STAHL et al v. BAUER AUTOMOTIVE, INC. et al
Filing
87
OPINION. Signed by Judge Stanley R. Chesler on 8/7/2019. (sms)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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WILLIAM J. STAHL, et al.,
Plaintiffs,
v.
BAUER AUTOMOTIVE, INC., et al.,
Defendants.
Civil Action No. 15-361 (SRC)
OPINION
CHESLER, District Judge
This matter comes before the Court on Plaintiffs’ motion for partial summary judgment
and on Defendants’ cross-motion for summary judgment. The motions have been fully briefed,
and the Court has reviewed the papers filed by the parties. It proceeds to rule on the motion
without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons that
follow, Plaintiffs’ motion for partial summary judgment will be denied, Defendants’ motion for
summary judgment will be granted in part, and the remainder of this action will be dismissed
without prejudice pursuant to 28 U.S.C. § 1367(c)(3).
I.
BACKGROUND
This is an action for recovery of environmental remediation costs brought under the
Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C. §
9601, et seq. (hereinafter “CERCLA”). The cleanup costs at issue relate to property consisting of
two adjacent parcels of land located at 2-12 River Road in the Borough of Chatham, New Jersey
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and owned at all relevant times by National Manufacturing Company (“NMC”). The subject
property will hereinafter be referred to as the “NMC Site.” Plaintiffs William J. Stahl, the Estate
of Otto Stahl, Jr., Richard P. Stahl and Karl Heilig (collectively, “Plaintiffs” or “the Stahls”) are
individuals who owned all outstanding shares of NMC until July 15, 1997. Defendants George
Bauer and Kathryn Bauer (“the Bauers”) own a parcel of real property located at 27 Watchung
Avenue in the Borough of Chatham, New Jersey. The Bauers’ parcel will hereinafter be referred
to as the “Bauer Property.” Defendant Bauer Automotive has, since 1975, operated a truck repair
shop on the Bauer Property. The Bauer Property is adjacent to the NMC Site.
Plaintiffs’ CERCLA and related state law claims center on the environmental
contamination detected at a location on the NMC Site in and around monitoring well MW-4R.
The gravamen of the action is that the contamination in the MW-4R area resulted from the
migration of hazardous substances allegedly discharged by Defendants on the adjacent Bauer
Property. Plaintiffs maintain that Defendants are responsible for the contamination of the NMC
Site in the MW-4R area and are therefore liable for the cost of remediating that area.
A. The Stahls’ Sale of NMC in 1997
NMC was founded in 1952 by Otto Stahl, Sr., who later transferred ownership to his sons
and a nephew, the individuals this Opinion refers to collectively as the Stahls. NMC was at all
relevant times engaged in the manufacture of metal parts for industrial uses. According to
William Stahl, NMC “manufactured deep drawn metal enclosures, a process that consisted of
reshaping raw sheet metal using custom dies . . . and extreme pressure oils.” (Stahl Cert., ¶ 17.)
He adds that, following this process, “chlorinated solvents were used to remove the extreme
pressure oils.” (Id., ¶ 18.) Chlorinated solvents, including a material known as Trichloroethylene
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(“TCE”), were used by NMC in the degreasing process. TCE is classified as a hazardous
substance, under federal and New Jersey state law.
It is undisputed that prior to the Stahls’ 1997 sale of NMC, TCE was discharged at the
NMC Site. An underground storage tank (“UST”) had been maintained in the parking lot area of
2 River Road, in and around the area of monitoring well MW-5. The UST was used to store wash
water containing TCE. The Stahls concede that environmental contamination found in the MW-5
area resulted from an on-site discharge of TCE.
The Stahls sold NMC on July 15, 1997. On May 28, 1997, they entered into a Stock
Purchase Agreement (“SPA”) with Waverly Partners for the sale of all the issued and
outstanding shares of NMC. In relevant part, the SPA included an indemnification provision,
pursuant to which the Stahls agreed to indemnify NMC for any costs NMC incurred to remediate
environmental contamination existing at the NMC Site prior to the closing date of the SPA. In
Section 10.1(d), the SPA sets forth that the indemnification obligation on the Stahls encompasses
damages, liabilities, costs and expenses arising from, specifically:
Any liability incurred by the Buyer Indemnified Parties, or costs incurred
by them, arising out of, or relating to, the actual, alleged, or threatened
pre-Closing discharge, disposal, release, spillage, leaking or existence of
any Hazardous Materials on, at, under, or flowing on, under or from, (i)
any Real Property, and/or (ii) any property presently or formerly owned,
leased, operated or used by the Company (whether or not the Company
knew at the time such properties were being used for such purposes) for
the transportation, treatment, storage, handling or disposal or Hazardous
Materials. The Stockholders’ obligations under this subsection (d) shall
exist whether the contamination is discovered pre-Closing or post-Closing.
