Bp Amoco Chem. Co. v. Flint Hills Resources, LLC

• Decision Date: 20 May 2009
• Docket Number: No. 05 C 5661.,05 C 5661.
• Citation: 615 F.Supp.2d 765
• Parties: BP AMOCO CHEMICAL COMPANY, Plaintiff/Counter-Defendant, v. FLINT HILLS RESOURCES, LLC, Defendant/Counter-Plaintiff. Flint Hills Resources, LLC, Third-Party Plaintiff, v. BP Corporation North America Inc., Defendant.
• Court: U.S. District Court — Northern District of Illinois

615 F.Supp.2d 765

BP AMOCO CHEMICAL COMPANY, Plaintiff/Counter-Defendant, v. FLINT HILLS RESOURCES, LLC, Defendant/Counter-Plaintiff.

Flint Hills Resources, LLC, Third-Party Plaintiff, v. BP Corporation North America Inc., Defendant.

Consolidated Case No. 05 C 5661.

United States District Court, N.D. Illinois, Eastern Division.

May 20, 2009.

COPYRIGHT MATERIAL OMITTED

Richard Cartier Godfrey, Bernard Taylor, Drew George Peel, Elizabeth J. Kappakas, Erica Blaschke Zolner, Hariklia Carrie Karis, Marla Tun Conneely, Raymond Christopher Heck, Scott William Fowkes, Travis John Quick, Kirkland & Ellis LLP, Chicago, IL, Douglas G. Haynam, Joseph S. Simpson, Louis E. Tosi, William L. Patberg, Shumaker, Loop &amp Kendrick LLP, Toledo, OH, for Plaintiff/Counter-Defendant.

James R. Figliulo, Marc S. Porter, Michael Thomas Graham, Ryan P. Stiles, Sara Anne Paguia, Thomas Daniel Warman, Figliulo & Silverman P.C., Susan M. Franzetti, Nijman Franzetti LLP, Chicago, IL, Dean Kuckelman, Wichita, KS, for Defendant/Counter-Plaintiff/Third-Party Plaintiff.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge:

Plaintiff/Counter-Defendant BP Amoco Chemical Company ("BP Amoco") sued Defendant/Counter-Plaintiff Flint Hills Resources, LLC ("Flint Hills") seeking a declaratory judgment that it had not breached the Asset Purchase and Sale Agreement ("PSA") pursuant to which it had sold a chemical manufacturing plant (the "Joliet Plant") and related assets to Flint Hills. (R. 8-1, Am.Compl.) Flint Hills filed counterclaims against BP Amoco for fraud and breach of contract. (R. 14-3, Answer & Countercls.) Flint Hills also asserts breach of contract claims against the guarantor of the PSA, BP Corporation North America Inc. ("BP North America"). (R. 103-1, Flint Hills' Third-Party Compl.) In the present motion, BP Amoco and BP North America (collectively, "BP") seek partial summary judgment on certain environmental compliance claims. (R. 334-1, BP's Mot. for Partial Summ. J.) For the reasons discussed below, the Court grants in part and denies in part BP's summary judgment motion. Specifically, the Court grants BP's summary judgment motion as to Flint Hills' Claims 7, 23, 43, 29, 46, 51, and the PD-700 Low Pressure Absorber in Claim 80. The Court also grants BP's summary judgment motion as to Flint Hills' fraud claims based on Claims 4, 22, and 42.

BACKGROUND

I. Northern District of Illinois Local Rule 56.1

When determining summary judgment motions, the Court derives the background facts from the parties' Local Rule 56.1 statements. Specifically, Local Rule 56.1 assists the Court by "organizing the evidence, identifying undisputed facts, and demonstrating precisely how each side propose[s] to prove a disputed fact with admissible evidence." Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 527 (7th Cir.2000). Local Rule 56.1(a)(3) requires the moving party to provide "a statement of material facts as to which the moving party contends there is no genuine issue." Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir.2009). "The opposing party is required to file `a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." Id. (citing N.D. Ill. R. 56.1(b)(3)(B)). In addition, Local Rule 56.1(b)(3)(C) requires the nonmoving party to present a separate statement of additional facts that require the denial of summary judgment. See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643-44 (7th Cir.2008). Pursuant to the Local Rules, the Court will not consider any additional facts proposed in the nonmoving party's Local Rule 56. 1(b)(3)(B) Response, but instead must rely on the nonmovant's Local Rule 56. 1(b)(3)(C) Statement of Additional Facts when making factual determinations. See id. at 643; Cichon v. Exelon Generation Co., L.L.C., 401 F.3d 803, 809 (7th Cir. 2005) ("Local Rule 56.1 requires specifically that a litigant seeking to oppose a motion for summary judgment file a response that contains a separate `statement ... of any additional facts that require the denial of summary judgment.'") (emphasis in original).

