The Need For Expert Evidence To Make Out An Innocent Landowner Defense Under CERCLA

As every litigator knows, evidence almost always tells a story that is untidy and riddled with loose ends.  This was illustrated by a recent innocent landowner case in California — Coppola v. Smith.  There, a company had purchased land in 1995 without knowledge that it had been contaminated with perchloroethylene (PCE) from a dry cleaning operation in the 1950s and 1960s.  When the company was sued under contribution by a nearby dry cleaner for contributing PCE to to regional groundwater contamination, the company claimed that it was protected by the innocent landowner defense under Section 101(35)(A) and (B) of CERCLA.  The company moved for summary judgment on its innocent landowner defense, and the federal court mostly agreed, finding that the company had purchased the site long after disposal of the PCE, had no knowledge of the contamination until eight years after the purchase,  had done nothing to contribute to the contamination, and had cooperated fully with the government.

The sticking point, however, was whether the company in purchasing the property in 1995 had made all “appropriate” inquiries about the property and its environmental condition.  Here’s where the untidiness came in.  The company had reviewed a preliminary site assessment prepared four years before the 1995 purchase.  Although that assessment found no environmental issue with the property, the assessment was not conducted in accordance with ASTM standards and the assessment specifically noted that information about the ownership and operation of the property from 1958 to 1972 could not be found and that PCE had been detected at low levels in two nearby groundwater wells without any apparent source.

The dry cleaner contended that this preliminary site assessment could not satisfy the company’s  innocent landowner defense because it did not employ ASTM standards, did not involve soil and groundwater testing, and failed to consult historical Sanborn maps which showed the site being used for dry cleaning.  The court rejected the dry cleaner’s contention on the ground that it had failed to show that it was applying standards and practices which were customary in 1995 in this part of California.  Nonetheless, the court went on to deny summary judgment.  According to the court, the company had likewise failed to present any evidence as to whether its review of the preliminary report was consistent with the standard of environmental due diligence customarily employed in the area in 1995 when purchasing property.  Plainly, an expert witness on what was customary environmental due diligence in 1995 was necessary to tidy up the loose ends in the evidence.


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