991 F.2d 49 (2nd Cir. 1993), 596, Commander Oil Corp. v. Advance Food Service Equipment

Docket Nº:596 Docket 92-7827.
Citation:991 F.2d 49
Party Name:COMMANDER OIL CORPORATION, Plaintiff, v. ADVANCE FOOD SERVICE EQUIPMENT, Defendant. SLATER DEVELOPMENT CORPORATION formerly known as Slater Electric Inc., Defendant Third-Party Plaintiff-Appellant, v. PASS & SEYMOUR, INC. and LEGRAND S.A., Third-Party Defendants-Appellees.
Case Date:April 13, 1993
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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991 F.2d 49 (2nd Cir. 1993)

COMMANDER OIL CORPORATION, Plaintiff,

v.

ADVANCE FOOD SERVICE EQUIPMENT, Defendant.

SLATER DEVELOPMENT CORPORATION formerly known as Slater

Electric Inc., Defendant Third-Party Plaintiff-Appellant,

v.

PASS & SEYMOUR, INC. and LEGRAND S.A., Third-Party

Defendants-Appellees.

No. 596 Docket 92-7827.

United States Court of Appeals, Second Circuit

April 13, 1993

Argued Nov. 30, 1992.

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Joseph Zuckerman, New York City (Richard G. Leland, Rosenman & Colin, New York City, of counsel), for third-party plaintiff-appellant.

Thomas C. Buckel, Jr., Hancock & Estabrook, Syracuse, NY, for third-party defendants-appellees.

Before: OAKES, WINTER, and WALKER, Circuit Judges.

WALKER, Circuit Judge:

Third-party plaintiff Slater Development Corporation ("Slater") appeals from the July 2, 1992 Order of the United States District Court for the Eastern District of New York (Mishler, J.), that granted summary judgment to third-party defendants Pass & Seymour, Inc. and Legrand S.A. ("PSI") on the ground that, under the language of contracts whereby PSI purchased the business and leased certain properties from Slater, PSI is not obligated to indemnify Slater for environmental liability. We conclude that the language is ambiguous and thus a genuine issue of fact remains. Accordingly, we vacate the grant of summary judgment and remand for proceedings consistent with this opinion.

Background

Commander Oil Corporation ("Commander Oil"), the owner of a site in Garden City, New York, brought an action to recover environmental response costs for damage to that site against Slater and others pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et seq. ("CERCLA"). According to the complaint, Slater employed Pasley Solvents and Chemicals, Inc. ("Pasley") to remove industrial waste generated at Slater's Glen Cove, New York facility between 1972 and 1982. Pasley allegedly disposed of the waste illegally at the Garden City site that it had leased from Commander Oil.

The dispute in this case, however, is between defendant Slater and PSI, a third-party defendant that Slater brought into the suit in order to seek indemnification. On September 14, 1987, Slater contracted to sell its business of manufacturing electrical wiring devices to PSI. Under an Asset Purchase Agreement of that date, PSI acquired the business, excluding real estate and other specified assets, and leased Slater's offices and manufacturing facilities located in Glen Cove, New York and Elizabeth, New Jersey. At the January 22, 1988 closing, Slater and PSI signed a ten-year lease covering the Glen Cove and Elizabeth properties (the "Lease").

The Asset Purchase Agreement contains an indemnification clause in which PSI agreed to take over from Slater the defense of certain "litigations" and to indemnify Slater for any liabilities that resulted. PSI's obligation covered certain specified pending lawsuits, as well as "all other litigations occurring from and after the date of signing the Agreement relating to the business and assets being acquired hereunder." At the closing, PSI and Slater signed an Assumption Agreement which restated PSI's defense and indemnification obligations as set forth in the Asset Purchase Agreement.

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The Lease also contains indemnification language. Article 23 allocates responsibility between Slater and PSI for environmental liabilities occurring on or about the Glen Cove and Elizabeth premises. PSI agrees to be responsible for contamination arising at the premises during the Lease term and to defend and indemnify Slater for any cleanup costs, losses and damages arising from an "Environmental Event," which the Lease defines as "any events or conditions involving the emission, spill, discharge or cleanup of any hazardous or toxic substance or waste on the premises or ... actual knowledge or notice of any other events or conditions on the premises which could give rise to any such emission, spill, discharge or cleanup...." However, under the Lease, PSI is not responsible for pre-transfer on-site contamination at the Glen Cove or Elizabeth premises.

In its third-party complaint against PSI, Slater seeks a declaratory judgment that PSI is required to assume the defense of the primary action by Commander Oil against Slater and indemnify Slater for costs incurred to date and any ultimate liability. Before any discovery, Slater moved and PSI cross-moved for summary judgment pursuant to Fed.R.Civ.P. 56(c). The district court granted summary judgment in favor of PSI and dismissed Slater's third-party complaint. This appeal followed.

Discussion

We review the district court's grant of summary judgment to determine whether a genuine issue of material fact exists and whether the law was applied correctly below. National Union Fire Ins. Co. v. Turtur, 892 F.2d 199 (2d Cir.1989). It is well settled that a court should grant a motion for summary judgment only when the evidence...

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