(Stahl Cert., Ex. A: SPA § 10.1(d)).
Pursuant to the SPA, and as required by the New Jersey Industrial Site Recovery Act
(“ISRA”), the contemplated transfer of real property comprising the NMC Site triggered an
obligation to assess and clean up environmental contamination on the property. NMC
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accordingly conducted two environmental surveys of the NMC Site prior to the closing of the
stock sale. The Phase II Environmental Investigation revealed that the soil and/or groundwater at
ten different locations on the NMC Site contained hazardous substances, including TCE and
other chlorinated solvents.
Notwithstanding the discovery of contamination at the NMC site, the Stahls and the stock
purchaser, Waverly Partners, proceeded with the stock sale. Prior to the closing, the Stahls
entered into a Supplemental Agreement. The Supplemental Agreement acknowledged the
findings of the Phase II Environmental Investigation Report and addressed the issue of ISRA
compliance, that is, the legal obligation to remediate the contaminated property. The
Supplemental Agreement placed responsibility for cleanup of the NMC Site on NMC, the legal
entity which would continue following the stock transfer. The parties agreed that NMC “shall be
responsible for initiating and completing all control and cleanup procedures described in the
Phase II report and emanating from the Remediation Agreement of July 9, 1997, or as directed
by the NJDEP and/or any other State or Federal agency.” (Stahl Cert., Ex. B: Supplemental
Agreement § 1.03). The Supplemental Agreement further provided that NMC would “be
responsible for expending the Remediation Amount, as well as the initiation of whatever legal
action(s) that may be necessary in order to ensure that the responsibility for remediation is on
those parties identified in the Phase II Report as the persons responsible for the contamination of
National-NJ properties.” (Id.)
The Stahls and NMC executed the Supplemental Agreement on July 15, 1997.
Immediately thereafter, on the same date, the stock purchase transaction closed.
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B. Post-Sale Lawsuit and Arbitration
Subsequent to the closing, numerous disputes arose between the Stahls and NMC. Many
concerned the environmental contamination of the NMC Site. The issues related to, among other
matters, the nature and extent of the contamination, the source of the contamination, the remedial
measures needed to be taken, the cost of the remediation, which party would bear the cost of
remediation and which party had the obligation to pursue damages claims against third parties.
The Stahls filed a lawsuit against NMC in the Superior Court of New Jersey to recover certain
monies owed, and NMC counterclaimed for, among other things, recovery of amounts it
expended for environmental liabilities. NMC claimed that these amounts were owed by the
Stahls under their SPA indemnification obligations. It did not, however, assert any CERCLA
claims against the Stahls for recovery of remediation costs.
On or about September 25, 2002, the Stahls and NMC settled the New Jersey state court
lawsuit by agreeing to submit to binding arbitration. Following numerous hearing dates, witness
testimony, and the collection of evidence, an arbitration panel consisting of three retired state
court judges issued a final award on or about May 11, 2005 (the “Arbitration Award”). In their
Amended Complaint, the Stahls summarize the Arbitration Award’s determinations on matters
relating to the Stahls’ and NMC’s respective remediation and payment obligations. The
Amended Complaint sets forth as follows:
1. The 2-12 River Road Property is contaminated with at least four
hazardous materials, namely, TCE, CIS-12 dichlorethene,
tetrachlorethene, and vinylchloride. TCE is the principal contaminant
on the site and the evidence supported a finding [that] the TCE
contamination occurred on-site and was an aged release that had
existed for an extended period of time. The Panel found that the
contamination occurred prior to July 15, 1997.
2. The Plaintiffs [the Stahls] were required, pursuant to the
environmental indemnification provisions of the Stock Purchase
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Agreement, to pay NMC, through offsets of moneys due to them, the
sum of $396,089 as reimbursement to NMC for the cost of
investigating and remediating environmental contamination incurred
through December 31, 2003 with respect to the Properties.
3. Pursuant to the environmental indemnification provisions of the Stock
Purchase Agreement, the Plaintiffs were required to indemnify NMC
for the costs and expenses NMC actually incurs in investigating and
remediating the environmental contamination on the Properties, but
NMC may not seek to recovery [sic] such costs and expenses from the
Plaintiffs until such time as NMC has, with respect to the Properties,
initiated, completed and paid for the remediation in accordance with a
plan approved and accepted by the NJDEP.
(Am. Compl., ¶ 16.)
