Sep 11: In the U.S. Court of Appeals, Sixth Circuit, Case No. 10-3634. Appealed from the Northern District of Ohio at Toledo. Textileather Corporation, which purchased a vinyl manufacturing facility with hazardous waste management units (RCRA units) from GenCorp Inc., appeals from the district court's grant of summary judgment to GenCorp in this breach-of-contract and Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) action. The Appeals Court affirmed in part, reversed in part and remanded the case to the district court for further proceedings consistent with its opinion.
The Appeals Court ruled that, "OEPA was not a party to the APA, so it fairly falls under the common meaning of 'third person. . . we reverse the district court's decision granting summary judgment to GenCorp and instruct the district court to enter summary judgment in favor of Textileather on the legal question of whether the retained liabilities section applies. We remand this case to the district court for proceedings to determine the appropriate allocation of costs and damages under the terms of that provision. . . the district court properly concluded that the allocation and assumption of liability provisions apply to CERCLA claims as well. GenCorp retained only those CERCLA liabilities covered by Sections 9.1.1 and 9.1.2."
In 2001, Ohio EPA (OEPA) approved a closure plan submitted by Textileather. In its letter regarding the approved closure plan, OEPA noted that compliance with this approved plan was expected and would be monitored. Textileather appealed portions of the approved plan. The Ohio Tenth District Court of Appeals affirmed the plan in part and reversed in part with instructions to OEPA to approve a plan consistent with its holding. OEPA has not yet issued a new plan. Throughout the course of the RCRA closure proceedings, including the negotiation of various plans and appeal of the approved plan, Textileather notified GenCorp that it believed, pursuant to the Asset Purchase Agreement (APA), GenCorp was obligated to indemnify and defend Textileather in these proceedings.
Textileather brought the action to recover the costs it incurred in the RCRA closure proceedings. Textileather and GenCorp filed cross-motions for summary judgment, and the district court granted GenCorp's motion and denied Textileather's motion. In particular, the district court held the APA to be unambiguous and determined that, under the terms of the APA, OEPA did not constitute a "third party" and Textileather's RCRA closure proceedings with OEPA did not constitute a "claim or action."
The Appeals Court ruled that, "OEPA was not a party to the APA, so it fairly falls under the common meaning of 'third person. . . we reverse the district court's decision granting summary judgment to GenCorp and instruct the district court to enter summary judgment in favor of Textileather on the legal question of whether the retained liabilities section applies. We remand this case to the district court for proceedings to determine the appropriate allocation of costs and damages under the terms of that provision. . . the district court properly concluded that the allocation and assumption of liability provisions apply to CERCLA claims as well. GenCorp retained only those CERCLA liabilities covered by Sections 9.1.1 and 9.1.2."
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