1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

10-23-1995

United States v USX Corp.

Precedential or Non-Precedential:

Docket 94-5681

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1995 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"United States v USX Corp." (1995). 1995 Decisions. Paper 278.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/278
1 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

_───────────_ 

No. 94-5681 

_───────────_ 

UNITED STATES OF AMERICA, 

v. 

HUGHES, HUBBARD & REED, 

 Intervenor-Plaintiff 

v. 

USX CORPORATION; ATLANTIC DISPOSAL SERVICE, 

INC.; EASTERN SOLID WASTE EQUIPMENT COMPANY, 

INC.; A.C. REALTY; CHURCHDALE LEASING INC.; 

PAUL C. MURPHY, INC.; ATTWOODS, INC.; ALVIN 

WHITE; AVE MARIA CARITE, AS EXECUTOR OF THE 

ESTATE OF CHARLES CARITE; STEPHEN MINER, AS 

EXECUTOR OF THE ESTATE OF CHARLES CARITE, 

 Defendants 

and 

ALVIN WHITE; A.C. REALTY; ANTHONY CARITE, 

JR., AVE MARIA CARITE, AS EXECUTOR OF THE 

ESTATE OF CHARLES CARITE; STEPHEN MINER, AS 

EXECUTOR OF THE ESTATE OF CHARLES CARITE; 

ATLANTIC DISPOSAL SERVICE, INC.; USX 

CORPORATION; THE HARLEYSVILLE MUTUAL 

INSURANCE COMPANY, 

 Third-party Plaintiffs 

v. 

CHUBB GROUP OF INSURANCE COMPANIES; FIRST 

STATE INSURANCE COMPANY; THE HARLEYSVILLE 

MUTUAL INSURANCE COMPANY; INTERSTATE FIRE AND 

CASUALTY COMPANY; PENNSYLVANIA MANUFACTURERS 

INSURANCE COMPANY; SAFETY MUTUAL CASUALTY 

CORPORATION; WYLE LABORATORIES, INC.; EASTERN 
2 

SOLID WASTE EQUIPMENT COMPANY, INC.; 

CHURCHDALE LEASING INC.; A.C. REALTY; 

ATTWOODS, INC.; PAUL C. MURPHY, INC.; ALVIN 

H. WHITE; AVE MARIA CARITE, AS EXECUTOR OF 

THE ESTATE OF CHARLES CARITE; STEPHEN MINER, 

AS EXECUTOR OF THE ESTATE OF CHARLES CARITE; 

ANTHONY CARITE, JR.; UTICA MUTUAL INSURANCE 

COMPANY, 

 Third-party Defendants 

ATLANTIC DISPOSAL SERVICE, INC., ALVIN WHITE, 

A.C. REALTY, AVE MARIE CARITE, AS EXECUTOR OF 

THE ESTATE OF CHARLES CARITE, AND STEPHEN 

MINER, AS EXECUTOR OF THE ESTATE OF CHARLES 

CARITE, 

 Appellants 

_───────────_ 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civil No. 90-3068) 

Argued July 26, 1995 

Before: BECKER and ALITO, Circuit Judges, 

VANASKIE, District Judge* 

(Filed October 23, 1995) 

*The Honorable Thomas I. Vanaskie, United States District Judge 

for the Middle District 

 of Pennsylvania, sitting by designation 
3 

 Sanford F. Schmidt (Argued) 

 Gerston, Cohen & Grayson 

 20 Kings Highway West 

 Haddonfield, NJ 08033 

 

 Attorney for Appellants 

 Atlantic Disposal 

Service, Inc., 

 Alvin White and A.C. Realty 

 Joseph H. Kenney (Argued) 

 Kenney & Kearney 

 220 Lake Dyrive East 

 P.O. Box 5034 

 Cherry Hill, NJ 08034 

 Attorney for Appellants 

 Ave Maria Carite and Stephen 

Miner, 

 as Executors of the Estate of 

Charles 

 Carite 

 Albert M. Ferlo, Jr. (Argued) 

