[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
MARCH 01, 2002
No. 00-14975 THOMAS K. KAHN
CLERK
________________________
D.C. Docket No. 97-01484 CV-DTKH
BLASLAND, BOUCK & LEE, INC.,
a New York Corporation,
Plaintiff-Counter
Defendant-Appellee-
Cross-Appellant,
versus
CITY OF NORTH MIAMI, a
municipal corporation of the State
of Florida,
Defendant-Counter-
Claimant-Appellant-
Cross-Appellee.
__________________________
Appeal from the United States District Court for the
Southern District of Florida
_________________________
(March 1, 2002)
Before CARNES, BARKETT and KRAVITCH, Circuit Judges.
CARNES, Circuit Judge:
The City of North Miami hired Blasland, Bouck and Lee (Blasland), an
environmental engineering firm, to clean up a polluted parcel of land owned by the
City. The City was required to clean up the land by a consent decree it had entered
into with the United States Environmental Protection Agency in settlement of a
lawsuit the EPA had brought against the City under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C.
§§ 9601 et seq. Midway through the cleanup job, the City terminated Blasland’s
contract. Blasland believed that the City had terminated the contract without cause
and had failed to pay all the money owed under the contract; the City believed that
Blasland was not entitled to payment because it had been negligent in doing the
work. This litigation is the fruit of their disagreement.
Blasland sued the City to recover the money owed under their contract,
asserting theories of recovery that included breach of contract and CERCLA cost
recovery. The City counterclaimed for professional negligence, breach of contract,
and CERCLA contribution. All of the claims but the CERCLA claims were tried
to a jury, which found in favor of Blasland on its breach of contract claim and in
favor of the City on its professional negligence (malpractice) and breach of
contract counterclaims. The CERCLA claims were then tried to the court, which
2
ruled in favor of Blasland and against the City. That ruling provided an alternate
ground of support for the damage award the jury had returned for Blasland, but it
did not add to the total award. After the verdicts, the court also ordered that the
City’s counterclaim award be set off by amounts the City had recovered in a
previous CERCLA contribution suit against the companies that had shipped the
waste to the landfill. That setoff reduced the City’s counterclaim award to zero,
and the court entered judgment for Blasland in the full amount awarded it by the
jury, plus prejudgment interest on that amount.
The City appeals, raising three points of error. Blasland cross-appeals,
raising its own four points of error, including one point that requires us to confront
an issue of first impression in this circuit about the availability of defenses to a
CERCLA suit. For the reasons discussed below, we affirm in part, reverse in part,
and remand.
I. BACKGROUND
A. FACTS
In 1970 the City acquired a tract of land along Biscayne Bay. In 1972 it
leased the land to a private company, Munisport Incorporated, for development as
a golf complex, and then in 1974 it amended the lease to allow the site to be used
3
as a landfill. Solid waste was dumped at the Munisport site from 1974 to 1980. In
1983 EPA put the site on its National Priorities List1 of hazardous release sites and
conducted a series of studies that revealed that the buried waste was decomposing
and causing ammonia to leach into the underlying groundwater. That
contaminated groundwater was, in turn, polluting an adjacent mangrove preserve in
Biscayne Bay.
In 1990 the EPA compiled the results of its studies in a Record of Decision
document, developed a cleanup plan for the site, and filed a CERCLA complaint
against the City to force it to clean up the Munisport site. The EPA and the City
settled that suit by a consent decree, under which the City agreed to clean up the
Munisport site according to the EPA plan in return for the EPA’s covenant not to
sue. Attached to the consent decree was a document, called a Scope of Work, that
outlined the EPA’s vision of how the City should study the pollution problem,
design a more detailed cleanup plan, and put that plan into effect. The EPA plan
required the City to: 1) breach a causeway between the adjacent mangrove preserve
and Biscayne Bay, allowing more tidal circulation into the preserve; 2) construct
1
The National Priorities List is a list of polluted sites compiled by the EPA. CERCLA
requires the EPA to compile the list. Placement of a site on the list makes the site eligible to be
cleaned up through the expenditure of money from the Superfund, a fund financed through a
combination of appropriations, EPA fees, and industry taxes, which was also established by
CERCLA. 42 U.S.C. § 9605; see also United States v. Hercules, Inc., 247 F.3d 706, 715 (8th
Cir.), cert. denied, 122 S.Ct. 665 (2001).
4
groundwater-pumping wells at the borders of the landfill to intercept contaminated
water before it entered the preserve, thereby forming a “hydraulic barrier” between
the site and the preserve; 3) construct a treatment system for the intercepted
groundwater; and 4) perform the hydrogeological studies necessary to design the
hydraulic barrier and treatment system.
At roughly the same time as it settled the EPA suit, the City entered into an
agreement with the Florida Department of Environmental Regulation (DER), under
which the Department agreed to reimburse the City for the study and cleanup of the
pollution at the Munisport site, and the City agreed to cleanup the landfill and then
close it. DER’s payment was conditioned on its approving the cleanup work, and
its approval was neither conditioned on nor triggered by EPA approval.
In July 1992 the City hired Blasland, an engineering firm, to do the studies
and coordinate the cleanup work at the site.2 The City-Blasland contract provided
that Blasland’s work must be done to the satisfaction of both EPA and DER, and it
specifically referenced the terms of both the consent decree and the agreement
between the City and DER. By referencing the consent decree, the contract
incorporated the terms of the attached Scope of Work. The Scope of Work laid
2
Blasland had already been working at the site at the time it was hired to coordinate the
cleanup job. When the City released its erstwhile prime contractor from the job, the City moved
Blasland up from sub to prime contractor, or, in CERCLA terminology, the “Response Action
Coordinator.”
5
out a multi-step process for studying the contamination problem and then
designing and implementing a solution. EPA approval was necessary at each step.
The City was required to cure any deficiencies identified by the EPA, which had
authority to order the City to redo any study or test that the EPA judged had not
been properly performed.
The contract between Blasland and the City contained a “pay-when-paid”
clause in recognition of the fact that the City was depending on reimbursement
from DER to pay Blasland for the cleanup work. Under the pay-when-paid clause,
the City only became obligated to pay Blasland on a given invoice after DER had
cleared that invoice and reimbursed the City for it.
Payment for the main cleanup job was to be a fixed price of $1.4 million. In
addition, the contract included an extra-work clause, under which the City could
have Blasland perform additional “out of scope” tasks at the site that were not part
of the EPA cleanup. Payment for those tasks was to be based on Blasland’s normal
hourly rate.
While Blasland was coordinating the CERCLA-cleanup work, it was also
doing other work at the site under the contract’s extra-work clause. In particular,
one extra task Blasland performed was supervising another contractor’s placement
of fill dirt at the site. Unfortunately, that contractor illegally dumped fill into
6
wetlands, causing additional cleanup costs and prompting notices of violation from
federal and state agencies.