Indeed, the Arbitration Award provided a thorough review of the SPA and Supplemental
Agreement, as well as the negotiations leading up to those contracts. It also reached certain
conclusions about the relative rights and duties of the parties to those agreements. Of relevance
to the lawsuit before this Court, the arbitrators determined that the Stahls had, in consideration of
the sale of their stock in NMC, agreed to, among others, the following three things:
One, the Stahls agreed to indemnify NMC for the remediation costs it actually incurs in
performing the remediation, as approved by New Jersey Department of Environmental
Protection (“NJDEP”). The Arbitration Award states as follows:
In light of these settled principles [of contract interpretation], the PANEL
FINDS that the Stahls did not have a contractual obligation to indemnify
National [NMC] with respect to National’s [ISRA] liabilities, 1 or for any
other potential liabilities relating to the environmental remediation of the
The Arbitration Award issued by the arbitrators refers to National’s “ERISA” liabilities.
Clearly, that acronym – which refers to the federal employment benefits statute known as the
Employee Retirement Income Security Act of 1974 – was used in error. The matters at issue
before the arbitrators concerned environmental cleanup of the NMC Site, and thus in context, the
quoted sentence can be understood to refer to National’s liabilities under “ISRA” – New Jersey’s
Industrial Site Recovery Act, which requires owners of certain industrial sites to investigate and
remediate upon property transfers. New Jersey permits parties to shift the obligation for ISRA
compliance from seller to buyer. Feighner v. Sauter, 259 N.J. Super. 583, 589-90 (App Div.
1992); Dixon Venture v. J. Dixon Crucible, 235 N.J. Super. 105, 109 (App. Div. 1989) (citing
N.J.S.A. 13:1K-9c).
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property. The Stahls’ contractual obligation was to indemnify National for
the cost and expenses actually incurred by National in initiating,
completing, and paying for the cleanup of the River Road properties.
***
Beyond the language of the agreements [the SPA and Supplemental
Agreement] and the construction placed on them by the parties, if there
were any doubt that the parties intended that the Stahls would reimburse
National for the costs and expenses National incurred in remediating the
property, it was resolved by the parties and incorporated in and made part
of the Arbitration Agreement. The Arbitration Agreement, in pertinent
part, expressly provided:
Any invoices relating to claims or reimbursement of
environmental costs or expenses incurred after October 10,
2002 shall be submitted by the Defendant (National) in due
course to Plaintiffs’ (Stahl) counsel. Plaintiff shall have 30
days to either agree to said invoices or to notify
Defendant’s counsel that the Plaintiffs dispute said
invoices. Any disputes relating to environmental costs or
expenses incurred after October 10, 2002, shall be decided
through binding arbitration with the third selected arbitrator
or an agreed-upon replacement acting as a sole arbitrator.
(Stahl Cert., Ex. D: Arbitration Award at ¶¶ 69, 71.)
Two, the Stahls agreed to cede any involvement in the performance of remediation
activities at the NMC Site. The arbitrators found that
As a result of the agreement reached by the parties and memorialized by
the execution of the Supplemental Agreement at that meeting, National
acquired the exclusive right to initiate, complete, and control the clean-up
procedures emanating from the Remediation Agreement or as may be
directed by the DEP. The Stahls gave up that right and were excluded
from the process even though they were obligated to reimburse National
for the costs and expenses it incurred. The PANEL find this to be
sufficient consideration for the Supplemental Agreement . . ..
(Id. at ¶ 80.)
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Three, the Stahls agreed that any legal action to pursue third parties which may bear
responsibility for the NMC Site contamination would be brought by NMC. The Arbitration
Award states that
The Supplemental Agreement does not specifically provide that National
is to institute a lawsuit against any party. Rather, it requires National to
institute whatever legal action may be necessary to ensure that the
responsibility for remediation is on those parties identified in the Phase II
report as the persons responsible for the contamination.
(Id. at ¶ 78.)
The foregoing facts are undisputed. Moreover, the Stahls admit for purposes of this
motion that, “in accordance with the arbitration award, NMC (through its new owners)
conducted the investigation and remediation, and Plaintiffs, who did not participate in
conducting the investigation and/or remediation, reimbursed NMC for the cost.” (Defs.’
Statement of Material Facts (“SOMF”) ¶ 16; Pls.’ Response to SOMF ¶ 16.)
C. Remediation of the NMC Site: Contamination at MW-4R and MW-5
NMC retained an environmental consultant, Environmental Liability Management
(“ELM”), in connection with the performance of its remediation obligations. According to the
Amended Complaint, in 2005 NMC and ELM engaged in a large soil excavation action to
remove contaminants at the NMC Site in the MW-5 area, where TCE had admittedly been
discharged on-site. ELM also conducted a comprehensive review of information and data
collected from the NMC Site and from the Bauer Property during previous investigations, which
had been performed at the NJDEP’s direction to determine the source of contamination detected
on the NMC Site at MW-4R. Soil and ground water samples were collected from temporary
monitoring wells installed on the Bauer Property. According to the Stahls, ELM advised that
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contamination detected at another location at the NMC Site, the area at monitoring well MW-4R,
is “attributable to an off-property source.” (Am. Compl., ¶ 26.)
