US v. Hardy

• Decision Date: 13 February 1996
• Docket Number: Civ. A. No. 3:90CV-695-J,3:90CV-792-J.
• Citation: 916 F. Supp. 1385
• Parties: UNITED STATES of America, Plaintiff, v. Ben HARDY, et al., Defendants.
• Court: U.S. District Court — Western District of Kentucky

916 F. Supp. 1385

UNITED STATES of America, Plaintiff, v. Ben HARDY, et al., Defendants.

Civ. A. Nos. 3:90CV-695-J, 3:90CV-792-J.

United States District Court, W.D. Kentucky, Louisville Division.

February 13, 1996.

COPYRIGHT MATERIAL OMITTED

Anna C. Thode, James R. MacAyeal, Environmental Enforcement Section, U.S. Department of Justice, Washington, D.C., Richard A. Dennis, Regina S. Edwards, Asst. U.S. Attys. United States Attorney, Louisville, KY, for U.S.

Mark Feather, David Langdon, Brown Todd & Heyburn, Louisville, KY, for Ben Hardy, The Hofgesang Foundation, Inc., J.H. Realty, Inc., Liquid Transporters, Inc. and Valley Sanitation, Inc.

Lloyd R. Cress, Carolyn M. Brown, Danny C. Reeves, Marcus P. McGraw, Greenebaum Doll & McDonald, Lexington, KY, for American Synthetic Rubber Co., Atlantic Richfield Co. (ARCO) and Industrial Disposal Co.

Jane I. Tudor, Greenebaum Doll & McDonald, Louisville, KY, for Ashland Chemical Co.

Thomas F. Harrison, Day Berry & Howard, Hartford, CT, for B.F. Goodrich Co. and The Olympic Homecare Products Co.

Bryan G. Tabler, Joan M. Heinz, Marcie R. Horowitz, Barnes & Thornburg, Indianapolis, IN, for Boone Box Co.

George L. Seay, Jr., Wyatt Tarrant & Combs, Frankfort, KY, for Courier Journal & Louisville Times, Reynolds Metals Co., Southern Gravure Service, Inc. and United Catalysts, Inc.

Victor Baltzell, Miller Mosley Clare & Townes, Louisville, KY, for George W. Whitesides Co.

Donald L. Cox, Scott R. Cox, Lynch, Cox, Gilman & Mahan, Louisville, KY, for Hoechst Celanese Corp. and Kewanee Industries, Inc.

Wayne J. Carroll, McKenzie & Peden, Louisville, KY, for Kurfees Coatings, Inc.

Louis H. Clark, Liberty Plastics & Metals Co., Louisville, KY, for Liberty Plastics & Metals Co.

Thomas T. Terp, Charles H. Pangburn, Taft, Stettinius & Hollister, Cincinnati, Ohio, Robert B. Craig, Taft, Stettinius & Hollister, Covington, KY, for Mobil Oil Corp.

Louis E. Tosi, Douglas G. Haynam, Peter J. McCabe, Suller & Henry, Toledo, Ohio, for Owens-Illinois, Inc.

Ellen S. Friedell, Senior Counsel, Rohm & Haas Co., Philadelphia, PA, for Rohm and Haas Co. David S. Waskey, Day Smith Walton & Durham, Louisville, KY, for Standard Gravure Corp.

Richard M. Sullivan, Kenneth A. Bohnert, Edward F. Busch, Conliffe Sandmann & Sullivan, Louisville, KY, Brett D. Heinrich, Waste Management of Kentucky, Inc., Oak Brook, Illinois, for Waste Management of Kentucky, Inc.

John R. Cromer, Kenneth W. Maher, David E. Dearing, Cromer, Eaglesfield & Maher, Indianapolis, IN, for Dow Corning Corporation.

Edgar A. Zingman, H. Carl Horneman, Wyatt Tarrant & Combs, Louisville, KY, Vanessa M. Berge, David A. Smart, Wyatt Tarrant & Combs, Lexington, KY, for Ford Motor Company.

MEMORANDUM OPINION

JOHNSTONE, Senior District Judge.

Waste Management moved to alter, amend, or vacate the court's February 21, 1995 Findings of Fact and Conclusions of Law. (Docket Nos. 308 & 313). In the February 1995 opinion, the court concluded that an express indemnity agreement existed between Dow Corning and Tri-City Industrial Services.¹ The court further held that the indemnity agreement covered both liquid and solid waste, continued until April 1968, and encompassed CERCLA liability. The court then determined that Dow Corning could recover the following amounts from Waste Management: (1) the amount that Dow Corning paid to the United States to resolve its CERCLA liability, $321,000; (2) costs and legal fees in the amount of $138,411.99; and (3) prejudgment interest on the amount of $321,000.

