Opinion
CIVIL ACTION NO. 01-2424 SECTION "K"(5)
December 7, 2001
Before the Court is Plaintiff's, Sisters of Mercy Ministries, Inc. and Sisters of Mercy Health Systems, St. Louis, Inc. (collectively referred to herein as "Sisters") Motion for Remand (rec. doc. 7), Defendants' Vincent Viso, Thomas Dwyer, and Vincent Staiano ("individual defendants") Motion to Dismiss (rec. doc.9)and, Defendant's, Ispat Inland Steel Company ("Inland"), Motion to Dismiss (rec. doc. 8).
Wilson Bennett changed its name to "Inland Steel Container Company" in 1942. In 1953, the company participated in a merger, and the land became owned by "Inland Steel Company." (Wilson Bennett, Inland Steel Container Company, and Inland Steel Company will be referred to as the "Inland Companies"). Finally in 1998, Inland Steel Company was acquired by Ispat International, Inc., which then changed its name to Ispat Inland Inc.
On April 16, 2001, Sisters lodged its petition for damages against Inland and one of its former employees, Vincent Viso, to recover costs it incurred remediating environmental contamination on property that was sold to it by Inland. On July 8, 2001 Sisters amended its petition to add Dwyer and Staiano, also former employees of Inland. With the consent of the individual defendants, Inland timely removed the proceeding to federal court on the basis of diversity jurisdiction. Plaintiff opposed removal to a federal forum and filed a Motion to Remand. Inland and the individual defendants subsequently filed motions to dismiss.
After reviewing the relevant law, oral presentations, and memoranda, this Court holds that: (1) plaintiff's Motion for Remand is DENIED, (2) individual defendants' Motion to Dismiss individuals is GRANTED and (3) Defendant, Ispat Inland Steel Company's, Motion to Dismiss is GRANTED in part and DENIED in part.
BACKGROUND
This dispute arises over contamination found at property located at 3801 Bienville Street in New Orleans ("Site"). Plaintiff, Sisters of Mercy Ministries, Inc., is a Louisiana not-for-profit organization that has its principal place of business in New Orleans. Plaintiff, Sisters of Mercy Health Systems, St. Louis, is a Missouri not-for-profit organization with its domicile in St. Louis, Missouri. Defendant, Ispat Inland, Inc., is a Delaware corporation with its principal place of business in Indiana. The three individual defendants, Thomas Dwyer, Vincent Staiano, and Vincent Viso, are residents of Louisiana.
Ispat Inland is the successor, through various name changes, mergers, and acquisitions, of Wilson Bennett Manufacturing Company, which acquired the Site 1934.
Inland sold the Site to Mercy Hospital of New Orleans in early 1984. During environmental assessments conducted on connection with negotiations to sell the Site to a third party in 1999, Sisters of Mercy discovered that the soils and groundwater in and under the Site were contaminated. On April 14, 2000, plaintiff made demand by certified mail on Inland requesting Inland's assistance in the clean up effort at the Site. Defendant did not respond to plaintiff's request and plaintiff cleaned the Site alone in June and July, 2001. Plaintiff asserts that during its entire ownership period, it never used, generated, transported, stored, or disposed of any hazardous substance at the Site. Thus, plaintiff alleges that Inland Company is legally required to reimburse them for the costs of all necessary investigative and remedial work performed at the Site because it and its predecessor companies: (1) were responsible for causing the environmental pollution and (2) failed to report the contamination when it abandoned the Site.
Sisters of Mercy Ministries, Inc. is the successor in interest to the claims of Mercy Hospital.
Furthermore, plaintiff contends that the three individual defendants: (1) were employed at the Site "until it closed in 1983," (2) knew of the contamination, (3) abandoned the facility in a contaminated state and (3) failed to report the contamination and abandonment to the proper authorities. Specifically, plaintiff represents that Dywer was the Plant Manager of the Site, Staiano served as the Plant Superintendent of the Site, and Viso was the director of health, safety, and environment at the Site. However, the individual defendants dispute plaintiff's fundamental allegation that they were employed at the Site until 1983 and, while not included in their Opposition to Plaintiff's Motion to Remand, each individual defendant submitted an affidavit stating that their employment relationship with Inland ended long before 1983. For example: (1) Dwyer retired from the Inland Companies in 1974, (2) Staiano retired from the Inland Companies in 1973 and, (3) Viso permanently left Inland in 1973. The veracity of these affidavits is unrefuted by plaintiff.