Plaintiffs assert that ELM’s investigations and analysis demonstrate that the source of the
contamination is the Bauer Property. In a June 18, 2008 letter written by ELM to the NJDEP,
ELM reported that “the analytical results for the ground water samples collected from the
property located northwest of the National site . . . support the conclusion that a potential source
of CVOs [chlorinated volatile organic compounds] is located on the neighboring northwestern
property (not owned by National) which is attributable for the constituents detected in National
property well MW-4R . . ..” (Coffey Cert., Ex. A at 16.) In its February 8, 2011 Remedial
Investigation Report, ELM concluded that the off-site source of TCE and other contaminants
detected at MW-4R was indicated by the consistent eastern ground water flow together with the
results of ground water samples collected from the upgradient adjacent property to the northwest
at 27 Watchung Avenue (the Bauer Property). ELM’s report stated that “[t]he results, which
were previously submitted to the NJDEP, documented that samples collected from the 27
Watchung Avenue property contained significantly greater concentrations of TCE (more than
two times) than were found in well MW-4R . . .. Further, the sample collected up gradient of the
27 Watchung Avenue property . . . contained TCE at a concentration (1.5 ug/l) approaching the
GWQS [ground water quality standards] for TCE, documenting that this portion of the National
property is not the source of the TCE on the 27 Watchung Avenue property.” (Coffey Cert., Ex.
B at vi.) The report further states that, while multiple lines of evidence indicate that the
contamination at MW-4R is due to an off-property source, “multiple lines-of-evidence have
eliminated the potential that a source is present at the National property which could be
attributable for the CVOs/TCEs being detected in MW-4R.” (Id. at x.) Additionally, a May 21,
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2013 Remedial Action Report prepared by ELM repeats these conclusions with regard to the
source of contamination detected at MW-4R.
In addition to the ELM reports, Plaintiffs rely on the expert report of their civil and
environmental engineering expert, Eric Raes, for their theory that Defendants’ discharge of
volatile organic compounds caused the MW-4R contamination. Raes concludes that “the
contaminants detected in the MW-4R area are migrating from the adjacent and upgradient Bauer
Automotive Site.” (Coffey Cert., Ex. F at 1.) He noted in his report that, since at least 1975,
“Bauer Automotive has used and stored a machine parts washer utilizing solvents to clean parts
and machines in connection with its auto and truck repair operations.” (Id. at 5.) At his
deposition, Raes testified while he does not have affirmative evidence that TCE was one of the
cleaning solvents used by Bauer Automotive, “[i]t was the industry standard to use TCE and
TCA and PCE for parts cleaning until recycling was implemented.” ((Provorny Cert., Ex. G:
Raes Dep. 36:13-21.) However, Raes admitted that he cannot conclude whether the source of the
TCE contamination found at MW-4R originated on the Bauer Property or, alternatively, on a
property upgradient from the Bauer Property. (Id. at 24:18-25, 54:2-7.) He also testified that only
very limited soil samples have been taken from the Bauer Property and that TCE has not been
detected in the samples. (Id. at 25:16-26:13.)
D. The Stahls’ Instant Lawsuit Against Bauer
The Stahls initiated this action in the United States District Court for the District of New
Jersey on January 20, 2015, alleging that the Bauer Property is the source of the contamination
detected on the NMC Site at MW-4. In particular, the Amended Complaint alleges as follows:
44. Given the history of the Bauer Automotive Site as an auto and
truck repair facility, it is obvious that business used and stored chlorinated
solvents as detected in the MW-4R Area in its auto and truck repair
operations.
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45. Based upon the information deduced from the extensive soil
and ground water sampling and monitoring activities completed at the
National Manufacturing Site by National and ELM, the horizontal and
vertical delineation of the contaminant plume conducted at the National
Manufacturing Site, topographic maps, aerial photos and other related site
inspections and investigations, it is obvious that the contaminants detected
in the MW-4R Area are migrating from the adjacent and up gradient Bauer
Automotive Site.
(Am. Compl., ¶¶ 44-45.) In sum, the Stahls assert that the Bauers and Bauer Automotive are
responsible for the contamination at MW-4R based on the nature of the business operations at
the Bauer Property, its relative topography (upgradient of the NMC Site), the flow of
groundwater, and the soil and groundwater samples collected from both the NMC Site and the
Bauer Property. The Amended Complaint further avers that as a result of the migration of
hazardous substances from the Bauer Property to the NMC Site and the Bauers’ role in allegedly
causing that contamination, the Stahls “have incurred and will continue to incur costs associated
with the investigation and remediation of contaminated soils and groundwater at the [NMC]
Site.” (Id. ¶ 48.)
