Ed Niemi Oil Company, Inc. v. Exxon Mobil Corporation

Filing 61

OPINION AND ORDER: For the foregoing reasons, plaintiff Niemi Oil Companys Motion for Summary Judgment 34 is DENIED. As discussed above, defendant Exxon Mobil Corporations Motion for Summary Judgment 25 is DENIED in part and GRANTED in part. Signed on 3/11/13 by Judge Michael W. Mosman. (dls)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
ED NIEMI OIL COMPANY, INC.,
No. 3:11-cv-00214-MO
Plaintiff,
OPINION AND ORDER
v.
EXXON MOBIL CORPORATION,
Defendant.
MOSMAN, J.,
Ed Niemi Oil Co., Inc. (“Niemi”) brings this action seeking contribution from Exxon
Mobil Corporation (“Exxon Mobil” or “Exxon”) for costs Niemi incurred in cleaning up
hazardous substance contamination on two sites formerly leased or owned by Exxon Mobil, and
a declaration that Exxon Mobil is liable for future remedial action costs. Exxon Mobil brings
two counterclaims seeking contractual indemnification and contribution from Niemi for
remediation costs incurred and future remedial action costs. Exxon Mobil moves for summary
judgment on Niemi’s contribution and declaratory relief claims. Niemi moves for summary
judgment on its claims, arguing that Exxon Mobil is liable for contribution and Niemi is entitled
to declaratory relief as a matter of law. Because genuine issues of material fact exist as to each
party’s liability, Niemi’s motion for summary judgment is denied, and Exxon Mobil’s motion for
summary judgment is denied in part and granted in part.

1 – OPINION AND ORDER

BACKGROUND
This dispute concerns the allocation of remediation costs incurred in cleaning up
petroleum contamination at two sites, a gasoline service station and a bulk petroleum storage
plant, in Astoria, Oregon.
I.

Bulk Plant Site
Exxon Mobil and its predecessors began leasing the bulk petroleum storage facility

(“Bulk Plant Site”) from the Port of Astoria in approximately 1925. (See Bakalian Decl. [34-1]
Ex. 5 at 3.) Over the years, Exxon Mobil made several improvements to the Bulk Plant Site,
including installing numerous above ground storage tanks (“ASTs”) for the purpose of storing
and distributing petroleum products. (Id. [34-1].)
J. Ed Niemi first worked at the Bulk Plant Site as a night watchman and delivery driver in
the 1920s. Around 1945, Mr. Niemi, under the name J. Ed Niemi, Distributor, began distributing
petroleum products for Exxon Mobil’s predecessor, Mobil Oil. (See Bakalian Decl. [32-1] Ex.
4–26.) The parties dispute the extent to which Mr. Niemi operated his business out of the Bulk
Plant Site, and the extent of his control over the Bulk Plant during this period.
In 1966, Niemi Oil Co. subleased the Bulk Plant Site from Exxon Mobil. (Carlton Decl.
[27-2] Ex. 1 at 89–90.) This lessor-lessee relationship continued until 1976, when Exxon Mobil
terminated its lease with the Port of Astoria and sold many of the improvements on the property
to Niemi’s related entity, ETU, Inc. (Id. [27-2] Ex. 1 at 102–03.) On July 13, 1976, Niemi
leased a portion of the Bulk Plant Site from the Port of Astoria until the late 1990s, when the Port
of Astoria cancelled the lease and Niemi vacated the site. (See Carlton Supp. Decl. [36] Ex. 2;
see Answer [10] ¶ 27.)
In the 1990s the Oregon Department of Environmental Quality (“DEQ”) identified
substantial soil and groundwater contamination on Astoria properties, including the Bulk Plant
2 – OPINION AND ORDER

Site. In 2001, DEQ issued a unilateral order to Niemi and several other companies, not including
Exxon Mobil, ordering them to undertake a remedial investigation and clean up the contaminated
properties. (Harrington Decl. [34-5] at 2; Carlton Decl. [27-2] Ex. 1 at 40–76.)
In 2003, Exxon Mobil became involved in the cleanup of the Bulk Plant Site, and began
sharing in the costs associated with the investigation and remediation of the site.
II.

