A Cautionary Chapter 21E Tale: Overly Aggressive Demands for Cleanup Contribution Will Backfire
Nov. 23, 2015 – A company whose insurance paid for its entire $300,000 cleanup (incurred after an employee caused a massive oil spill) wanted more: a windfall. Predictably, things didn’t end well.
Pursuant to the pre-litigation negotiation requirements of Chapter 21E (analogous to that under Chapter 93A), R.M. Packer Co. sent a letter to Dockside demanding 80% of the cleanup costs. The trial judge found that Packer “well knew” that Dockside was “blameless.” Remarkably, Packer also sent a letter to a second company demanding the same 80% contribution. Unable to reach an agreement, Packer sued the two companies.
In a forceful opinion, the Massachusetts Appeals Court affirmed the trial court’s award of attorney’s fees and costs to Dockside under Chapter 21E’s fee-shifting provision, §4A(f).
Section 4A requires parties to attempt to allocate cleanup costs among themselves before resorting to litigation. However, both sides must be reasonable. Section §4A(d) entitles a plaintiff to its fees and costs if the defendant unreasonably denies liability or refuses to participate in the negotiation process in good faith. On the other hand, §4A(f) entitles a defendant to its fees and costs if the plaintiff “takes an unreasonable prelitigation position regarding the existence or extent of another person’s liability,” noted the Appeals Court. Section 4A(f)(2) addresses plaintiffs who have no reasonable basis for asserting that defendants are liable, while §4A(f)(3) addresses plaintiffs who unreasonably overstate defendants’ shares of liability.
Here, the Court felt so strongly that Packer should pay Dockside’s attorney’s fees and costs that it decided an issue that the trial court had not. The trial court had awarded fees and costs under §4A(f)(2) (unreasonableness as to whether Dockside was liable at all). The Appeals Court did not decide that issue, but held that Packer was liable under §4A(f)(3) in any event (unreasonableness as to Dockside’s share of liability even if it was liable at all).
The court’s willingness to affirm on a different ground and the strength of its opinion confirms that plaintiffs – like defendants – must take their obligation to be reasonable in the §4A process seriously.
The case is Packer v. Marmik.
Photo credit: Lori Semprevio
Posted In: Hazardous Materials/Chapter 21E