Peter Voggenthaler v. Maryland Square LLC
724 F.3d 1050
| 9th Cir. | 2013Background
- A dry-cleaning operation at Maryland Square Shopping Center in Las Vegas released tetrachloroethylene (PCE) from ~1969–2000; spills flowed from a floor drain into underlying soil and groundwater, creating a plume that threatened nearby homes.
- Nevada Division of Environmental Protection (NDEP) discovered contamination, undertook cleanup, and sued under CERCLA and Nevada law to recover past and future response costs; neighboring homeowners sued under RCRA seeking injunctive relief to compel cleanup and to stop further violations.
- SBIC operated the dry cleaner (1969–1984) and admitted periodic spills, including a ~100-gallon spill in 1982; DCI operated later (1984–2000). Maryland Square purchased the property in 2005, demolished the building in 2006, and did not remove contaminated soil.
- District court granted summary judgment to NDEP (CERCLA and state claims) and to homeowners (RCRA injunctive relief) against various owners and operators; multiple appeals followed.
- On appeal the Ninth Circuit largely affirmed liability (especially for SBIC and under Nevada law), reversed or vacated parts on procedural grounds, and remanded limited issues (notably Maryland Square’s CERCLA bona‑fide prospective purchaser showing, RCRA procedural issues, and a guarantor’s liability).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Commerce Clause challenge to applying CERCLA to contamination wholly in Nevada | NDEP: federal regulation of hazardous substances and groundwater is within Congress’s commerce power | Maryland Square: applying CERCLA to purely intrastate soil/groundwater exceeds Commerce Clause (Lopez/Morrison) | Rejects challenge; CERCLA regulation fits Commerce Clause (groundwater as article of commerce and cleanup materially affects interstate commerce). |
| Whether Maryland Square qualifies as a CERCLA bona‑fide prospective purchaser (BFPP) exception | Maryland Square: performed pre‑purchase inquiries and acted in good faith; should be exempt from CERCLA liability | NDEP/homeowners: Maryland Square’s submissions fail to show required pre‑purchase steps or that it prevented/reduced exposure after acquisition | Vacated summary judgment against Maryland Square on CERCLA and remanded to allow Maryland Square to cure evidentiary/formal defects and substantively prove BFPP elements. |
| RCRA liability and remedies (homeowners’ injunctions); effect of Maryland Square’s demolition | Homeowners: owners (including post‑acquisition owner) are contributors under RCRA; Maryland Square’s demolition exacerbated spread and exposure | Maryland Square: acquired after spills, so not a contributor; motion for reconsideration barred by interlocutory appeal | Reversed and remanded on procedural grounds—district court erred in refusing to decide Maryland Square’s reconsideration; RCRA liability as to demolition/exacerbation must be considered on remand. |
| SBIC operator liability under CERCLA and Nevada law; indemnity obligations | NDEP/prior owners: SBIC spilled PCE down drains (point sources), so liable as an operator and must indemnify landlords per leases | SBIC: spills onto concrete floor not "disposal" into environment; lease termination/limits absolve responsibility | Affirmed SBIC liability under CERCLA and Nevada law (drain discharge counts as disposal/point source); lease indemnities enforce SBIC’s duty to prior owners. |
| Personal guarantor (Melvin Shapiro) liability for cleanup/indemnity | Prior owners: Shapiro guaranteed obligations and should be personally liable for indemnity | Shapiro: guaranty is prospective; spills occurred before guaranty effective date, so no personal liability | Reversed as to Shapiro—guaranty construed as prospective and no evidence of spills after guaranty date; entry of judgment against him vacated. |
Key Cases Cited
- Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009) (CERCLA places cleanup costs on parties responsible for contamination)
- Sporhase v. Nebraska ex rel. Douglas, 458 U.S. 941 (1982) (groundwater is an article of commerce)
- Gonzales v. Raich, 545 U.S. 1 (2005) (Congress may regulate local economic activity that in the aggregate affects interstate commerce)
- Meghrig v. KFC West, Inc., 516 U.S. 479 (1996) (RCRA citizen suits and limitations on retrospective relief)
- Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dep’t of Natural Res., 504 U.S. 353 (1992) (federal interest in environmental regulation of water resources)
- City of Colton v. Am. Promotional Events, Inc.–W., 614 F.3d 998 (9th Cir. 2010) (entitlement to declaratory relief for future CERCLA response costs once past cost liability established)