US v. Hardy

• Decision Date: 21 February 1996
• Docket Number: Civil A. No. 90-695-L(J).
• Citation: 916 F. Supp. 1373
• Parties: UNITED STATES of America, Plaintiff, v. Ben HARDY, et al., Defendants.
• Court: U.S. District Court — Western District of Kentucky

916 F. Supp. 1373

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

Civil A. No. 90-695-L(J).

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

February 21, 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.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JOHNSTONE, Senior District Judge.

FINDINGS OF FACT

This is a dispute regarding an indemnity claim arising from the disposal of waste at the Lee's Lane Landfill in Elizabethtown, Kentucky. It began when the United States of America brought suit against numerous defendants, alleging that they violated section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9607(a). The United States sought reimbursement of costs incurred in response to the release or threatened release of hazardous substances from the Lee's Lane Landfill. Most of the claims between the United States and defendants were settled when the court approved a consent decree between the parties on August 4, 1993. Dow Corning agreed to pay the United States $321,000 to resolve its alleged liabilities.¹

This Consent Decree did not resolve a cross-claim of Dow Corning against Waste Management of Kentucky, Inc. Dow Corning contends that Waste Management, Tri-City Industrial Services' corporate successor, is contractually obligated to indemnify Dow Corning from all losses arising from the waste hauled out of the Elizabethtown plant.² The claim for these damages include: $321,000.00 which it paid to the United States to settle its CERCLA claim; $354,902.53 in attorney's fees and costs allegedly incurred in defending itself against the United States and Waste Management's cross-claim; and prejudgment interest on the above sums. Waste Management argues that it has no obligation to indemnify Dow Corning and is not responsible for Dow Corning's cost associated with the Lee's Lane site. Waste Management further maintains that even if an indemnity agreement existed, it only covered a short period of time and did not encompass CERCLA liability.

The contractual relationship between Dow Corning and Tri-City originated over thirty years ago. Since then, time has taken documents, purchase orders, and witnesses. To determine the contractual relationship between the parties, the court must piece together documents, purchase orders, and testimony from witnesses, some of whom are deceased. In late 1963, Headie Lee, Purchasing Agent and Traffic Manager of Dow Corning, met with Palmer Benson, Operations Manager of Tri-City, now deceased, to discuss disposal of Dow Corning's waste.³ Lee informed Benson that Dow Corning generated various kinds of waste, both liquid and solid.⁴ During the course of negotiations, Benson toured the Dow Corning plant in Elizabethtown and Lee viewed Tri-City's disposal operation at the Lee's Lane Landfill in Jefferson County.⁵ The Lee's Lane site was the only site that they visited.

During these discussions, Headie Lee was concerned with the proper disposal of all waste. At trial, Lee testified that he was concerned with whether "the waste materials would be disposed of in an acceptable manner" and whether Tri-City would "supply us Dow Corning with an indemnity agreement and certificates of insurance." (Trial Transcript p. 21.) In a 1969 deposition, Lee testified that Dow Corning was "primarily interested in the proper disposal of all waste" and was concerned about livestock becoming ill or being injured due to improper waste disposal. (Plaintiff's trial exhibit # 9, Headie Lee 1969 deposition, pp. 35-36.) Palmer Benson's statements were consistent with Lee's testimony. Benson, in a 1971 deposition, stated that Dow Corning was very 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.)

On December 20, 1963, Benson and Lee toured the Tri-City manufacturing facilities, where the Anchorpac system was manufactured.⁶ They also visited the Lee's Lane site. That same day, Benson wrote and signed a letter to Lee memorializing the discussions between the two. Dow Corning introduced the letter as plaintiff's exhibit # 1. The letter states:

This will conform our conversation today concerning the ANCHORPAC SYSTEM and the disposal of your liquid by-product.

We can install the P-1-28 ANCHORPAC unit at your dock five working days after receipt of your order for a 90 day trial period. The equipment will consist of the ANCHORPAC unit, the standard hopper, dock ramp and the 44 yard closed container. The total purchase price for this equipment is $10,250.00. The monthly lease price will be $332.00. At the end of the 90 day trial period, if the equipment is acceptable and the equipment is purchased, the $996.00 paid during the trial period would apply to the purchase price. If the equipment is leased the trail sic period would be applied to a 36 month lease. At the end of 36 months the equipment can be purchased for $512.50.

In disposing of the material from the ANCHORPAC, we would use the dump that you inspected today.⁷ This dump buries each load as it is dumped so that any product that is not destroyed in the ANCHORPAC would be destroyed and buried. If for some reason this does not prove satisfactory, we can dispose of the load at another dump where the material would be burned.

Due to the characteristics of the material, the container may have to be sprayed with oil or some coating so the load will dump clean. After a load or two, we will be able to determine what is required. We would haul these loads at $75.00 per load. The service would be on a call basis until we could set up a regular schedule and we would bring an empty container each time.

In checking with George Whiteside Company, I found that they reclaim lacquers and lacquer thinners. We are hauling these residues which vary in consistency. I believe this material would be comparable to your liquids. To date we have had no problem with this material.

We can supply a closed water tight 8 to 10 cubic yard container for your liquid. We can move this container a minimum of once a month at $75.00 per load. We would supply and maintain this container. This material would also be dumped at the dump you visited today. This is the same dump that we are disposing of the Whiteside material. It will be dumped in the same hole and will be covered. Until you decide on this service, we would arrange to dispose of the barrelled material.

With regard to your liability concerning either product destruction or the liquid material, we assume complete responsibility when the container is loaded into our truck. In other words, we would hold you free and harmless from any liability resulting from any damage due to our hauling or disposing of these items. We carry 100,000, 300,000 and 50,000 public liability insurance and we will supply a certificate of insurance.

Thank you for this opportunity to quote.

(Plaintiff's trial exhibit # 1.) (Emphasis added.)

Lee testified at trial that he chose not to accept "the liquid-type container for the disposal of waste chemicals, liquids and semi-liquids," and chose not to "have our material burned at a dump." Other than that, Lee testified that Dow Corning "accepted" the entire letter, which included using the Lee's Lane site for disposal of waste and the indemnity agreement. (Trial transcript p. 24.)

On January 2, 1964, Dow Corning issued Purchase Order 150-N to Tri-City. The parties were unable to locate a...