Dixon Lumber Company, Incorporated v. Austinville Limestone Company, Inc.
MEMORANDUM OPINION. Signed by District Judge Elizabeth K. Dillon on 10/31/2017. (bw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
DIXON LUMBER CO., INC.,
AUSTINVILLE LIMESTONE CO., INC.,
Civil Action No. 7:16-cv-00130
By: Elizabeth K. Dillon
United States District Judge
Plaintiff Dixon Lumber Company (Dixon) and defendant Austinville Limestone
Company (ALC) own adjacent plots of land in Wythe County, Virginia. Both companies bought
their property from Gulf & Western Industries (G&W), which operated a zinc and lead mine on
ALC’s site through a division called New Jersey Zinc Company (NJZ). Years before ALC and
Dixon purchased their properties, NJZ dumped limestone tailings, a byproduct of its mining
operations, on the plot now owned by Dixon. Dixon seeks to hold ALC responsible for
environmental liabilities arising from those limestone tailings under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§
This opinion addresses two pending motions. The first is a motion for partial dismissal
filed by ALC. (Dkt. No. 104.) The second is Dixon’s motion to strike ALC’s affirmative
defenses. (Dkt. No. 112.) The motions have been fully briefed and were argued before the court
on October 6, 2017. For the reasons set forth below, ALC’s motion for partial dismissal will be
granted, and Dixon’s motion to strike ALC’s affirmative defenses will be denied.
In November 1984, Dixon purchased land from G&W. Dixon represents that it was
unaware of the tailings pile on part of the land called Austin Meadows; Dixon did not learn about
the pile until 1992 when it received a letter from the State Water Control Board informing it that
high amounts of zinc and lead were emanating from the tailings. The same year it received the
letter, Dixon entered a consent agreement with the Department of Environmental Quality (DEQ)
to remove the tailings pile from Austin Meadows and reclaim the limestone tailings.
That consent order authorized Dixon to contract with ALC to remove the limestone
tailings. A series of amended consent orders extended the term of the order until 2015. Pursuant
to the consent orders, Dixon and ALC entered into a series of agreements regarding the removal
of the limestone tailings. The original agreement, executed in 1993, authorized ALC to remove
the tailings pile and provided that its operations would be considered remedial actions on behalf
of Dixon. Subsequent agreements in 2003 and 2008 extended the timeline for ALC’s tailings
removal activities and provided that Dixon would receive a royalty for tailings removed,
processed, and sold by ALC. Dixon alleges that ALC failed to conduct these removal activities
in a timely manner and to comply with the removal standards acceptable to DEQ and that, as a
result, ALC caused releases or threatened releases of hazardous substances from the site.
Following a heavy rainfall and discharge of pollutants in June 2013, DEQ and the
Department of Mines, Minerals, and Energy (DMME) entered into a letter of agreement with
Dixon and ALC. Among other things, the agreement required Dixon and ALC to develop a final
plan for reclamation of Austin Meadows and submit it to DEQ and DMME. While developing
that plan, Dixon and ALC hit an impasse on which party would be responsible for final
reclamation costs on Dixon’s site. Dixon subsequently filed this suit, claiming that ALC is liable
for at least some of the costs.
Dixon’s original complaint alleged that ALC was liable for response costs as an “owner”
(as successor to NJZ) under 42 U.S.C. § 9607(a)(1) and as an “operator” under 42 U.S.C.
§ 9607(a)(2), as well as for contribution under 42 U.S.C. § 9613. By order dated June 9, 2017,
the court held that ALC was not a corporate successor to G&W for purposes of CERCLA
liability. (Dkt. No. 70.) Thereafter, Dixon filed a first amended complaint adding the claim that
ALC is liable as an “arranger” pursuant to 42 U.S.C. § 9607(a)(3).
A. ALC’s Motion to Dismiss Dixon’s Arranger Liability Claim
ALC first moves to dismiss Dixon’s arranger liability claim under Rule 12(b)(6) for
failure to state a claim for which relief can be granted. It contends that Dixon failed to state an
arranger liability claim because it did not allege that ALC arranged for the disposal of hazardous
substances by any other party, as is required under 42 U.S.C. § 9607(a)(3). In response, Dixon
argues that 42 U.S.C. § 9607(a)(3) does not require a party to have arranged for disposal with
another party in order for arranger liability to attach. The court rejects Dixon’s argument and
holds that Dixon has failed to state an arranger liability claim.