ANALYSIS
Motion to Remand
Plaintiff, Sisters of Mercy Ministries, Inc. and the individual defendants are citizens of Louisiana. Thus, there is no diversity jurisdiction under 28 U.S.C. § 1441 (b), and this Court must remand the case to state court, unless the individual defendants can prove that they were fraudulently joined. For the reasons that follow, this Court finds that the individual defendants were fraudulently joined and the matter should not be remanded to state court.
Because there are no "federal question" issues ( 28 U.S.C. § 1441(a)) presented by on the face of plaintiff's complaint.
Fraudulent Joinder and Removal Standards
To establish that an in-state defendant has been fraudulently joined, the removing party must show that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court or that there is outright fraud in the plaintiff's pleadings of jurisdictional facts. See B. Inc. v. Miller Brewing Co., 663 F.2d 545 (citing Keating v. Shell Chemical Co., 610 F.2d 328, 331-32 (5th Cir. 1980)). In this case, the individual defendants have made no allegations of fraud in the plaintiffs' pleadings. Therefore, to defeat Sister's Motion to Remand, defendants must show, as a matter of law, that there is no possible basis for recovery against them.
The standard employed to determine whether a defendant has been fraudulently joined is well established in the Fifth Circuit. As was previously articulated by this Court:
The burden is on the defendant, as the moving party, to prove that jurisdiction exists for removal purposes. See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). Where there have been allegations of "fraudulent joinder", it is clear that the burden is on the removing party to prove the alleged "fraud". See id. The burden of persuasion placed upon those who "cry fraudulent joinder" is indeed a heavy one. See id.; In re Gas Water Heater Prods. Liability Litigation, No. Civ. A. 96-2484, 1996 WL732525, at *1 (E.D. La. Dec. 12, 1996) (Duval, J.).
In evaluating fraudulent joinder claims, the Fifth Circuit has adopted a summary judgment-like procedure, permitting the Court to "pierce the pleadings" and consider evidence outside the pleadings, such as affidavits and depositions accompanying the notice of removal or the motion to remand, as well as the controlling state law. See Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir. 1995); Ford, 32 F.3d. at 935; Carriere, 893 F.2d at 100; In re Gas Water Heater Prods. Liability Litigation, 1996 WL 732525, at * 1. Furthermore, all disputed questions of fact and all ambiguities in the controlling state law are resolved in favor of the nonmoving party. See id.; Dodson, 951 F.2d at 42. However, "the mere assertion of metaphysical doubt" as to material facts is insufficient to create an issue if there is no basis for those facts; Sullivan v. Gen-Corp., Inc., No. Civ. A. 95-709, 1995 WL 32 1743, at *2 (E.D. La. May 24, 1995) (Duval, 1.).
When the Court considers a motion to remand, substantial summary judgment-type evidence, such as affidavits and deposition transcripts may be presented and along with the factual allegations in the pleadings to support the idea that recovery against the non-diverse defendant is possible. See Floyd, 2000 WL 306681, at *2 (plaintiff and defendant submitted affidavits); Tramonte v. Chrysler Corp., No. Civ. A. 95-2109, 1999 WL 440456, at *2 (E.D. La. June 28, 1999) (Fallon, J.) (court received briefs and heard oral argument on motion to remand); Peck v. Black and Decker, Inc., No. Civ. A. 93-1285, 1993 WL 441808, at *2 (E.D. La. Oct. 27, 1993) (Mentz, J.) (plaintiff and defendants submitted affidavits); Morreale v. Surgitek, Inc., No. Civ. A. 92-139 1, 1992 WL 193489, at * 1 (E.D. La. July 30, 1992) (Arceneaux, J.) (plaintiff conducted "investigation" and defendant submitted affidavit).
