CBS, INC. v. Henkin

Citation803 F. Supp. 1426
Decision Date07 October 1992
Docket NumberNo. S90-612M.,S90-612M.
PartiesCBS, INC., Plaintiff, v. Daniel J. HENKIN, Mary H. Henkin, James M. Klapp, Defendants. Daniel HENKIN, Mary Henkin and James Klapp v. Emerson DeFORD.
CourtU.S. District Court — Northern District of Indiana


Thomas H. Singer, Eugenia S. Schwartz, South Bend, Ind., Douglas P. Jacobs, Madeleine Schachter, c/o CBS, Inc., John Grosz, John Eicheneyer, Neil Capobianco, New York City, for plaintiff.

Glenn L. Duncan, Elkhart, Ind., Frank J. Deveau, Donald C. Biggs, Indianapolis, Ind., for defendants Daniel J. Henkin, Mary H. Henkin and James M. Klapp.

Robert J. Konopa, South Bend, Ind., John D. Tully, Grand Rapids, Mich., for third party defendant DeFord.


MILLER, District Judge.

This cause is before the court on defendant Mary Henkin's motion for summary judgment on Counts I, II, V, and VI of the complaint of plaintiff CBS, Inc. ("CBS"). For the reasons that follow, the court concludes that Mrs. Henkin's motion must be granted.

I. Background

In May 1970, Dan Henkin, Mary Henkin, and five other individuals formed the Gemeinhardt Corporation ("Gemeinhardt") for the sole purpose of purchasing all of the outstanding stock of K.G. Gemeinhardt Company, Inc. ("KGGC"), which owned and operated a flute and piccolo plant in Elkhart, Indiana. Shares of Gemeinhardt were issued as follows:

                Keith Rupel                    10 shares
                Robert Meyer                   10 shares
                Charles Gableman               15 shares
                Daniel Henkin                  20 shares
                Mary Henkin                    20 shares
                James Van Horn                 30 shares
                Kenneth Stanton                35 shares

Gemeinhardt completed its purchase of KGGC's stock in May 1970, and the KGGC stock was Gemeinhardt's sole asset. KGGC continued to hold title to the manufacturing plant and surrounding real estate ("the property").

In 1973, James Klapp and Nicholas Jakab became shareholders of Gemeinhardt, with each purchasing 1.75 shares. Daniel Henkin also received another ten shares of Gemeinhardt stock, bringing his total to thirty shares. During 1975, all the original shareholders, except Mary and Daniel Henkin, sold their shares back to Gemeinhardt. A 4000-for-1 stock split also occurred during 1975. After these transactions, the holdings of Gemeinhardt stock were as follows:

                Daniel Henkin          120,000 shares
                Mary Henkin             80,000 shares
                James Klapp              7,000 shares
                Nicholas Jakab           7,000 shares

In May 1977, CBS purchased all of KGGC's assets, including the property. KGGC and Gemeinhardt were dissolved shortly thereafter.

In her affidavit, Mrs. Henkin stated that she owned the Gemeinhardt stock in her name, not jointly. She also affirmed that from May 1970 until May 1977 she was a director of Gemeinhardt, but she was not a director of KGGC. She held the title of Secretary-Treasurer of Gemeinhardt and Assistant Secretary of KGGC only for one day and for the sole purpose of closing the sale to CBS.

Mrs. Henkin was never involved in any aspect of the business of Gemeinhardt or KGGC; she never attended a single meeting of shareholders, officers, or directors of Gemeinhardt or KGGC; she never had any responsibility with either corporation; she never saw any financial statements of either corporation; and she never had an office at KGGC's plant. Mrs. Henkin did not visit the plant except for social reasons. She was not involved in the May 1970 purchase of KGGC stock or in the May 1977 sale of assets to CBS. Mrs. Henkin knew nothing about KGGC's manufacturing process; she knew nothing about the wastes that were generated in that process or in the manner such wastes were disposed; and she never personally disposed of or authorized the disposal of any substance at or in the vicinity of the property.

After CBS's purchase of KGGC in 1977, the property was found to contain contaminated groundwater. In 1985, CBS entered into a consent order with the United States Environmental Protection Agency ("EPA") requiring CBS to take measures to mitigate the damage from the contaminated groundwater. CBS alleges that it has incurred and will continue to incur substantial response costs associated with complying with the EPA consent order.

CBS brings this action under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., to recover the defendants' equitable share of the response costs that CBS has incurred and will incur in monitoring and mitigating the danger from the contaminated groundwater on the property. Count I of CBS's complaint alleges that Mrs. Henkin is liable under CERCLA § 107(a), 42 U.S.C. § 9607(a), as a former "owner and operator" of the contaminated property: Count II seeks contribution from Mrs. Henkin for CBS's clean up costs pursuant to CERCLA § 113(f), 42 U.S.C. 9613(f). Count V alleges that, under state law, Mrs. Henkin is liable for personally disposing of, or authorizing the disposal of, waste onto the property. Count VI seeks recovery for contribution under state law.

