# Petition for Writ of Certiorari — Mumaw v. Nurad, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1992
- **Citation:** 506 U.S. 940

## Text

Q 2- 3 G Bupreme Court, US.
No FILED
1992

IN THE OFFICE OF THE CLERK

| Supreme Court of the United States

OcroBER TERM, 1992

KENNETH B. MUMAW,
Petitioner

NURAD, INCORPORATED,

Respondent.

PETITION FOR A Writ OF CERTIORARI TO THE
UnNrrep States Court or APPEALS
FOR THE FourtTH Circuit

PETITION FOR A WRIT OF CERTIORARI

CHARLES R. ‘Tayor, JR.
(COUNSEL OF RECORD)
Joy T. HACHETTE
GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER
233 E. Redwood Street
Baltimore, Maryland 21202
(410) 576-4228

Attorneys for Petitioner

EELS LL LILA LO. LLIN OL ILL ICE IT NDE SALE LL LIE INLET LEST SLI LE IESE BA TENE LILIA DELLA
THE DAILY RECORD COMPANY, 11 EAST SARATOGA STREET, BALTIMORE, MD 21202

QUESTION PRESENTED

The issue presented here is whether a
prior owner of property is liable under 42
U.S.C.A. § 9607 (a) (2) when no active
disposal of hazardous substances occurred

during his Ownership of the property.

QUESTION P
TABLE OF A
OPINIONS B
JURISDICTI
PERTINENT

STATEMENT

REASONS FO

I.

Il.

III.

CONCLUSION
APPENDIX A
APPENDIX B

APPENDIX C

TABLE OF CONTENTS

RESENTED

UTHORITIES

ELOW

ON

STATUTES

OF THE CASE

R GRANTING WRIT

THE FOURTH CIRCUIT'S
HOLDING CONFLICTS WITH
THE HOLDINGS OF OTHER
COURTS

THE FOURTH CIRCUIT'S °
HOLDING BROADENS THE
SCOPE OF CERCLA BEYOND
ITS PLAIN MEANING

THE FOURTH CIRCUIT'S

11

DEFINITION OF DISPOSAL IN

WASTE INDUSTRIES IS NOT

THE CONTROLLING LAW IN THE

PRESENT CASE

~-A-145

EEE es

TABLE OF AUTHORITIES

CASES: Page

3550 Stevens Creek Assocs. v.Barclays
Bank of California, 915 F.2d
1355 (9th Cir. 1990), cert.
denied, 111 S.ct. 2014
I a le 10

Ecodyne Corp. v. Shah, 718 F. Supp.
pees (8.0. Cal. 1989) .... 7-9

Freytag Vv. Comm'r of Internal
Revenue, 111 S.Ct. 2631

[OD ek kk we ht lt wk 14
In_re Diamond Reo Trucks, ing., i115

B.R. 559 (Bkrtcy. W.D. Mich.

1990) ee a a ae ne @ya0

Snediker Developers Ltd. Partnership
Vv. Evans, 773 F. Supp. 984 (E.D.
Mees SUG 2. ww kt tk 7,10

United States v. Waste Indus., Inc.,;
734 F.2d 159 (4th Cir.
SE ee 15-17

STATUTES:
Resource Conservation and Recovery Act,
("RCRA")
42 U.S.C.A. § 6902 tea & tal
1992) Ae ee ee er ee ‘ * + ° 2
42 U.S.C.A. § 6903(3) (1983 &
Supp. 1992) “Tb Sekt Tar Peer eer ee 2,8,16
- i123 =

Comprehensive Environmental Response,
Compensation and Liability Act,

("CERCLA")
42 U.S.C.A. § 9601(29) (1983 &
Supp. 1992) a ae oe oe ee ee ee ee ee 2
42 U.S.C.A. § 9601(35)(C) . 2,13,14
42 U.S.C.A. § 9607(a) (1983 &
Supp. 1992) ese *@ © © @ © 2
42 U.S.C.A. § 9607(a) (2) (1983
& Supp. 1992) ..... . . passim
RULES
Fed. R. Civ. P. 54 5

—

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

KENNETH B. MUMAW,

Petitioner,
Vv.

NURAD, INCORPORATED,

Respondent.

Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW
The opinion of the United States
Court of Appeals for the Fourth Circuit
will be reported at 966 F.2q 837, and is

reprinted in the Appendix ("A- "> «2

pages A-1 thru A-40. The unreported
opinion and order of the United States
District Court for the District of
Maryland is reprinted at pages A-41 thru

A-144.

- JURISDICTION

The judgment of the United States
Court of Appeals for the Fourth Circuit
was entered on May 29, 1992. A-2. This
Court has jurisdiction pursuant to 42
U.S.C.A. § 9601 et al.

PERTINENT STATUTES

The statutes involved in this case
are 42 U.S.C.A. § €902: 42 U.S.C.A.
§ 6903(3);7; 42 U.S.C.A. § 9601(29); 42
U.S.C.A. § 9601(35)(C); and 42 U.S.C.A.

§ 9607(a). The text of these provisions

are set forth at A-145 thru A-151.

STATEMENT OF THE CASE

Nurad, Inc. ("Nurad") seeks to impose
liability, under the Comprehensive
Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C.A.
§ 9601 et seq., on ~Kenneth B. Mumaw
("Mumaw") and others for the cost of
removing several old underground storage
tanks ("USTs") from property it purchased
from Mumaw.

Mumaw purchased property in
Baltimore, Maryland on October 13, 1976,
and sold that property to Nurad on the
Same day. Nurad's complaint alleges that
USTs containing hazardous substances were
present at the time of Mumaw's purchase
and sale. In 1987, Nurad was cited by the
Maryland Department of the Environment,
which required removal or proper
abandonment of the USTs. The contents of

the tanks were removed and several of the

USTs were either removed or abandoned in
place. __Soils around the USTs were
excavated, tested and found to be non-
hazardous, and disposed of.

- In February 1990, Nurad initiated
suit against former owners, tenants and
individuals in the United States District
Court for the District of Maryland. Nurad
sought recovery of response costs under
CERCLA, and cited various common law
theories.

Following discovery, several of the
parties, including Mumaw, moved for
summary judgment.

On August 15, 1991, Judge Nickerson
granted Mumaw's, as well as several of the
other parties', motion for summary
judgment against Nurad. The District
Court found that Mumaw was not an owner at
the time of disposal because there was no

affirmative participation in the disposal

of a hazardous substance, which the Court
concluded was a prerequisite to liability
under 42 U.S.C.A. § 9607(a) (2). Summary
judgment was also granted to Nurad as to
another defendant.

On September 6, 1991, Judge Nickerson
granted Nurad's Motion for Entry of
Judgment under Fed. R. Civ. P. 54. On
September 11, 1991, Nurad filed its appeal
and a cross-appeal was filed by one of the
defendants. The appeals were consolidated
pursuant to an October 3, 1991 Court
Order. Nurad was designated appellant and
the appellees and cross-appellant were
required to file a joint brief.

The Court of Appeals reversed the
District Court's grant of summary judgment
as to Mumaw, finding that active disposal
was not required under 42 U.S.C.A.

§ 9607(a) (2) and remanded the case.

REASONS FOR GRANTING WRIT

This case presents an important
question of interpretation of the
Superfund Law. Several courts have
considered the phrase owner "at the time
of disposal" and have generally agreed
upon its meaning. In Nurad, however, the
Fourth Circuit announced a contrary
interpretation.

CERCLA, § 9607(a) (2) imposes
liability on "any person who at the time
of disposal of any hazardous’ substance
owned or operated any facility at which
such hazardous substances were disposed
of." CERCLA also imposes liability on a
current owner of a facility, any person
who arranged for disposal or treatment of

hazardous substances, or any person who

accepted hazardous substances for
transport to disposal facilities. Based
on its interpretation of "disposal," the

Fourth Circuit held Mumaw liable. The
Court, however, misconstrued § 9607 (a) (2)
by discussing only the word "disposal"
rather than the phrase that actually
appears in the statute - "at the time of
disposal." Manifestly, "at the time of
disposal" is different from "disposal."
The Fourth Circuit's decision
Significantly alters the meaning of CERCLA

and should be reviewed and revised.

I. THE FOURTH CIRCUIT'S HOLDING
CONFLICTS WITH THE HOLDINGS
OF OTHER COURTS
The same question presented in this

case was considered in Snediker Developers

Ltd. Partnership v. Evans, 773 F. Supp.

984 (E.D. Mich. 1991); Ecodyne Corp. v.

Shah, 718 F. Supp. 1454 (N.D. Cal. 1989);

In_re Diamond Reo Trucks, Inc., 115 B.R.
5959 (Bkrtcy. W.D. Mich. 1990). All of

these Courts reached conclusions contrary

- J =

iil

to the Fourth Circuit's decision as to the
—— meaning of owner "at the time of
disposal."

In Ecodyne Corp. v. Shah, 718 F.

Supp. at 1457, the District Court
dismissed an intermediate owner at the
summary judgment stage. In construing the
term "disposal," the Court looked to the
grammar and structure of the Resource
Conversation and Recovery Act ("RCRA"), 42
U.S.C.A. § 6903(3):
The meaning of a word is or

may be known from the
accompanying words - this is the
principle of noscitur a sociis.
In ascertaining what disposal
means, the Court looks at its

definitional components and
finds that these three nouns
(discharge, deposit and

injection) and four’ gerunds
(dumping, spilling, leaking, and
placing}, when read together all
have in common the idea that
someone do something with

hazardous substances. Taking
the clearest example, the Court
notes that "placing", read in

the context of the statute,
means a person introducing -

putting - formerly controlled or
contained hazardous substances
into the environment. For
plaintiff solipsistically to
read, for example, "leaking" as
meaning the general migration of
chemicals’ and, aS such, a
disposal under 45 9607(a) (>),
renders not only the defini-
tional phrase of RCRA § 6903(3)
"into or on any land or water"
superfluous, but would also
conflict with the general
structure of § 9607(a).

id. The Court concluded that the scope of
liability under CERCLA, § 9607(a)(2) does
not automatically reach intermediate
former owners because:

To define disposal as plaintits

wishes would effectively make

all property Owners from the

time a site became polluted (up

to and including the current

owner) potentially liable

under § 9607(a)(2) even if these

Owners did not introduce- the
chemicals onto the site.

Id.
Other cases have read § 9607(a)(2) as
imposing liability on prior owners or

operators who actively dispose of or

introduce hazardous substances into the

environment. In In re Diamond Reo Trucks

Inc., 115 B.R. at 565, the Court concluded
that "the mere ownership of the site
during a period of time in which migration
or leaching may have taken place, without
any active disposal activities, does not
bring [the deferdant] within the liability
provision of § 9607(a)(2)." 3550 Stevens

Creek Associates v. Barclays Bank of

California, 915 F.2d 1355 (9th Cir. 1990),

cert. denied, 111 S.Ct. 2014 (1991), also

construed "disposal" for purposes. of
§ 9607(a) (2) as requiring some affirmative
act of discarding a substance as a waste.

In Snediker, 773 F. Supp. at 989, the

Court points out that the plaintiff's
"sweeping interpretation of the term
disposal would effectively impose cleanup
liability on any owner in a chain of

title.*

- 10 -

II. THE FOURTH CIRCUIT'S HOLDING
BROADENS THE SCOPE OF CERCLA
BEYOND ITS PLAIN MEANING

In enacting CERCLA, Congress
expressly limited the CERCLA liability of
former owners to those who owned "at the
time of disposal." In its ruling, the
Fourth Circuit holds that a current owner
is liable irrespective of whether disposal
occurs during the term of ownership. In
addition, the Fourth Circuit imposes
liability on all prior owners and reasons
that its decision is in accord with the
broad remedial purpose of CERCLA because
CERCLA imposes strict liability. This
result is not, however, what Congress
enacted.

The Fourth Circuit's holding will
have far reaching consequences. Interim
owners who previously had been regarded as
not liable will now be_ subject’ to

liability and litigation. Parties in

- ll-

pending CERCLA litigation will seek to add
additional interim owners as defendants,
increasing the number of parties in such
cases and further complicating already
complex litigation. The issue will remain
unsettled until resolved by this Court.
In future business transactions and
real estate sales, purchasers who discover
contamination will seek redress’ from
everyone in the chain of title from the
time of disposal until the present. It is
true, as the Fourth Circuit points out,
that the purpose of CERCLA is to encourage
""voluntary private action to remedy
environmental hazards.'" A-31 (quoting In
re Dant v. Russell, Inc., 951 F.2d 246,
248 (9th Cir. 1991)). That statutory
purpose does not necessitate broadening
the list of parties liable to include all

prior owners.

The Fourth Circuit expresses its fear
that:

(A]n owner could avoid liability

Simply by standing idle while an

environmental hazard festers on

his property. Such an owner

could insulate himself from

liability by virtue of his
passivity, so long as he trans-

fers the property before any

response costs are incurred.

A-32. This statement demonstrates that
the Fourth Circuit ignored the provisions
Of § 9601(35)(C) imposing liability for
actual knowledge of and nondisclosure of a
release.

CERCLA, § 9601(35)(C) which imposes
liability for nondisclosure also becomes
meaningless under the Fourth Circuit's
decision. Section 9601(35)(C) of CERCLA

provides, in pertinent part, that:

[I]f the defendant obtained
actual knowledge of the release
or threatened release of a
hazardous substance at such
facility when the defendant
owned the real property and then
subsequently transferred

- 13 -

ownership of the property to

another person without

disclosing such knowledge, such
defendant shall be treated as

liable under section 9607(a) (1)

of this title and no defense

under section 9607(b) (3) of this

title shall be available to such
defendant.
A-148. In reaching its holding, the
Fourth Circuit totally disregarded
§ 9601(35) (C).

If all prior owners are held liable,
as the Fourth Circuit's decision requires,
the non-disclosure provisions of
§ 9601(35)(C) are rendered meaningless.
Elementary cannons of statutory

construction forbid this result. eyta

v. Comm'r of Internal Revenue, 111 S.Ct.