The primary work under the contract, however, was the “in scope work” of
cleaning up the Munisport landfill according to the EPA plan. Once the City and
Blasland signed the contract, Blasland began work on that job, with the EPA
providing oversight to assess compliance with the consent decree and its Scope of
Work. The first few phases of the plan went through without a hitch, as Blasland
devised a plan to study the pollution, conducted studies, and began using the
studies to develop a plan for the actual cleanup work. Problems arose, however, in
the design of the planned hydraulic barrier. To build that barrier, Blasland first had
to conduct a “pump test” to determine how many pumps it would need to
effectively prevent water from seeping into the mangrove preserve. Blasland
deficiently performed one of the pump tests,3 and then it used the results of that test
to design of the barrier. The EPA deemed that design unacceptable, and it sent
Blasland and the City a letter identifying deficiencies in the design and instructing
the City to revise its cleanup plan.
3
The district court found as a fact that Blasland’s performance of that test was deficient,
and Blasland has not challenged that factual finding in this appeal.
7
In June 1995, approximately one month after the EPA instructed the City to
revise the plan, the City terminated Blasland’s contract. The City refused to pay
Blasland for some of its work, which the City claimed had been improperly
invoiced. About three-quarters of the work for which the City refused to pay was
out-of-scope work.
The City then replaced Blasland with another firm, Secor International,
which prepared and implemented its own cleanup plan for the site. In September
1997, the EPA amended its Record of Decision document to one of “No Further
Action,” meaning that no further cleanup work at the site was required of the City,
and in 1999 the site was removed from the National Priorities List.
While it was having the site cleaned up by Blasland, and then by Secor, the
City also sought to recover the costs of that cleanup from those who had caused the
pollution in the first place. In 1992, soon after signing the consent decree with the
EPA, the City brought a CERCLA contribution lawsuit against the former
operators of the landfill, seeking to recover “the past and future costs associated
with the cleanup and remediation” of the site. City of North Miami v. Berger, 828
F. Supp. 401, 403 (E.D. Va. 1993). The City settled that case, receiving from the
defendants $900,000 and title to a tract of land.
8
Later, in 1995, the City brought a second CERCLA contribution lawsuit, this
time against the towns and companies that had sent their garbage to the landfill.
See City of North Miami v. A&E Constr., Inc., No. 95-0545-CIV-MARCUS (S.D.
Fla.). In that second lawsuit (“the A&E lawsuit”), the City, according to
deposition testimony its manager gave in the present case, sought to recover “as
much money on the cost of the closure and Superfund remediation at the site as we
were legally entitled to under CERCLA . . . and all these other acronyms that are
out there. . . .” The City settled the A&E lawsuit in June 1997 and received just
over one million dollars.
B. PROCEDURAL HISTORY
In May 1997, Blasland sued the City for failure to pay for some of the work
Blasland had performed under the contract. Blasland’s theories of recovery
included breach of contract, account stated, quantum meruit, CERCLA, and
Florida Statutes § 376.313 (a state cleanup-cost-recovery statute). The City
brought counterclaims for professional malpractice, breach of contract, and
CERCLA contribution.
9
Blasland’s state statutory and contract claims, as well as the City’s contract
and professional malpractice counterclaims, were tried to a jury. The jury found
for Blasland on its contract claim, awarding it roughly $380,000. The jury found
for the City on Blasland’s state statutory claim, and for the City on its counterclaim
that Blasland had breached the contract by committing professional malpractice,
awarding the City $114,000. Of that $114,000 award, $50,000 was for Blasland’s
malpractice in performing its in-scope work, and $64,000 was for Blasland’s
negligence in performing the out-of-scope work of supervising the contractor who
had illegally placed fill in wetlands areas.
The CERCLA claims were then tried separately to the court. The court
ruled in favor of Blasland, finding that it should recover roughly $375,000, but that
amount was included in, instead of being in addition to, the $380,000 awarded to
Blasland by the jury on the contract claim. That $375,000 figure did not include
approximately $110,000 the City had failed to pay Blasland, because the City had
not been reimbursed for that amount by DER. The district court concluded that the
pay-when-paid clause in the contract prevented Blasland from recovering that
$110,000, even under CERCLA.
After the jury and bench trials, Blasland filed a motion to set off against the
City’s counterclaim award the amounts the City had previously received in the
10
Berger and A&E settlements. The district court granted the motion as to the A&E
settlement, and because the amount of the A&E settlement was well in excess of
the City’s counterclaim award, that award was zeroed out. The district court also
granted Blasland’s motion to tax prejudgment interest on the total amount it was
awarded on its claims against the City. Interest came to roughly $176,000,
bringing the total judgment for Blasland to approximately $556,000. After final
judgment was entered, Blasland filed four motions for judgment as a matter of law,
including one raising a statute of limitations argument against the City’s
malpractice counterclaim. The court denied all four motions, denying the statute
of limitations motion on the ground that Blasland had waived it by not raising it at
trial.
The City has appealed both the setoff that eliminated its counterclaim award
and the award of prejudgment interest. Blasland has cross-appealed both the
district court’s failure to grant it a judgment as a matter of law on its statute of
limitations defense to the City’s malpractice counterclaim, and the court’s refusal
to include in Blasland’s CERCLA claim award the $110,000 covered by the
contract’s pay-when-paid clause.4
4
Both the City and Blasland press other issues in this appeal. The City contests an
evidentiary ruling, while Blasland complains about parts of the jury instructions. Blasland also
contends that the district court erred in failing to grant it judgment as a matter of law on the
wetlands-dumping portion of the City’s counterclaim. As to all of these issues, after careful
consideration of the parties’ briefs, their oral arguments, and the record, we affirm the district
11
II. THE CITY’S APPEAL ISSUES
A. SETOFF
After the conclusion of the trials, Blasland moved to set off against the
City’s counterclaim award the sum the City had recovered when it settled its
previous CERCLA lawsuit against the A&E defendants, who had shipped waste to
the Munisport site while it was being used as a landfill. Specifically, Blasland
sought the setoff under Florida Statutes § 46.015(2), which allows for setoff in
non-tort cases. (The parties agree that Florida law controls the setoff issue.) The
City opposed Blasland’s setoff motion on the ground that the prior settlement
represented a separate recovery for a different injury than the injury the City
suffered as a result of Blasland’s professional negligence. As a separate recovery
for a separate injury, the City argued, it’s a&E settlement proceeds should not be
set off against its counterclaim award. The district court held a hearing and heard
argument on the setoff question before issuing its order.
