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Dixon Lumber Co., Inc. v. Austinville Limestone Co., Inc.

United States District Court, W.D. Virginia, Roanoke Division

June 9, 2017



          Elizabeth K. Dillon United States District Judge

         Plaintiff Dixon Lumber Company and defendant Austinville Limestone Company (ALC) own adjacent plots of land in Wythe County, Virginia. Dixon's property is called “Austin Meadows, ” and the court will refer to ALC's as “the Austinville site.” Both companies bought their property from Gulf & Western Industries (G&W), which operated a zinc and lead mine on the Austinville site through a division called New Jersey Zinc Company (NJZ). Years before ALC and Dixon purchased their properties, NJZ dumped limestone tailings, a byproduct of its mining operations, on Austin Meadows. Dixon now seeks to hold ALC responsible for environmental liabilities arising from those limestone tailings under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601-9675.

         Before the court are Dixon and ALC's cross-motions for partial summary judgment on the issue of whether ALC is a corporate successor of G&W. (Dkt. Nos. 49, 51.) Both motions have been fully briefed and argued and are now ripe for disposition. For the reasons stated below, the court finds that ALC is not G&W's corporate successor and will therefore grant ALC's motion and deny Dixon's.

         I. BACKGROUND

         The Austinville site has been mined, more or less continuously, since the mid-eighteenth century. NJZ bought the mine in 1902 and, at some point, was acquired by and became a part of G&W.[1] It is undisputed that NJZ was a division of G&W at all times relevant to Dixon and ALC's motions.

         Until 1981, NJZ extracted dolomitic limestone containing zinc and lead ore from an underground mine on the Austinville site. The mine was made up of a 1200-foot mine shaft with perpendicular levels every 100 to 200 feet. Miners would drill into the limestone on the various rock levels, use gun powder to blast the rock loose, and then use shovels, front end loaders, and electric-powered railcars to transport the rock to an underground “jaw crusher” at the base of the mine shaft. Once crushed by the jaw crusher, the rocks would be hoisted out of the mine to be processed and milled.

         The limestone rocks that came out of the mine were of two kinds. Some rocks, called “deads, ” contained no zinc or lead ore. Those rocks were crushed and sold as gravel or agricultural rock. The other rocks (those with lead and zinc in them) were sent through what the parties call a “wet flotation process” to extract the ore. First, the rocks would be sent through a series of crushers, rod mills, and ball mills, until they were reduced to a fine, powdery substance. That substance would be mixed with water and piped into flotation chambers. Chemicals would then be added to the resulting slurry that would cause the zinc and lead to float to the top, where it could be skimmed off. Once the zinc and lead had been removed from the chemical slurry, the remaining limestone particles, called “fines” or “tailings, ” were piped elsewhere on NJZ's property. Tailings that were sufficiently coarse to be saleable, called “coarse” tailings or “new lime, ” were sold as agricultural limestone, and NJZ stockpiled them near the plant where they could be loaded onto railcars and trucks. The remaining tailings-i.e., those that were too fine to be sold-were a waste product for NJZ, and NJZ dumped them in hollows and valleys throughout the property for storage. At some point, NJZ disposed of these waste fines on Austin Meadows, resulting in the tailings pile at issue in this case.[2] NJZ also dumped tailings on a location on the Austinville site called Bunker Hill.

         During the course of its operations, NJZ acquired certain environmental obligations, reflected by an NPDES permit and a no-discharge certificate. The permit, NPDES Permit No. VA 0000272, authorized, and required NJZ to monitor, discharges from several outfalls on the Austinville site. No-Discharge Certificate No. IW-ND-1026 forbade discharges to state waters from Austin Meadows, and required NJZ to regrade and revegetate that location.

         In fall 1981, G&W announced its intent to close NJZ's mining operations on the Austinville site. By the end of that year, G&W had closed the underground mine, terminated the majority of NJZ's employees, and largely ceased operations on the site. Once the mine was closed, NJZ no longer produced zinc and lead; however, it continued to sell agricultural limestone from the existing stockpiles. NJZ retained an employee to operate the scales for weighing the limestone, and continued to utilize the same contractor to operate the heavy machinery associated with loading it.

         Around the time that G&W announced its decision to close the Austinville mine, James River Limestone Company (JRLC), a well-established Virginia producer of limestone products, contacted G&W and informed it that JRLC might be interested in purchasing the property if agricultural limestone was available in the area. On October 23, 1981, after several meetings between JRLC and G&W representatives, and a visit by JRLC representatives to the Austinville site, JRLC offered to purchase some of G&W's assets associated with NJZ's Austinville mining operations. G&W and JRLC communicated periodically throughout the end of 1981 and the following year. In some of its letters to G&W, JRLC stated that it would have to consider possible reclamation costs and environmental liabilities in its asset purchase.

