BEFORE
THE
ILLINOIS
POLLUTION
CONTROL
BOARD
ELMHURST MEMORIAL
HEALTHCARE
and
ELMHURST MEMORIAL
HOSPITAL,
Complainants,
vs.
RECEVED
CLERK’S
OFFICE
JUN
2
62009
)
STATE
OF
ILLINOIS
)
Pollution
Control
Board
)
)
No.
PCB 2009-066
)
(Citizen’s Suit
)
Enforcement
Action)
)
)
)
NOTICE
OF FILING
To:
Carey
S.
Rosemarin
Andrew
J.
Marks
Law Offices
of Carey
S.
Rosemarin,
P.C.
500
Skokie
Boulevard,
Suite 510
Northbrook, Illinois
60062
PLEASE
TAKE
NOTICE
that
on
June
26, 2009, we filed
with the
clerk
of the
Illinois
Pollution
Control
Board
an original
and nine copies of
Response
of
Chevron
U.S.A.
Inc. to
Motion
to
Strike
Affirmative Defenses,
a copy of
which is attached
hereto
and
herewith
served upon you.
Dated:
June
26, 2009
Joseph
A.
Girardi
Robert
B. Christie
Henderson
&
Lyman
Attorneys
for
Chevron U.S.A.
Inc.
175
W.
Jackson Blvd.,
Suite 240
Chicago,
Illinois
60604
(312)
986-6960
CHEVRON
U.S.A.
INC.
By:
)
)
)
CHEVRON
U.S.A.,
INC.
Respondent.
attorneys
BEFORE
THE
ILLINOIS POLLUTION
CONTROL
BOARD
ELMHURST MEMORIAL
HEALTHCARE
)
ECEVED
CLEq<’
OFFIQE
and
ELMHURST
MEMORIAL
HOSPITAL,
)
2621109
)
STATE
OF
ILLINOIS
Complainants,
)
No.
PCB
2Th1n
Control
Boa
)
(Citizen’s
Suit
vs.
)
Enforcement
Action)
)
CHEVRON
U.S.A., INC.
)
)
Respondent.
)
RESPONSE OF
CHEVRON U.S.A.
INC.
TO
MOTION
TO STRIKE
AFFIRMATIVE
DEFENSES
Respondent,
Chevron
U.S.A.
Inc.,
incorrectly
named
as
Chevron
U.S.A.,
Inc.
(“Respondent”),
by its attorneys
Henderson &
Lyman, and
for its
response to
the motion
of
Complainants,
Elmhurst Memorial
Healthcare and
Elrnhurst
Memorial Hospital
(“Complainants”),
to
strike
affirmative
defenses,
states
as follows:
Law Applicable
to
the
Complainants’
Motion
With
respect
to
affirmative
defenses, the procedural
rules of the
Illinois
Pollution
Control
Board (“Board”) provide
only that “any
facts constituting
an
affirmative
defense must
be
plainly set forth before
hearing in the
answer or
in
a
supplemental
answer,
unless the
affirmative
defense could
not
have
been
known
before
hearing.”
(Emphasis
supplied)
35
Ill. Adm.
Code
103.204(d).
As the Board
procedural
rules
do
not
specifically
define,
state or
enumerate specific
affirmative defenses,
the
Board has
defined
affirmative
defenses
in many of its decisions.
For
example,
in People
of the
State of
Illinois
v.
Stein
Steel Mills Services,
Inc.,
PCB
No.
02-1 (April 18, 2002),
the
Board
initially
defined an affirmative
defense
as
“new
facts or
arguments that, if
true,
1
will
defeat. .
.
the
government’s claim even
if all allegations in the complaint
are true.”
Citing: People
v.
Community
Landfill
Co.,
PCB 97-193, slip
op. at 3
(Aug.
6,
1998). In
addition, the Board (pursuant
to
the authority granted under
35
Iii. Adm. Code
101.100(b)), then enlarged that definition
to
also include the definition of
an affirmative
defense
found in the Illinois Code of Civil Procedure, specifically:
(d)
The facts constituting any affirmative defense, such
as
payment,
release, satisfaction, discharge, license, fraud, duress, estoppel, laches,
statute of frauds, illegality, that the negligence of a complaining
party
contributed in
whole
or
in
part to the injury of which he
complains, that
an instrument or transaction is either void or voidable in
point of law, or
cannot
be
recovered upon
by
reason
of any
statute
or
by
reason
of
nondelivery,
want or failure
of
consideration in whole or in part, and
any
defense
which by
other affirmative matter
seeks to
avoid the legal effect of
or defeat the cause
of action
set
forth in the complaint, counterclaim, or
third-party complaint, in whole or in part, and any ground or
defense,
whether
affirmative or not, which, if
not
expressly
stated
in the pleading,
would
be
likely
to take
the opposite party
by
surprise, must be plainly set
forth in the answer or reply. 735 ILCS 5/2-613(d)
(Emphasis supplied)
Further, the Board
has
held that pleading of defenses should be
liberally allowed in
order
to
inform the parties
of
the
legal theories
to be
presented, prevent
confusion
as to
whether
a
defense
has been timely raised, and avoid taking the
other party
by surprise.
People
v. Geon Company,
PCB
No.
97-62 (October 2,
1997);
Citing, People v. Midwest
Grain
Products,
PCB
No.
97-179 (August 21, 1997).
