Interstate Power Co. v. Kansas City Power & Light Co.
| Citation | 909 F. Supp. 1241 |
| Decision Date | 01 September 1993 |
| Docket Number | No. C 89-3033.,C 89-3033. |
| Parties | INTERSTATE POWER COMPANY, Plaintiff, v. KANSAS CITY POWER & LIGHT COMPANY; and Iowa-Illinois Gas & Electric Company, Defendants. KANSAS CITY POWER & LIGHT COMPANY, Defendant and Third-Party Plaintiff, v. IOWA-ILLINOIS GAS & ELECTRIC COMPANY, Third-Party Defendant, and Bob McKiness Excavating & Grading, Inc., Third-Party Defendant and Fourth-Party Plaintiff, v. CITY OF MASON CITY; and Iowa Department of Natural Resources, Fourth-Party Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
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Kent M. Ragsdale, Dubuque, IA, Clement F. Springer, Jr., Ronald W. Teeple, John L. Leonard, Defrees & Fiske, Chicago, IL, for plaintiff Interstate Power Company, a Delaware Corporation.
Mark L. Zaiger, Shuttleworth & Ingersoll, Cedar Rapids, IA, Jerome T. Wolf, Terry W. Schackmann, Barry L. Pickens, Spencer Fane Britt & Browne, Kansas City, MO, Mark G. English, Kansas City Power & Light, Kansas City, MO, for defendant Kansas City Power and Light Co.
David C. Duncan, Stephen D. Hardy, Iris J. Post, Grefe & Sidney, Des Moines, IA, for third-party plaintiff Bob McKiness Excavating & Grading, Inc.
Thomas J. Shields, Lane Waterman, Davenport, IA, Cathy S. Woollums, Iowa-Illinois Gas & Electric Co., Davenport, IA, Robert M. Olian, Pamela R. Hanebutt, Arlene Haas, Sidley & Austin, Chicago, IL, for third-party defendant Iowa-Illinois Gas and Elec. Co.
Anne L. Clark, Philip H. Dorff, Jr., Hopkins Huebner, Des Moines, IA, for third-party defendant City of Mason City, Iowa.
Craig A. Kelinson, Asst. Atty. Gen., Des Moines, IA, for third-party defendant Iowa Department of Natural Resources.
INDEX OF CONTENTS
INTRODUCTION ......................................................... 1246
FINDINGS OF FACT ..................................................... 1247
Findings of Fact in IPC's Case Against KCPL ....................... 1247
Findings of Fact in IPC's and KCPL's Case Against Iowa-Illinois ... 1254
Control of Peoples By Railways (Maine) and Power .............. 1254
Liquidation and Dissolution of Power .......................... 1256
Liquidation and Dissolution of Railways (Delaware) ............ 1257
KCPL's Acquisition of Peoples' Assets ......................... 1259
Agency Relationship Between KCPL and Peoples .................. 1261
Liquidation of Continental in 1949 ............................ 1262
CONCLUSIONS OF LAW ................................................... 1262
General Conclusions of Law ........................................ 1262
Conclusions of Law Re: IPC's CERCLA Claims Against KCPL ........... 1264
Contract Language ............................................. 1265
Extrinsic Evidence ............................................ 1271
Conclusions of Law Re: IPC's State Law Claims ..................... 1273
Conclusions of Law Re: Liability of Iowa-Illinois ................. 1274
Iowa-Illinois as Successor to Railways (Delaware) ............. 1275
Continuation Theory ....................................... 1276
Express/Implied Assumption of Liability ................... 1278
De Facto Consolidation or Merger .......................... 1278
Piercing Peoples' Corporate Veil .............................. 1279
Traditional Veil Piercing & Owner Liability ............... 1279
Control & Operator Liability .............................. 1280
KCPL's Status as Corporate Successor or Operator .............. 1281
CONCLUSION ........................................................... 1281
ORDER ................................................................ 1282
APPENDIX A: Chart of Successorship Theories
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
This cause having come on for trial, the court, having heard and considered the evidence including the testimony of witnesses and the presentation of exhibits, and having heard and considered arguments of counsel, and being otherwise fully advised, now makes and enters herein the following Findings of Fact and Conclusions of Law. To summarize the outcome of the Court's Findings of Fact and Conclusions of Law, the Court has ruled in favor of Interstate Power Company on its CERCLA claims against Kansas City Power & Light Company; ruled in favor of Interstate Power Company on its state law contribution claim (Count VII) against Kansas City Power & Light Company; ruled against Interstate Power Company on all of its other state law claims against Kansas City Power & Light Company; and ruled against Interstate Power Company and Kansas City Power & Light Company on their claims against Iowa-Illinois Gas & Electric Company.
Before setting out its Findings of Fact and Conclusions of Law, the Court draws the readers attention to several abbreviations that are used frequently herein.1 Readers may also find it helpful to first examine APPENDIX A, which sets out the theories of corporate succession discussed herein.
