Court Opinion

ID: 9522159
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:18:44.828098+00
Date Added: 2024-06-11T13:02:20.939027
License: Public Domain

Johnson, J.,
¶ 53. dissenting in part, and concurring in part. I concur with Part I of the majority’s opinion, but considering the remedial purpose of the Vermont Waste Management Act (VWMA) combined with its strict liability statutory framework, I cannot agree that a landowner is able to escape liability simply by pointing to a negligently conducted environmental assessment given to him by the party selling him the subject property. If that is all it takes to meet the VWMA’s exception from liability, then the tail is wagging the dog. Contrary to the arguments implicit in defendant Fiore’s diligent-owner defense, the VWMA was not intended to be an economic redevelopment statute. Instead, it is a strict liability statute enacted to protect the public from the health and environmental consequences of hazardous waste contamination, and thus its exceptions to liability for current owners of contaminated property are necessarily narrow. Accordingly, I dissent from Part II of the majority’s decision.
¶ 54. The majority errs by focusing solely on whether it was reasonable for Fiore to rely on an admittedly “flawed” environmental assessment of the land. Ante, ¶¶ 34, 38. Such an interpretation of the VWMA undercuts the law’s strict liability scheme and expands a narrow exception to liability by ignoring the fact that the assessment upon which Fiore relied — regardless if that reliance was reasonable — was worthless. Once Fiore is precluded from using the negligently performed environmental assessment to make out an affirmative diligent-owner defense, there remain factual questions as to whether his inquiry amounted to a diligent investigation; thus, I would conclude that summary judgment on this issue was premature, and I respectfully dissent.9
¶ 55. The facts and complicated procedural history of this case are set forth in detail by the majority. Ante, ¶¶ 2-10. Fiore purchased the subject property in March 1999 and opened a pizzeria shortly thereafter. At the time of purchase, the property *333was owned by Banknorth, which had foreclosed on the property in 1997. The previous owner had used the property from 1996 until 1997 to operate a bakery. Before its use as a bakery, the property was owned from 1970 to 1996 by David Benvenuti and Howe Cleaners, who used the property to operate a dry-cleaning business. It was during the property’s use for dry cleaning that hazardous waste, such as perchloroethylene (PCE), was released onto the property. The release of this hazardous waste has resulted in contamination of the air within the building located on the property as well as migration of contaminants to underlying and adjoining properties through contaminated soils and groundwater. Vermont’s Agency of Natural Resources (ANR) has incurred over $300,000 in response costs to clean up the contamination, and the site remains contaminated.
¶ 56. At the time he purchased the property, Fiore was aware of the property’s past use as a dry-cleaning site, but maintained that there was no physical indication of present contamination. Just prior to purchase, Banknorth furnished Fiore with a Phase I environmental site assessment report prepared in 1998 by Griffin International, Inc., an environmental consulting and engineering company. The assessment, which all sides now concede was negligently conducted, concluded that “the property presented no significant environmentally hazardous conditions” and recommended “no further investigation.” Fiore also claims he justifiably relied on assurances from ANR that the site presented no health hazards. Fiore subsequently purchased the property and opened his pizzeria.
¶ 57. Following its discovery of contamination, the State brought a cost recovery action against Fiore and the previous owners of the property. In response to that action, Fiore moved for summary judgment, arguing that he was shielded from liability under the VWMA on a diligent-owner defense. See 10 V.S.A. § 6615(e).10 The trial court ruled in favor of Fiore, concluding that “it is reasonable for a person to rely on a recently produced, professional Phase 1 environmental report . . . and that such reliance is sufficient to constitute diligent and appropriate investigation as a *334matter of law.” The court further noted that even though the Griffin report was negligently conducted, the State had not produced evidence that would have “put Fiore on notice of either existing contamination or a faulty investigation or report by Griffin.” On appeal, the State argues — and I agree — that a negligently performed assessment cannot form the basis of a diligent-owner defense.
¶ 58. The purpose and statutory scheme of the VWMA, and its federal counterpart the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), indicate that the remedial goals of these statutes were intended to be quite broad and that the exceptions to liability quite narrow. By enacting the VWMA, the Vermont Legislature sought to address “the increasingly complex social, economic and legal problems of managing solid and hazardous wastes.” State v. Ben-Mont Corp., 163 Vt. 53, 57, 652 A.2d 1004, 1007 (1994); accord State v. Carroll, 171 Vt. 395, 400, 765 A.2d 500, 503 (2000) (“The statutory scheme is intended to hold all parties responsible for hazardous materials contamination accountable for the costs associated with its proper clean-up and disposal”). The same impetus to impose strict liability on those responsible for the problems caused by the treatment and disposal of hazardous waste motivated enactment of CERCLA. See Pennsylvania v. Union Gas Co., 491 U.S. 1, 21 (1989) (“The remedy that Congress felt it needed in CERCLA is sweeping: everyone who is potentially responsible for hazardous-waste contamination may be forced to contribute to the costs of cleanup.”); Walls v. Waste Res. Corp., 823 F.2d 977, 980 (6th Cir. 1987) (noting that CERCLA was enacted to require responsible parties to “bear the costs and responsibility for remedying the harmful conditions they created” (quotation omitted)).
¶ 59. Thus, the VWMA provides that a person who currently owns or operates a facility on which contamination has occurred, regardless of whether the current owner or operator is directly responsible for the contamination, shall be liable for “abating such release or threatened release” and for the “costs of investigation, removal and remedial actions incurred by the state which are necessary to protect the public health or the environment.” 10 V.S.A. § 6615(a)(4)(A)-(B). The statute explicitly holds responsible parties strictly liable “for all cleanup, removal and remedial costs.” Id. § 6615(c).
