Textileather Corp. v. Gencorp. Inc
| Decision Date | 05 May 2010 |
| Docket Number | Case No. 3:08 CV 171. |
| Parties | TEXTILEATHER CORPORATION, Plaintiff,v.GENCORP INC., Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
Louis E. Tosi, Joseph S. Simpson, Shumaker, Loop & Kendrick, Toledo, OH, Michael J. O'Callaghan, Shumaker, Loop & Kendrick, Columbus, OH, for Plaintiff.
Robert S. Walker, Matthew P. Silversten, Jones Day, Cleveland, OH, for Defendant.
Plaintiff Textileather Corporation (“Textileather”) filed this lawsuit seeking to recover from Defendant GenCorp Inc. (“GenCorp”) expenses incurred in attempting to close hazardous waste units at a manufacturing facility in Toledo, Ohio (Doc. No. 1, ¶¶ 23-25). After this Court dismissed two claims from the Complaint (Doc. No. 19), three claims remain alleging breach of contract and seeking relief under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”).
This matter is before the Court on cross-Motions for Summary Judgment (Doc. Nos. 72 & 75). Both parties filed oppositions (Doc. Nos. 85 & 86), and the Court held a hearing on March 12, 2010 (Doc. No. 97). For the following reasons, GenCorp's Motion is granted, and Textileather's Motion is denied.
The underlying facts of this case are not in dispute, and both parties agree the case is appropriate for summary judgment (Hearing Transcript (“TR”) pp. 27-29). From the mid-1950s to 1990, GenCorp or related entities owned a vinyl manufacturing facility on Twining Road in Toledo (“Facility”). In 1989 the Facility's employees established the Toledo Buy-Out Committee to negotiate the purchase of the Facility from GenCorp. The Committee created a new company, Textileather, to purchase the Facility. The parties signed an Asset Purchase Agreement (“APA”) on May 30, 1990, and Textileather became the owner of the Facility on June 4, 1990 when the deal closed (“Closing”).
The environmental condition of the Facility was an issue during the buy-out negotiations. Textileather and GenCorp included detailed provisions in the APA to allocate environmental liabilities. GenCorp agreed that it would retain specifically designated environmental liabilities for certain identified chemicals and locations, and also would defend and indemnify Textileather for claims involving retained liabilities. Textileather assumed all business-related environmental liabilities not retained by GenCorp.
Much of the environmental concern arose from GenCorp's operation of hazardous waste management units (“RCRA units”) at the Facility. These RCRA units reclaimed solvent waste. Under the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), GenCorp was obligated to obtain RCRA Part A and Part B permits to operate the RCRA units. As of the Closing, GenCorp had applied for but not yet received a RCRA Part B permit. In the APA, GenCorp agreed to pay, subject to a limit of $250,000, for those activities necessary to complete the process of obtaining the Part B permit. After the Closing, Textileather continued to pursue the Part B permit and to operate the RCRA units. But in December 1990, Textileather decided to shut down the units.
This decision to stop operating the RCRA units triggered a regulatory obligation to submit a closure plan to be approved by the Ohio Environmental Protection Agency (“OEPA”). OEPA refused to approve Textileather's plan, and required Textileather to “submit a modified closure plan addressing the deficiencies of its previously submitted plan.” Textileather Corp. v. Korleski, 2007 WL 2306968, *3 (Ohio Ct.App.2007). Over the next ten years, Textileather and the OEPA negotiated a revised plan, but were unable to agree. Finally, in November 2001, OEPA approved a closure plan, but Textileather disagreed with many aspects of the plan and appealed it to the Environmental Review Appeals Commission, and then to the Ohio Tenth District Court of Appeals, which affirmed in part and reversed in part. The court of appeals remanded the matter to the OEPA with instructions to approve yet another plan consistent with the court's holdings. OEPA has yet to approve a new closure plan.
Textileather incurred costs during its protracted negotiations and litigation with the OEPA.1 Textileather filed this suit against GenCorp seeking to recover, under both the APA's indemnity provisions and costs incurred in attempting to fulfill its regulatory obligation to close the RCRA units.
