Nunn v. Chemical Waste Management, Inc.
| Decision Date | 02 September 1988 |
| Docket Number | Nos. 85-1509,85-1570,s. 85-1509 |
| Citation | 856 F.2d 1464 |
| Court | U.S. Court of Appeals — Tenth Circuit |
| Parties | , 19 Envtl. L. Rep. 20,183 Paul B. NUNN, Gene Miles and John S. Hoover, Plaintiffs-Appellants, v. CHEMICAL WASTE MANAGEMENT, INC., a Delaware corporation, and Waste Management, Inc., a Delaware corporation, Defendants-Appellees, United States of America, Amicus Curiae. Paul B. NUNN, Gene Miles and John S. Hoover, Plaintiffs-Appellees, v. CHEMICAL WASTE MANAGEMENT, INC., a Delaware corporation, and Waste Management, Inc., a Delaware corporation, Defendants-Counterclaimants-Appellants, United States of America, Amicus Curiae. |
Thomas A. Wood, Wichita, Kan. (H.E. Jones, William R. Smith and David J. Morgan of Hershberger, Patterson, Jones & Roth, Wichita, Kan., with him, on the briefs), for plaintiffs/appellants.
Robert L. Driscoll of Stinson, Mag & Fizzell, Kansas City, Mo. (Catherine M. Hauber and Mary Ann Tyrrell of Stinson, Mag & Fizzell, Kansas City, Mo., Steve A. Leben of Stinson, Mag & Fizzell, Overland Park, Kan., and William Tinker of McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, Kan., with him, on the briefs), for defendants/appellees.
F. Henry Habicht, II, Asst. Atty. Gen., Martin W. Matzen and Blake A. Watson, Attys., Dept. of Justice, Washington, D.C., Francis S. Blake, Gen. Counsel, and Gail Cooper, Atty., E.P.A., Washington, D.C., of counsel, filed a brief on behalf of amicus curiae.
Before LOGAN, SETH and BARRETT, Circuit Judges.
This action for breach of contract was brought by Paul B. Nunn, Gene Miles and John S. Hoover, the former owners of a corporation named National Industrial Environmental Services, Inc. (NIES), against Chemical Waste Management, Inc. (Chemical Waste), the purchaser of the shares of the corporation, and Waste Management, Inc. (Waste Management), Chemical Waste's parent and sole shareholder. In their suit, the former owners alleged that Chemical Waste had breached its contractual duty of payment on a promissory note of $2,400,000.00 that it had executed in their favor in exchange (with some cash) for all the outstanding stock of NIES. The former owners also sought to hold Waste Management liable as guarantor for an accelerated payment of the note.
Chemical Waste and Waste Management counterclaimed against the former owners, stating causes of action for negligence, breach of warranty, and violations of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Sec. 9601 et seq.
After a bench trial, the trial court denied recovery on all of plaintiffs' causes of action and entered judgment on defendants' counterclaim for breach of warranty. As damages, the trial court awarded Chemical Waste and Waste Management $1,710,400.00 in lost profits and $6,964,942.17 for costs to remedy contamination through August 30, 1984. The trial court also conditionally awarded $2,000,000.00 in damages for future remediation costs. Both sides have appealed.
We considered the appeals previously and remanded the cases to the trial court because the issues could not be fully decided by consideration of either claim. We there held that the CERCLA issue was an essential element of the appeal, and it had not been decided by the trial court.
The facts are not in dispute. Chemical Waste owns and operated a nationwide network of industrial waste facilities. In 1979, officers of Chemical Waste initiated negotiations for the acquisition of NIES. NIES was an attractive takeover target because it owned a permitted industrial waste disposal facility near Wichita, Kansas. During negotiations on the terms of the corporate acquisition the attorneys for Chemical Waste and NIES exchanged three drafts of an acquisition agreement. In each draft, counsel for NIES requested and received changes in the contractual language, including amendments to the warranties being made by the former owners of NIES. The final acquisition agreement was executed between the former owners and Chemical Waste on May 14, 1980. As consideration for all the outstanding stock in NIES, Chemical Waste made a $500,000.00 cash payment to the former owners and gave its promissory note for $2,400,000.00 which was guaranteed by Waste Management.
The former owners of NIES made numerous warranties regarding NIES's industrial waste facility to Chemical Waste in the final acquisition agreement. The trial court found that the former owners warranted, inter alia:
The trial court further found that "[u]nder the [acquisition] Agreement, the warranties were deemed effective as of December 15, 1980," and that Chemical Waste "would not have bought NIES without the warranties that its site complied with all applicable laws."
