The opinion of the court was delivered by: Lonny R. Suko United States District Judge
A bench trial was conducted in this matter from November 15 to November 17, 2011. This "Memorandum of Decision" represents the court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52(a)(1) based on the record existing prior to trial, testimony presented at trial, and exhibits admitted at trial.
Smith Brothers Farms, Inc. ("Smith Brothers") owned and operated the dairy facility (the "Dairy") located at 11792 Road 12.5 SW, near Royal City, Washington.
On June 7, 2004, Community Association For The Restoration Of The Environment (CARE) filed a complaint against Smith Brothers in the Federal District Court for the Eastern District of Washington, alleging violations of the Clean Water Act (CWA), 33 U.S.C. § 1251 et seq., Comprehensive Environmental Response, Liability, and Compensation Act (CERCLA), 42 U.S.C. § 9601 et seq., and the Emergency Planning and Community Right-to-Know Act (EPCRA), 42 U.S.C. § 11004 et seq. (ECF No. 1).
On March 24, 2006, CARE and Smith Brothers Farms, Inc., entered into a proposed Consent Decree in settlement of CARE's claims. (ECF No. 39). The Court approved and entered the Consent Decree on May 23, 2006. (ECF No. 40).
Defendant Nelson Faria Dairy, LLC ("Faria") purchased the Dairy and its underlying assets from Smith Brothers on October 2, 2006. (ECF No. 58 at 4).
Beginning on October 2, 2006, Faria became solely responsible for compliance with the Consent Decree. (ECF No. 40 at ¶¶ 3, 37).
Pursuant to ¶¶ 7-8 of the Consent Decree, on December 15, 2008, CARE provided Faria with notice of its intent to inspect the Dairy on December 17, 2008.
On December 17, 2008, representatives from CARE, including Mike Brown, Gary Christensen, and Rick Carter, inspected the Dairy.
Pursuant to ¶ 9 of the Consent Decree, on December 22, 2008, CARE notified Faria of four conditions which CARE alleged could cause or lead to an imminent discharge of pollutants from the Dairy facility in violation of applicable legal requirements, including the Clean Water Act. (ECF No. 58 at 6-8).
The issues alleged in CARE's December 22, 2008 letter included: (1) over-application of lagoon waste to the "Hebdon Field" which caused ponding along an area adjacent to the south side of an irrigation canal; (2) significant ponding of manure water in a field just north of the Dairy; (3) applications to a field directly east of the Dairy when the ground was frozen, snow covered, and with no active cropping; (4) application of manure wastes to a field south of the Dairy which had no crop currently growing. (See id.)
On January 30, 2009, CARE provided another letter to Faria alleging ten other violations of the Consent Decree. (Id. at 10-12).
CARE attempted to negotiate a settlement with Faria regarding the alleged Consent Decree violations over the course of the next 18 months. (Plaintiff's Ex. 72).
On May 17, 2010, CARE filed a Motion for an Order to Show Cause For Failure to Comply with Consent Decree. (ECF No. 55). The Court granted CARE's motion on May 18, 2010. (ECF No. 60). In doing so, the court extended the Consent Decree indefinitely pending further order. Accordingly, the Consent Decree remains in effect and has not expired.*fn1
CARE's Motion for an Order to Show Cause, (ECF No. 55), alleged numerous instances of non-compliance. In an order dated January 7, 2011 (ECF No. 123), the court found eight instances of non-compliance.
Faria's non-compliance with the Consent Decree began no later than November 1, 2006, when Faria failed to properly prepare its water balances. (ECF No. 123 at 3; Ex. 51 at 5 (incorrect water balance for period from October-November, 2006)).
II. INSTANCES OF NON-COMPLIANCE PREVIOUSLY FOUND BY COURT
This court previously found eight separate instances of non-compliance by Defendant with the Consent Decree. See January 7, 2011 "Order Re Motion For Order Of Contempt," (ECF No. 123), which is fully incorporated herein. Pending trial, the court reserved determination of whether those instances of non-compliance constituted contempt. The court now concludes these instances of non-compliance did not amount to "substantial compliance" with the Consent Decree and therefore, Defendant is in contempt with regard to those eight violations of the Consent Decree. "Substantial compliance" is a defense to civil contempt and is not vitiated by a "few technical violations" where every reasonable effort has been made to comply. In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993). The eight instances of non-compliance recited in the court's January 7, 2011 order do not amount to a "few technical violations" and the Defendant did not make every reasonable effort to comply with the specific terms of this very detailed Consent Decree.