It is,
therefore, clear that any set of facts or any provisions
of law, including those
which constitute
defenses specifically set
forth in 5/2-613(d) above, that
could or
might
avoid or
defeat
a
cause of
action,
whether
in whole or
in part,
or that could or might
take the
opposing
party
by
surprise, must
be
pled or they are waived. Thus, at
the
pleading stage
of
a
proceeding,
as
here, a
respondent must
be
accorded all appropriate
opportunity
to
present any set of facts
or any provisions of law that presently
are an
2
affirmative
defense,
or
which may,
through
discovery
and preparation
for hearing,
ripen
into an
affirmative
defense.
In
People
v. Stein Steel,
supra,
the
Board
further
held that
a
motion
to
strike
an
affirmative
defense
admits
all
well-pleaded
facts
constituting
the
defense,
and
attacks
only the
legal
sufficiency
of those
facts. The
Board found
that
“where
the
well-pleaded
facts
of an affirmative
defense
raise the
possibility
that
the
party
asserting
them
will
prevail,
the
defense
should
not
be
stricken.”
Citing,
International
Insurance
Co.
v.
Sargent
and
Lundy,
242 Ill.
App.
3d 614,
630-31, 609
N.E.2d
842,
853-54
(1st Dist.
1993),
Citing,
Raprager
v.
Allstate
Insurance
Co.,
183
Ill.
App.
3d
847,
854, 539
N.E.2d
787,
791
(2nd
Dist.
1989)
(Emphasis
supplied).
And
there is
no
requirement
to
raise
any new
facts in
an
affirmative
defense,
as the
Board
has
held that
a respondent
may rely
on
the
facts
pled
by a
complainant.
See
International
Union,
etc., et al.
v Caterpillar
Inc., PCB
No.
94-20
(holding that
a
fully
developed
record
may
show
that a
violation
of the Act
did not
occur
or
that the relief
requested
by
the
complainant
is
improper).
For the
reasons
set forth
below, application
of
the foregoing
principles
to the
affirmative
defenses
alleged
by
Respondent
finds that
the Complainants’
motion
to
strike
should be
denied.
Argument
Affirmative
Defense
No. I
- No
Assumption
of
Texaco Inc.’s
Liabilities
Complainants
did
not move
to
strike
this
defense;
therefore,
no
response
is
made.
3
Affirmative Defense
No.
II
- Discharge in Bankruptcy
Complainants allege that
Respondent is responsible for the liabilities of Texaco
Inc. in this
matter, which Respondent has denied. In this affirmative defense,
Respondent
has asserted that, irrespective of this responsibility issue, the claims alleged
in the Complaint were discharged in
the Texaco Inc. bankruptcy (“Texaco
Bankruptcy”)
that took place in the late 1980s. Thus, Complainants cannot have any claims against
Texaco
Inc. for
which they can allege
Respondent
could
be responsible.
In their motion to strike this defense, Complainants, in summary,
argue that
their
claims
against
Texaco Inc. were not discharged
by
the Texaco bankruptcy
because
the
Complainants did
not
know,
and could not
have
known, of their claims at
the
time of
the Texaco
Bankruptcy. Complainants reason, therefore, that
they
could not have filed,
and were not required to
file,
a
claim
in the Texaco bankruptcy to
preserve their claims.
Complainants do not dispute
the
following:
1. On April 12, 1987, Texaco Inc. instituted
a
proceeding under
Chapter 11
of the United
States
Bankruptcy Code, entitled In re Texaco
Inc.,
et
at., 87
B 20142, United States
Bankruptcy for the Southern District of New York
(hereinafter the
“Texaco Bankruptcy”).
2. On January 26, 1988, the Court
in the Texaco Bankruptcy entered an
order that fixed the date
of March 15, 1988 as the last date
for creditors to
file proofs of
claim.
3.
On
March 23, 1988, the Court in the Texaco Bankruptcy entered
an
order
approving confirmation of the plan of reorganization
(“Plan”) of
Texaco Inc. (Exhibit
1)
4.
The Plan provides that any claims not filed and approved by
the Court
in the Texaco
Bankruptcy are discharged and forever barred.
5.
No
claims arising
out
or relating to
any
acts, omissions
or liabilities
of
Texaco Inc.
arising
out
of or relating to the Property,
including
but
not
limited
to
the
claims
alleged
in the Complaint, were filed in the
Texaco
4
Bankruptcy
by
Complainants
or
any other
person or
entity.
While
Complainants
rely on
several
cases
in support
of
their position
that deal
with
other bankruptcies,
they do
not refer
to
or discuss
any
cases
that
have been
decided
on this
very
issue
by
the bankruptcy
court
as a
part of the
Texaco
Bankruptcy.
These
Texaco Bankruptcy
decisions
demonstrate
that
Complainants’
claims
have
been
discharged.
Texaco
Inc.
v.
Fred Saunders,
et
al. (In
re
Texaco
Inc.), 182
B.R. 937
(1995) arose
out
of
an
action
brought
by
Texaco Inc.
to
reopen the
Texaco
Bankruptcy
for
the
purpose
of
enforcing
the discharge
provisions
of the
order
confirming
the plan
of
reorganization
(“Order
of Confirmation”)
against
Mr.
Saunders
and
approximately
20
other
persons (collectively
“Saunders”).
Saunders
was
pursuing
various
environmental
claims
against
Texaco
Inc. in
a state
court
proceeding
in Louisiana
in
1995.
None of
the
Saunders
had
filed claims
in the Texaco
Bankruptcy.
The
Saunders
state court
action
was
initiated well
after
the conclusion
of
the
Texaco
Bankruptcy
and
sought
damages
from
Texaco Inc.
for
remediation
of the
environmental
impacts to
the
Saunders
real
property.