 United States Dept. of Justice 

 Environment & Natural 

Resources 

 Division 

 P.O. Box 23795 

 Washington, DC 20026 

 Attorney for Appellee 

_───────────_ 

OPINION OF THE COURT 

_───────────_ 

VANASKIE, District Judge

 This is an appeal from a declaratory judgment in favor 

of the United States and against defendants/appellants Atlantic 

Disposal Service, Inc. ("ADS"), the principal shareholders of 
4 

ADS, Alvin White ("White") and Charles Carite ("Carite"), and 

A.C. Realty, decreeing that each is jointly and severally liable 

under §107 of the Comprehensive Environmental Response, 

Compensation, and Liability Act ("CERCLA"), 42 U.S.C.A. §§9601-75 

(1995), for any future response costs incurred by the United 

States at a hazardous waste site located in Tabernacle, New 

Jersey (the "Tabernacle Site"). The district court held, on 

summary judgment motions, that each appellant was liable under 

CERCLA as a "person who . . . accepted . . . hazardous substances 

for transport to disposal or treatment facilities . . . or sites 

selected by such person." 42 U.S.C.A. §9607(a)(4)(1995). ADS 

was held liable based upon evidence that its employees had 

transported approximately 200 drums of hazardous waste to the 

Tabernacle Site pursuant to an arrangement negotiated by a 

representative of ADS with the lessees of the Tabernacle Site. 

White and Carite were held liable based upon the district court's 

finding that they exercised control over the activities of ADS in 

1976 and 1977, when the drums were deposited at the Tabernacle 

Site.0 A.C. Realty, a partnership formed by Carite and White 

which owned the land and buildings occupied by ADS, was held 

liable on the ground that it was a joint venturer of ADS at the 

time of the disposal activities at issue here. 

 Although we agree that the record before the district 

court established, as a matter of law, the liability of ADS as a 

 

0Charles Carite was killed in an airplane accident in 1991, and the executors of his estate have 

been substituted as defendants. During the relevant time frame, Carite and White were the sole 

shareholders, directors and officers of ADS. 
5 

"transporter" under §107(a)(4) of CERCLA, 42 U.S.C.A. 

§9607(a)(4), we find that there are genuine issues of material 

fact pertaining to the potential liability of White, Carite and 

A.C. Realty. Specifically, as to White and Carite, the district 

court erred in assessing liability on the basis of day-to-day 

control of the affairs of ADS, as opposed to whether White and/or 

Carite actually participated in the decision to dump drums of 

hazardous waste at the Tabernacle Site. Because there are 

genuine disputes pertaining to the knowledge and participation of 

White and Carite in the Tabernacle Site dumping, summary judgment 

on their liability is inappropriate. As to A.C. Realty, we find 

that there are genuine issues concerning the intent of the 

parties to establish a joint venture relationship, thereby 

precluding summary judgment on this issue as well. Accordingly, 

we will affirm the declaratory judgment against ADS, but will 

vacate the declaratory judgment against White, Carite and A.C. 

Realty and remand to the district court for further proceedings. 

I. FACTS AND PROCEDURAL HISTORY

 A. The Statutory Liability Scheme

 "Congress enacted CERCLA to facilitate the cleanup of 

potentially dangerous hazardous waste sites, with a view to the 

preservation of the environment and human health." Tippins, Inc. 

v. USX Corp., 37 F.3d 87, 92 (3rd Cir. 1994). One of the 

principal purposes of CERCLA is "to force polluters to pay for 

costs associated with remedying their pollution." United States 

v. Alcan Aluminum Corp., 964 F.2d 252, 259-60 (3rd Cir. 1992). 
6 

 CERCLA imposes liability for the costs of cleaning up a 

polluted site on four separate categories of parties: 