Hiway Service Station
Exxon Mobil’s predecessor purchased the gasoline service station on Marine Drive in

Astoria (“Hiway Service Station”) in 1945. (Bakalian Decl. [34-1] Ex. 5 at 13–14.) In 1965,
Niemi leased the Hiway Service Station from Exxon Mobil and began operating the service
station. (Id. [34-1].) In 1978, Niemi purchased the Hiway Service Station from Exxon Mobil,
and operates it to this day. (Id. [34-1].)
In 1999, while Niemi was in the process of removing an underground waste oil tank that
predated its purchase of the Hiway Service Station, environmental consultants discovered
petroleum contamination in the soil as well as groundwater. (Bakalian Decl. [34-2] Ex. 6 at 3–
4.) Niemi contracted to investigate the contamination and, after submission of the report, DEQ
determined that no further remedial action was necessary. (Id. [34-2] Ex. 7.)
APPLICABLE LAW
I.

Standard of Review
On cross-motions for summary judgment, the court “evaluate[s] each motion separately,

giving the nonmoving party in each instance the benefit of all reasonable inferences.” ACLU of
Nev. v. City of Las Vegas, 466 F.3d 784, 790–91 (9th Cir. 2006) (quoting ACLU of Nev. v. City
of Las Vegas, 333 F.3d 1092, 1097 (9th Cir. 2003)). Summary judgment is proper when “there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). The moving party bears the initial responsibility of informing the
3 – OPINION AND ORDER

court of the basis of its motion and providing evidence in support of its motion that demonstrates
the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986).
“If the moving party meets its initial burden of showing ‘the absence of a material and
triable issue of fact,’ ‘the burden then moves to the opposing party, who must present significant
probative evidence tending to support its claim or defense.’” Intel Corp. v. Hartford Accident &
Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991) (quoting Richards v. Neilsen Freight Lines, 810
F.2d 898, 902 (9th Cir. 1987)). The nonmoving party must go beyond the pleadings and
designate facts showing an issue for trial. Celotex, 477 U.S. at 322–23.
The substantive law governing a claim determines whether a fact is material. T.W. Elec.
Serv. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). The court should view
inferences drawn from the facts in the light most favorable to the nonmoving party. Id. at 631.
If the factual context makes the nonmoving party’s claim as to the existence of a material issue
of fact implausible, that party must come forward with more persuasive evidence to support the
claim than would otherwise be necessary. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986).
II.

Oregon Hazardous Waste Act
The Oregon Hazardous Waste Act imposes strict liability on certain classes of parties for

remedial action costs incurred by a release of hazardous waste. Or. Rev. Stat. § 465.255(1).
Potentially liable parties include:
a) Any owner or operator of the facility at the time the acts occurred that resulted
in the release;
b) Any owner or operator who became the owner or operator after the time of the
acts that resulted in the release, and who knew or reasonably should have
known of the release when the person first became the owner or operator;
4 – OPINION AND ORDER

c) Any owner or operator who obtained actual knowledge of the release at the
facility during the time when the person was the owner or operator of the
facility and then subsequently transferred ownership or operation of the
facility to another person without disclosing such knowledge;
d) Any person who, by any acts or omissions, caused, contributed to or
exacerbated the release, unless the acts or omissions were in material
compliance with applicable laws, standards, regulations, licenses or permits;
and
e) Any person who unlawfully hinders or delays entry to, investigation of or
removal or remedial action at a facility.
Id. § 465.255(1)(a)-(e). Such parties are known as “potentially responsible parties” or “PRPs”.
As relevant here, the elements of potential liability as an owner are (1) the party was an owner or
operator; (2) of a facility; (3) from which there was a release; (4) which caused the incurred
response costs. Oregon ex rel. Dept. of Environmental Quality v. Spar Investment Co., 2004 WL
2110704, at *8 (D. Or. Sept. 21, 2004) (citing California v. Campbell, 319 F.3d 1161, 1165 (9th
Cir. 2003)). “Owner or operator” is defined to include “any person who owned, leased, operated,
controlled or exercised significant control over the operation of a facility.” Or. Rev. Stat. §
465.200(20).
Any PRP who incurs remedial action costs may seek contribution from any other liable or
potentially liable party. Or. Rev. Stat. § 465.257(1). A PRP seeking contribution from another
PRP under an “owner or operator” theory need not prove the occurrence of a specific release, or
that the defendant caused the release, but rather merely that a release occurred while the
defendant PRP was an owner or operator of the facility that caused incurred response costs. See
Graham v. State, 995 P.2d 1167, 1172 n.4 (Or. App. 2000). Once potential liability has been
established, the court determines the share of remedial action costs to be borne by each party
using equitable factors, including those listed in Or. Rev. Stat. § 465.257(1)(a)-(k).