         On October 25, 1982, JRLC and G&W executed an Agreement for the Purchase of Assets (the Purchase Agreement) (Purchase Agreement ¶ 7, Dkt. No. 50-6), which JRLC promptly assigned to ALC, a subsidiary it created to operate the Austinville site.[3] Among other things, ALC agreed to purchase, for $600, 000: (1) the parcel of real property on which G&W operated the mine (i.e., the Austinville site); (2) all tangible property except items that G&W could use in other mines, which were identified in an appendix to the agreement; and (3) the stockpiles of “new” agricultural limestone on the site. (Purchase Agreement ¶¶ 1-3.) The agreement also contemplated the transfer of certain environmental and reclamation licenses and authorizations to ALC. (Id. ¶ 5.) The precise terms of the Purchase Agreement are discussed in section II.C.1, below.

         The day the agreement was signed, NJZ and ALC sent a joint letter to the State Water Control Board to inform the Board that the property had been transferred and that ALC was assuming responsibility for compliance with NPDES Permit No. VA 0000272. Specifically, NJZ and ALC informed the Board that the transferred property encompassed four of six discharges covered by the existing NPDES permit and noted that three of the four had been eliminated as a result of the mine shutdown. The letter indicated that ALC would assume responsibility for the discharges on the transferred property starting October 25, 1982. Ultimately, the State Water Control Board issued ALC a new permit, No. VA 0058424, instead of transferring No. VA 0000272.

         After ALC purchased the Austinville site, it began its operations by selling agricultural limestone from the existing stockpiles, which it blended with NJZ's waste piles of fines on the site. Planning to begin its own permanent mining operations before the stockpiles of agricultural limestone were depleted, ALC also began tearing out the equipment that NJZ used for its wet flotation process in order to install its own equipment. ALC tore out NJZ's rod and ball mills and replaced them with different kinds of crushers, called “Bradley presses, ” for its mining operations. ALC also installed conveyer belts and bucket elevators to replace the pipes that NJZ used to transport the lime, and installed shaker screens to separate the lime from larger particles. After it installed the new equipment, ALC operated what the parties refer to as a “dry” mining process. ALC never reopened the underground NJZ mine, or sold zinc or lead; instead, it extracted dolomitic limestone from an open-faced quarry. This work was originally done by an independent contractor, but was taken over by ALC within a year or two. Limestone that ALC extracted from the quarry was sent through newly installed Bradley presses, which crushed it down for sale-ALC did not use any sort of flotation process. Eventually, ALC installed a bagging operation in order to sell agricultural limestone in smaller quantities and began selling pelletized limestone as well.

         In November 1984, Dixon purchased 2, 071 acres of land from G&W, which included Austin Meadows. Dixon paid $800, 000 for that land. Dixon represents that it was unaware of the tailings pile on Austin Meadows at the time of the purchase and did not contractually assume any environmental permitting or compliance obligations with respect to the property. Dixon learned about the tailings pile in 1992 when it received a letter from the State Water Control Board informing it that the drainage system under Austin Meadows had begun to fail and that high amounts of zinc and lead had been found in the New River, supposedly emanating from the tailings pile. The same year, Dixon entered into a consent agreement with the Department of Environmental Quality (DEQ) to remove the tailings pile from Austin Meadows and reclaim the property by 1999. That consent order authorized Dixon to contract with ALC to remove the limestone tailings. A series of amended consent orders extended the term of the order until 2015.

         Pursuant to the consent orders, Dixon and ALC entered into a series of agreements regarding the removal of the limestone tailings. The original agreement, made in 1993, authorized ALC to remove the tailings pile on Austin Meadows and provided that its operations would be considered remedial actions on behalf of Dixon. Subsequent agreements in 2003 and 2008 extended the timeline for ALC's tailings removal activities and provided that Dixon would receive a royalty for tailings removed, processed, and sold by ALC.

         Following a heavy rainfall and discharge of pollutants in June 2013, DEQ and the Department of Mines, Minerals and Energy (DMME) entered into a letter of agreement with Dixon and ALC. Among other things, that letter required Dixon and ALC to develop a final plan for reclamation of Austin Meadows and to submit it to DEQ/DMME. While developing that plan, Dixon and ALC hit an impasse on which party would be responsible for final reclamation costs on the Austin Meadows site. Dixon subsequently filed this suit, claiming that ALC, as NJZ's corporate successor, is liable for at least some of the costs of reclaiming Austin Meadows.


