ELR Citation: ELR 20022
No(s). s. 1:89-CV-503, -961 (W.D. Mich. Mar 6, 1991)

The court holds that a purchase agreement that provided for the Michigan Department of Natural Resources (MDNR) to treat contaminated groundwater at a hazardous waste site does not preclude the successor owners' liability for groundwater contamination under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §107(a)(3). Although the MDNR undertook remedial actions at the site pursuant to the purchase agreement, groundwater contamination went largely unattended and worsened after the purchase agreement was completed. In this consolidated CERCLA cost recovery action, the previous owner of the site seeks to recover its response costs from the MDNR and the successor owner defendants, claiming that the purchase agreement between the MDNR and that defendants amounted to arranging for the disposal or treatment of contaminated groundwater.

The court first holds that the unchecked spread of contaminated groundwater, which was identified in the purchase agreement as a problem at the site, qualifies as a disposal. The court bases its holding on CERCLA's definition of "disposal," which includes "spilling" and "leaking." The court next concludes that the necessary nexus between the parties and the hazardous substances required for liability under §107(a)(3) is not determined by whether a party created or left hazardous substances or had title to them, but rather whether the party assumed responsibility for determining their fate. The court holds that based on the purchase agreement, plaintiff has alleged a claim establishing the necessary nexus, since the MDNR and the successor owners agreed to have the MDNR remedy the groundwater contamination problem. Although the MDNR thereby became the party responsible for the groundwater contamination, the shifting of this responsibility is sufficient proof of the successor owners' connection to the contaminated groundwater.

The court next holds that in light of the expansive interpretations given to CERCLA generally and to §107(a)(3) in particular, the alleged purchase agreement with respect to groundwater contamination, if proved, would be an arrangement for disposal that is subject to CERCLA liability. Thus, the court holds that genuine issues of material fact exist and summary judgment is inappropriate. Although none of the parties to the purchase agreement was initially responsible for creating the contamination at the site, the alleged agreement that the MDNR would treat the problem and release successor owners of responsibility for it, if proven, would expose the parties to CERCLA liability. The court observes that the specter of parties not being liable for hazardous substance disposal arrangements that result in further contamination might encourage private agreements that do not account for the arrangements' safety or success.

The court next holds that the MDNR's cross-claim against the successor owners under §107(a)(1) as present owners of the site is not barred by the purchase agreement. CERCLA §107(e)(1) generally forbids the use of releases to bar CERCLA liability, and this outcome is consistent with CERCLA's broad policies of encouraging cleanups and placing the burden of their costs on those responsible for hazardous waste problems. Thus, MDNR's cross-claim under §107(a)(2) for disposal that has occurred since the successor owners' purchase of the site may proceed to trial. Further, the court holds that the purchase agreement does not bar any claims for contribution by other parties in the action against the successor owners. Finally, the court holds that MDNR's motion for summary judgment on its state-law claims, including claims of promissory estoppel, innocent misrepresentation, contractual damages, and specific performance, are precluded because genuine issues of material fact exist.

[A previous decision in this case is published at 20 ELR 20712.]

Counsel for Plaintiff
Patrick J. Conlon
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Ave., Roseland NJ 07068
(201) 992-8700

J. Michael Smith, Gordon J. Quist
Miller, Johnson, Snell & Cummiskey
800 Calder Plaza Bldg., Grand Rapids MI 49503
(616) 459-8311

Counsel for Defendants
John D. Tully
Warner, Norcross & Judd
111 Lyon St. NW, Ste. 900, Grand Rapids MI 49503
(616) 459-6121