Norlander v. Caldwell: Five Lessons for Plaintiffs Seeking Cost Recovery Under MTCA
In late 2019, the King County Superior Court issued a decision in Norlander v. Caldwell, Case No. 18-2-05702-7 SEA, which serves as a cautionary tale for plaintiffs seeking to recover remedial action costs under Washington’s Model Toxics Control Act (MTCA).
Billie Swift and Dustin Norlander (Swift/Norlander) purchased a home from the Caldwells in the fall of 2014 for $800,000. Soon after, they found evidence of oil seeping into their basement and had soil tests done that confirmed the presence of heating oil in concentrations exceeding MTCA cleanup levels. Swift/Norlander then demolished the preexisting residence, excavated the petroleum-contaminated soil, and built a new home, spending between $2.5 and $3 million on the entire project. Like many property owners who incur additional costs as a result of contamination left by previous owners, they sued the Caldwells to recover their remedial action costs under MTCA.
Even though Swift/Norlander proved at trial that hazardous substances had been released into the environment when the Caldwells’ owned the property—which establishes their potential liability under RCW 70.105D.040(1)(b)—the court nevertheless exercised its equitable discretion to deny Swift/Norlander’s prayer for cost recovery. This case provides several lessons for would-be MTCA plaintiffs to consider before filing suit.
Lesson 1: Don’t Overreach
Many, if not most, MTCA cleanups are performed voluntarily in conjunction with redevelopment. Under MTCA, only the additional costs of the development attributable to contamination, known as “incremental costs,” are recoverable. But Swift/Norlander’s claim included costs they would have incurred anyway in the course of building their new home, such as the entire cost of removing the old foundation and excavating for the new one. Although it is perhaps unfair to judge them too harshly in hindsight, Swift/Norlander might have made a more persuasive case if they had put more care into segregating their development costs from their remedial action costs.
Lesson 2: Don’t Make the Problem Worse
One factor that made the court particularly disinclined to rule in Swift/Norlander's favor was the fact that they knew of the leaking underground storage tank (UST) by February of 2015, but instead of immediately removing the source of contamination, they had the tank refilled with heating oil and did not pump it out until October. The court concluded “that oil had continued to leak out of the nearly-full UST after February 2015” and that Swift/Norlander’s knowing contribution to the contamination weighed against their claim for cost recovery.
Lesson 3: Cost Recovery Should Not Be an Afterthought
Several of the faults the court found with Swift/Norlander’s claims were the result of their not performing and documenting the cleanup with an eye toward cost recovery. For example, the court was not convinced that Swift/Norlander’s feasibility study had adequately considered less costly cleanup alternatives, Swift/Norlander also did not attempt to notify the Caldwells before performing the remedial work. Although these omissions are not a barrier to receiving regulatory closure on a contaminated property and Washington case law says that they are not an absolute bar to cost recovery—see Taliesen Corporation v. Razore Land Company, 135 Wn. App. 106 (2006)—the Norlander decision demonstrates that courts may be reluctant to reward plaintiffs who fail to adequately follow MTCA's procedure while conducting environmental cleanup.
Lesson 4: Consider the Human Element
Under RCW 70.105D.080, trial courts have extremely broad discretion to allocate responsibility for remedial action costs on whatever “equitable factors as the court determines are appropriate.” This means that plaintiffs have to look beyond the legal elements of their claim to the human dimension of the story they want to tell the court. In this case, one can imagine that a plaintiff with the resources to spend $3 million to build their dream home may have been fighting an uphill battle in attempting to recover several hundred thousand dollars from a retired couple who had sold their home for $800,000. Judges are not blind to the relative positions of the parties before them and may be reluctant to saddle less well-resourced parties with cleanup costs and attorney’s fees, even if the law would allow them to do so.
Lesson 5: Trial is a Gamble
Although the Caldwells came out of trial with an impressive result, they did so at considerable risk. As mentioned above, the court found all of the elements necessary to hold them liable for a portion of Swift/Norlander’s remedial action costs and attorney’s fees. On the other side of the table, Swift/Norlander had reason before trial to be confident in their legal case, but instead came out with no recovery and a likelihood of having to pay the Caldwells' legal bill. If nothing else, this case is a reminder that litigation is inherently unpredictable and that settlement should be a top priority.
Norlander underscores the importance of planning for cost recovery from the outset of any environmental remediation. Many, if not all, of the factors that led the court to deny Swift/Norlander’s cost recovery claims could have been addressed, or at least mitigated, by engaging knowledgeable counsel before and during the remediation process to ensure that the cleanup was performed and documented so as to maximize the chances of successful cost recovery.