2631 (1991). While it is true, as the
Fourth Circuit remarks several times, that
CERCLA is to be read broadly to accomplish

its remedial purposes, Congress did not

intend to make all prior owners liable.

ee

The policy underlying CERCLA,
obtaining voluntary cleanup, does not
authorize the Court to alter the language
of the statute. By expanding the meaning
of owner "at the time of disposal" to "all
prior owners after the disposal," the
Fourth Circuit has rewritten CERCLA,

§ 9607(a) (2).

III. THE FOURTH CIRCUIT'S DEFINITION
OF DISPOSAL IN WASTE INDUSTRIES
I8 NOT THE CONTROLLING LAW IN
THE PRESENT CASE

In this case, the Fourth Circuit

cited United States v. Waste Industries,

Inc., 734 F.2d 159 (4th Cir. 1984) as
precedent for its interpretation of
"disposal." The Fourth Circuit then
applied the term "disposal" to CERCLA,
§ 9607(a) (2). The wording contained in

CERCLA, § 9607(a)(2), and applicable to

this case, is not, however, "disposal" but

owner or operator "at the time of
disposal."

In Waste Industries, the Fourth

Circuit interpreted the term "disposal" as
it appears in RCRA, 42 U.S.C.A. § 6903(3).
In that case, the Fourth Circuit concluded
that some of the words in the definition
were of an active voice and others were of
a passive voice. The Court concluded that
disposal had a range of meanings including
not only active conduct but also the
reposing of hazardous waste and its
subsequent movement through the environ-
ment.

Waste Industries was not a CERCLA

action and addressed a different factual
and legal context than the one presented
here. In Waste Industries, the Court
considered whether, in 1979, the Environ-
mental Protection Agency ("EPA") had

authority under RCRA to require remedia-

- 16 -

'

tion by former owners or operators of an
inactive landfill. The Fourth Circuit
ruled that RCRA

Section 7003 .. . is designed
to deal with situations in which
the regulatory schemes’ break
down or have been circumvented.

* « Congress expressly
intended that this and other
language [RCRA § 7003] close
loopholes in environmental
protection.

Id. at 164-165. Applying the law as it

was prior to the enactment of CERCLA, it

appears that the only way for the Waste

Industries Court to preserve the EPA's

ability to demand cleanup by former owners
was to define "disposal" in RCRA to cover
completely passive repose or movement
through the environment.

In contrast, the language contained

in CERCLA and the language applicable to

this case is "at the time of disposal."

The Fourth Circuit failed to mention this
language in its opinion. The additional
phrase "at the time of" qualifies and
modifies the meaning of "disposal." The
Fourth Circuit’s disregard of this phrase
effectively rewrites CERCLA to impose
liability on all prior owners.
CONCLUSION

For the foregoing reasons, this’

Petition for a Writ of Certiorari should

be granted.

Respectfully submitted,

Dede Utah

CHARLES R. TAYLOR, JR.
(Counsel of Record)

JOY Y. HATCHETTE

GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER

233 E. Redwood Street

Baltimore, Maryland 21202

(410) 576-4228

Attorneys for Petitioner

August 27, 1992

- 18 =

APPENDICES

APPENDIX A

UNITED STATES COURT OF sAPPEALS
FOR THE FOURTH DISTRICT

No. 91-1775

NURAD, INCORPORATED,
Plaintiff-Appellant,
Vv.

WILLIAM E. HOOPER & SONS
COMPANY; James E. Hooper, Jr.;
Kenneth B. Mumaw;

All States Moving & Storage;
Raymond McMillan; Lawrence L.
Hooper; Universal Laboratory
Installations, Incorporated; Monumental
Millwork, Incorporated,
Defendants-Appellees,
and
FRANK S. NICOLL, JR.; Shareholders of
Monumental Enterprises,
Incorporated; Sudler Moving & Storage,

Incorporated, Defendants,

Vv.

J. LANGRALL & SONS; Zemco
Corporation; Chesapeake Envelope &
Print Company; Les Care Laminates,

Third Party Defendants.

No. 91-1790

NURAD, INCORPORATED,
Plaintiff-Appellee,
We
WILLIAM E. HOOPER & SONS
COMPANY, Defendant-Appellant,

A=}

and
JAMES E. HOOPER, JR.; Frank S. Nicoll,
Jr.; Shareholders of Monumental
Enterprises, Incorporated; Kenneth B.
Mumaw; All States Moving & Storage;
Raymond McMillan; Lawrence L.
Hooper; Universal Laboratory
Installations, Incorporated;
Monumental Millwork, Incorporated;
Sudler Moving & Storage,
Incorporated, Defendants,
Vv.

J. LANGRALL & SONS; Zemco
Corporation; Chesapeake Envelope &
Print Company; Les‘ Care Laminates,

Third Party Defendants.

Appeals from the United States
District Court for the
District of Maryland,

at Baltimore.
William M. Nickerson, District Judge.
(CA-90-661-WN)

Argued: March 4, 1992
Decided: May 29, 1992

Before WILKINSON, Circuit Judge,
WILLIAMS, United States District Judge
for the Eastern District of Virginia,
sitting by designation, and MACKENZIE,
Senior United States District Judge for

the Eastern District of Virginia, sitting
by designation.

Affirmed in part, reversed in part, and
remanded by published opinion. Judge
Wilkinson wrote the opinion, in which

A-2

————————

Judge Williams and Senior Judge MacKenzie
joined.

COUNSEL

ARGUED: Gina Monath Zawitoski, PIPER &
MARBURY, Baltimore, Maryland, for
Appellant. Mark Herbert Kolman, ANDERSON,
KILL, OLICK & OSHINSKY, Washington, D.C.;
Pamela Joyce White, George Whitthorne
Kelly, OBER, KALER, GRIMES & SHRIVER,
Baltimore, Maryland; Samuel A. Bleicher,
MILES & STOCKBRIDGE, Washington, D.C.;
Robert John Carson, SMITH, SOMERVILLE &
CASE, Baltimore, Maryland; Howard Kenneth
Kurman, OFFIT & OFFIT, P.A., Lutherville,
Maryland, for Appellees.

ON BRIEF: Deborah E. Jennings, William W.
Toole, PIPER & MARBURY, Baltimore,
Maryland, for Appellant. Marian Hwang,
MILES & STOCKBRIDGE, Baltimore, Maryland;
Charles R. Taylor, Jr., GORDON, FEINBLATT,
ROTHMAN, HOFFBERGER & HOLLANDER,
Baltimore, Maryland, for Appellees.

OPINION

WILKINSON, Circuit Judge:

This is a suit brought by the current
Owner of a piece of property for
reimbursement of costs it incurred in
removing from the property some

underground storage tanks and their

A-3

hazardous contents. The current owner
sought reimbursement from previous owners
and tenants at the site, claiming that
they were liable under the Comprehensive
Environmental Response, Compensation, and
Liability Act. (CERCLA) as "owners" or
"operators" of the facility at the time of
"disposal" of the hazardous substances.
42 U.S.C. § 9607(a) (2). The district
court entered summary judgment against the
original owner of the tanks and in favor
of the other defendants.

We think the district court was
correct both in holding that the original
owner was liable under CERCLA and in
holding that the tenant defendants were
not liable as "operators" of the facility
in question. We think it erred, however,
in absolving certain of the previous owner
defendants on the ground that they were

not owners "at the time of disposal." By

A-4

requiring proof of affirmative participa-
tion in hazardous waste disposal as a
prerequisite to liability under
§ 9607(a) (2); the district court miscon-
strued both the statutory definition of
"disposal" and a decision of this court
interpreting that definition. We think
the statute plainly imposes liability ona
party who owns a facility at the time
hazardous waste leaks from an underground
storage tank on the premises. Any other
result would substantially undermine
CERCLA'S goal of encouraging voluntary
Cleanup on the part of those ina position

to do so.

Le
Plaintiff Nurad, Inc., brought this
lawsuit to recover the costs it incurred
in removing several underground storage

tanks (USTs) from a piece of property it

A~-5

owns in Baltimore, Maryland. From 1905 to
1963, Wm. E. Hooper & Sons, Co. ° (the
Hooper Co. or the Company) owned the site
and adjacent pronertian, collectively
known as Hooperwood Mills. At some point
before 1935, the Hooper Co. began to
install tanks for the storage of mineral
spirits which it used to coat fabrics in
its textile finishing plant. The Company
continued to use the tanks for that
purpose until 1962, when it shut down its
finishing operations. At that time, the
Hooper Co. abandoned the USTs and did not
remove the mineral spirits.

In 1963, the Hooper Co. sold
Hooperwood Mills to Property Investors,
Inc. Frank Nicoll, as president and
principal shareholder of Property
Investors and its successor, Monumental
Enterprises, Inc., leased several of the

buildings on Hooperwood Mills to various

A-6

tenants, none of which ever used the USTs.
Then in 1976, Monumental Enterprises sold
Hooperwood Mills to Kenneth Mumaw, who
subdivided the property and sold a portion
of it to Nurad.

Nurad's operations at the~ site
involve the manufacture of antennae. In
all its years at the site, Nurad
apparently never used the USTs. In 1987,
however, the Maryland Department of the
Environment informed Nurad that the tanks
had not been properly abandoned = and
required that they be removed from the
ground or filled with sand or concrete
within 180 days. Nurad sought assistance
with the cleanup from several of the
previous owners and tenants of the site,
but they all refused. Nurad then hired an

environmental consultant and a tank

removal contractor to analyze the contents

of the tanks and dispose of several of the
tanks and the surrounding soil.

In 1990, Nurad filed this CERCLA
suit, seeking reimbursement for approxi-
mately $226,000 in cleanup costs’ from
former owners of the site (the Hooper Co.,
Nicoll, Mumaw, and Monumental
Enterprises); from former tenants at the
site (Allstates Moving & Storage, Raymond
B. McMillan, Universal Laboratory
Installations, inc., and Monumental
Millwork); and from James Hooper, Jr., and
Lawrence Hooper (the Hooper brothers), who
were shareholders and directors of the
Hooper Co. The district court decided the
issues of liability on summary judgment.
In its view, only the Hooper Co. was
liable under CERCLA for costs incurred by
Nurad in removing the tanks. The court
found that the tenant defendants did not

qualify as “operators" because they did

A-8

not possess sufficient authority to

control the hazardous waste at’ the
facility. Further, the court ruled that
certain of the previous owners were not
liable because they were not owners "at
the time of disposal." According to the
district court, "disposal" necessarily
contemplated some element of affirmative
participation on the part of the
defendant, and only the original owner
actively dealt with hazardous substances
at the site. Accordingly, the court
granted summary judgment against the
Hooper Co. and in favor of the other
defendants. The court also granted
Nurad's motion to bifurcate the issues of
liability and damages, and entered final
judgment pursuant to Rule 54(b) of the

Federal Rules of Civil Procedure.

Both Nurad and the Hooper Co.

appeal.!

Ii.

Congress enacted CERCLA to address
the increasing environmental and health
problems associated with inactive
hazardous waste sites. The statute
encourages private cleanup of such hazards
by providing a cause of action for the
recovery of costs incurred in responding
to a “release" of hazardous substances at

any "facility." 42 U.S.C. § 9607; H.Rep.

'Nurad appeals from the district
court's order granting the motions for
summary judgment filed by the Hooper
brothers, Kenneth Mumaw, Allstates Moving
& Storage, Raymond McMillan, Universal
Laboratory Installations, Inc., and
Monumental Millwork. Frank Nicoll did
not move for summary judgment, and is not
a party to this appeal. The Hooper Co.
appeals from the district court's order
denying its motion for summary judgment
and granting Nurad's motion as against
the Company.

A-10

No. 1016, 96th Cong., 2d Sess. ee
reprinted in 1980 U.S.C.C.A.N. 6119, 6120.
Under CERCLA, a person who incurs’ such
cleanup costs is entitled to recover from

anyone who qualifies as a “responsible

person" under the statute. 42 U.&.C.
§ 9607. Responsible persons include the
current “owner" or "operator" of the

facility, id. § 9607(a)(1), any person who
"owned" or "operated" the facility at the
time of "disposal" of a hazardous
substance, id. § 9607(a)(2), any person
who "arranged for disposal or treatment"
of hazardous substances at the faciiity,
id. § 9607(a)(3), and any person who
accepts hazardous substances "for
transport to disposal or treatment
facilities, incineration vessels or
sites," id. § 9607(a) (4). Any of these
responsible persons is strictly liable for

costs incurred in responding to _ the

A~ii

release of a hazardous substance at the
facility. United States v. Monsanto Co.,
858 F.2d 160, 167 (40m Gar. 1988),
"subject only to the defenses set forth in
subsection (b)." 42 U.S.C. § 9607(a).
The court has the authority to "allocate
response costs among liable parties using
such equitable factors as the court
determines are appropriate." ia.

§ 9613(f)(1).?

*The statute also provides that
costs will be recoverable only if they
are "necessary" and "consistent with the
national contingency plan." 42 U.S.C. §
9607(a)(4)(B). The district court in
this case granted Nurad's motion to
resolve the issues of necessity of the
costs and consistency with the national
contingency plan at the damages phase.
The court's decision to bifurcate was
based on its view that the record on
these issues was incomplete. Under the
circumstances, the decision to bifurcate
was well within the court's discretion.
See County Line Inv. Co. v. Tinney, 933
F.2d 1508, 1513 (10th Cir. 1991), and —~
cases cited therein.

A-12

Here the district court found that
Nurad's costs were in response to a
release oor threatened release of a
hazardous substance under CERCLA. The
issues on appeal concern the scope of the
terms defining responsible persons under
§ 9607(a) (2)--specifically, the meaning of
the terms "owned," "operated," "facility,"
and "disposal." We think it best to
approach the meaning of those terms by
considering Nurad's claims against the

various parties who were prior owners or

tenants at Hooperwood Mills.
A.

We shall first address Nurad's claims
against the former tenants at the site.
The district court dismissed Nurad's
claims against the tenant defendants on
the grounds that they lacked the authority
to control the USTs and therefore did not

"operate([]" a Facility” under §

A~iJ3

9607(a) (2). Nurad raises three objections
to this aspect of .the ‘district ceurt's
ruling. First, Nurad contends that the
district court applied the wrong legal
standard in interpreting the word
"operator." In Nurad's view, the court
too narrowly defined that term to include
only those persons who actually exercised
control over the facility.

