Joslyn Mfg. Co. v. Koppers Co., Inc.

• Decision Date: 28 December 1994
• Docket Number: No. 93-5553,93-5553
• Citation: 40 F.3d 750
• Parties: , 63 USLW 2476, 25 Envtl. L. Rep. 20,476 JOSLYN MANUFACTURING CO., Plaintiff-Appellant, v. KOPPERS COMPANY, INC. and the Louisiana & Arkansas Railway Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 750

40 F.3d 750

39 ERC 1939, 63 USLW 2476, 25 Envtl.

L. Rep. 20,476

JOSLYN MANUFACTURING CO., Plaintiff-Appellant, v. KOPPERS COMPANY, INC. and the Louisiana & Arkansas Railway Company, Defendants-Appellees.

No. 93-5553.

United States Court of Appeals Fifth Circuit.

Dec. 28, 1994.

Rehearing Denied Jan. 25, 1995.

T. Haller Jackson, III, Tucker, Jeter, Jackson & Hickman, Shreveport, LA, Jay A. Canel, Stephen D. Davis, Leslie F. Notaro, Canel, Davis & King, Chicago, IL, for appellant.

Bobby S. Gilliam, Penny D. Seller, Wilkinson, Carmody, Gilliam & Hussey, Jerald N. Jones, Office of City Atty., Shreveport, LA, for Louisiana & Arkansas Railway Co.

James Fleet Howell, Jeffrey W. Weiss, Wiener, Weiss, Madison & Howell, P.C., Shreveport, LA, for Beazer East Inc.

Steven E. Danekas, Robert L. Shuftan, Cynthia A. King, Wildman, Harrold, Allen & Dixon, Chicago, IL, for Koppers Co., Inc.

Appeal from the United States District Court for the Western District of Louisiana.

Before POLITZ, Chief Judge, and GOLDBERG and DUHE, Circuit Judges.

DUHE, Circuit Judge:

This is an action for contribution arising under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Secs. 9601, et seq., and the Louisiana Environmental Quality Act (LEQA), La.Rev.Stat. 30:2271, et seq.

Appellant Joslyn Manufacturing Company (Joslyn) appeals from judgment entered following a bench trial and from an order denying its motion to vacate. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. For the reasons set forth below, we affirm.

I. BACKGROUND

Joslyn sued T.L. James & Co., Koppers Company, Inc. (Koppers), Louisiana & Arkansas Railway Company (L & A) and others. Joslyn sought recovery of response costs and a declaration of future liability under both CERCLA and LEQA. The district court granted summary judgment for T.L. James & Co. See Joslyn Corp. v. T.L. James & Co., Inc., 696 F.Supp. 222 (W.D.La.1988), affirmed, 893 F.2d 80 (5th Cir.1990), cert. denied, 498 U.S. 1108, 111 S.Ct. 1017, 112 L.Ed.2d 1098 (1991). ¹ Joslyn dismissed all remaining parties except Koppers and L & A.

Judge Stagg conducted a four day bench trial, and held that Joslyn was obligated to defend and indemnify L & A for all damages to the property. Joslyn moved to vacate judgment. The district court denied the motion and Joslyn filed this appeal.

II. FACTS

This litigation involves two contiguous parcels of land in Bossier City, Louisiana, known collectively as the Lincoln Creosoting site. The first parcel contained a wood treatment plant, including buildings, treating and storage tanks, wood treatment cylinders, black storage areas and other equipment. The second parcel contained industry tracks used in conjunction with the wood treatment operations on the first parcel. A chart depicting the relevant history of the parcels is set out in Appendix A.

A. Wood Treatment Operations

Lincoln owned the first parcel from at least 1935 to 1950 when it sold the parcel to Joslyn. Lincoln leased portions of the second parcel from L & A beginning in 1938 and continuing through 1950 when it assigned its leases to Joslyn. According to Joslyn, prior to the sale and assignment Lincoln operated four wood treatment cylinders on the first parcel. Lincoln's creosote recovery system allowed raw creosoting chemicals to drip from the treating cylinders to a sump pit located below the system. The system recovered some of the creosote from the sump. The remaining chemicals and waste water were discharged into an open ditch which emptied into a slough at the east end of the second parcel. From the slough, the creosoting chemicals were washed away by rain to the surrounding land areas and waterways. Investigation of the site has revealed substantial creosote contamination in the areas of the ditch and the slough. Joslyn claims that contamination also occurred due to Lincoln's use of creosote to kill weeds, and because of Lincoln's use of creosote residue as a base for roads.

On August 1, 1950, Joslyn bought the first parcel, and the plant and equipment located thereon, from Lincoln. On August 14, 1950, Lincoln ² assigned its leases on portions of the second parcel to Joslyn. Joslyn executed leases directly with L & A in 1955 and 1967.

