Opinion ID: 201206
Heading Depth: 1
Heading Rank: 2

Heading: Part One: Affirmative defenses

Text: CERCLA mandates that: 17 No action for contribution for any response costs or damages may be commenced more than 3 years after— 18 (A) the date of judgment in any action under this Act for recovery of such costs or damages, or 19 (B) the date of an administrative order under section 122(g) [42 USCS § 9622(g)] (relating to de minimis settlements) or 122(h) [42 USCS § 9622(h)] (relating to cost recovery settlements) or entry of a judicially approved settlement with respect to such costs or damages. 20 42 U.S.C. § 9613(g)(3). 21 Section 9613(g)(3) lists four events that trigger the running of the statute of limitations: (1) the entry of a judgment; (2) a § 9622(g) de minimis settlement; (3) a § 9622(h) cost recovery settlement; and (4) a judicially approved settlement. The Capuanos contend that R & H's contribution action is time-barred because a judgment against R & H was entered on April 20, 1988, at which time R & H was adjudged jointly and severally liable for past and future costs of remediation at the Picillo site. See O'Neil, 682 F.Supp. at 730-31. If they are correct, any claims for contribution should have been brought by April 20, 1991, many years before this case was filed. 22 To support their argument, the Capuanos first contend that the plain language of § 9613(g)(3) sets the triggering date for starting the statute of limitations as the date of judgment in any action under this Act. 42 U.S.C. § 9613(g)(3) (emphasis added). Since O'Neil was a judgment in an action under § 9607, the plain language of § 9613(g)(3) would suggest that the statute of limitations started in 1988. The Capuanos make this argument acknowledging that response costs relating to the groundwater remediation had not been identified or incurred at the time of the O'Neil judgment. Nevertheless, citing United States v. Davis, 261 F.3d 1, 46 (1st Cir.2001), the Capuanos argue that costs or damages need not be identified for a plaintiff in a CERCLA action to seek an allocation of future response costs. 23 The Capuanos also argue that an adjudged liable PRP who is permitted to seek contribution for response costs before its liability is established, and who can seek an allocation of future response costs once its liability is established, should not be able to split its contribution claims into several successive lawsuits as the cleanup continues and the PRP's costs become fixed. Splitting contribution suits results in inefficiencies and conflicting judgments, the antitheses of CERCLA's policy objectives. 24 The district court, rejecting the Capuanos' arguments, held that whether a PRP can seek contribution ultimately depends on whether it incurs future costs. Until that occurs, regardless of whether liability has been assessed against a contribution defendant, there has been no expenditure or fixing of costs for which a PRP may seek contribution. We agree with the district court's holding and reject the Capuanos' arguments for similar reasons. 25 We review de novo questions regarding the proper interpretation of a statute. See United Techs. Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 98 (1st Cir.1994). It is apodictic that our first recourse must be to the statute's text and structure. Id. at 99. The main issue on appeal is whether the 1988 O'Neil judgment qualifies, for purposes of the limitations period in this action, as a judgment in any action under this Act for recovery of such costs or damages. 42 U.S.C. § 9613(g)(3). It is undisputed that O'Neil was a judgment in an action under CERCLA. The controversy surrounds whether the O'Neil judgment was for recovery of such costs or damages. We believe it was not.