The A&E record showed that, in response to an interrogatory in that
litigation, the City had included in a list of the damages it sought in that lawsuit all
sums the City had paid to Blasland to implement the EPA cleanup plan, as well as
court without further discussion. See 11th Cir. R. 36-1.
12
the money to be paid to Secor in the future to finish the job.5 Further, during a
deposition in the present case, the City Manager explained that, in the A&E
litigation, the City had sought to recover “as much money on the cost of the closure
and Superfund remediation at the site as we were legally entitled to under
CERCLA . . . and all these other acronyms that are out there. . . .” Finally, at oral
argument on the setoff motion, the City’s lawyer conceded that, in the A&E suit,
the City “was seeking as much money as it could get from any source for all the
money it was obligated to pay out. It was seeking as much as it could possibly get.”
In ruling on the setoff motion, the district court first noted that “there is no
precise way for the court to determine what amount, if any, the City recovered [in
prior litigation] from others for damages attributed by the jury in this case to
[Blasland].” Nonetheless, the district court granted the setoff motion, concluding
that the sums sought by the city in the A&E suit “logically included money paid to
[Blasland].” The setoff wiped out the City’s entire counterclaim award, which
included both the $50,000 jury award on the City’s professional malpractice
counterclaim, and the $64,000 jury award on its separate counterclaim that
5
The City argues at length that the list of costs produced in response to the interrogatory
was merely a compilation of expenditures, not a list of its damages. However, as Blasland points
out, the document was submitted by the City as part of its sworn answers to interrogatories
inquiring about damages. Therefore the district court was justified in treating the list as evidence
of the damages sought by the City in the A&E litigation. At the least, the district court’s finding
in that respect was not clearly erroneous.
13
Blasland’s negligent supervision had led to the contractor’s illegally dumping fill
in protected wetlands.6
The City advances two principal arguments that the district court erred in
granting Blasland’s motion for setoff. In considering those arguments, we review
the district court’s interpretation of the state statute de novo, see Salve Regina Coll.
v. Russell, 499 U.S. 225, 231, 111 S. Ct. 1217, 1221 (1991), and its factual
determinations for clear error, see Fed. R. Civ. P. 52(a). The City’s first argument
against the setoff is that Blasland failed to comply with the plain language of the
Florida setoff statute. The statute provides that:
At trial, if any person shows the court that the plaintiff . . . has delivered
a written release or covenant not to sue to any person in partial
satisfaction of the damages sued for, the court shall set off this amount
from the amount of any judgment to which the plaintiff would be
otherwise entitled at the time of rendering judgment.
Fla. Stat.§ 46.015(2).
The City’s position is that the statute’s plain language requires the party
seeking a setoff to introduce a copy of the release from the prior litigation. It bases
this position on the statutory limitation that a setoff is available only “if any person
shows the court that the plaintiff . . . has delivered a written release or covenant not
6
Blasland in its motion had also sought a setoff of the settlement from the prior Berger
litigation, which was filed in 1992 and settled in 1993. The district court, however, set off only
the A&E settlement amount, and Blasland does not complain about the court’s decision not to set
off the Berger settlement amount.
14
to sue to any person in partial satisfaction of the damages sued for. . . .” Fla. Stat.
§ 46.015(2). Blasland did not introduce the settlement document from the prior
litigation as evidence to support its motion for setoff.7 According to the City,
Blasland’s failure to introduce the settlement documents from the A&E case
violated the technical requirements of the statute, meaning that the district court’s
decision to grant the setoff was error.
However, the plain language of the statute does not contain any requirement
that the party seeking a setoff introduce the written settlement into evidence. The
statute merely says that a setoff is required “if any person shows the court. . .” that
there was a release delivered in a prior lawsuit. Fla Stat. § 46.015(2) (emphasis
added). Introducing the release itself is one way of showing the court it exists, but
not the only way; neither the statute nor Florida case law requires the introduction
of the release itself. In this case, both the fact and amount of the A&E settlement
were before the district court and were undisputed by the parties. This was enough
to satisfy the statute’s “show the court” requirement.
The City’s second argument that the setoff was error is somewhat more
persuasive, but not enough so. The argument is that under Florida law Blasland
was not entitled to a setoff because the City’s recovery against Blasland did not
7
The parties disagree as to whether Blasland was ever given a copy of the settlement
agreement by the City. It does not matter, because, as we explain, Blasland was not required to
introduce the document in order to qualify for a setoff under the Florida statute.
15
duplicate the City’s recovery in the A&E litigation. Because the City’s argument
depends on the interaction of Florida setoff law and CERCLA liability law, before
proceeding with our analysis we first provide some background.
We begin with Florida law. Under it, the purpose of a setoff is to prevent a
party from recovering twice for the same damages. See, e.g., Kingswharf, Ltd. v.
Kranz, 545 So. 2d 276, 278 (Fla. 3d DCA 1989). Therefore, when a party seeks
recovery for the same injury in two separate lawsuits, a defendant in the second
lawsuit is “entitled to a credit for any amount paid to the claimant in settlement for
the injury.” Baudo v. Bon Secours Hosp./ Villa Maria Nursing Ctr., 684 So. 2d
211, 214 (Fla.3d DCA 1996) (quotation and citation omitted). This is true even
when co-defendants are held liable for the same injury under different theories of
liability. See Raben Builders, Inc. v. First Am. Bank & Trust Co., 561 So. 2d
1229, 1230-31 (Fla. 4th DCA 1990). It is not true, however, when the first and
second lawsuits seek recovery for different injuries altogether. See Fla. Corvette
Calipers, Inc. v. Cincinnati Milacron Mktg. Co., 670 So. 2d 1203, 1203 (Fla. 4th
DCA 1996); Gordon v. Rosenberg, 654 So. 2d 643, 645 (Fla. 4th DCA 1995).
Finally, in cases in which a set off of the recovery in prior litigation is in order, the
entire amount of the prior recovery must be setoff against the current award, unless
the release from the prior litigation specifically allocates sums among the various
16
claims being settled. See Dionese v. City of West Palm Beach, 500 So. 2d 1347,
1351 (Fla. 1987) (“The only proper method of ensuring against duplicate
recoveries in an undifferentiated lump sum settlement situation is to set-off the
total settlement funds [from the first case] against the total jury award [in the
second case].”).
Now, some background about CERCLA liability. The City’s prior
lawsuit—the A&E suit—alleged a CERCLA contribution claim. CERCLA’s cost
recovery provisions allow a plaintiff in a contribution lawsuit to recover only costs
of work that is “consistent with the national contingency plan.” 42 U.S.C. §
9607(a)(B); see also Redwing Carriers, Inc. v. Saraland Apts., 94 F.3d 1480, 1496
(11th Cir. 1996). The national contingency plan “is a series of regulations,
promulgated by the [EPA], that establish the procedures and standards for
government and voluntary response actions to hazardous substances . . . .”