Saunders
alleged
the
impacts
occurred
as
the
result
of the
migration
of contaminants
generated
by Texaco
Inc.
on
adjoining
property
(that had
previously
been operated
by
Texaco
Inc.)
to
the
Saunders
property.
All
of
Texaco
Inc.’s actions
at
the
adjoining
property
were
concluded
years
before
the
Texaco
Bankruptcy
was initiated.
Texaco
Inc.
filed
an
affirmative
defense
in
the
state
court
action
alleging the
Saunders
claims
were discharged
in
the
Texaco
Bankruptcy.
Saunders
moved
to strike
the
defense,
but the
state
court judge
denied
their
motion,
stating:
5
Well,
I
do
[have
jurisdiction to decide
the
motion
to
strike],
I don’t
have
any
doubt
about
it,
but I’m not [going
to]
knock out
something
that is
not
[going
to]
impede my law
suit, it’s not [going
to] stop
anything
at
this
basis. I
understand what you’re
saying.
I believe
you.
And believe
me I
understand
what you’re saying.
I
don’t
think
I can strike a
defense
like
that. Saunders,
182 B.R.
at
943 (1995)
At the same time
Texaco Inc. also filed
a motion
in the bankruptcy
court in New
York (initiating this
1995
proceeding)
to
reopen the
Texaco
Bankruptcy
to
enforce
against Saunders
the injunction
contained
in the Order of
Confirmation
that prohibits
any
person from
pursuing a
claim
that
has been
discharged.
In response
Saunders
alleged
(as
do
Complainants
here)
that their claims
had not manifested
themselves
and
could
not have been known
by the respondents
at the
time
of the
Texaco
Bankruptcy.
The bankruptcy
court denied
these
defenses
and
enforced
the discharge
against
Saunders.
In reaching its decision,
the bankruptcy
court
first restated
the
law
that the
confirmation of
a
plan under
Chapter
11 discharges
the debtor
from any debt
that
arose
prior
to
the
date
of such confirmation,
whether or not
a
proof
of claim
on that
debt
is
filed or
allowed,
citing
11
U.S.C.
1141(d)(1).
Thus,
all
debts
are
discharged
and the only
right that
a
holder
of a
discharged
debt may
have is
through
the
proof-of-claim
process.
The
bankruptcy
court
next restated
the law
regarding the effect
of the
discharge as
being a
permanent injunction
against
the commencement
or continuation
of any action
to
recover discharged
claims,
citing 11 U.S.C.
524(a)(2).
The
bankruptcy
court then
found
that the Order
of Confirmation
of the
Texaco Inc.
plan of
reorganization
mirrors
these
provisions
and is binding
on all
persons
holding
claims
against
Texaco
Inc.
The
bankruptcy
court
next reviewed
the meaning
of
“debt”,
in the
context of
6
what
the
Order of
Confirmation
discharges.
The court
found
that “debt”
means
“liability
on
a
claim”,
citing
11
U.S.C.
101(12).
The court
then
found
that
“claim”
means:
(A) right
to payment,
whether
or not such
right
is reduced
to judgment,
liquidated,
unliquidated,
fixed,
contingent,
matured,
unmatured,
disputed,
undisputed,
legal, equitable,
secured
or
unsecured;
or
(B) right
to
an
equitable
remedy
for
breach of
performance
if
such breach
gives
rise to
a
right
to
payment,
whether or
not
such right
to an
equitable
remedy
is reduced
to
judgment,
fixed,
contingent,
matured,
unmatured,
disputed,
undisputed,
secured
or unsecured.
The court
reviewed
the decisions
interpreting
the nature
and
breath
of
“claim”,
quoting
from
In re Chateaugay
Corp.,
944
F.2d 997
(2nd
Cir. 1991),
as follows:
Congress
unquestionably
expected
this
definition
to
have
wide
scope.
‘By
this
broadest
possible
definition
.... the bill
contemplates
that
all
legal
obligations
of
the
debtor,
no matter
how remote
or contingent,
will
be
able
to be
dealt
with
in the
bankruptcy
case.’
H.R.Rep
No.
595,95th
Cong.,
2d
Sess.
309
(1978), reprinted
in
1978 U.S.Code
Cong.
&
Admin.
News
5787,
5963,
6266.
See also
Tohnson
v. Home
State
Bank, 501
U.S.
78,
83,
111
S.Ct.
2150,
2154, 115
L.Ed2d
66
(1991);
Pennsylvania
Dep’t
of
Public Welfare
v.
Davenport,
495
U.S.
552,
557,
1105.
Ct. 2126,
2130,
109
L.Ed.2d
588
(1990).
The bankruptcy
court
then
applied
this law
to the Saunders
claims and
determined
that all
of Texaco
Inc.’s operations
at
the adjoining
property
ceased
years
before
the
Texaco
Bankruptcy.
As
a
result
the
court
found
that
“All
of the
physical
events
required
to
establish
causation
and
damage for
such
claims occurred
prior
to
the
confirmation.”
Texaco
v Saunders,
182 B.R.
at
951 The
court thus
ruled
that
all
claims
resulting
from
Texaco
Inc.’s operations
at
the
adjoining
property
arose
prior
to
the
Texaco
Bankruptcy
and that
the
Saunders
claims
were
discharged
in
the
Texaco
Bankruptcy.