26 The district court, in O'Neil, issued a declaratory judgment holding R & H jointly and severally liable for all future costs of removal or remedial action incurred by the state relative to the Picillo site. This declaratory judgment did not trigger the statute of limitations for the groundwater cleanup because being held jointly and severally liable for all future costs of removal or remedial action is not a judgment for the recovery of such costs. 27 Reaching this conclusion requires us to dissect 42 U.S.C. § 9613. Section 9613(g)(2) provides that, in an initial action for the recovery of costs, the court shall enter a declaratory judgment on liability for response costs or damages that will be binding on any subsequent action or actions to recover further response costs or damages. 42 U.S.C. § 9613(g)(2)(B) (emphasis added). The O'Neil judgment was an initial action for the recovery of costs associated only with the soil remediation. The district court also entered a declaratory judgment by holding that the defendants are jointly and severally liable for all future costs of removal or remedial action incurred by the state relative to the Picillo site. O'Neil, 682 F.Supp. at 730. Although the district court entered a judgment on liability for future response costs, the district court did not enter a judgment for the recovery of such costs. The declaratory judgment is binding on any subsequent actions to recover response costs or damages, but it is not itself a judgment for the recovery of such costs or damages. 28
29 The Capuanos also contend that the O'Neil judgment triggered the running of the statute of limitations because it was a judgment for the recovery of response costs. In O'Neil, R & H was held jointly and severally liable for past response costs totaling $991,937.30 for the soil remediation. Thus, the Capuanos argue, R & H had three years from the date of the O'Neil judgment to bring a contribution action not only for costs relating to the soil remediation, but also for any response costs or damages that could arise in the future. 30 We disagree and, once again, begin our inquiry by examining the language of the statute. When interpreting a statute, courts must strive to give effect to each subsection contained in a statute, indeed, to give effect to each word and phrase. Browning-Ferris, 33 F.3d at 101. Section 9613(g)(3) states that [n]o action for contribution for any response costs or damages may be commenced more than 3 years after—(a) the date of judgment in any action ... for recovery of such costs or damages. 42 U.S.C. 9613(g)(3) (emphasis added). There are two plausible interpretations of subparagraph (a). Under one interpretation, the term such costs or damages refers to any response costs. Under a second interpretation, the term such costs or damages refers to the costs or damages contained in the judgment mentioned in subparagraph (a). 31 Several factors favor the latter interpretation. First, other subsections of § 9613(g)(3) contain the word such and use it to limit and identify a word within the same sentence. For example, § 9613(g)(4) states that [n]o action based on rights subrogated pursuant to this section by reason of payment of a claim may be commenced ... more than 3 years after the date of payment of such claim. 42 U.S.C. § 9613(g)(4) (emphasis added). Similarly, § 9613(g)(5) states that where a payment pursuant to an indemnification agreement with a response action contractor is made ... an action ... for recovery of such indemnification payment from a potentially responsible party may be brought at any time before the expiration of 3 years from the date on which such payment is made. 42 U.S.C. § 9613(g)(5) (emphasis added). In both subsections, the word such is used to identify a particular claim or payment. Similarly, we find that such costs in § 9613(g)(3) refers to the judgment mentioned earlier in the sentence and identifies a particular claim or payment. 2 32 Our interpretation of other subsections of § 9613 further supports the interpretation that such costs refers to costs identified in the judgment. Section 9613(g)(2) requires a court to enter a declaratory judgment on liability and then provides that subsequent actions for future response costs may be maintained at any time during the response action, but must be commenced no later than 3 years after the date of completion of all response action. See 42 U.S.C. § 9613(g)(2)(B). Section 9613(g)(2), therefore, allows for the cleanup and the payment for that cleanup to occur in phases. When a PRP is forced to pay more than its share of that cleanup, it turns to § 9613(f), which allows a PRP to seek contribution from any other person who is liable or potentially liable. 42 U.S.C. § 9613(f)(1). We have determined that § 9613(g)(2)'s declaratory provision applies to § 9613(f)(1), allowing a PRP to obtain a declaratory judgment in a contribution action. See Davis, 261 F.3d at 45-46. After obtaining such a declaratory judgment, a PRP is able to seek contribution from other PRPs in phases as it incurs costs beyond its pro rata share. By interpreting such costs to refer to those costs contained in a judgment, a PRP would not lose the ability to seek contribution if a phase of a cleanup occurs after three years of an initial judgment. 