We do not agree with Nurad that the
district court applied an improper
standard. The district Court applied the
correct standard in holding that’ the
tenant defendants need not have exercised
actual control in order to qualify as
operators under § 9607(a)(2), so long as
the authority to control the facility was
present. Although the court did note that
the tenant defendants "never actively
participated in the disposal of hazardous

substances" at the site, the court's

A-14

—V——

decision quite properly turned on the fact
that they lacked "authority to control the
operations or decisions involving the
disposal of hazardous substances at the
Site or the contents of the _ USTs"
(emphasis added). Indeed, the district
court's examination of the terms of the
various leases in question indicated that
it recognized that authority to control--
not actual control--was the appropriate
standard. This is the definition of the
word “operator" that most courts have
adopted, see, e.g., CPC Int'l, Inc. vv.

Aerojet-General Corp., 731 F. Supp. 783,

788 (W.D.Mich. 1989); Idaho v. Bunker Hill

Co., 635 F. Supp. 665, 671-72 (D.Idaho
1986), and it is one which properly
declines to absolve from CERCLA liability
a party who possessed the authority to
abate the damage caused by the disposal of

hazardous substances but who declined to

aA-is

actually exercise that authority by
undertaking efforts at a cleanup. Under
this standard, the district court was
entitled to consider a defendant's actual
conduct as evidence of the authority to

control, see, e.g. Riverside Market Dev.

Corp. v. International Bldg. Prods., Inc.,

931 F.2d 327, 330 (5th Cir. 1991); New

York v. Shore Realty Corp., 759 F.2d 1032,

1052 (2d Cir. 1985), but it clearly did
not inflate that item of evidentiary
Significance into a dispositive legal
requirement.

Second, Nurad objects to the district
court's interpretation of the word
"facility." Liability under § 9607(a) (2)
extends to any person who "operated any
facility" at which hazardous substances
were disposed of, and the district court
proceeded on the premise that- the

"facility" in this case was confined to

A-16

the USTs.? Nurad contends that the

"facility" at issue here encompassed the
entire Nurad site, so that the proper
inquiry is whether the tenant defendants
had control over any portion of that site,

not just the storage tanks.

we disagree. CERCLA defines
"faciiity* to include a "building,
structure, ... storage container" or other

“area where a hazardous substance has been
deposited, stored, diSposed of, or placed,
or otherwise come to be located." 42
U.S.C. § 9601(9). In this case, the only
"area" where hazardous substances have

"come to be located" is in and around the

‘The district court purported to
sidestep the issue of whether to define
the "facility" to encompass the entire
Nurad property, but its analysis reveals
that it considered the facility to be
limited to the USTs. In concluding that
the tenant defendants did not "operate"
the "facility," for example, the court
reasoned that they “lacked the requisite
degree of control over the USTs."

A-17

storage tanks, so the relevant "facility"
is properly confined to that area. To be
sure, the tanks are a part of the larger
piece of property that is now the Nurad
site. During the relevant period,
however, the site was subdivided and
separate portions of it were leased out to
individual tenants. The fact that those
tenants may have had control over a
building that was adjacent to the USTs is
irrelevant under the statute; a defendant
operates a "facility" only if it has
authority to control the area where the
hazardous substances were located. Thus,
while liability under § 9607(a)(2) is

strict, Monsanto, 858 F.2d at 168, it

nonetheless extends only to those who have
authority over the area where hazardous
substances are stored. The statute places
accountability in the hands of those

capable of abating further environmental

A-18

iia leila

harm, while Nurad's proposed definition of
"facility" would rope in parties who were
powerless to act.

Finally, Nurad contends that even if
the court applied the correct legal
standard, it erred in its factual
determination that the tenant defendants
lacked the authority to control the USTs.
Nurad contends that as lessees the tenants
had a property interest that necessarily
included the implicit authority to control
the portion of the site that contained the
USTs. We agree with the district court,
however, that the terms of the tenants’
lease agreements conclusively establish
that their authority as tenants did not
extend to the USTs. Defendant Allstates
Moving & Storage, for example, leased
parts of several buildings on the Nurad
site to conduct its freight transfer and

storage operations from 1966 to 1979, but

A-19

|

Allstates' lease agreements never
conferred upon it -any authority over the
USTs, which were under the active
management of the landlord. The initial
lease demised to Allstates the "1st floor
of Building 4C," and limited it to use "as
an office and warehouse for the storage of
furniture[,] appliances, and other such
equipment and material consistent with the
business of the tenant." In addition, the
lease demised to Allstates use of the
following common areas: the lavatory
marked I and the parking area narked II
and ... the railsiding in the said complex
to spot boxcars plus the ... driveways to
the siding in order to load and unload
goods stored in the demised premises.
Subsequent lease agreements denised to
Allstates portions of other buildings on
the site, but none expanded its authority

to use any common areas other than those

A-20

) |

specifically identified in the initial
agreement, and none purported to give
Allstates authority to use the areas where
the tanks were situated.

The other tenant defendants also
lacked authority to control the USTs.
Universal Laboratory Installations, Inc.,
occupied portions of two of the buildings
at Hooperwood Mills under an oral lease
for nine months during 1972. Universal
used the buildings as an office and
storage facility for its cabinet
installation business. Under Universal's
oral agreement, it had the right to occupy
specific portions of the two buildings,
rights of ingress and egress to those
buildings, and the right to use the
loading dock. Monumental Millwork leased
a portion of one of the buildings at the
site from 1969 to 1978 for use as an

office and for the assembly and storage of

A-21

doors and windows. Nurad makes broad
assertions about both Universal's and
Millwork's authority over the Nurad site,
but has adduced no evidence sufficient to
contradict the trial court's conclusion
that they had no authority to control the
USTs or their contents.

Given the precise language of the
lease agreements and the absence of any
express authority to use the USTs, we
think it would be unreasonable to assume
that the tenant defendants possessed any
implicit authority to exercise control
over the tanks. Indeed, Nurad's
suggestion that these tenants had some de
facto authority over the USTs is
inconsistent with the landlord's actual
practice, which required a separate lease
agreement when in 1966 the Hooper Co.,
then a tenant, sought to use one of the

tanks. Under the circumstances, the

A-22

| 7

tenant defendants may even have been
trespassing if they had attempted to
assume the role of "operator" of the USTs.
We thus agree with the district court that
each of the tenant defendants--Allstates
Moving & Storage, Universal Laboratory
Installations, and Monumental Millwork--
was entitled to summary judgment. Since
Nurad's only allegations against McMillan
were that he was president and sole
shareholder of Allstates, our holding
requires that McMillan be granted summary
judgment also.
B.

Next we address Nurad's’ claims
against James and Lawrence Hooper. Nurad
contends that the district court erred in
finding that the Hooper brothers did not
qualify as operators. Even if we assume
that a corporate officer may be held

personally liable as an operator, see

A-23

Shore Realty, 759 F.2d at 1052, we agree
with the district court that the Hooper
brothers lacked the requisite authority to
control the USTs or to prevent the
disposal of hazardous waste at the site.
It is true that the Hooper brothers were
vice presidents of the Hooper’ Co.
beginning in the early 1960s. Any
authority they possessed was’ entirely
subordinate to that of their father,
however, who - president and majority
stockholder exercised ultimate authority
over the finishing plant. The senior
Hooper was not anxious to cede this
authority to his sons; an uncontradicted
affidavit described him as "a man of
strong will and temperament suited to
running the entire affairs of the
corporation, which he did." Nurad has
failed to direct our attention to any

evidence that would undermine the district

A-24 .

court's conclusion that "James Hooper,
Sr., as president during the relevant
times, retained all decision-making
authority over the company including the
daily operations at the finishing plant,"
and that the younger Hoopers’ should
accordingly not face CERCLA liability.‘
S.
Finally, we address Nurad's claims

against the previous owners of the site,

“Nurad insists that the district
court failed to give proper weight to the
fact that the Hooper Co. resumed its
finishing operations as a tenant in 1966
in two buildings that the Company leased
from Property Investors. Nurad suggests
that during that period the Hooper
brothers controlled the underground tank
then in use, denominated the "building 28
tank." The district court found,
however, that Mr. Hooper, Sr., was at
that time still in a position to exercise
absolute control over the Company.
Moreover, Nurad has conceded that the
building 28 tank is not on the Nurad site
and is not a subject of this suit, so
that the Hooper brothers' control of that
tank cannot affect their status as
operators of the facility in question.

A-25

the Hooper Co. and Kenneth Mumaw. Neither
the Hooper Co. nor Mumaw appeals from the
district court's conclusion that they are
prior owners of the facility. At oral
argument, Mumaw did direct our attention
to the fact that he held legal title to
the property for only a short period of
time. We do not think, however, that the
work “owned" is a word that admits of
varying degrees. Such equitable
considerations as the duration of
Ownership may well be relevant at a later
stage of the proceedings when the district
court allocates response costs among
liable parties, see 42 J.8.C.
§ 9613(f)(1), but we reject any suggestion
that a short-term owner is somehow not an
owner for purposes of § 9607(a)(2).
Because both the Hooper Co. and Mumaw
are prior owners of the facility, we must

ask whether recovery against them is

A-26

: ilar A eas

nonetheless barred because no "disposal"
of hazardous wastes took place on their
watch. The district court took a narrow
view of the word "disposal," limiting it
to disposal by affirmative human conduct.
Thus, the court concluded that the Hooper
Co. was liable because it actively
disposed of hazardous substances and then
abandoned them in the USTs. The court
held, however, that Mumaw was not liable--
even though passive migration of hazardous
substances may have occurred during his
ownership--since he did not take an active
role in managing the tanks or their
contents.

We think the district court's
restrictive construction of "disposal"
ignores the language of the _ statute,
contradicts clear circuit precedent, and
frustrates the fundamental purposes of

CERCLA. The statute defines "disposal" in

A-27

42 U.S.C. § 9601(29) by incorporating by
reference the definition found in the
Resource Conservation and Recovery Act
(RCRA). That definition states: The term
"disposal" means the discharge, deposit,
injection, dumping, spilling, leaking, or
placing of any solid waste or hazardous
waste into or on any land or water so that
such solid waste or hazardous waste or any
constituent thereof may enter the
environment or be emitted into the air or
discharged into any waters, including
ground waters. 42 U.S.C. § 6903(3). Some
of the words in this definition appear to
be primarily of an active voice. See

Ecodyne Corp. v. Shah, 718 F. Supp. 1454,

1457 (N.D.Cal. 1989). This is true of
"deposit," "injection," "dumping," and
"placing." Others of the words, however,

readily admit to a passive component:

hazardous waste may leak or spill without

A-28

any active human participation. The
district court arbitrarily deprived these
words of their passive element by imposing
a requirement of active participation as a
prerequisite to liability.

Indeed, this circuit has already
rejected the "strained reading" of
disposal which would limit its meaning to

“active human conduct." United States v.

-

Waste Ind., Inc., 734 F.2d 159, 164-65
(4th Cir. 1984). In Waste Industries, the
court held that Congress intended the 42
U.S.C. § 6903(3) definition of disposal
"to have a range of meanings," including
not only active conduct, but also the
reposing of hazardous waste and its
subsequent movement through the
environment. Id. at 164. Here the
district court attempted to distinguish
Waste Industries on the ground that it

involved the authority of the

A-29

Environmental Protection Agency to demand
cleanup by former owners and operators
under RCRA. The district court thought

that the Waste Industries definition was

necessary to close a loophole in RCRA's
environmental protection scheme, see id.

at 165, and believed "that the only way

for the Waste Industries court to preserve

the EPA's ability to demand cleanup by the
actual former owners and operators was to
define 'disposal' in RCRA to cover
completely passive repose or movement
through the environment." In this CERCLA
action, by contrast, the district court
noted that the current owner and all prior
owners were already defendants and in some
cases were liable for cleanup costs.

We think the district court was bound
to follow Waste Industries in interpreting
the term "disposal." It is true that

Waste Industries interpreted the

A-30

definition in the context of RCRA, but
Congress expressly provided that under

CERCLA the term "shall have the meaning

provided in section 1004" of RCRA (42
U.S.C. § 6903(3)). 42 U.S.C. § 9601(29).
Moreover, the aim of both RCRA and CERCLA
is to encourage the cleanup of hazardous
waste conditions. Whether the context is
one of prospective enforcement of
hazardous waste removal under RCRA or an
action for reimbursement of response costs
under CERCLA, a requirement conditioning
liability upon affirmative human
participation in contamination equally
frustrates the statutory purpose.

It is easy to see how the district
court's requirement of active
participation would frustrate the
statutory policy of encouraging "voluntary
private action to remedy environmental

.

hazards," In re Dant & Russell, Inc., 951

A-31

F.2d 246, 248 (9th Cir. 1991). Under the
district court's view, an owner could
avoid liability simply by standing idle
while an environmental hazard festers on
his property. Such an owner could
insulate himself from liability by virtue
of his passivity, so long as he transfers
the property before any response costs are
incurred. A more conscientious owner who
undertakes the task of cleaning up the
environmental hazard would, on the other
hand, be liable as the current owner of
the facility, since "disposal" is not a
part of the current owner liability scheme

under 42 U.S.C. § 9607(a)(1). See Shore

Realty, 759 F.2d at 1044. The district
court's view thus introduces the anomalous
Situation where a current owner, such as
Nurad, who never used the storage tanks
could bear a substantial share of the

cleanup costs, while a former owner who

A-32

+ pone

was similarly situated would face no
liability at all. A CERCLA regime which
rewards indifference to environmental
hazards and discourages voluntary efforts
at waste cleanup cannot be what Congress
had in mind.

The district court's view of the
CERCLA definition of disposal is also at
odds with CERCLA's” strict liability
emphasis. The trigger to liability under
§ 9607(a) (2) is ownership or operation of
a facility at the time of disposal, not
culpability or responsibility for the
contamination. See Monsanto, 858 F.2d at
168 ("The traditional elements of tort
culpability on which the site-owners rely
Simply are absent from the statute.");
Shore Realty, 759 F.2d at 1044 (noting
that Congress specifically rejected a
causation requirement). We must decline

therefore to engraft onto the statute

A-33

additional prerequisites to the
reimbursement of response costs’ which
Congress did not place there.