         A. Summary Judgment Standard

         Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[W]hen a court considers a summary judgment motion, ‘[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.'” Greater Baltimore Ctr. for Pregnancy Concerns, Inc. v. Mayor & City Council of Baltimore, 721 F.3d 264, 283 (4th Cir. 2013) (en banc) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986)). When considering cross-motions for summary judgment, the court must “consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Defs. of Wildlife v. N.C. DOT, 762 F.3d 374, 392 (4th Cir. 2014) (quoting Bacon v. City of Richmond, Va., 475 F.3d 633, 638 (4th Cir. 2007)).

         B. Dixon's Procedural Challenges

         Before discussing the substance of Dixon and ALC's motions for summary judgment, the court will address several procedural challenges that Dixon raised in opposition to ALC's motion. Dixon makes three procedural arguments: (1) that ALC's motion should be denied because it did not include a separately-captioned statement of facts as required by Local Civil Rule 56(b); (2) that some of ALC's arguments about NJZ's and ALC's histories and operations are improper because they contradict the testimony of ALC's corporate designee; and (3) that the deposition testimony of three fact witnesses must be excluded because ALC did not disclose those witnesses as required by Federal Rule of Civil Procedure 26. The court will address these contentions in turn.

         1. ALC's failure to include a separately-captioned statement of facts

         Under this court's Local Civil Rule 56, a motion for summary judgment must include “a separately captioned section setting forth with specificity the material facts claimed to be undisputed together with specific record citations thereof.” W.D. Va. Civ. R. 56(b). Although ALC's brief included a cited introduction section and citations for ALC's factual claims throughout, it did not include a separate statement of facts. After Dixon noted this defect in its opposition brief, ALC promptly moved for leave to file a supplemental statement of facts that listed the factual statements of its brief in a properly-captioned section without changes to citation or wording. (Dkt. No. 56.) The court granted that motion and gave Dixon the opportunity to respond. (Dkt. No. 61; Dkt. No. 65.) Dixon, in turn, filed specific objections to all 50 numbered paragraphs of ALC's supplemental statement of facts. Nevertheless, Dixon argues that the court should deny ALC's motion for summary judgment for failure to comply with Local Civil Rule 56.

         Although ALC's brief violated Local Rule 56(b), the court will exercise its discretion to overlook that violation here. See, e.g., Simmons v. Navajo Cty., 609 F.3d 1011, 1017 (9th Cir. 2010) (noting that “[d]istrict courts have broad discretion in interpreting and applying their own rules”) (quoting Miranda v. S. Pac. Transp. Co., 710 F.2d 516, 521 (9th Cir. 1983)); Ass'n for Retarded Citizens v. Thorne, 68 F.3d 547, 553-54 (2d Cir. 1995); El-Kaissi v. Martinaire, Inc., No. 03-cv-132, 2005 U.S. Dist. LEXIS 43417, at *6-9 (S.D. Tex. Nov. 3, 2005) (collecting cases suggesting that district courts have discretion to decide whether to overlook violations of their local rules). The purpose of Local Civil Rule 56(b) is to ensure that a party filing for summary judgment provides notice of the purportedly undisputed material facts, so that both the court and the opposing party can gauge whether summary judgment is appropriate. There is no indication that ALC's failure to include a facts section was an attempt to mislead the court as to the undisputed facts; indeed, all of the facts from its later-filed supplement were included verbatim in its original brief. So, although Dixon did not have the benefit of that section when responding to ALC's motion, it had notice of ALC's factual contentions and was able to address them in its opposition brief. Moreover, the court will consider both ALC's factual supplement and Dixon's objections thereto in resolving ALC's motion. Since ALC's initial non-compliance with Local Civil Rule 56(b) did not meaningfully affect Dixon's ability to respond to its motion or this court's ability to resolve it, the court rejects Dixon's argument.

         2. Dixon's claim that ALC's motion contradicts the testimony of its corporate designee

         Next, Dixon claims that ALC's motion for summary judgment should be denied because portions of it contradict the testimony of Kevin Mann, ALC's President and corporate designee. Specifically, Dixon claims that, in his Rule 30(b)(6) deposition, Mann denied knowledge of: (1) NJZ and G&W's corporate histories and operations on the Austinville site; (2) the corporate history of ALC I from 1910 to 1996; and (3) the equipment transferred from NJZ to JRLC. But ALC's motion for summary judgment, and particularly its argument that ALC is not a continuation of G&W, compares the operations of NJZ and ALC I before and immediately after the ...

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