Do Not Clean, Clean Dirt: Douglass v. Shamrock Paving, Inc.
On December 21, 2017, the Washington Supreme Court issued a decision interpreting the private right of action under Washington’s Model Toxics Control Act (“MTCA”), Douglass v. Shamrock Paving, Inc. The decision analyzes three issues: (1) whether investigation costs are recoverable as “remedial action costs” where initial soil sample results do not exceed cleanup levels; (2) whether cleanup costs are recoverable “remedial actions costs” where soil sample results do not exceed cleanup levels; and (3) whether plaintiff was entitled to an award of attorney’s fees as the prevailing party before a determination on the amount of recoverable remedial action costs against the defendant.
This is an unfortunate, but all too common, set of facts. Shamrock, a paving contractor, used a vacant parcel of property as a staging area for a Washington Dept. of Transportation project without the permission of Mr. and Mrs. Douglass, the property owners. When the Douglasses found out, they were rightfully upset, so they hired a lawyer—but not an environmental lawyer—to file a lawsuit for nuisance and trespass. After commencing the action, the Douglasses discovered that Shamrock’s activities on the property resulting in minor spills of lube oil onto the surface of the ground. The Douglasses’ consultant, Tetra Tech, took two soil samples, which showed concentrations of petroleum products that did not exceed MTCA Method A cleanup levels. A footnote suggests that Tetra Tech gave the Douglasses the option to take no further action to remediate the site, among other options. Nonetheless, the Douglasses requested Tetra Tech to remove 68 tons of soil. The Douglasses thereafter amended their complaint to assert an MTCA claim to recover the costs of investigation and soil removal. The Douglasses also sought their prevailing party attorney’s fees under MTCA, RCW 70.105D.080.
For practitioners, consider whether the MTCA claim was necessary where damages to restore the property are recoverable under trespass and nuisance. The only limitation to trespass and nuisance theories is the lack of a fee shifting provision like the one found in MTCA. The subsequent addition of a MTCA claim provides some insight into the driving force behind the instant litigation. The plaintiff’s strategy in Douglass may pose more risk following the Court’s new attorney’s fees analysis discussed below.
First, the Court held that investigation costs are remedial action costs even where the initial samples meet, but do not exceed, cleanup levels. Second, the Court held that the cleanup costs were not automatically recoverable remedial action costs because the sample results did not exceed cleanup levels. The Court deferred to Department of Ecology’s published cleanup levels, which are deemed to be protective of human health or the environment, absent site-specific conditions, not present here, requiring more stringent cleanup standards. If the cleanup levels are not exceeded, there is no potential threat to human health or the environment, no cleanup is required, and therefore the cleanup costs incurred by the Douglasses were not, under MTCA, recoverable as remedial action costs. The practical question for the consultant is: Why remove 68 tons of soil for a minor release that did not exceed MTCA’s unrestricted land use cleanup levels?
Finally, the Supreme Court reversed the Court of Appeals’ decision to award fees to the Douglasses as the prevailing party before a final judgment. The Court of Appeals awarded fees to the Douglasses because they had proven every element of their MTCA claim: a release of a hazardous substance, which caused them to incur remedial action costs, and Shamrock is a liable party under MTCA. The Court of Appeals’ decision was consistent with precedent, namely Taliesen, where an MTCA plaintiff is entitled to attorney’s fees once the plaintiff establishes every element of its claim, even absent an affirmative judgment for money following equitable allocation of remedial action costs. The purpose of this rule, as Taliesen explains, is to encourage a private party to conduct an independent remedial action and compel recalcitrant potentially liable parties (“PLPs”) to contribute by leveraging the risk of attorney’s fees against the recalcitrant. Now, in Douglass, the Court rejects the Taliesen rule, holding that a plaintiff must establish the elements of an MTCA claim and obtain an affirmative judgment in its favor after trial.
In my opinion, the attorney’s fees analysis in Douglass is contrary to MTCA’s remedial purpose. There are a number of different funding agreement strategies that leverage attorney’s fees under MTCA against PLPs. Now, unlike under Taliesen, recalcitrant PLPs may defend the equitable allocation before agreeing to fund a cleanup because the risk of an adverse attorney’s fees judgment is borne equally by both parties. In other words, the hammer used by MTCA plaintiffs to compel the payment of cleanup costs is softened considerably.
This Court’s analysis also erodes MTCA’s strong preference for joint and several liability. The Court repeatedly notes that plaintiff’s MTCA claim is a “contribution claim,” so equitable allocation is necessary to determine plaintiff’s and defendant’s fair share before awarding fees. However, this analysis omits a joint and several “cost recovery” claim where equitable allocation among plaintiff and defendant is not at issue because plaintiff is not a PLP. Note that the contractor was a trespasser, so plaintiff here may not in fact be a PLP under MTCA. See, e.g., RCW 70.105D.3(a)(iii). The plaintiff in a joint and several cost recovery claim should still be entitled to attorney’s fees under the Taliesen standard. The existence of both contribution and cost recovery claims under MTCA, unlike CERCLA, has always been uncertain. This case furthers the uncertainty about whether MTCA provides for two distinct claims—cost recovery and contribution—since Douglass requires equitable allocation before awarding any attorney’s fees in all cases.