5 – OPINION AND ORDER

ANALYSIS
I.

Bulk Plant Site
A.

Potential Liability

Determining much of the parties’ potential liability in this case is fairly straightforward.
Exxon Mobil is potentially liable for remediation costs incurred as a result of releases which
occurred while it leased the Bulk Plant Site from the Port of Astoria from 1925 until 1976. See
Or. Rev. Stat. §§ 465.200(20), 465.225(1)(a). Absent evidence of being the cause of a particular
release, Exxon Mobil is not a PRP for any contamination that occurred after the cancellation of
the lease with the Port of Astoria and sale of equipment to Niemi in 1976.
Similarly, Niemi is potentially liable for remediation costs incurred as a result of releases
which occurred while it leased the Bulk Plant Site from 1966 through 1997, first as a sublessee
from Exxon Mobil and later as the prime lessee from the Port of Astoria.
Whether Niemi was an owner or operator of the Bulk Plant before 1966 requires
additional discussion. Exxon Mobil points to a May 25, 1951, application for premises liability
insurance for Mr. Niemi that includes a box checked by Exxon Mobil’s predecessor that
indicates the insurance “[i]s to be included in revised bulk plant rental.” (Carlton Decl. [27-4]
Ex. 3.) Additionally, Exxon Mobil points to an undated newspaper advertisement that traces
Niemi back to its predecessors, and indicates that Niemi was based at the Bulk Plant at the time
of publishing. (Carlton Decl. [27-1] Ex. 1 at 6–9; Carlton Decl. [27-2] Ex 1. at 77.) Notably,
however, the advertisement’s timeline of the history of Niemi includes an event in 1970. (Id.
[27-1]; id. [27-2].) Exxon Mobil’s strongest evidence of Niemi’s presence at the Bulk Plant is a
1946 Astoria City Directory entry listing J. Ed Niemi, Distributor with the Bulk Plant office
telephone number. (Id. [27-1] Ex. 1 at 12; id. [27-2] Ex. 1 at 80–87.)

6 – OPINION AND ORDER

Niemi, on the other hand, maintains that it did not lease the Bulk Plant until 1966, and
points to the lack of any lease agreement between Exxon Mobil and Niemi before 1966, and the
lack of any other mention of a lease agreement in two decades of distributor agreements between
Niemi and Exxon Mobil. (See Bakalian Decl. [32-1] Ex. 4–26.)
B.

Exxon Mobil’s Motion

For purposes of Exxon Mobil’s Motion for Summary Judgment, I view the facts in the
light most favorable to Niemi. See T.W. Elec. Serv., 809 F.2d at 631. A single box checked by
an Exxon Mobil employee and a newspaper advertisement published after 1970 listing Niemi’s
address at the Bulk Plant cannot conclusively establish that Niemi was an owner or operator of
the Bulk Plant before 1966. This is especially true in light of the extensive documentation of
distributor agreements between Niemi and Exxon Mobil during this period that make no
reference to any lease of the Bulk Plant. That Niemi was listed at a telephone number associated
with the Bulk Plant only shows that Niemi conducted some business out of the Bulk Plant during
this period, not that it “owned, leased, operated, controlled or exercised significant control over”
the Bulk Plant. See Or. Rev. Stat. § 465.200(20). Based on the record before me, then, I cannot
conclude as a matter of law that Niemi is potentially liable as an owner or operator of the Bulk
Plant for remediation costs caused by releases that occurred before 1966. A genuine issue of fact
exists as to Niemi’s potential liability as an owner or operator before 1966.
1.