Thus, we hold that § 9607(a) (2)
imposes liability not only for active
involvement in the "dumping" or "placing"
of hazardous waste at the facility, but
for ownership of the facility at a time
that hazardous waste was "spilling" or
"leaking." The only remaining question is
whether a statutory disposal of hazardous
waste occurred during the period of
Hooper's and Mumaw's ownership.

We think for the following reasons
that it did. Initially, the record
supports the conclusion that both the
Hooper Co. and Mumaw owned the facility at
a time when the mineral spirits were
"leaking" from the tanks. Nurad has
established that the Hooper Co. began to

install the USTs some time before 1935 and

A-34

that mineral spirits reposed in the tanks
until they were removed by Nurad in 1988-
89. Nurad has further presented
uncontroverted evidence that at the time
the tanks were removed the soil around
several of the tanks was contaminated with
mineral spirits. Indeed, the district
court found that the "mineral spirits in
the excavated soil show an exact
chromatographic match" with those in one
tank, and that another of the tanks had
"corrosion holes in the bottom and was
underlain by discolored soils that
emanated solvent odors." Neither the
Hooper Co. nor Mumaw has pointed to
anything to overcome the presumption that
the leaking that has occurred was not a
sudden event, but the result of a gradual
and progressive course of environmental
contamination that included these

defendants' period of ownership. We do

A~33S

not think in such circumstances that
Congress intended to impose upon a CERCLA
plaintiff the onerous burden of
pinpointing at what precise point a
leakage may have begun. This circuit has
been careful not to vitiate what was
intended as remedial legislation by
erecting barrier upon barrier on the road
to reimbursement of response costs. As
this court emphasized in rejecting a
requirement that a CERCLA plaintiff prove
a nexus between waste sent by a particular
defendant to a particular site and the
resulting environmental harm: Congress
knew of the synergistic and migratory
capacities of leaking chemical waste, and
the technological infeasibility of tracing
improperly disposed waste to its
source..."To require a plaintiff under
CERCLA to ‘'fingerprint' wastes is to

s

eviscerate the statute." Monsanto, 858

A-36

_— s

F.2d at 170 (quoting United States v.

Wade, 577 F. Supp. 1326, 1332 (E.D.Pa.

1983)).

Finally, we agree with the district
court that the Hooper Co.'s claim that
there was no_- statutory disposal is
especially insubstantial. The Company
disposed of hazardous substances at the
Site by depositing them in the USTs and
abandoning them upon closing its finishing
plant in 1962. The statute provides that
"disposal" includes the "placing" of any
hazardous waste "into or on any land" so
that such hazardous waste "may enter the
environment," 42 U.S.C. § 6903(3), and
courts have specifically held that

depositing hazardous waste into enclosed

containers fits tris definition. See,

e.g., Westwood Pharmaceuticals, Inc. v.

National Fuel Gas Distribution Corp., 737

.

F. Supp. 1272, 1278 (W.D.N.Y. 1990),

A-37

aff'd, No. 91-9157, --- F.2d --- (2d Cir.
March 11, 1992). Even if we accept the
Hooper Co.'s argument that the storage of
useful mineral spirits for active use as a
raw material cannot constitute disposal

because it is not "waste," see 3550

Stevens Creek Assoc. v. Barclays Bank, 915
F.2d 1355, 1362 (9th Cir. 1990), we think

there clearly was a disposal in 1962 when
the Company closed down the finishing
plant and abandoned the tanks. At that
point, the mineral spirits clearly became
"waste," as they were abandoned and were
apparently never again used. See 40
C.F.R. § 261.2 (defining waste as any
"discarded" material, or material which
has been "abandoned").

The Hooper Co. is quick to point out
that it later "sold" the USTs and their
contents to Property Investors, but we

.

agree with the district court that the

A-38

sale of the previously abandoned tanks to
a real estate investor--who had no use for
the mineral spirits or the tanks and
apparently never used them--cannot reverse
the earlier disposal. A defendant who has
abandoned hazardous materials at a site
cannot escape CERCLA liability by simply
labelling a subsequent transfer of the
property as a "sale" of the hazardous
waste. See United States v. Aceto Agric.
Chems. Corp., 872 F.2d 1373, 1381 (8th
Cir. 1989) ("({C]jourts have imposed CERCLA
liability where defendants sought’ to
characterize their arrangement with
another party who disposed of their
hazardous substances as a '‘'sale' rather
than a 'disposal.'")
Lee

In sun, Nurad is entitled to

reimbursement from some of the _ prior

occupants of Hooperwood Mills, but not

A-39

from all. We affirm the district court's
dismissal of ies ige es claims against each
of the tenant defendants and against the
Hooper brothers, and we affirm the entry
of summary judgment in Nurad's’ favor
against the Hooper Co. We reverse the
district court's denial of Nurad's motion
for summary judgment as to Mumaw. We
remand the case for further proceedings
consistent with this opinion.

AFFIRMED IN PART, REVERSED IN PART,

AND REMANDED.

*
%

APPENDIX B

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

NURAD, INC. +
v. * CIVIL ACTION
NO. WN 90-661

WM. E. HOOPER & *

SONS CO. et al.
*

* * * * * * * * *

MEMORANDUM

Plaintiff Nurad, Inc. ("Nurad")
initiated this action pursuant to Section
107 of the Comprehensive Environmental
Response, Compensation, and Liability Act

of 1980 ("CERCLA"), 42 U.S.C. § 9607,° to

*This section provides, in pertinent
part:

[A]ny person who at the time of
disposal of any hazardous substance
owned or operated any facility at
which such hazardous substances were
disposed of, . . . from which there
is a release or a threatened release
which causes the incurrence of
response costs, of a hazardous
substance, shall be liable for --
(continued...)

A-41

recover costs incurred and to be incurred
responding to alleged releases and the
threat of release from seven Underground
Storage Tanks at property currently owned
by Nurad. Named as defendants in this
action are the prior owners of the
property and others associated with the
site.

Plaintiff has filed two motions for
partial summary judgment and a declaration
that defendants are jointly and severally
liable for Nurad's response costs
consistent with the National Contingency
Plan ("NCP"). Nurad's first motion is
directed at defendants Wm. E. Hooper &

Sons Co. (the "Hooper Co." or “Hooper"),

°(...continued)
(B) any other necessary costs
of response incurred by any
other person consistent with
the national contingency plan;
42 U.S.C. § 9607(a) (2) (B).

A-42

James E. Hooper, Jr., Allstates Moving and
Storage ("“Alistates"), Kenneth B. Mumaw,
Raymond B. McMillan, and Frank S. Nicholl,
Jr.®° Nurad has also moved for partial
summary judgment against defendants
Lawrence L. Hooper, Universal Laboratory
Installations, Inc. ("Universal") and
Monumental Millwork, Inc. ("Monumental
Millwork") .’” Defendants oppose these

motions.®

Several defendants, including
the Hooper Co., James and Lawrence Hooper,
Allstates, Mr. McMillan, Mr. Mumaw,
Monumental Millwork and Universal have

filed cross-motions for summary judgment

‘Paper Nos. 96, 158
"Paper No. 145.

8See Paper Nos. 110, 111, 114, 146,
148, 150, 151, 159.

A-43

against Nurad.?’ Plaintiff has filed
oppositions to these motions. '?

The Court heard oral argument on all
summary judgment motions on March 1, 1991.
After hearing arguments and reviewing the
pleadings and supporting papers, the Court
will rule as set forth below."

BACKGROUND

The following is a summary of the

important background facts; other facts

will be discussed in the context of the

liability issues.

%Paper Nos. 93, 97, 102, 118, 123,
137, 139, 154.

"See Paper Nos. 108, 109, 127, 142,
147, 157.

"There are three other pending
motions: 1) Zemco Corporation's
("Zemco") Motion for Summary Judgment
(Paper No. 113); 2) Nurad's Motion for
Bifurcation (Paper No. 94); and 3) James
E. Hooper Jr.'s Motion to Dismiss (Paper
No. 133). All of these motions are ripe
and will be ruled on at this time.

A-44

This case arises out of the existence

of seven Underground Storage Tanks
("USTs") located at the northwest corner
of 2165 Druid Park Drive in Baltimore,
Maryland (the "Nurad site" or the "Site")
where Nurad currently owns and operates an
antenna manufacturing facility. The Site
also encompasses a connected group of
buildings designated as Buildings 4, 4A,
4B, 4C, 24, and 24a." According to
Nurad, the USTs were installed by the
Hooper Co. which owned the Site and the
surrounding properties (the "Hooperwood
Mills" or the "Mill") from 1905 until
November 30, 1963. Before its sale in
1963, the Hooper Co. ran ae textile

manufacturing operation at the Mill and

For a map of the Site, see Exhibit
H to Appendix of Exhibits to Nurad's
Memorandum in Support of Motion for
Partial Summary Judgment and Declaration
of Liability (hereinafter "Nurad Exhibit

re a

A-45

LDC

conducted finishing operations at Building
4 which involved the flameproofing and
waterproofing of canvas. Nurad alleges
that during these operations, the Hooper
Co. used certain chemicals and stored them
in two of the USTs from as early as 1935
until 1962. Four additional USTs appear
on a site map dated April 14, 1945" and
another UST appears on a site map dated
June 3 1948." The dates of
installation, however, are not shown on
these maps. A map prepared by Hooper's
insurance agent and dated December 3, 1962
depicts the location of each UST and its
contents.”

In 1963, the Mill, including the

Site, was sold to Property Investors, Inc.

See Nurad Exhibit F.
“See Nurad Exhibit G.

See Nurad Exhibit H.

A-46

Defendant Frank S. Nicholl was’ the
president and principal shareholder of
Property Investors and its successor
corporation Monumental Enterprises during
the relevant times. In 1966, the Hooper
Co. leased from Property Investors
Buildings 24 and 24A on the Site to
conduct a small finishing operation there.
On August 9, 1976, Monumental Enterprises
sold Hooperwood Mills, including the Site,
to Kenneth B. Mumaw who subdivided it into
three parcels and sold the Site or Parcel
"Cc" to Nurad, Parcel "B" to the Hooper Co.
and Parcel "A" to Chesapeake T.V. See
Nurad Exhibit U. Parcel "B" consists of
Buildings 2, 2A and 28 and associated
property, and is adjacent to the Nurad
site. Before purchasing Parcel "C" or the

Site, Nurad occupied as a tenant all or a

part of the second floor of Buildings 4,

4B and 4C. In 1988, the Hooper Co. sold
Parcel "B" to Kenneth Mumaw. a

In the Fall of 1988, Nurad learned
that at least one of the USTs contained
hazardous substances. On December 16 and
19, 1988, Nurad hired Geraghty and Miller
("G&M") and Chem Clear to perform
historical research of the Site, identify
and analyze the contents of the tanks,
conduct tank closures, Cleaning '- and
sealing. Nurad alleges that it has
incurred response costs of approximately
$277,680.77 relating to these activities
but claims that it has not developed a
permanent remedy for the Site. Plaintiff
presently seeks a declaration that
defendants are jointly and_- severally
liable for these costs and any future
costs to be incurred by Nurad consistent
with the NCP. At this time, Nurad does

not ask for a determination of the amount

A-48

a ok cael in alli aac Ue

of recoverable costs (i.e., the necessity

of the response costs and their

consistency with the NCP).

DISCUSSION
Ee Plaintiff's Motions for Partial
Summary Judgment and Defendants'

Motions for Summary Judgment

A. Summary Judgment Standard

Summary judgment is proper if the
evidence before the court, consisting of
the pleadings, depositions, answers to
interrogatories, and admissions of record,
establishes that there is no genuine issue
as to any material fact and that the
moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(C);3

Celotex Corp. v. Catrett, 477 U.S. 317,

322 (1986). Rule 56 mandates the entry of
summary judgment against a party who,
after reasonable time for discovery and

upon motion, "fails to make a showing

A-49

sufficient to establish the existence of
an element essential to that party's case,
and on which that party will bear the
burden of proof at trial." Id. at 322.
"(A] complete failure of proof concerning
an essential element of the non-moving
party's case necessarily renders all other
facts immaterial [and] [t]he moving party
is ‘entitled to judgment as a matter of
law.'" Id. at 323. (citations omitted).
If the evidence favoring the
non-moving party is "merely colorable, or
is not significantly probative, summary

judgment may be granted." Anderson v.

Liberty Lobby Inc., 477 U.S. 242, 249-50

(1986) (citations omitted). Unsupported

speculation is insufficient to defeat a

motion for summary judgment. Felty v.

Graves-Humphreys Co., 818 F.2d 1126, 1128

(4th Cir. 1987) (citing Ash _ v. United

Parcel Serv., Inc., 800 F.2d 409, 411-12

A-50

i i a i Usd a ei

(4th Cir. 1986)). Moreover, the mere
existence of some factual dispute is
insufficient to defeat a motion for
summary judgment; there must be a genuine
issue of material fact. Anderson, 477 U.S.
at 247-48. Thus, only disputes over those
facts that might affect the outcome of the
case under the governing law are
considered to be "material." Id.

Finally, in assessing such a motion,
the Court must view the evidence and all
justifiable inferences in the light most
favorable to the party opposing the
motion. United States v. Diebold. Inc.,
369 U.S. 654, 655 (1962) (per curiam).

B. CERCLA Section 107(a)

In order to grant partial summary

judgment on the issue of defendants’

liability under Section 107, Nurad must

prove the following four elements:

(1) the site is a "facility";

(2) a "release" or a "threatened
release" of any "hazardous substance"
from the facility has occurred;

(3) the release or threatened release
has caused plaintiff to incur
"response costs"; and

(4) the defendant is a person who
owned or operated the facility when a
hazardous substance was disposed of.

United States v. Conservation Chem. Co.,

619 F. Supp. 162, 184 (W.D. Mo. 1985);

Southland Corp. v. Ashland Oil. Inc., 696

F. Supp. 994, 999 (D. N.J. 1988). Absent
the demonstrated presence of an
affirmative defense listed in 42 U.S.C. §

9706(b)(1)-(3), and upon proof of the

Several defendants contend that
Nurad must also prove that its response
costs are consistent with the NCP to
establish liability, That argument will,
be addressed infra at 49 during the
Court's discussion of Nurad's motion to
bifurcate.

above elements, CERCLA imposes strict,
joint and several liability upon the

offending party. United States v.