The Stahls seek to recover those costs from Defendants under CERCLA and a number of
New Jersey statutory and common law theories of relief. The Amended Complaint pleads the
following claims:
Count I: CERCLA § 107
Count II: CERCLA § 113
Count III: New Jersey Spill Act
Count IV: Declaratory Judgment
Count V: Strict Liability
Count VI: Restitution
Count VII: Contribution
Count VIII: Common Law Indemnification
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Count IX: Public Nuisance
Count X: Negligence
Plaintiffs now move for summary judgment as to their CERCLA § 107 claim only, and
Defendants cross-move for summary judgment as to all claims in the Amended Complaint. This
Court has subject matter jurisdiction over the action pursuant to 28 U.S.C. § 1331.
II.
DISCUSSION
A. Legal Standard
The parties’ cross-motions for summary judgment are governed by Federal Rule of Civil
Procedure 56. Rule 56(a) provides that a “court shall grant summary judgment if the movant
shows that there is no genuine issue as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986) (construing the similarly worded Rule 56(c), predecessor to the current
summary judgment standard set forth in Rule 56(a)). A factual dispute is genuine if a reasonable
jury could return a verdict for the non-movant, and it is material if, under the substantive law, it
would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
In considering a motion for summary judgment, a district court “must view the evidence 'in the
light most favorable to the opposing party.’” Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014)
(quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). It may not make credibility
determinations or engage in any weighing of the evidence. Anderson, 477 U.S. at 255; see also
Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (holding same).
Once the moving party has satisfied its initial burden, the nonmoving party must establish
the existence of a genuine issue as to a material fact in order to defeat the motion. Jersey Cent.
Power & Light Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). To create a genuine
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issue of material fact, the nonmoving party must come forward with sufficient evidence to allow
a jury to find in its favor at trial. Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir.
2001), overruled on other grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of the Int'l
Union of Operating Eng’rs and Participating Emp'rs, 134 S. Ct. 773 (2014). The party opposing a
motion for summary judgment cannot rest on mere allegations; instead, it must present actual
evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see
also Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990) (holding that
“unsupported allegations in [a] memorandum and pleadings are insufficient to repel summary
judgment”). Indeed, Rule 56(c)(1) expressly requires a party who asserts that a fact is genuinely
disputed to support that assertion by:
(A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the motion
only), admissions, interrogatory answers, or other materials; or (B)
showing that the materials cited do not establish the absence or presence
of a genuine dispute, or that an adverse party cannot produce admissible
evidence to support the fact.
Fed. R. Civ. P. 56(c)(1). If the non-movant fails to “properly support an assertion of fact or fails
to properly address another party’s assertion of fact as required by Rule 56(c), the court may . . .
consider the fact undisputed for purposes of the motion.” Fed. R. Civ. P. 56(e)(2).
In the District of New Jersey, moreover, Local Civil Rule 56.1 imposes an additional
requirement on both movants and non-movants related to summary judgment motions. The party
moving for summary judgment must file a statement which lists, in separately numbered
paragraphs, material facts the movant asserts are not in dispute, with citations to the specific
portions of the record supporting those factual assertions. In turn, the party opposing summary
judgment “shall furnish, with its opposition papers, a responsive statement of material facts,
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addressing each paragraph of the movant’s statement, indicating agreement or disagreement and,
if not agreed, stating each material fact in dispute and citing to the affidavits and other
documents submitted in connection with the motion.” L. Civ. R. 56.1(a). Indeed, the local rule
warns that “any material fact not disputed [in such a responsive statement] shall be deemed
undisputed for purposes of the summary judgment motion.” Id.
B. CERCLA § 107 Claim
CERCLA § 107 allows a private party, including a “potentially responsible party”
(“PRP”), to recover expenses it has incurred in cleaning up contaminated sites. 42 U.S.C. §
9607(a); United States v. Atl. Research Corp., 551 U.S. 128, 131 (2007). To establish liability
under § 107, a plaintiff must prove the following elements:
(1) that hazardous substances were disposed of at a “facility”; (2) that
there has been a “release” or “threatened release” of hazardous substances
from the facility into the environment; (3) that the release or threatened
release has required or will require the expenditure of “response costs”;
and (4) that the defendant falls within one of four categories of responsible
parties.
United States v. CDMG Realty Co., 96 F.3d 706, 712 (3d Cir. 1996) (citing 42 U.S.C. §
9607(a)). Section 107(a) lists the four classes of people liable for response costs: the facility’s
current owner or operator; any person who owned or operated the facility “at the time of
disposal” of a hazardous substance; one who arranged for disposal or arranged for transport for
disposal of a hazardous substance; and one who accepts hazardous substances for transport. 42
U.S.C. § 9607(a)(1)-(4).