1. Standard of review under Rule 12(b)(6)
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a
plaintiff’s allegations must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
This standard “requires the plaintiff to articulate facts, when accepted as true, that ‘show’ that the
plaintiff has stated a claim entitling him to relief, i.e., the ‘plausibility of entitlement to relief.’”
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 678). The
plausibility standard requires more than “a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678.
In determining whether the plaintiff has met this plausibility standard, the court must
accept as true all well-pleaded facts in the complaint and in any documents incorporated into or
attached to the complaint. Sec’y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700,
705 (4th Cir. 2007). Further, it must “draw all reasonable factual inferences from those facts in
the plaintiff’s favor,” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999), but it
need not “accept legal conclusions couched as facts or ‘unwarranted inferences, unreasonable
conclusions, or arguments,’” Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012)
(quoting Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)).
2. The court will consider Dixon’s attached exhibits.
Dixon attached ten exhibits to its amended complaint: a 1992 DEQ letter to plaintiff; the
June 1994 consent order; the 1999 consent order; the 2008 consent order; the 1996 agreement
between the parties; defendant’s mining permit; the parties’ 2003 limestone tailings removal
agreement and its 2008 amended version; the parties’ 2013 letter of agreement with DEQ and
DMME; and a DEQ email praising plaintiff in 2013. (Dkt. No. 85.) While generally, a court
should not consider documents outside of the complaint on a Rule 12(b)(6) motion, see Fed. R.
Civ. P. 12(d), it “may consider official public records, documents central to plaintiff’s claim, and
documents sufficiently referred to in the complaint so long as the authenticity of these documents
is not disputed.” Witthohn v. Fed. Ins. Co., 164 F. App’x 395, 396–97 (4th Cir. 2006).
The exhibits’ authenticity is not disputed, and they do not raise new claims for the first
time. See S. Walk at Broadlands Homeowner’s Ass’n v. Openband at Broadlands, LLC, 713
F.3d 175, 184–85 (4th Cir. 2013) (“It is well-established that parties cannot amend their
complaints through briefing or oral advocacy.”). Nor do the exhibits reflect a “unilateral . . .
version of contested events,” or “contested events” at all. See Goines v. Valley Cmty. Serv. Bd.,
822 F.3d 159, 167–68 (4th Cir. 2016). Thus the court will consider the documents, though some
or most may make no difference in its resolution of ALC’s motion for partial dismissal.
3. Dixon fails to state an arranger liability claim against ALC.
CERCLA imposes liability upon four broad categories of “potentially responsible
parties” (“PRPs”): (1) owners and operators of a vessel or facility, (2) any person who owned or
operated a facility at the time a hazardous substance is disposed, (3) those persons who arrange
for disposal or treatment of hazardous substances, and (4) those who accept hazardous
substances for transport to disposal or treatment facilities. 42 U.S.C. § 9607(a). ALC moves to
dismiss Dixon’s claim under the third liability category, often called the arranger provision,
which imposes liability on
any person who by contract, agreement, or otherwise arranged for disposal or
treatment . . . of hazardous substances owned or possessed by such person, by any
other party or entity, at any facility or incineration vessel owned or operated by
another party or entity and containing such hazardous substances.
Id. § 9607(a)(3) (emphasis added). If PRP status is established, a party faces liability under
CERCLA for “all costs of removal or remedial action incurred by the United States Government
or a State” as well as “any other necessary costs of response incurred by any other person
consistent with the national contingency plan.” Id. § 9607(a)(4). CERCLA permits a PRP to
“seek contribution from any other person who is liable or potentially liable under section
9607(a).” Id. § 9613(f)(1).
Although Dixon amended its complaint to add the arranger liability claim, it did not
allege any additional facts to those already addressing owner and operator liability in its original
complaint. Instead, Dixon asserts that while “the operative facts underlying Dixon’s original
complaint supporting ALC’s liability as a CERCLA ‘owner’ and/or ‘operator’ had not changed,”
it amended its complaint because ALC’s liability “was expanded based on the recent decision in
Chevron Mining Inc. v. United States, 863 F.3d 1261 (10th Cir. 2017).” (Pl.’s Opp’n 1, Dkt. No.