*335¶ 60. One of the limited exceptions to liability under the VWMA is what the trial court referred to as the “diligent owner” affirmative defense:
Any person who is the owner or operator of a facility where a release or threatened release existed at the time that person became owner or operator shall be liable unless he or she can establish by a preponderance of the evidence that after making diligent and appropriate investigation of the facility, he or she had no knowledge or reason to know that said release or threatened release was located on the facility.
Id. § 6615(e). Presumably, the Legislature added this limited exception to liability to ineentivize inquiry into whether purchased property is contaminated and to prevent unfairness that would result from holding a purchaser of contaminated land liable when he made every reasonable effort to determine if the land was contaminated before purchase. The passive landowner, however, who turns a blind eye to potential contamination on his newly acquired land, cannot escape liability.11
¶ 61. The VWMA largely tracks its federal precursor, CERCLA.12 Thus, we look to interpretation and application of the *336comparable federal innocent-landowner defense for guidance in interpreting our own provision. See Hodgdon v. Mt. Mansfield Co., 160 Vt. 150, 165, 624 A.2d 1122, 1130 (1992) (noting that “[because the Vermont Legislature patterned our handicap-discrimination statute on federal legislation, we look to federal case law for guidance in construing the definitions at issue”).13 The innocent-landowner defense in CERCLA focuses on whether a purchaser of contaminated property had “reason to know” of the contamination at the time of purchase. 42 U.S.C. § 9601(35)(A)(i). Unlike the VWMA, CERCLA (as set forth during the relevant time period of this action) provides explicit guidance on how a defendant may establish that it had “no reason to know” of a prior disposal:
To establish that the defendant had no reason to know . . . the defendant must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability. For purposes of the preceding sentence the court shall take into account any specialized knowledge or experience on the part of the defendant, the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reason*337ably ascertainable information about the property, the obviousness of the presence or likely presence of contamination at the property, and the ability to detect such contamination by appropriate inspection.
Id. § 9601(35)(B) (1999).14
¶ 62. The performance of a Phase I environmental site assessment, which courts considered the customary commercial practice even before the 2002 amendments to CERCLA codified it as the baseline, acts as a safe harbor to CERCLA liability. See R.E. Goodson Constr. Co. v. Int’l Paper Co., Civil Action No. 4:02-4184-RBH, 2006 WL 4916336, at *38 (D.S.C. Dec. 15, 2006) (considering whether landowner had met his burden under pre-2002 CERCLA innocent-landowner defense and concluding that “customary practice” included performance of Phase I assessment and that performance of such assessment provided “safe harbor” to escape CERCLA liability); see also United States v. Domenic Lombardi Realty, Inc., 290 F. Supp. 2d 198, 211 (D.R.I. 2003) (citing expert testimony that environmental assessment of property was required to satisfy “good commercial or customary practices” for purchasing property).
*338¶ 63. The fact that a defendant is merely shown an environmental assessment, however, may not be enough to escape liability. Rather, the adequacy of the assessment is a crucial fact in determining whether it is even relevant to a diligent-owner defense. See LaSalle Nat’l Trust, N.A. v. Schaffner, No. 91 C 8247, 1993 WL 499742 (N.D. Ill. Dec. 2, 1993). In LaSalle National Trust, the court considered whether evidence presented by the defendant that he had hired a professional consultant to conduct an environmental audit before purchasing the land in question and that the audit had yielded no evidence of contamination could meet the “all appropriate inquiry” requirement under CERCLA. Id. at *7. The court looked at evidence beyond the mere fact that an environmental investigation was conducted and inquired into whether the audit was “consistent with good commercial and customary practices.” Id. As part of this analysis, the court considered the fact that the defendant itself had brought an independent action against the consultant alleging that the consultant had been negligent in its investigation. Id. The court refused to grant summary judgment on the basis of the facts presented, finding instead that genuine issues of fact existed as to whether the inquiry made by the defendant was sufficient to escape liability. Id.15 See also S.S. & G, LLC v. California, No. 02:02-CV-2514-GEBJFM, 2005 WL 2016843, at *2 (E.D. Cal. 2005) (noting that questions of fact were raised as to whether environmental consultants performing Phase I assessment “exercised a level of care in accordance with generally accepted and local standards of professional practice in effect at the time” and thus summary judgment was inappropriate for this issue).
¶ 64. The reasoning behind imputing a professional environmental consultant’s negligence to the landowner who relies upon it is straightforward: when a defendant relies upon a professional company’s performance of an environmental assessment to meet his burden to conduct a diligent investigation, he adopts whatever investigation is performed by the professional company as his own. This is hardly a new concept of law and one that makes sense in *339this context given the remedial purpose and strict liability framework of the VWMA. See Restatement (Second) of Agency § 215 (1958) (“A master or other principal who unintentionally authorizes conduct of a servant or other agent which constitutes a tort to a third person is subject to liability to such person.”); see also In re Desautels Real Estate, Inc., 142 Vt. 326, 337, 457 A.2d 1361, 1366 (1982) (“The law of vicarious liability has long been recognized in Vermont as but an outgrowth of the maxim respondeat superior. Vicarious responsibility has been defined as an indirect legal responsibility, as for example, the liability of an employer for the acts of an employee, or a principal for the torts and contracts of his agent.” (citation omitted)). Thus, though I agree with the majority that performance of a valid Phase I assessment may indicate a purchaser’s due diligence under § 6115(e), I cannot agree that a negligently performed assessment should be given any weight.
