United States v. CDMG Realty Co.

Sharkey’s Farm Landfill (Sharkey’s Landfill) operated as a municipal landfill from 1945 to 1972 in Morris County, New Jersey. During its operations, Sharkey’s Landfill received and disposed of hazardous chemical waste and municipal solid waste. In 1981, Dowel purchased 10 acres of the Sharkey’s Landfill property. The property was vacant when purchased by Dowel and remained vacant during Dowel’s ownership. The only activity performed by Dowel on the land was a soil investigation to determine the land’s ability to support construction. The soil investigation involved drill borings that bored through various waste materials and groundwater. In 1987, Dowel sold the property to HMAT Associates, Inc (HMAT) (defendant). Dowel disclosed in the contract of sale that the property was part of Sharkey’s Landfill, that the landfill was under investigation by state and federal authorities, and that the property was part of a potential Superfund site under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In 1989, the Environmental Protection Agency (EPA) and New Jersey Department of Environmental Protection and Energy (plaintiffs) commenced actions against potentially responsible parties liable for the cleanup costs of the Sharkey’s Landfill property. Dowel was not sued, but HMAT was named as a defendant under CERCLA because it was the current owner of the property. HMAT filed a third-party suit against Dowel to seek contribution from Dowel as a former owner of the property at the time of disposal. HMAT argued that Dowel was liable under CERCLA as a former owner at the time of disposal because of the passive migration of waste in the landfill that occurred during Dowel’s ownership. Dowel and HMAT moved for summary judgment. The district court granted Dowel’s summary-judgment motion and denied HMAT’s motion. HMAT appealed.