Southdown v. Allen
| Citation | 119 F.Supp.2d 1223 |
| Decision Date | 07 November 2000 |
| Docket Number | No. CV-96-J-3300-S.,CV-96-J-3300-S. |
| Parties | In the Matter of SOUTHDOWN, et al., v. Leslie S. ALLEN, et al. |
| Court | U.S. District Court — Northern District of Alabama |
Richard E Davis, Cabaniss Johnston Gardner Dumas & O'Neal, Birmingham, AL, Sandy G Robinson, Cabaniss Johnston Gardner Dumas & O'Neal, Mobile, AL, Christopher W Mahoney, Nancy N Young, Stephen M Arner, Beveridge & Diamond PC, Washington, DC, John E Acres, Southeastern Legal Group, Birmingham, AL, for Southdown, Inc., plaintiff.
Richard E Davis, Cabaniss Johnston Gardner Dumas & O'Neal, Birmingham, AL, Sandy G Robinson, Cabaniss Johnston Gardner Dumas & O'Neal, Mobile, AL, Christopher W Mahoney, Nancy N Young, Stephen M Arner, Beveridge & Diamond PC, Washington, DC, for Southdown Environmental Treatment Systems, Inc., Southdown Environmental LLC, plaintiffs.
Charles R Driggars, Kaye K Houser, James S Williams, Sirote and Permutt PC, Birmingham, AL, for Leslie S Allen, defendant.
Charles E Merrill, Amy E Randles, Husch & Eppenberger LLC, St Louis, MO, for Coltec Industries, Inc., defendant.
Marshall Timberlake, Gregory C Cook, Yvonne N Beshany, Balch & Bingham LLP, Birmingham, AL, John H Grady, Jones Day Reavis & Pogue, Atlanta, GA, Brent A Fewell, Jones Day Reavis & Pogue, Pittsburgh, PA, for Customer Defendants, defendant.
Pending before the court are third party defendants, Nortru, Inc.(Nortru) and Allworth, Inc.'s (Allworth) motion for partial summary judgment (doc. 752) and plaintiffs' cross-motion for partial summary judgment (doc. 763).1 Both Nortru and plaintiffs have filed briefs in support of and in opposition to their respective motions. The Customer defendants listed below2 (Customer defendants) have filed a brief in support of Nortru's motion for partial summary judgment as has defendant Allen. Additionally, customer defendants Silgan Containers Manufacturing Corporation ("Silgan"), Carboline Company, Sanderson Plumbing Products, Inc., Master Lock Company, and Kimoto Tech, Inc., have joined in the brief filed by Listed Customer defendants in support of Nortru's motion.
Additionally, by order of August 24, 2000 (doc. 767) the court allowed the parties to file briefs regarding two issues raised by the Customer defendants in their arguments supporting Nortru's motion, namely that "Southdown seeks reimbursement of the clean up costs from the Customer defendants, who in turn are entitled to indemnification from Allworth who is thus indemnified by Southdown" and that "plaintiff failed to conduct an environmental study of the property at the time of its purchase of the property ... [potentially barring] any claim by plaintiff that it did not contaminate the property for lack of evidence." All parties have responded to the Order of August 24, 2000.
For the reasons stated below, the court does find that Nortru's motion for partial summary judgment is due to be GRANTED, and the Southdown plaintiffs' motion for partial summary judgment is due to be DENIED.
The court finds the following to be the undisputed facts in this case:
1. From September 1990 until April 1995, the Southdown plaintiffs owned all of the issued and outstanding shares of common stock of Allworth.3 Southdown plaintiffs' Seconded Amended Complaint, ¶¶ 56, 69.
2. Allworth operated and continues to operate a hazardous waste recycling facility located at the Site, whose address is 500 Medco Road, Birmingham, Alabama. Id. at ¶ 49.
3. In December, 1994, Law Engineering, Inc., an environmental consultant retained by the Southdown plaintiffs, provided the Southdown plaintiffs with the results of soil samples taken at Site. The results indicated the presence of several volatile and semi-volatile organic compounds in the soil at the Site, including acetone, 2-butanone, 1,1-dichloroethane, 1,1-dichloroethene, cis-1,2-dichloroethene, ethylbenzene, methylene chloride, 4-methyl-2-pentanone, tetrachloroethene, toluene, 1,1,1-trichloroethane, trichloroethene, xylenes, benzo[b]fluoranthane, bis [2-ethylhexy] phthalate, butyl benzyl phthalate, chysene and pyrene, as well as certain metals. Law Engineering, Inc. provided these results to the Southdown plaintiffs no earlier than December 22, 1994. Id. at ¶ 64.
4. In early 1995, Nortru commenced negotiations with the Southdown plaintiffs concerning the purchase of the stock of Allworth. Id. at ¶ 65.