 (1) The owner and operator of a 

facility from which there has been a release 

or threatened release of hazardous substances 

necessitating responsive action, §107(a)(1); 

 (2) A person who owned or operated such 

a facility at the time hazardous substances 

were deposited there, §107(a)(2); 

 (3) A person who arranged for the 

transportation, disposal or treatment of 

hazardous substances at such a facility, 

§107(a)(3); and 

 (4) A person who had accepted hazardous 

substances for transportation to a facility 

selected by that person, §107(a)(4).0

 

0

Section 107(a)of CERCLA, in pertinent part, states: 

 Notwithstanding any other provision or rule of law, and subject only to the 

defenses set forth in subsection (b) of this section -- 

 (1) the owner and operator of a vessel or a facility, 

 (2) any person who at the time of the disposal of any 

hazardous substance owned or operated any facility at which such 

hazardous substances were disposed of, 

 (3) any person who by contract, agreement, or otherwise 

arranged for disposal or treatment, or arranged with a transporter 

for transport for disposal or treatment of hazardous substances 

owned or possessed by such person, by any other party or entity, at 

any facility or incineration vessel owned or operated by another 

party or entity and containing such hazardous substances, and 

 (4) any person who accepts or accepted any hazardous 

substances for transport to disposal or treatment facilities, 

incineration vessels or sites selected by such person, 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-- 
7 

 Potentially responsible parties described by 

subsections (1) and (2) are generally known as "owners" and 

"operators"; those who fall under subsection (3) are generally 

known as "generators" and sometimes referred to as "arrangers"; 

and those who fall under subsection (4) are commonly known as 

"transporters."0 See Atlantic Richfield Co. v. Blosenski, 847 

F.Supp. 1261, 1271 (E.D. Pa. 1994). Liability of responsible 

parties is strict, i.e., not dependent on a finding of fault. 

See Tippins, 37 F.3d at 92.0 This appeal involves the question 

 

 (A) all costs of removal or remedial 

action incurred by the United States Government or 

a State or an Indian tribe not inconsistent with the 

national contingency plan; 

 (B) any other necessary costs of 

response incurred by an other person consistent with 

the national contingency plan; 

 (C) damages for injury to, 

destruction of, or loss of natural resources, 

including the reasonable costs of assessing such 

injury, destruction, or loss resulting from such a 

release; and 

 (D) the costs of any health 

assessment or health effects study carried out under 

section 9604(i) of this title. 42 U.S.C.A. 

9607(a)(1995). 

The term "person" as used in §107(a) is defined to include "an individual, firm, corporation, 

association, partnership, consortium, joint venture, commercial entity, United States 

Government, State, municipality, commission, political subdivision of a State or any interstate 

body." 42 U.S.C.A. §9601(21). 

0CERCLA defines the terms "transport" and "transportation" as "the movement of a hazardous 

substance by any mode." 42 U.S.C.A. §9601(26). 

0

Strict liability is described as "liability that is imposed on an actor apart from either (1) an intent 

to interfere with a legally protected interest without a legal justification for doing so, or (2) a 
8 

of whether the record before the district court established that 

ADS, White, Carite and/or A.C. Realty should be held liable as 

"transporters" of hazardous substances to the Tabernacle Site.0

B. The Potentially Responsible "Transporter" Parties

 White and Carite formed ADS in 1963. ADS was engaged 

in the business of hauling waste from commercial and industrial 

establishments. At the time of incorporation, Carite owned 50 

percent of ADS' stock, White owned 49 percent of the stock, and 

the remaining one percent was owned by White's spouse.0 From its 

incorporation until 1991, when its assets were sold, White and 

Carite were the sole officers and directors of ADS. White was 

the President of ADS; Carite was its Secretary/Treasurer. 

 As business expanded, White and Carite formed other 

corporations and partnerships. In 1971, they incorporated 

Eastern Solid Waste Equipment Company, Inc. ("ESWECO"). Although 

initially intended to operate as a distributor of refuse 

collection equipment, ESWECO essentially served as a maintenance 

company for the equipment used and buildings occupied by ADS. 