Marriott Corp. v. Simkins Indus., 929 F. Supp 396, 403 (S.D. Fla. 1996). Those
regulations provide that a remedial action is consistent with the national
contingency plan if it results in a “CERCLA quality cleanup.” 40 C.F.R. §
300.700(c)(3)(ii). A “CERCLA-quality cleanup,” in turn, is defined as a cleanup
that is “protective of human health and the environment . . . and . . . cost effective.”
55 Fed. Reg. 8666, 8793 (1990). Remedial actions that are “carried out in
17
compliance with the terms of . . . a consent decree entered into pursuant to . . .
CERCLA” are presumed to be “consistent with the” national contingency plan. 40
C.F.R. § 300.700(c)(3)(i).
It is against this backdrop of Florida law and CERCLA that the City’s anti-
setoff argument plays out. The argument begins with the premise that, under
Florida setoff law, duplication between awards exists only if what has been
awarded in the present case rightfully could have been recovered in the prior
litigation. Because the City’s claim against the A&E defendants was a CERCLA
cost-recovery claim, in that lawsuit the City was entitled to recover only the costs
of work that was of “CERCLA quality,” which includes the requirement that the
work have been cost effective. But, says the City, Blasland’s work was negligently
performed (the jury determined that at least some of it was), meaning that it could
not have been “cost effective” and therefore was not “CERCLA-quality.”
Accordingly, the City argues, it was not entitled to recover in the A&E lawsuit the
monies it had paid to Blasland. This means, in turn, that the City’s counterclaim
award against Blasland for its non-“cost effective” work was necessarily an award
for a different injury than the one for which the City received it’s a&E settlement.
In the first lawsuit, against the A&E defendants, the City’s injury for which the
City was seeking compensation was paying for a “CERCLA-quality” clean up of
18
the Munisport site.8 In the second lawsuit, this one involving Blasland, the City’s
injury was the money it lost because of Blasland’s breach of its contractual
promise to do a “CERCLA-quality” cleanup job. Thus, concludes the City,
because its counterclaim award against Blasland was an award for a different
injury than the one for which it was compensated in the A&E suit, there was no
duplication of awards and should have been no setoff.
The City’s argument is a fine polysyllogism, with flawlessly connected
episyllogisms, but its initial premise is flawed. The flawed premise is that, under
Florida setoff law, duplication of awards only exists if what has been awarded in
the present case rightfully could have been recovered in the prior litigation. That is
not Florida law. In deciding whether what the City obtained in the A&E lawsuit
duplicated its counterclaim award against Blasland in this case, it does not matter
whether in the A&E lawsuit the City was entitled to recover under CERCLA the
sums it had paid to Blasland. Instead, what matters is that the City sued for those
sums in the A&E lawsuit, and the defendants in that lawsuit paid the City to settle
it. The Florida setoff statute allows an award to be reduced by a setoff of
compensation “of the damages sued for,” Fla. Stat. § 46.015(2), not just for
damages a party was entitled to recover. Florida law does not limit the availability
8
To be picky about it, the injury for which the City sought compensation was that portion
of the cleanup cost that exceeded the City’s equitable share of the expenses.
19
of a setoff to situations in which the injury compensated in the second lawsuit
duplicates the injury for which the party would have been entitled to compensation
in the first lawsuit had it gone to trial. In a similar vein, the Restatement (Second)
of Torts provides that a prior settlement should be setoff against a second judgment
for the same injury “whether or not the person making the payment [in the prior
suit] is [actually] liable to the injured person.” Restatement (Second) of Torts §
885(3) (1977).
If a plaintiff seeks damages for an injury in a lawsuit, settles that suit, and
then attempts to recover for the same injury in a second lawsuit, under Florida law
the settlement amount from the first lawsuit should be set off against any award in
the second one regardless of what the result in the first lawsuit would have been if
it had been litigated to conclusion on the merits. A contrary rule requiring the
second court to decide whether the party who recovered the money in the first
lawsuit was entitled to it, would undermine some of the advantages of the
settlement. It would force the second court to decide the very issues the parties in
the first case chose to settle rather than litigate to conclusion. The correct approach
under Florida law, in deciding whether awards are duplicative and therefore subject
to setoff, is to determine whether any injury alleged in the first lawsuit is
duplicated by the injury for which an award has been won in the second lawsuit.
20
Employing this approach, the district court found that the damages the City
had sought in the A&E suit did overlap with its counterclaim award in this lawsuit.
We agree. In the A&E lawsuit, the City included in its list of the damages it was
seeking both the sums it had paid to Blasland and the sums it would have to pay
Secor to fix Blasland’s errors and finish the job. By the time the City compiled
that list of damages, it knew of the deficiencies in Blasland’s work, which is why it
had fired Blasland and hired Secor, and it still included in its CERCLA claim
against the A&E defendants the sums it had paid to Blasland. The City therefore
was alleging in the A&E lawsuit that it could recover under CERCLA the money it
had paid Blasland, and the statements of the City’s representatives in both the A&E
lawsuit and this one confirm that was the City’s position. When, in this lawsuit,
the City was awarded on its counterclaim sums it had paid to Blasland, that award
covered some of the same loss for which it had sought recovery in the first lawsuit.
Blasland therefore was entitled to a setoff of the settlement the City had recovered
in the A&E lawsuit.9
B. PREJUDGMENT INTEREST
9
There is a somewhat different way of looking at this issue, which leads to the same
conclusion. Under Dionese, because the A&E settlement did not allocate sums between the
City’s payments to Blasland and its payments to Secor, the entire A&E settlement amount had to
be setoff against the City’s counterclaim award against Blasland. Dionese, 500 So. 2d at 1351.
This is what the district court did.
21
After the verdicts, Blasland filed a motion to tax prejudgment interest, which
the court granted over the City’s opposition. The City contends that the district
court should not have awarded any prejudgment interest to Blasland, or in the
alternative, that it awarded too much.
Under Florida law, which the parties agree applies, the general rule in
contract cases is that the prevailing party receives prejudgment interest on its
award, and that is so even if the losing party is the State or one of its subdivisions.
See Broward County v. Finlayson, 555 So. 2d 1211, 1213. (Fla. 1990); see also
Public Health Trust of Dade County v. State, 629 So. 2d 189, 190 (Fla. 3d DCA
1993); City of Cooper City v. PCH Corp., 496 So. 2d 843, 847 (Fla. 4th DCA
1986); Broward County v. Sattler, 400 So. 2d 1031, 1032-33 (Fla. 4th DCA 1981).