The
same
is true
of the
claims
of Complainants
here. The
Complaint
alleges
that
Texaco
Inc.
did not
own
or operate
the
USTs or
the Property
after
1977,
well before
the
7
Texaco
Bankruptcy. Thus, any action of Texaco Inc. that could
have given rise to the
claims
alleged
by
Complainants were completed prior
to
the Texaco
Bankruptcy. These
claims were, therefore,
debts
of Texaco Inc.
at
the
time
of the Texaco
Bankruptcy and
were
discharged
by
the Order of Confirmation.
The bankruptcy court then examined and rejected the Saunders
arguments
that
their
claims were
“unmanifested”
and
“unknown” and should not
fall under the
meaning
of
“claim”.
With respect
to
“unmanifested”, Saunders
argued that the
contamination caused by
Texaco
Inc.
was not visible
at
the surface
of their land at the
time of the Texaco
Bankruptcy and, therefore, had not manifested
itself. While the
bankruptcy
court agreed with Saunders on that particular fact,
the court
found that
fact
was not controlling
of the issue of discharge. The controlling
issue
is,
rather, whether
the
contamination was capable of being detected
prior
to
confirmation
of the plan. The
court found that
it certainly was capable of detection by reasonable
investigation
of the
property prior to confirmation
of the plan. As such the
contamination
would fall within
the meaning of
“claim”,
as
it was fully matured and
uncontingent.
In the instant
matter before the Board, the claims of
Complainants
were easily
capable of
detection
by
long-standing
methods
of investigation of
real property for the
presence
of the USTs and releases
from the USTs. Like the
Saunders claims,
while any
contamination
may
not
have been not visible at the surface
of the Property,
any releases
that
existed in 1987 were
certainly capable of detection
at
that
time. Thus,
Complainants’
claims were discharged.
The
Saunders respondents
also argued that they had no
knowledge of the
existence
of
their claims at the
time
of the Order of Confirmation.
The bankruptcy court
8
assumed,
for the
purpose of
its
ruling, that
the Saunders respondents’ assertions were
true.
Nevertheless, the bankruptcy
court ruled that these claims were within the
definition of
a
“claim”.
Citing again
to
In Re
Chateaugay, supra, the court found that
response
costs
for pre-petition
releases are within the definition of “claim”,
regardless
of when
such costs are
incurred.
In the instant
matter, there is no question that any releases that occurred
under
Texaco’s operation of the Property were prior
to the Texaco Bankruptcy. Therefore, any
response costs, no matter when incurred, including those which Complainants allege
were recently incurred, are “claims” and have been discharged. Thus, the fact that
these Complainants did own the Property
at
the time of
the
Texaco Bankruptcy, and,
therefore, could not have filed
a
claim,
does
not change the rule
that
the
debt
for
which
they
now
seek
recompense was discharged,
and
no
one can now bring a
claim for
it.
The
decision of the bankruptcy court in Texaco v.
Saunders
is the law of the
case
in the
Texaco Bankruptcy. As Complainants’ motion
to
strike this defense involves the
Texaco
Bankruptcy, Texaco v. Saunders is also the law of this
case
in determining the
instant
motion. For this reason, Complainants’
reliance in their motion on decisions
that
Complainants argue
would lead
to a
different result are simply not controlling
here.
For all of the foregoing reasons
Respondent
submits that Complainants’ motion
to
dismiss
Affirmative Defense
No.
III should
be
denied.
Affirmative Defense
No.
III
— No
Jurisdiction Under the
Act
Complainants’ motion
to
strike Affirmative Defense
No.
III should be denied
because
the
provisions
of the Act upon
which
the Complaint relies
were enacted
after
9
Texaco
last owned or
operated the USTs or the Property and these
provisions cannot be
retroactively
applied.
The Complaint,
at
paragraph
4, alleges that Respondent is responsible
for any
liability
of Texaco
Inc.
The Complaint,
at
paragraphs
6 - 9,
then alleges
that Texaco Inc.
owned and/or operated the Property and USTs on the Property from 1959
through 1977
and that releases occurred from
the USTs. In Count I, at paragraphs
28 - 34, the
Complaint
alleges that, as a
result
of these alleged releases, Texaco
Inc. violated the
current provisions of Section
21(a)
of the Act,
which provides that
“No
person shall: (a)
Cause
or allow the open dumping of any waste”. 415 ILCS
5/21(a) Complainants
alleges that “waste” is defined
as
in Section
5/3.535
of the
current provisions
of the Act
to
include the alleged releases from the USTs. 415 ILCS
5/3.535
In Count II, at paragraphs 35 - 41,
the Complaint
similarly
alleges that Texaco
Inc. violated the
current provisions of Section 21(e) of the Act which
provides that
“No
person shall: (e)
Dispose, treat, store or abandon any waste, or transport
any waste into
this State
for disposal,
treatment, storage or abandonment, except at a site
or facility
which meets the
requirements of this Act and of regulations
and
standards
thereunder”.
415
ILCS 5/21(a)
The Complaint again relies on the current definition
of “waste” as
provided
in Section
5/3.535
of the Act. 415 ILCS
5/3.535
Respondent’s affirmative
defense alleges
that
(i) the Complaint
alleges
and
relies
on
the
current versions of various sections of the Act, (ii) these current
versions
were
not
in effect during 1977 or at any time prior to
1977, (iii)
these
current versions are not
applicable to
any time when Texaco owned or operated the USTs
or the Property, and
(iv) these
current versions may not be
retroactively
applied. As
such, the
defense
10
alleges
that the Board
is without
jurisdiction
to enforce
these
current versions
against
Respondent
in this matter.
