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Wilson Road Development Corp. v. Fronabarger Concreters, Inc.

United States District Court, E.D. Missouri, Southeastern Division

September 16, 2016




         Plaintiffs Wilson Road Development Corporation (WRDC), Brenda Dumey, Daniel Dumey, and the Brenda Kay Dumey and Daniel E. Dumey Revocable Living Trusts initiated this action on May 11, 2011, seeking monetary and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as amended, 42 U.S.C. §§ 9601 et seq. The defendants, Union Electric Company d/b/a Ameren Missouri and Citizens Electric Corporation (collectively, “the utility defendants”), have filed counterclaims. The lawsuit stems from the discovery of polychlorinated biphenyls (PCBs) on the Dumeys' 43.5 acre tract of land (hereinafter, “the Dumey property”) located downhill from and downgradient to property owned by Missouri Electric Works, Inc., in Cape Girardeau, Missouri (hereinafter, “the MEW site”).[1]

         Plaintiffs assert the following CERCLA claims against the utility defendants: First, the utility defendants are strictly, jointly, and severally liable as “arrangers” for the PCB contamination on the Dumey property, pursuant to 42 U.S.C. § 9607(a)(3). Second, because they are such arrangers, the utility defendants are jointly and severally liable to plaintiffs for $100, 796.04 in necessary response costs plaintiffs have thus far incurred, consistent with the National Contingency Plan (NCP), to address the contamination, pursuant to § 9607(a)(3)(B). Third, because the utility defendants are liable for plaintiffs' incurred response costs, plaintiffs are automatically entitled to a declaration that the utility defendants are strictly, jointly, and severally liable for all future necessary response costs plaintiffs incur consistent with the NCP, pursuant to 42 U.S.C. § 9613(g)(2).

         The utility defendants bring identical, interrelated counterclaims against plaintiffs: First, that plaintiffs are also liable as arrangers under § 9607(a)(3), which entitles the utility defendants to recover jointly and severally from plaintiffs in contribution, pursuant to § 9613(f)(1). Second, because plaintiffs are liable as arrangers under § 9607(a)(3), the utility defendants alternatively are entitled to contribution from plaintiffs under Missouri law. See Mo. Rev. Stat. § 537.060.

         On August 17 and 18, 2015, the case was tried to the Court, sitting without a jury. Having reviewed the testimony and documentary evidence, the relevant pleadings, and the parties' arguments, the Court now makes findings of fact and conclusions of law as required by Rule 52(a)(1) of the Federal Rules of Civil Procedure.


         On March 17, 1989, Brenda Dumey acquired the Dumey property from Six- Thirty Corporation in satisfaction of a debt. On March 24, 2009, she placed the property into the Brenda Kay Dumey Revocable Living Trust and the Daniel E. Dumey Revocable Living Trust, and she and her husband, Daniel Dumey, took title as trustees. In February 2011, the Dumeys formed WRDC. [Doc. #348 at ¶ 16] Mrs. Dumey is the secretary, treasurer, and sole board member of WRDC, while Mr. Dumey serves as its president.

         From 1952 to 1982, near what would become the Dumey property, MEW operated a business “performing repairs and scrapping of transformers, capacitors[, ] and other electrical equipment containing” PCBs “in oils.” [Doc. #269-2 at 6] MEW “repaired or scrapped more than 16, 000 transformers at the MEW [s]ite.” United States v. Union Elec. Co., 132 F.3d 422, 429 (8th Cir. 1997); see [Doc. #269-2 at 16] (same). Many operations MEW performed involved draining and changing the oil inside of those transformers, some of which contained PCBs. The manufacture and use of PCBs was banned in the late 1970s under the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq., and PCBs are identified as a hazardous substance under CERCLA. 42 U.S.C. § 9601(14); 40 C.F.R. § 302.4.

         On March 27, 2008, the Morrill defendants acquired the MEW site through a foreclosure sale. On November 12, 2009, Fronabarger became the owner of the MEW site and later constructed a self-storage facility there.