When a court is deciding whether to award prejudgment interest, however,
“the law is not absolute and may depend on equitable considerations.” Finlayson,
555 So. 2d at 1213; see also State v. Family Bank of Hallandale, 623 So. 2d 474,
479 (Fla. 1993). One such consideration is that “‘[i]n choosing between innocent
victims . . . it would not be equitable to put the burden of paying interest on the
public.’” Hallandale, 623 So.2d at 479 (quoting Flack v. Graham, 461 So. 2d 82,
84 (Fla. 1984)). Another consideration is that it is inequitable to allow an award of
prejudgment interest when the delay between injury and judgment is the fault of
22
the prevailing party. Id. at 480. An additional one is that it is inequitable to award
prejudgment interest to a party who could have, but failed to, mitigate its damages.
Id. The weight of equitable considerations may foreclose any award of
prejudgment interest at all, see id. at 480; Flack, 461 So. 2d at 84, or may simply
warrant a reduction in the amount to be awarded, see Finlayson, 555 So. 2d at
1213-14 (restricting the time for computing prejudgment interest to the time since
demand for payment was first made, and citing other cases that had done the
same).
The decision whether to refuse or reduce prejudgment interest, that is, how
to balance the equities, is within the trial court’s sound discretion. Accordingly, we
review the decision to grant prejudgment interest only for an abuse of that
discretion. Cf. Parker Towing Co. v. Yazoo River Towing, Inc., 794 F.2d 591, 594
(11th Cir. 1986) (stating, in an admiralty case, that the district court’s decision
whether equitable factors warrant not awarding prejudgment interest is reviewed
by this court for abuse of discretion). When a district court has discretion, there
are usually a range of choices it may make and still be affirmed; there is not only
one right choice for the court to make. See In re Rasbury, 24 F.3d 159, 168 (11th
Cir. 1994). Accordingly, in determining whether a district court has abused its
discretion, we sometimes will affirm even though, had the case been ours to decide
23
in the first instance, we would have reached a different result than the district court.
Id. (pointing out “[t]hat is how an abuse of discretion standard differs from a de
novo standard of review.”).
The City argues that, in deciding to award prejudgment interest to Blasland,
the district court erroneously ignored, or failed to properly weigh, four equitable
factors that point in the City’s favor. The City says those four factors are that: 1)
the City paid substantial sums to Blasland under the contract and only withheld
final payment due to inadequate invoicing by Blasland; 2) the City promptly paid
the jury award after the district court ruled on the CERCLA claims; 3) Florida law
disfavors placing the burden of paying interest on taxpayers; and 4) the City had a
well-founded claim that Blasland had committed malpractice.
As to the four equitable factors the City invokes, the first and second are
makeweights. It does not matter that the City paid Blasland a lot of money if it
paid less than it owed.10 And the City should not get bonus points for promptly
paying the judgment against it, which is no more than it was legally required to do.
As to the third factor – the public policy that “in choosing between innocent
victims” taxpayers should not bear the burden of paying interest, see Flack, 461
10
As to deficiencies in the invoices, the district court specifically found that any
deficiencies in the invoices were remedied by Blasland’s submission of revised invoices, and the
court calculated prejudgment interest only from the time those revised invoices were submitted.
Thus, flaws in the invoices had no effect on the City’s failure to pay during the time the interest-
clock was running.
24
So. 2d at 84 – that factor does not apply here. The City was not an “innocent
victim,” because it breached the contract. That distinguishes this case from
Hallandale, where the court emphasized that the party seeking to recover
prejudgment interest against the State did not have a contract with the State.
Hallandale, 623 So. 2d at 479. In this case, of course, the City and Blasland did
have a contract. Indeed, the dispute between them is primarily a breach of contract
disagreement of the sort for which, as the district court noted, “interest is nothing
more than compensation for loss.” Generally, in breach of contract cases the time
value of money calls for awarding prejudgment interest.
That leaves the City’s fourth, and most persuasive, equitable factor, which is
that it had a well-founded malpractice claim against Blasland. While the city was
not an “innocent party,” Blasland was not entirely innocent either; the jury found it
guilty of professional malpractice. It is true that professional malpractice is not the
same as a failure to mitigate damages or unwarranted procedural delay, which are
two of the equitable factors recognized in Hallandale. 623 So.2d at 480. However,
it is somewhat like them because those two factors focus on the fault of the victim
in either creating the damages or causing delay in recovering them. Blasland’s
professional malpractice in performing some of its work under the contract played
a role in precipitating the City’s breach and in prolonging the City’s refusal to pay
25
for the work that was properly done. For that reason the delay in Blasland’s
getting the money it should have was partially Blasland’s own fault.
Considering all of four factors together with the circumstances of this case,
if we were deciding the matter initially we might deny prejudgment interest to
Blasland altogether. Or we might not. That is not, however, the question before
us. Instead, the question is whether the district court’s decision not to deny
prejudgment interest altogether is within the range of legitimate choices open to
that court given the applicable law and the circumstances of this case. See
Rasbury, 24 F.3d at 168. We conclude that it is.
We turn now to the different question of whether the district court abused its
discretion in not reducing the amount of prejudgment interest. The City argues the
sum on which the court awarded prejudgment interest should have been reduced by
the amount the City was awarded on its counterclaim against Blasland for
professional malpractice, an award that was wiped out by the setoff caused by
payments from a different group of defendants in another case. The district court
noted this argument of the City’s was “not unpersuasive, particularly because
[Blasland] fortuitously escaped the consequences of its own negligence” by virtue
of the setoff. The court nonetheless concluded that prejudgment interest “should
26
rise and fall with the award itself,” and so taxed interest on Blasland’s entire
award.
We agree with the district court that the City’s argument on this point is
strong. It is inequitable for Blasland to have its liability for botching a job
fortuitously erased because of a setoff, and then demand interest on the portion of
its judgment that would have been negated by an award against it but for the
serendipitous setoff. Florida allows a court to take such equities into account, and
neither the district court nor Blasland has suggested any good reason why Blasland
should receive what amounts to interest on the damages its own negligence caused.
If the purpose of prejudgment interest is to provide the prevailing party with
the time value of the money it should have had at the time it was wronged – to
restore the party to an unwronged position – the only money that Blasland
equitably should have had since the time it was wronged was the value of the
award to it minus the value of the City’s counterclaim award against it. Blasland is
equitably entitled to prejudgment interest only on the net wrong it suffered, not the
gross wrong. Setoff law dictates that Blasland recover the full amount of its
award, but the law relating to prejudgment interest cares more for equitable
considerations and does not require that Blasland’s good fortune regarding the
27
setoff be increased by prejudgment interest on the amount of the setoff. Blasland
is not entitled to a windfall on its windfall.