Even in cases where a motion to remand was denied based on a claim of fraudulent joinder, courts have received substantial summary judgment-type evidence from both parties. See Burden, 60 F.3d at 215 (Fifth Circuit affirmed district court denial of motion to remand where state court pleadings, affidavits, and other evidentiary materials were submitted); Pate v. Adell Compounding, Inc., 970 F. Supp. 542, 548-49 (M.D. La. 1997) (plaintiff submitted affidavit attesting that all allegations in petition were true and correct and defendant submitted two affidavits in support of its contentions); Zehner v. Nordskog Industries, Inc., No. Civ. A. 92-2508, 1992 WL 233984, at *3 (E.D. La. Sept. 2, 1992) (Feldman, J.) (deposition testimony was cited by plaintiff and defendant); Jones v. Hyatt Corp., No. Civ. A. 90-0722, 1991 WL 197161, at **2-3 (E.D. La. Sept. II, 1991) (Wicker, J.) (plaintiff supported allegations with deposition and pleadings while defendant submitted affidavit and other evidentiary materials).
With that standard in mind, the Court turns to the merits of plaintiff's allegations against the individual defendants. Generally, Sisters contends that defendants are liable for clean up and remediation costs incurred during its cleanup of the Site based on its interpretation and application of the following statutes: (I) Cleanup and Remediation Statutes La. R.S. 30:2276(A) and (G)(3) and (2) Notification Statutes La. R.S. 30:1073(I)(1982), La R.S. 30:1148(C)(1) (1983) (presently La. R.S. 30:2025 and La. R.S. 30:2204), and (3) Citizen Suit Provision La. R.S. 30:1074 (1979).
Liability Under La. R.S.30:2276(A) and (G)(3): Clean Up and Remediation
Initially, plaintiff contends the individual defendants are liable under La. R.S. 30:2276(G)(3) which states:
In furtherance of the purpose of this Chapter, a person who has incurred remedial costs in responding to a discharge or disposal of a substance covered by this Chapter, without the need for an initial demand by the secretary, may sue and recover such remedial costs as defined in R.S.30:2272(9) from any person found by a court to have performed any of the activities listed in Subsection A if the plan for remedial action was approved by the secretary in advance or, if an emergency, the secretary was notified without unreasonable delay and the secretary accepts the plan thereafter. An action by a person other than the secretary shall not be barred by the failure of the secretary to demand participation in the remediation. Such action shall be barred if the plaintiff does not make written demand on the defendant by certified mail, return receipt requested, at least sixty days prior to initiation of suit based on the cause of action provided in this Subsection . (Emphasis added).
La. R.S. 30:2276(G)(3) clearly requires written demand on a defendant by certified mail at least sixty days prior to initiation of suit to recover remedial costs incurred by a plaintiff who has used its funds to clean a polluted site. Plaintiff admits that it did not serve the individual defendants with requisite notice of suit, but argues that notice served on Inland was sufficient. Plaintiff's position is incorrect.
Goodwin v. Agrilite of Louisiana, 26,061 (La.App. 2 Cir. 9/21/94), 643 So.2d 249, involved a factual scenario similar to this case. In Goodwin, a landowner (plaintiff) filed an action against several corporate officers and their company that occupied the property before plaintiff. However, plaintiff failed to give the individual defendants written demand 60 days before the institution of its suit as required by La. R.S. 30:2276(G)(3). Concluding that plaintiff had failed to state a cause of action against defendants, the Court noted, "[I]n any event, Goodwin failed to state a cause of action because he did not allege that he made a written demand upon the appellees at least sixty days prior to suit." Goodwin at 353, n. 3.
Because La R.S. 30:2276(G)(3) does not provide for constructive notice under its provisions and plaintiff has cited no case law to support such an assertion, plaintiff's failure to provide the individual defendants with a sixty day written demand before the institution of its suit is tantamount to failure to state a cause of action against them. Service on Inland was insufficient to comply with proscriptions of La. R.S. 30:2276 (G)(3).
Furthermore, La. R.S. 30:2276(G)(3) applies only to persons who have performed one of the activities listed in Subsection A. Subsection A of 30:2276 states:
A. The court shall find the defendant liable to the state for the costs of remedial action taken because of an actual or potential discharge or disposal which may present an imminent and substantial endangerment to health or the environment at a pollution source or facility, if the court finds that the defendant performed any of the following:
(1) Was a generator who generated a hazardous substance which was disposed of or discharged at the pollution source or facility.
