Maine Town Bound by Settlement Reached by State Concerning Environmental Contamination
December 1, 1999
On October 21, 1999, the First Circuit Court of Appeals, in a decision
labeled as "Not For Publication - Not To Be Cited As Precedent," in
Town of Boothbay v. Getty Oil Co. et al., looked into the question whether,
under Maine law, the doctrine of res judicata bars a town from suing a private
party for environmental damage affecting the town's water supply where the state
has previously litigated and settled claims of environmental damage against the
same party for the same harm. The background facts and issues are set forth in
the Magistrate Judge's opinion in Town of Boothbay v. Getty Oil Co., Civ. No.
98-125-P-DMC, Mem. Dec.(D. Me. Dec. 7, 1998), from which opinion this appeal was
taken.
In this case, the defendants, Getty Oil Company, Texaco Refining and
Marketing, Inc., and Texaco, Inc., (collectively, Getty) were allegedly
responsible for the discharge between 1939 and 1976 of gasoline from underground
storage equipment at their service station in the Town of Boothbay, Maine
(Boothbay) into the surrounding groundwater. The Maine Department of
Environmental Protection (the MDEP) subsequently learned of the contamination
and began cleanup efforts. In 1990, the MDEP discovered that the contamination
had spread to surrounding wells, and brought suit against Getty in Maine
Superior Court under various Maine environmental statutes, seeking reimbursement
for the costs of cleanup and remediation of the contaminated properties. MDEP
and Getty ultimately settled for a lump sum payment designed to cover
alternative remediation costs. The lawsuit was subsequently dismissed with
prejudice. Boothbay did not learn of the settlement until after it had been
finalized, although it had been aware of the MDEP's action and had not attempted
to intervene.
In 1998, after dismissal of the MDEP action, Boothbay brought a diversity
action against Getty in federal district court, raising allegations against
Getty for trespass, negligence, nuisance, and strict liability, based on the
contamination of the wells and the groundwater. Among other relief, Boothbay
sought extension of water lines from the town's water supply to the contaminated
properties, an extension previously sought by the MDEP in its action. The
Magistrate Judge granted summary judgment to Getty on this claim, holding that
the same claim for environmental damage had previously been brought against
Getty and settled by the MDEP, and that Boothbay was bound by that settlement
under the doctrine of res judicata because Boothbay was deemed to be in "privity"
with the MDEP. The doctrine provides that a final judgment on the merits is a
bar to subsequent litigation involving identical claims and identical parties,
or persons in privity with those parties.
On appeal, Boothbay argued that its claims against Getty were not barred by
res judicata. First, Boothbay argued that there was such a "divergence of
interests" between the MDEP and Boothbay that the state did not adequately
represent the town's interest in restoring a clean water supply to the
contaminated area. Boothbay stated that, because the MDEP's sole interest was in
recouping the cleanup expenses it had incurred, its interests were different
than those of the town and therefore, there was no true "privity." The
Court of Appeals, held, however, that the record showed that the MDEP had
"vigorously" pursued the demand that Getty finance a water line
extension until it determined that alternative remediation methods would
adequately solve the town's contamination problem. The court noted that Boothbay
had failed to support its theory that the MDEP acted in "bad faith or
unreasonably." Therefore, the court concluded that Boothbay had failed to
demonstrate that the MDEP and the town had "misaligned interests," or
that the MDEP had provided Boothbay with "inadequate representation"
to such an extent so as to preclude the application of res judicata.
Boothbay also argued that because the Maine environmental statutes under
which the MDEP had brought its action against Getty reserve to municipalities
and others a right against the state environmental funds as well as a right to
bring their own lawsuits, res judicata was not justified. The Court of Appeals
agreed that the determination of whether a party is in privity with the state
(and thus barred from bringing supplemental claims against a defendant
subsequent to a suit brought by the state) is affected by the legislature's
implicit or explicit reservation of their right to bring such claims. However,
the court noted that Boothbay had asserted a claim for relief against Getty that
is not supplemental to, but rather the same as that previously brought by the
MDEP. The court held that nothing in the Maine statutes suggested that third
parties should have the opportunity to bring an identical environmental
enforcement claim where the state has already done so.
Therefore, the Court of Appeals affirmed the Magistrate Judge's award of
summary judgment to Getty.
For more information, contact Robert Whitney at 1-888-688-8500.
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