of
procedural fencing or to obtain a res judicata advantage; or whether the use of a
declaratory action will result in entanglement between the federal and state court
The federal court also may consider the convenience of the parties and the
availability and relative convenience of other remedies. Government Employees
Ins. Co. v. Dizol, 133 F.3d 1220, 1225 n. 5 (9th Cir. 1998). The Ninth Circuit has
recognized that where “there are parallel state proceedings involving the same
issues and parties pending at the time the federal declaratory action is filed, there is
a presumption that the entire suit should be heard in state court.” Dizol, at 1225.
Application of the Brillhart factors confirms that this Court should decline
exercising jurisdiction in this case.
Avoiding Needless Determinations of State Law
The first Brillhart factor directs federal courts to avoid making needless
determinations of state law. Dizol, 133 F.3d at 1225. The Landowners base their
claims for restoration damages upon state common law. ARCO has asserted an
affirmative defense to the Landowners’ claims for restoration damages based upon
federal law. Given that diversity of citizenship provides the sole basis for subject
matter jurisdiction in this declaratory action, the first Brillhart factor would be
neutral. The Ninth Circuit has stated that when the “sole basis of jurisdiction is
diversity of citizenship, the federal interest is at its nadir.” Continental Casualty
Co. v. Robsac Indus., 947 F.2d 1367, 1371 (9th Cir. 1991).
Discouraging Forum Shopping
The second Brillhart factor seeks to discourage the use of the declaratory
judgment procedure as a means to forum shop. Dizol, 133 F.3d at 1225. This factor
primarily addresses “reactive” declaratory judgment suits. Robsac Indus., 947 F.2d
The timing of the present declaratory action proves suspect. ARCO filed this
declaratory action at a time when the underlying state court action had been pending
for over seven years. The second Brillhart weighs in favor of declining jurisdiction.
Avoiding Duplicative Litigation
The third Brillhart factor seeks to avoid duplicative litigation. Robsac Indus.,
947 F.2d at 1373. This factor focuses on whether the issues in this case are, or
could be, addressed in the state proceeding. Id.
The issue to be determined in this action is whether § 113(h) of CERCLA
bars the Landowners’ claims for restoration damages. The identical issue is
pending before the state court on ARCO’s motion for summary judgment. (Doc.
15-3). ARCO presented the issue to the state court for determination on May 20,
2013, more than two years before this action was filed. The state court is equally
capable of deciding the issue. Given that ARCO first presented the issue to the state
court for determination, the third Brillhart factor weighs in favor of declining
Two other factors identified by the Ninth Circuit weigh in favor of declining
jurisdiction. First, further prosecution of this declaratory action could lead to an
entanglement between the federal and state court systems. This Court and the state
court potentially could reach disparate conclusions regarding whether CERCLA
bars the Landowners’ claims for restoration damages. Second, further prosecution
of this declaratory action will not settle all aspects of the underlying state court
action. The declaratory relief sought by ARCO in this case relates only to the
Landowners’ claims for restoration damages. The Landowners have asserted
damage claims in the state court action that would remain viable even if ARCO
were to prevail in this action. The Court finds no compelling reason to exercise
jurisdiction in this case.
I agree with Judge Lynch that the Landowners’ Motion to Dismiss should be
granted. I adopt Judge Lynch’s Findings and Recommendations for the reasons
Accordingly, IT IS HEREBY ORDERED:
Defendants’ Motion to Dismiss (Doc. 14-1) is GRANTED.
All other pending motions (Doc. 14-2, 21 and 33) are DENIED as
This case is DISMISSED without prejudice.
The Clerk is directed to enter judgment accordingly.
DATED this 15th day of February, 2017.
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