Northeastern Pharmaceutical & Chemical Co.

("NEPACCO"), 810 F.2d 726, 732 (8th Cir.

1986), cert. denied, 484 U.S. 848 (1987);

New York v. Shore Realty Corp., 759 F.2d

1032, 1042 (2d Cir. 1985).

With these principles in mind, the
Court will review the arguments presented
by the parties.

1. Facility

CERCLA defines "facility" as, among
other things, "any site or area where a
hazardous substance has been deposited,
stored, disposed of, or placed or
otherwise come to be located." 42 U.S.C. §
9601(9) (B). This definition has. been
broadly interpreted and includes almost
every place where a hazardous substance

could ultimately become located. See,

A-53

e.g., Dedham Water Co. v. Cumberland Farms

Dairy Inc., 889 F.2d 1146 (1st Cir.

1989); United States v. NEPACCO, 810 F.2d

726; United States v. Ward, 618 F. Supp.

884, 895 (E.D.N.C. 1985); New York v.

General Electric Co., 592 F. Supp. 291,

296 (N.D.N.Y. 1984).

"Hazardous substance" is defined in

Section 101(14), CERCLA, 42 U.S.C. §

9601(14) and includes, inter alia, any
substance specifically listed by the
Environmental Protection Agency ("EPA") as
a hazardous waste under Section 3001 of
the Resource Conservation and Recovery Act
(“Rome ), 42. 3.3.6; 8 602i; In addition
to the listed hazardous wastes, other
substances are hazardous under CERCLA if
they exhibit any of the hazardous

characteristics identified by RCRA: EP

toxicity, corrosivity, reactivity, and

.

ignitability. See 42 0.8.€,

§ 9601(14)(C), 40 C.F.R. § 261.20 et seg.

Nurad argues that the Site is a
"facility" as defined by CERCLA because
laboratory analyses of tank contents
confirm that mineral spirits-based
solvents (e.g., Xylol, Solvesso, Amsco)
and methyl isobutyl ketone ("MIBK") are or
were in several of the tanks on Nurad's

property.'’ Nurad also points out that

“puring their investigation of the
Site, Chem Clear and G&M identified the
location and contents of the seven USTs.
Nurad Tank 1 was located to the west of
Buildings 4, contained fuel oil and was
removed on December 21, 1988. Nurad
Tanks 3, 4, and 7 were addressed together
because of their close proximity. Tank 3
contained 40 gallons of substance
containing 90% MIBK and the contents were
removed on January 18, 1989. Tank 4
contained approximately one inch of
sludge overlain with water. Tank 7 is
described to have contained 1200 gallons
of water and 1% MIBK and the contents
were removed on January 31, 1989. These
tanks were then cleaned and sealed in
place.

(continued...)

both substances are present in the soils
around the tanks and loading dock at the

Site.'® Because MIBK and mineral spirits

7... continued)

The undisputed results of the
analyses of the tanks' contents are
summarized below:

TANK NO. LAST KNOWN CONTENTS (1962)
1989 CONTENTS

1 Fuel OilWeathered Fuel Oil

2 (determined to be a former

aboveground tank)

3 MIBKMIBK (90%)

4 (Liquid) Mineral SpiritsMineral
Spirits in Water

4 (Sludge) Mineral Spirits Petroleum
Hydrocarbons

5 Mineral Spirits Water

6 Mineral Spirits Water

7 MIBK
MIBK and Mineral Spirits
in Water

See Nurad Exhibit A at 37, 61, 62, 70,
ree

See Nurad Exhibit A at 13-14, 18
and Nurad Exhibit B.

A-56

are hazardous wastes under RCRA,’ Nurad
argues that they are also hazardous
substances under Section 101(14) of
CERCLA. 42 U.S.C. § 9601(14).

None of the defendants dispute that
hazardous substances have come to be
located on Nurad's property. Given the
past and current presence of these
substances at the Site, the Court finds
that the Nurad property, 2165 Druid Park
Drive, is a "facility" within the meaning

of CERCLA.@

Nurad asserts that mineral spirits
is a hazardous waste because it has a
flash point of less than 60°C (140°F) and
is ignitable. See Nurad Exhibit C; 40
C.F.R. § 261.21.

2Tn arguing that they are not
operators, the tenant defendants
(Allstates, Universal and Monumental
Millwork) suggest that the Court should
define the "facility" as only those areas
of the Nurad parcel which actually
contain hazardous substances. The Court
need not address this argument, however,
sinte the Court concludes that these

(continued...)

A-57

2. Release or Threatened Release

Nurad must also demonstrate there has
been a release or a threatened release of
hazardous substances from the Site.
CERCLA defines "release" to include any of
the following:

any spilling, leaking, pumping,

pouring, emitting, emptying,

discharging, injecting,

escaping, leaching, dumping, or

disposing into the environment
(including the abandonment or

discarding of barrels,
containers, and other closed
receptacles containing any

hazardous substance or pollutant
or contaminant) ....

42 U.S.C. § 9601(22). The term

"environment" refers to "surface water,

groundwater, drinking water supply, land

surface or subsurface strata, or ambient

air." 42 U.S.C. § 9601(8).

20(.. continued)
defendants are not operators of the
"facility" even when defined to include
the entire Nurad parcel. See infra at
30-37.

A-58

{

This definition has also been broadly
construed. A release occurs, for example,
when asbestos fibers are blown from one

site by the wind, United States v. Metate

Asbestos Corp., 584 F. Supp. 1143, 1149
(D. Ariz. 1984), Or when hazardous

“substances leach into soil and the

groundwater, United States v. Wade, 577 F.

Supp. 1326, 1334 sD. Pa. 1983).
Moreover, the release or threatened
release “of a or any hazardous substance"

is sufficient to establish liability. See

United States v. South Carolina Recycling
and Disposal, Inc. ("SCRDI"), 653 F. Supp.

984 (D.S.C. 1984), 'd_in t__and

vacated in part sub nom, 858 F.2d 160 (4th
Cir. 1988), cert. denied, 490 U.S. 1106

(1989); United States v. Wade, 577 F.

Supp. at 1333 ("the release which results
in the incurrence of response costs and

liability need only be of "a" hazardous

A-59

substance and not necessarily one
contained in defendant's waste.").
Leaking tanks also constitute "releases"
under 42 U.8.C. § 9601(22), Emhart
Industries, Inc. v. Duracell Intern. Inc.,
665 F. Supp. 549 (M.D. Tenn. 1987), and
corroding and deteriorating tanks amount

to a threat of release. See New York v.

Shore Realty Corp., 759 F.2d at 1045; see
also United States v. Medley, 13 Chem.

Waste Lit. Rep. 143, 146 (D.S.C. Nov. 4,

1986) ("The emitting or release of
volatile organics into the ambient air and
the storage of hazardous substances in
deteriorating or leaking drums and unlined
lagoons . es * clearly constituted a
'release' or ‘substantial threat' of
release.").

In the present case, the Hooper Co.
operated a finishing plant at the Site

from the early 1930s until mid-1962.

A-60

i
$
|
3
j

There is undisputed testimony that Hooper
used two USTs to store mineral
spirits-based solvents from 1935 to
1962.2" Although there is no evidence
that the other five tanks were used during
this time, a site map prepared in 1962 by
the Hooperwood Mills' insurance company
shows the contents of four of the seven

USTs as mineral spirits-based solvents and

*ISee Appendix, of Exhibits to
Nurad's Opposition to the Hooper
defendants' Motion for Summary Judgment
(hereinafter "Nurad Opposition Exhibit _
") Exhibit A at 8-14, 67-70 (deposition
transcript of Gary W. Pope, Sr.) and
Exhibit Y at 23-26 (deposition transcript
of Kenneth B. Mumaw).

The parties, however, disagree as to
which two tanks were used to store
chemicals and/or solvents. Nurad claims
that Tanks 6 and 8 were used by Hooper to
store solvents and chemicals during the
finishing plant operations while Hooper
claims that Tank 8 and a tank ona
property adjacent to the Site were used.
The Court does not find that this
disagreement presents a material issue of
fact since both parties agree that Tank 8
was used by Hooper during this time and
the record supports this finding. Id.;
Nurad Exhibit H.

A-61

two USTS as containing MIBK. Nurad
Exhibit H. Moreover, in a November 1963
Bill of Sale, the Hooper Co. characterized
the contents of six of the tanks as
"solvents or processing materials." Nurad
Opposition Exhibit G. Therefore, by 1988
the two buried USTs at the Site which were
used by Hooper at the finishing plant were
over 40 years old, and the other tanks
were at least 20 years old. In light of
these facts, the Court concludes that when
Nurad discovered in 1988 that at least one
of ‘tn USTs contained hazardous
substances, there was a threat of release.

The Court further finds that an
actual release occurred at the Site.
Nurad has presented undisputed evidence
that mineral spirits were discovered in
the excavated soils in the _ roll-off
containers around the tanks and loading

dock at the Site. Nurad Exhibit B. These

A-62

|
i
i
2
:
9
|

mineral spirits in the excavated soil show
an exact chromatographic match with the
mineral spirits in the liquids found in
Tank 4. Nurad Exhibit A at 18. Moreover,
Tank 8 was confirmed to have corrosion
holes in the bottom and was underlain by
discolored soils that emanated solvent
odors. Nurad Exhibit A at 10-11.
Additionally, soils around the tanks near
the loading dock also emitted odors of
solvents and fuel oil strong enough to
require respiratory protection for
workers. Nurad Exhibit A at 13-14.

Based on this uncontroverted
evidence, the Court concludes that an

actual release occurred. See U.S. Vv.

Hardage, 761 F. Supp. 1501, 1510 (W.D.
Okla. 1990) ("(p]resence of hazardous
substances in the soil, surface water or
ground water of a site demonstrates a

release" under CERCLA). Contrary to the

A-63

defendants' suggestion, whether the
release was in a reportable quantity or
whether Nurad notified the state or
federal authorities when the alleged
release occurred are not relevant to a
determination of CERCLA liability. - See
id. at 1511 ("Liability under CERCLA does
not depend upon any particular quantity of

the hazardous substance. Even a de minimis

contributor can be held liable."); United

States v. Wade, 577 F. Supp. at 1339-41.

The Court thus finds that Nurad has met
its burden of showing that there has been
a release or threatened release of
hazardous substances from the Site.

3. Response Costs

CERCLA also requires Nurad to
demonstrate that the release or threatened
release of hazardous substances caused it
to incur response costs. 42 U.S.C. §

9607 (a) (4). Nurad argues that its

A-64

response actions were directly
precipitated by its discovery that the
USTs contained hazardous substances and
its concern that those substances were
entering the environment. Nurad alleges
that it incurred costs from conducting a
"removal" action, i.e., steps taken on an
expedited basis to eliminate a continuing
release of hazardous substances from these
tanks. See 40 C.F.R. § 300.415. Nurad
points out that it investigated the age,
location and contents of the tanks, then
removed several of them and their
contents. pi

The Hooper defendants contend that to
satisfy this requirement Nurad must show
that Hooper's conduct caused Nurad to

incur response costs. Because no causal

nexus exists between Hooper's actions and

Nurad's response action, according to

Hooper, Nurad cannot demonstrate this
element of CERCLA liability.

The Hooper defendants' argument
misses the point. As the district court
recently explained in United States v.

Alcan Aluminum Corp., 755 F. Supp. 531,
544 (N.D.N.Y. 1991):

all that Section 107(a) requires
is that there be a release or
threatened release of hazardous
substance which causes the
incurrence of response costs. .

. ([t)here is absolute]y no
requirement that plaintiff,
demonstrate a causal nexus
between the defendant's conduct
and the contamination at the
property involved. What appears
to be required, at most, is that
the plaintiff demonstrate some
relationship between a release
and a response.

See also Gham Water Co. v. umbe
Farms Dia nce., 889 F. 2d at 1154.

In this regard, tne Court notes that
a release of hazardous substances occurred
and a threat of release of hazardous

substances existed in 1988. | Nurad

A-66

responded to this release and threatened
release. Under the statute, therefore,
the required nexus has been established.

4. Owners and/or Operators

In addition to the above elements
common to any party potentially liable
under Section 107 of CERCLA, Nurad must
also establish that each party falls
within at least one of the four classes of
covered persons under CERCLA. Nurad seeks
to impose liability upon all defendants
under Section 107(a)(2) which provides
that cny person who at the time of
disposal of any hazardous substance owned
or operated any facility at which such
hazardous substances were disposed of is
Laecle for response costs under CERCLA.
The present action involves two types of

defendants; 1) individuals who owned the

Site; and 2) others associated with the

Site. The Court will discuss’ each
category separately below.

a. Defendants in the Chain of Title

1. The Hooper Co,

As discussed previously, the Hooper
Co. owned and operated the Site from at
least 1905 to November 30, 1963. During
this time, the company ran a textile
manufacturing operation at the Mill, and
from as early as 1926 to 1963 conducted
finishing operations at Building 4
utilizing MIBK and mineral spirits.
Although there is some dispute over which
tanks were actually used during the
finishing operations at Building 4,
Hooper concedes that it used two USTs to
the east of that Building, including Nurad

Tank. 8, to store mineral spirits-based

See supra n.17.

A-68 7

solvents.“ Hooper also admits that it

used a variety of chemicals and/or
solvents including MIBK in its finishing

operations.”

The company purchased MIBK
and stored it in 55 gallon drums
above-ground in connection with these
operations. See Nurad Exhibit E at 37,
L331.

In 1962, the Hooper Co. shut down the
finishing plant operations and ceased its
use of the tanks. Hooper did not remove
the tank contents. Rather, in November,
1963, Hooper sold the Mill, including the
Site and the tanks, to Property Investors.

At the time of the sale, there were seven

USTs at the Site. Nurad Opposition

*3See Hooper's Memorandum in
Opposition to Nurad's Motion for Summary
Judgment and for Bifurcation at 4;
Hooper's Memorandum of Law in Support of
Motion for Summary Judgment at 8.

see id.