Emphasizing the cost-recovery remedy of CERCLA § 107, the Supreme Court has
distinguished this provision from the statute’s other avenue of relief, CERLCA § 113, which
provides a contribution claim. Atl. Research, 551 U.S. at 138-39. Section 113 “authorizes a PRP
to seek contribution [from other PRPs] ‘during or following’ a suit under § 106 or § 107(a).” Id.
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at 138. In contrast, relief under CERLCA § 107 is available to those parties which have
“incurred” their own costs in cleaning up a site. Id. at 139. The Supreme Court made clear in
Atlantic Research that a party that reimburses another for the response costs that the other party
paid in the first instance does not “incur its own costs of response” and therefore does not have a
right to seek recovery under § 107. Id. The Court held:
And § 107(a) permits cost recovery (as distinct from contribution) by a
private party that has itself incurred cleanup costs. Hence, a PRP that pays
money to satisfy a settlement agreement or a court judgment may pursue §
113(f) contribution. But by reimbursing response costs paid by other
parties, the PRP has not incurred its own costs of response and therefore
cannot recover under § 107(a).
Id. at 139.
The Bauers argue in their cross-motion for summary judgment that the Stahls lack
standing to pursue their § 107(a) claim to recover response costs from Defendants because
Plaintiffs did not incur their own remediation costs but rather reimbursed NMC for the expenses
it paid in connection with its cleanup of the NMC Site. The Stahls do not dispute that NMC
performed the remediation and that they themselves did not participate in the cleanup of the
NMC Site. Nor do the Stahls dispute that they reimbursed NMC for expenses incurred by NMC
in connection with the cleanup. The Stahls’ admitted reimbursement of response costs initially
paid by others would appear to place them outside the purview of those parties which may avail
themselves of § 107’s cost-recovery mechanism. Nevertheless, the Stahls argue that denying
them the right to proceed under § 107 simply because of the manner in which the payment of
response costs was structured would constitute a hyper-technical application of CERCLA § 107.
Instead, the Stahls maintain, the Court should recognize that, by virtue of their agreement to
indemnify NMC for remediation costs, the Stahls in essence “incurred” the costs of cleaning up
the NMC Site and thus have standing to recover under § 107.
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The only authority cited by the Stahls in support of their argument is Agere Systems Inc.
v. Advanced Environmental Technology Corporation, 602 F.3d 204 (3d Cir. 2010), in which the
Third Circuit found that two PRPs, which had paid response costs pursuant to a settlement
agreement with other plaintiffs, had incurred cleanup costs within the meaning of CERCLA §
107. Id. at 225. The facts on which the Third Circuit’s decision was based differ significantly,
however, from the Stahls’ circumstances. Agere was a cost-recovery suit brought under
CERCLA § 107(a) and the Pennsylvania environmental remediation statute by five plaintiffs:
Agere, Cytec, Ford, SPS and TI. 2 Id. at 210. Four of those plaintiffs had been sued by the EPA,
resulting in two consent decrees for cleanup of the contaminated site at issue. Id. at 212-13.
Plaintiffs Cytec, Ford and SPS entered into the “OU-1 Consent Decree,” and then entered into a
settlement agreement with Agere, TI and others “whereby they all agreed to collectively fund
and perform OU-1 work and to otherwise comply with the OU-1 Consent Decree.” Id. at 212.
Thereafter, and in a similar fashion, plaintiffs Cytec, Ford, SPS and TI entered into the “OU-2
Consent Decree” and then entered into a separate, private settlement agreement with Agere “to
collectively fund and perform the OU-2 work and to otherwise comply with the OU-2 Consent
Decree.” Id. at 213. Summarizing the arrangement to pay for and perform the remediation, the
Court of Appeals noted that the parties to both settlement agreements “contributed to group trust
accounts from which they paid and will continue to pay various contractors to perform the work
required” by the consent decrees. Id.
One of the issues on appeal in Agere concerned the district court’s holding that Agere
and TI had the right to assert § 107(a) cost recovery claims for the amount they paid pursuant to
the settlement agreements. Id. at 224-25. The appellant argued that, under the Supreme Court’s
The Court has identified the Agere plaintiffs for clarity but has adopted the shorthand used by
Third Circuit in its opinion for brevity.
2
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holding in Atlantic Research, Agere and TI had not incurred response costs by paying into group
trust accounts because they did so only to “satisfy a settlement agreement.” Id. at 225. The Third
Circuit rejected this argument and affirmed the district court’s ruling. Id. The Court of Appeals
reasoned as follows:
We do not think the Supreme Court intended to deprive the word
“incurred” of its ordinary meaning. Agere and TI put their money in the
pot right along with the money from the signers of the consent decrees.
The costs they paid for were incurred at the same time as the costs
incurred by the signers of the consent decrees and for the same work.
