Harley-Davidson, Inc. v. Minstar, Inc., 90-C-1245.

• Decision Date: 05 November 1993
• Docket Number: No. 90-C-1245.,90-C-1245.
• Citation: 837 F. Supp. 978
• Parties: HARLEY-DAVIDSON, INC., Plaintiff, v. MINSTAR, INC., AMF Incorporated, the United States of America, the United States Department of Defense, and the United States Department of the Navy, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

837 F. Supp. 978

HARLEY-DAVIDSON, INC., Plaintiff, v. MINSTAR, INC., AMF Incorporated, the United States of America, the United States Department of Defense, and the United States Department of the Navy, Defendants.

No. 90-C-1245.

United States District Court, E.D. Wisconsin.

November 5, 1993.

Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., Alice D. Seeger, Milwaukee, WI, for plaintiff.

Alice L. Mattice, U.S. Dept. of Justice, Environmental & Natural Resources Div., Washington, DC, James L. Santelle, Asst. U.S. Atty., U.S. Dept. of Justice, E.D. Wis., Milwaukee, WI, J. Andrew Schlickman, Sidley & Austin, Chicago, IL, David J. Edquist, Gibbs, Roper, Loots & Williams, S.C., Milwaukee, WI, for defendants.

DECISION AND ORDER

RANDA, District Judge.

This case involves a dispute between Plaintiff, Harley-Davidson, Inc., ("Harley-Davidson"), and Defendants Minstar, Inc., ("Minstar"), AMF, Inc., ("AMF"), U.S.A., U.S. Department of Defense, and the U.S. Department of the Navy (collectively, "the Navy"), over liability for clean-up of a contaminated industrial site. The dispute centers on two agreements¹ and a settlement in State Court arising from one of the agreements. Minstar and AMF assert that the Agreements effectively transferred liability and, hence, the cost of clean-up from Minstar and AMF to Harley-Davidson. Harley-Davidson acknowledges the Agreements, disputes their meaning, and argues that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) negates Minstar AMF's contractual transfer of liability. Harley-Davidson seeks recovery of its response costs under CERCLA, and a declaration of the liability of all parties under CERCLA and the two Agreements.

Minstar and AMF move the Court for judgment on the pleadings which, pursuant to a subsequent Order of Judge J.P. Stadtmueller, was transformed into a Motion for Summary Judgment.²

FACTS

The genealogy for this industrial site is rather short, considering that it has been used as such since 1944. In 1944 the Navy took title to the industrial site in question now known as the York Facility. From 1944 to 1964, the Facility was operated as the York Naval Ordinance Plant. The United States sold the facility to AMF on January 31st, 1964. In 1980, AMF transferred the York Facility by a Quitclaim Deed to a wholly owned subsidiary, AMF York, Incorporated ("AMF York"). Paragraph Three of the 1980 Agreement provided that AMF York "shall assume and discharge and shall indemnify AMF Incorporated against all debts, liabilities and obligations without limitation relating to AMF Incorporated's AMF York Division, its operations and products, whether known or unknown". On June 16, 1981, AMF transferred the Facility to Harley-Davidson. Minstar acquired AMF in 1985.

All three owners of the Facility, the Navy, AMF, and Harley-Davidson have performed manufacturing operations there. In 1986, Harley-Davidson conducted an environmental audit at the Facility and discovered environmental contamination. Since 1986, Harley-Davidson has responded to the contamination under the supervision of the Pennsylvania Department of Environmental Resources. Harley-Davidson alleges that the contamination at the Facility is attributable to the activities of the prior owners, operators and successors in interest (the Navy, AMF and Minstar).

Harley-Davidson filed this action pursuant to CERCLA Sections 107 and 113, 42 U.S.C. § 9607, 9613, naming the Navy, AMF, and Minstar as defendants. As previously indicated, Harley-Davidson seeks recovery of its response costs and a declaration of liability. An Amended Complaint was filed by Harley-Davidson containing an additional count against Minstar and AMF based on the Pennsylvania Hazardous Sites Cleanup Act. ("PAHSCA")³

While alleging that Harley-Davidson was responsible for the contaminated site, AMF and Minstar also alleged that they had discharged all of their obligations to Harley-Davidson for environmental contamination at the York Facility pursuant to the 1980 and 1981 Purchase Agreements.