The evidence reveals that Joslyn took over all of Lincoln's physical facilities and continued wood treatment operations without interruption. George Bauer, Joslyn's plant manager from 1950 to 1963, testified that "There was a shutdown [of Lincoln] one night and startup the next morning as Joslyn, same people, same equipment." Joslyn used creosote and several other chemicals throughout its 19 years of wood treatment operations on the site. There is no dispute that both Lincoln and Joslyn's wood treatment operations resulted in environmental contamination.

Joslyn continued operations at the plant until December 1969 when it sold the property to Koppers. Koppers purchased the first parcel from Joslyn in order to remove some of the wood treatment equipment from the property. Specifically, Koppers sought to acquire two treatment cylinders for use at other Koppers' plants. These cylinders, which sat on concrete pads, were removed in September 1970 by lifting them off of their supports and placing them on double flat cars. In addition, Koppers removed railroad ties, tracks, tram cars, frogs and switches. Koppers also removed the fans and doors from a dry-kiln located on the property. The trial court determined that at no time during Koppers' ownership did it operate the wood treatment facility, nor did Koppers dismantle the entire plant.

Koppers owned the property until January 1971 when it sold the property to the Myatt family doing business as the Specialty Oil Company. Thirteen days later, the Myatts transferred ownership to Marvin E. Pollard. L & A sold the second parcel in March of 1972. The property then passed through several additional owners, the last of which subdivided the property.

B. Environmental Action

On February 3, 1986, the Louisiana Department of Environmental Quality (DEQ) issued an order against T.L. James, Joslyn, Koppers, L & A and others, requiring that a fence be erected around the perimeter of the site. While Joslyn bore the majority of the fencing cost, L & A--though denying liability for remediation--paid a pro rata share. L & A and Koppers requested a hearing on all matters relating to the February 3, 1986 compliance order issued by DEQ.

On August 2, 1986, the DEQ issued a second order against T.L. James, Joslyn, Koppers, L & A and others ordering them to develop a plan for investigation of the site and for clean up of "problem areas" discovered during the Phase 1 investigation. Koppers and L & A again denied liability and requested a hearing on the compliance order. Joslyn submitted a "remedial investigation work plan" to the DEQ. On November 17, 1988, the DEQ approved the Joslyn work plan. Once again, Koppers and L & A denied liability and requested a hearing in regard to the November 17, 1988 compliance order.

On April 30, 1991, the DEQ issued an order against T.L. James, Joslyn, Koppers, L & A and others to submit a "remedial action plan" and, upon plan approval, to implement the plan. Again, Koppers and L & A denied liability and requested a hearing. On January 17, 1992, Joslyn submitted a "removal action work plan" to the DEQ. Joslyn began clean up of the site on February 28, 1992. In June and July of 1992, Joslyn sought DEQ's permission to stop work at the site. DEQ denied the request and, as of the date of the trial, Joslyn claims that it had expended over $13 million in its clean up of the site.

III. STANDARD OF REVIEW

Joslyn appeals from judgment entered by the district court after a bench trial on the merits. We review the district court's findings of fact for clear error and legal issues de novo. F.D.I.C. v. McFarland, 33 F.3d 532, 536 (5th Cir.1994). However, we may affirm for reasons other than those relied upon by the district court. Ballard v. United States, 17 F.3d 116, 118 (5th Cir.1994).

IV. INDEMNIFICATION OF L & A

As indicated above, Lincoln entered into several leases with L & A. Two of those leases, executed in 1942 and 1949, were assigned by Lincoln to Joslyn. Joslyn leased portions of the second parcel directly from L & A in 1955 and 1967. After reviewing the terms of the indemnity clauses contained in the four leases, the district court held,

L & A is clearly liable to Joslyn for response costs under CERCLA because L & A is a past owner of parcel 2 of the site and owned this property at the time hazardous substances were disposed. Any amount for which L & A owes Joslyn under CERCLA as a past owner, however, is MOOT, because any such amount is CANCELLED OUT by the fact that Joslyn is ultimately liable for such amount under the indemnity provisions of the four leases at issue.

(emphasis in original). Joslyn agrees that it is bound by the indemnity clauses contained in the 1955 and 1967 leases it executed with L & A. In addition, Joslyn concedes that it is bound by the indemnification clauses in the 1942 and 1949 leases for all contamination which occurred after the August 14, 1950 assignment from Lincoln. The issue before this Court is whether Joslyn, as assignee, is required to indemnify L & A for environmental damage caused by Lincoln prior to the August 14, 1950 assignment. The scope of the assignment must be determined by applying Louisiana law.

A. Terms of the Indemnification Provision

The starting point of our analysis must be the language of the leases. The 1942 lease from L & A to Lincoln contained the following indemnification provision,

Lessee forever shall defend, indemnify as an insurer, and save harmless Carrier from, for and against any and all liability, judgments, outlays and expenses (1st) consequent on any injury, death, damage, loss or destruction (a) suffered or caused by or to any person or property incident to or while being engaged...