Sanchez et al v. Esso Standard Oil de Puerto Rico, Inc.

Filing 406

OPINION AND ORDER DENYING 367 MOTION to dismiss CERCLA Claims as to Jorge Luis Sanchez-Sanchez, Alicia Solano, Dolores Service Station and Auto Parts, Inc., Hector Sanchez-Gomez, Angel Sanchez-Gomez, Jorge Francisco Sanchez, filed by Dolores Service Station and Auto Parts, Inc., Angel Sanchez-Gomez, Jorge Luis Sanchez-Sanchez, Jorge Francisco Sanchez, Alicia Solano, Hector Sanchez-Gomez. Signed by Chief Judge Jose A Fuste on 8/2/2010.(mrj)

Sanchez et al v. Esso Standard Oil de Puerto Rico, Inc.

Doc. 406

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UNITED STATES DISTRICT COURT D IS T R IC T OF PUERTO RICO J O R G E FRANCISCO SÁNCHEZ and D O L O R E S SERVICE STATION AND A U T O PARTS, INC., C iv il No. 08-2151 (JAF) Plaintiffs, v. E S S O STANDARD OIL DE PUERTO R IC O , INC., D e f e n d a n t.

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O P I N I O N AND ORDER P la in tif f s , Jorge Francisco Sánchez and Dolores Service Station and Auto Parts, Inc., b rin g this action against Defendant, Esso Standard Oil de Puerto Rico, Inc. (Docket No. 1.) P la in tif f s allege violations of 42 U.S.C. §§ 6901­6992k. (Id.) Defendant counterclaims against P la in tif f s and impleads Third-Party Defendants, Jorge Luis Sánchez-Sánchez, Alicia SolanoD ía z , Héctor Benito Sánchez-Gómez, and Ángel M. Sánchez-Gómez, seeking reimbursement u n d e r the Comprehensive Environmental Response, Compensation, and Liability Act (" C E R C L A " ), 42 U.S.C. § 9607(a), and indemnification under Puerto Rico law. (Docket N o . 301.) Plaintiffs and Third-Party Defendants (together, "Movants") move, respectively, to d ism is s Defendant's CERCLA claims against them. (Docket No. 367.) Defendant opposes the m o tio n . (Docket No. 384.)

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I. F a c tu a l and Procedural Synopsis W e draw the facts below from the relevant pleadings in this case (Docket Nos. 1; 301; 3 0 5 ; 350). Since 1984, Plaintiffs, Defendant, and Third-Party Defendants have all owned and o p e ra te d Dolores Service Station (the "service station") in Canóvanas, Puerto Rico. Plaintiffs a n d Third-Party Defendants have commercial stores and own real property located at the service s ta tio n , and they exercise control over the premises. Defendant installed and operated

u n d e rg ro u n d storage tanks ("USTs"), pipelines, and servicing equipment at the service station. D e f e n d a n t has also supplied petroleum fuel products to that location. O v e r the course of the service station's operation, at undetermined periods of time, the U S T s and other components released hazardous substances into the ground under the service s ta tio n . In 2003 and 2006, Defendant's consultant conducted subsoil evaluations that

d isc o v e re d the presence of contaminants beneath the service station at levels exceeding s ta n d a rd s set by the Puerto Rico Environmental Quality Board ("EQB"). Defendant has since in c u rre d expenses to assess and address the release or disposal of hazardous wastes that are u n re la te d to UST fuel operations at the service station. Defendant has kept records of these c o sts. Defendant has also consulted key stakeholders and EQB in formulating and

im p le m e n tin g its response action. O n October 17, 2008, Plaintiffs commenced the instant case in federal court, alleging v io la tio n s of the EQB's UST standards, and illegal operation of the service station as a waste

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d isp o sa l facility. (Docket No. 1.) Defendant filed an amended answer with counterclaims a g a in st Plaintiffs and claims against other parties, seeking indemnification under contract and re im b u rs e m e n t under CERCLA for the cost of response actions that are unrelated to the USTs. (D o c k e t No. 222.) Plaintiffs, Sánchez-Sánchez, and Solano-Díaz moved to dismiss these claims (D o c k e t No. 229), which we granted in part by dismissing Defendant's CERCLA claims for f a ilu re to state a claim (Docket No. 279). O n March 15, 2010, Defendant amended its answer again to reassert the CERCLA c la im s . (Docket No. 301.) On June 30, Movants moved to dismiss these claims (Docket N o . 367), and Defendant opposed (Docket No. 384).1 II. S ta n d a r d for Judgment on the Pleadings R u le 12(c) allows any party to move for judgment on the pleadings "[a]fter the pleadings a re closed--but early enough not to delay the trial." Fed. R. Civ. P. 12(c). "The standard for e v a lu a tin g a Rule 12(c) motion . . . is essentially the same as that for deciding a Rule 12(b)(6) m o tio n ." Asociación de Subscripción Conjunta del Seguro de Responsabilidad Obligatorio v. F lo re s Galarza, 484 F.3d 1, 22 (1st Cir. 2007) (quoting Pasdon v. City of Peabody, 417 F.3d 2 2 5 , 226 (1st Cir. 2005)).

Because Movants filed this motion to dismiss for failure to state a claim following their answers to Defendant's pleading (Docket Nos. 305; 350), we treat this motion as one seeking judgment on the pleadings. See Fed. R. Civ. P. 12(h)(2).