33 The Capuanos disagree and contend, citing Davis, that regardless of when a PRP incurs response costs, a PRP is required to seek a declaratory judgment in a contribution action for any future remediation within three years of being held liable for any type of remediation. Such an argument is self-defeating and proves why a judgment for soil remediation does not trigger the statute of limitations for contribution claims relating to the groundwater remediation. The O'Neil judgment regarding soil remediation triggered the statute of limitations for a contribution action regarding soil remediation. Consequently, R & H sought contribution from other PRPs for the soil remediation. See American Cyanamid v. King Indus., Inc., 814 F.Supp. 215 (D.R.I.1993). R & H could not, however, seek contribution relating to the soil remediation from the Capuanos because the Capuanos had settled with the government regarding costs associated with soil remediation and, as discussed earlier, settling parties are immune from contribution suits regarding matters addressed in the settlement. See 42 U.S.C. § 9613(f)(2). At the time of the O'Neil judgment, R & H was also unable to seek contribution relating to the groundwater remediation because it was uncertain whether groundwater remediation was likely to occur. See Davis, 261 F.3d at 47-48 (stating that a PRP may seek a declaratory judgment in a contribution action if the PRP is likely to incur more than its fair share of future cleanup); see also Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1192 (9th Cir.2000) (stating that declaratory relief is appropriate when there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant declaratory relief (citation omitted)). Indeed, in 1988, Rhode Island and the United States had not assessed whether there was groundwater contamination at the Picillo site. On appeal in O'Neil, we discussed giving Rhode Island and the EPA time to conduct further tests and we discussed the possibility that after conducting the necessary tests, the government [could] conclude[] [that] there was in fact no harm to the area's groundwater. O'Neil, 883 F.2d at 183. As such, R & H could not seek a declaratory judgment against the Capuanos after the O'Neil judgment because, at the time of the O'Neil judgment, R & H did not have a contribution claim, declaratory or otherwise, against the Capuanos. See Davis, 261 F.3d at 48 (stating that a PRP may seek a declaratory judgment in a contribution action if the PRP is likely to incur more than its fair share of future cleanup). Thus, the O'Neil judgment pertaining to soil remediation could not trigger the statute of limitations for a contribution action for groundwater remediation. 34 This interpretation of § 9613 comports with the legislative history of the statute of limitations and advances CERCLA's purpose. See Ortega v. Star-Kist Foods, Inc., 370 F.3d 124, 143 (1st Cir.2004) (Resort to legislative history is appropriate where, as here, the text of a statute is susceptible to two textually plausible interpretations.). 35 The legislative history indicates that § 9613 establishes a three-year statute of limitations for the filing of an action for contribution for response costs or damages. The statute of limitations begins to run at the date of judgment for recovery of response costs or damages or the date of entry of a judicially approved settlement with respect to such costs or damages. H.R.Rep. No. 253(I), 99th Cong., 1st Sess., at  (1985). In discussing the statute of limitations, Congress referred to § 9613(g)(3)(A) and § 9613(g)(3)(B) together. In subsection (B), the statute of limitations is triggered by the entry of a judicially approved settlement with respect to such costs or damages. 42 U.S.C. § 9613(g)(3)(B). The entry of a judicially approved settlement provides contribution protection only regarding matters addressed in the settlement and allows a settling PRP to seek contribution within three years of that settlement for costs incurred in the settlement. See 42 U.S.C. § 9613(f)(2). Similarly, a PRP has three years to seek contribution for costs contained within a judgment. The statute of limitations, however, is not triggered for costs not contained within the judgment. 36 Generally, the interpretation of § 9613 implicates two competing principles. On the one hand, CERCLA's `essential purpose' [is] making `those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created.' Boyd v. Boston Gas Co., 992 F.2d 401, 405 (1st Cir.1993) (quoting Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.1986)). Congress also wanted to give potentially responsible parties the explicit right to sue other liable or potentially liable parties who also may be responsible for the hazardous waste site. H.R.Rep. No. 253(I), 99th Cong., 1st Sess., at 15 (1985) (by enacting SARA, Congress wanted to protect the interests and rights of those who may be held liable for ... clean-ups.). 