¶ 65. Here, all sides agree that the Phase I environmental site assessment performed by Griffin International was negligently conducted. It may well be that the Griffin report was objectively dependable or that Fiore had no reason to be suspicious of the report’s legitimacy, ante, ¶ 38, but this guise of authority does not change the fact that the report was essentially worthless. Indeed, the end result is as if no environmental assessment had been performed at all. Thus, I cannot agree that the mere fact that Fiore happened to be given an assessment — especially by the entity attempting to convince him to buy the property — is enough, as a matter of law, to shield him from liability under the VWMA. This fact alone does not necessarily mean that Fiore automatically fails in making out his diligent-owner affirmative defense. Instead, Fiore merely loses the “safe harbor” from liability that performance of a valid Phase I assessment normally provides. Indeed, the performance of a Phase I assessment is only one factor that courts consider in determining whether a landowner can prevail on an affirmative defense to liability; Fiore, therefore, is left to point to other evidence indicating that he met his burden. See 42 U.S.C. § 9601(35)(B)(iii) (1999) (listing factors); Maturo v. Comm’r of Dep’t of Envtl. Prot., No. CV910313753S, 2008 WL 1734580, at *10 (Conn. Super. Ct. Mar. 19, 2008) (concluding that though defendant had made some inquiry, there were multiple warning signs that should have alerted him to contamination, such as the land’s past use as gas station); BCW *340Assocs., Ltd. v. Occidental Chem. Corp., Civ. A. No. 86-5947, 1988 WL 102641, at *21 (E.D. Pa. Sept. 29, 1988) (rejecting innocent-landowner defense in situation where defendant had conducted several environmental studies, none of which were found to be deficient, but where “[i]n light of [the plaintiffs] knowledge concerning the dust in the warehouse and the nature of [the defendant’s] activities, it cannot be said that it exercised due care or took adequate precautions”).
¶ 66. After the assessment falls out of the equation, there are simply not enough facts on which the trial court could rale on Fiore’s diligent-owner defense as a matter of law. Fiore asserted the following in support of his diligent-owner claim: (1) he did nothing to contaminate the property; (2) he had no actual knowledge of the contamination; (3) physical inspection did not indicate any contamination; (4) he paid $125,000 for the property, which had been assessed at $127,000; (5) he had no specialized knowledge of the dry-cleaning business; (6) following a tank pull report and investigation (conducted by Griffin) of the underground tanks on the property, Fiore was told by ANR that the agency was not aware of any health threat from the site; and (7) in 2000, he was told by a hazardous materials specialist at ANR that he had done “everything he could reasonably do to insure he was not purchasing an impacted piece of property.” See 42 U.S.C. § 9601(35)(B) (1999) (listing statutory factors indicating all appropriate inquiry, including “obviousness of the presence” of the contamination, “ability to detect” the contamination, the “specialized knowledge or experience” of the defendant, and the “relationship of the purchase price to the value of the property”).
¶ 67. On the other side, the State presented the following evidence demonstrating that Fiore should have discovered the contamination: (1) Fiore was aware that the property was formerly used as a dry-cleaning business; (2) Fiore has brought suit against Griffin International for negligence, in which Fiore has alleged that Griffin should have inquired further into the significance of the storage of dry-cleaning chemicals on the property and should have been aware that the previous owner improperly disposed of dry-cleaning chemicals; (3) the tank pull report submitted to ANR in 1997 and indicating that the site was free of health hazards involved a different inquiry and is irrelevant to the diligent-owner defense here; (4) there were two abandoned storage tanks, one of which contained some liquid and emanated PCE *341odors, on the property of which Fiore should have been aware; and (5) multiple environmental assessments indicated that the land was contaminated.
¶ 68. Because inquiry into whether a defendant has made out a diligent-owner defense is fact intensive, summary judgment on this issue is rarely appropriate. See United States v. 150 Acres of Land, 204 F.3d 698, 707 (6th Cir. 2000) (concluding that because particular inquiry necessary for defendant to establish innocent-landowner defense to CERCLA liability “is clearly dependent on the totality of the circumstances” and is thus “a very fact-specific question,” summary judgment was inappropriate to establish that, as matter of law, defendant’s actions did not amount to “appropriate inquiry”); Advanced Tech. Corp. v. Eliskim, Inc., 87 F. Supp. 2d 780, 785 (N.D. Ohio 2000) (noting that “[w]hat constitutes appropriate inquiry is a mixed question of law and fact and will depend on the totality of the circumstances”). Here, there is at least a factual question as to whether the inspection conducted by Fiore could meet the diligence requirement under § 6615(e).
¶ 69. The majority suggests that it would be unfair to preclude a landowner from showing he made at least some effort in obtaining an environmental investigation, even though the investigation turned out to be negligently performed. Ante, ¶ 38. Though in some instances the result may be unfair to an individual defendant, the statutory scheme of the VWMA, like that of CERCLA, is strict liability. See United States v. Price, 577 F. Supp. 1103, 1114 (D.N.J. 1983) (“Though strict liability may impose harsh results on certain defendants, it is the most equitable solution in view of the alternative — forcing those who bear no responsibility for causing the damage, the taxpayers, to shoulder the full cost of the clean up.”); see also United States v. Alcan Aluminum Corp., 990 F.2d 711, 716-17 (2d Cir. 1993) (“There may be unfairness in the legislative plan, but ... we still must take [CERCLA] as it is.”).16
*342¶ 70. For these reasons, I would conclude that summary judgment in favor of Fiore was inappropriate, and I would remand for resolution by the trier-of-fact whether Fiore has made out his diligent-owner defense. I respectfully dissent from Part II of the majority’s opinion.