Those costs were incurred in the ordinary sense that a bill one obligates
oneself to pay comes due as the job gets done. While the Supreme Court
in Atlantic Research did hold that § 107(a) permits a PRP to recover only
costs it has “incurred,” and did suggest that costs paid pursuant to a
settlement agreement are not such costs, those statements were not made
in the context of payments made for on-going work.
Id. The Agere court further reasoned that Atlantic Research’s exclusion of settlement payments
from the scope of costs incurred, within the meaning of § 107(a), appeared to be based on the
availability of relief under CERCLA § 113, the provision authorizing a contribution claim. Id.
Plaintiffs Agere and TI, however, would be barred from a contribution claim, the court noted,
because they had not themselves been subject to a civil action under CERCLA, as the Supreme
Court previously held was required to bring a § 113 claim. Id. (citing Cooper Indus. v. Aviall
Servs., 543 U.S. 157, 168 (2004)). The Agere court concluded that barring recovery for “all
PRPs who, like Agere and TI, agree to come forward and assist in a cleanup even though they
have not been subjected to a cost recovery suit” would penalize cooperative cleanup and thus run
counter to the goal of CERCLA. Id. at 226.
This Court recognizes the broad similarities between the Stahls and the “settlement
agreement” parties in Agere. Like Agere and TI, the Stahls have not been subjected to a
CERCLA § 107(a) cost recovery suit but do bear a contractual obligation to pay remediation
17
costs. That, however, is where the similarities end. Agere and TI voluntarily undertook the
remediation of a contaminated site in a joint endeavor with other PRPs. They assumed
responsibility for the cleanup as it was occurring and funded the cleanup through a trust account
they and other PRPs maintained for the contemporaneous payment of remediation costs as they
arose. In every practical sense, Agere and TI acted as co-remediators. In light of these facts, the
Third Circuit concluded that the formality of creating the joint endeavor through a private
“settlement agreement” should not bar Agere and TI from proceeding to recover costs under §
107, based on a hyper-technical application of a statement made by the Supreme Court in
Atlantic Research. In contrast, the Stahls did not assume any obligation to remediate the NMC
Site, did not participate in the cleanup (either directly or indirectly) and did not pay response
costs as the bills for remediation work became due. The Stahls owned contaminated property and
wished to sell it, as part of their sale of all their shares in NMC, triggering their obligation to
remediate under New Jersey statutory law. The Stahls transferred their cleanup obligation to the
purchaser of the stock, that is, to the “new” NMC, but, in consideration of the stock sale, also
agreed to indemnify NMC for remediation expenses. The Stahls’ indemnity agreement ran only
to the expenses of remediation performed NMC, with no involvement by the Stahls. Indeed, the
indemnification provision of the SPA as well as the Supplemental Agreement they signed
expressly provides that NMC would be “responsible for initiating and completing all control and
cleanup” of the NMC Site. Moreover, there is no indication that the Stahls contemporaneously
paid for ongoing remediation work, directly assuming the cleanup costs as the bills became due.
Nor is there any indication that they established a trust or escrow account from which NMC
could draw to pay response costs. Rather, the Supplemental Agreement expressly states that
NMC would be responsible “for expending the Remediation Amount.” Indeed, according to the
18
Arbitration Award, NMC and the Stahls established a reimbursement process, in which the
Stahls are given time to review the invoices submitted by NMC for the cleanup expenses and an
opportunity to dispute the invoices. 3 In short, the entire structure of the arrangement to which the
Stahls agreed positions them, in both form and substance, as a payor of response costs incurred
by another party—not as a joint remediator. The Stahls’ circumstances are simply are not
analogous to those presented in Agere, and the Court finds that decision in apposite to the case at
bar.
Atlantic Research, binding on this Court, holds that a CERCLA § 107(a) claim for cost
recovery is available to “a private party that has itself incurred cleanup costs.” Atl. Research,
551 U.S. at 139 (emphasis added). In so holding, the Supreme Court made clear that “by
reimbursing response costs paid by other parties, the PRP has not incurred its own costs of
response and therefore cannot recover under § 107(a).” Id. The uncontroverted facts in this case
establish that the Stahls reimbursed NMC for response costs related to the NMC Site. Because
they did not incur the costs of cleaning up the NMC Site, the Stahls cannot recover under
CERCLA § 107.
Accordingly, the Stahls’ motion for partial summary judgment on the CERCLA § 107(a)
claim will be denied, and summary judgment will be granted in Defendants’ favor on this claim.
While the Stahls agreed to remain responsible for the cost of remediation, there is no indication
that they negotiated an assignment of § 107 rights running to the party which incurs the
environmental response costs, that is, NMC. To the contrary, the Supplemental Agreement
expressly recognizes that any lawsuit for recovery of costs from other PRPs would be filed, if at
all, by NMC.