37 On the other hand, the Supreme Court has recognized that statutes of limitations are not disfavored, but rather `are found and approved in all systems of enlightened jurisprudence' [and] represent a pervasive legislative judgment that ... `the right to be free of stale claims in time comes to prevail over the right to prosecute them.' United States v. Kubrick, 444 U.S. 111, 117, 100 S.Ct. 352, 62 L.Ed.2d 259 (1979) (citations omitted). Indeed, by passing SARA, Congress recognized that CERCLA currently includes no explicit statute of limitations for the filing of cost recovery actions [and SARA] provides for the timely filing of cost recovery actions, to assure that evidence concerning liability and response costs is fresh and to provide a measure of finality to affected responsible parties. H.R.Rep. No. 253(I), 99th Cong., 1st Sess., at 15 (1985). 38 Defining such costs to identify those costs contained in a judgment upholds both principles. First, it ensures those responsible for environmental damage bear the costs for remedying the harmful conditions they created. An environmental cleanup takes many years to complete. To make the cleanup manageable, it is done in phases. If an initial cost recovery action triggered the statute of limitations for the recovery of any costs in future phases, PRPs could manipulate CERCLA to avoid paying their share. Indeed, by settling with the government for the soil remediation, the Capuanos received contribution protection for the soil remediation only. At the time of the soil remediation, the likelihood of a groundwater cleanup was unknown. Allowing the immunity the Capuanos received for the soil remediation to effectively shield them from contribution relating to future phases of the cleanup would provide the Capuanos protection for which they never paid—a result in conflict with the purpose of CERCLA. 39 Our interpretation of § 9613 also ensures that evidence concerning liability and response costs is fresh and provides a measure of finality to affected responsible parties. To limit such costs to those costs contained in a judgment results in a contribution action tracking the statute of limitations for cost recovery actions. In a cost recovery action, any actions after a declaratory judgment must be commenced no later than 3 years after the date of completion of all response action. 42 U.S.C. § 9613(g)(2)(B). Thus, the latest a judgment for the recovery of costs could occur is three years after the completion of a response action. A PRP would then have three years to commence a contribution action. The workings of 42 U.S.C. § 9613, therefore, ensure that evidence concerning liability and response costs is fresh.
40 The Capuanos argue that, under the doctrine of res judicata, R & H is precluded from seeking contribution against them. The applicability of the doctrine of res judicata is a question of law subject to plenary review. Bay State HMO Mgmt., Inc. v. Tingley Sys., Inc., 181 F.3d 174, 177 (1st Cir.1999). Under the doctrine of res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (citation omitted). For a claim to be precluded, there must be: (1) a final judgment on the merits in an earlier action; (2) sufficient identity between the causes of action asserted in the earlier and later suits; and (3) sufficient identity between the parties in the two suits. Bay State, 181 F.3d at 177. 41 The Capuanos first argue that R & H cannot seek contribution from them in this case because R & H failed to seek contribution from them in the King Industries case. See King Indus., Inc., 814 F.Supp. 215. The King Industries case was filed after R & H was found liable in O'Neil. In R & H's Second Amended Complaint in King Industries, R & H alleged that the defendants were jointly and severally liable to the plaintiffs for contribution ... [for] past and future response costs. R & H entered into multiple settlement agreements and dismissal agreements, approved by the district court, with most of the parties sued in King Industries. See King Indus., Inc., 814 F.Supp. 215. Some of the settlement agreements included dismissals with prejudice. The Capuanos contend that the dismissals with prejudice were judgments on the merits and therefore the doctrine of res judicata should preclude the suit before us from proceeding. We disagree for several reasons. 42 It is true that a voluntary dismissal with prejudice is ordinarily deemed a final judgment that satisfies the res judicata criterion. United States v. Cunan, 156 F.3d 110, 114 (1st Cir.1998). But, a dismissal with prejudice contained in a consent decree is not a ruling on the merits... [that] applies to others under the law of claim preclusion. Langton v. Hogan, 71 F.3d 930, 935 (1st Cir.1995) (emphasis added). The Capuanos were not defendants in King Industries and were not parties to any of the settlement agreements. Therefore, the dismissal agreements do not have a res judicata effect over claims against the Capuanos. 