Asarco LLC v. Goodwin

• Citation: 756 F.3d 191
• Decision Date: 25 June 2014
• Docket Number: Docket No. 13–3954–cv.
• Parties: ASARCO LLC, Plaintiff–Appellant, v. Neva R. GOODWIN, S. Parkman Shaw, and William A. Truslow, as Trustees of the Trust under Article Second of the Will and Codicils of John D. Rockefeller for the benefit of John de Cuevas and his descendants, and as Trustees of the Trust under Article Second of the Will and Codicils of John D. Rockefeller for the benefit of Elizabeth de Cuevas and her descendants, Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

756 F.3d 191

ASARCO LLC, Plaintiff–Appellant,

v.Neva R. GOODWIN, S. Parkman Shaw, and William A. Truslow, as Trustees of the Trust under Article Second of the Will and Codicils of John D. Rockefeller for the benefit of John de Cuevas and his descendants, and as Trustees of the Trust under Article Second of the Will and Codicils of John D. Rockefeller for the benefit of Elizabeth de Cuevas and her descendants, Defendants–Appellees.^*

Docket No. 13–3954–cv.

United States Court of Appeals,Second Circuit.

Argued: April 7, 2014.

Decided: June 25, 2014.

E. Duncan Getchell, Jr. (Eugene E. Matthews III, Richard C. Beaulieu, K. Elizabeth Sieg, on the brief), McGuireWoods LLP, Richmond, VA; Dion W. Hayes, Marshall Biel, on the brief, McGuireWoods LLP, New York, NY; Gregory Evans, on the brief, Integer Law Corporation, Los Angeles, CA, for Plaintiff–Appellant.

Edward M. Grauman, Beveridge & Diamond, P.C., Austin, TX (Stephen L. Gordon and Megan R. Brillault, Beveridge & Diamond, P.C., New York, NY, on the brief), for Defendants–Appellees.

Before: KEARSE, JACOBS, and LYNCH, Circuit Judges.

GERARD E. LYNCH, Circuit Judge:

This case requires us to decide whether, in 2014, the Trustees of the residuary trust created by the will of John D. Rockefeller Sr. in 1937 may be made to contribute to cleanup costs of environmental contamination allegedly caused by corporations controlled by Rockefeller in Washington State between 1892 and 1903. The answer to that question turns on a number of provisions of federal and state law.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601–9675 (“CERCLA”), imposes liability for cleanup costs on persons who are responsible for the release or threatened release of hazardous substances into the environment. See42 U.S.C. § 9607(a). A party who has been sued for such contamination may then seek contribution from others in the chain of title or from certain polluters—the so-called potentially responsible parties. Such potentially responsible parties include, as relevant here, the owners and operators of the property at the time of the hazardous waste disposal. See id. § 9613(f). While CERCLA does not expressly permit contribution claims against successors-in-interest, such as beneficiaries of the estates of such potentially responsible parties, our precedents require us to analyze applicable state law to determine whether such liability may be imposed. See Marsh v. Rosenbloom, 499 F.3d 165, 181–84 (2d Cir.2007). Here, the applicable state law is a provision of New York probate law, seeN.Y. Est. Powers & Trusts Law § 12–1.1(a), which holds testamentary beneficiaries liable for certain debts of a decedent. Where the applicable state law would permit such contribution claims, those claims must be brought within three years of “the date of ... entry of a judicially approved settlement with respect to such costs.” 42 U.S.C. § 9613(g)(3)(B). Separately, CERCLA requires subrogation claims to be brought within three years of the payment of a claim. See id. § 9613(g)(4).

Plaintiff-appellant ASARCO LLC (“Asarco”) appeals from a judgment of the United States District Court for the Southern District of New York (Thomas P. Griesa, Judge ) dismissing its Second Amended Complaint. As part of its Chapter 11 bankruptcy, the United States Bankruptcy Court for the Southern District of Texas (Richard S. Schmidt, Bankruptcy Judge ) approved two settlement agreements related to the environmental contamination at the Everett Smelter and the Monte Cristo Mining Area (together, “the Sites”), located in Washington State. As a result of those settlements, Asarco eventually paid the United States, the State of Washington, and the Port of Everett $50.2 million for costs related to the remediation of the Sites. Asarco then sought contribution, directly and as a purported subrogee, from the Trustees of the residuary trusts created by the will of the late John D. Rockefeller, which now benefit his great-grandchildren, alleging that the remediation costs were fairly attributable to activities of corporations controlled by Rockefeller, which owned and operated the contaminated sites.