ESWECO was owned by relatives of White and Carite, but White and 

Carite served as the sole officers of that corporation. 

 Carite and White were also the sole partners in A.C. 

Realty, which was the owner of approximately 8.5 acres of land 

 

breach of a duty to exercise reasonable care, i.e., actionable negligence." W. Page Keaton, et al., 

Prosser & Keaton on the Law of Torts §75 at 534 (5th ed. 1984). 

0There is no dispute that the Tabernacle Site is a "facility" under CERCLA. Nor is there any 

challenge to the fact that there has been a release of hazardous substances from this facility. 

0By 1977, White and Carite each owned 50 percent of the ADS stock. 
9 

located in Mt. Laurel, New Jersey. Facilities constructed on a 

three-acre section of this parcel were leased to ADS. In the 

late 1970's, A.C. Realty leased another acre of land to Atlantic 

Recovery and Transfer Systems, Inc. ("ARTS"), which operated a 

waste transfer station adjacent to ADS.0

 Also in the late 1970's, White and Carite established 

A.C. Enterprises, a partnership that leased containers and trucks 

to ADS. In 1982, A.C. Enterprises sold its assets to Churchdale 

Leasing, Inc., a Subchapter S corporation owned by White and 

Carite, who were its sole officers and directors. Churchdale 

Leasing continued to lease rolling stock and containers to ADS. 

 ESWECO, A.C. Realty, and A.C. Enterprises dealt solely 

with ADS and other companies established by White and Carite. 

Neither A.C. Realty nor A.C. Enterprises had any employees; ADS 

employees performed the work of these partnerships.0

C. The Tabernacle Site

 One of the ADS industrial accounts during the 1970's 

was a plant operated by USX Corporation in Camden, New Jersey. 

ADS hauled 55-gallon drums of liquid waste from the USX facility 

to a landfill in Gloucester County. When the Gloucester County 

landfill refused to accept the USX drums, arrangements were made 

to dispose of the drums on a 1-acre wooded parcel in Tabernacle, 

New Jersey, leased by Robert Ware, an ADS mechanic. Ware's 

 

0Carite and White were each 50 percent shareholders in ARTS as well. 

0After the business operations of A.C. Enterprises were turned over to Churchdale Leasing, ADS 

continued to provide the employees to conduct the leasing business. ESWECO, A.C. Realty and 

A.C. Enterprises conducted their business at the Mt. Laurel facility leased to ADS. 
10 

understanding was that ADS would pay him a fixed amount for each 

drum dumped at the Tabernacle Site. 

 In 1976, Edith Ruhl, who was then Ware's wife, saw 

three trucks arrive at the Tabernacle Site and unload 55-gallon 

drums and other containers. Painted on the doors of the trucks 

were the words "Atlantic Disposal Services." An ADS dispatcher, 

William Milsop, acknowledged sending trucks containing drums of 

liquid waste to the Tabernacle Site. 

 In 1982, investigators of the Burlington County, New 

Jersey Health Department discovered 193 barrels and containers at 

the Tabernacle Site. Attached to at least one of the drums found 

at the Tabernacle Site were USX shipping documents. 

 Pursuant to a "Unilateral Administrative Order" issued 

by the United States Environmental Protection Agency ("EPA") in 

February of 1984 pursuant to §106(a) of CERCLA, 42 U.S.C.A. 

§9606(a) (1995),0 ADS removed all drums and related waste from 

the Tabernacle Site. Analyses of the contents of the drums 

revealed a number of hazardous substances. Soil sampling 

disclosed a release of the hazardous substances to the 

environment. Sampling from monitoring wells confirmed the 

existence of groundwater contamination. 