I. January 27, 1964 Indemnity Document

First, Waste Management argued that the January 27, 1964 Indemnity Document was unenforceable because: (1) it was not a consistent term nor a mere "memorial" of the contract between the parties; and (2) it modified and expanded the scope of an already existing express indemnity agreement without additional consideration.² See Pool v. First National Bank of Princeton, 287 Ky. 684, 155 S.W.2d 4 (1941). Waste Management contended that the court should reconsider its holding because the initial documents, i.e. the letter of December 20, 1963 and Purchase Order 150-N, formed a completely integrated contract which did not omit an indemnity agreement. Waste Management maintained that they contained an indemnity agreement which essentially provided: Tri-City would hold Dow Corning free and harmless from any liability resulting from any damage due to Tri-City's hauling or disposing of these items.

Waste Management compared the language of the initial documents with the January 27, 1964 document to demonstrate that the obligations of Waste Management under the January 27 document were much more expansive. The company then argued that the subsequent January 27, 1964 document was neither a consistent term nor a "memorial" of the already existing contract because (1) there was already an indemnity agreement and (2) the January 27, 1964 document greatly increased Tri-City's responsibilities under the contract.

In its Conclusions of Law, the court held: Restatement (Second) of Contract § 216 (1981) states:

(1) Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated.

(2) An agreement is not completely integrated if the writing omits a consistent additional agreed term which is (a) agreed to for separate consideration, or

(b) such a term as in the circumstances might naturally be omitted from the writing.

Comment d to § 216 provides that "evidence of the consistent additional terms is admissible unless the court finds that the writing was intended as a complete and exclusive statement of the terms of the agreement." Restatement (Second) of Contract § 216 cmt. d (1981). In Dohrman v. Sullivan, 310 Ky. 463, 220 S.W.2d 973, 975 (Ky.1949), the court held that if "all the material terms which are to be incorporated into the contemplated future instrument have been agreed upon," it may be inferred that the instrument is "to be a mere memorial of the contract already final by the earlier mutual assent of the parties to those terms."

12. Here, the court finds that the letter of December 20, 1963 and Purchase Order 150-N did not form a completely integrated document.³ Further, the indemnity agreement may "naturally have been omitted from the writing." During the trial, Lee testified that after Benson signed Purchase Order 150-N, they had a contract, but they "were still awaiting the completion of the indemnity agreement." (Trial transcript p. 57.) Evidence of the "Indemnity" document is admissible as "a consistent additional term" and may be used to supplement the partially integrated contract.

The court agrees with Waste Management that the January 27, 1964 indemnity agreement expanded Tri-City's contractual obligations to Dow Corning. However, Waste Management failed to provide evidence demonstrating that the parties intended to exclude the January 27, 1964 indemnity agreement. Rather, the evidence shows that it was the parties' intent to include this indemnity agreement as part of the contract. During the trial, Lee testified that after Benson signed Purchase Order 150-N, they had a contract, but they "were still awaiting the completion of the indemnity agreement." (Trial transcript p. 57). In addition, during a 1969 deposition, Lee testified that he had communicated to Benson that he was concerned with the possibility of livestock becoming ill or being injured due to improper waste disposal. (Plaintiff's trial exhibit # 9, Headie Lee 1969 deposition, pp. 35-36). Further, Benson, in a 1971 deposition, testified that Dow Corning was concerned about "someone being hurt or damaged because of the type of material that they had." (Plaintiff's trial exhibit # 10, Palmer Benson 1971 deposition, pp. 5-6).

No additional consideration was needed because the initial documents did not form a completely integrated agreement. Thus, the January 27, 1964 indemnity agreement did not modify a completely integrated agreement. Rather, the indemnity agreement was admissible as "a consistent additional term." The court will not alter its previous opinion with respect to this issue.

II. CERCLA Liability

Next, Waste Management argued that Tri-City had no duty to indemnify Dow Corning for its CERCLA liability at Lee's Lane Landfill in Jefferson County, Kentucky. Relying on Blackstone Valley Electric Company v. Stone & Webster, Waste Management maintained that a court, in determining whether an indemnification agreement encompasses CERCLA liability, must consider:

whether any language dealt with CERCLA-type liabilities, whether the scope of the contractual language permitted an inference regarding assumption of future-arising liabilities, whether the agreement predated or post-dated CERCLA's enactment, whether clean up issues were addressed in the parties' negotiations, whether the parties knew of the presence of hazardous wastes on the site, and whether any separate consideration was paid for the release of liability.

Blackstone Valley Elec. Co. v. Stone & Webster, Inc., 867 F.Supp. 73, 78 (D.Mass.1994).

As evidenced in the record, the parties discussed possible damage to animals and property near the site. Both parties knew that some of Dow Corning's materials were hazardous and flammable. The January 27, 1964 agreement contained language that reflects the parties' negotiations and concerns:

Tri-City agrees to indemnify and save Dow Corning free and harmless from and against any and all loss, damage, injury, liability, and any claim or claims therefor, including claims for injury or death to any and all persons or property ... resulting directly or indirectly by the collection, transportation, and disposal by Tri-City.

Applying the Blackstone factors, the court finds that parties intended for the agreement to indemnify against CERCLA liability.

Waste Management also cites Steego Corporation v. Ravenal, 830 F.Supp. 42 (D.Mass.19...