         A. Investigation and Action by the Environmental Protection Agency

         According to the Environmental Protection Agency (EPA), “[t]he salvaged transformer oil was filtered through Fuller's earth, ” which is also called “diatomaceous earth, ” “for reuse, ” and an “estimated 90% of the transformer oil was recycled.” [Doc. #269-2 at 6] Though the process of filtering used transformer oil through Fuller's earth allowed much of the oil to be recycled, the filtering process itself generated waste. A portion of the oil was absorbed into the diatomaceous earth during the filtering process. Each batch of Fuller's earth thus became contaminated with oil (and therefore with PCBs); it was eventually so impregnated with oil that it was no longer suitable as a filtering mechanism. MEW disposed of PCB-contaminated diatomaceous earth on the MEW site.

         Transformer oil cannot be filtered and recycled ad infinitum. Recycled transformer oil can be used to lubricate and insulate a transformer, as with new oil. However, though filtering used transformer oil rids it of impurities, the filtering process does not alter the inevitable chemical progression whereby the combination of wear and time renders all such oil unrecyclable. That is so because all transformer oil eventually loses its dielectric properties-among the vital qualities of such oil-leaving it unfit for use in transformers. MEW's operation is estimated to have generated “28, 000 gallons of oil” “that was not recycled, ” “the majority” of which MEW disposed of onsite. Id.; see Union Elec., 934 F.Supp. at 326-27.

         The EPA began investigating MEW in the mid-1980s. On October 25, 1984, the EPA discovered over 100 55-gallon drums of transformer oil at the MEW site, all of which contained PCBs. Some of those drums were leaking oil. In 1986, an EPA investigation found soil on the MEW site was contaminated with PCBs. The EPA's “action level” or “remediation standard” for PCB contamination in soils such as those on the MEW site is 10 parts per million (ppm). The surface soil on the MEW site was contaminated with PCBs in concentrations of up to 58, 000 ppm.

         The investigation also raised concerns regarding the possible spread of PCB contamination beyond the MEW site. By 1987, the EPA's Field Investigation Team discovered PCB contamination in the ravine that drains onto the Dumey property. In 1988, the EPA forbid MEW from accepting any electrical equipment containing PCBs at concentration levels higher than 1 ppm. In 1989, the EPA discovered groundwater contamination, and it found surface soil contamination on over 70% of the MEW site, including over four acres of highly contaminated surface soil. B & D Elec., 2007 WL 1395468, at *1. All transfers of transformers to MEW ceased the same year. The MEW site was designated a “Superfund” site and placed on the National Priorities List (NPL)[2] on February 21, 1990, shortly after Mrs. Dumey acquired the Dumey property.[3]

         The EPA delineated the Superfund site into three operable units (OUs), which, in short, include the soils on MEW site (OU-1), groundwater (OU-2), and a wetlands south of and downgradient to the MEW site (OU-3) that encompasses, in part, portions of the Dumey property. Though over the years they have often been referred to interchangeably, the Dumey property and OU-3 are not precisely coextensive. Eastern sections of the Dumey property are not wetland areas covered by OU-3, and the OU-3 wetlands also extend in several directions beyond the borders of the Dumey property. In any event, the contaminated areas of the Dumey property at issue here are part of OU-3.

         From 1988 to 1991, the EPA sent notices to potentially responsible parties (PRPs), inviting them to participate in settlement negotiations regarding the Superfund site. The negotiations resulted in the entry of a consent decree between the United States, the State of Missouri, and a group of forty-two PRPs. The PRPs who signed the consent decree were and are legally obligated to perform the work under the consent decree regardless of the cost.

         Though by signing the consent decree the PRPs did not admit liability under CERCLA, the PRPs acknowledged that they had sent particular transformers to MEW during its operation. Those transformers and the responsibility units derived therefrom in turn determined each PRP's share of response costs for the removal and remediation efforts at the Superfund site. See Union Elec., 132 F.3d at 429. Among the settling PRPs were the utility defendants.

         The settling PRPs were later known as the Missouri Electric Works Steering Committee (MEWSC) or the MEW Trust. The consent decree required the MEWSC to perform soil remediation and a groundwater study, and to reimburse the EPA for oversight costs. Union Elec., 934 F.Supp. at 332. The MEW Trust conducted remediation, including thermal treatment of contaminated soil on the MEW site at OU-1, and sued MEW and other PRPs for contribution. Soil remediation was completed in 2000, and approved of by the EPA in its First and Second Five-Year Review Reports, in 2004 and 2009 respectively.

