City of Detroit v. Simon

• Decision Date: 28 November 2000
• Docket Number: Nos. 99-1073,99-1128,s. 99-1073
• Citation: 247 F.3d 619
• Parties: (6th Cir. 2001) The City of Detroit, Plaintiff-Appellee, v. George Simon; Joseph Simon; Norina Simon; Shirley Simon; Maurice Taylor; Madeline Taylor; U.S. Group, Inc., a Michigan corporation; U.S. Equipment Company, a Michigan corporation, Defendants-Appellants, Eaton Corporation, an Ohio corporation, Defendant. The City of Detroit, Plaintiff-Appellant, v. George Simon; Joseph Simon; Norina Simon; Shirley Simon; Eaton Corporation, an Ohio corporation, Defendants-Appellees, Maurice Taylor; Madeline Taylor; U.S. Group, Inc., a Michigan corporation; U.S. Equipment Company, a Michigan corporation, Defendants. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 619

247 F.3d 619 (6th Cir. 2001)

The City of Detroit, Plaintiff-Appellee, v. George Simon; Joseph Simon; Norina Simon; Shirley Simon; Maurice Taylor; Madeline Taylor; U.S. Group, Inc., a Michigan corporation; U.S. Equipment Company, a Michigan corporation, Defendants-Appellants, Eaton Corporation, an Ohio corporation, Defendant.

The City of Detroit, Plaintiff-Appellant, v. George Simon; Joseph Simon; Norina Simon; Shirley Simon; Eaton Corporation, an Ohio corporation, Defendants-Appellees, Maurice Taylor; Madeline Taylor; U.S. Group, Inc., a Michigan corporation; U.S. Equipment Company, a Michigan corporation, Defendants.

Nos. 99-1073, 99-1128.

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: November 28, 2000

Decided and Filed: April 16, 2001

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 91-75348, Avern Cohn, District Judge.

Ruben Acosta, David H. Fink, FINK, ZAUSMER & KAUFMAN, Detroit, Michigan, for Plaintiff.

Robert Charles Davis, DAVIS LAW GROUP, Mt. Clemens, Michigan, for Defendants-Appellants and Defendants-Appellees.

Harry T. Quick, Martindale, Brzytwa & Quick, Cleveland, OH, for Eaton Corp.

James H. Russell, WINSTON & STRAWN, Chicago, Illlinois, Eric J. Magnuson, Rider, Bennett, Egan & Arundel, Minneapolis, MN, for Eaton Corp.

Before: NELSON, SILER, and CLAY, Circuit Judges.

OPINION

DAVID A. NELSON, Circuit Judge.

This is an environmental protection case in which the plaintiff (the City of Detroit) thought it had reached a settlement with one of the corporate defendants (Eaton Corporation) during the second day of trial. When the trial court was advised that Eaton and the city had resolved their differences, the terms of the settlement were placed on the record in open court. Some weeks later, however, Eaton denied that there had been a meeting of the minds with respect to the scope of the "contribution protection" (i.e., indemnification against demands for contribution among tortfeasors) that Eaton was to receive from the city. The city's position was and is that the record contains a clear expression of agreement on the scope of such protection.

Professing itself unable to determine precisely what the parties had come to agreement on, the trial court denied a motion by the city for entry of a settlement judgment. The case was eventually tried to completion, and a final judgment was entered on all claims.

Upon review, we conclude that the trial court erred in declining to hold Eaton to the settlement it had said it was accepting. The record, as we read it, shows that the city's lawyer adequately clarified the scope of the agreed contribution protection. The record further shows that Eaton's lawyer explicitly acknowledged that the clarification was correct. Insofar as the district court subsequently found that the record did not manifest a meeting of minds, we are satisfied that the court's finding was clearly erroneous.

Both the city and the remaining defendants challenge other aspects of the final judgment as well. Unpersuaded, we shall reject these challenges.

I

For a period of several decades ending in 1973, as we understand the uncontested facts, subsidiaries or corporate predecessors of Eaton Corporation owned and occupied a tract of industrial real estate located at the intersection of French Road and Grinnell Avenue in the City of Detroit. There were several buildings on the site, including a factory, a warehouse, a garage, a boiler house, and some office buildings.

Various firms occupied the property before and after Eaton's occupancy. Different occupants disposed of different hazardous wastes on the site. The contaminants included polychlorinated biphenyls ("PCBs"), petroleum, and petroleum by-products such as ethyl benzene, toluene, and xylene.

During a period that ended in 1989 the property was occupied by defendant U.S. Equipment Co., a wholly-owned subsidiary of defendant U.S. Group, Inc. The latter corporation is connected with defendants George, Joseph, Norina and Shirley Simon. It will be convenient for us to refer to the Simons, U.S. Equipment, and U.S. Group collectively as "the Simon group."