The court begins by examining the plain language of the arranger liability provision. The
language of the provision imposes liability on any party who (1) arranged for disposal (2) of
hazardous substances (3) that the party owns or possesses (4) by any other party. 42 U.S.C.
§ 9607(a)(3). Although the statute does not define “arranged for,” the Supreme Court narrowed
the scope of arranger liability in Burlington Northern by holding that a party’s intent to dispose
of hazardous substances is required to establish arranger liability; mere knowledge is not
sufficient. Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 610–11 (2009)
(emphasizing that arranger liability “may not extend beyond the limits of the statute itself”). The
Court explained that arranger liability would certainly attach “if an entity were to enter into a
transaction for the sole purpose of discarding” a hazardous substance; less clear cases, on the
other hand, “turn on a fact-specific inquiry into the nature of the transaction.” 556 U.S. at 610
(internal citations and quotations omitted).
In determining whether ALC “arranged for” the disposal of hazardous substances, the
court cannot conclude ALC “enter[ed] into a transaction” with the “purpose of discarding” a
hazardous substance because not a single “transaction” has been alleged. Instead of pointing to
any transaction, Dixon’s primary argument is that the Tenth Circuit has recognized a novel
category of arranger liability whereby “those same facts” that support owner and operator
liability “also support a claim for ‘arranger liability’” without any involvement of a third party.
(Dkt. No. 111 at 7.) According to Dixon, “for the first time, a federal circuit court of appeal[s]
recognized that a party like ALC who excavated mine tailings containing hazardous substances
. . . could also be liable as an arranger because, upon excavation of the mine tailings, the
hazardous substances became the property of the mining company.” (Id. at 5.)
But like Burlington Northern, Chevron Mining’s holding reflects a narrow scope of
arranger liability: the Tenth Circuit held that the United States was liable as an “owner” but not
an “arranger” regarding property that it leased to a mining company because the United States
did not own or possess the hazardous substances disposed of. Chevron Mining, 863 F.3d at
1261. The Tenth Circuit addressed the “by any other party” language in the statute by making
clear that the phrase modifies “arranged for disposal” rather than “hazardous substances owned
or possessed.” Id. at 1281–82. In other words, arranger liability attaches where a party arranged
for disposal of hazardous substances—that it owns or possesses—by any other party. Indeed,
two such transactions with third parties were present in Chevron Mining: the United States’ sale
of land and its approval of pipeline permits with the intent of disposal. Id. Thus, Chevron
Mining did not recognize a new kind of arranger liability absent a transaction with a third party.1
During oral argument, Dixon relied on United States v. Monsanto Co. to argue that the
Fourth Circuit does not require “by any other party” as an essential element of arranger liability.
858 F.2d 160 (4th Cir. 1988). But Monsanto also focused on whether the defendant “owned or
possessed” the hazardous substances at issue; the “by another party” element was simply not at
issue in the case. Id. at 170 (reasoning that CERCLA does not require “proof of ownership” that
rises to the level of “‘fingerprint[ing] wastes”). No other case Dixon cites supports its argument
that ALC can “arrange for” the disposal of mine tailings without transacting with any other party.
See, e.g., Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1341 (4th Cir.
Nor does the case help Dixon’s argument. Although Dixon devoted much of its briefing to arguing that
ALC “owned or possessed” the mine tailings, ALC does not contest its ownership or possession for purposes of the
motion to dismiss. (Def.’s Reply 3, Dkt. No. 117.)
1992) (rejecting arranger liability claim because plaintiff failed to “allege that [defendant]
arranged for the contaminated soil to be disposed of ‘by any other party or entity’ under
9607(a)(3)”); Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1511 (11th Cir.