Exhibits B, G. Subsequently, in 1966, the
company leased two buildings on the Site
(Buildings 24 and 24A) and conducted a
small finishing operations there. It used
the "Building 28 tank" in that operation.
See Nurad Exhibit I at 81-85.

Based on these undisputed facts, the
Court concludes that the Hooper Co. is a
prior owner and operator of the site.*

2. Lawrence L. Hooper and James E.

Hooper, Jr.

Nurad also seeks to hold defendants
Lawrence L. Hooper and James E. Hooper,
Jr. liable as prior owners and operators
under CERCLA. Nurad argues that these

defendants had the capacity to make a

“The Court will discuss infra at
38-45 Hooper's argument that no
"disposal" occurred during its ownership
of the Site and, that its transfer of the
Site to Property Investors defeats
Nurad's argument that it is a prior owner
or operator.

A-70

timely discovery of the USTs and could

have prevented the abandonment of the
tanks and the disposal of hazardous
substances at the Site during their
ownership. Nurad points out that each
defendant held stock in the company and
that they were remaindermen in a family
trust. As former officers and directors
of the Hooper Co., according to Nurad,
both defendants were in positions to
influence company decisions, including the
disposition of Hooperwood Mills, the USTs
and their contents.

Defendants James and Lawrence Hooper
contest their liability under CERCLA.
They argue that from 1947 to 1961 as
Salesmen for Hooper and upon their return
in 1963 neither defendant participated in
decisions regarding the use of the USTs,
nor did either have a controlling stock

interest in the company. These defendants

A-71

also contend that neither had the general
nor specific power to control the
operations of the Hooper Co. before or
after the sale of the Site in 1963.

The undisputed facts regarding the
individual Hooper defendants' association
with the Site support the _ following
findings: Both Lawrence L. Hooper and
James E. Hooper, Jr. became associated
with the Hooper Co. as teenagers, working
summers at the Hooperwood Mills. From
this exposure, they were aware that the
compas used solvents to coat fabrics.
James, Jr. was aware that the solvent was
stored in tanks and drums at the Mill,
while Lawrence was aware that the company
used chemicals, including MIBK, obtained
in 55 gallon drums. See Nurad Opposition
Exhibit M at 5-6, 8-9, 14-20, 115-119
(deposition of Lawrence Hooper); Nurad

Opposition Exhibit I at 34-35 (deposition

A-72

of James Hooper, Jr.). Lawrence Hooper,
however, did not know that the company
used USTs at the Site.

From 1947 to 1961, the Hooper
brothers worked for the company as
salesmen outside of Maryland. Nurad
Opposition Exhibits M, lI. From 1961 to
1963, they left Hooper and began working
for Mount Vernon Mills. Upon their return
in late 1963, they both became vice
presidents of the company. Prior to and
during their employment at Mount Vernon
Mills, the Hoopers remained on the Hooper
Co.'s Board of Directors having been
elected on March 29, 1960 and every year
thereafter until 1963. Nurad Opposition
Exhibits K, L. The Board had six members,
three of whom were always James E. Hooper,
Sr., James E. Hooper, Jr. and Lawrence L.
Hooper. Id.; Nurad Opposition Exhibits M,

I.

The Hoopers were also contingent

remaindermen beneficiaries of the Robert
P. Hooper Trust, administered by their
father, James E. Hooper, Sr., as_ sole

trustee from 1958 until his death in 1977.

See id. The Trust held a majority of the
voting stock of the company. Apart from
this interest, each defendant

independently owned additional shares of
non-voting preferred stock in the company
prior to 1963. Id. ni

From 1958 to April, 1969, James E.
Hooper, Sr., their father, was the
president of the Hooper Go. The Hooper
defendants have submitted an affidavit
which indicates that Mr. Hooper, Sr. ran
the day-to-day operations of the company.
On April 21, 1969, he resigned and became
Chairman of the Board and continued as

Chief Executive Officer until his death in

1977. In 1969, James, Jr. succeeded his

father as president.

CERCLA § 107(a)(2), 42 U.S.C._ §
9607(a)(3), imposes strict liability upon
prior owners or operators of a facility at
the time of disposal. Under CERCLA "owner
or operator" is defined as "any person
owning or operating" an onshore facility,
and the term "person" includes both
individuals and corporations. It does not
exclude corporate officers and employees.
Id. at § 9601. Significantly, the
definition of "owner or operator" excludes
"a person, who, without participating in
the management of a... facility, holds
indicia of ownership primarily to protect
his security interest in the facility."
Id. at § 9601(20(A).

Although CERCLA does not explicitly
address whether a court may hold a

corporate officer liable for response

A-75

costs, nor does it set forth any standard,
courts have generally held that corporate
officers may be personally liable under

CERCLA for response costs. See, e.g., New

York v. Shore Realty Corp., 759 F.2d 1032;

Vermont v. Staco, Inc., 684 F. Supp. 822
(Db. Ve. _1988); United States v.

Northernaire Plating Co., 670 F. Supp.

742 (W.D. Mich. 1987), aff'd, 889 F.2d

1497 (6th Cir. 1989), cert. denied, 110 S.

Ct. 1527 (1990); United States v. Carolawn
Co., 14 Env't L. Rep. 20,699 (D.S.C. June

15, 1984); but see Joslyn Corp. v. T.L.

James & Co., 696 F. Supp. 222 (W.D. La.

1988), aff'd, 893 F.2d 80 (5th Cir. 1990),
cert. denied, 111 S. Ct. 1017 (1991).

The standards of liability
established by the decisions addressing
this issue range from basing liability on
personal participation in the waste

disposal activities to emphasizing the

A-76

authority to control the wrongful conduct

(the “authority to control analysis") or
the ability to prevent contamination (the
"prevention test"). This Court agrees
with the line of cases which looks to an
individual's authority to control a
facility's waste disposal activities in
determining a corporate officer's
liability under CERCLA.

In United States v. NEPACCO, 810 F.2d

726 (8th Cir. 1986), cert. denied, 484

U.S. 848 (1987), the Eighth Circuit
applied the "authority to control
analysis". In that case, the court held

the president and major shareholder of
NEPACCO liable as a "generator" under RCRA
despite a finding that he had no knowledge
of the plan to dispose of hazardous waste,

nor was he present at the plant during the

period of waste disposal. The Court
weasoned that although the president was
not “personally involved in the actual
decision to . . . dispose of hazardous
substances," he in fact was "in charge of
and directly responsible for all of
NEPACCO's operations .. . and he had the
ultimate authority to control the disposal
of NEPACCO's hazardous substances." Id. at
744.

In a Second Circuit case, the court

adopted a similar standard. In New York

v. Shore Realty Corp., 759 F.2d 1032 (2d

Cir. 1985), the court held the principal
officer and shareholder liable as an
operator under CERCLA where ae close

corporation purchased contaminated

“The Court observed that its
"analysis of the scope of personal
liability under the RCRA is similar to
our analysis of the scope of individual
liability under CERCLA." Id. at 745.

A-78

property, but did not actually dispose of
hazardous substances. As in NEPACCO, the

Shore Realty court determined that the

defendant was liable as an _ operator
because he was "in charge of the operation
Of the facility ...« . * 34. wt 1082.
Moreover, several district courts
have also focused on an_- officer's
authority to control in determining

liability under CERCLA. In United States

v. Carolawn Co., 14 Env't L. Rep. 20,699

(D.S.C. June 15, 1984), the court held two
corporate officers personally liable
because they were responsible for the
day-to-day operations of a hazardous waste
disposal business. The court stated that
a corporate officer may be liable under
CERCLA if he “has control or authority
over the activities of a facility from
which hazardous substances are released or

participates in the management of such a

A-79

facility." Id. at 20,699. Likewise, in

Vermont _v. Staco, Inc., 684 F. Supp. 822

(D. Vt. 1988), the court imposed personal
liability on the managing shareholders
because they participated in the general
management and control of the corporation.
The defendants testified that they made
"decisions that relate to the managing
business and the marketing business and
the selling businesses and all the overall
operations of the company." Id. at 831-
32.

One district court has formulated a
new standard for corporate officer
liability. In Kelley v. Arco Industries
Corp., 723 F. Supp. 1214, 1219 (W.D. Mich
1989) the court held that in a close
corporation an individual is liable under
CERCLA if he could have prevented or
Significantly abated the hazardous waste

discharge forming the basis of the claim.

A-80

According to the Kelly court, factors
relevant to a determination of "operator"
liability include:

evidence of an _ individual's
authority to control, among
other things, waste handling
practices -- evidence such as
whether the individual holds the
position of officer or director,
especially where there is a co-
existing management position;
distribution of power within the
corporation, including position
in the corporate hierarchy and
percentage of shares owned. .
Weighed along with the power
factor will be evidence of
responsibility undertaken for

waste disposal practices,
including evidence of respon-
Sibility undertaken and
neglected, as well as
affirmative attempts to prevent
unlawful hazardous waste
disposal.
Id. Consequently, the focus in this

court's analysis is whether the corporate

individual could have prevented the

hazardous waste discharge at issue. Id.
Applying either the "authority to

control analysis" or the "prevention test"

to the facts of the present case leads the
Court to the same conclusion. Based on
the summary judgment record = and ~ the
undisputed facts regarding the individual
Hooper defendants' involvement at the
Site, the Court concludes that at or prior
to the sale of the Hooperwood Mills in
1963, neither individual Hooper defendant
waS an owner or operator of the Site.
From the early 1950s to June 1961,
although both of these defendants were
employed as salesmen for the company, both
worked and lived outside of the Baltimore
area. Moreover, even though they were
board members during this time and vice
presidents upon their return in 1963, it
is clear from the record that neither
defendant participated in the finishing
plant operations at the Mill prior to
1969. See Nurad Exhibit. I at 10-14,

50-52; Hooper Appendix D to Motion for

A-82

Summary Judgment (hereinafter "Hooper
Appendix __."), Lawrence Hooper Dep. at
33-48, 50-69; Hooper Appendix E.

In addition, the record demonstrates
that neither had the ability nor the

capacity to exercise such control over the

operations since their father, James
Hooper, Sr., as president during the
relevant times, retained all

decision-making authority over the company
including the daily operations at the
finishing plant. Mr. Hooper, Sr. also
provided all pertinent instructions
concerning his decision to sell the
property, and voted, as trustee, the
majority of stock interest in the company.

See Hooper Appendix A, Finney Aff. qq 5,

ion)
i)
N

*7aAs identified in the uncontradicted
Affidavit of Jervis S. Finney presented
by the individual Hooper defendants, "in

(continued...)

A-83

Although CERCLA was meant to be
interpreted broadly, Nurad has failed to
Support its assertion that James Hoover,
Jr. and Lawrence Hooper controlled or had
the ability to control the operations at
the Site prior to its saje. Nor is there
support for Nurad's contention that during
this time the individual defendants could

have prevented the abandonment of the USTs

27’... .continued)
1958 and at least until 1966, the
President and Chief Executive Officer of
the Company was James E. Hooper [Sr.].
{Legal counsel to the Hooper Co. ]
received our instructions and all
corporate approvals from James E. Hooper
[Sr]. He was a man of strong will and
temperament suited to running the entire
affairs of the corporation, which he did.
All major corporate decisions were made
by Mr. Hooper. [He] also controlled and
voted, as trustee, the majority of shares
of stock of the corporation which had
been placed in trust upon the death of
his father, Robert Hooper." Hooper
Appendix A, Finney Aff. at 4 5.

A-84

and the disposal of hazardous substances

at the Site.%

The Court will therefore grant the
individual Hooper defendants' motion for
summary judgment on this issue and deny
Nurad's motion for partial summary
judgment as to these two defendants.

3. Frank S. Nicholl, Jr.

The Hooper Co. sold the entire Mill
parcel, including the Site at issue in

this case, to Property Investors, Inc.

“The Court also rejects Nurad's
argument that Lawrence and James, Jr.
were owners and operators of the Site
after the company's sale of the Mill in
1963. After the sale, the Hooper Co.
leased Buildings 24 and 24A on the Site
and conducted finishing operations there
in 1966. Although Nurad correctly points
out that during this time both defendants
were vice presidents and directors of the
company, Mr. Hooper, Sr. was still
president in 1966 and was still sole
trustee of the trust containing the
voting stock. Based on this record,
therefore, the Court concludes that
during this time neither Hooper defendant
had a position of power or the capacity
to affect the decisions of the Hooper Co.

A-&5

("Property Investors") on November 30,
1963. Property Investors owned the parcel
until October 9, 1964, when it merged with
Monumental Enterprises, Enc.
("Monumental"). Monumental then owned the
parcel from October 9, 1964 until October
13, 1976.

Defendant Frank S. Nicholl, Jr. was
the president and principal stockholder of
both’ Property Investors and Monumental.
During its ownership, Property Investors
rented property at the Mill to Hooper,
Nurad and others.

Nurad argues that partial summary
judgment against Frank Nicholl is
appropriate based on his status as a prior
owner and operator of the Site from 1963
until 1976. Nurad contends that defendant
Nicholl personally participated and
controlled property management decisions

relating to the Site and Mill on a routine

A-86

basis during the time he owned it. Nurad
further suggests that Mr. Nicholl actively
managed the corporations and routinely met
and corresponded with the tenants. on
matters relating to the Site and their
leases. According to Nurad, since Mr.
Nicholl personally handled insurance and
other business issues relating to the
Mill, he had the authority and opportunity
to empty the tanks and to address the
contamination then existing. Nurad points
out that in June, 1966, the Factory
Insurance Association, the insurer of the
Hooperwood Mills, conducted an inspection
of the property and specifically
recommended closure of the USTs. Mr.
Nicholl failed to do so, and the tanks
remained open during his ownership. Nurad
Suggests that had defendant Nicholl
performed the tank closures at that time

the potential environmental damage from

A-87

the USTs would have been substantially
reduced.

Although Mr. Nicholl does not dispute
that he was president and the principal
shareholder of both Property Investors and
Monumental during the relevant times, he
argues that based on the present facts he
can not be held liable as a prior owner or
operator. He points out that there is no
evidence that either Property Investors or
Monumental operated a hazardous waste
disposal business. Nor is there any
evidence, according to defendant Nicholl,
that he was involved in managing hazardous
substances at the Mill. Even though his
tenants might have handled such wastes,
Nicholl points to the lease agreements
with the tenants and argues that he had no

authority to influence their decisions

over these matters.