Under the 1981 Agreement, AMF agreed to "retain and be responsible for the liabilities and obligations in respect of the related assets against and in respect of which AMF is indemnifying (Harley-Davidson) pursuant to Sec. 10.5(a)." 1981 Agreement, Sec. 2.2. The liabilities and obligations for which Harley-Davidson was indemnified included any loss, liability, or obligation in connection with AMF's liabilities "arising out of or resulting from an event or an occurrence ... due to non-compliance with any Federal, State, or local law, regulation, order or administrative or judicial determination relating to the environment ..." prior to transfer of the property to Harley-Davidson. 1981 Agreement Sec. 10.5(a)(1). These Agreements were the subject of the aforementioned State action brought by Harley-Davidson in Wisconsin State Court. Harley-Davidson, Inc., v. Minstar, Inc., No. 90-CV-004063 (Milwaukee Circuit Court, Wisconsin, filed March 23, 1990), which has subsequently been settled.⁴

The 1980 and 1981 Agreements and the settlement of the State Court litigation are the basis for AMF's and Minstar's present motion. AMF and Minstar contend that the Agreements comprise Harley-Davidson's exclusive remedy against them for pre-acquisition environmental problems and that the settlement of the State Court action precludes Harley-Davidson's CERCLA action. In other words, AMF and Minstar argue that they have, as recognized potentially responsible parties under CERCLA, successfully transferred and satisfied the liability they may owe under CERCLA to Harley-Davidson, another potentially responsible party.

ANALYSIS

Because the Court interprets Sec. 107(e) of CERCLA to preclude the contractual transfer of liability between parties responsible or potentially responsible for the clean-up of contaminated sites, Minstar and AMF cannot rely on the 1980 and 1981 Agreements or the State Court settlement arising therefrom to avoid any further liability it may have under the Statute.⁵

The conclusion that this Court reaches is considered the "minority" view. However, the Court accepts this view for the following reasons:

Although the stated purpose of CERCLA is clear some of its sections, in particular Sec. 107(e)(1), have been, judging from the amount of differing opinions, elusive in their meaning. The meaning of Sec. 107(e)(1) becomes readily clear, however, through an application of the language of the statute itself and the proper canons of statutory construction. Since the meaning of Sec. 107(e)(1) is discernable from these sources and is consistent with the objective of the law, there is no need to delve into its legislative history.⁶ The primary guide for interpreting Sec. 107(e)(1), therefore, must be the language of Sec. 107(e)(1). "The law as it is passed is the will of the majority of both houses, and the only mode in which that will is spoken is in the act itself ..." Conroy, ___ U.S. at ____, 113 S.Ct. at 1567, quoting Aldridge v. Williams, 44 U.S. 9, 3 Howard 9, 24, 11 L.Ed. 469 (1844).

With this in mind, we look at the language of CERCLA. Under Sec. 107(a) there are four categories of potentially responsible parties. The current owner and operator of a contaminated site, the owner or operator of that site when contamination occurred, the generators of the waste sent to the contaminated site, and the transporters of the waste sent to the contaminated site.⁷

Sec. 107(e)(1) states:

Indemnification, hold harmless, etc., agreements or conveyances; subrogation rights

(1) No indemnification, hold harmless, or similar agreement or conveyance shall be effective to transfer from the owner or operator of any vessel or facility or from any person who may be liable for release or threat of release under this section to any other person the liability imposed under this section. Nothing in this subsection shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under this section.⁸

42 U.S.C.A. § 9607(e)(1).

Taking up the first sentence of 107(e)(1), it is clear that the language proscribes any transfer "to any other person the liability imposed under this section".⁹ This all-inclusive language precludes, unless clarified elsewhere, not only the transfer of "the liability imposed under this section" between potentially responsible parties, but the transfer between a potentially responsible party and a party not liable under the law.¹⁰ Therefore, regardless of the nature of the liability imposed under this section, the transfer of that liability to "any other person" is proscribed. Courts considering only the first sentence are universal in their opinion that no other meaning could be drawn from this language. Standing alone, the first sentence is clear and unambiguous and draconian in its approach.

In turn, the second sentence of Sec. 107(e)(1), which by definition should be a qualifier of the lead first sentence¹¹ and therefore either explain or modify the first sentence, appears at first glance to contradict it. The second sentence of 107(e)(1) states:

Nothing in this subsection shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under this section.

42 U.S.C.A. § 9607(e)(1).

Some Courts have dealt with this apparent contradiction by reading the second sentence of 107(e) as a primary sentence, thereby permitting the transfer of liability between all parties and not just between potentially responsible parties. Reading the language of the second sentence in this manner permits the transfer of liability in all cases but it also, as a matter of course, negates the first sentence completely. In this it flies in the face of basic statutory and grammatical construction. Indeed, other Courts have dealt with this negation by simply ignoring the language of the first sentence altogether. See e.g., Marmon Group, Inc. v. Rexnord, Inc.,...