SCHIAVONE v. PEARCE

No. 3:91 CV 662 CFD

77 F. Supp.2d 284 (1999) | Cited 0 times | D. Connecticut | December 6, 1999

RULING ON MOTION FOR SUMMARY JUDGMENT

Defendant and third-party plaintiff Kerr-McGee Chemical LLC("Kerr-McGee")1 brings this action against third-partydefendant Union Camp Corporation ("Union Camp"). Kerr-McGeeclaims that Union Camp is liable to it for any damages, costs,and other relief that may be awarded against Kerr-McGee under theComprehensive Environmental Response, Compensation, and LiabilityAct ("CERCLA"), as amended, 42 U.S.C. § 9601 et seq., andConn.Gen.Stat. § 22a-452. Union Camp filed the instant motion forsummary judgment [Document # 189]. For the reasons set forthbelow, the motion for summary judgment is GRANTED and thethird-party action is DISMISSED.

I. Background

In Schiavone v. Pearce, 79 F.3d 248, 250-51 (2d Cir. 1996),the Second Circuit set forth the historical background of thiscase, as follows:

Union Bag & Paper, the predecessor of Union Camp, formed American Creosoting Corporation ("AmCre Corp.") in 1956 to facilitate Union Camp's acquisition of certain assets from American Creosoting Company. With funds supplied by Union Camp, AmCre Corp., a wholly owned subsidiary of Union Camp, purchased these assets, which included a business on certain leased real property in North Haven, Connecticut. American Creosoting Company had operated a creosoting facility on this property since 1922. On July 24, 1964, Union Camp entered into a stock purchase agreement with Kerr-McGee Oil, the predecessor of Kerr-McGee Corporation, whereby Kerr-McGee acquired AmCre Corp. In Section 4 of this stock purchase agreement ("the indemnification agreement") . . . Union Camp agreed to indemnify and hold harmless AmCre Corp. and Kerr-McGee for legal claims and suits filed against them prior to August 1, 1965. . . . Subsequent to its purchase of AmCre Corp., Kerr-McGee changed the name of AmCre Corp. to Moss American, Inc. ("Moss American"). In 1974[,] Kerr-McGee Chemical Corporation, a subsidiary of Kerr-McGee Corporation, merged with Moss American, assuming all Moss American's liabilities.

A contract between AmCre Corp. and the New York, New Haven and Hartford Railroad Company ("the Railroad"), concerning the operations of the creosoting plant in North Haven, Connecticut ("the plant"), forms the basis of the underlying action. From approximately 1921 through 1966, the Railroad owned the property on which the plant is located and leased it to American Creosoting Company. The property, which changed ownership several times over subsequent years, suffered creosote contamination as a result of the plant's storage, handling, and disposal activities. Prior to September 25, 1984, at the behest of the Connecticut Department of Environmental Protection, the then — owners of the property, defendants Herbert H. Pearce ("Pearce") and Donald B. Lippincott ("Lippincott"), implemented a remedial program to cleanse the land. Their curative efforts, however, were not without critics.

Plaintiff Michael Schiavone, who purchased the property from Pearce and Lippincott by warranty deed on or about October 23, 1984, commenced the underlying lawsuit [in the United States District Court for the District of Connecticut], alleging that Pearce and Lippincott had inadequately remediated the creosote contamination, causing plaintiff to incur substantial clean-up costs. Plaintiff named Kerr-McGee [Corporation and Kerr-McGee Chemical Corporation] as . . . defendant[s]. Kerr-McGee impleaded Union Camp, seeking contribution based on Union Camp's management of the plant, through the activities of Union Camp's wholly owned subsidiary and the title owner of the plant, AmCre Corp., from 1956 through 1964.

During that period, Union Camp and AmCre Corp. shared the same board of directors, and several of AmCre Corp.'s high-ranking officers, specifically its president, general counsel, assistant comptroller, and assistant treasurer, were also employed by Union Camp. During the years in question, Union Camp's legal department rendered services to AmCre Corp., including the review and approval of the 1958 renewal of the contract [with the Railroad] concerning the operations of the plant. Kerr-McGee states that several Union Camp employees participated, as officers and directors of AmCre Corp., in the negotiations surrounding the 1958 contract renewal. Kerr-McGee also maintains that during this period, the interlocking Union Camp-AmCre Corp. board of directors examined and approved capital expenditures, including pollution-control equipment, for AmCre Corp.'s creosoting plants. [Union Camp disputes the extent of its employees' participation in the 1958 contract renewal negotiations and in approving AmCre Corp.'s capital expenditures.] It is Kerr-McGee's contention that Union Camp's sustained involvement in the plant's operations reflects an exercise of control by Union Camp sufficient to render Union Camp directly liable for the environmental harm caused.