43 Second, at the time of the King Industries suit, R & H could not pursue a claim against the Capuanos because the groundwater remediation had not yet occurred and the Capuanos had contribution immunity for claims relating to the soil remediation. [R]es judicata will not attach if the claim asserted in the second suit could not have been asserted in the first. Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 38 (1st Cir.1998); Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 756 (1st Cir.1994) (stating that principles of res judicata will bar all claims that either were or could have been asserted in the initial action.). 44 The Capuanos also argue that R & H is precluded from seeking contribution because of Fed.R.Civ.P. 41(a)(1), also known as the two dismissal rule. This Rule states that an action may be dismissed by the plaintiff without order of court ... [and] the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed ... an action based on or including the same claim. R & H dismissed two cases: the King Industries case and a 1995 contribution lawsuit against the Capuanos filed in the District Court of Rhode Island. Nonetheless, the two dismissal rule does not apply to this case because the dismissal in the King Industries case does not count as a dismissal for purposes of this rule as applied to the Capuanos. The two dismissal rule is not applicable unless the defendants are the same or substantially the same or in privity in both actions. 5 Moore's Federal Practice § 41.04 (2d ed.1996). The Capuanos were not defendants in King Industries, nor were they in privity with the defendants in King Industries. See generally Gonzalez, 27 F.3d at 757-63. As a result, the two dismissal rule does not preclude R & H's claims against the Capuanos.
45 In 1988, the Capuanos entered settlement agreements with the United States and Rhode Island. In return for contribution immunity, the Capuanos paid $1,500,000 to the United States and $500,000 to Rhode Island. The Capuanos argue that their Consent Decree provides contribution immunity against R & H's contribution claims. 3 The Capuanos' settlement agreement provided immunity for future liability for past response costs, but it did not provide immunity for claims related to groundwater protection or remediation. The Capuanos argue that R & H failed to prove that the money R & H paid to the United States, and for which R & H now seeks contribution, was for groundwater protection or remediation. We disagree. The Capuanos' argument is nothing more than creative word play. According to the Capuanos, R & H settled with the government for past response costs. R & H's past response costs are costs incurred by the United States through October 25, 1995. Thus, R & H's past response costs would be future liability for past response costs as it pertains to the Capuanos and the Capuanos have contribution protection for future liability for past response costs. 46 Regardless of how the Capuanos choose to phrase the costs incurred, it is undisputed that the four corners of the Capuanos Consent Decree does not provide contribution immunity for costs relating to groundwater protection or remediation. At trial, R & H introduced documents detailing the work performed by the United States in regard to the groundwater remediation and introduced the testimony of an expert that the cost of the groundwater Remedial Investigation (RI) and Feasibility Study (FS) exceeded $4.7 million. The expert testified that the groundwater RI/FS was different from the soil RI/FS and the $4.7 million did not include any costs dealing with the soil remediation. R & H ultimately settled with the United States for $4.35 million and is seeking contribution for a portion of that amount. The evidence showed, therefore, that the costs R & H paid to the United States, for which it now seeks contribution, were for groundwater protection and remediation, and the Capuanos do not have contribution immunity for costs relating to groundwater protection or remediation. 47 In the alternative, the Capuanos argue that even if there was proof showing that R & H is seeking contribution for the RI/FS relating to the groundwater, a RI/FS is part of a removal action and is not groundwater protection or remediation and thus it is not a cost that was excluded from the Capuanos' Consent Decree. 48 The RI/FS is part of the groundwater protection and remediation process. The purpose of the ... (RI/FS) is to assess site conditions and evaluate alternatives to the extent necessary to select a remedy. Developing and conducting an RI/FS generally includes the following activities: project scoping, data collection, risk assessment, treatability studies, and analysis of alternatives. 40 CFR 300.430. Since the RI/FS is the first step in groundwater protection and remediation, the RI/FS is not a cost excluded by this Consent Decree.