Although awarding prejudgment interest to Blasland was within the
legitimate range of choices open to the district court, awarding prejudgment
interest for the full amount of the award was not. The maximum amount on which
prejudgment interest should have been awarded is the portion of Blasland’s award
it would have recovered if the City’s counterclaim had been subtracted from that
award instead of being erased by the setoff. We will remand so that the district
court can adjust the figures accordingly.
III. BLASLAND’S CROSS-APPEAL ISSUES
A. STATUTE OF LIMITATIONS
Blasland contends that the City’s counterclaim for professional malpractice
was barred by the statute of limitations, and that the district court erred in failing to
grant Blasland’s motion for judgment as a matter of law on that basis.11 Blasland
raised the statute of limitations as an affirmative defense in its answer and included
it in the parties’ pretrial stipulation, but failed to raise that defense at trial or at any
11
Our holding that the district court properly granted a setoff, which zeroed out the City’s
counterclaim award, does not moot this issue. Because of our other holding that Blasland is not
entitled to prejudgment interest to the extent of the City’s counterclaim award, whether the City
should have gotten that award to begin with does matter.
28
time before the entry of final judgment. Instead, after the district court had entered
final judgment, Blasland filed a motion for judgment as a matter of law asserting
the statute of limitations defense. The district court denied the motion, ruling that
Blasland had waived the defense by not raising it earlier.
For a court to be obligated to consider a post-trial motion for judgment as a
matter of law, the moving party must have made a motion for such a judgment
under Rule 50(a) at the close of all the evidence. See SEC v. Adler, 137 F.3d 1325,
1331 n.18 (11th Cir. 1998); see also Austin-Westshore Constr. Co. v. Federated
Dep’t Stores, Inc., 934 F.2d 1217, 1222 (11th Cir. 1991); Fed. R. Civ. P. 50(b). By
failing to make a motion for judgment as a matter of law at the close of all the
evidence, Blasland forfeited its right to have the court consider its post-trial motion
for judgment as a matter of law.
Even though the motion was procedurally improper, however, we may
review the issue if the district court’s failure to hold the City’s counterclaim barred
on statute of limitations grounds was plain error. That is not much of a reprieve
for Blasland, though, because “[p]lain error review is an extremely stringent form
of review.” Farley v. Nationwide Mut. Ins. Co., 197 F.3d 1322, 1329 (11th Cir.
1999). One of the requirements of the plain error test is that the error, if any, must
have been plain under existing law. Id.
29
Without cluttering up this opinion with an extraneous discussion of the
niceties of Florida statute of limitations law, we focus on one point that is fatal to
Blasland’s argument. Even assuming that the City did bring its counterclaim after
the statute of limitations had run, under Florida law that counterclaim would not be
time-barred if it was a compulsory counterclaim for recoupment of money
damages. See, e.g., Allie v. Ionata, 503 So.2d 1237, 1239 (Fla. 1987); cf. Rybovich
Boat Works, Inc. v. Atkins, 585 So. 2d 270, 271 (Fla. 1991). Blasland does not
contend otherwise. At a minimum, then, to show plain error Blasland would have
to demonstrate that the City’s counterclaim plainly was not compulsory. It has
not done so.
A counterclaim is compulsory when it arises out of the same transaction or
occurrence as the claim it is countering. See Londono v. Turkey Creek, Inc., 609
So. 2d 14, 19 (Fla. 1992). Both Blasland’s claim and the City’s counterclaim arose
out of the same contract, out of related work, performed at the same site, during the
same period of time. Both the claim and counterclaim made allegations about in-
scope work and allegations about out-of-scope work – even if the particular
allegations are different.12 For these reasons, it is not plain that the City’s
12
The particular tasks for which Blasland sought payment under the contract were not
exactly the same tasks that the City claimed Blasland had performed negligently. The district
court recognized this when it said about the CERCLA claims and counterclaim that “[t]he work
for which [Blasland] has not been paid is unrelated to the work forming the basis of the City’s
counterclaim for professional malpractice. . . .” Despite Blasland’s contentions to the contrary,
30
counterclaim was not compulsory. Because the plainness requirement of the plain
error test is not met, we will not decide Blasland’s statute of limitations contention
on the unfiltered merits, i.e., whether the counterclaim was actually compulsory,
which is the issue we would have decided if it had been properly raised and
preserved in the district court.
B. CERCLA AND THE PAY-WHEN-PAID CLAUSE
Blasland’s other cross-appeal contention is that the district court erred in
preventing it from recovering money under CERCLA on the basis of the contract’s
pay-when-paid clause. As we have mentioned, the contract between Blasland and
the City contained what the parties referred to as a “pay-when-paid” clause, which
stated that: “[Blasland] recognizes that CITY’s obligation of payment of
compensation is specifically contingent upon CITY’s receipt of funding from the
D.E.R. for payment of such fees, costs and expenses of [Blasland].” The City was
not reimbursed by DER for approximately $110,000 of the work done by Blasland.
The pay-when-paid clause clearly prevented Blasland from recovering that money
in a suit for breach of the contract, because it specifically and explicitly made the
City’s contractual liability contingent on DER reimbursement. Blasland also
however, the court did not make that observation in the context of conducting a compulsory-
counterclaim analysis, but instead in the context of analyzing whether Blasland’s own
negligence prevented it from recovering under CERCLA. That is a different matter.
31
sought that money, however, in its CERCLA claim against the City. The district
court found that the pay-when-paid clause also prevented Blasland from recovering
the $110,000 under CERCLA. According to the district court, the contractual pay-
when-paid clause provided the City with a valid defense from CERCLA liability to
Blasland to the extent that the City did not receive funding from D.E.R. for that
work. We disagree.
To understand our reasoning, it is necessary to understand the CERCLA
liability scheme. CERCLA provides two possible avenues for a party to recover
monies it spends cleaning up a polluted site. One is a suit for direct cost recovery
based on section 107(a) of the statute. 42 U.S.C. § 9607. Direct cost recovery is
available only to so-called “innocent parties,” that is, “[p]arties who are not
themselves liable or potentially liable for response costs under § 107(a) of
CERCLA . . . .” Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489,
1513 (11th Cir. 1996). In most instances, the only “innocent party” is the
government agency that is forced to cleanup the land: “the typical section 107(a)
action is brought by a governmental plaintiff that has expended taxpayer dollars in
cleaning up a facility.” Id. It “is possible that a private party may qualify as an
‘innocent’ plaintiff enabling it to bring a cost recovery action based on Section
107(a) alone ,” id., but, in practice, it is rare. Kaufman and Broad-South Bay v.