Defendant's alleged "good faith" and lack of willfulness is irrelevant. "Good faith" does not excuse civil contempt. Id.*fn2 Technical or inadvertent violations are not a defense to contempt if the defendant has failed to take all reasonable steps to compliance. General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986). The court questions Defendant's good faith in light of Mr. Faria's testimony that he read the very detailed and technical requirements in the 26 page Consent Decree only once after he purchased the dairy and furthermore, did not seek the assistance of counsel and/or other professional help to insure he fully understood his obligations and what exactly he needed to do in order to comply with those obligations. The evidence bears out there was never any reasonable effort by Defendant to comply with the specific terms of the Consent Decree. Defendant may sincerely believe it improved the Dairy through changes it made and in doing so, complied with the "spirit" of the Consent Decree. That, however, is not adequate. Since January 7, 2011, the Defendant has not purged its contempt in any meaningful way with regard to the eight violations of the Consent Decree previously found by the court.
A party may have an equitable defense to a remedy ordered by the court, but the only defense to a violation of a consent decree must be found within the four corners of the decree. Cook v. City of Chicago, 192 F.3d 693, 695 (7th Cir. 1999). Defendant has not met its burden of establishing any equitable defense to its violations of the Consent Decree. Mr. Faria at no time gave notice of nor communicated with anyone else associated with CARE, including Cindy Carter, prior to making changes to the Dairy operations. Mr. Faria's interactions with Carter, which are best be described as no more than casual, do not constitute reasonable reliance on the part of Defendant that it did not have to comply with the very specific terms of the Consent Decree, particularly so when those terms include: 1) that "this Decree may not be modified except by written amendment agreed to by the Parties and approved by the Court;" 2) that counsel for CARE, in addition to Cindy Carter, was to be provided with all notices required under the Decree; and 3) that "CARE shall act as a single legal entity with respect to all notices, decisions, and other actions taken under this Decree," and Defendant "shall not be answerable to individual CARE members in complying with this Decree." (ECF No. 40 at Paragraphs 34, 38 and 39). Cindy Carter did not, indeed could not by herself, waive violations of the Consent Decree. Hence, there was no waiver by CARE and it is not equitably estopped from seeking to hold Defendant in contempt for these violations of the Consent Decree.
The fact CARE members, pursuant to the terms of the Decree (ECF No. 40 at Paragraphs 7-10), did not formally inspect the dairy until December 2008 does not give rise to a laches defense. Defendant cannot claim any prejudice in light of its failure to make any reasonable effort to comply with the Consent Decree from the moment it purchased the dairy.
In its January 7, 2011 order, the court reserved determination of whether Defendant's failure to have a NPDES permit constituted a violation of the Consent Decree.
Paragraph 5 of the Consent Decree states that "[i]n operating the Dairy, the Defendants shall abide by CERCLA, EPCRA, CWA, and any applicable Washington National Pollution Discharge Elimination System ("NPDES") permit and the Dairy's nutrient waste management plan." (Emphasis added). The plain language- "any applicable permit" -suggests there may be no applicable permit.
Washington courts apply the "context rule" which permits a court to look to extrinsic evidence to discern the meaning or intent of words or terms used by contracting parties, even when the parties' words appear to be clear and unambiguous. Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836 (1999). Extrinsic evidence includes the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties, and the reasonableness of the respective interpretations urged by the parties. Hearst Communications, Inc v. Seattle Times Co., 154 Wn.2d 493, 502, 115 P.3d 262 (2005). Extrinsic evidence may not, however, be used to "'show an intention independent of the instrument' or to 'vary, contradict or modify the written word.'" Id. at 503, quoting Hollis, 137 Wn.2d at 695-96. Moreover, extrinsic evidence of a party's subjective, unilateral intent as to the contract's meaning is not admissible. Id. Nor is it admissible under the parol evidence rule to add to the terms of a fully integrated written contract. Brogan & Anensen, LLC v. Lamphiear, 165 Wn. 2d 773, 775, 202 P.3d 960 (2009).