Proof of a Release

In its Motion for Summary Judgment, Exxon Mobil argues that Niemi has failed to
identify any release of hazardous materials for which Exxon Mobil is potentially liable. Simply
put, Exxon Mobil maintains that Niemi has failed to create a genuine issue of fact as to whether
there was a release of hazardous materials during the period of its ownership or operation of the
Bulk Plant. This argument is unavailing.
7 – OPINION AND ORDER

It is undisputed that petroleum products were stored at, and dispensed from, the Bulk
Plant during the period of Exxon Mobil’s ownership. It is also undisputed that the DEQ ordered
Niemi and other companies to investigate and clean up contamination caused, in large part, by
releases of petroleum products. (Carlton Decl. [27-2] Ex. 1 at 40–56; Harrington Decl. [34-5] at
2.) In addition, Niemi submitted several declarations from first-hand witnesses and experts in
bulk petroleum storage.
Niemi submitted two declarations from Alice Codd, a former employee of Niemi from
1968 through 1996, who worked as a bookkeeper at the Bulk Plant. (Codd Decl. [32-2] at 3;
Codd Decl. [49] at 1.) Ms. Codd stated that “Niemi did not own any of the petroleum product or
inventory at the bulk plant. The petroleum products were delivered, stored and owned by Mobil.
Niemi would purchase product from Mobil for distribution to its gas station, commercial and
residential customers.” (Codd Decl. [49] at 2.) According to Ms. Codd, Exxon Mobil would
offload petroleum products from a barge or tanker truck, and store them at the Bulk Plant, where
it would sell the product to other distributors and consumers. (Codd Decl. [32-2] at 4, 6.) Exxon
Mobil’s employees were responsible for all of the delivery operations, including connecting and
disconnecting product lines and hoses. (Id. [32-2] at 5.) In 1976, Ms. Codd stated that ETU,
Inc., a corporation she formed with Warren Bechtold, then-president of Niemi, bought the
equipment remaining at the Bulk Plant from Exxon Mobil, but then re-sold the four largest
storage tanks, and continued operating at the Bulk Plant in a “greatly reduced fashion.” (Id. [322] at 6.) Niemi leased the Bulk Plant from the Port of Astoria in 1976. (Carlton Dec. [36-2] Ex.
2.)
Niemi submitted a declaration from John Kurtis Harrington, a licensed professional
engineer hired by Niemi as an environmental consultant to work on the remedial investigation

8 – OPINION AND ORDER

and cleanup of the Bulk Plant. Mr. Harrington submitted a declaration stating that “[p]etroleum
impacts to the [Bulk Plant] Site occurred due to releases resulting from historical operations at
the Site.” (Harrington Decl. [34-5] at 2.) Mr. Harrington further stated that “elevated levels of
gasoline- and diesel-range hydrocarbons were detected in subsurface soil samples collected near
the large petroleum fuel ASTs and product dispensing facilities formerly located at the Site.”
(Id. [34-5] at 3.) Additionally, Mr. Harrington noted that a “[r]eview of the chemical analytical
laboratory’s gas chromatography with mass spectrometry detection . . . analysis indicates that
residual petroleum contamination found in soil beneath the Site is highly weathered and is likely
indicative of an older release(s).” (Id. [34-5].) Similarly, with respect to groundwater
contamination at the Bulk Plant, Mr. Harrington stated that “[b]ased on my review of the
[remedial investigation] data and distribution of the [light nonaqueous-phase liquid], the majority
of residual contamination beneath the Site appears to have originated from the AST(s) located at
the northeastern portion of the former Mobil Bulk Plant.” (Id. [34-5] at 4.)
In addition to Mr. Harrington’s declaration, Niemi submitted a declaration from Larry
Gregory, a construction and maintenance engineer for Exxon Mobil from 1972 to 2010.
(Gregory Decl. [47] at 1.) Mr. Gregory worked for Exxon Mobil in the Portland area from 1974
to 1977, and during that time “had responsibility for maintenance and construction of Mobil’s
service stations and bulk oil storage facility tanks in the Oregon sales district.” (Id. [47] at 1–2.)
Mr. Gregory stated that he recalled visiting the Bulk Plant after a report of a large release of
gasoline sometime between 1975 and 1977. (Id. [47] at 2–3.) Mr. Gregory reported that during
his career he had responsibility for identifying and controlling leaks and spills from underground
and above ground storage tanks at service stations, and that he is aware from his experience
working for Mobil Oil that “spills and releases regularly occur on a small scale like drips from