3
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C. CERLCA § 113 Claim
CERLCA § 113(f) authorizes an action for contribution “during or following any civil
action any civil action under section 9606 of this title or under section 9607(a) of this title.” 42
U.S.C. § 9613(f)(1). As noted above, the Supreme Court has held that “a private party who has
not been sued under [CERCLA] § 106 or 107(a)” may not assert a contribution claim under §
113(f). Cooper Indus. v. Aviall Servs., 543 U.S. 157, 161 (2004); see also Agere, 602 F.3d at 225
(citing Cooper as “explaining that § 113(f) authorizes contribution claims only for PRPs who
have been subject to a civil action under CERCLA”). Defendants argue that because there is no
dispute that Plaintiffs have not been sued under CERCLA § 106 or § 107(a), Plaintiffs lack
standing to pursue a § 113 claim and summary judgment should therefore be granted. Defendants
are correct.
Additionally, it appears that in failing to oppose Defendants’ cross-motion as it pertains
to the CERCLA § 113 claim, Plaintiffs have abandoned the claim. “District courts in and out of
this Circuit routinely deem abandoned a party’s claim when that party fails to present any
opposition to a motion for summary judgment.” See Samoles v. Lacey Twp., 12-cv-3066, 2014
U.S. Dist. LEXIS 79211, 2014 WL 2602251, at *4 n.8 (D.N.J. June 11, 2014) (collecting cases);
cf. Reynolds v. Wagner, 128 F.3d 166, 178 (3d Cir. 1997) (stating, in the context of an appeal
from a district court’s decision, that “an argument consisting of no more than a conclusory
assertion such as the one made here (without even a citation to the record) will be deemed
waived.”)
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Accordingly, summary judgment will be granted in Defendants’ favor as to Plaintiffs’
claim under CERCLA § 113. 4
D. New Jersey State Law Claims
Defendants also seek summary judgment as to all the state law causes of action pled in
the Amended Complaint. The Court notes that Plaintiffs have failed to oppose the motion as to
all the state law claims except Count III for relief under the New Jersey Spill Act, N.J.S.A.
58:10-23.11f(a)(2). However, pursuant to its discretion under 28 U.S.C. § 1367, the Court will
not reach this portion of Defendants’ motion and will instead dismiss the state law claims
without prejudice.
Thus far, the Court had exercised supplemental jurisdiction over Plaintiffs’ state law
causes of action, including the Spill Act claim, pursuant to 28 U.S.C. § 1367(a), on the basis that
the state claims were “so related” to the federal CERCLA claims, on which the Court’s original
jurisdiction was predicated, that they formed part of the same case or controversy. The Court’s
grant of summary judgment for the Defendants on the CERCLA claims, however, disposes of the
claims on which the Court’s original jurisdiction is based.
Under 28 U.S.C. § 1367(c)(3), a district court may decline to exercise supplemental
jurisdiction if “the district court has dismissed all claims over which it has original jurisdiction.”
The Supreme Court has held that once federal claims are dismissed, a federal court should
“hesitate to exercise jurisdiction over state claims,” unless circumstances justify this exercise.
United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966); see also New Rock Asset Partners,
The Court recognizes that this result leaves the Stahls without a CERCLA remedy. While the
Supreme Court has observed that CERCLA “defines PRPs so broadly as to sweep in virtually all
persons likely to incur cleanup costs,” Atlantic Research, 551 U.S. at 136, it has also delineated
limits on the parties that may sue under § 107 or § 113. The Stahls simply cannot be shoehorned
into the statute’s remedial scheme.
4
21
L.P. v. Preferred Entity Advancements, 101 F.3d 1492, 1504 (3d Cir. 1996) (“once all federal
claims have been dropped from a case, the case simply does not belong in federal court.”). The
Court concludes that its continuing exercise of jurisdiction over the New Jersey Spill Act claim
and the various causes of action under New Jersey common law would not be appropriate. In its
discretion, pursuant to 28 U.S.C. § 1367(c)(3), the Court declines to exercise supplemental
jurisdiction over the remaining state law claims.
The Court will accordingly dismiss Plaintiffs’ state law claims without prejudice, so that
they may be re-filed in the Superior Court of New Jersey, within the thirty-day time period
provided by 28 U.S.C. § 1367(d).
III.
CONCLUSION
For the reasons set forth above, Defendants have demonstrated that they are entitled to
summary judgment on Plaintiffs’ claims under CERCLA § 107 and § 113, pursuant to Federal
Rule of Civil Procedure 56(a). Their motion for summary judgment on those claims will be
granted, and Plaintiffs’ motion for summary judgment will be denied. The remaining state law
claims will be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3). An appropriate
Order will be filed.
s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: August 7, 2019
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