To ameliorate the polluting of the leakage Chemical Waste and Waste Management undertook various remediation efforts all of which were either required or approved by the State of Kansas. As of the time of trial Kansas authorities had not permitted the Wichita facility to recommence operations. However, no direct request to reopen may have been made. Shortly after the Wichita facility was closed by KDHE, Chemical Waste notified the former owners that it was suspending payments on the promissory note.
The former owners contend on appeal that the trial court erred in granting judgment for the defendants on the breach of warranty counterclaim. The former owners urge that the trial court misconstrued the warranties contained in the acquisition agreement. Specifically, the former owners maintain that they did not warrant that the Wichita facility did not leak, that the facility's noncompliance with pertinent federal laws and regulations is irrelevant given the wording of the warranties, that they did not warrant facts about which they had no knowledge, and that the warranties contained in the acquisition agreement should be construed against the defendants since their attorney was primarily responsible for drafting the agreement.
At the outset it must be observed that "[t]he intention of the parties and the meaning of the contract are to be deduced from the instrument where its terms are plain and unambiguous." First National Bank & Trust Co. v. Lygrisse, 231 Kan. 595, 647 P.2d 1268, 1273 (quoting Martin v. Edwards, 219 Kan. 466, 548 P.2d 779, 785-86). In the absence of contractual ambiguity, a trial court's interpretation of the contract presents an issue of law which is reviewed de novo on appeal. See CMI Corp. v. Gurries, 674 F.2d 821, 825 (10th Cir.); Duffin v. Patrick, 212 Kan. 772, 512 P.2d 442, 447-48. In Teton Exploration Drilling v. Bokum Resources Corp., 818 F.2d 1521, 1526 (10th Cir.), we held that
Our review of the relevant contractual language leads us to conclude as a matter of law that the warranties made by the former owners are ambiguous insofar as the leakage issue and the applicability of federal laws and regulations are concerned. Accordingly, we review the trial court's resolution of these ambiguities by a clearly erroneous standard.
In Section 2.12 of the acquisition agreement, the former owners warranted that:
"[NIES] is not in default under any law or ordinance, or under any order of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency, or instrumentality wherever located; its operations are in compliance with all applicable laws, permits and ordinances and there are no claims, actions, suits or proceedings pending, or threatened, against or affecting the Company or any Shareholder, at law or in equity, or before or by any federal, state, municipal, or other governmental department, commission, board, bureau, agency or instrumentality, wherever located, which might result in any material adverse change in the financial condition or business of the Company or which would question the validity or propriety of this agreement or of any action taken or to be taken in accordance with or in connection with this agreement."
In Section 2.30 of the acquisition agreement, the former owners warranted that:
"[NIES], from the inception of operation at the [Wichita] Site, has been and is in compliance with the terms, conditions and requirements of all licenses, permits and authorizations it holds and the laws, ordinances and regulations pursuant to which such licenses, permits and authorizations were granted."
We are not persuaded by the former owners' contention that the foregoing warranties do not include within their scope a warranty against leakage at the Wichita waste facility. Although the warranties do not expressly mention leakage, we conclude that the trial court did not clearly err in interpreting these ambiguous contractual warranties to warrant against the leakage of toxic...
To continue reading
Request your trial
-
Rigby v. Clinical Reference Laboratory, Inc.
...Id. (quoting Fasse, 736 P.2d at 933). The existence of a contractual ambiguity is a question of law. Nunn v. Chemical Waste Management, Inc., 856 F.2d 1464, 1467 (10th Cir. 1988) (citations Under Kansas law, contracting parties are presumed to act for their own benefit; thus, an intent to b......
-
King v. Pa Consulting Group, Inc.
...resolution of its proper meaning is a question of fact "subject to review on a clearly erroneous standard." Nunn v. Chem. Waste Mgmt., Inc., 856 F.2d 1464, 1467 (10th Cir.1988). In this case, the district court squarely held that the § 12.2(c) waiver provision of the Agreement was ambiguous......
-
F.D.I.C. v. American Cas. Co. of Reading, Pa.
...This argument presents a question of contract interpretation which we review de novo under applicable law. Nunn v. Chemical Waste Management, Inc., 856 F.2d 1464, 1467 (10th Cir.1988). Under Oklahoma insurance law, a genuine ambiguity exists only when the policy contains doubtful language s......
-
Milk 'N' More, Inc. v. Beavert
...court's interpretation of [a] contract presents an issue of law which is reviewed de novo on appeal." Nunn v. Chemical Waste Management, Inc., 856 F.2d 1464, 1467 (10th Cir.1988). De novo review is appropriate because the district court's interpretation of the contract clause turned on "an ......