(2) Was a transporter who transported a hazardous substance which was disposed of or discharged at the pollution source or facility.
(3) Was a disposer who disposed of or discharged a hazardous substance or hazardous waste at the pollution source or facility.
(4) Contracted with a person for transportation or disposal at the pollution source or facility.
(5) Is or was the owner or operator of the pollution source or facility subsequent to the disposal of hazardous waste.
Without any detail, plaintiff contends that the individual defendants were employed in positions listed in La. R.S. 30:2276(A) until 1983 and "knew of the contamination." In Goodwin, the plaintiff's complaint similarly asserted that: (1) one employee defendant had exercised day-to-day control of employees, (2) two employee defendants were employed in a supervisory capacity, and (3) all three were aware of the contaminated site and allowed the it to remain in use. However, the Court in that case found plaintiff's general allegations insufficient to state a cause of action and explained that plaintiff was required to show that the individual employees actually participated in the discharge or disposal of hazardous substances.
Similarly, in the instant case, plaintiff's complaint is insufficient to establish that the individual defendants were in fact employed in a position as listed in 30:2276(A) or that they participated in any contamination at the site. Plaintiff merely states that Dwyer was the Plant Manager, Staiano was the Plant Superintendent, and Viso was the director of health, safety, and environment of Inland "until the date it was closed." However, proof of the individuals' "job titles," without any job descriptions or examples of their activities on the Site gives this Court no basis to find that the individual defendants were "transporters," "generators," "disposers, owners or operators" as required by La. R.S. 30:2276(A) and (G)(3).
Furthermore, plaintiff urges this Court to ignore the most fundamental fact revealed in the individual defendants' affidavits — that their employment with Inland Companies ended in the early 1970's. It is plaintiff's position that because defendants' original Statement of Grounds for Removal did not include the dates that their employment with Inland ended, the Court should turn a blind eye to the fact that they were not even employed by Inland at the time La. R.S. 30:2276 and other relevant statutes were passed. However, when considering fraudulent joinder and a motion for removal or remand, the Court is permitted to consider evidence outside the pleadings, such as affidavits and depositions. The veracity of the defendants' affidavits has not been challenged by plaintiff and the Court accepts them as true.
Also, there has been no argument that La. R.S. 30:2276 was intended to have retroactive effect. Louisiana Civil Code Article 6 provides that, "In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretive laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary." However, substantive laws can be applied retroactively when they are remedial or the statute expressly or impliedly provides for such application and it does not violate constitutional protections. La. R.S. 30:2276 neither expressly or impliedly requires retroactive application nor has there been any argument that it is procedural or remedial in nature. Therefore, the Court gives it prospective effect only.
Because the individual defendants had long since left Inland when La. R.S. 30:2276 was enacted and the statute does not have retroactive effect, its proscriptions are inapplicable to them and there is no possible claim against the individual defendants under current La. R.S. 30:2276(G).
Liability Under La. R.S. 30:1073(1) and La. R.S. 30:1148(C)(1) : Notification Claims
Plaintiff also asserts that the individual defendants violated the notification requirements enacted by La. R.S. 30:1073(I) (1982) and La. R.S. 30:1 148(C)(1) (1983) and bring suit through the citizen suit provisions in La. R.S. 30:1074. For the reasons that follow, the Court finds (1) plaintiff has not and will not be able to state a cause of action against the individual defendant under the notification provisions and (2) a citizen suit against the individual defendants is not proper.
Now La. R.S. 3 0:2204.
Now La. R.S. 30:3026.
The relevant portion of former La. R.S. 30:1073 stated:
Reporting. Any person who discharges, emits or disposes of any substance in contravention of any provision of this chapter or of any permit or license terms and conditions, shall immediately upon learning of the discharge, emission, or disposal notify the office, the department of Public Safety, and the local law enforcement as to the nature and amount thereof and the circumstances surrounding same.Acts 1982, No. 300.