         The EPA issued a certificate of completion for the soil remediation at OU-1. In March of 2014, “surface soil sampling” conducted by the EPA “detected PCBs above the 10 ppm cleanup standard” “near the former MEW building, ” which “represents a potential new exposure route” that “requires further evaluation.” [Doc. #269-2 at 9, 24] The EPA has determined “[a]dditional sampling is required to confirm” the “detection” of PCBs above 10 ppm at OU-1 and to “delineate the impacted area.” Id. at 9. Negotiations between the PRPs and the EPA over the scope of remediation necessary for the groundwater at OU-2 and the wetlands at OU-3 are ongoing. To date, OU-3 remains unremediated.

         As early as 1991, the Dumeys began efforts to sell portions of their property. However, their efforts have been unsuccessful. In July 2003, the MEW Trust began fieldwork on the Dumey property, during which the PRPs constructed an access road and installed monitoring wells, pursuant to a license agreement with Brenda Kay Construction, Inc. (BKC), another development corporation founded by the Dumeys. At the behest of the EPA, the Dumeys later constructed a pond on the Dumey property to facilitate monitoring and remediation of the wetlands. The MEW Trust erected a fence around the pond to restrict access in February 2007. Also, Brenda Dumey testified that, after seeing the high school track team running on Wilson Road, she asked the City of Cape Girardeau to spread gravel on the road. The city agreed, and a portion of the road was closed.

         Environmental investigations of the Dumey property confirmed the presence of PCBs by no later than 2003, and the Dumeys were aware of the contamination.

         B. Remediation Efforts by the EPA and the PRPs

         As part of its Second Five-Year Review Report, published in August 2009, the EPA noted:

A June 2005 Ecological Risk Screening Evaluation and a June 2006 Expanded Ecological Risk Screening Evaluation was performed at OU[-]3 confirming a presence of PCBs in fish and other biota associated with the pond and channel in the wetlands. Elevated concentrations of PCBs were detected in stormwater drainage ditches adjacent to the [MEW site] along Wilson Road.

[Doc. #104-45 at 32] Further, Mrs. Dumey admitted she was aware the Dumey property was contaminated by July 2003. [Doc. #104-2 at 4]; see [Doc. #104-81] (licensing the MEW Trust to perform certain work on the Dumey property to “address the PCB contamination, ” with Mrs. Dumey's authorization); [Doc. #93-14 at 2] (informing Mrs. Dumey in July 2003 that the MEW Trust would be installing monitoring wells on the Dumey property). Thus, it was universally understood that the Dumey property was contaminated with PCBs years before plaintiffs tested it.

         In the Second Five-Year Review Report, the EPA also acknowledged that the Morrill defendants acquired the MEW site in 2008, and remarked that those owners planned to “redevelop[]” the MEW site “for commercial uses.” [Doc. #104-45 at 18] That is, before plaintiffs tested the Dumey property, the EPA knew-and had revealed to the public-that the Morrill defendants were PRPs, because they were the owners of the MEW site. See 42 U.S.C. § 9607(a)(1). Deed restrictions placed on the MEW site by the EPA permitted certain “commercial and industrial” uses of the property. [Doc. #104-45 at 28] The EPA also put in place erosion controls. Id. In 2009, the EPA intended to annually monitor erosion at the MEW site and to take “[n]o action” to place “[i]nstitutional controls” on the soil there. Id. at 29, 33.

         The EPA was also aware of Fronabarger's ownership of the MEW site; the company communicated with the EPA both before and after it acquired the property. [Doc. #104-21 at 16] On April 28, 2010, before plaintiffs incurred response costs, the EPA sent Fronabarger a letter explaining, inter alia, that the “restrictions” placed on the MEW site forbid it from using the property for certain purposes and obligated Fronabarger to “provid[e] access to the site for environmental response and investigation activities.” [Doc. #104-71 at 2] Consequently, before plaintiffs incurred any of the response costs they seek to recover here, the EPA was aware Fronabarger owned the MEW site, and the EPA thus knew of the company's status as a PRP. See 42 U.S.C. § 9607(a)(1).