We assume arguendo that New York law permits the imposition of liability on testamentary beneficiaries in such circumstances, but nevertheless conclude that the district court properly dismissed Asarco's contribution claims because they are barred by the applicable three-year statute of limitations, and its subrogation claims because Asarco is not a subrogee. We therefore AFFIRM the judgment of the district court.

BACKGROUND

The Second Amended Complaint, and the bankruptcy documents it references, set forth the following facts, which we must accept as true in adjudicating a motion to dismiss under Rule 12(b)(6), drawing all reasonable inferences in Asarco's favor. Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec. LLC, 568 F.3d 374, 377 (2d Cir.2009).

I. Facts

Located in the Mt. Baker–Snoqualmie National Forest in Snohomish County, Washington, the Monte Cristo Mining Area (“MCMA”) includes several large mine complexes, and the former site of an ore processing and concentrating facility. The former Everett Smelter plant property and surrounding area are located in Everett, Washington, some 40 miles from the MCMA. Predecessors of Asarco, a limited liability company organized under Delaware law, operated Everett Smelter from approximately 1903 to 1912, and the MCMA from approximately 1903 to 1905. Before Asarco's operation of the Sites, the Puget Sound Reduction Company (“PSRC”) held legal title to the Everett Smelter, which was PSRC's principal business activity. PSRC “was operated by [John D.] Rockefeller directly and through his personal agents acting at his direction and under his control.” J.A. 72, ¶ 4. Rockefeller also had interests in companies that owned or operated several of the MCMA mines. Asarco alleged, and the district court assumed arguendo that Rockefeller's control of those corporate entities was exercised in a manner that warrants piercing the corporate veil and imposing personal liability on Rockefeller for the actions of those corporations.

Between 1892 and 1903, under Rockefeller's ownership and operation of the Sites, substantial quantities of slag—a material containing various hazardous substances—and smelting wastes were discharged at the Everett Smelter. Further, various mining wastes were discharged at the MCMA as a result of the mining activities, as well as the storage, processing, and transportation of mining ore. The discharge of those waste products caused various hazardous substances, including arsenic, lead, and other heavy metals and metal-like substances to be released into the environment, contaminating the Sites.

Rockefeller died in 1937. In his will and its codicils, he established a residuary trust for the primary lifetime benefit of his granddaughter, Margaret Strong de Cuevas, which upon her death was divided into two separate trusts for the benefit of her children, Rockefeller's great-grandchildren. Those trusts, which will not terminate until the deaths of those great-grandchildren, still contain substantial assets received directly from Rockefeller's estate or derived from the original assets so received.

II. Prior ProceedingsA. Bankruptcy Proceedings

On August 9, 2005, Asarco filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. The United States, State of Washington, and the Port of Everett filed proofs of claim for remediation costs, future response costs, and natural resource damages. On April 18, 2008, pursuant to Federal Rule Bankruptcy Procedure 9019(a),¹ the Bankruptcy Court approved a settlement of the Everett Smelter claims. Under the terms of the settlement, the State of Washington and Port of Everett were allowed a general unsecured claim in the amount of $38 million, to be allocated between the two. On June 5, 2009, the bankruptcy court approved a similar agreement under which the State of Washington and the United States were allowed general unsecured claims totaling just over $12.2 million, settling the MCMA claims.² Both settlements became effective when they were approved by the bankruptcy court. The bankruptcy court approved Asarco's Reorganization Plan on November 13, 2009, and the Plan became effective on December 9, 2009. The Everett Smelter and MCMA claims were paid on the latter date.

B. District Court Proceedings

After emerging from its Chapter 11 bankruptcy reorganization, Asarco pursued its right under CERCLA to require other potentially responsible parties to reimburse it for those parties' fair share of remediation costs. Asarco filed the original complaint in this action against the Trustees on May 10, 2012, alleging substantial response costs and seeking contribution for Rockefeller's environmental liabilities at the Everett Smelter site only. Asarco amended its complaint on July 17, 2012, to include a similar claim for contribution for Rockefeller's liabilities at MCMA. The Trustees moved to dismiss the Amended Complaint, and with the consent of the Trustees and leave of the district court, Asarco filed its Second Amended Complaint on October 25, 2012. The Second Amended Complaint included two additional claims against the Trustees for contribution at both sites, by Asarco as subrogee of itself as the former debtor-in-possession and predecessor-in-interest. The Trustees moved to dismiss the Second Amended Complaint, and the district court granted the motion in an oral ruling.

The district court noted that under CERCLA the owner and operator of a facility is liable for cleanup costs, and assumed “that if John D. Rockefeller were alive today, he [could] be held liable as the owner and perhaps even the operator” of the Sites. J.A. 451. The district court refused, however, to...