 A Remedial Investigation and Feasibility Study 

("RI/FS") was undertaken by EPA in 1985. As a result of the 

RI/FS, "special notice letters" were issued in July of 1988 to 

 

0

Section 106(a) authorizes EPA to issue "such orders as may be necessary to protect the public 

health and welfare and the environment" from an imminent and substantial danger resulting from 

an actual or threatened release of hazardous substances. 
11 

ADS and USX, affording them the opportunity to negotiate an 

agreement to perform the Remedial Design and Remedial Action 

("RD/RA") proposed by EPA for the Tabernacle Site.0 The ensuing 

negotiations resulted in an agreement by USX to perform the 

RD/RA. ADS, however, refused to participate in the environmental 

remediation work. 

 D. Procedural History

 In August, 1990, the United States commenced this cost 

recovery action pursuant to Section 107 of CERCLA, 42 U.S.C.A. 

§9607 (1995), naming as defendants only USX and ADS. Liability 

was sought to be imposed on USX as a "generator," and ADS was 

alleged to be liable as a "transporter." 

 In July of 1992, the United States amended its 

complaint, adding as defendants White and Carite. The United 

States claimed that White and Carite were personally liable for 

the transportation of USX waste to the Tabernacle Site based upon 

their alleged pervasive control of ADS. The United States also 

added as defendants Churchdale Leasing, ESWECO, and A.C. Realty, 

alleging that these entities were "joint venturers" of ADS in 

connection with the transportation of wastes containing hazardous 

substances to the Tabernacle Site. USX filed cross-claims 

against each of these parties.0 

 

0The "special notice letters" were issued pursuant to §122(e) of CERCLA, 42 U.S.C.A. 

§9622(e)(1995), which establishes the mechanism for negotiating an agreement with potentially 

responsible parties to undertake environmental remediation work. 

0

In addition, USX named Anthony Carite, Jr., Charles Carite's brother and the operations 

manager of ADS, as a third-party defendant. Pursuant to a stipulation of dismissal, the USX 

claims against Anthony Carite, Jr. were later dismissed. 
12 

 In an opinion dated December 6, 1993, the district 

court ruled that ADS, A.C. Realty, Churchdale Leasing, and ESWECO 

had been engaged in a joint venture that encompassed the 

transportation of waste containing hazardous substances to the 

Tabernacle Site.0 In separate Memoranda and Orders filed on 

January 12, 1994, the district court ruled that ADS, White and 

Carite were liable as "transporters" under §107(a)(4) of CERCLA, 

and USX was liable as a generator under §107(a)(3) of CERCLA. 

The district court, however, declined to grant summary judgment 

in favor of the United States on its damage claim of 

$1,778,518.89, finding that there were genuine issues of material 

fact "regarding the reasonableness of the RI/FS and whether the 

United States' response costs were incurred due to a `needless 

and expensive monitoring study.'" (A. 127a.) 

 By letter dated March 11, 1994, the United States 

informed the district court that it had reached a settlement with 

USX and Attwoods, Inc.0 Under the terms of the settlement, USX 

agreed to pay the United States $1.71 million of the $1.78 

 

0The December 6, 1993 Memorandum and Order addressed cross-motions for summary judgment 

filed by USX, as third-party plaintiff, and by ESWECO and Churchdale Leasing, two of the 

third-party defendants. The United States had separately moved for summary judgment on the 

joint venture issue. While the district court did not address the motion of the United States on 

this point, the parties have acknowledged that the ruling on USX's motion applies with equal 

force to the claims of the United States against A.C. Realty as an alleged joint venturer. 