Complainants
respond
by
arguing
that the
Act
(which
became
effective
in
1970)
and all subsequent
amendments
to the
Act,
including
those
to
Sections
21(a) and
(e),
may
be
applied
retroactively.
Complainants,
consequently,
argue
that the
releases
alleged,
although
admittedly
alleged
to
have occurred
not
later than
1977 are,
therefore,
subject
to
these
current
provisions
of the
Act. Complainants’
motion
is
both
misleading
and plainly
wrong.
When
the Act
became
effective in
1970, section
21(a),
then
being 1971
Ill. Rev.
Stat.,
Ch.
111½,Sect.
1021(a),
provided
only as follows:
No person
shall:
(a)
Cause
or
allow
the
open
dumping
of garbage;
There
is no
reference
to “waste”
in
1021
(a),
nor
did
the
Act in
1970 even
contain
a
definition
for
“waste”.
“Garbage”
was
defined as:
(e)
“Garbage”
is waste
resulting
from
the handling,
processing,
preparation,
cooking,
and consumption
of
food,
and
wastes
from the
handling,
processing,
storage,
and
sale of produce.
1971
Ill.
Rev.
Stat.,
Ch. 111½,
Sect. 1003(e).
As
the
definition
of “garbage”
obviously
does
not
include
releases
of
petroleum
from
USTs,
it is
clear that
Section 21(a),
in
1970, did
not
relate
to
or
regulate
the
releases
from
USTs that
are
alleged in
the Complaint.
The
same
conclusion
is true
for
Section
21(e).
In 1970
Section
21(e) provided:
No
person
shall:
(e)
Conduct
any refuse-collection
or refuse-disposal
operations,
except
for
refuse
generated
by the operator’s
own
activities,
without
a
permit
granted
by
the
Agency
upon
such
conditions,
including
periodic
reports
and
full
access
to
adequate
records
and
the inspection
of
facilities,
as
may
be
necessary
to assure
compliance
with
this
Act
and with
regulations
adopted
thereunder,
after
the
11
Board
has
adopted
standards
for
the location,
design,
operation
and
maintenance
of
such
facilities;
1971
Iii.
Rev.
Stat.,
Ch.
111½,Sect.
1021(e)
There
is
no reference
to
“waste”
in
1021(e),
nor did
the
Act in
1970
even
contain
a
definition
for
“waste”.
“Refuse”
was
defined
as:
(k) “Refuse”
is any
garbage
or other
discarded
solid
materials.
1971
Ill. Rev.
Stat.,
Ch.
111½,Sect.
1003(k)
As
the
definition
of
“refuse”
obviously
does
not
include
releases
of petroleum
from
USTs,
it
is
clear
that
Section
21(e),
in 1970,
did
not
relate
to
or
regulate
the
releases
from
USTs
that
are alleged
in
the Complaint.
And
no
other
provision
of
the
1970 version
of
Section
1021,
which
is the
only
section
of the
1970
Act prohibiting
land
pollution,
related
to or
regulated
the
releases
alleged
from
the
USTs.
See
1971
Ill. Rev.
Stat.,
Ch.
111½,Sect.
1021
(b)
— (d) and
(0.’
The
Complaint
alleges
that Texaco
ceased
operating
the
USTs
and the
Property
in
1977.
The
1977
Illinois
Revised
Statutes
contain
revisions
to
the Act
passed
to
and
including
July
2,
1977.
The
1977
version
of the
Act
continues,
at
1021
(a),
to
regulate
only
the
open
dumping
of garbage,
and,
at
1021(e),
to
regulate
only
the disposal
of
refuse.
1977
Ill. Rev.
Stat.,
Ch.
111½,
Sect.
1021(a)
and
(e).
The
definition
of “garbage”,
at
Section
1003(e),
remained
the
same, and
the
definition
of
“refuse”,
at Section
1003(k),
also
remained
the
same,
except
that
radioactive
materials
are
excepted
from
the
definition.
Thus,
in
1977
the
releases
from
the
USTs
alleged
in
the Complaint
were
not
regulated
by
the
Act.
While
the
Act, in
1970,
defined
the
term
“contaminant” as
“any
solid,
liquid,
or
gaseous
matter,
any
odor,
or
any
form
of energy,
from
whatever
source”
(1971
Ill.
Rev.
Stat.,
Ch.
111½,
Sect.
1003(d)),
the
release
or
discharge
of
a
contaminant
is
regulated
only
in
respect
to
air
and
water
pollution,
not
land
pollution.
See
1971 Ill.
Rev.
Stat.,
Ch.
12
The
1979
version
of
the Act,
as contained
in the
1979
Illinois
Revised
Statutes,
makes
the
following
relevant
changes:
1.
Sections
1021(a)
and (b)
are
combined
and
the word
“refuse”
is
substituted
for
“garbage”.
Ch. 111½,
Section
1021
(a);
2.
Section
1021(e)
became
Section
1021(d),
but
continued
to
regulate
only
refuse
collection
and
refuse
disposal.
Ch.
111½,
Sect.
1021(d);
3.
The
term “refuse”
is redefined
to
mean
simply
“waste”.
Ch. 111½,
Sect.
1003(s);
and
4.
For
the
first time
the
word
“waste”
became
a defined
term.
Ch. 111½,Sect.
1003
(ff).
Whether
the
term
“waste”
does
or
does
not
include
the
releases
alleged
in
the
Complaint
is
not
relevant
to this
matter,
as the
earliest
that
any
amendment
contained
in the
1979
Illinois
Revised
Statutes
was
effective
is July
1,
1978,
which
is
after
the
date
that the
Complaint
alleges
Texaco
Inc. ceased
operating
the
USTs
or
the
Property.