9 – OPINION AND ORDER

hoses and nozzles and occasionally on a larger scale from pipe or tank leaks or surface spills.”
(Id. [47] at 3–4 (emphasis added).)
In addition, Niemi submitted a declaration from Clement Mesavage, a consultant with 38
years of experience in the “midstream portion of the petroleum and chemical industry
characterized by its bulk liquid (‘tank farm’) facilities that store and transfer petroleum.”
(Mesavage Decl. [48] at 1–3.) Mr. Mesavage reviewed documents relating to the Bulk Plant
Site. (Id. [48] at 4.) Based on his review of the “environmental report lab data,” Mr. Mesavage
noted that methyl tertiary butyl either (MTBE) was not present in the groundwater. (Id. [48] at
6.) Mr. Mesavage stated that MTBE was an additive in gasoline used between 1979 and 1995,
and its absence in the lab data “suggests that there were no significant spills or leaks of gasoline
since about 1979.” (Id. [48].)
Finally, Niemi submitted a declaration from Anthony Rieck, a consultant with 34 years of
experience in the petroleum industry, including tank inspection and repair, as Executive Director
of the National Leak Prevention Association, and as a consultant providing petroleum safety and
compliance services. (Rieck Decl. [32-3] at 2–3.) Mr. Rieck reviewed documents relevant to the
Hiway Service Station and the Bulk Plant. As to the Bulk Plant, Mr. Rieck stated that standard
industry practices at such bulk plants in the 1960s and 1970s often resulted in the release of
petroleum products. (See id. [32-3] at 5–12.)
Seen in the light most favorable to Niemi, the above declarations and undisputed facts
create a genuine issue of material fact as to Exxon Mobil’s liability. Niemi need not prove either
the occurrence of any particular release, or that Exxon Mobil caused it. Rather, it must prove
that a release occurred during Exxon Mobil’s period of ownership that caused the incurrence of

10 – OPINION AND ORDER

remediation costs. See Graham, 995 P.2d at 1172 n.4. A rational jury could conclude from the
above that Niemi has met this burden.
2.

Indemnity

Exxon Mobil next argues that indemnity clauses in the Bulk Plant lease agreements
require Niemi to indemnify Exxon Mobil for any liability incurred as a result of petroleum
contamination at the Bulk Plant. The indemnity provisions read:
Lessee agrees to indemnify Lessor against all claims, losses and liabilities arising
out of damage to property (including property of the parties) or injury to, or death
of, persons (including Lessee) occasioned by, or arising out of, (a) the use or
condition of the premises, the improvements and equipment thereon or any motor
vehicle used in connection with the business conducted at the premises, (b) acts or
omissions of Lessee or Lessee’s agents or employees, (c) Lessee’s nonperformance of this lease, or (d) the storage or handling of products on the
premises.
(Carlton Decl. [27-2] Ex. 1 at 89, 96.)
Under Oregon law, “[i]n interpreting a contractual provision a court first examines the
text of the disputed provision in the context of the document as a whole, and determines, as a
matter of law, whether the provision is ambiguous.” Riverside Homes, Inc. v. Murray, 214 P.3d
835, 841(Or. App. 2009) (internal citation omitted). When making this determination, “[t]he
court may consider extrinsic evidence of the circumstances underlying the formation of the
contract.” Id. (internal citation and quotation omitted). “If, after this first step, the contractual
provision is clear, the analysis ends. If it remains ambiguous, the court then examines extrinsic
evidence of the contracting parties’ intent. Finally, if those two analytical steps have not allowed
the court to resolve the ambiguity, the court applies appropriate maxims of contract construction
to determine the parties’ intent.” Id. (internal citations omitted).
I conclude the language of the indemnity provision above unambiguously requires Niemi
to indemnify Exxon Mobil for remediation costs incurred due to contamination that occurred
11 – OPINION AND ORDER