5. Nortru hired Environmental and Safety Designs, Inc. ("Ensafe") to perform a limited Environmental Site Assessment (ESA) at the Site to determine soil and groundwater quality. Ensafe took soil samples at nine locations and drilled groundwater monitoring wells at three of these locations. Id. at ¶¶ 65-66.
6. In April 1995, Ensafe provided Nortru with a written report documenting the results of its ESA. Ensafe documented that the Site was contaminated with hazardous substances. The report noted, inter alia, the presence of fifteen volatile organic compounds in the subsurface soils at the Site, including acetone, methyl ethyl ketone, bromodichloromethane, 1,1-dichloroethane, 1,1-dichloroethene, 1,2-dichloroethene (total), ethyl benzene, methyl isobutyl ketone, methylene chloride, perchloroethylene, toluene, 1,1,1-trichloroethane, 1,1,2-trichlorothane, trichloroethene, and xylenes, as well as the semi-volatile organic compounds m.p.-methylphenol and bis 2-ethylexylphthalate, and certain metals. The report also found that eleven volatile organic compounds were present in the groundwater at the Site, including acetone, 1,2-dichloroethane, 1,1-dichloroethene, 1,2-dichloroethane (total), methylene chloride, perchloroethylene, toluene, 1,1,1-trichloroethane, trichloroethene, vinyl chloride, and xylenes. Of these eleven volatile organic compounds in the groundwater, nine were present in concentrations above U.S. EPA's maximum contaminant levels for drinking water. Id. at ¶ 67.4
7. On April 28, 1995, Nortru and the Southdown plaintiffs entered into a Stock Purchase Agreement, pursuant to which, among other things, the Southdown plaintiffs conveyed the shares of stock of Allworth to Nortru. Id. at ¶ 69.
8. On April 29, 1995, Nortru and the Southdown plaintiffs entered a Remediation Agreement as an express condition precedent to Nortru's entry into the Stock Purchase Agreement. Stock Purchase Agreement, Art. 6.1(q).
9. Southdown, Inc. guaranteed the performance of the Southdown plaintiffs' obligations pursuant to the Stock Purchase Agreement and Remediation Agreement. Id., Art. 6.1(p).
10. Article 2.1 of the Remediation Agreement provides:
SETS shall, at its sole expense (which expense shall include, but is not limited to, all costs relating to preparation of the Plan or Plans, responding to and compliance with any Order, the cost of all contractors to perform the Work or the requirements of the Plan or Plans or any Order and any costs assessed by any of the Agencies for oversight of the Work), remediate (i) all known Contamination located on the Real Property or on contiguous property where the source of Contamination is on or originated from the Real Property, and (ii) all previously unknown Contamination discovered on the Real Property, or on contiguous property not owned by Rho-Chem or Allworth where the source of Contamination is on or originated from the Real Property, during the course of remediating known Contamination, each to the extent required by the Agencies.5
11. Article 3.1 of the Remediation Agreement further provides:
Indemnity by SETS. To the fullest extent permitted by law, SETS agrees to indemnify, defend and hold harmless Purchaser and its agents and employees, from and against any and all liabilities, costs, expenses (including attorneys' fees), claims, demands, judgments, losses or damages on account of injury, disease or death to any person, including SETS' and Purchasers' employees, or damage to property, or any type of loss or damage whatsoever arising out of or in connection with the performance or breach of any obligation hereunder by SETS and its employees, contractors, suppliers, and agents, except to the extent that SETS [sic, should be Purchaser] contributed to the claim, loss, damage, injury or liability.
12. Article 11.2 of the Stock Purchase Agreement states as follows:
Indemnification of the Purchaser. The Sellers shall defend, indemnify and hold the Companies [Allworth among others] and the Purchaser [Nortru] and their respective affiliates harmless from and against any and all damages suffered by the Companies or the Purchaser or any affiliate thereof as a result of, caused by, arising out of, or in any way relating to ... (v) without limitation as to time, the Environmental Claims of which sellers are aware listed on Schedule 11.2.
Schedule 11.2 contains a section entitled "Allworth Soil and Groundwater Remediation," which discloses the existence of soil and groundwater contamination at the Site. Article 11.1 of the Stock Purchase Agreement defines "Damages" as "any and all damages, losses, deficiencies, costs, expenses, obligations, fines, expenditures, claims and liabilities, including reasonable counsel fees and reasonable expenses of investigation."
13. Article 13.6(c) of the Stock Purchase Agreement provides: "In the event of a dispute between the parties in connection with this Agreement, the party against which a judicial or arbitral award is made shall reimburse the prevailing party for all reasonable fees and expenses incurred and paid to said counsel for such service."
14. Article XII NONCOMPETITION COVENANT of the Stock Purchase Agreement provides: "Sellers understand and acknowledge that a portion of the value of the Shares, ... is attributable to business relationships between the Companies and key customers of the Companies ...."
15. On or about December 20, 1996, the Southdown plaintiffs filed a complaint in this court against defendant Allen, the individual who sold the Allworth...
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