Elementis Chromium L.P. v. Coastal States Petroleum Company v. El Paso Merchant Energy-Petroleum Co., Successor by Merger to Coastal States Crude Gathering Company, Formerly Known as Coastal Refining and Marketing, Inc., Third Party Plaintiff-Appellee-Cross-Appellant v. Amerada Hess Corporation, Third Party Magellan Terminals Holdings L.P., Third Party Defendant-Appellant-Cross-Appellee
Docket: 04-20519
Court: Court of Appeals for the Third Circuit; May 26, 2006; Federal Appellate Court
In the case of Elementis Chromium L.P. et al. v. Coastal States Petroleum Company, the United States Court of Appeals for the Fifth Circuit reviewed a district court's judgment concerning liability for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The plaintiffs, Elementis, owned a contaminated manufacturing plant and sued El Paso for recovery of cleanup costs. El Paso settled with Elementis and subsequently sought contribution from Magellan Terminals Holdings L.P. and Amerada Hess Corporation, claiming they were partially responsible for the contamination.
The district court found El Paso to be 89.95% responsible and Magellan and Hess collectively 10.05%. It imposed joint and several liability on Magellan and Hess, treating them as a single entity for liability purposes. Magellan appealed this decision, arguing that liability under CERCLA § 113(f) should be several only, and that it had preserved its objection to the joint and several liability ruling. The appellate court agreed with Magellan, vacating the joint and several liability judgment and remanding for a proper allocation of responsibility between Magellan and Hess. Conversely, the court affirmed the district court's allocation of liability to El Paso. Both Magellan and El Paso filed appeals concerning the judgments and findings made by the district court.
The court must first determine if Magellan waived its objection to joint and several liability in CERCLA § 113(f) contribution actions before addressing the appropriateness of such liability. The standard of review for altering or amending a judgment is typically abuse of discretion, unless reconsidering legal questions, in which case the review is de novo. Motions to alter judgments cannot introduce arguments that could have been made prior to the judgment or present new legal theories. El Paso argued, and the district court agreed, that Magellan and Hess waived their objections during discussions regarding the proper defendants in the CERCLA action.
Counsel for Magellan/Hess identified Hess and Magellan Terminal Holdings as responsible parties but noted that they denied liability. The court inquired about the allocation of cleanup costs, leading to the mention of an indemnity agreement between Hess and Williams. The district court later imposed joint and several liability on Magellan and Hess, prompting Magellan's motion to amend, which the court found troubling due to its late timing. The court remarked that had the matter been raised during trial, it could have allowed for further evidence and informed decision-making. Ultimately, the court concluded that Magellan waived its argument against joint and several liability by failing to present it at trial, thereby denying the motion. The existence of an indemnity agreement was significant in supporting the conclusion of waiver, allowing the court to rely on statements made by counsel in open court, invoking the doctrines of judicial estoppel and waiver.
A party presents an issue in court if it has been included in pleadings or pretrial orders, or if it has been tried by consent. In this case, Magellan's objection to joint and several liability was included in the pretrial order, which the district court acknowledged. An issue may be waived if a party makes a specific concession later, but the exchange regarding joint and several liability between Magellan’s counsel and the district court was ambiguous, not a concession. Magellan should not lose the right to argue this issue based on a brief mention of an indemnity agreement.
The district court's frustration over Magellan's lack of evidence on joint and several liability is understandable given that Magellan maintained it was not liable for contamination. El Paso, as the party seeking contribution, had the burden to prove Magellan's liability under CERCLA § 107(a) and the equitable share of costs. El Paso claimed it did not need to prove individual defendant liability but provided no supporting case law. Therefore, the court did not relieve El Paso of this burden. Magellan cannot be penalized for not presenting evidence on cost allocation when it did not bear the burden of proof. The district court abused its discretion by determining that Magellan waived its objections to joint and several liability, leading to a review of the merits of Magellan's and Hess's claims.
The standard for reviewing a bench trial involves clear error for factual findings and de novo for legal issues. The imposition of joint and several liability is a legal matter reviewed de novo. Under CERCLA § 113(f)(1), any person may seek contribution from others liable under § 107(a), allowing courts to allocate costs among liable parties using equitable factors, thereby mitigating the harshness of joint and several liability.
The parties dispute whether liability in § 113(f) contribution actions under CERCLA is joint and several or several only, a matter not previously addressed in this circuit. Most other circuits have determined that liability is several only, as supported by cases such as United States v. Davis and Pinal Creek Group v. Newmont Mining Corp. The Ninth Circuit articulated that a joint and several approach contradicts CERCLA's text and traditional contribution principles, potentially causing procedural issues. It was concluded that when a liable party sues another under CERCLA, it is not a cost recovery action under § 107(a), making joint and several liability inappropriate. The language of § 113(f)(1) emphasizes equitable allocation of response costs among liable parties, allowing recovery only of proportional shares from other tortfeasors. Imposing joint and several liability in these actions could lead to inefficiencies and litigation prolongation.
The district court erred by imposing joint and several liability on Hess and Magellan, leading to a vacated and remanded judgment to properly divide liability between them. Additionally, El Paso challenged the district court's allocation of only 10.05% of future response costs to Hess and Magellan. The findings were reviewed for clear error, and the court found sufficient evidence implicating El Paso in the contamination, concluding there was no clear error in the district court's allocation to El Paso.
In conclusion, the court reversed the district court's imposition of joint and several liability against Magellan, affirming that liability under CERCLA § 113(f) is several only. The decision was vacated and remanded for a proper allocation of Magellan and Hess's share of response costs, while affirming the allocation of future costs to El Paso.
The court reversed and vacated certain aspects of the district court's decision while affirming others. Magellan is identified as the entity legally responsible for the Hess Terminal since its sale by Hess in 1999, leading to the dismissal of the Williams companies from the suit. The court examined whether Magellan waived its objection to joint and several liability, noting that the district court had viewed its argument as waived. However, unlike in the Ergo Science case, where a clear waiver was established, Magellan's situation was less definitive, and it did not assert that joint and several liability was appropriate, allowing it to assert its objection without judicial estoppel.
El Paso failed to provide evidence against Magellan, which requested a finding that the Hess terminal did not handle benzene during its ownership. The court stated that imposing joint and several liability would contradict its earlier decision that liability under CERCLA § 113(f) is several only. The district court had previously granted partial summary judgment in favor of El Paso, agreeing that Hess and Williams could not maintain certain CERCLA claims against it. El Paso's reliance on Browning-Ferris Industries v. Ter Maat regarding the district court's equitable powers to impose joint and several liability was found to conflict with the majority of circuit courts on this issue. The court noted that the concerns about several liability raised in Ter Maat were not applicable in this case. The district court has sufficient factual basis to allocate responsibility between Magellan and Hess, potentially based on the timeline of ownership and the historical contamination events prior to Magellan's acquisition of the Hess property.
