Comerica Bank-Detroit v. Allen Industries, Inc.

• Decision Date: 19 July 1991
• Docket Number: Civ. A. No. 86-CV-40205-FL.
• Citation: 769 F. Supp. 1408
• Parties: COMERICA BANK-DETROIT, Successor Trustee under the Graham John Graham Trust Agreement, Plaintiff, v. ALLEN INDUSTRIES, INC., General Motors Corporation, American Renovating Company, Wyandotte Paint Products Company, Amchem Products, Inc., Emco Chemical, Inc., and Carl J. Schriber, and Elizabeth Graham Trust Under Agreement, Jointly and Severally, Defendants.
• Court: U.S. District Court — Western District of Michigan

769 F. Supp. 1408

COMERICA BANK-DETROIT, Successor Trustee under the Graham John Graham Trust Agreement, Plaintiff, v. ALLEN INDUSTRIES, INC., General Motors Corporation, American Renovating Company, Wyandotte Paint Products Company, Amchem Products, Inc., Emco Chemical, Inc., and Carl J. Schriber, and Elizabeth Graham Trust Under Agreement, Jointly and Severally, Defendants.

Civ. A. No. 86-CV-40205-FL.

United States District Court, E.D. Michigan, S.D., at Flint.

July 19, 1991.

Martin Kimmel, Pontiac, Mich., Jeffrey K. Haynes, Bloomfield Hills, Mich., for plaintiff, Comerica Bank-Detroit.

Clayton F. Farrell, Daniel J. Fleming, Southfield, Mich., for Amchem.

Herbert G. Sparrow, III, Graham L. Teal, Detroit, Mich., for Wyandotte Paint.

Carl J. Schriber, pro per.

David L. Maurer, Elaine Black, Detroit, Mich., for Allen Industries.

Daniel McCarthy, Troy, Mich., for America Renovating Co.

John Scherbarth, Asst. Atty. Gen., Lansing, Mich., for State of Mich.

James J. Fausone, Detroit, Mich., for General Motors.

Barry L. King, Troy, Mich., for Emco Chemical.

James Ramer, Harbor Spring, Mich., for Elizabeth Graham.

Michael J. Hainer, Detroit, Mich., for Joan Graham.

NEWBLATT, District Judge.

MEMORANDUM OPINION AND ORDER

Before the Court are two motions for entry of judgment. The first is brought by Comerica Bank-Detroit (Comerica) to have the Court enter the consent decree between Comerica and General Motors (GM). A similar agreement has been offered for this Court's approval by the Attorney General of the State of Michigan (the State) and General Motors. On August 16, 1990, this Court acknowledged receipt of the motions and the proposed judgments and gave notice of its intention to sign and enter the judgments unless it was convinced that such entry would be inappropriate. Emco Chemical, Inc. and Allen Industries, Inc. responded by filing objections to the proposed judgments. Reply briefs have been filed addressing the arguments furnished in the objections. For the reasons stated below, both Joint Motions are GRANTED, and the objections of Allen are OVERRULED. The objection filed by Emco Chemical is MOOT.

Judgment is sought pursuant to Rule 54(b) of the Federal Rules of Civil Procedure which empowers district courts in multi-party or multi-claim cases to enter judgment against one party, or on one claim, "only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."

Under the Comerica/GM agreement, the parties to the settlement agreed that GM would be released from liability from all of Comerica's claims against GM, but in addition, Comerica and GM agreed between themselves that GM would be released from all the cross claims for indemnity brought against GM by the rest of the defendants in this case. The face of the State/GM agreement releases GM only from the claims brought by the State. Pursuant to § 9613(f)(2) § 113(f)(2) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9607, however, GM asserts that when a potential responsible party reaches a settlement with either the United States Government or with a state government, the settling party obtains protection against claims for contribution that are brought by parties that have not yet settled.

Emco's objection merely states that it is willing to waive its objections if GM will acknowledge that GM's cross claim against Emco is dismissed along with the cross claim filed by Emco. Thus, the only objection that offers any substantive argument was filed by Allen.

THE REQUIREMENTS OF RULE 54(b)

Allen first argues that entry of the order is inappropriate under Rule 54(b) because the Court cannot determine that there is no just reason for delay. Certain claims against GM will survive the proposed judgment, according to Allen.¹ The surviving claims represent potential future judgments which are also potential subjects for appeals processes separate from the judgment that Comerica and GM propose to enter pursuant to this joint motion.

The potential for piecemeal appeals provides a just reason for delaying judgment under the Rule 54(b) standards. Allen cites WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE, § 2654. "Rule 54(b) does not represent a departure from or abandonment of the fundamental principle against splitting a claim and determining cases at the appellate level in piecemeal fashion." § 2654. Allen argues, therefore, that avoidance of the risk of piecemeal appellate litigation provides just reason for delay.