Union Camp moved for summary judgment on both the CERCLA and state statutory claims. On August 25, 1994, the district court[, Peter C. Dorsey, Chief Judge,] granted the motion, finding that the indemnification agreement shifted all Union Camp's liabilities, including environmental liabilities, to Kerr-McGee. The district court did not address the factual question of the extent of Union Camp's direct liability, if any, as it deemed Kerr-McGee's CERCLA and state statutory claims to be barred, based on the indemnification agreement. On September 14, 1994, Kerr-McGee moved for reconsideration, arguing that the district court had incorrectly interpreted the indemnification agreement and had improperly declined to address the issue of Union Camp's direct CERCLA and state statutory liability.

In an April 18, 1995[] ruling, the district court denied Kerr-McGee's motion, and on June 1, 1995, final judgment was entered in favor of Union Camp.

1. On October 12, 1999, the court granted Kerr-McGee ChemicalCorporation's motion to substitute Kerr-McGee Chemical LLC asdefendant and third-party plaintiff in this action, absentobjection.

2. This holding resolves any indirect liability of Union Camp.Moreover, the evidence presented by Kerr-McGee in opposition tothis motion for summary judgment is insufficient underConnecticut law to create a genuine issue of material fact as towhether the corporate veil of Union Camp may be pierced. See,e.g., Angelo Tomasso, Inc. v. Armor Constr. & Paving, Inc.,187 Conn. 544, 447 A.2d 406, 411-13 (1982); Accashian v. City ofDanbury, No. CV 970147228S, 1999 WL 30594, at *5-6(Conn. Sup.er.Ct. Jan.8, 1999) (discussing Bestfoods,Conn.Gen.Stat. § 22a-452, and piercing the corporate veil); seealso infra pp. 290-93.

3. According to Kerr-McGee, W.D. Cole, Vice President of UnionCamp, recommended in August 1956 that Union Camp "clearlyindicate to AmCre Corp.'s customers that it, Union Camp, wascommitted to the creosoting business." Plaintiff's SupplementalOpposition at 14; see also Plaintiff's Supplemental Facts at4. Kerr-McGee also asserts: "In 1957, Mr. Cole proposedimmediately selling the creosoting business, or alerting itscustomers that Union Camp intended to commit itself to thatbusiness. It is clear that Union Camp did not sell the businessin 1957. Thus, the logical inference is that Union Camp did alertthe various customers (including the . . . Railroad) that it wascommitted to the creosoting operations." Plaintiff'sSupplemental Opposition at 15; see also Plaintiff'sSupplemental Facts at 4.

4. Because Kerr-McGee fails, as a matter of law, to presentsufficient evidence to support its operator liability claimsagainst Union Camp, it is unnecessary for the court to addressthe factual evidence presented by Union Camp.

5. As evidence of Mr. Mimms's advising AmCre Corp., Kerr-McGeealso cites a letter not addressed to Mr. Mimms, and which makesno mention of Mr. Mimms. See Plaintiff's Supplemental Facts at8 & Ex. 7.

6. To the extent that Kerr-McGee contends that it is entitledto additional discovery on the issue of Union Camp's operatorliability before the court rules on the instant motion forsummary judgment, or that a stay on discovery prevented it fromadequately investigating the facts in response to the motion forsummary judgment, the court granted Kerr-McGee leave to conductadditional discovery and to file supplemental briefs and evidencefollowing the hearing on the motion for summary judgment. SeeOrder, Apr. 19, 1999 [Document # 209]. Kerr-McGee then conductedadditional discovery and filed a supplemental brief opposingsummary judgment on July 28, 1999. See Plaintiff's SupplementalOpposition. No motion has been filed to extend the period forsuch supplemental discovery by Kerr-McGee.

7. Conn.Gen.Stat. § 22a-452 also "appears to address []situations where one owner's property is contaminated byhazardous waste from another owner's property." 642 A.2d at 765.In this case, Kerr-McGee's claims arise from its purchase ofAmCre Corp. and the North Haven plant from Union Camp, not fromcontamination of Kerr-McGee property from Union Camp property.

8. In its motion papers, Kerr-McGee apparently does notdispute the argument raised by Union Camp in its motion forsummary judgment that failure to establish operator liability orvicarious liability under CERCLA precludes liability underConn.Gen.Stat. § 22a-452.

