In re G-I Holdings, Inc.
| Decision Date | 01 May 2017 |
| Docket Number | 01–3879(RG) (Jointly Administered),Case Nos.: 01–30135(RG) |
| Citation | 568 B.R. 731 |
| Parties | IN RE: G–I HOLDINGS, INC. f/k/a GAF Corporation, et al., Debtors. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
Riker, Danzig, Scherer, Hyland & Perretti, LLP, BY: Dennis J. O'Grady, Esq., Rachel F. Gillen, Esq., Headquarters Plaza, One Speedwell Avenue, Morristown, New Jersey, 07962–1901, Co–Counsel for G–I Holdings, Inc.
Quinn Emanuel, Urquhart & Sullivan, L.P., BY: Andrew J. Rossman, Esq., Sylvia E. Simson, Esq., Jonathan B. Oblak, Esq., Joshua R. Rosenthal, Esq., 51 Madison Avenue, New York, New York 10010, Co–Counsel for G–I Holdings, Inc.
Gibbons P.C., BY: Michael R. Griffinger, Esq., Brett S. Theisen, Esq., William S. Hatfield, Esq., One Gateway Center, Newark, New Jersey 07102, Attorneys for Ashland LLC (f/k/a Ashland, Inc.), International Specialty Products, Inc., and ISP Environmental Services, Inc.
Before the Court is a Motion to Enforce a Plan Injunction filed by G–I Holdings, Inc. ("G–I")1 and GAF Corporation ("GAF") (collectively "G–I" or "Debtors"). G–I is seeking an order to enforce the Confirmed Plan's discharge injunction against Ashland, LLC ("Ashland"), International Specialty Products, Inc. ("ISP"), and ISP Environmental Services, Inc. ("IES") (collectively "Ashland Parties" or "Plaintiffs"). Ashland filed Opposition to the Motion and G–I filed a Reply. This Court held Oral Argument on February 16, 2017. The following constitutes this Court's findings of fact and conclusions of law.
This dispute arises in connection with the Ashland Parties' potential liability for remediation of a Superfund site located in Linden, New Jersey (the "LCP Site"),2 and the Ashland Parties' claims seeking indemnification from G–I for costs and expenses paid by or asserted against them by governmental entities or third parties related to the LCP Site based on an Indemnification Agreement between the parties. G–I contends that the Confirmation Order and the injunctive provisions of its Confirmed Plan bar the Ashland Parties' claims. Ashland contends that this Court is without jurisdiction to decide this issue because this Court recently remanded the Ashland Parties' Complaint to state court and because the Remand Order is pending appeal before the New Jersey District Court. Ashland further contends that even if this Court has jurisdiction to decide the Motion, the Court should find that the Plan's discharge injunction does not apply to the Ashland Parties' claims because the claims arise from an assumed executory contract.
For the reasons discussed herein, this Court will deny the Motion without prejudice.
The dispute concerns liability for the environmental remediation of a certain Superfund site located in Linden, New Jersey—the LCP Site.
The LCP Site is the location of a former chemical manufacturing facility on an approximately 26–acre parcel of property in Linden, New Jersey. The LCP Site was acquired by GAF Corporation3 prior to 1950. GAF Corporation constructed a chlor–alkali plant at the LCP Site, which it operated until it sold the property to Linden Chlorine Products, Inc. in 1972. The operations of the former chlor–alkali plant by GAF Corporation at the LCP Site resulted in the contamination of the LCP Site and off–site areas with various hazardous substances, including mercury. The LCP Site ceased production permanently in 1985.
The issue of who now bears responsibility for the LCP Site depends upon a series of complex corporate transactions and contractual agreements that span the course of three decades.
In 1989, GAF was liquidated, and its liabilities were transferred to five separate entities: Dorset Inc. ("Dorset"), GAF Building Materials Corporation (formerly known as Edgecliff Inc.), Merick Inc., Perth Inc., and Clover Inc. According to G–I, Dorset received "all the assets and liabilities, known and unknown, relating to [GAF's] acetylenic chemicals, surfactants, specialty chemicals, organometalics, mineral products, industrial filters and filter vessels business (collectively, the ‘Chemical Businesses')," while GAF Building Materials Corporation, formerly known as Edgecliff Inc., received "all the assets and liabilities, known and unknown, relating to [GAF's] commercial and residential roofing materials business."4 See Motion to Dismiss Adversary Proceeding at 6, Ashland Inc. v. G–I Holdings, Inc., Adv. Pro. No. 15–02379, ECF No. 12 (citing the 1989 Liquidation Plan). To effectuate the Liquidation Plan, on April 10, 1989, GAF entered into instruments of Assignment and Assumption with Dorset and GAF Building Materials Corporation, which transferred, in relevant part, "100% of the liabilities arising out of... environmental claims arising out of plants currently operating in the Chemical Businesses" to Dorset, and "100% of all liabilities arising out of... environmental claims from plants no longer operating and from oil waste pollution" to GAF Building Materials Corporation. Id. at 7.