during the period of the lease. The indemnity clause specifically provides that Niemi must
indemnify Exxon Mobil for “all claims, losses and liabilities arising out of damage to property
(including property of the parties) . . . arising out of, (a) the use or condition of the premises . . .
or, (d) the storage or handling of products on the premises.” (Carlton Decl. [27-2] Ex. 1 at 89, 96
(emphasis added).) While liability arising from soil and groundwater contamination may not
have been a common problem in 1966 when the original lease was signed, the inclusive word
“all” includes liabilities known and unknown at the time.
Niemi argues that the indemnity provision should be read in the context of a maintenance
provision in the lease. Niemi maintains that because Exxon Mobil was responsible for
maintenance of the storage tanks, the indemnity provision should not be read to require Niemi to
indemnify Exxon Mobil for contamination caused, at least in part, by that maintenance. The
maintenance provision provides:
Lessor, at its expense, shall make all repairs (including painting) and
replacements necessary to keep the premises in good order and condition unless
the necessity therefor is due to the negligence or misconduct of Lessee or
Lessee’s employees or agents. If Lessor fails to make such repairs and
replacements, Lessee’s sole remedy shall be the right to terminate this lease.
Except to the extent Lessor shall make repairs or replacements as above provided,
Lessee at its expense shall maintain the premises in good, safe, clean and sanitary
condition at all times and make all repairs and replacements necessary for that
purpose. If Lessee does not so maintain and repair the premises and make
necessary replacements, Lessor at its option may do so and the cost thereof shall
be paid by Lessee. Lessor shall not be liable for losses to Lessee’s business
resulting from any repair or replacement work performed by Lessor or from any
delays in commencing or completing such work.
(Carlton Decl. [27-2] Ex. 1 at 89, 96 (emphasis added).) While Niemi is correct that contractual
provisions are interpreted in context of the document as a whole, the context provided by the
maintenance provision does not change the interpretation of the indemnity clause. See Riverside
Homes, Inc., 214 P.3d at 841 (providing that contractual provisions are interpreted in the context
12 – OPINION AND ORDER

of the contract as a whole). The parties at the time of contracting very well could have
contracted to require Niemi to indemnify Exxon Mobil for any liability arising from Exxon
Mobil’s maintenance of the tanks; at least to the extent Exxon Mobil performed the maintenance
non-negligently. This is consistent with the last sentence of the maintenance provision, which
provides that Exxon Mobil is not liable to Niemi for losses to Niemi’s business resulting from
Exxon Mobil’s maintenance. Thus, my reading of the indemnity clause is not inherently
inconsistent with the maintenance provision. Therefore, the maintenance provision does not
change the unambiguous meaning of the indemnity clause.
Finally, Niemi relies on cases holding that indemnity provisions should not be read to
require a plaintiff to indemnify a defendant for the defendant’s own negligence. See, e.g., Cook
v. Southern Pac. Transp. Co., 623 P.2d 1125, 1128 (Or. App. 1981), rev. denied, 631 P.2d 340.
With the exception of some evidence relating to a spill in the mid-1970s, Niemi has submitted no
evidence that Exxon Mobil negligently maintained the storage tanks or other equipment, or
otherwise negligently caused a release. To the contrary, Niemi submitted a declaration
suggesting that such releases were routine consequences of such maintenance and in compliance
with industry practice at the time. (See Rieck Decl. [32-3] at 5–12.) Absent a showing that
Exxon Mobil was negligent in causing particular releases which led to the incurrence of
remediation costs, the indemnity clause requires Niemi to indemnify Exxon Mobil for
remediation costs caused by contamination during the period of the lease.
Exxon Mobil argues that the indemnity provision requires Niemi to indemnify Exxon
Mobil for remediation costs regardless of when the contamination occurred. But there is nothing
in the lease agreements suggesting that Niemi must indemnify Exxon Mobil for past liability. By

13 – OPINION AND ORDER

its own terms, the indemnity clause only applies to remediation costs caused by contamination
during the period of the lease.
I also reject Exxon Mobil’s argument that the 1976 Bill of Sale for the equipment
remaining at the Bulk Plant requires Niemi to hold Exxon Mobil harmless for all past
contamination. By its terms, the 1976 Bill of Sale provision cited by Exxon Mobil only applies
to Clean Water Act regulations governing oil pollution prevention, not remediation of past
contamination. (Carlton Decl. [27-2] Ex. 1 at 102.) The other Bill of Sale provision cited by
Exxon Mobil only requires Niemi to hold harmless and indemnify Exxon Mobil for liability
arising out of the use or condition of the above ground storage tanks arising after the date of the
Bill of Sale. (Id. [27-2] Ex. 1 at 102–03.) The 1976 Bill of Sale is inapplicable to liability for
preexisting soil and groundwater contamination.
C.

