On March 18, 2014, the United States Court of Appeals for the
Second Circuit decided that under the federal environmental cleanup
law known as the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") (42 U.S.C.
§9607), a subcontractor cannot recover the value of unpaid
work directly from a landowner if the landowner has already paid
the general contractor for the subcontractor's work and the
general contractor had failed to make the required payments to the
subcontractor.
In this case, Price Trucking Corp. v. Norampac Industries
Inc., the defendant landowner hired a general contractor to
perform environmental remediation work, including excavation and
the removal of contaminated soil, on its property in Erie County,
New York. The general contractor hired the plaintiff subcontractor
to remove contaminated soil from the site and transport it to a
licensed disposal facility. The subcontractor performed and
completed all of the required work at the site, but was not paid in
full by the general contractor for its services. The landowner paid
the general contractor for all costs associated with the cleanup of
the site, but the general contractor failed to remit the portion of
the payment due to the subcontractor. As a result, the
subcontractor sought payment of its unpaid balance directly from
the landowner, claiming that such recovery from the landowner was
permitted under CERCLA's contribution provisions.
CERCLA's purpose is to encourage the timely cleanup of
hazardous waste sites and to place the cost of such cleanup on
those responsible for creating or maintaining such hazardous
condition. CERCLA imposes strict liability on owners and operators-
regardless of whether they caused such release of hazardous
substances. The subcontractor argued that under CERCLA any party
who incurs "response costs" is entitled to recover those
costs from any responsible party in a contribution action.
Since the landowner was a "responsible party",
and since the subcontractor had incurred "response
costs" in connection with the removal of the contaminated
soil, the subcontractor reasoned that it was entitled to sue the
landowner to recover those costs. However, the Second Circuit found
that CERCLA did not intend to hold a landowner perpetually liable
in any dispute relating to the cleanup among general contractors,
subcontractors, employees and suppliers.
Once the landowner has paid the total costs for the cleanup of its
property, its liability for payments under CERCLA is discharged. As
such, under CERCLA, a landowner does not have to pay twice for the
same work performed on its land.
The court also said that a subcontractor can seek recourse under
the N.Y. Lien Law, which provides that a subcontractor can place a
mechanic's lien on the landowner's property to hold such
landowner responsible for any unpaid work, but only to the extent
that such landowner has not paid the general contractor for such
work in question.
This article is presented for informational purposes only and is not intended to constitute legal advice.