Pursuant to Federal Civil Rule 56(c), summary judgment is appropriate where there is “no genuine issue as to any material fact” and “the moving party is entitled to judgment as a matter of law.” Id. When considering a motion for summary judgment, the court must draw all inferences from the record in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The court is not permitted to weigh the evidence or determine the truth of any matter in dispute; rather, the court determines only whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)
The summary judgment standard does not change simply because the parties present cross-motions. Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991). The fact that both parties move for summary judgment does not mean the court must grant judgment as a matter of law for one side or the other; rather, the “court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Id. As outlined above, the material facts are not in dispute in the instant case, making it well suited for summary judgment. See Havensure, LLC v. Prudential Ins. Co. of Am., 595 F.3d 312, 315 (6th Cir.2010); Federal Civil Rule 56(c)(2).
The APA is governed by Ohio law (APA, Section 11.3). Construction and interpretation of a written contract are questions of law. Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (1996). “The purpose of contract construction is to discover and effectuate the intent of the parties,” and “the intent of the parties is presumed to reside in the language they chose to use in their agreement.” Id. Extrinsic evidence is admissible to ascertain intent only when the contract terms are unclear or ambiguous. Id. at 314, 667 N.E.2d 949. The court reads the contract as a whole, and gathers the intent of each party from a consideration of the whole. Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Authority, 78 Ohio St.3d 353, 361, 678 N.E.2d 519 (1997).
GenCorp correctly argues that, under the plain language of the APA, it did not retain the liabilities at issue in this case (TR 12-14). The contract language is clear and unambiguous. Therefore, interpretation of the contract terms is a question of law, and extrinsic evidence is unnecessary. See Graham, 76 Ohio St.3d at 313, 667 N.E.2d 949; Kellie Auto Sales, Inc. v. Rahbars & Ritters Enters., LLC, 172 Ohio App.3d 675, 682-83, 876 N.E.2d 1014 (2007) ( ).
The specific issue is whether GenCorp retained liability for Textileather's costs related to closing the RCRA units entitling Textileather to indemnification. The APA addresses this issue. Section 9.1 of the APA, labeled “Environmental Liabilities,” describes which party retains particular liabilities.
Specifically, Section 9.1.1 2 describes those environmental liabilities retained by GenCorp. It states in part: “[GenCorp] will retain responsibility for all liabilities, if any, to third persons in respect of the substances, conditions and other matters which are included on the Chemicals List in Section 9.1.6, ... whenever such liabilities may arise, and by whatever third persons may assert such liabilities.” Section 9.1.1 then describes examples of retained liabilities covered by this language.
Section 9.1.2 further lists specific liabilities retained by GenCorp, only one which is relevant to the current dispute. That one is found in Section 9.1.2(c) and states in part: “[s]ubject to the limit of $250,000, Seller will pay for the costs of performing those activities which are necessary to obtain the Part B RCRA permit described in Seller's prospectus.”
Section 9.1.3 states that Textileather “will assume [GenCorp's] liabilities in respect of any substances or environmental conditions relating to the Business except those retained by [GenCorp] as provided in Sections 9.1.1 or 9.1.2.”
Section 9.1.4 3 sets forth the circumstances under which GenCorp is to defend and indemnify Textileather. GenCorp's indemnification responsibility is limited to liabilities retained by GenCorp in Sections 9.1.1 and 9.1.2. Indemnification therefore turns on whether GenCorp retained a specific liability under Sections 9.1.1 and 9.1.2.
Textileather seeks to recover costs incurred in attempting to fulfill its regulatory obligation to close the RCRA units. Once Textileather decided to stop operating the RCRA units, Textileather was required to obtain OEPA approval. See Ohio Admin. Code § 3745-66-13.
Whether the OEPA “administrative action” related to the closure plan falls within the APA requirements for indemnification depends on whether it is a “claim or action” under Section 9.1.4. The APA does not define...
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