Niemi’s Motion

Niemi’s motion for summary judgment is not merely the flip side of Exxon Mobil’s.
Rather, due to the nature of the claims Niemi moves for summary judgment on, it necessarily
seeks the allocation of liability. Because the undisputed facts are insufficient to allow me to
apportion liability, summary judgment is inappropriate on Niemi’s claims. The issues of when
the releases occurred, and which contamination caused the incurrence of remediation costs are
replete with genuine issues of fact.
Considering many of the occurrences at issue are very old, witnesses have passed away,
memories have faded, and documents have been lost or destroyed, it is likely any liability
allocation I would ultimately engage in would necessarily be imprecise. Nonetheless, because I
cannot conclude as a matter of law that Exxon Mobil is not liable for any of the remediation

14 – OPINION AND ORDER

costs at the Bulk Plant, and because there are genuine issues of fact as to the allocation of
liability, summary judgment is inappropriate.
II.

Hiway Service Station
A. Contribution Claims
The analysis for the Hiway Service Station largely mirrors that for the Bulk Plant. Exxon

Mobil is potentially liable as an owner for remediation costs caused by contamination that
occurred from the time Exxon Mobil’s predecessors purchased the Hiway Service Station until
1978 when Niemi’s affiliate, ETU, Inc., purchased the Site. Niemi is potentially liable as an
owner or operator for remediation costs caused by contamination that occurred from the time
Niemi began leasing the Hiway Service Station from Exxon Mobil in 1965, through its purchase
in 1978, until the waste oil tank’s removal in 1999.
Exxon Mobil’s argument that there is no evidence of a release at the Hiway Service
Station for which it is liable is unavailing. It is undisputed that Niemi incurred investigation
costs due to petroleum contamination in the vicinity of an underground waste oil storage tank
(“waste oil UST”). It is undisputed that the waste oil UST was in use during the period for
which Exxon Mobil is potentially liable, including the time before Niemi leased the Hiway
Service Station. In his declaration, Mr. Rieck stated that “[g]enerally, releases from waste oil
tanks are the result of a cumulative series of human error events, poorly connected piping and
other equipment failures over the entire lifetime of the tank service.” (Rieck Decl. [32-3] at 8.)
Mr. Rieck further opined “[i]t is likely that the leak of waste oil from this tank occurred prior to
the period of Niemi’s ownership of the service station.” (Id. [32-8] at 9.) This is sufficient to
create a genuine issue of fact as to whether a release occurred for which Exxon Mobil is
potentially liable.

15 – OPINION AND ORDER

Similar to the Bulk Plant, Exxon Mobil argues that an indemnity provision in the lease
requires Niemi to indemnify it for all liability. The Hiway Service Station leases contained the
following indemnity provision:
Lessee agrees to indemnify Lessor against all claims, losses and liabilities arising
out of damage to property (including property of the parties) or injury to, or death
of, persons (including Lessee) occasioned by, or arising out of, (a) the use or
condition of the premises, the improvements and equipment thereon or any motor
vehicle used in connection with the business conducted at the premises, (b) acts or
omissions of Lessee or Lessee’s employees, agents or tenants, (c) Lessee’s
nonperformance of this lease, or (d) the storage or handling of products on the
premises. Lessee shall on demand present such evidence as Lessor may
reasonably require of Lessee’s financial ability to discharge this indemnification
obligation, provided that acceptance by Lessor of any such evidence shall not
limit Lessee’s indemnification hereunder.
(Carlton Decl. [27-2] Ex. 1 at 106–07, 109–10, 112–13, 115–16.) Not surprisingly, this language
is materially identical to the indemnity provision in the Bulk Plant leases. The Hiway Service
Station leases also contained maintenance provisions materially identical to those in the Bulk
Plant leases. Accordingly, as discussed above, Niemi must indemnify Exxon Mobil for any
liability associated with remediation costs incurred as a result of contamination during the period
of the leases.
Just as with the Bulk Plant, the issues relating to allocation of liability are rife with
genuine issues of fact. Accordingly, summary judgment is inappropriate for both parties on the
Hiway Service Station contribution claim for past remedial costs. There is currently no genuine
issue of fact, however, regarding the necessity of future remedial actions costs. There are
presently no future remedial action costs because DEQ issued a No Further Action
Determination (“NFA”). (Carlton Decl. [34-2] Ex. 7 at 7.) Accordingly, Exxon Mobil is entitled
to partial summary judgment on Niemi’s Hiway Service Station contribution claim to the extent
it claims future remedial action costs.