 1 concur, however, with the majority that the discovery sanction issued by the trial court against the State was warranted and that summary judgment in favor of Banknorth was appropriate. I also agree with the majority that the State’s late discovery requests were properly denied and that the State was precluded from bringing its common law nuisance claim.

 Fiore also claims he is entitled to the defense set forth in 10 V.S.A. § 6615(d). Though the applicability of this defense was not addressed in the trial court’s order, it would appear that this defense is not available to Fiore because, as a purchaser of contaminated land, he is in an indirect contractual relationship with the third party he claims is responsible for the contamination.

 Given the strict liability framework and remedial purpose of CERCLA, federal courts have adopted a narrow interpretation of the comparable innocent-landowner defense. For instance, the First Circuit has noted:
As an acquiring party and an owner of the facility during a period of “passive” disposal, [defendant] would be held to an especially stringent level of preacquisition inquiry — on the theory that an acquiring party’s failure to make adequate inquiry may itself contribute to a prolongation of the contamination.
In re Hemingway Transp., Inc., 993 F.2d 915, 932-33 (1st Cir. 1993) (footnote omitted); accord Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 845-46 (4th Cir. 1992) (“A CERCLA regime which rewards indifference to environmental hazards and discourages voluntary efforts at waste cleanup cannot be what Congress had in mind.”). The same policy reasons that dictate narrow interpretation of the exceptions to liability under CERCLA necessitate a similar interpretation of exceptions to liability under the VWMA, especially given the similarity between the two schemes.