32
Unisys Corp., 868 F. Supp 1212, 1216 (N.D. Cal. 1994) (“a CERCLA plaintiff,
other than the government, will rarely be ‘innocent’ and thus permitted to sue
under [section 107]”). But see OHM Remediation Services v. Evans Cooperage
Co., 116 F.3d 1574, 1581-82 (5th Cir. 1997) (allowing a private contractor to
proceed as a plaintiff under section 107(a)). In this case, the district court
concluded after the bench trial of the CERCLA claims that Blasland was an
“innocent party” entitled to bring a direct cost recovery action. The City has not
contested that conclusion on appeal, so we will assume for the purpose of
reviewing the district court’s decision that Blasland is an innocent party. See
Allstate Ins. Co. v. Swann, 27 F.3d 1539, 1542 (11th Cir. 1994).
The second avenue of recovery under CERCLA is a contribution suit under
section 113 of the statute. 42 U.S.C. § 9613(f). A section 113 suit allows “guilty”
parties– “responsible parties” in CERCLA-decision jargon – who are liable for
some of the cleanup costs, but have paid more than their fair share of those costs,
to recover the amount of their excess payments from other parties who are also
responsible for the pollution. See Redwing Carriers, 94 F.3d at 1513.
Contribution suits are the only avenue of recovery available to a responsible party,
which under CERCLA includes an owner of a facility where waste was dumped,
an operator of a facility, an “arranger” of the disposal or treatment of hazardous
33
waste at a facility, or an acceptor of waste for transportation or disposal. 42 U.S.C.
§ 9607(a). In this case, the City, as owner of the Munisport site, was a responsible
party.
In either a section 107 direct cost recovery action or a section 113
contribution action, the elements of the plaintiff’s prima facie case are the same.
To establish one, the plaintiff must show: 1) that the site is a CERCLA “facility”;
2) that there was a release or threatened relase of a hazardous substance; 3) which
caused the plaintiff to incur response costs consistent with the National
Contingency Plan; and 4) the defendant is a statutorily liable person, i.e., a
responsible party, as described above. Redwing Carriers, 94 F.3d at 1496-97. In
this case, the district court found that Blasland had proved its prima facie case, and
the City does not contest that determination. The dispute is not over the
requirements of the prima facie case, but instead over the availability of defenses.
Once a prima facie case is proven there are, according to section 107(a) of
the statute, three and only three defenses to liability. Specifically, that section
provides that liability is “[n]otwithstanding any other provision or rule of law, and
subject only to the defenses set forth in subsection (b) of this section.” 42 U.S.C. §
9607(a) (emphasis added). The defenses set forth in subsection (b) are that the
pollution was caused entirely by either: 1) an act of God; 2) an act of war; or 3) an
34
act of a third party unconnected to the defendant. Id. § 9607(b). It is undisputed
that none of the 107(b) defenses apply to this case.
Section 107, read by itself, indicates that the only defenses to a CERCLA
cost recovery action are the three defenses listed in section 107(b). The Sixth
Circuit has said that section 107(b) “set[s] forth the universe of defenses to section
107 liability.” Velsicol Chem. Corp. v. Enenco, Inc., 9 F.3d 524, 530 (6th Cir.
1993). Yet the exclusivity language of section 107(a) is belied by a passel of
defenses explicitly provided in other sections of CERCLA. There are statutes of
limitations, each applicable to a different type of cost recovery claim. 42 U.S.C. §
9613(g). See Smith Land & Imp. Corp. v. Celotex Corp., 851 F.2d 86, 89 (3d Cir.
1988). And various specific sorts of substances are exempted from the coverage of
the statute. See, e.g., 42 U.S.C. § 9601(14) (petroleum exclusion); 42 U.S.C. §
9607(i) (pesticide exclusion). So, too, are secured creditors who might otherwise
be considered “owners” under CERCLA, 42 U.S.C. § 9601(20)(E)(1), and
“innocent landowners,” 42 U.S.C. § 9601(35). And, in contribution suits, the
defendant may escape liability either by virtue of an indemnification or a hold
harmless agreement with the plaintiff, 42 U.S.C. § 9607(e), or by proving it has
already settled its liability to the government, see 42 U.S.C. § 9613(f)(2). If, as
the Sixth Circuit said, section 107(b) sets out the “universe of defenses” to
35
CERCLA liability, then the statute contains alternate universes. The existence of
additional enumerated CERCLA defenses elsewhere in the statute contradicts
section 107(a)’s statement that section 107(b) provides the exclusive set of
defenses to CERCLA. However, the pay-when-paid clause does not fall into any
of these other enumerated defenses either.13
Instead, the pay-when-paid clause at issue in this case is, or at least is closely
akin to, an equitable defense. The City claims that because Blasland agreed that
the City’s contractual liability would be contingent on DER reimbursement,
Blasland should not be allowed to conduct an end-run around the contract using
CERCLA. This sounds like an equitable estoppel argument that runs along the
following lines: Although Blasland did not release the City from CERCLA
liability, it did release the City from contractual liability, and it would be unfair to
allow Blasland to circumvent that release with a CERCLA suit. The City claims its
pay-when-paid defense is really a legal not an equitable argument, and that not
13
The City suggests that its contractual pay-when-paid clause is similar enough to either a
consent decree or release, which are CERCLA-enumerated ways of resolving liability, to be
enforceable under CERCLA. It is true that under CERCLA the government (the usual
“innocent party”) can enter into a consent decree with a polluter and thereafter be bound by that
settlement. It also is true that CERCLA expressly allows responsible parties to allocate liability
among themselves via releases and indemnification agreements. The City claims that, just as
CERCLA makes consent decrees and releases effective to release liability, its contract with
Blasland should be effective to release the City’s liability. But the pay when-paid-clause did not
purport to release CERCLA liability, or any liability other than contractual liability; it speaks of
the City’s obligation to pay “compensation” under the contract not of liability for contribution
under CERCLA. It therefore is not one of the defenses based on release of liability enumerated
in CERCLA itself.
36
enforcing the clause would permit Blasland to retain the benefits of its contract
while disregarding those burdens it now finds undesirable. Legally speaking, this
is incorrect, because Blasland never assumed the “burden” of foregoing CERCLA
recovery; the terms of the clause do not mention CERCLA liability. It is only in
equity that the City’s argument has a good ring to it. Thus the City’s invocation of
the pay-when-paid clause is, or is at least materially similar to, an equitable
defense.
A majority of the circuits that have considered the issue have found that
107(a) bars defendants in CERCLA suits from raising equitable defenses to
liability. See Town of Munster, Ind. v. Sherwin-Williams Co., 27 F.3d 1268, 1270
(7th Cir. 1994) (“CERCLA does not permit equitable defenses to § 107 liability”);
Velsicol, 9 F.3d at 530 (holding that the doctrine of laches may not bar a CERCLA
cost recovery action); Gen. Electric v. Litton Indus. Automation Systems, 920 F.2d
1415, 1418 (8th Cir.1990) (holding that CERCLA does not provide for an unclean
hands defense to liability), cert. denied, 499 U.S. 937, 111 S. Ct. 1390 (1991);
Smith Land, 851 F.2d at 90 (concluding that under CERCLA the doctrine of caveat
emptor is not a defense to liability for contribution).