1. This case involves a parcel of real property located at Delaware Avenue and Fifth Street, S.E., and abutting a waterway known as Willow Creek, in Mason City, Section 10 of Twp. 96 N., Range 20 W., Cerro Gordo County, Iowa (hereinafter referred to as the "Site").
2. From about 1904 to 1952, a coal gasification plant, also referred to as a manufactured gas plant, existed on a portion of the Site. (IPC Exs. 2, 3, 11, 15, 21-27, 63-69, 73, 80-82; KCPL Ex. 50.)
3. From approximately 1904 until 1931, and then intermittently thereafter until 1948 at the latest, People's Gas & Electric (hereinafter "People's (Mason City)") operated the manufactured gas plant at the Site. (IPC Exs. 2, 3, 4, 11, 15, 21-27, 63-69, 73, 80-82.)
4. A by-product of the coal gasification process utilized by that plant was coal tar or water gas tar. (Testimony of Michael Chase, Tr. 44; Scott Harkins, Tr. 14-33; KCPL Ex. 284.)
5. During the operation of the manufactured gas plant at the Site, coal tar was generated and stored at the site. (Testimony of Michael Chase, Tr. 7-10, 21-24.)
6. Constituent hazardous substances derivative from the coal tar generated and stored at the Site have also been found at the Site. (Testimony of Michael Chase, Tr. 8-9, 12; IPC Exs. 225, 447.)
7. From 1901 until October 1, 1906, the corporate owner-operator of the Site was Brice Gas & Electric Company, owned by Mr. W.E. Brice; from October 1, 1906 until April 1, 1913, the corporate owner-operator of the Site was Peoples Gas & Electric Company (hereinafter referred to as "Peoples"), then owned by Mr. W.E. Brice. (IPC Exs. 1-4.)
8. In 1912 or 1913, Peoples was acquired by United Light & Railways Company, a Maine corporation with its principal offices in Grand Rapids, Michigan (said corporation hereinafter referred to as Railways (Maine)). (IPC Exs. 7, 8, 10.)
9. In 1923 or 1924, United Light & Power Company (Hereinafter referred to as "Power"), a Maryland corporation, was incorporated. (KCPL Ex. 702, Response of Iowa-Illinois to KCPL Request to Admit No. 3.)
10. On October 2, 1924, an article in The Mason City Daily Globe Gazette, "Mason City Concern Part of Gigantic Consolidation of Electrical Companies," announced that Peoples, along with other utility companies, would be consolidated with The United Light and Power Company. (IPC Ex. 16.)
11. In 1923, Power acquired all of Railways' (Maine) assets, which included Peoples, and assumed all of its liabilities, and Railways (Maine) was then dissolved. (IPC Ex. 588-B.)
12. In April 1932, Power sold all of Peoples' stock to Power & Light Securities Company, a member of the United Light & Power holding company family, in exchange for $4,393,750. (IPC Exs. 54, 55.)
13. On or about April 4, 1932, KCPL, also a member of the United Light & Power holding company family, agreed with Power & Light Securities Company to purchase the assets of Peoples in exchange for $4,393,750 and the assumption of Peoples' liabilities. (KCPL Ex. 702, Response of Iowa-Illinois to KCPL Requests to Admit Nos. 7-11; IPC Exs. 29-34.)
14. On or about April 11, 1932, KCPL purchased the assets of Peoples for $4,393,750 and the assumption of Peoples' liabilities. (KCPL Ex. 15; KCPL Ex. 702, Response of Iowa-Illinois to KCPL Requests to Admit Nos. 7-11, 13; IPC Exs. 29-31, 33, 34, 48, 75.)
15. In October of 1932, following KCPL's purchase of Peoples' assets, KCPL became the owner of one hundred percent of Peoples' stock. (IPC Ex. 43(b), 44; KCPL Ex. 1, p. 2; Iowa-Illinois Ex. 7.)
16. After KCPL's purchase of Peoples' assets in April 1932, Peoples continued to operate and manage the Site, and operate the gas manufacturing plant thereon, as KCPL's agent under an agency agreement, for which Peoples was to receive $100.00 per year, and said operation continued under the name of Peoples' Gas & Electric Company. (Iowa-Illinois Ex. 1; IPC Ex. 75.)
17. Following KCPL's purchase of Peoples in April 1932, the manufactured gas plant on the Site was operated on an experimental basis in 1933 producing water gas, some of which was for domestic use, and some water gas was manufactured at the Site in 1941. (IPC Exs. 65, 67.)
18. Peoples, as KCPL's agent, continued to manage the Site from 1932 to 1950 when the agency agreement between Peoples and KCPL was terminated. (IPC Ex. 75.)
19. The $100.00 annual fee due Peoples under its agency agreement of April 1, 1932 with KCPL may not have been paid regularly, and was not paid at all in the later years of the life of the agency agreement. (KCPL Ex. 15, p. 1.)
20. The manufactured gas plant and gas holder at the Site, except for certain underground basins and cisterns that were buried and concealed from sight,...
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