Therefore,
a
plain
reading
of
Section
21 of
the Act
from
its inception
in
1970
through
1978
demonstrates
that
the Act
never
regulated
releases
of
petroleum
from
USTs;
thus,
the
Act cannot
be
applicable
to
the
releases
alleged
in
the Complaint
unless
it
were
to be
applied
retroactively,
which
Respondent’s
affirmative
defense
alleges
cannot
be done.
The
decisions
of
the Board
have
consistently
confirmed
Respondent’s
position.
In
Casanave
v. Amoco
Oil
Company,
PCB No.
97-84
(1997),
the
Board
refused
to
apply
Section
21 of the
Act
retroactively.
There,
the
complainant
brought
a
citizen’s
enforcement
action
against
Amoco
regarding
leaking
USTs
under
Sections
21(a),
(d)-(f),
(i)
and
(m)
of the
1996
provisions
of the
Act. Amoco,
however,
had
ceased
operating
the
USTs
and
the
property
in
1952 and,
therefore,
moved
to
dismiss
the
Complaint
111½,Sect.
1009
and
1012.
13
alleging
the Act cannot
be
applied retroactively.
The Board
agreed
with
Amoco
and
held that, in order
for Amoco
to
have
violated
the provisions of the
Act relied
upon
by
Complainants,
Amoco
must
have
engaged
in the proscribed
conduct
after
those
provisions
became
effective
(citing People
v. Fiorini, 143
Ill. 2d 318; 574
N.E. 2d 612).
The Board stated:
Because
the
complaint
does not
allege that Amoco
owned, operated,
possessed or
controlled
the
property
or the underground
storage
tanks
after the
effective date
of
the
Act
in 1970
or after the
Section
21
provisions
became effective,
Amoco
could not
have allowed contamination
to
continue or
disposed, stored
or
abandoned
any
waste based
on the
facts of
this case
after
the Section
21 provisions became
effective.
See
Mandel,
PCB
92-33, slip
op. at 5-6.
Therefore,
even
assuming that
all well-pleaded
allegations are true,
none of the
conduct
alleged
in the
complaint occurred
after 1970, the
effective
date of
the
Act, or after
the
effective dates
of
the
Section 21
provisions. Consequently,
no
set of facts
in
the complaint
can
be
proved that
would entitle the
complainant
to
relief.
Hence,
the
complaint
must
be
dismissed.
People ex rel.
Fahner v.
Carriage Way
West, Inc.,
88
Ill. 2d
300,
430 N.E.2d
1005,
1008-09
(1981).
Two years
later
in Union
Oil Company
v.
Barge-Way
Oil Company,
et
al.,
PCB
No.
98-169
(1999),
the Board
again held that
Section 21 cannot
be
applied
retroactively.
There,
Union
Oil
sought
to enforce
Section 21(e), as
it was amended
in 1979 to
include
“waste”,
against actions
of Mobil
Oil
Company
that are
alleged
to
have occurred on
or
about
1974.
Mobil
moved to
dismiss
arguing that,
in order for
it
to be
liable
under the
1979
amendments
to
Section 21, those
amendments
would
have
to
be
applied
retroactively,
and that they
simply
cannot be
so
applied.
The
Board
agreed
with
Mobil
and
dismissed
the
claims,
stating:
Under
Illinois
law,
a
statutory
amendment
will be
construed as
applying
prospectively
absent
express
language to
the contrary.
People
v. Fiorni,
143 Ill.
2d 318, 333,
574 N.E.2d
612
(1991).
As stated in
Fiorini,
“an
exception to
the rule of
prospectivity
arises where
the
legislature
intended
that the
amendment apply
retroactively
and where
the
amendment
14
applies only
to
changes
in procedure
or
remedies,
rather
than
substantive
rights,”
(Emphasis
added.)
Fiorini,
143
Ill. 2D at
333
(citing
Matier
v.
Chicago
Board
of
Education,
[10] 82111.
2d
373, 390,
415
N.E. 2d 1034
(1980)).
Thus,
in
order
for
retroactive
application
to
be
permissible,
there
must
be
both
express
statutory
language
allowing
for such
application
and
the law
which
is sought
to be retroactively
applied
is not substantive.
Id.
Illinois
courts
have defined
substantive
law
as that
“which establishes
rights
and
duties
that may
be
redressed
through
the
rules of
procedure.”
Fiorini,
143
Ill.
2d at 333.
The
Board’s
holdings in
Casanave
and
Union
Oil
are
controlling
here.
The
complaint
alleges
that
Texaco
owned
and/or
operated
the USTs
and
the
Property
between
1959
and 1977.
The
Complaint
does not
allege that
Texaco
owned
or operated
the
USTs
or the Property
at any
time
after 1977.
The
provisions
of
Section
21, upon
which
Complainants
rely, were
not
amended
to
include
a
definition
of
the
term
“waste”
that might
apply
to the alleged
releases
from
the
USTs
until
after
1977.
Thus, the
only
manner
in which
Texaco
could
be
liable
under
the 1979
amendments,
or
any post-1979
amendments,
to
Section
21 would
be to
apply
the
provisions
of amended
Section
21
retroactively,
which
the
Board
has
clearly determined
cannot be
done.
The
amendments
to
Section
21
do
not
state
they are
to be
applied
retroactively.
And,
in
any
event,
the prior
decisions
of the
Board
have
determined
that
the
amendments
are
substantive
and,
therefore,
cannot
be
applied
retroactively.