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B o rro w in g from the standard for dismissal under Rule 12(b)(6), "a [movant's] obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Morales-Tañon v. P.R. E le c . Power Auth., 524 F.3d 15, 18 (1st Cir. 2008) (internal quotation marks omitted) (quoting B e l l Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The plaintiff's complaint and the d e f e n d a n t's answer "must contain factual allegations sufficient to `raise a right to relief above th e speculative level.'" Id. (quoting Twombly, 550 U.S. at 555). III. A n a ly s is M o v a n ts contend that we should dismiss Defendant's CERCLA claims against them b e c a u s e of (1) a statutory exemption for owners who hold only security interests in affected p ro p e rtie s and (2) Defendant's failure to sufficiently allege the basis for the claims. (Docket N o . 367.) We address these arguments in turn. A. S e c u r ity Interest Exception M o v a n ts argue that Defendant fails to establish the Movants' status as owners or o p e ra to rs of the service station in support of its CERCLA claim. (Id.) Under CERCLA, private p a rtie s who undertake responsive actions for sites contaminated by hazardous substances may s e e k reimbursement from "the owner and operator of a . . . facility." 42 U.S.C. § 9607(a)(1). In defining potentially culpable owners and operators of polluted sites, CERCLA e x c lu d e s persons "who, without participating in the management of a . . . facility, hold[] indicia

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o f ownership primarily to protect [their] security interest in the . . . facility." 42 U.S.C. § 9601(20)(A). A facility includes "any building, structure, installation, equipment, pipe . . . , o r . . . any site or area where a hazardous substance has been deposited, stored, disposed of, or p la c e d ." § 9601(9). The purpose of this security interest exception "is to shield from liability th o s e `owners' who are in essence lenders holding title to the property as security for the debt." W a te rv ille Indus., Inc., v. Fin. Auth., 984 F.2d 549, 552 (1st Cir. 1993); accord § 9601(E). T h e re is no indication that Movants hold a security interest in the service station or the U S T s as a creditor pursuant to some security agreement. We, thus, find that the security interest e x c e p tio n does not preclude Defendant's counterclaim against Movants as operators of the s e rv ic e station. See Waterville Indus., 984 F.2d at 552. B. S u b s ta n tia l Compliance M o v a n ts argue that, like Defendant's previous demand for reimbursement, the latest a m e n d e d answer fails to show that Defendant has undertaken a response action that complies w ith the National Contingency Plan ("NCP"). (Docket No. 367; see Docket No. 279.) In re sp o n s e , Defendant contends that its pleadings demonstrate substantial compliance with the N C P . (Docket No. 384.) U n d e r CERCLA, private parties may only seek reimbursement from other responsible p e rs o n s for "necessary costs of response incurred . . . consistent with the [NCP]." 42 U.S.C. § 9607(a)(4)(B). "A private party response action will be considered `consistent with the NCP' if the action, when evaluated as a whole, is in substantial compliance with the applicable

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re q u ire m e n ts [enumerated], and results in a CERCLA-quality cleanup." 40 C.F.R. § 300.700(c)(3)(i) (2009). S u c h applicable requirements may include provisions for workers' safety, documentation o f expenditures, feasibility studies prior to the selection of a remedial plan, removal of h a z a rd o u s material, compliance with applicable regulations, and site evaluations. § 300.700(c)(5). In addition, private parties "should provide an opportunity for public comment c o n c e rn in g the selection of the response action." § 300.700(c)(6). Furthermore, A "CERCLA-quality cleanup" is a response action that (1 ) protects human health and the environment, (2) utilizes p e rm a n e n t solutions and alternative treatment technologies or re s o u rc e recovery technologies to the maximum extent p ra c tic a b le , (3) is cost-effective, (4) satisfies Applicable and R e le v a n t or Appropriate Requirements for the site, and (5 ) provides opportunity for meaningful public participation. F ra n k lin County Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 5 4 3 (6th Cir. 2001) (citing National Oil and Hazardous Substances Pollution Contingency Plan, 5 5 Fed. Reg. 8666, 8793 (Mar. 9, 1990)). "[I]mmaterial or insubstantial deviations from the [ e n u m e ra te d ] provisions" do not render the response action noncompliant with the NCP. § 300.700(c)(4). W e previously dismissed Defendant's CERCLA claims under 42 U.S.C. § 9607(a)(4)(B), f in d in g that Defendant's pleadings were "conclusory with respect to the manner in which such m e a s u re conforms with the NCP, because we have no details from which to infer Defendant's

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c o m p lia n c e with CERCLA." (Docket No. 279 at 7.) Defendant's latest amended answer adds th e following language: [ D e f e n d a n t] has conducted response actions at the [service s ta tio n ] under the direct supervision of the [EQB]. [Defendant] h a s monitored its costs to ensure that they were incurred to a c c o m p lis h necessary and appropriate response actions. [ D e f e n d a n t] accounted for these costs . . . . Moreover, [ D e f e n d a n t] involved key stakeholders in the development and im p le m e n ta tio n of its technically sound work plans culminating in an approvable Corrective Action Plan filed with the [EQB] a n d implemented in accordance with applicable procedures. (D o c k e t No. 301 at 13, 15.) W h ile brief, unlike Defendant's previous allegations (Docket No. 222 at 13, 15), these re v is e d averments allow us to deduce that Defendant is in substantial compliance with the re le v a n t requirements under the NCP. See 40 C.F.R. § 300.700(c)(3)(i). We need not probe f u rth e r; Defendant's ultimate success or failure on the merits is reserved for another day. We, th e re f o re , reject Movants' challenge to Defendant's CERCLA claims. IV . C o n c lu s io n A c c o rd in g ly, we hereby DENY Movants' motion for dismissal (Docket No. 367). I T IS SO ORDERED. S a n Juan, Puerto Rico, this 2 n d day of August, 2010. s/J o s é Antonio Fusté JO S E ANTONIO FUSTE C h ie f U.S. District Judge