Former La. R.S. 30:1 148(C)(1) stated:
Whenever any responsible person, owner, or operator of any inactive or abandoned site obtains information that indicates that hazardous waste is leaching, spilling, discharging, or otherwise moving in, into, within, or on any land or water, such person shall notify the office in accordance with regulations to be adopted. This notification requirement shall apply to leaching, spilling, discharging, or moving of hazardous waste occurring hereafter although the hazardous waste was heretofore present at the site.Acts 1983, No. 459
Under the above statute, plaintiff alleges that the individual defendants had the responsibility to notify the "appropriate party" of contamination at the Site. However, the individual defendants were not employed at the Site when the notification statutes were enacted and, as discussed above with the application of La. R.S. 30:2276, there has been no argument by plaintiff that these statutes were intended to have retroactive effect. Therefore, there is no possibility that plaintiff can establish the defendants had a legal duty to report any contamination, if any at the Site during their employment in the early 1970's.
Furthermore, for many of the same reasons noted above, plaintiff's citizen suit against the individual defendants is improper. La. R.S. 30:1074 stated:
(1) Except as provided in Subsection (2) of this Section, any person having an interest, which is or may be adversely affected, may commence a civil action on his own behalf against any person whom he alleges to be in violation of this Chapter or of the regulations promulgates hereunder.
(2) No action under this Part shall be commenced under Subsection (1) hereof:
(a) Prior to thirty days after the plaintiff has given notice of the violation
(i) to the assistant secretary and (ii) to an alleged violator.
First, the individual defendants in this case were not afforded the requisite notice from plaintiff under this statute. Furthermore, the Court finds it is impossible for the individual defendants to be held "in violation of" a statute that was not in effect at the time of their employment with Inland. Because the statute does not expressly or impliedly require retroactive effects and plaintiff has presented no argument that it should, the Court finds that plaintiff can not maintain a citizen suit against the individual defendants.
Motion to Dismiss by Ispat Inland
The Court now takes up plaintiff's claims against defendant, Inland, and in turn, Inland's Motion to Dismiss and Motion for More Definite Statement. Much like the allegations lodged against the individual defendants, plaintiff claims that Inland should be held liable for twice their portion of the costs plaintiff expended during its cleanup of the Site because Inland failed to comply with the mandates of La. R.S. 30:2276(G)(1) and failed to notify the Louisiana Department of Environmental Quality ("LDEQ") of the presence of contamination on the Site as required by former La R.S. 30:1137(H) and Act 459 of 1983, Act 299 of 1982, and Act 194 of 1980.
Motion to Dismiss Standard
The Fifth Circuit has consistently warned that "[m]otions to dismiss for failure to state a claim are viewed with disfavor and rarely granted." Southern Christian Leadership Conference v. Supreme Court of State of Louisiana, C.A. 99-30895, 2001 WL 575601 (5th Cir. May 29, 2001). Such motions are usually denied because they "`admit the facts alleged in the complaint but challenge plaintiff's right to relief based upon those facts.'" Crowe v. Henry, 43 F.3d 198, 203 (5th Cir. 1995) (quoting Ward v. Hednell, 366 F.2d 247, 249 (5th Cir. 1966)). Therefore, when considering a motion to dismiss, district courts should construe complaints liberally, accept the factual allegations of the complaint as true, and resolve all ambiguities or doubts regarding the sufficiency of the claim in favor of the plaintiff. Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278 (5th Cir. 1993). Unless it "appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim," the complaint should not be dismissed for failure to state a claim. Id. at 284-85 and Conley v. Gibson, 355 U.S. 41, 45-46.
Even with the cautious attitude employed by this Court when considering motions to dismiss, plaintiff has failed to state a claim against the individual defendants. Because there is no reasonable basis of recovery against the individual defendants, Plaintiff's Motion to Remand is DENIED and individual defendants' Motion to Dismiss is GRANTED.
Plaintiff's Claim Under La R.S. 30:2276(G)(1)
Under La. R.S. 30:2276(G)(1), a "participating party" is one who has received a demand from the state and agreed to clean up a pollution source or facility. The participating party, then, can sue and recover the costs it expended during the cleanup from any "nonparticipating party." A "nonparticipating party" is one who has: (1) refused to comply with the demand of the secretary to clean up a pollution source or facility, (2) failed to respond to the demand, or (3) against whom a suit has been filed by the secretary. Plaintiff alleges it is a "participating party" and believes Inland fits the criteria for a "non-participating party" and should be held liable for plaintiff's costs.