16 – OPINION AND ORDER

B. Declaratory Relief
Exxon Mobil is also entitled to summary judgment on Niemi’s claim for declaratory
relief in relation to the Hiway Service Station. In a diversity action, the availability of a
particular remedy will generally be determined by substantive state law. The matter is different
with declaratory judgments, however, because, in addition to the underlying merits of the
substantive state question, the availability of the remedy turns on whether the plaintiff has
Article III standing to seek declaratory relief.
“For a declaratory judgment to issue, there must be a dispute which ‘calls, not for an
advisory opinion upon a hypothetical basis, but for an adjudication of a present right upon
established facts.’” Ashcroft v. Mattis, 431 U.S. 171, 172 (1977) (quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 242 (1937)). Thus, although sometimes discussed as a substantive
prerequisite to declaratory relief, the requirement that a declaratory judgment only issue for an
adjudication of a present right upon established facts is a jurisdictional Article III standing
requirement.
Article III standing requirements apply to federal diversity actions. See Lee v. American
Nat’l Ins. Co., 260 F.3d 997, 1001–02 (9th Cir. 2001). Therefore, because the availability of a
declaratory judgment partially turns on an Article III jurisdictional requirement that plaintiff
must meet in this case, I apply federal law to determine whether Niemi has created a genuine
issue of fact as to its entitlement to declaratory relief for future remedial action costs at the
Hiway Service Station.
“Whether declaratory relief is appropriate depends upon ‘whether the facts alleged, under
all circumstances, show that there is a substantial controversy, between the parties having
adverse legal interests, of sufficient immediacy and reality to warrant the issuance of declaratory

17 – OPINION AND ORDER

judgment.’ A case is ripe where the essential facts establishing the right to declaratory relief
have already occurred.” Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1192 (9th Cir. 2000)
(quoting Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986)).
Niemi’s complaint requested a declaratory judgment holding Exxon Mobil liable for
future remedial action costs in proportion to their assessed liability at the Hiway Service Station.
DEQ issued an NFA for the Hiway Service Station which states that further action will only be
necessary if “new or undisclosed facts show that the cleanup does not comply with the
referenced rules.” (Carlton Decl. [34-2] Ex. 7 at 7.) Additionally, the NFA requires that “any
future work in the contaminated areas of the property, including any sampling, management, and
disposal of contaminated soil and groundwater must be performed in accordance with DEQ
regulations and policies.” (Id. [34-2].)
As the name suggests, however, the NFA does not require any further action; it merely
provides that if any future work takes place in the contaminated areas or any new or undisclosed
facts are discovered, further action may be required at that time. Niemi has not alleged that any
work is currently planned for the contaminated area, and the possibility of “new or undisclosed
facts” is too speculative to support a declaratory judgment. Thus, Exxon Mobil is entitled to
summary judgment on Niemi’s declaratory judgment claim regarding the Hiway Service
Station. 1
///
///
///
1

I note the result would be no different under Oregon law. See Morgan v. Sisters School Dist. No. 6, ___ P.3d ___,
353 Or. 189, 2013 WL 179480, at *5 (Jan. 17, 2013) (“‘This court consistently has held that courts cannot issue
declaratory judgments in a vacuum; they must resolve an actual and justiciable controversy. To be justiciable, a
controversy must involve a dispute based on present facts rather than on contingent or hypothetical events.’”)
(quoting TVKO v. Howland, 73 P.3d 905, 908 (Or. 2003)).

18 – OPINION AND ORDER

CONCLUSION
For the foregoing reasons, plaintiff Niemi Oil Company’s Motion for Summary Judgment
[34] is DENIED. As discussed above, defendant Exxon Mobil Corporation’s Motion for
Summary Judgment [25] is DENIED in part and GRANTED in part.
DATED this

11th

day of March, 2013.

/s/ Michael W. Mosman____
MICHAEL W. MOSMAN
United States District Judge

19 – OPINION AND ORDER