A-

88

Applying either the "authority to

control analysis" or the "prevention test"
discussed above, the Court finds that
based on this record Frank Nicholl was an
Owner or operator of the Site from 1963
until 1976. Mr. Nicholl's relationship to
Property Irvestors and Monumental is
Similar to Mr. Hooper, Sr.'s relationship
to Hooper Co.; both were officers actively
involved in the day-to-day operations of
the companies they owned and controlled.
Here, like Mr. Hooper, Sr., Mr. Nicholl
was aware of the USTs and.their contents.
Defendant Nicholl also recognized the need
to empty them, and as the president and
principal stockholder of Property
Investors and Monumental who ran all
aspects of those companies' operations,
Mr. Nicholl certainly had the capacity and
authority to properly dispose of the

hazardous substances in them. ee Nurad

A-89

Exhibits N, 0 at 2-3, P, Q, R; Deposition
Transcript of Kenneth B. Mumaw (Paper No.
112) (hereinafter referred to as "Mumaw
Deposition").

The Court rejects Mr. Nicholl's
suggestion that as a landlord he had no
authority to control his tenants'
activities.

However, even assuming, argquendo,
that he could not influence his tenants'
decisions on these matters, it is clear
that absentee landlords can be held liable
under Section 107(a)(2) of CERCLA as prior
owners at the time of disposal even though
they have not participated in conduct
resulting in the release of hazardous
substances.

In United States v. Monsarto Co., 858
F.2d 160, 166 (4th Cir. 1988), cert.
denied, 490 U.S. 1106 (1989) the Fourth

Circuit rejected an argument similar to

A-90

the one made here by defendant Nicholl.

In Monsanto. the site owners contended
that they were innocent absentee landlords
unaware or unconnected to the waste
disposal activities that took place on
their land. They argued that their lease
with the tenants did not allow the tenants
to store chemical waste on the premises,
but they admitted that they became aware
of waste storage and accepted lease
payments. Nevertheless, the Fourth
Circuit held

In light of the strict liability
imposed by section 107(a), we
cannot agree with the
site-owners contention that they
are not within the class of
owners Congress intended to hold
liable. . . . The plain language
of section 107(a)(2) extends
liability to owners of waste
facilities regardless of their
degree of participation in the
subsequent disposal of hazardous
waste.

Id. at 169.

_

Based on this case law and the
uncontradicted facts presented on the
summary judgment record, the Court
concludes that Frank Nicholl was an owner
or operator of the Site from November 30,
1963 to October 13, 1976.°

4. Kenneth B. Mumaw

Monumental entered into a contract
with Kenneth B. Mumaw to purchase the
Hooperwood Mills on July 30, 1976. Nurad
Exhibit S. Although the deed reflects a
transfer date of October 13, 1976, Mr.
Mumaw testified at his deposition that the
documents were backdated and the actual
property transfer took place in mid-

November, 1976. ee Mumaw Deposition at

“The Court will address Mr.
Nicholl's argument that there was no
"disposal" and no evidence of the
presence of hazardous substances in any
tanks during his ownership infra at
45-46.

>
1

92

114-16. In August, 1976, defendant Mumaw

contracted to sell three of the subdivided
parcels and decided to keep the land and
buildings to the south of the Site for
himself. In September, 1976, Mr. Mumaw
entered into a lease agreement with the
Hooper Co. and agreed to rent certain
buildings Mr. Mumaw had contracted to buy.
Nurad Exhibit V. Defendant Mumaw also
collected rent payments from tenants from
July to October, 1976.

According to Nurad, Mr. Mumaw held an
"equitable ownership" in the Site from the
time he entered into the Contract for
Sale, July, 1976, until he obtained full
legal title to the property in
mid-November, 1976. Nurad points out that
in recognition of Mr. Mumaw's equitable
interest, Mr. Nicholl obtained a fire

insurance general endorsement for the Mill

which named defendant Mumaw as an

A-93

additional insured. See Exhibit C to
Nurad's Memorandum in Opposition to
Mumaw's Motion for-Summary Judgment.

Mumaw contends that two documents
terminated his equitable ownership of the
Site: 1) a Letter of Intent dated June 18,
1976 from Mr. Mumaw to Nurad to convey the
Site and Mill to Nurad; and 2) the
Contract of Sale with Nurad dated August
9, 1976. Relying on Kingsley v. Makay,
253 Md. 24, 251 A.2d 585 (1969), defendant
Mumaw argues that he could not have
acquired any equitable interest in the
property in July since he had already
agreed to sell it to Nurad in June.

Under Maryland law the doctrine of
equitable conversion provides that a
purchaser who has a valid, enforceable and
‘binding agreement to convey, and thus can

compel conveyance in an action - for

specific performance, should be treated as

A-94

the owner of the property. Watson Vv.
Watson, 304 Md. 48, 61, 496 A.2dad 794
(1985). The doctrine, however, does not

apply to agreements to convey in which a
condition precedent to enforceability has
not been met since in this situation the
purchaser does not have ae right to

specific performance. ee H. McClintock

Handbook of the Principles of Equity § 106
at 287 (2d ed. 1948). Under the equitable

conversion doctrine, the purchaser is
treated as the equitable owner of the
property. If at the time of contract,
however, the vendor did not have the title
which he contracted to convey, there is no
conversion. Id. at 286-87.

In the present’ case, defendant
Mumaw's Letter of Intent to Nurad and the
Contract of Sale with Nurad did not
terminate his equitable ownership in the

Site for several reasons. First, the

A-95

Letter of Intent was expressly "contingent
upon Mumaw's purchasing the Hooperwood
Mills complex from Frank S. Nicholl Jr.'s
(Property Investors]." Nurad Exhibit U.
Because the Letter of Intent acknowledged
that Mr. Mumaw's purchase was a condition
precedent to the sale to Nurad, it did not
preclude Mr. Mumaw's acquisition of an
equitable interest in the- property.
Second, the August 9th Contract was not,
on that date, specifically enforceable;
there were conditions precedent to the
Sale which had not been performed and thus
Nurad could not have obtained equitable
title to the property then. For example,
Nurad had not obtained financing and Mumaw
had not obtained subdivision approval.
See Nurad Exhibit U. And third, the

August 9th Contract of Sale provided that

Mr. Mumaw bear the risk of harm to the

property until the actual settlement in
November. See id.

Mr. Mumaw's reliance on Kingsley is
misplaced. The status of the contract
purchaser's equitable interest between the
time he agreed to sell and the actual sale

was not at issue in Kingsley. Rather, in

that case the Maryland Court of Appeals
determined whether the sale of an
equitable interest in property must be
recorded to be valid. Contrary to
defendant Mumaw's Suggestion, the Court
did not hold that a buyer, prior to
receipt of a deed, who contracted to
resell the property had given up all
equitable title to the property.

Based on these facts, the Court finds
that Kenneth Mumaw was both a legal and
equitable owner of the Site prior to its
sale to Nurad in November, 1976. As such,

he is liable as a prior owner under

A-97

Section 107(a)(2) of CERCLA.*° cf. United

States v. Carolawn, 14 Env't L. Rep.

20,699 (D.S.C. June 15, 1984) (short-term
owners can be subject to CERCLA
liability).

b. Defendants Associated with the Site

1. Allstates Moving
and Storage and

Raymond B. McMillan

From 1966 to 1979, Sudler Moving and
Storage d/b/a Allstates Moving and
Storage, Inc. ("Allstates") leased certain
buildings and portions of these buildings

near the USTs at the Site and conducted a

freight transfer and storage operation

*Nurad also argues that Defendant
Mumaw was an operator, of the Site from
the mid-1960s to 1976. Because the Court
s finds that this defendant is a prior
owner, the Court need not address Nurad's
operator argument. Mr. Mumaw's argument
that there was neither a "disposal" nor a
release of hazardous substances during
his ownership will be discussed infra at
45-46.

A-98

there.*' Raymond B. McMillan was the
president and sole shareholder of
Allstates from 1960 throughout Allstates'
tenancy. Mr. McMillan ran Allstates'
office at this location.

Nurad contends that Allstates and Mr.
McMillan are liable under Section
107(a) (2) as former operators of the Nurad
site. Arguing that Allstates' had
"control" over the facility, Nurad points
to the fact that defendant Allstates had

"access" to the area where the USTs were

SAllstates leased the following

buildings:

Building No. Dates of Occupancy
First Floor of 4C 1966-1979

First Floor of 4B 1966-1979

First Floor of 4 & 4A 1966-1979
Buildings 24 & 24A 1975-1979
Buildings 28 & 28A Before 1976-1977

See Exhibit D to Allstates'
Memorandum of Law in Support of Motion
for Summary Judgment (paper No. 102)
(hereinafter "Allstates' Exhibit D").

A-99

located, that it had parking facilities in

the vicinity of the USTs, and that
Allstates condasead freight loading and
unloading operations in the vicinity of
the USTs. Nurad also alleges that prior
to leasing the buildings, Allstates had
inquired of the owner of the property
whether the tanks would be available for

use for fueling Allstates' vehicles.

Nurad cites United States v. SCRDI, 653

F. Supp. 984 (D.S.C. 1984) to support its
arguments.
Allstates, on the other hand,

contends that it never "operated" the

CERCLA site.** Citing to its leases with

s%tallstates also argues that Nurad's
characterization of the entire Nurad
property, 2165 Druid Park Drive, as a
CERCLA "facility" is erroneous and that
no "disposal" took place during
Allstates' tenancy. Because the Court
concludes that Allstates was not an
"operator" of the Site even when defined
to include the entire Nurad parcel, the

(continued...)

A-100

|
|
|
'
|
|
H
i
'

Nurad,* Allstates points out that it did
not have legal authority or actual
physical control over the area of the Site
where the USTs are or ‘ere located.
According to Allstates, it was a tenant in
only a portion of one group of buildings
on the Site, with the right to use a
certain parking area that did not include
the land on which the USTs are located.
Allstates further argues that it had no
legal authority over the USTs or their
contents, and thus it never actually
exercised control over then.

Several courts have held tenants
liable under CERCLA as owners or operators

of a facility. see, e.g., United States

v._SCRDI, 653 F. Supp. at 1003;

32’... .continued)
Court need not address the "facility"
argument. As to Allstates' "disposal"
argument, see infra at n.35.

See Allstates, Exhibit D.

A-101

International Clinical Laboratories, Inc.

v. Stevens, 20 Env't L. Rep. 20,560,

20,561 (E.D.N.Y. 1990); Versatile Metals,

Inc. v. Union Corp., 693 F. Supp. 1563,

1571 (E.D.Pa. 1988); United States v.
Northernaire Plating Co., 670 F. Supp. 742
(W.D. Mich. 1987).

However, in determining liability the
courts emphasize the tenant's control over
or participation in the disposal of
hazardous substances at the facility. See

BCW Associates, Ltd. v. Occidental Chem.

Corp., 1988 U.S. Dist. LEXIS 11275 (E.D.
Pa. 1988) (tenant was not operator

because tenant's activities at facility
were "limited in scope, well-confined, and
unrelated to the disposal or release of
hazardous substances") ; International
Clinical Laboratories, Inc. v. Stevens, 20
Env't L. Rep. at 20561 (tenant liable as

operator because it generated and

A-102

discharged hazardous wastes at site);
Versatile Metals, Inc. v. Union Corp., 693
F. Supp. at 1571 (purchaser-lessee liable
where it actively contributed to the
contamination of facility).

For example, in United States v.
SCRDI, the case relied on by Nurad, the
tenant and subtenant had leased all of the
property where the facility was located
and the subtenant was actively operating
it. Finding both liable under CERCLA, the
Court reasoned that the tenants
"maintained control over and
responsibility for the use of the
property." 653 F. Supp. at 1003. It is
clear from the decision that the degree of
a tenant's control over a facility was
critical to the court's determination. In
fact, the court explained that "site

control is an important consideration in

A-103

determining who qualifies as an owner
under § 107(a)." Id.

In the present case, although
Allstates had access to the USTs by virtue
of Allstates' use of the common areas at
the Site, the undisputed evidence clearly
demonstrates that Allstates' tenancy was
confined to a small group of buildings and
its activities in and around those
buildings were limited in scope and
unrelated to the disposal or release of
hazardous substances from the USTs. See
Allstates' Exhibit D. Here, unlike the
tenants in SCRDI, Allstates never owned,
leased, used or managed the USTs or their
contents; rather, the evidence
demonstrates that the Mill owners’ had
control over the common areas. See Mumaw
Deposition at 60-66, 80-82. Also unlike

the tenants in SCRDI, Allstates never

actively participated in the disposal of

A-104

hazardous substances at the Site. In the
Court's view, Allstates' mere access to
the USTs, without more, is insufficient to
support a finding of "“operator" status

under CERCLA. See Edward Hines Lumber Co.

v. V a aterials Co., 685 F. Supp. 651
(N.D. Ill. 1988), aff'd, 861 F.2d 155 (7th
Cir. 1988). Because the Court concludes
that Allstates lacked the requisite degree
of control over the USTs, and that it was
not involved in the disposal or release of
hazardous substances at the Site, the
Court will grant Allstates' motion for
summary judgment as to the CERCLA count
and deny Nurad's motion for partial
summary judgment as to Allstates'
liability under CERCLA.

The Court further finds that the
grounds for granting Allstates' motion for
summary judgment on the CERCLA count also

support granting summary judgment in

A-105

Allstates' favor on Nurad's' negligence

claim against Allstates. In Count 2,
Nurad alleges that Allstates had a duty to
warn Nurad of the existence, contents and
condition of the USTs. Because the Court
has concluded that Allstates lacked the
legal authority and actual control over
the USTs, their contents or the land on
which they are located, Allstates had no
legal duty, as a matter of law, to warn

Nurad about them. See Heinrich vv.

Goodyear Tire & Rubber Co., 532 F. Supp.

1348, 1357 (D. Md. 1982) (common law duty
to warn others of dangerous condition
arises only where defendant owns’ the
property on which the dangerous condition
exists or "at least the right or a duty to
control, if not actual control over, the
activity causing the hare. *).