Inland argues in its Motion to Dismiss, however, that it cannot be held liable under La. R.S. 30:2276 as a "nonparticipating party" under the LDEQ because no "demand or suit" or other notice was provided to Inland by the secretary of the LDEQ.
In Goodwin v. Agrilite of Louisiana, 643 So.2d 249 (La.App. 2 Cir. 9/21/94), the Court was faced with a similar factual scenario and concluded:
To be either a participating or nonparticipating party, the party must have received demand by the state. However, Goodwin's petition at best alleged only that the former owners . . . were aware of a request by the DEQ to remove offending material, and in no way suggests that a written demand was ever made on any corporate officers to clean the site.
Goodwin's failure to comply with the proscriptions of La R.S. 30:2276 (G)(1) led that Court to dismiss plaintiffs' claims.
Similarly, in this case, there is no evidence that Inland received demand from the state to cleanup any pollution or its facility. Without such proof, this Court is left with no alternative but to dismiss this claim against Inland.
Plaintiff's Notification Claims
Plaintiff also alleges Inland had a duty to notify the LDEQ of all contamination (if any) at the Site under Act 194 of 1980, Act 299 of 1982, and Act 459 of 1983 which were "in effect when the Site was closed." Plaintiff claims each Act imposed a duty on defendant to disclose any pollution that occurred on the Site while under its control to the LDEQ. However, defendant (1) contends that Acts 194 and 299 do not include any notification requirements, (2) claims the notification requirements of Act 459 do not apply to it because it was enacted by LDEQ after the Site was sold, (3) admits it is not certain what plaintiffs' specific claims are under the statutes, and (4) therefore requests clarification of plaintiffs' allegations.
To date, plaintiffs have not attempted to elaborate on their basis for holding defendants liable under Acts 194 and 299. However, giving plaintiff the benefit of the doubt in a motion to dismiss, the Court directs plaintiff to clarify its claims based on these Acts.
Act 459 states in pertinent part:
Whenever the owner or operator of any active site or other facility obtains information that indicated that hazardous waste is leaching, spilling, discharging, or otherwise moving into, within, or on any land or water such person shall notify the office in accordance with regulations to be adopted. This notification requirement shall apply to leaching, spilling, discharging, or moving of hazardous waste occurring hereafter although the hazardous waste was heretofore present at the site or facility.
Act 459 became effective in 1983 and was adopted by the LDEQ in 1985. Defendants owned the Site until it was sold to plaintiff in 1984. Therefore, plaintiff claims that the regulations "to be adopted" should apply to defendant because it was the owners of the property when the statute was effective (1983). Defendant, on the other hand, contends that Act 459 does not apply to it because it was no longer the owner of the site when the Act was enacted by the LDEQ (1985). Furthermore, defendant points out that plaintiff has not alleged what "information" the facility had "indicating that hazardous waste was leaching, spilling or discharging into, within or on any land or water" before the sale of the property.
Because, when considering a motion to dismiss, the court should construe complaints liberally, accept the factual allegations of the complaint as true, and resolve all ambiguities or doubts regarding the sufficiency of the claim in favor of the plaintiff, this Court finds that Inland's Motion to Dismiss should be GRANTED in part and DENIED in part. The Court GRANTS defendants Motion to Dismiss under La. R.S. 30:2276 (G)(1) because there is no possibility that Inland is a "non-participating party" as required by Goodwin. However, the Court DENIES defendant's motion to dismiss plaintiff's notification claims and directs plaintiff to clarify its allegation under the notification statutes.
Accordingly,
IT IS ORDERED that plaintiffs' motion for remand is DENIED, as this Court finds defendants Dwyer, Staiano, and Viso were fraudulently joined.
IT IS FURTHER ORDERED that defendants, Dwyer, Staiano, and Viso's, Motion to Dismiss should be GRANTED.
IT IS FURTHER ORDERED that defendant, Ispat Inland's Motion to Dismiss should be GRANTED in part and DENIED in part.