Ashland claims that the liabilities in connection with the LCP Site were transferred to Edgecliff Inc., which later became GAF Building Materials Corporation, because such liability fell under the umbrella of "environmental liabilities associated with plants no longer operating," such as the LCP site, whereas G–I claims the liabilities in connection with the LCP Site were transferred to Dorset, because such liability is related to the Chemical Businesses. Ashland asserts here that ISP and IES were later incorporated in 1991 as subsidiaries of GAF, and thus ISP and IES were never in the corporate lineage of Edgecliff Inc./GAF Building Materials (one of the Defendant–Indemnitors), which assumed responsibility for the LCP site before ISP and IES were even formed.
G–I, however, takes the position that none of the G–I Parties are responsible for any environmental liabilities or obligations at the LCP Site as these liabilities and obligations were assumed by IES in 1991 and that even if these liabilities resulted in G–I following the series of corporate transactions referred to herein, which G–I claims they did not, these liabilities were discharged in G–I's bankruptcy case.
In 1991, ISP and IES were incorporated as subsidiaries of GAF Chemicals. On May 8, 1991, GAF Chemicals, GAF, and ISP 9 Corporation ("ISP 9")5 entered an agreement whereby ISP 9 assumed certain liabilities and obligations of GAF Chemicals, including "[a]ll liabilities and obligations relating to the manufacture and sale of specialty chemicals at Linden, NJ, known and unknown, contingent or otherwise, including liabilities for the remediation of the Linden site...." (the "1991 Agreement"). Additionally, the 1991 Agreement stated that IES:
shall indemnify, defend, and hold harmless [GAF Chemicals], GAF and its other subsidiaries from and against any and all [liabilities and obligations described in the 1991 Assumption Agreement Schedule] and any and all liabilities, costs and expenses in connection with any investigations, claims, actions, suits or proceedings arising out of or resulting from the conduct of any business, ownership or any assets or incurrence of any liabilities or obligations on and after May 9, 1991 by [IES].
Therefore, G–I alleges that IES assumed all GAF and GAF Chemicals' liabilities, including those associated with the LCP Site. The Ashland Parties allege, conversely, that because liability originally passed from GAF to GAF Buildings Materials Corporation, and not to Dorset/GAF Chemicals, liability in connection with the LCP Site was not transferred to ISP and IES in the 1991 Agreement.
In 1994, GAF Buildings Materials Corporation formed a new corporation as a wholly–owned subsidiary known as Building Materials Corporation of America (now Standard Industries, Inc.) ("BMCA").6
BMCA, which is also an indirect subsidiary of G–I, is the primary operating subsidiary and principal asset of G–I. BMCA acquired the operating assets and certain liabilities of GAF Building Materials Corporation's roofing commercial and residential roofing materials business. G–I asserts that BMCA did not assume any liabilities associated with "closed manufacturing facilities," and therefore cannot be held liable in connection with the LCP Site.
On October 18, 1996, GAF Corporation (including its successor "GAF"), G–I, G Industries Corp., GAF Chemicals, and ISP Holdings Inc. (the parent of ISP and IES at the time) entered into an indemnification agreement in connection with certain "Spin Off Transactions" involving GAF and its subsidiaries (the "Indemnification Agreement"). Section 2.2(a) of the Indemnification Agreement entitled "Indemnification and Release" provides at subsection (a)(1):
GAF and G–I [ ] shall jointly and severally indemnify, defend and hold harmless ISP Holdings, its Post Spin Subsidiaries and each of their respective present and future Representatives and Affiliates from and against all GAF Liabilities and any and all Indemnifiable Losses of ISP Holdings, its Post Spin Subsidiaries and each of their respective Representatives and Affiliates arising out of or due to, directly or indirectly, the GAF Liabilities, whether such GAF Liabilities arose before, or arise after, the Spin Off Date.
See Indemnification Agreement, Appx. 6 at 6, Motion for Remand, Ashland, Inc. v. G–I Holdings, Inc., Adv. Pro. No. 15–02379, ECF No. 9–7.
As part of the spin–off transactions, ISP Holdings and its subsidiaries, including IES and ISP, were spun off from the GAF Entities. At that time, Samuel J. Heyman owned 96% of ISP Holdings and its subsidiaries.7 On or around August 23, 2011, Ashland Inc.8 acquired ISP Holdings and its subsidiaries, and is currently the parent company of ISP and IES.
On January 5, 2001, G–I, a Delaware corporation with its principal place of...
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