See
also Vogue
Tyre
&
Rubber
Company
v.
Illinois EPA,
PCB
96-10 (2004).
Complainants
rely
on Grand
Pier Center
LLC
v. American
International
Specialty
Lines
Insurance
Company,
PCB No. 05-157
(2005),
as
finding
that
the Act
can
be
applied
retroactively.
This reliance
is
misplaced.
While the
decision
in Grand
Pier
relies
on
the opinion
of the
appellate
court
in
State
Oil
Company
v.
State
of Illinois,
822
15
N.E.2d 876
(2004),
the
decision
is plainly
wrong
and in apposite
to
all existing
decisions
of the
Board.
Grand
Pier
did
not
overrule
Casanave,
Union
Oil or Vogue,
nor
did
it
even
refer
to
or
distinguish
these
decisions;
thus,
Casanave,
Union
Oil
and Vogue
remain
the
law
of
the
Board
regarding
the issue
of
retroactivity.
Further,
as
the Board
held in Casanave
and
Union
Oil, there
is
a
two-prong
test that
must
be met
before
a
statute
may be
applied
retroactively:
the statute
must
specifically
provide
that it is
to be
applied
retroactively,
and
the
statute
must
be
of
a procedural
nature
and not
affect
substantive
rights.
In
Grand
Pier, the
two prong
test
was
misapplied
to
extend
retroactivity
to
Section
21(e) of
the Act. Section
21(e)
clearly
affects a party’s
substantive
rights
as it regulates
a
party’s
conduct.
Under
People
v.
Fiorini,
supra,
which
is an
Illinois
Supreme
Court
decision,
a substantive
statute cannot
be
applied
retroactively.
Thus,
Fiorini
is
controlling
here and
the holding
in Grand
Pier is
not
controlling
here.
For
all of the
foregoing
reasons
Respondent
submits
that
Complainants’
motion
to
dismiss
Affirmative
Defense
No.
III should
be denied.
Affirmative
Defense
No.
IV
— No
Jurisdiction
to
Award
Cost Recovery
Complainants
move
to
strike
this
defense
arguing
that
the
Board
has
always
ruled
that it
has the
authority
to
award
cleanup
costs.
Respondent
is well
aware of
the
Board’s
decisions
on
this issue.
Although
the
Board
has
determined
that
it has
the
authority
to
award cost
recovery,
it is undisputed
that
the Act,
at
415
ILCS
5/33
(b),
does
not specifically
grant
this authority
to the
Board.
The Board
has,
therefore,
inferred
that
it has
the
authority
to
award
cost recovery
via
the
language
in
5/33(a)
that
allows
the
Board
to “enter
such final
order,
or make
such
final
determination,
as
it shall
16
deem
appropriate
under
the
circumstances.”
415
ILCS
5/33
(a)
But
this
position
is not
undisputed.
In
Casanave,
supra,
Board
Member
R.
C.
Flemal, in a
special
concurring
opinion,
opined
that
the
Board
does
not
have
the
power
to
hear
private
cost
recovery actions.
And
in
NBD
Bank
v. Krueger
Ringier,
Inc.,
292
Ill.
App.
3d
691
(1997),
the
appellate
court
held
that
a private
right
of
action
cost
recovery
does
not
exist
under
the Act
for the
circumstances
of
the
instant
case,
stating:
The
Illinois
Environmental
Protection
Act
and
companion
regulations
were
not
designed
to
protect
the
purchasers of
real
estate
who
discover
after
the
conveyance
that
remedial action
is
necessary
to remove
contaminants
from
the
property,
nor
was
the
Act designed to
protect
against economic
losses
resulting
from
the
obligation
to
remove
contaminants.
Given
the
foregoing,
Respondent
respectfully
requests
that
the Board
revisit
and
reconsider
its prior
determinations
allowing
cost
recovery.
This
request
is
especially
relevant in actions
such
as
this
matter,
where
any
reasonable
due
diligence
by
Complainants
prior
to
purchasing
the
property
would
have
disclosed
the
releases
alleged
and
Complainants
could
have
avoided
incurring
the
costs
which
they
now
request
the
Board
award
to
them.
For
all
of the
foregoing
reasons
Respondent
submits
that
Complainants’
motion
to
dismiss
Affirmative
Defense No.
IV
should
be
denied.
Affirmative
Defense No.
V
- Incurred
Risk
Affirmative
Defense No.
VI
- Assumption
of
Risk
Affirmative
Defense
No.
VII -
Avoidable
Consequence
These
three
defenses
allege
that
the
Complaint does
not
allege
that
Complainants
performed
any
due
diligence,
which
would
surely
have
disclosed
the
existence
of
the
USTs
and
the
releases
alleged.
Given
the
foregoing,
the
defenses
allege
that
17
Complainants
either
incurred,
assumed
or could
have
avoided
the
risk
of (a)
the
existence
of
the
USTs
and
the
alleged
releases
being
on
the Property,
and
(b)
the
remediation costs,
which
they
now
ask
the
Board
to
award
them
from
Respondent.
Complainants
brush
all three
of
these defenses
aside
stating
“Respondent
has
articulated
no
legal
theory
by
which
a
third
party’s
investigation
(or lack
of
investigation)
prior
to entering
into a
contract
for
the purchase
of property
could
possibly
relieve
Respondent
of
responsibility
for violations
of
Sections
21(a)
or
(e) .
.
Motion,
at
p.
11.
Complainants
are
not
correct.