The Court is not persuaded by this argument because it cannot perceive any risk that the parties to these settlement agreements will appeal this judgment. The parties have agreed to the terms of the settlement, and have moved jointly for the entry of this judgment. The only issue that might present itself for appeal at this time is the issue of contribution protection. Since this issue presents questions of statutory construction and consideration of general tort theory of joint tort-feasor liability, any appeal at this time would "`not deal with the factual issues at the heart of the adjudicated claims,'" and is "`sufficiently distinct to permit certification.'" International Union of Elec., Radio and Machine Workers AFL-CIO, CLC v. Westinghouse Elec. Corp., 631 F.2d 1094 (3rd Cir.1980) cert. denied 452 U.S. 967, 101 S.Ct. 3121, 69 L.Ed.2d 980 (1981) (quoting district court's opinion). The inquiry into the issue of contribution protection would not "involve any duplication of effort if done separately" from the rest of the issues presented in this case. Prudential Ins. Co. of America v. Curt Bullock Builders, Inc. 626 F.Supp. 159, 169 (N.D.Ill.1985). Thus, the Court does not perceive any risk from piecemeal litigation at the appellate level, so the Court hereby determines that there is no just reason for delay. Thus, the requirements of Rule 54(b) do not prevent the entry of the proposed orders.

GM'S LIABILITY UNDER THE CROSS CLAIMS

As stated above, the agreement between Comerica and GM provides GM with contribution protection from the other defendants in this matter, and although the State/GM agreement is silent as to contribution protection, GM asserts that § 113(f)(2) of CERCLA provides such protection to parties who settle with the government. The Court will now consider which, if any, of the cross claims survive the proposed judgments.

The terms of § 113(f)(2) make it clear that the cross claims do not survive the settlement between the State and GM. The statute provides as follows: "A person who has resolved its liability to the United States or a state in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement." CERCLA § 113(f)(2).

Allen acknowledges that § 113(f)(2) does permit contribution protection in a situation like this where the defendant settles with the State. The presence of the government is not the only prerequisite, however, according to Allen. There must be an administrative or judicial evaluation of the reasonableness of the settlement, and the mere recitation of the parties' good faith is insufficient. The court in United States v. Moore, 703 F.Supp. 455 (E.D.Va.1988) refused to grant § 113(f)(2) contribution protection to the defendant, the Department of Defense, when it settled with the EPA, since the settlement had not received administrative approval. The court concluded that there was too much opportunity for collusion between the two government agencies.

Allen argues here that there has been no evaluation of the reasonableness of this settlement, so GM should receive no contribution protection under § 113(f)(2). Allen calls for an "in depth evaluation" of this proposed settlement, especially considering the public interest. Other factors to be considered include:

A comparison of the strengths of plaintiffs' case versus the amount of the settlement offer; the likely complexity, length, and expense of the litigation; the amount of opposition to the settlement among affected parties; the opinion of competent counsel; and the stage of the proceedings and the amount of discovery already taken at the time of the settlement.

In re Acushnet River & New Bedford Harbor, 712 F.Supp. 1019, 1028 (D.Mass.1989).

The Court feels that an evidentiary hearing to explore the fairness and good faith nature of this settlement "is not required by CERCLA or the implementing regulations." Edward Hines Lumber Company v. Vulcan Materials Co., 1987 WL 27368 (N.D.Ill. Dec. 4, 1987), aff'd, 861 F.2d 155 (7th Cir.1988). Parties enter into settlements to avoid the time and costs of preparing for trial. Requiring evidentiary hearings before entering consent judgments would compel litigation of such issues as "the risk of victory or defeat, the risk of a high or low verdict, the unknown strengths or weaknesses of the opponent's case, the inexact appraisal as to the elements of danger, the defendant's solvency and the amount of insurance coverage." Donovan v. Robbins, 752 F.2d 1170, 1181 (7th Cir.1985). This Court is uncertain what standards could be applied to determine whether the evidence shows fairness, reasonableness and consistency with the goals of CERCLA. The preparation for such "mini-trials," and the uncertainty of the outcomes, would discourage parties from settling, and this would be contrary to CERCLA's policy of encouraging early settlement.

The Court should not act as a rubber stamp, but a detailed investigation of the fairness of the settlement, including a full blown evidentiary hearing, is not necessary or appropriate here. Kelley v. Thomas Solvent Co., 717 F.Supp. 507 (W.D.Mich. 1989).

Where a court is reviewing a consent decree to which the government is a party, the balancing of competing interests affected by a proposed consent decree "must be left, in the first instance, to the discretion

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