The City of Detroit acquired the real estate by condemnation in 1989. The purpose of the city's acquisition was to clear flight paths for a municipal airport located on the far side of a railroad track that runs next to the property.

The city demolished the factory and other buildings, cleaned up the PCBs, and, through consultants, made a detailed survey of the remaining contaminants. The city then brought the instant lawsuit against the Simon group, Eaton, General Motors Corporation (a sometime lessee of the property) and others. The relief sought included both recovery of the environmental cleanup and investigation costs already incurred by the city and entry of a declaratory judgment with respect to future remediation costs. The city's claims were based in part on the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. ("CERCLA"), and the former Michigan Environmental Response Act ("MERA"), M.C.L. §§ 299.601, et seq., now recodified in Part 201 of the Michigan Natural Resources and Environmental Protection Act, M.C.L. §§ 324.20201, et seq. ("NREPA").

In 1994 the city moved for partial summary judgment on a claim that the Simon group was responsible for all of the PCB cleanup costs. The district court granted the motion, ultimately awarding the city $156,619.91 for reimbursement of its costs plus attorney fees. General Motors was dismissed with the acquiescence of the city.

On March 6, 1995, the case went to trial on the remaining claims against the Simon group and Eaton. Shortly before the trial was to resume the next day, the court was informed that Eaton and the city had reached a settlement. The terms of the settlement were promptly memorialized, at the court's request, in proceedings conducted on the record. With the reader's indulgence, we shall describe these proceedings in some detail.

After stating his understanding that there had been a resolution of the dispute between the city and Eaton, but no resolution of the dispute between the city and the Simon Group, the trial judge turned to the city for an account of what was being agreed to. Mr. David H. Fink, one of the lawyers representing the city, responded as follows:

"The terms of the settlement with Eaton will be a full and final settlement in the dispute between the City of Detroit and the Eaton Corporation would be the following:

One, the payment by [E]aton of $1.2 million cash; that is, no trust funds or anything. It would be one straight payment of $1.2 million.

Two, the City of Detroit would provide contribution protection with respect to any claims brought in the past or in the future with respect to this site by the City of Detroit. That, of course, would include the pending claims against the Simons but would also include any other claim that might be brought by the City of Detroit against any other parties. They would have contribution protection.

There would not be any guarantee of indemnification as to third-party claims. The City is not aware of any third-party claims that have been brought or threatened in any way with respect to the site with the exception of issues related to EPA and EPA has long since given up with respect to the Simon defendants." (Emphasis supplied.)

Mr. Fink went on to describe two obligations to be assumed by Eaton: an obligation to cooperate with the city on a statutory claim not directly relevant here, and an obligation to cooperate on the city's claims against other parties. More specifically, as far as the latter obligation was concerned, Mr. Fink explained that Eaton was agreeing not to object to the city's working with experts initially retained by Eaton, it being understood that Eaton would not have to incur further costs in this connection.

At this point, the transcript shows, Mr. James H. Russell, environmental litigation counsel for Eaton, asked for permission to confer with "co-counsel." (Mr. Russell may have been referring here to Eaton house counsel Sharon O'Flaherty, or lead trial counsel Harry T. Quick, or both.) After an off-the-record discussion between counsel, Mr. Russell went directly to the expert witness point; he offered no objection or other comment regarding Mr. Fink's explanation of the scope of the protection Eaton would receive against claims for contribution among tortfeasors.

What Mr. Russell said was this:

"We do not expect a problem in the operation of the last point that Mr. [F]ink has just identified. I don't know that we're prepared to put that into the agreement. The reason is that the experts that Mr. Fink would wish to have are independent contractors; they are outside experts."

The court then proposed a way of resolving the expert witness problem, if it was a problem, and Mr. Russell responded to the court's proposal by saying "[w]e have no objection."

Mr. Fink, on behalf of the city, then returned to the subject of contribution protection:

"Your Honor, the only item on the list that I see that will require any 'fl[e]shing out' in the agreement itself is the form of the contribution protection and I just want to be clear from the City's p[er]spective and that is that we would expect that any claims brought against Eaton that arise from a claim brought by the City, that the defense of that claim would be tendered to the City of Detroit and the City would have to affirm, as it would, as to the absolute guarantee to provide that contribution protection brought by the City of Detroit but then that the City would, of course, having taken on that responsibility, would control the defense of the claim." (Emphasis supplied.)

At this juncture the court offered a suggestion with regard to the final wording of the agreement with respect to such claims:

"Well, let me suggest this: If there is any dispute, that is to...