Accordingly, the Court will grant

A-106

Allstates' motion for summary judgment as
to Count 2.

The Court will also grant “Mr.
McMillan's motion for summary judgment as
to the CERCLA and common law counts and
deny Nurad's motion for partial summary
judgment as to his liability under CERCLA.
Nurad has not alleged any facts, aside
from the fact that Mr. McMillan was
president and the sole shareholder of
Allstates, to support its allegation that
defendant McMillan is a responsible party
under CERCLA Section 107(a). Because the
Court has concluded that Allstates is not
liable under either CERCLA or Maryland
common law, Mr. McMillan is also not

liable under CERCLA as a prior operator or

A-107

under Maryland common law for negli-

gence.

2. Universal Laboratory Installations.

7

Although Universal was not a tenant
on the Site like Allstates, for
approximately nine months during 1972
Universal occupied Buildings 28 and 28A
(herein collectively referred to as
"Building 28") which are located directly
- east of Nurad's'~ property. Universal
installs cabinets, shelving and other

materials at installations where it is

Raymond McMillan filed a third
party complaint against Zemco claiming
that Zemco was also a tenant at the Site.
zemco has filed a motion for summary
judgment arguing that it never leased
property at the Site. In responding to
this motion, Allstates and Mr. McMillan
acknowledged that if their motion for
summary judgment was granted then
"Allstates would have no objection to
dismissal of Zemco." Paper No. 124 at 5.
Accordingly, the Court will grant Zemco s
motion for summary judgment.

A-108

engaged by contract to perform such work.
During nine months in 1972, Universal used
the upstairs portion of Building 28 as an
office and a portion of the first floor
for tool and hardware storage. Universal
had no other rights in the property, other
than ingress and egress, the right to use
the loading dock on the west side of
Building 28, and the right to use the door
located on the south side of Building 28
for entering and leaving the building.™®
Even when the Court characterizes
Building 28 as part of the Nurad
"facility," applying the test discussed
above to these facts leads the Court to
the conclusion that Universal is not

liable under CERCLA as an operator of the

see Universal's Memorandum of Law
In Support of Motion for Summary
Judgment, Exhibit C (Affidavit of Charles
F. Metzger, Sr.) (hereinafter "Metzger
Affidavit")

A-109

Site during its occupancy of Building 28.
Although Universal never executed a
written lease in connection with its use
of Building 28, the record demonstrates
that like Allstates', Universal's
association with the Site was confined to
a specific area; the first and second
floors of Building 28. Metzger Affidavit.
Also like Allstates, Universal never
participated in the disposal of hazardous
substances at the Site. Id. Nor did it
use, store or transport any hazardous
substances or any other chemicals in
connection with its occupancy of Building
a6. i4. Moreover, during this time,
Universal had no Knowledge of the
existence of the USTs at the Site. Id.
Based on these undisputed facts, the
Court concludes that Universal did not
have the control or the authority to

control the operations oor decisions

A-110

involving the disposal of hazardous
substances at the Site or the contents of
the USTs. Thus, the Ccurt will grant
Universal's motion for summary judgment on
the CERCLA and negligence counts and deny
Nurad's motion for partial summary
judgment as to CERCIA liability.

3. Monumental Millwork, Inc.

Monumental Millwork was not a tenant
on Nurad's property and it never used or
occupied any portion of the Site. From
1968 to 1978 it occupied a portion of
Building 2 located at 2139 Druid Park-
Drive, southeast of the site.*
Monumental Millwork used Building 2 to
assemble doors and windows and to store
them for subsequent distribution. Like

Universal, Monumental Millwork neither had

%Ssee Monumental Millwcrk's
Memorandum of Law in Support of Motion
for Summary Judgment Exhibits. A, C
(hereinafter "Monumental Exhibit __").

A~iii

knowledge of the USTs nor did it use
hazardous substances or the USTs. in
connection with its tenancy of Building 2.
See Monumental Exhibit B; Mumaw Deposition
at 211-213. Even assuming that Building 2
is part of the Nurad "facility," the Court
concludes that Monumental Millwork is in
the same position as Universal; during its
occupancy of Building 2 it did not
maintain control over or responsibility
for the USTs or hazardous substances at
the Site and it never participated in the
disposal of hazardous substances there.
Accordingly, the Court will grant
Monumental Millwork's motion for summary
judgment on the CERCLA and negligence
counts and will deny Nurad's motion for

partial summary judgment as to CERCLA

liability.

A"il¢d

5S. Owners or Operators At the Time of

Disposal
In addition to finding that a party

is an owner or operator, under Section
107(a) (2) of CERCLA a plaintiff must also
demonstrate that a "disposal" of hazardous
substances occurred at the facility during
the defendant's ownership or operation. 42
U.S.C. § 9607(a) (2). Because the Court
has found that the Hooper Co., Mr. Nicholl
and Mr. Mumaw are prior owners or
operators, the Court will now address
whether a "disposal" of hazardous
Substances occurred during each of these
defendant's ownership or operation of the
Site.

a. The Hooper Co.

CERCLA adopts by reference the RCRA
definition of "disposal" which includes:
the discharge, deposit,

injection, dumping, spilling,
leaking or placing of any solid

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waste or hazardous waste into or

on any land or water so that

such solid waste or hazardous

waste or any constituent thereof

may enter the environment or be

emitted into the air or

discharged into any waters,
including groundwaters.
42 U.S.C. §§ 9601(29), 6903(3).

The few reported decisions concerning
the definition of "disposal" have held
that depositing hazardous substances into
subsurface receptacles constitutes

"disposal" within the meaning of CERCLA.

: See Westwood Pharm., Inc. v. National Fuel

Gas Distr. Corp., 737 F. Supp. 1272, 1278

(W.D.N.Y. 1990); Amland Properties Corp.

v. Aluminum Co. of Am., 711 F. Supp. 784,

791 (D. N.J. 1989). Moreover, it is
clear from the language of the statute
that disposal occurs even when hazardous
substances are placed in underground

receptacles that are structurally sound,

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Since in doing so they "may" enter the

environment. Westwood, at 1278.

Here, Nurad alleges a "disposal" of
hazardous substances occurred during the
Hooper Co.'s ownership of the Site
because: 1) Hooper employees occasionally
Spilled MIBK at the Site; 2) the company
placed MIBK and mineral spirits in USTs
between 1926 and 1962; 3) Hooper ceased
using the USTs in 1962; and 4) Hooper
abandoned the USTs by selling them to
Property Investors in 1963.

The Hooper Co. contests that it
disposed of any hazardous substances at
the Site. Hooper disputes that its
employees spilled MIBK at the property or
that the USTs were leaking during its
ownership. Hooper further suggests that
it did not dispose of the USTs by selling
them to Property Investors since in doing

SO Hooper was transferring a "useful

A“1i5

substance for a useful purpose." To
support this argument, Hooper points to
both the Contract of Sale and the Bill of
Sale between Hooper and Property Investors
which specifically listed the USTs as

items sold. Such a sale, according to

Hooper, does not constitute an
"abandonment" of the USTs as Nurad
suggests.

The Court finds that genuine issues
of material fact exist as to whether any
Hooper employee spilled MIBK onto the Site
and whether MIBK was stored in any of the
USTs during Hooper's ownership of the
Site. Nurad has presented the testimony
of Gary W. Pope, a supervisor at Hooper's
finishing plant from 1935 to 1962, to
Support its claim that Hooper spilled MIBK
at the Site. At his deposition, however,
Mr. Pope testified that Hooper employees

"may" have spilled MIBK onto the ground

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reel

while transferring it from 55 gallon drums

to 5 gallon buckets. Moreover, to
contradict insurance records presented by
Nurad to show that MIBK was stored in the
USTs, Hooper relies on the testimony of
Mr. Pope who stated that Hooper never
Stored MIBK in any UST during his tenure
with the company. Based on this
conflicting evidence, the Court can not
conclude at this time that MIBK was
spilled on the ground at the Site or was
stored in the USTs by the Hooper Co.
during its ownership.

It is undisputed, however, that the
Hooper Co. stored mineral spirits in two
USTs on the Site from 1935 through mid-
1962.3’ In a 1963 Bill of Sale to
Property Investors, the Hooper Co.

acknowledged that these tanks contained

*’See supra at ll, 15.

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solvents and processing materials.
Moreover, Mr. Pope testified that Hooper
stored mineral spirits in two USTs.
Because the Court has determined that
mineral spirits is a hazardous substance
under CERCLA, the Court concludes that
the Hooper Co. "disposed" of hazardous
substances at the Site by storing mineral

spirits in the USTs. See Westwood, 737 F.

Supp. at 1278.

The Court also rejects the Hooper
Co.'s argument that the sale of the USTs
and the Site "reverses" the company's
previous disposal of hazardous substances
at the Site. Hooper relies on Brockton

Wholesale Beverage Co. v. Chevron U.S.A.,

Inc., 1990 U.S. Dist. LEXIS 9998 at 2 (D.

Mass. 1990) and C. Greene Equip. Corp. v.

Electron Corp., 697 F. Supp. 983 (N.D.

38see supra at 9.

A-118

Ill. 1988) to support its argument on this
point. These cases, however, are
inapposite for two reasons. First, they
do not involve the sale of previously
disposed of materials. Second, the courts
in these cases’. were interpreting a
different section of CERCLA; the courts
were determining whether a defendant had
"arranged for disposal or treatment
of hazardous substances" pursuant to
Section 107(a)(3) of CERCLA which relates
to "generators," a group of potentially
responsible parties entirely different
from those under Section 107(a)(2) who
"own or operate a facility at the time of
disposal" which is at issue in this case.
In sum, on the basis of the summary

judgment record, the Court concludes that

Hooper deposited mineral spirits into the

USTs during its ownership of the Site.

Since the Court finds that Hooper's

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subsequent sale of the USTs and the Site
does not "reverse" these previous actions,
the Court finds that the Hooper Co.
disposed of hazardous substances during
its ownership of the Site. The Court will
therefore deny the Hooper Co.'s motion for
summary judgment as to the Hooper Co. and
will grant Nurad's motion for partial
summary judgment against Hooper Co. on the
issue of CERCLA liability.

Nurad also argues that Hooper
"operated" the Site when it leased two
buildings on the Site (Buildings 24 and
24A) and conducted finishing operations
there for a few years beginning in 1966.
Hooper used the Building 28 tank in that
operation. Although it is undisputed that
Hooper did not actively dispose of
hazardous substances during its operation
of this building, Nurad argues that the

passive migration and reposing of

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hazardous substances at the Site during
this time constitute "disposal" under
CERCLA.

Nurad relies on United States v.

Waste Industries, Inc., 734 F.2d 159, 164

(4th Cir. 1984), to support its’ broad

interpretation of "disposal." In that
case, the Fourth Circuit held that
"disposal," as so defined in RCRA,
encompasses both hazardous waste in a
state of repose at a site and the gradual
leaking of wastes into the environment:

The inclusion of "leaking" as
one of the diverse definitional

components of "disposal"
demonstrates that Congress
intended "disposal" to have a
range of meanings, including
conduct, a physical state, and
an occurrence. Discharging,

dumping and injection (conduct),
hazardous waste reposing (a
physical state) and movement of
waste after it has been placed
in a state of repose (an
occurrence) are all encompassed
in the broad definition of
disposal.

A~lLél

Id. at 164 (holding that Section 7003 of
RCRA applies to inactive disposal sites) ;

see also United States v. Ottati & Goss,

Inc., 630 F. Supp. 1361, 1399 (D. N.H.

1985), aff'd in part, vacated in part, 900

F.2d 429 (1st Cir. i990) ("'disposal'
includes within its purview leaking, which
ordinarily occurs not through affirmative
action but as a result of inaction or
negligent past actions.") (quotations
omitted).

_The Court disagrees with Nurad's
assertion that the Fourth Circuit's
definition of disposal in Waste Industries

is controlling law in the present case.

That case, which was not a CERCLA action,
addressed a different factual and legal
context than the one presented here. In
Waste Industries, the court considered
whether in 1979 the EPA had authority

under RCRA to require remediation by

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former owners or operators of an inactive
landfill. The Fourth Circuit ruled that
RCRA § 7003 is "designed to deal with
Situations in which the regulatory schemes
break down or have been circumvented...
Congress expressly intended that this
other language (RCRA § 7003] close
loopholes in environmental protection."
Id. at 164. Applying the law as it was
before the enactment of CERCLA, it appears
that the only way for the Waste Industries
court to preserve the EPA's ability to
demand cleanup by the actual former owners
and operators was to define "disposal" in
RCRA to cover completely passive repose or
movement through the environment.

The circumstances that motivated the
Fourth Circuit to define "disposal" so
broadly in RCRA § 7003 do not exist in
this situation. Here, the current owner

and all prior owners and operators are
a

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parties to this CERCLA action and as noted
above some of them are liable for the
response costs. Although CERCLA adopts by
reference the definition of "disposal"
found in RCRA, it also adds the term
"release" to cover both active. and passive

conditions. The Waste Industries court

construed the term "disposal" in the RCRA

context, where there was otherwise no

responsibility for conditions
corresponding to a CERCLA "release." In
enacting CERCLA, Congress expressly

limited CERCLA liability to former owners
"at the time of disposal," a phrase which
must refer to an action or have no meaning
at all.

These contextual differences have
also been recognized by other courts which
have required some affirmative action to
constitute disposal under CERCLA. In

Ecodyne Corp. v. Shah, 718 F. Supp. 1454,

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1457 (N.D. Cal. 1989), for example, the
district court dismissed an intermediate
Owner on summary judgment grounds. - In
construing the term "disposal," the court
looked to the grammar and structure of
RCRA § 1004(3), 42 U.S.C. § 6903(3):

The meaning of a word is or may

be known from the accompanying
words - this is the principle of

noscitur a sociis. In
ascertaining what disposal
means, the Court looks at its
definitional components and
finds that these three nouns
(discharge, deposit and
injection) and four’ gerunds

(dumping, spilling, leaking, and
placing), when read together all
have in common the idea that
someone do something with

hazardous substances. Taking
the clearest example, the Court
notes that "plac

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1204%3A1. Public record. Not legal advice.