         Further, by 2009 the EPA was already negotiating with the utility defendants and other PRPs a consent decree for “all remaining work” at the Superfund site, including an “RI/FS” and subsequent “remedial design/remedial action (RD/RA) for the wetlands area” on the Dumey property. [Doc. #104-45 at 8] According to the EPA, a “protectiveness determination of the remedy at OU[-]3 [could not] be made until further information [was] obtained, ” which would require “necessary” “investigation[s]” and “the collection of data to determine the ecological risks for the” Superfund site. Id. at 9, 11. Because gathering such information was “necessary, ” the EPA explicitly contemplated sampling and analyzing “the wetland surface soils, sediments, surface water[, ] and soil” at OU-3. Id. at 34.

         The EPA planned to conduct a CERCLA-compliant “focused remedial investigation and ecological risk assessment, ” which was to be followed by a record of decision (ROD) for OU-3. Id. at 11. When the EPA issued the Second Five-Year Review Report in 2009, the agency “expected that” the testing would “take approximately three years to complete, ” and “at that time a protectiveness determination” for OU-3 would “be made.” Id. at 9. The EPA anticipated that, with agency oversight, the PRPs would complete that investigation by September 30, 2011, and would prepare an ecological risk assessment for OU-3 to “determine whether there is an unacceptable risk to the environment” by September 30, 2012. Id. at 37. The agency also issued “Special Notice Letters” of its intention to complete an “RI/FS and RD/RA” for OU-3, and took additional steps to inform the public of its plans. Id. at 30. Indeed, the investigation was completed-albeit later than anticipated-before the EPA issued its Third Five-Year Review Report in July 2014, which incorporates the test results and analysis. See [Doc. #269-2].

         Following the investigation, the EPA drafted and submitted to the PRPs for negotiation a proposed Statement of Work (SOW) “for the RI/FS for OU[-]3.” [Doc. #341-2 at 1] Among other things, the SOW recognizes that “low levels of PCBs” remain “in the soil and stream sediment” at OU-3 and that PCBs have been “detected in all fish sampled” from the pond. Id. at 4. “The purpose of” the SOW is “to set forth the requirements for conducting” an RI/FS “to enable selection of a remedy to eliminate, reduce, or control risks to human health and the environment, ” by “develop[ing] the data necessary to support the selection of an approach for remediation of” OU-3. Id. at 5. The SOW also tracks CERCLA's regulatory framework vis-à-vis planning, testing, data quality, data analysis, report generation, ensuring health and safety during testing, cost effectiveness, “green remediation principles, ” and community relations. Id. at 6-11; see, e.g., 40 C.F.R. §§ 300.420(c)(4), 300.430(a)(1).

         C. Response Costs Claimed by Plaintiffs

         Plaintiffs seek to recoup $100, 796.04 in response costs they allegedly incurred for work performed by two companies: S&ME and Burnside Environmental. The Court addresses each corporation's work in turn.

         (1) SM&E

         From “November 15 through November 17, 2010, ” before this litigation began, S&ME “conducted a limited soil investigation” on the Dumey property. [Doc. #104-42 at 1] No S&ME witness testified at trial. Plaintiffs did not introduce into evidence at trial any deposition transcripts, affidavits, contracts between themselves and S&ME, or other records in which S&ME employees or agents explained the limited soil investigation. The only evidence plaintiffs submitted of the work S&ME conducted consists of three invoices and a report S&ME generated after its investigation.

         The invoices

         The first invoice, which is #444742 and is dated December 7, 2010, reflects $5, 800.00 in “labor” and $370.00 in “expenses” for: “Activities associated with Exhibit A: Historical Site Research, ” followed by a redacted section of text. [Doc. #104-15 at 6] No addition description of S&ME's work is documented on that invoice. “Exhibit A” is not attached to the invoice, and plaintiffs have offered no explanation what that unidentified exhibit refers to. The second page of that invoice shows that eight S&ME employees spent a total of sixty-five hours performing the historical site research and the redacted work. Id. at 7.