 The VWMA’s diligent-owner defense, for instance, is substantially similar to the innocent-landowner defense contained in CERCLA. Under 42 U.S.C. § 9601(35)-(A)(i), a person may qualify for the innocent-landowner defense if:
At the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which *336is the subject of the release or threatened release was disposed of on, in, or at the facility.

 The majority criticizes the use of CERCLA’s innocent-landowner defense as helpful guidance for interpretation of our own diligent-owner defense, seemingly arguing that the Legislature in Vermont intended to adopt a much broader exception to liability under the VWMA. Ante, ¶ 42 n.5. The majority cites no authority that directly supports this proposition, and it is difficult to believe that, where much of the statutory provisions of the VWMA are taken word-for-word from CERCLA, the Legislature intended the VWMA to depart from CERCLA in this way. Such an interpretation would be woefully out of fine with other areas of environmental protection law in Vermont, where the regulatory scheme is often more stringent than federal counterparts. Cf. Jipac, N.V. v. Silas, 174 Vt. 57, 62-63, 800 A.2d 1092, 1097 (2002) (noting strong environmental protection policy behind Vermont’s Act 250); In re Town of Sherburne, 154 Vt. 596, 601 n.6, 581 A.2d 274, 277 n.6 (1990) (noting that in context of interaction between Vermont’s Water Quality Standards and federal Clean Water Act, “[bjecause state regulations may impose more rigorous standards than the federal counterparts, state agencies should first look to the state regulations for guidance”).

 It may very well be that the analysis employed to determine whether Fiore made out his diligent-owner defense is hopelessly stuck in time. Subsequent to Fiore’s purchase of the relevant property, Congress and the Environmental Protection Agency recognized that evolving technology and sawier land purchasers necessitated a narrower definition of “all appropriate inquiry” under CERCLA, one that takes into account more modem commercial practices. Thus, in 2002, CERCLA’s innocent-landowner affirmative defense provision was amended to provide clarity to courts and purchasers of land alike. The 2002 “Brownfields Amendments” clarified the “all appropriate inquiry” standard, stating that purchasers of property before May 31, 1997, shall take into account such things as commonly known information about the property, the value of the property if clean, the ability of the defendant to detect contamination, and other similar criteria. 42 U.S.C. § 9601(35)(B)(iv)(I). For property purchased on or after May 31, 1997, the procedures of the American Society for Testing and Materials, including the document known as Standard E1527-97, entitled “Standard Practice for Environmental Site Assessment: Phase 1 Environmental Site Assessment Process,” were to be used until EPA promulgated regulations. 42 U.S.C. § 9601(35)(B)(iv)(II). The EPA promulgated regulations further clarifying what amounted to “all appropriate inquiry” in 2005. See 40 C.F.R. § 312.20(e) (noting that all appropriate inquiries may include results of environmental reports, provided those reports meet certain objectives and performance standards). I agree with Fiore, however, that the appropriate standard that guides analysis in this case was that in existence in 1999 when Fiore purchased the property.

 The majority attempts to distinguish LaSalle by focusing on the fact that in that case the Phase I assessment raised concerns that should have alerted the purchaser to contamination. Ante, ¶ 41. This fact may have indicated that there were other factors present suggesting that the landowner should have been aware of the contamination, but it does not answer the question of whether any weight should be given to a negligently performed assessment.

 Moreover, and as Fiore is well aware, a defendant who has been wronged by an environmental consulting company is not without recourse. In WATCO v. Pickering Environmental Consultants, Inc., for instance, the state appeals court addressed whether an environmental consulting agency had engaged in negligent misrepresentation when it prepared what ended up being an inaccurate Phase I assessment. No. W2006-00978-COA-R3-CV, 2007 WL 1610093 (Tenn. Ct. App. June 5, 2007); see also Iron Partners, LLC v. Dames & Moore, No. C07-5643RBL, 2009 WL 1587898 (W.D. Wash. June 8, 2009). The court found that the standard of care *342is “that level of care and diligence ordinarily employed by the average firm practicing in the same geographic area and at the same time.” WATCO, 2007 WL 1610093, at *21.