ELR Citation: ELR 20370
No(s). CIV. 83-707 TUC-WDB (D. Ariz. Dec 6, 1984)

The court rules that costs incurred to comply with the Resource Conservation and Recovery Act (RCRA) are response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but that plaintiff waste site owner's action against the prior owner is barried by a release in the sale agreement and by the clean hands doctrine. Initially the court rules that nothing in CERCLA precludes its application to active hazardous waste disposal sites. Sites with RCRA permits are expressly exempted from the notice requirement of CERCLA §103, but not from the liability provisions in §107. The court rules that government action is not a prerequisite to a private cost recovery action in this case, decisions in other courts to the contrary notwithstanding, because the cleanup is under Environmental Protection Agency supervision pursuant to a RCRA consent decree.

Turning to the several defenses, the court first rules that a warranty disclaimer included in the purchase agreement is irrelevant to this action, which is not based on a warranty theory. However, the court also rules that the Settlement Agreement and Release associated with the purchase agreement govern liability in this case to the extent the parties intended to address that issue. The clear language of the general release and the facts surrounding its negotiation lead the court to rule that the release governs CERCLA liability.

Finally, the court also rules that the clean hands doctrine applies in CERCLA liability actions among private parties, and that in this case it bars recovery. Actions based on §107 are in the nature of restitution and so equitable defenses apply. In this case, unlike an earlier case in which one potentially responsible party was allowed to sue another, plaintiff operated the facility it purchased from defendant as a hazardous waste disposal site for some time. The relative waste contributions of the parties are, the court rules, irrelevant. The result does not undermine the broad liability purposes of CERCLA since defendant can still be liable in a government cost recovery action.

Counsel for Plaintiff
John E. Lindberg
Bilby & Shoenhair
Ninth Floor, Valley National Bldg., Congress at Stone, P.O. Box 871, Tucson AZ 85702
(602) 792-4800

Robert P. Johnstone, Renee R. Mawhinney
Bawes & Thornburg
1313 Merchants Bank Bldg., Indianapolis IN 46204
(317) 638-1313

Counsel for Defendant
Leo N. Smith
Molloy, Jones, Donahue, Trachta, Childers & Mallamo
33 N. Stone, P.O. Box 2268, Tucson AZ 85702
(602) 622-3531

Warren S. Radler, Barbara B. Guibord
Rivkin, Leff, Sherman & Radler
Suite 3900, 30 N. LaSalle St., Chicago IL 60602
(312) 782-5680