1996) ( rejecting arranger liability claim because failure to remove tar seeps from the ground was
“inaction [that] does not amount to an ‘arrangement’ for disposal within the meaning of
CERCLA”). Thus, the court refuses to ignore the plain language, “by any other party,” under 42
U.S.C. § 9607(a)(3). See Lockheed Martin Corp. v. United States, 35 F. Supp. 3d 92, 122
(D.D.C. 2014) (“Arranger liability generally prevents owners of hazardous waste from avoiding
liability under CERCLA by transferring ownership of the waste to another party for the purposes
Alternatively, Dixon argues that it has satisfied the “by any other party” requirement.
First, Dixon directs the court to ALC’s preliminary engineering review agreement and to ALC’s
DMME permit amendment. (Am. Compl. Ex. E, F, Dkt. Nos. 85-5, 85-6.) But nothing in either
document refers to contractors or transactions with third parties. Second, Dixon asks the court to
infer that ALC’s mine tailing extractions involved third party contractors. In the absence of
allegations regarding contractors in the amended complaint, the court declines to make that
inference. See Cozart, 680 F.3d at 365 (The court need not “accept legal conclusions couched as
facts or unwarranted inferences.”) Thus, the court will grant ALC’s motion to dismiss the
arranger liability claim in count one of Dixon’s amended complaint. (Dkt. No. 85.)
B. Dixon’s Motion to Strike ALC’s Affirmative Defenses
Dixon moves to strike all of ALC’s affirmative defenses as either not permitted under
CERCLA or as conclusory. ALC argues that the three exclusive defenses permitted under 42
U.S.C. § 9607(b) are not exclusive defenses in contribution claims brought under 42 U.S.C. §
9613 and that its defenses are contextually comprehensible. The court concludes that ALC’s
affirmative defenses are validly pleaded.
1. Standard of review
Under Federal Rule of Civil Procedure Rule 8(b), “in responding to a pleading, a party
must . . . state in short and plain terms its defenses to each claim asserted against it,” Fed. R. Civ.
P. 8(b)(1)(A), and “[i]n responding to a pleading, a party must affirmatively state any avoidance
or affirmative defense,” Fed. R. Civ. P. 8(c)(1). The primary purpose of Rule 8 is to ensure that
the plaintiff has adequate notice that a defense will be raised at trial or in a subsequent
dispositive motion, Hewitt v. Mobile Research Tech., Inc., 285 F. App’x. 694, 696 (11th
Cir.2008), and not to “show” the court or the plaintiff that the defendant is entitled to the
defense, Odyssey Imaging, LLC v. Cardiology Assoc. of Johnston, LLC, 752 F. Supp. 2d 721,
726 (W.D. Va. 2010). “Dismissal under Rule 12(f) is appropriate where the defendant has not
articulated its defenses so that they are contextually comprehensible.” Odyssey, 752 F. Supp. 2d
at 726 (citing Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001)). In
other words, affirmative defenses may not be pled “so cryptically that their possible application
will remain a mystery until unearthed in discovery.” Id.
2. ALC’s affirmative defenses are validly pleaded in this action.
ALC’s affirmative defenses are as follows: (1) failure to state a claim;2 (3) act of God; (4)
act or omissions of a third party; (5) failure to mitigate; (6) contributory negligence; (7) damages
were costs Dixon was contractually obligated to pay; and (8) quantum meruit.
a. Affirmative defenses (1), (5), (6), (7), (8)
CERCLA only allows for three exclusive, enumerated defenses under 42 U.S.C. 9607(b):
act of God, act of war, and act or omission of a third party. Nevertheless, a plaintiff asserting a
During oral argument, ALC withdrew its second affirmative defense concerning the statute of limitations.
CERCLA claim must still plead a claim upon which relief may be granted. See Berger v. City of
N. Miami, 820 F. Supp. 989 (E.D. Va. 1993) (granting 12(b)(6) motion to dismiss CERCLA
claims). Thus, ALC’s first affirmative defense of failure to state a claim is valid.
With respect to ALC’s last four defenses, Dixon leans most heavily on Stringfellow, a
Central District of California case, for the proposition that the three CERCLA defenses (act of
God, act of war, act or omission of an unrelated third party), 42 U.S.C. § 9607(b), are the only
available defenses, even in contribution actions brought under § 9613. See United States v.