Without
the
benefit
of discovery
it
is not
yet
known
what
the
contract
documents
between
Complainants
and
their
seller
provided
in
respect
to
the
environmental
condition
of
the
Property.
Customarily,
however,
as
a part
of a
buyer’s
due
diligence
in
a
commercial
real
estate
transaction,
the buyer
provides
in the
contract
documents
for
a
right
to
perform
a Phase
I and,
if necessary,
a
Phase
II investigation
of the
real
estate
to
determine
the environmental
risks
involved
in
acquiring
the
real
estate.
The
allegations
of the
Complaint
demonstrate
that
Complainants
are
sophisticated
business
enterprises
and
are,
assumedly,
represented
by professional
advisors.
Thus,
Complainants
should
have
known
what
the
environmental
risks
were
in acquiring
the
Property
prior
to
closing
on it. From
the
allegations
of
the Complaint,
however,
it appears
Complainants
did not
know,
as
they
allege
the
USTs
and
the releases
were
first
“detected”
in
2006
after
a
2005 closing.
Complaint,
para.
13-24.
The
post-closing
discovery
of USTs
and
related
releases
by
a buyer
of
commercial
real
estate
has
been
found
by the
Illinois
appellate
court
to
be
simply
the
“disappointed
commercial
expectations”
of
the
buyer.
NBD
Bank
v. Krueger
Ringier
18
inc,
supra,
at
p.
696. And the NBD Bank court held that the Act
was not intended
to
be
used by such a disappointed buyer
to
recover the
costs
of removal of
contaminants.
language
quoted
from NBD Bank,
at
Response,
p.
17.
In the instant
case
these three affirmative defenses raise
exactly
that issue.
Application of NBD Bank
to the instant case
finds that Complainants should
not
be
allowed to use
the Act
to
recover remediation
costs
that should
have
been resolved
with
their seller in their acquisition of the
Property.
For
all
of
the foregoing reasons Respondent submits
that Complainants’
motion
to dismiss
Affirmative
Defense Nos.
V-Vu
should be
denied.
Affirmative Defense No. VIII
- Causation
Complainants argue that this
defense cannot
be a
defense because
it presents no
new facts and
is merely
a
denial. However, an
affirmative defense
is not required
to
plead
new facts, and any set of
facts or law which could defeat a
claim or take the
opposing party by
surprise must be pled.
S
Response,
pp.
1-3.
As this defense alleges,
releases
may have occurred as a
result of the actions of third parties
operating
the USTs
after Texaco
operated them
by
these
third parties abandoning the
USTs in place or
removing
them. Discovery
will
be
taken on this issue and may
support this
defense.
As
this
could be a
defense to the claim or could take
Complainants by surprise,
at this early
stage
of this
proceeding the defense
should not
be
stricken.
For
all of the foregoing reasons
Respondent submits that
Complainants’ motion
to
dismiss
Affirmative
Defense No.
VIII should
be
denied.
Affirmative
Defense
No.
IX - Laches
Complainants
argue
that
laches is not applicable here
because
they
have not
19
unreasonably delayed
in bringing this action; however, Complainants
misperceive this
issue. Laches requires two elements:
unreasonable delay in bringing a
claim and
prejudice
to the party against whom the claim is brought. People v. Skokie
Valley
Asphalt
Co., PCB 96-98
(2004).
There is no question that the second element
is met here.
It has been over
30
years since Texaco
operated the
Property. Evidence that
Respondent could use
to
defend itself certainly has been lost. Records may
have
been
destroyed
and witnesses may have died or cannot
be
found.
The first
element
has also been met. It
is not that
these
Complainants
unreasonably
delayed, as they acquired the Property in the past
few years. But their
recent acquisition of the Property
does
not wash away the fact that any releases caused
by
Texaco
occurred more than
30
years
ago.
If the owner of the
Property at the time
that
Texaco operated the USTs
were
to
have brought this action at
this
time,
the delay
would
be
unreasonable
and
laches would certainly
apply.
That
delay is not mitigated
simply
because Complainants recently acquired the Property.
Given the time that has
passed
since these
claims
could
have been brought, Complainants must be
held
to
the
same
standard that the prior owner would
have been held. A simple sale
of the
Property
from
a
person who would have been subject to a laches
defense to another
person
should not
do
away with the laches defense.
For all
of the foregoing reasons Respondent submits that Complainants’
motion
to
dismiss
Affirmative
Defense No.
IX should
be
denied.
20
Dated:
June 26, 2009
Joseph A. Girardi
Robert B.
Christie
Henderson &
Lyman
Attorneys
for Chevron
U.S.A. Inc.
175 W. Jackson
Boulevard
Suite 240
Chicago,
Illinois
60604
(312)
986-6960
Respectfully
submitted,
Chevron
U.S.A. Inc.
21
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PROOF OF SERVICE
BY
MAIL
I, Sarah
A. Whitford,
a
non-attorney
on oath, state
that I served a copy
of this
Notice
and
Response
of Chevron U.S.A.
Inc. to
Motion
to
Strike
Affirmative
Defenses
on the persons
to
whom the Notice
is directed at
the address
contained
in the
Notice
by
depositing
the same in
the
U.S.
mail
at
175
West Jackson
Boulevard, Chicago,
Illinois
60604 before
5:00 p.m. on June
26, 2009.
Sarah A.
Whitfor
Subscribed
and sworn
to before
me this
26th
day
of
June, 2009.
STEPHANIE
A
DEMAS
,4.
SSNEXPIRESOV2W13
Notary
Public