Hanlin Group, Inc. v. Intern. Minerals & Chemical Corp., Civ. No. 89-0089-B.

• Decision Date: 07 September 1990
• Docket Number: Civ. No. 89-0089-B.
• Citation: 759 F. Supp. 925
• Parties: HANLIN GROUP, INC., Plaintiff, Counterclaim Defendant, v. INTERNATIONAL MINERALS & CHEMICAL CORPORATION, Defendant, Counterclaim Plaintiff.
• Court: U.S. District Court — District of Maine

759 F. Supp. 925

HANLIN GROUP, INC., Plaintiff, Counterclaim Defendant, v. INTERNATIONAL MINERALS & CHEMICAL CORPORATION, Defendant, Counterclaim Plaintiff.

Civ. No. 89-0089-B.

United States District Court, D. Maine.

September 7, 1990.

Michael N. Ambler, Jr., John J. O'Leary, Jr., Daniel E. Boxer, Stephen G. Grygiel, Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Me., for plaintiff, counterclaim defendant.

Daniel A. Pileggi, George Z. Singal, Gross, Minsky, Mogul & Singal, P.A., Bangor, Me., Constantine L. Trela, Jr., Thomas F. Ryan, Carol A. Doyle, Andrew Schlickman, Sidley & Austin, Chicago, Ill., Howard Post, Northbrook, Ill., for defendant, counterclaim plaintiff.

ORDER AFFIRMING THE RECOMMENDED DECISION OF THE MAGISTRATE

HORNBY, District Judge.

The United States Magistrate filed with the Court on July 26, 1990, with copies to counsel, his Recommended Decision on Defendant's Motion for Judgment on the Pleadings. On August 14, 1990, both plaintiff and defendant filed Objections to the Magistrate's Recommended Decision on Motion for Judgment on Pleadings. I have reviewed and considered the Magistrate's Recommended Decision, together with the entire record; I have made a de novo determination of all matters adjudicated by the Magistrate's Recommended Decision; and I concur with the recommendation of the United States Magistrate for the reasons set forth in his Recommended Decision, and determine that no further proceeding is necessary.

It is therefore ORDERED as follows:

1. The Recommended Decision of the Magistrate is hereby ADOPTED.

2. The Plaintiff's Objections to the Magistrate's Recommended Decision on Defendant's Motion for Judgment on the Pleading are hereby REJECTED.

3. The Defendant's Objections to the Magistrate's July 26, 1990 Recommended Decision on Motion for Judgment on Pleadings are hereby REJECTED.

4. IMC's motion for judgment on the pleadings is GRANTED as to Count VIII (Continuing Nuisance), Count IX (Continuing Trespass) and those portions of Counts VII (Wrongful Involvement in Litigation) and X (Strict Liability for Abnormally Dangerous and Ultrahazardous Activities) which assert claims for punitive damages, and the motion in all other respects is DENIED.

RECOMMENDED DECISION ON DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS

DAVID M. COHEN, United States Magistrate.

In this action the plaintiff, Hanlin Group, Inc. ("Hanlin"), formerly named Linden Chemicals & Plastics, Inc. ("LCP"), asserts against the defendant, International Minerals & Chemical Corporation ("IMC"), a breach-of-contract claim arising out of a purchase agreement between LCP and IMC covering two manufacturing plants, one of which is located at Ashtabula, Ohio and the other at Orrington, Maine. Hanlin also asserts indemnity and contribution claims relating to response actions it has been required to take pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. § 9601 et seq., as well as common-law claims for indemnity, contribution, strict liability, continuing trespass, continuing nuisance and wrongful involvement in litigation. In addition to declaratory and injunctive relief, Hanlin seeks compensatory and punitive damages and reasonable attorney fees. Before the court is IMC's motion for judgment on the pleadings on Counts I and III through X.¹

Fed.R.Civ.P. 12(c) provides in part that, "after the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." The First Circuit Court of Appeals has addressed the applicable standard for evaluating a Rule 12(c) motion:

Because rendition of judgment in such an abrupt fashion represents an extremely early assessment of the merits of the case, the trial court must accept all of the nonmovant's well-pleaded factual averments as true and draw all reasonable inferences in its favor.... The court may not grant a defendant's Rule 12(c) motion "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief."

Rivera-Gomez v. de Castro, 843 F.2d 631, 635 (1st Cir.1988) (citations omitted). See also Lovell v. One Bancorp, 690 F.Supp. 1090, 1096 (D.Me.1988), appeal dismissed, 878 F.2d 10 (1st Cir.1989) (on motion for judgment on pleadings, factual allegations in complaint must be taken as true and legal claims assessed in light most favorable to plaintiff; judgment warranted only if there are no genuine issues of material fact and moving party establishes that it is entitled to judgment as matter of law).