Stringfellow, 661 F. Supp. 1053 (C.D. Cal. 1987). But Stringfellow does not support this
proposition. The Stringfellow court considered only liability under CERCLA section 107(a), 42
U.S.C. § 9607(a), not contribution under CERCLA section 113, 42 U.S.C. § 9613. 661 F. Supp.
at 1061 (“[T]he Court will consider contribution of damages at a subsequent proceeding since it
does not affect defendants’ initial liability.”). The court explicitly asserted that it “has discretion
to use equitable factors in apportioning damages,” although “the Court’s discretion in
apportioning damages among the defendants during the contribution phase does not effect [sic]
the defendants’ liability.” Id. at 1060. Ultimately, the court concluded that “the only affirmative
defenses that can be asserted to liability under section 107(a) are those listed in section 107(b).”
Id. (emphasis added). Thus, Stringfellow supports Dixon’s correct assertion that CERCLA only
allows for three defenses to § 9607(a) liability, but it does not support the argument that
CERCLA only allows for three defenses to contribution actions brought under § 9613.
The court may properly consider ALC’s affirmative defenses (5)–(8) to Dixon’s
contribution claim after liability has been established, a conclusion that is bolstered by the cases
on which Dixon relies. First, in Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d
86, 89 (3d Cir. 1988), the Third Circuit explicitly noted that “[t]he defenses enumerated in
section 9607(b) are not exclusive in suits for contribution,” and “the defenses in section 9607(b)
coexist with equitable considerations that may mitigate damages.” Second, while United States
v. Shell Oil Co., No. 91-cv-589, 1992 WL 144296, at *9 (C.D. Cal. Jan. 16, 1992), did not
involve a contribution claim brought under § 9613, the district court did not strike the
defendants’ affirmative defenses to the § 9607(a) action: “While the issues of setoffs and
recoupment are perhaps inappropriate as affirmative defenses, the Court will not dismiss these
defenses as the issues will be addressed after liability has been established.” Third, the district
court in Richmond, Fredericksburg & Potomac Railroad Co. v. Clarke, No. 90-336, 1991 WL
321033, at *5 (E.D. Va. Jan. 22, 1991), reasoned that the defendant’s common law defenses to
claims brought under § 9613 as well as § 9607(a) were allowed as “factors,” though not
technically as “defenses,” for the court to consider in determining damages. Therefore, the court
concludes that it may consider defenses (5)–(8) after liability has been established.
b. Affirmative defenses (3) and (4)
Although these are two of the expressly enumerated defenses under 42 U.S.C. § 9607(b),
Dixon argues that they are “conclusory and too loosely pled.” This court has explained that the
standard for pleading defenses differs from that for pleading a claim in that, rather than “show”
the pleader is entitled to relief, “defenses must be contextually comprehensible in order to give
the plaintiff adequate notice of the nature of the defense.” Cheney v. Vitro Am., Inc., No. 7:10cv-00246, 2010 WL 5125281, at *1 (W.D. Va. Dec. 9, 2010). The requirement of “contextual
comprehensibility” bars defenses that are pled “so cryptically that their possible application will
remain a mystery until unearthed in discovery.” Odyssey, 752 F. Supp. 2d at 726.
ALC’s third affirmative defense is: “The 2013 releases and threatened releases of
hazardous substances at the Site were caused solely by an act of God.” (Dkt. No. 106.) Its
fourth affirmative defense is: “The 2013 releases and threatened releases of hazardous substances
at the Site were caused solely by the acts or omissions of a third party, other than an agent or
employee of Austinville or one whose act or omission occurred in connection with a contractual
relationship with Austinville.” (Id.) These affirmative defenses are specific to 2013, and in light
of the heavy rainfall and discharge of pollutants in June 2013 that led both parties to enter into a
letter of agreement with DMME, they are far from “cryptic” or “unintelligible.” Odyssey, 752 F.
Supp. 2d at 726. The court concludes that ALC’s third and fourth affirmative defenses are
validly pleaded defenses that provide adequate notice to Dixon.
For the foregoing reasons, the court will grant ALC’s motion to dismiss Dixon’s arranger
liability claim and deny Dixon’s motion to strike ALC’s affirmative defenses.
An appropriate order will follow.
Entered: October 31, 2017.
/s/ Elizabeth K. Dillon
Elizabeth K. Dillon
United States District Judge
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