Courts denying the availability of equitable defenses to CERCLA liability
have done so for two reasons. The first, of course, is the plain language of section
37
107(a) which explicitly limits defenses to those three enumerated in section 107(b).
See, e.g., Veliscol, 9 F.3d at 530; Town of Munster, 27 F.3d at 1271. The second
reason is the Congressional intent behind the statute, which was to have pollution
cleaned up as quickly as possible and to see that the responsible polluters are made
to pay for the cleanup. See Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219,
1221 (11th Cir. 2000) (“CERCLA is a broad, remedial statute animated by a
sweeping purpose to ensure that those responsible for contaminating American soil
shoulder the costs of undoing that environmental damage.”); United States v.
Navistar Intern. Transp. Corp., 152 F.3d 702, 707 n.7 (7th Cir. 1998) (recognizing
that one of CERCLA’s purposes is “prompt clean up of polluted cites”) (citation
omitted)). Recognizing non-enumerated defenses to CERCLA liability would
frustrate Congress’s intent by giving responsible parties an incentive to delay
cleaning up a polluted site, in the hopes of escaping liability and passing the
buck(s) to someone else. For these two reasons, courts have generally rejected
attempts to impress equitable defenses into the ranks of defenses to CERCLA
liability.
We agree that CERCLA’s section 107(a) bars equitable defenses. Section
107(a) imposes liability “[n]otwithstanding any other provision or rule of law, and
subject only to the defenses set forth in subsection (b) of this chapter.” Although
38
this statement may be contradicted by other defenses provided elsewhere in the
statute, that does not mean this Court has the same power as Congress to create
exceptions to section 107(a)’s bar on other defenses based on our own sense of
what would be good policy. The plain language of section 107 indicates that
Congress wanted defenses to suits brought by an innocent party to be narrowly
circumscribed. Recognizing unenumerated equitable defenses would widen too far
the circle of exemption from CERCLA liability, and invite defendants in suits
brought by an innocent party (usually the EPA) to raise such defenses in the hopes
of persuading the court that although the defenses were not enumerated in
CERCLA, they should have been. Therefore, defenses, including equitable ones,
that are not enumerated in the statute cannot thwart the imposition of CERCLA
liability.14
14
We recognize that the Seventh Circuit has speculated in dicta that, while CERCLA does
bar equitable defenses, there still may be viable defenses to CERCLA liability that are not
enumerated either in section 107(b) or anywhere else in the statute. Town of Munster, 27 F.3d at
1272. As the Seventh Circuit explained:
[T]hough we need not (and do not) decide the matter, we doubt seriously that res
judicata, collateral estoppel, accord and satisfaction, and statutes of limitation are
“defenses” as CERCLA employs that term. While the statute does not define the
term, we read the defenses enumerated in §§ 107(b) as addressing the causation
element of the underlying tort and negating the plaintiff's prima facie showing of
liability. A defendant who claims that he already has litigated the same matter
(res judicata), reached agreement on and paid for its damages (accord and
satisfaction), or was not sued within the relevant limitations period does not
contest whether the plaintiff can establish liability under §§ 107; rather he
interposes a legal or statutory shield against having to litigate (or relitigate) the
issue or case.
Id. (citations omitted). In this case, the district court looked to Town of Munster as persuasive
39
Section 107(a) bars the assertion of all equitable defenses to CERCLA
liability. The pay-when-paid clause is more like an impermissible equitable
defense than any of the permissible defenses enumerated in CERCLA. We
therefore hold that the pay-when-paid clause in the contract between Blasland and
the City was not enforceable under CERCLA to bar Blasland from recovering
under that statute any money owed it by the City for which the City had not been
paid by DER.15 Thus the district court erred in deciding that the pay-when-paid
clause in the contract between Blasland and the City prevented Blasland from
recovering the $110,000 that it was owed by the City, but for which the City had
not been repaid by DER.
This result may seem unfair, but, as the Eighth Circuit has said in discussing
107(a)’s exclusion of non-enumerated defenses: “We realize this [provision] can
and does lead to harsh results, but we are obliged to enforce the law as Congress
authority to guide its analysis of the pay-when-paid clause, and found that the clause was just the
sort of viable “legal shield” defense envisioned by the Town of Munster court. We offer no
views on the persuasiveness of the Seventh Circuit’s musings, however, because they are
irrelevant to this case. The pay-when-paid clause is simply not a defense-in-bar (or “legal
shield”) of the sort that the Seventh Circuit suggested may still be available under CERCLA.
15
Had this been a contribution suit between two responsible parties, the pay-when-paid
clause might well have been considered in deciding a equitable allocation of liability between
Blasland and the City. See Redwing Carriers, 94 F.3d at 1513. We need not decide that,
however, because the district court found Blasland was an innocent party, not within any of
CERCLA’s categories of liable or potentially liable parties, and the City does not challenge that
ruling. Therefore, the district court could not equitably allocate liability between the City, a
responsible party, and Blasland, an innocent party.
40
has written it, unless, of course, such law violates some provision of the
Constitution.” United States v. Mexico Feed and Seed Co., 980 F.2d 478, 484 n.5
(8th Cir. 1992); see also United States v. Price, 577 F. Supp. 1103, 1114 (D. N.J.
1983) (“Though strict liability may impose harsh results on certain defendants, it is
the most equitable solution in view of the alternative–forcing those who bear no
responsibility for causing the damage . . . to shoulder the full cost of the clean
up.”). The result may be particularly harsh in a case like this one, which is not the
normal CERCLA “innocent plaintiff” case. Blasland was not cleaning up the site
with taxpayer funds as a public service; it was doing so for profit, and it did not
even do an entirely competent job. Nonetheless, the result we reach is compelled
by the combination of the district court’s uncontested finding that Blasland was an
innocent party and CERCLA’s provisions on the availability of defenses.
IV. CONCLUSION
The district court’s judgment is AFFIRMED, except in these two respects:
(1) the award of prejudgment interest is REVERSED insofar as it awards interest
that Blasland would not have recovered if there had not been a setoff of the City’s
counterclaim award; and (2) its decision on Blasland’s CERCLA claim is
REVERSED insofar as it relied on the contractual pay-when-paid clause as a
41
ground for denying Blasland recovery of its CERCLA costs from the City. The
case is REMANDED for further proceedings consistent with this opinion.
42