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Florida Power & Light Co. v. Allis Chalmers Corp.

June 25, 1996

FLORIDA POWER & LIGHT CO., PLAINTIFF-APPELLANT,
v.
ALLIS CHALMERS CORP., CENTRAL MOLONEY, INC., GENERAL ELECTRIC CO., KUHLMAN ELECTRIC CO., MCGRAW EDISON, INC., ET AL., DEFENDANTS-APPELLEES.



Appeals from the United States District Court for the Southern District of Florida. (No. 86-1571-CIV-CCA). C. Clyde Atkins, Judge.

Before Hatchett and Black, Circuit Judges, and Clark, Senior Circuit Judge.

Author: Hatchett

HATCHETT, Circuit Judge:

In this case involving the liability of companies handling electrical transformers contaminated with a hazardous substance, under the Comprehensive Environmental Response Compensation and Liability Act of 1990 (CERCLA), we affirm the district court.

FACTS

For more than forty years, Westinghouse Electric Corporation, General Electric Company, Allis-Chalmers Corporation, Central Moloney, Inc., Kuhlman Electric Company, McGraw Edison, Inc., and Wagner Electric Corporation (hereinafter "the manufacturers") sold Florida Power and Light (FP & L) oil-filled electrical transformers for use in its utility business. Unbeknownst to FP & L, the mineral oil contained in these transformers became contaminated with a hazardous substance known as polychlorinated biphenyls (PCBs) during the manufacturing process. FP & L, at the end of the transformers' useful life, resold these transformers to Pepper's Steel and Alloys, Inc. (Pepper's Steel) as scrap metal. During the salvaging process, Pepper's Steel released significant quantities of the mineral oil from the transformers onto the ground. As a result, the Pepper's Steel site and surrounding environment became contaminated with PCBs.

On November 22, 1976, Westinghouse sent FP & L a letter informing FP & L that some of the transformers it purchased possibly contained PCBs in the mineral oil. Approximately six months later, General Electric sent FP & L a letter also informing FP & L that the transformers it purchased could contain PCB-contaminated mineral oil. Both letters warned FP & L that PCBs accumulate in the environment and that FP & L should take the appropriate environmental precautions when disposing of the transformers. Despite the receipt of both letters, FP & L failed to inform Pepper's Steel of the potential contamination problem. FP & L, however, continued to sell transformers to Pepper's Steel as scrap metal.

On May 10, 1977, Pepper's Steel learned that its site contained PCBs and other hazardous substances. On October 4, 1977, Pepper's Steel sent FP & L a letter informing FP & L that it believed that some of the transformers it purchased from FP & L contained mineral oil contaminated with PCBs. FP & L, shortly thereafter, tested the mineral oil in its transformers and discovered the oil contained PCBs. For several months following the discovery of PCBs on the Pepper's Steel site, Pepper's Steel refused to accept transformers from FP & L. Pepper's Steel subsequently resumed purchasing transformers from FP & L, but only after FP & L drained the mineral oil from the transformers. Despite this preventive measure, the contamination of the Pepper's Steel site worsened.

In July 1993, the Environmental Protection Agency (EPA) and the Florida Department of Environmental Regulations (DER) brought emergency environmental cleanup actions against Pepper's Steel, FP & L, and other owners of that site for unacceptable levels of PCBs, lead, arsenic, and antimony in violation of the Comprehensive Environmental Response Compensation and Liability Act of 1990 (CERCLA). In March 1985, the EPA filed another lawsuit against the same parties seeking to recover the response costs EPA incurred as a result of its investigation and removal of the hazardous substances. On May 26, 1987, FP & L entered into a consent decree with EPA agreeing to reimburse EPA and DER for response and oversight costs relating to the cleanup of the Pepper's Steel site. In the consent decree, FP & L reserved its right to seek reimbursement from third persons also liable under CERCLA.

PROCEDURAL HISTORY

On July 18, 1986, FP & L filed this action against the manufacturers seeking reimbursement under 42 U.S.C. § 9607(a)(3) of CERCLA for costs it incurred in the Pepper's Steel cleanup based on a claim of contribution. In its complaint, FP & L also asserted state law restitution, indemnity, negligence, breach of contract, breach of warranty, negligent misrepresentation, and strict liability claims. On March 21, 1988, the district court granted partial summary judgment in favor of the manufacturers on FP & L's contribution claim. In a prior appeal filed pursuant to 28 U.S.C. § 1292(b), this court affirmed the district court's grant of partial summary judgment holding that a mere sale of a useful product without additional evidence that the transaction included an arrangement for the disposal of the hazardous substance does not subject the manufacturers to liability under CERCLA.

On remand, the district court entered a second partial summary judgment in favor of the manufacturers on FP & L's negligence, breach of contract, breach of warranty, negligent misrepresentation, and strict liability claims finding that the applicable Florida statute of limitations barred those claims. On April 9, 1990, the district court granted summary judgment in favor of the manufacturers on FP & L's remaining claims of restitution and indemnity. FP & L thereafter filed a motion for leave to amend its complaint seeking to add a claim for contribution under a different provision of CERCLA than previously considered in the prior appeal. The district court on June 19, 1990, denied FP & L's motion for leave to amend. FP & L also filed a motion for default judgment against Westinghouse alleging that it withheld evidence of an "arrangement of disposal" during discovery. On January 31, 1990, the district court adopted the magistrate judge's report and recommendation denying FP & L's motion for a default judgment.

FP & L filed this appeal seeking review of the district court's grant of summary judgment in favor of the manufacturers on its restitution, indemnity, and state law claims. FP & L also appeals the district court's denial of ...


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