Based on the extrinsic evidence presented at trial, the court concludes the mutual intent of the parties who entered into the Consent Decree (Smith Brothers and CARE) was that the term "any applicable permit" referred to a general permit or to an individual NPDES permit. These parties did not intend there might be no applicable permit at all. At the time the Consent Decree was filed (May 23, 2006), Smith Brothers was operating under a general NPDES permit and expressed its intention to continue to operate under such a permit through the period of the Consent Decree. In a March 2005 letter from counsel for Smith Brothers to the Plaintiff, counsel for Smith Brothers urged the term of the Consent Decree be limited to three years in consideration of the fact "the Dairy will be under the State of Washington's new CAFO (Concentrated Animal Feeding Operation) permit which is much more restrictive than the General Permit for Dairy Operations" and that "[t]hese and other applicable regulatory requirements will extend beyond the term of the consent decree." (Plaintiff's Ex. 62 at p. 30). In the same letter, counsel for Smith Brothers indicated the dairy "will soon be subject to the State of Washington's CAFO NPDES and Waste Discharge General Permit" and that "the Dairy's overall nutrient-management program will incorporate the combined groundwater protection requirements of the settlement, the Nutrient Management Plan, and the CAFO permit." (Id. at 22). The testimony at trial of Scott Highland, president of Smith Brothers, corroborated it was Smith Brothers' understanding that pursuant to the Consent Decree, it would need to have a NPDES permit.
The objective of the Consent Decree establishes that having a NPDES permit was a requirement of the Decree. The primary focus of CARE's lawsuit against Smith Brothers was to obtain compliance with the Clean Water Act. CARE made clear in correspondence with Smith Brothers that obtaining a NPDES permit was "of course, also a necessary component" of any acceptable settlement. (ECF No. 78 at 4). CARE stated that its settlement proposal was "generally intended to help assess and ensure future compliance with the Clean Water Act." (Id. at 11). In a later letter to Smith Brothers, CARE insisted that some sort of Clean Water Act penalties be paid since the "facility has been operating without the required NPDES permit since the operations started." (Id. at 15).
The fact Mr. Faria was not involved in the negotiations regarding the Consent Decree and was not an original party to the Decree is of no significance. See Newport Yacht Club v. City of Bellevue, 2010 WL 1286860 at *4 (W.D. Wash. 2010)("More importantly, Helland was not a party to the contract, making her interpretation of the Settlement Agreement- even if contradictory- irrelevant"). It is the mutual intent of CARE and Smith Brothers which is of significance. Were it otherwise, the successor or assign of a Consent Decree could easily circumvent the mutual intent of the parties to the Consent Decree. Furthermore, it bears noting that there is evidence in the record indicating Faria Dairy was aware that a NPDES permit was required. In November 2008, Faria Dairy sold off 1/2 of its assets to Allred Brothers, LLC. The "Agreement For Purchase And Sale Of Real Property, And Livestock, Bill Of Sale And Escrow Instructions," (Plaintiff's Ex. 63 at 00560), contains a provision, Paragraph 13(b), stating the buyer acknowledged reviewing "the Application for and Final Order for Concentrated Animal Feeding Operations NPDES" and the "State Waste Discharge General Permit applications." It is also noted that Mr. Faria maintains an ownership interest in at least six other dairies, five located in Texas and one in New Mexico. Some of these dairies have CAFO NPDES permits and are subject to regulatory controls similar to those in Washington.
Based on the aforementioned extrinsic evidence, a reasonable interpretation of the Consent Decree is that Paragraph 5 required Smith Brothers Dairy and its successor, Faria Dairy, to "abide by" (operate), and therefore necessarily have, a NPDES Permit. Extrinsic evidence is not used here to show an intention independent of the Decree or to "vary, contradict or modify the written word." The court does not rely on extrinsic evidence of any party's subjective, unilateral intent and its interpretation does not add to the terms of the "fully integrated" Decree. (See ECF No. 40 at Paragraph 34).
Since it purchased the dairy, Defendant has not operated the Dairy under a NPDES permit. It has not complied or "substantially complied" with Paragraph 5 of the Consent Decree and it has no equitable defenses to compliance. Because Paragraph 5 of the Consent Decree was sufficiently clear by an objective standard which takes into account the context in which it was issued*fn3 , it is appropriate to find the Defendant in contempt for not obtaining a NPDES permit. Defendant has not offered a good faith and reasonable interpretation of Paragraph 5 so as to justify its failure to procure a NPDES permit.
IV. OTHER ALLEGED INSTANCES OF ...