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SOO LINE R.R. CO. v. TANG INDUS.

March 13, 1998

SOO LINE RAILROAD COMPANY, Plaintiff,
v.
TANG INDUSTRIES, INC.; COMETCO CORPORATION and COZZI IRON & METAL, INC., Defendants.



The opinion of the court was delivered by: LEINENWEBER

 Plaintiff Soo Line Railroad Company ("Soo Line") sues three entities who previously leased a portion of its railroad yard, Tang Industries, Inc. ("Tang"), Cometco Corporation ("Cometco") and Cozzi Iron & Metal, Inc. ("Cozzi"), for contribution and response costs recovery under the Comprehensive Environmental Response, Compensation and Liability Act of 1990 ("CERCLA"), as amended, 42 U.S.C. § 9601 et seq. (1990) and violations of state law. Defendant Tang moves to dismiss all portions of plaintiff's complaint concerning its liability.

 BACKGROUND

 Plaintiff's allegations, accepted as true on a motion to dismiss, Antonelli v. Sheahan, 81 F.3d 1422, 1427 (7th Cir. 1996), are as follows. Soo Line and its predecessors in interest have owned and operated a 120-acre railroad yard (the "railroad yard" or the "Site") located in Schiller Park, Illinois since the turn of the century. Prior to 1952, the 3.5 acre Site was generally unused by Soo Line. In 1952, however, Soo Line leased the railroad yard to Tang's predecessor in interest, Schiller Park Compressed Steel Corporation ("SPCS"). Soo Line and SPCS entered into six written lease agreements extending over a period of 30 years, which provided SPCS with exclusive leasehold rights to the Site and stated that the Site shall be continuously used as a scrap material storage yard. For approximately 30 years, SPCS operated a scrap yard on the Site.

 On November 3, 1982, SPCS' tenancy ended when Cometco bought certain SPCS assets and SPCS assigned all its rights under its last effective lease agreement with Soo Line to Cometco. On the same date, Cometco and Soo Line entered into a written lease agreement, providing Cometco with exclusive rights to the Site. The Cometco lease also provides that Site should be used as a scrap material storage yard. Cometco operated a scrap yard on the Site for approximately five years. According to plaintiff, Cometco's operation of the Site resulted in at least one or more of the following substances being brought onto or generated at the Site: oil and hydraulic fluids, fuel oil, diesel fuel, gasoline, lubricants, hydraulic fluids containing PCBs, used batteries, scrap plastic and metal, toxic metal, paints, antifreeze and various solvents. Prior to the termination of the Cometco lease, on October 23, 1986, Soo Line requested that Cometco restore and clean the contaminated media caused by its scrap yard operations. Cometco responded that it would comply with Soo Line's demand. In February, 1987, Soo Line terminated the Cometco lease agreement.

 Once Cometco vacated the Site in the Spring of 1987, Soo Line retained an environmental engineering firm to perform a preliminary Site contamination assessment of the railroad yard. The assessment showed that the Site was contaminated with hazardous substances and recommended that additional testing be performed and a work plan of remediation be undertaken at the Site. Plaintiff, in a letter dated July 8, 1987, demanded that Cometco indemnify Soo Line for the cost of the work to be done at the facility. By letter dated July 17, 1987, Cometco denied legal responsibility for the costs of the response action.

 On July 10, 1996, Soo Line sold the Site to the Regional Transportation Authority, d/b/a Metra Commuter Rail System ("Metra"). Prior to the sale of the railroad yard, Metra incurred response costs consistent with the NCP. As a condition of the sale, Soo Line was required to deposit $ 2,100,000 in an environmental escrow to compensate Metra for the costs incurred in removing the contaminants from the Site and other response activities. Soo Line alleges that it continues to incur costs associated with the cleanup of the Site.

 In moving to dismiss, defendant Tang attacks virtually every aspect of plaintiff's amended complaint. For the foregoing reasons, defendant's motion is granted in part and denied in part.

 ANALYSIS

 In ruling on Tang's motion to dismiss, the court adheres to the familiar standard of viewing the complaint in the light most favorable to plaintiff. Consequently, the court accepts all well-pleaded allegations as true and draws all reasonable inferences in favor of the plaintiff. Antonelli, 81 F.3d at 1427; Teague v. United States Postal Serv., 1997 U.S. Dist. LEXIS 20864, No. 94 C 2152, 1997 WL 803869, at *2 (N.D. Ill. Dec. 29, 1997). The court will only dismiss a complaint for failure to state a claim if no relief may be granted under any set of facts that could be proven consistent with the allegations found in the complaint. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 2232, 81 L. Ed. 2d 59 (1984).

 Potentially Responsible Party under CERCLA § 107

 CERCLA creates two different causes of action by which parties can recoup costs associated with environmental cleanups. The first, § 107(a) provides a direct cost recovery action against potentially responsible parties ("PRPs"), or persons who are liable because they fall into one of four categories: (1) the owner or operator of the facility; (2) any person who owned or operated the facility at the time of disposal of any hazardous substance; (3) any person, who by contract, agreement, or otherwise, arranged for the disposal or treatment of hazardous substances owned or possessed by that person; and (4) any person who accepted any hazardous substances for transport to disposal or treatment facilities. CERCLA § 107(a), 42 U.S.C. §§ 9607(a)(1-4). Under § 107(a), PRPs are strictly and jointly and severally liable if there was a release or threat of a release of a hazardous substance at a facility and a person incurred necessary response costs consistent with the national contingency plan. Id. The other mechanism by which parties can recoup costs is § 113, which provides that "any person may seek contribution from any other person who is liable or potentially liable." CERCLA § 113, 42 U.S.C. § 9613(f)(1).

 In Count VI, plaintiff seeks relief against Tang pursuant to § 107(a) of CERCLA. Tang responds that plaintiff's § 107(a) claim fails as a matter of law because plaintiff, itself, is a potentially responsible party ("PRP"), and, therefore, cannot recover under § 107. According to Tang, plaintiff's only remedy is an action for contribution under § 113 of CERCLA.

 Generally, parties who are themselves liable are barred from suing directly under § 107(a). Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764 (7th Cir. 1994). Instead, when a potentially responsible party under CERCLA sues other PRPs, its claim is "a quintessential claim for contribution" under § 113 of CERCLA. Id. at 764; Rumpke of Indiana, Inc. v. Cummins Engine Co., Inc., 107 F.3d 1235, 1240 (7th Cir. 1997) ("When two parties who both injured the property have a dispute about who pays how much . . . the statute directs them to § 113(f) and only to § 113(f)."). A direct action for recovery of response costs is reserved only for innocent parties. New Castle Cty. v. Halliburton Nus Corp., 111 F.3d 1116, 1120 (3rd Cir. 1997); See also United Tech. Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 100 (1st Cir. 1994) ("It is sensible to assume that Congress intended only innocent parties--not parties who were themselves liable--to be permitted to recoup the whole of their expenditures.").

 However, in Akzo, the Seventh Circuit hypothesized that an innocent PRP, such as a "landowner forced to clean up hazardous materials that a third party spilled onto its property" may maintain a cost recovery action under § 107(a). 30 F.3d at 764. Rumpke reiterated this exception, holding that "landowners who allege that they did not pollute the Site in any way may sue for direct response costs under § 107(a)." Rumpke, 107 F.3d at 1240. The Rumpke court stated that there are two possible outcomes from such an "innocent" landowner suit pursuant to § 107(a): (1) the facts will demonstrate that the landowner was truly "blameless"; or (2) the facts will reveal ...


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