RULING ON MOTION FOR SUMMARY JUDGMENT

Defendant and third-party plaintiff Kerr-McGee Chemical LLC("Kerr-McGee")1 brings this action against third-partydefendant Union Camp Corporation ("Union Camp"). Kerr-McGeeclaims that Union Camp is liable to it for any damages, costs,and other relief that may be awarded against Kerr-McGee under theComprehensive Environmental Response, Compensation, and LiabilityAct ("CERCLA"), as amended, 42 U.S.C. § 9601 et seq., andConn.Gen.Stat. § 22a-452. Union Camp filed the instant motion forsummary judgment [Document # 189]. For the reasons set forthbelow, the motion for summary judgment is GRANTED and thethird-party action is DISMISSED.

I. Background

In Schiavone v. Pearce, 79 F.3d 248, 250-51 (2d Cir. 1996),the Second Circuit set forth the historical background of thiscase, as follows:

Union Bag & Paper, the predecessor of Union Camp, formed American Creosoting Corporation ("AmCre Corp.") in 1956 to facilitate Union Camp's acquisition of certain assets from American Creosoting Company. With funds supplied by Union Camp, AmCre Corp., a wholly owned subsidiary of Union Camp, purchased these assets, which included a business on certain leased real property in North Haven, Connecticut. American Creosoting Company had operated a creosoting facility on this property since 1922. On July 24, 1964, Union Camp entered into a stock purchase agreement with Kerr-McGee Oil, the predecessor of Kerr-McGee Corporation, whereby Kerr-McGee acquired AmCre Corp. In Section 4 of this stock purchase agreement ("the indemnification agreement") . . . Union Camp agreed to indemnify and hold harmless AmCre Corp. and Kerr-McGee for legal claims and suits filed against them prior to August 1, 1965. . . . Subsequent to its purchase of AmCre Corp., Kerr-McGee changed the name of AmCre Corp. to Moss American, Inc. ("Moss American"). In 1974[,] Kerr-McGee Chemical Corporation, a subsidiary of Kerr-McGee Corporation, merged with Moss American, assuming all Moss American's liabilities.

A contract between AmCre Corp. and the New York, New Haven and Hartford Railroad Company ("the Railroad"), concerning the operations of the creosoting plant in North Haven, Connecticut ("the plant"), forms the basis of the underlying action. From approximately 1921 through 1966, the Railroad owned the property on which the plant is located and leased it to American Creosoting Company. The property, which changed ownership several times over subsequent years, suffered creosote contamination as a result of the plant's storage, handling, and disposal activities. Prior to September 25, 1984, at the behest of the Connecticut Department of Environmental Protection, the then — owners of the property, defendants Herbert H. Pearce ("Pearce") and Donald B. Lippincott ("Lippincott"), implemented a remedial program to cleanse the land. Their curative efforts, however, were not without critics.

Plaintiff Michael Schiavone, who purchased the property from Pearce and Lippincott by warranty deed on or about October 23, 1984, commenced the underlying lawsuit [in the United States District Court for the District of Connecticut], alleging that Pearce and Lippincott had inadequately remediated the creosote contamination, causing plaintiff to incur substantial clean-up costs. Plaintiff named Kerr-McGee [Corporation and Kerr-McGee Chemical Corporation] as . . . defendant[s]. Kerr-McGee impleaded Union Camp, seeking contribution based on Union Camp's management of the plant, through the activities of Union Camp's wholly owned subsidiary and the title owner of the plant, AmCre Corp., from 1956 through 1964.

During that period, Union Camp and AmCre Corp. shared the same board of directors, and several of AmCre Corp.'s high-ranking officers, specifically its president, general counsel, assistant comptroller, and assistant treasurer, were also employed by Union Camp. During the years in question, Union Camp's legal department rendered services to AmCre Corp., including the review and approval of the 1958 renewal of the contract [with the Railroad] concerning the operations of the plant. Kerr-McGee states that several Union Camp employees participated, as officers and directors of AmCre Corp., in the negotiations surrounding the 1958 contract renewal. Kerr-McGee also maintains that during this period, the interlocking Union Camp-AmCre Corp. board of directors examined and approved capital expenditures, including pollution-control equipment, for AmCre Corp.'s creosoting plants. [Union Camp disputes the extent of its employees' participation in the 1958 contract renewal negotiations and in approving AmCre Corp.'s capital expenditures.] It is Kerr-McGee's contention that Union Camp's sustained involvement in the plant's operations reflects an exercise of control by Union Camp sufficient to render Union Camp directly liable for the environmental harm caused.