Accepting these guidelines, the facts for purposes of this motion are as follows: Between December, 1967 and April 30, 1982 IMC and/or Sobin Chemicals, Inc. ("Sobin") owned and operated a chemical manufacturing facility in Orrington, Maine.² Second Amended Complaint ("Complaint") ¶¶ 2, 13-14, 18-21. At various times during this period IMC manufactured chlorine, caustic soda, sodium hypochlorite (bleach), chloropicrin and hydrochloric acid at the Orrington facility. Id. ¶¶ 18-21. As a result of its manufacturing processes and disposal practices, IMC from 1967 to 1970 released, discharged and disposed of mercury and mercury-contaminated sludge directly into the Penobscot River. Id. ¶¶ 29-40. As the result of the federal government's filing in July, 1970 of an action against IMC for illegal mercury releases and discharges and a subsequent consent decree entered into between IMC and the federal government, IMC agreed to limit its discharges of mercury and mercury components into the Penobscot. Id. ¶¶ 49, 51. Between July, 1970 and April, 1982 IMC established, owned and/or operated, at or near its Orrington facility, seven unlined landfills into which it deposited mercury and mercury-contaminated materials and sludge. Id. ¶¶ 56-70. IMC's construction, ownership, operation and closing of the landfills during that period resulted in the accumulation of mercury, mercury contaminants and other contaminants in the soils, subsoils, surface waters and groundwater at or near the Orrington facility, as well as in the Penobscot River. Id. ¶¶ 71-75. In connection with its manufacturing process, IMC used carbon tetrachloride which it disposed of in three of its landfills during the period from approximately December, 1970 to February 18, 1982. Id. ¶¶ 76-80. Such handling and disposal practices resulted in the accumulation of hazardous substances and contaminants, including carbon tetrachloride and chloroform, in the soils, subsoils, surface waters and groundwater at or near the Orrington facility. Id. ¶¶ 81, 86-88. IMC knew that its handling and disposal of mercury and carbon tetrachloride caused and would continue to cause contamination at or near the Orrington facility, its soils, subsoils, surface waters and groundwater, as well as the Penobscot River and its banks and sediments, and has failed to remove such contamination. Id. ¶¶ 88-90.

On April 30, 1982 IMC sold the Orrington facility to LCP pursuant to a purchase agreement. Id. ¶ 140. The agreement contains two indemnity provisions. Id. ¶¶ 141-42. Prior to the closing date, IMC concealed from LCP the nature and extent of the mercury contamination at the facility, its disposal of carbon tetrachloride and the existence of any carbon tetrachloride and chloroform contamination thereat. Id. ¶ 143.

On February 21, 1986 the EPA issued to LCP a draft consent agreement and order pursuant to § 3008(h) of the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), 42 U.S.C. § 6928(h). Id. ¶ 145. The notice which accompanied the draft order stated that the EPA's action was based upon its determination that hazardous waste released from the Orrington facility required certain response measures in order to protect human health or the environment. Id. ¶ 146. In response, LCP notified IMC that the latter was obligated under § 12.11 of the purchase agreement to pay for the current and future work the EPA required of LCP in connection with the RCRA notice and draft order and specifically requested full payment from IMC of the full cost of the work to be performed by an engineering consultant it had hired to assist it in responding to the same. Id. ¶¶ 149-50. On December 11, 1986 the EPA and LCP, with the prior knowledge and consent of IMC, entered into a consent agreement and order under RCRA. Id. ¶ 152. Although IMC paid to LCP $40,000 toward the cost of its consultant, IMC has refused to make any further payment of LCP's costs in responding to the RCRA notice and order. Id. ¶¶ 157, 160, 185. LCP has incurred or will incur engineering fees and costs, attorney fees and costs, expenses for its employees' labor and costs, as well as other expenses arising from or related to the contamination of the soil, subsoil, air, surface water or groundwater at or near the Orrington plant. Id. ¶¶ 154, 158, 179, 184-85, 205-09, 224, 233, 240, 250-51, 255.

I. BREACH OF CONTRACT (COUNT I)

IMC argues that Hanlin's indemnification claim for expenses incurred in complying with the EPA's order falls within the limitation-of-liability clauses of §§ 7.06 and 12.11 of the purchase agreement which exclude from indemnification liability claims arising from laws not in existence on or before the closing date. Because the contract specifies that it is to be construed in accordance with Ohio law,³ the issue before the court is whether, taking the allegations of the complaint as true and viewing the legal claims in the light most favorable to LCP, the indemnification clauses can be construed under Ohio law as requiring IMC to indemnify LCP for its RCRA-order compliance costs.

Under Ohio law, "the purpose of contract construction is to effectuate the intent of the parties." Kelly v. Medical Life Ins. Co., 31 Ohio St.3d 130, 509 N.E.2d 411, 413 (1987) (citing Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974)). Ohio courts wi...