Moreover, the purpose of Rule 56.1 statements is to identify the relevant evidence supporting the material facts, not to make factual or legal arguments, see Cady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir. 2006), and thus the Court will not address the parties' arguments made in their Rule 56.1 statements and responses. Also, the requirements for responses under Local Rule 56.1 are "not satisfied by evasive denials that do not fairly meet the substance of the material facts asserted." Bordelon, 233 F.3d at 528. Further, the Court may disregard statements and responses that do not properly cite to the record. See Cichon, 401 F.3d at 809-10. Finally, "hearsay is inadmissible in summary judgment proceedings to the same extent that it is inadmissible in a trial." Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir.1997). With these standards in mind, the Court turns to the relevant facts of the case.

II. Relevant Facts

In light of the three summary judgment rulings already issued, the Court assumes the parties' familiarity with the Court's prior decisions and the facts of this case. To recap, in May 2004, BP sold a chemical plant located near Joliet, Illinois, and related assets to Flint Hills pursuant to the PSA. The parties engaged in extensive negotiations over the terms of the PSA, which includes an indemnification clause concerning potential breaches of warranties and representations. After assuming ownership of the Joliet Plant in late May 2004, Flint Hills' employees and contractors began to experience operational problems. During the late fall and early winter of 2004-05, Flint Hills and BP engaged in a series of discussions regarding possible indemnification claims. Those claims include certain environmental compliance claims.

Specifically at issue in the present motion are Flint Hills' allegations that BP committed fraud and breached the parties' PSA with respect to certain PSA representations that relate to environmental compliance at the Joliet Plant. In its motion for partial summary judgment, BP maintains that Flint Hills has failed to create a genuine issue of material fact for trial that BP breached its representations as to twelve of these environmental compliance claims. In addition, BP contends that three of Flint Hills' fraud claims based on its environmental compliance also fail as a matter of law. The Court thus turns to a brief overview of the facts and PSA provisions pertaining to the Joliet Plant's environmental compliance.

The Joliet Plant's equipment includes numerous pollution control devices to comply with air pollution regulations and permits, including the Joliet Plant's Title V Permit that the Illinois Environmental Protection Agency ("IEPA") issued pursuant to the Clean Air Act. (R. 337-1, BP's Rule 56.1 Stmt. Facts ¶ 4.) The information required in the Title V application to the IEPA includes the identity of the pollutants that are present in the emissions from each particular emissions unit and the quantity of the emissions of that particular pollutant. (R. 447-1, FH's Rule 56.1 Stmt. Add'l Facts ¶ 6.) The Title V Permit at the time of the Joliet Plant's closing date is dated July 18, 2001. (BP's Stmt. Facts ¶ 4.)

In 2003, as part of BP's ongoing review of its chemicals segment, BP decided to divest its Performance Chemicals Business Unit ("PCBU") and sell the Joliet Plant and PCBU. (Id. ¶ 13.) BP thus commissioned a third-party environmental consultant, URS Corporation, to prepare an environmental health and safety assessment of the Joliet Plant, including Clean Air Act compliance, for potential buyers of the Joliet Plant. (Id.; FH's Stmt. Add'l Facts ¶ 11.) Flint Hills had access to the URS report and conducted its own due diligence on the environmental compliance status of the Joliet Plant before the closing date of May 28, 2004. (BP's Stmt. Facts ¶¶ 15, 19; FH's Stmt. Add'l Facts ¶ 11.)

Article 7 of the PSA, entitled Representations and Warranties, contains the contract provisions concerning BP's environmental compliance. Article 7.1(j) states in relevant part:

(i) Except as set forth on Schedule 7.1(j)(1)-1, for the period running from January 1, 2004, until Closing, with regard to the Joliet Assets, Seller is in compliance with all Environmental Laws which require reporting of deviations and/or certifications of compliance. Except as set forth on Schedule 7.1(j)(i)-2, as of the Closing, with regard to the Joliet Assets, to Seller's Knowledge, Seller is in material compliance with all Environmental Laws that are not subject to deviation reporting or compliance certification requirements.

(ii) Except as set forth in Schedule 7.1(j)(ii), to Seller's Knowledge, with regard to the Joliet Assets, there are no facts or circumstances which would likely lead to a violation of or noncompliance with an Environmental Law after Closing.

(iii) Seller has filed all notices, reports and certifications, including certifications of compliance, required under all Environmental Laws and Environmental Permits with regard to the Joliet Assets. All such notices, reports and certifications are complete and accurate and were conducted after a reasonable inquiry into the circumstances related to the notice of certification.

(R. 14-3, Ex. A, PSA § 7.1(j)(i), (ii), (iii); BP's Stmt. Facts ¶ 19.) In addition, Section 7.1(j)(viii)(B) of the PSA states:

Except as provided in Schedule 7.1(j)(viii)-2, all environmental control equipment necessary for the operation of the Business as it is currently operated by Seller, is installed at the Joliet Plant, is in substantial compliance with Environmental Laws in effect on or prior to the Closing Date, and is operating in a manner sufficient to achieve and maintain such compliance;.......