         Invoice #444742 provides no insights into what “historical site research” was performed, why it was necessary, the goals of the research, how those goals are connected to remediating the Dumey property, or what specifically each S&ME employee did to facilitate that work. For example, an S&ME employee spent 17.5 hours working as a “Staff Professional - Grade I” and an additional 4 hours working as a “Staff Professional - Grade II” on the project, at different hourly rates. Id. But the invoice does not explain those roles, or the work that employee performed in each capacity. The first invoice also reflects $370.00 charged for expenses to a “subcontractor, ” “Environmental Data Resources.” Id. (capitalization removed). No witness from that subcontractor testified at trial, nor was any deposition testimony or other record evidence offered to explain what the subcontractor did, or why it was necessary. The invoice also does not differentiate between the historical site research and the work performed for the redacted purpose.

         The second invoice, which is #444743 and is also dated December 7, 2010, shows charges of $5, 235.75 for “labor” and $2, 581.19 for “supplies and expenses” for: “Activities associated with Exhibit B: Site Visit, Transportation & Lodging and Soil Assessment from November 10, 2010 to December 1, 2010.” Id. at 4 (some capitalization removed). “Exhibit B” is not described, nor have plaintiffs offered it into evidence. Further, as discussed more below, S&ME's own report reflects that it “conducted a limited soil investigation” over a three-day period from “November 15 through November 17, 2010.” [Doc. #104-42 at 1] But the second invoice reflects charges for a site visit and soil assessment from November 10, five days before the investigation began, until December 1, weeks after the investigation concluded. On its face the invoice does not explain that discrepancy, nor have plaintiffs introduced evidence to resolve it. To the extent the hours expended before and after the investigation might encompass pre-investigation and post-investigation activities, no facts have been adduced so stating. Any inference that is the case also cannot be sustained on the evidence offered because the other invoices show charges for pre-investigation site research and post-investigation analysis and report writing.

         The second invoice reflects block-billed hours without details of each employee's activities, or why those actions were necessary. Among other expenses billed were two S&ME employees' “entertainment” and meal costs, totaling $148.38. Id. at 5. S&ME also charged plaintiffs $166.83 for “supplies, ” which reflects $145.07 in actual expenses with a cost multiplier of 1.15, a multiplier for which no justification has been offered. Id. S&ME's employees spent 64.25 hours performing the work in question, with the bulk of those hours expended by two employees. Id. But only the number of hours worked and the employees' hourly billing rates are documented, not the actual work performed.

         For example, one employee worked 2.5 hours as a “CAD II, ” at $58.00 per hour. Id. No evidence before the Court explains what a “CAD II” is, why that employee's work was necessary, or that his hourly rate is necessitated by the complexity of the work. As another example, an S&ME employee worked 0.25 hours as a “Staff Professional - Grade I, ” at an hourly rate of $65.00, and 42 additional hours as a “Staff Professional - Grade II, ” at $75.00 an hour. Id. The invoice does not explain what either professional designation means, or why the employee sometimes worked in a “Grade I” capacity while the bulk of his time was billed at the higher, “Grade II” rate.

         The third invoice, which is #452263 and is dated February 4, 2011, is similarly uninformative. Id. at 2. S&ME billed plaintiffs $4, 160.00 for “labor” and $8, 301.53 for “regular expenses” for: “conference calls, project research, report writing, senior review, analytical costs, drilling expenses, and sampling equipment rental.” Id. (some capitalization removed). That bill is “for professional services rendered from November 30, 2010 through January 20, 2011.” Id. (some capitalization removed). The first and most obvious problem is that S&ME billed plaintiffs for “drilling expenses” and “sampling equipment” fees for work purportedly beginning on or after November 30, 2010. Id. But all of S&ME's drilling and sampling occurred from November 15 through November 17. [Doc. #104-42 at 1] No evidence of record explains that discrepancy.

         The third invoice also does not detail what “project research” was conducted, who conducted it, how many hours they expended doing so, or why it was necessary. Nor is there evidence of how many hours were expended on “conference calls, ” which employees participated in those calls, and why those calls were necessary. Though a “senior review” of an environmental report might be prudent, no evidence submitted shows who conducted that review, whether such persons were qualified to review an environmental report, what changes they made, what data accuracy or quality-assurance plan they applied (if any), or the hours they expended. The term “analytical costs” is ...

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