0Attwoods had purchased the assets of ADS and the stock of Churchdale Leasing and ESWECO 

in March of 1991. Ownership of these companies was transferred to an Attwoods subsidiary 

known as Paul C. Murphy, Inc. The United States sued Attwoods and Paul C. Murphy, Inc. as 

purported corporate successors of ADS. USX filed cross-claims against these parties. In a 

Memorandum and Order dated January 11, 1994, the district court denied cross-motions for 

summary judgment on the issue of successor liability. (A. 100a-22a.) 
13 

million claimed as recoverable response costs. The March 11, 

1994 letter explained: 

 The settlement reached by the settling 

parties will encompass the following claims 

set forth in the pleadings in this action: 

 (1) All the United States' claims in 

its amended complaint except for a request 

for declaratory judgment for future response 

costs against the non-settling defendants; 

and (2) All claims by and between USX and 

defendants Attwoods, Churchdale Leasing, 

[ESWECO and Paul C. Murphy, Inc.]. Thus, the 

settlement will resolve all triable issues 

related to the United States' claims and the 

United States has no need at this time to 

participate in the pretrial conference 

scheduled for March 16, 1994. [A. 180-81a, 

emphasis added.] 

In a footnote in this letter, the United States also stated: 

 The Court has already ruled that the 

non-settling defendants are liable to the 

United States under Section 107(a) of CERCLA. 

Since the settlement will resolve the United 

States' claim for past costs, the only relief 

that the United States may ask this court for 

is a declaratory judgment of liability for 

future costs against the non-settling 

defendants. [A. 180a.]0

 The United States did not participate in the final 

pretrial conference, which was conducted on March 16, 1994. A 

jury trial commenced in June of 1994. In light of the settlement 

with the United States, the trial was limited to cross-claims 

between USX and Attwoods, on the one hand, and the ADS Defendants 

on the other.0 After several days of trial, USX, Attwoods, and 

 

0The non-settling parties were ADS, White, Carite and A.C. Realty, who will be referred to 

collectively as the "ADS Defendants." 

0USX sought recovery of $1.71 million paid to settle the United States' claims; $3.59 million 

incurred in conducting the RD/RA at the Tabernacle Site, and a declaration that ADS, White, 
14 

the ADS Defendants announced that they had reached a settlement. 

The basic terms of the settlement were that the ADS Defendants 

would pay $2 million to USX, and in exchange would receive a 

general release from USX as well as an agreement by USX to 

indemnify them for any future response cost incurred by the 

United States at the Tabernacle Site. They also would obtain from 

Attwoods a general release with respect to the Tabernacle Site. 

(A. 59a.-65a.) 

 At the time that counsel for the ADS Defendants placed 

on the record the settlement of the cross-claims, he requested 

"that this case . . . be dismissed with prejudice. . . ." 

(A. 61a.) Counsel for the United States objected to the 

dismissal with prejudice, observing: 

 This Court already ruled each one of 

those defendants is a liable party here. A 

settlement with the USX and Attwoods 

defendants deals with our present and past 

costs, but it does not deal with potential 

future costs at the site. 

 I just want to let the Court know that 

if they were to move to dismiss with 

prejudice, the Government might oppose that 

motion at that time. [A. 66a-67a.] 

 On August 15, 1994, the United States filed a motion 

for a declaratory judgment against the ADS Defendants for future 

costs that may be incurred at the Tabernacle Sites. The ADS 

Defendants responded to the request for declaratory relief by 

moving for dismissal for failure to prosecute arising out of the 

 

Carite and A.C. Realty were liable for all future costs incurred in connection with the RD/RA at 

the Tabernacle Site. Attwoods sought recovery of $2.71 million purportedly spent in connection 

with the cleanup of the Tabernacle Site. (A. 147a.-48a.) 
15 

fact that the United States had not participated in the 

preparation of the final pretrial order and had not attended the 

trial. In an Opinion dated September 20, 1994, the district 

court granted the United States' motion and denied the ADS 

Defendants' motion. 

 The ADS Defendants filed a timely notice of appeal, 

reasserting that the United States had effectively abandoned its 

request for declaratory relief. They also argue that the 

district court's summary judgment rulings on liability are 

erroneous. 

 The district court had jurisdiction pursuant to 28 

U.S.C. §1331 as the United States' claims arose under federal 

law. We have appellate jurisdiction under__