Union Camp moved for summary judgment on both the CERCLA and state statutory claims. On August 25, 1994, the district court[, Peter C. Dorsey, Chief Judge,] granted the motion, finding that the indemnification agreement shifted all Union Camp's liabilities, including environmental liabilities, to Kerr-McGee. The district court did not address the factual question of the extent of Union Camp's direct liability, if any, as it deemed Kerr-McGee's CERCLA and state statutory claims to be barred, based on the indemnification agreement. On September 14, 1994, Kerr-McGee moved for reconsideration, arguing that the district court had incorrectly interpreted the indemnification agreement and had improperly declined to address the issue of Union Camp's direct CERCLA and state statutory liability.

In an April 18, 1995[] ruling, the district court denied Kerr-McGee's motion, and on June 1, 1995, final judgment was entered in favor of Union Camp.

1. On October 12, 1999, the court granted Kerr-McGee ChemicalCorporation's motion to substitute Kerr-McGee Chemical LLC asdefendant and third-party plaintiff in this action, absentobjection.

2. This holding resolves any indirect liability of Union Camp.Moreover, the evidence presented by Kerr-McGee in opposition tothis motion for summary judgment is insufficient underConnecticut law to create a genuine issue of material fact as towhether the corporate veil of Union Camp may be pierced. See,e.g., Angelo Tomasso, Inc. v. Armor Constr. & Paving, Inc.,187 Conn. 544, 447 A.2d 406, 411-13 (1982); Accashian v. City ofDanbury, No. CV 970147228S, 1999 WL 30594, at *5-6(Conn. Sup.er.Ct. Jan.8, 1999) (discussing Bestfoods,Conn.Gen.Stat. § 22a-452, and piercing the corporate veil); seealso infra pp. 290-93.

3. According to Kerr-McGee, W.D. Cole, Vice President of UnionCamp, recommended in August 1956 that Union Camp "clearlyindicate to AmCre Corp.'s customers that it, Union Camp, wascommitted to the creosoting business." Plaintiff's SupplementalOpposition at 14; see also Plaintiff's Supplemental Facts at4. Kerr-McGee also asserts: "In 1957, Mr. Cole proposedimmediately selling the creosoting business, or alerting itscustomers that Union Camp intended to commit itself to thatbusiness. It is clear that Union Camp did not sell the businessin 1957. Thus, the logical inference is that Union Camp did alertthe various customers (including the . . . Railroad) that it wascommitted to the creosoting operations." Plaintiff'sSupplemental Opposition at 15; see also Plaintiff'sSupplemental Facts at 4.

4. Because Kerr-McGee fails, as a matter of law, to presentsufficient evidence to support its operator liability claimsagainst Union Camp, it is unnecessary for the court to addressthe factual evidence presented by Union Camp.

5. As evidence of Mr. Mimms's advising AmCre Corp., Kerr-McGeealso cites a letter not addressed to Mr. Mimms, and which makesno mention of Mr. Mimms. See Plaintiff's Supplemental Facts at8 & Ex. 7.

6. To the extent that Kerr-McGee contends that it is entitledto additional discovery on the issue of Union Camp's operatorliability before the court rules on the instant motion forsummary judgment, or that a stay on discovery prevented it fromadequately investigating the facts in response to the motion forsummary judgment, the court granted Kerr-McGee leave to conductadditional discovery and to file supplemental briefs and evidencefollowing the hearing on the motion for summary judgment. SeeOrder, Apr. 19, 1999 [Document # 209]. Kerr-McGee then conductedadditional discovery and filed a supplemental brief opposingsummary judgment on July 28, 1999. See Plaintiff's SupplementalOpposition. No motion has been filed to extend the period forsuch supplemental discovery by Kerr-McGee.

7. Conn.Gen.Stat. § 22a-452 also "appears to address []situations where one owner's property is contaminated byhazardous waste from another owner's property." 642 A.2d at 765.In this case, Kerr-McGee's claims arise from its purchase ofAmCre Corp. and the North Haven plant from Union Camp, not fromcontamination of Kerr-McGee property from Union Camp property.

8. In its motion papers, Kerr-McGee apparently does notdispute the argument raised by Union Camp in its motion forsummary judgment that failure to establish operator liability orvicarious liability under CERCLA precludes liability underConn.Gen.Stat. § 22a-452.

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