ELR Citation: ELR 21587
No(s). 94-1425 (4th Cir. Sep 27, 1995)

The court affirms a district court summary judgment against a sewer system operator for $140,930 in response costs under §107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and affirms a jury verdict of $2.5 million in damages against the operator for common-law negligence concerning perchloroethylene (PCE) contamination of a developer's land. The PCE originated from a research laboratory operated by a trade association of dry cleaners. The trade association had disposed of PCE through drains connecting to a public sewer line that runs adjacent to the developer's land. Leaks in the sewer line caused the PCE to migrate onto the developer's land. The court first holds that the district court did not abuse its discretion in waiving a requirement under Maryland's Local Government Tort Claims Act (LGTCA) that plaintiffs give local governmental defendants notice of any action for unliquidated damages within 180 days of the claim's accrual. Although the developer did not give notice to the operator within 180 days, the district court properly waived the notice requirement on the grounds that the developer had shown good cause for, and the operator failed to show prejudice from, the delay.

The court next holds that the operator's sewer system is a "facility" within the meaning of CERCLA §101(9). The court rejects the operator's argument that the language "including any pipe into a sewer or publicly owned treatment works" in §101(9) evinces a congressional intent to exclude publicly owned treatment works (POTWs) such as the operator's sewer system from the definition of "facility." It appears that Congress added the language to emphasize that pipes leading into sewers or POTWs are the responsibility of the pipes' owner or operator, not the sewer or POTW. The court also rejects the operator's argument that because the Federal Water Pollution Control Act (FWPCA) and the Resource Conservation and Recovery Act (RCRA) allow certain levels of hazardous materials to be discharged into sewer systems, Congress could not have intended to make sewer system operators liable for the foreseeable leaking of a hazardous substance that was allowed to be in the pipes in the first place. Congress is unlikely to have assumed that sewer system operators would keep their pipes in poor repair. Moreover, the argument fails to take account of the different purposes served by the FWPCA and RCRA on the one hand, and CERCLA on the other hand, and Congress' remedial purposes in enacting CERCLA are best served by including POTWs within the term "facility." The court also rejects the operator's public policy argument that interpreting "facility" to include POTWs is unfair because it requires state and local governments to pay for cleaning up wastes dumped by others into sewers. Although the argument may be meritorious, the court can only presume that Congress weighed and rejected such arguments when it enacted CERCLA without including a broad exemption for state and local governments or their POTWs.

The court next holds that the movement of PCE through cracks in the sewer onto the developer's land is a "release" under CERCLA §101(22). The court has previously interpreted the words "leaking" and "spilling" in CERCLA's parallel, extremely broad definition of "disposal" to include passive conduct. This also includes releases that migrate from one property to another. The court next holds that summary judgment in favor of the developer on the issue of causation was appropriate. The operator did not produce a genuine dispute of material fact as to noncausation and failed to meet its burden under CERCLA of proving causation. The operator failed to produce any evidence that the sewer did not leak, and the expert testimony the operator offered indicated only that the evidence did not prove causation, not that the operator could disprove causation. The court next holds that the operator is not entitled to CERCLA's innocent landowner defense, because it failed to produce sufficient evidence that it exercised due care with respect to the hazardous substance concerned or took precautions against foreseeable acts or omissions of any third party. The undisputed evidence indicated that the operator knew from inspecting the trade association's facility that the trade association used PCE and poured it into the sewer, and that the operator was also aware that that cracks were present in its sewer. And although the operator had the power to abate the foreseeable release of PCE, it failed to exercise that power.

Turning to the common-law negligence claim, the court affirms the district court's holdings that the operator had a duty to the developer and that sufficient evidence of proximate cause had been produced to send the case to the jury. The court holds that the public duty doctrine, which exempts governments from liability for negligent acts or omissions in the enactment or enforcement of regulations, does not exempt the operator from liability in this case. Although the operator had no common-law or statutory duty to the developer to enact or enforce regulations that might have prevented the trade association from putting PCE into the sewer, the public duty doctrine does not preclude the existence of a common-law duty from the operator to the developer to exercise due care in the construction, maintenance, and operation of the sewer. Thus, the district court properly instructed the jury that the operator could be found negligent, not for a breach of its public duties of enacting and enforcing regulations or for a breach of any particular regulation, but rather for a breach of its common-law duties to construct the sewer in a workmanlike manner and to inspect, maintain, and properly operate the sewer. The court next holds that the district court did not abuse its discretion in admitting evidence that the operator took no action to require the trade association to comply with the operator's regulations, that the operator failed to require the trade association to obtain a discharge authorization permit, and that the operator failed to monitor the trade association's discharges to ensure that they complied with the regulations. The evidence was all relevant and admissible to show foreseeability of the presence of contaminants in the sewer system, and such foreseeability relates to the elements of duty and proximate causation.

The court next rejects the operator's argument that the court should not recognize a duty from the operator to the developer to construct, maintain, and operate sewers with due care, on the basis that two of the factors—foreseeability and the extent of the burden to the defendant—weigh against finding such a duty. Although the operator may have not been negligent when the sewer was originally constructed, the construction of the sewer became negligent over time as it began to crack and the dangers of leaky sewers became known. The operator should have reasonably perceived some risk that groundwater contaminants such as PCE were being released into the sewer. Because the developer was clearly within the class of landowners whose land would foreseeably be harmed by the operator's negligence, the operator owed the developer a duty to reconstruct, maintain, and operate the sewer in a manner reasonably calculated to avoid the harm. The court holds that sufficient evidence existed for a reasonable jury to determine, as it did, that the operator's negligence was a proximate cause of the developer's injury.

Finally, the court holds that the district court's denial of the operator's motion to amend the judgment to reduce its liability to $200,000 based on a damages cap provision in the LGTCA is not reversible error. Any error in failing to allow the operator to raise the cap post-judgment was harmless because it is clear from the record that the same damages would have been awarded whether or not the statutory cap had been applied. The cap applies only to actions arising from events occurring on or after July 1987, and the relevent events in this case—the leaking of the PCE and the operator's negligence—occurred both before and after that date. Because the evidence was undisputed that PCE leaked into the developer's property before 1987 and that the damages suffered were created by the presence of PCE, the jury's verdict as to the amount of damages would not have changed if the cap had been applied.

[The district court's opinion is published at 24 ELR 20009. A prior decision is published at 22 ELR 21350.]

Counsel for Plaintiff
Jeffrey M. Johnson
Dickstein, Shapiro & Morin
2101 L St. NW, Washington DC 20037
(202) 785-9700

Counsel for Defendant
Randall M. Lutz
Smith, Somerville & Case
100 Light St., Baltimore MD 21202
(410) 727-1164

Before Niemeyer and Butzner, JJ.