Mrs. Henkin seeks summary judgment on those counts.

II. Summary Judgment Standard

A party seeking summary judgment must demonstrate that no genuine issue of fact exists for trial and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Duane v. Lane, 959 F.2d 673, 675 (7th Cir.1992). If that showing is made and the motion's opponent would bear the burden at trial on the matter that forms the basis of the motion, the opponent must come forth with evidence to show what facts are in actual dispute. Lujan v. National Wildlife Federation, 497 U.S. 871, 883-84, 110 S.Ct. 3177, 3186, 111 L.Ed.2d 695 (1990); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Sims v. Mulcahy, 902 F.2d 524, 540 (7th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 249, 112 L.Ed.2d 207 (1990). If he fails to do so, summary judgment is proper. Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir.1990); Tatalovich v. City of Superior, 904 F.2d 1135, 1142 (7th Cir.1990). A genuine factual issue exists only when there is sufficient evidence for a jury to return a verdict for the motion's opponent. Harbor House Condominium Ass'n v. Massachusetts Bay Ins. Co., 915 F.2d 316, 320 (7th Cir.1990); Hines v. British Steel Corp., 907 F.2d 726, 728 (7th Cir.1990). Summary judgment should be granted if no reasonable jury could return a verdict for the motion's opponent. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Brownell v. Figel, 950 F.2d 1285, 1289 (7th Cir.1991); Visser v. Packer Engineering Associates, Inc., 924 F.2d 655, 660 (7th Cir.1991).

The parties cannot rest on mere allegations in the pleadings, Hughes v. Joliet Correctional Center, 931 F.2d 425, 428 (7th Cir.1991); McCarthy v. Kemper Life Ins. Companies, 924 F.2d 683, 687 (7th Cir.1991), or upon conclusory allegations in affidavits. Cusson-Cobb v. O'Lessker, 953 F.2d 1079, 1081 (7th Cir.1992); Mestayer v. Wisconsin Physicians Service Ins. Corp., 905 F.2d 1077, 1079 (7th Cir.1990). The court must construe the facts as favorably to the non-moving party as the record will permit, Brennan v. Daley, 929 F.2d 346, 348 (7th Cir.1991); Soldal v. County of Cook, 923 F.2d 1241, 1245 (7th Cir.1991), and draw any permissible inferences from the materials before it in favor of the non-moving party, Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Prince v. Zazove, 959 F.2d 1395, 1398 (7th Cir.1992), as long as the inferences are reasonable. Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991). The non-moving party must show that the disputed fact is material, or outcome-determinative, under applicable law. Kizer v. Children's Learning Center, 962 F.2d 608, 611 (7th Cir.1992).

The court will address Mrs. Henkin's motion with the above standards in mind.

III. Preliminary Matters

Before proceeding to the merits, the court must rule upon two preliminary matters. First, CBS filed an affidavit pursuant to Fed.R.Civ.P. 56(f) in opposition to Mrs. Henkin's motion for summary judgment. Federal Rule of Civil Procedure 56(f) provides:

(f) When Affidavits are Unavailable. Should it appear from the affidavits of the party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

Rule 56(f) allows a party who has no specific evidence contradicting an opponent's motion for summary judgment to endure the motion by presenting both valid reasons for lack of proof and showing how postponement of a ruling will permit the non-movant to rebut the movant's showing. Otto v. Variable Annuity Life Ins. Co., 814 F.2d 1127, 1138 (7th Cir.1986), cert. denied, 486 U.S. 1026, 108 S.Ct. 2004, 100 L.Ed.2d 235 (1988). Rule 56(f) envisions a situation where summary judgment is sought prior to the initiation of discovery. Korf v. Ball State Univ., 726 F.2d 1222, 1229-30 (7th Cir.1984). The grant or denial of a Rule 56(f) motion is in the discretion of the trial court. Colby v. J.C. Penney, Inc., 926 F.2d 645, 648 (7th Cir.1991); United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289, 1294 (7th Cir. 1990), cert. denied, ___ U.S. ___, 112 S.Ct. 52, 116 L.Ed.2d 29 (1991).

A party that has been dilatory in discovery may not use Rule 56(f) to gain a continuance when he has only made vague assertions that further discovery would develop genuine issues of material fact. Colby v. J.C. Penney Co., Inc., 926 F.2d at 648; United States v. Bob Stofer Oldsmobile Cadillac, 766 F.2d 1147, 1153 (7th Cir. 1985). A party that fails to make reasonable efforts...

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