144 F. Supp. 3d 1019
N.D. Ind.2015Background
- In 2012 the Gary/Chicago Airport Authority acquired two parcels from Trust A-878 and Anthony Zaleski and sued them in 2015 for contamination, seeking damages and declaratory relief.
- Defendants (the sellers/third-party plaintiffs) filed a third-party complaint seeking contribution and declaratory relief from OXY USA, Inc., alleging Cities Service (OXY’s predecessor) owned and operated the property and pipeline easements before the Trust acquired the land in 1976.
- OXY moved to dismiss under Rule 12(b)(6), attaching a purported June 27, 1975 sale agreement between Cities Service and Lake Material Service that included a broad assumption-of-liabilities clause (including environmental liabilities).
- Defendants argued the agreement (1) does not bind them because they were not parties or in privity and (2) it’s unclear the agreement covers the same parcel described in the third-party complaint.
- The court considered whether it could examine: (a) the Airport Authority’s original complaint (which defendants do not adopt as true), and (b) the 1975 written agreement attached to OXY’s motion — concluding the Airport Authority complaint should not be treated as incorporated, but the 1975 agreement may be considered because the third-party claim depends on the prior transfer.
- The court concluded the 1975 agreement’s assumption clause runs with the land, binds subsequent grantees in privity of estate, and thus bars the defendants’ contribution claim against OXY; the third-party complaint was dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court may treat Airport Authority’s original complaint as incorporated into the third-party complaint | OXY: the Airport Authority’s allegations underlie and are incorporated into the third-party complaint, so they should be taken as true | Defendants: they do not rely on nor admit those allegations and have denied many of them | Court: not incorporated; defendants did not rely on those allegations, and some were expressly denied |
| Whether court may consider the 1975 Cities Service–Lake Material agreement on a 12(b)(6) motion | OXY: agreement is central to defendants’ claim and may be submitted without converting to summary judgment | Defendants: considering the agreement converts the motion into summary judgment or is improper because it wasn’t attached to their complaint | Court: may consider the agreement; document is referenced and central to the claim and thus properly considered on 12(b)(6) |
| Whether the agreement’s assumption-of-liability clause binds the current defendants | OXY: clause unambiguously transfers present and future environmental liabilities and was intended to run with the land | Defendants: they were not parties/privity and thus not bound; agreement lacks sufficient legal description to tie to the property | Court: defendants are in privity of estate (vertical/horizontal); clause touches and concerns the land and reflects intent to run with the land; therefore it binds subsequent owners |
| Whether the agreement and the third-party complaint refer to the same parcel | OXY: geographic descriptions align; dates are consistent with nominee sale to Trust | Defendants: agreement lacks the full legal description, so identity of land is indeterminable without parol evidence | Court: descriptions are consistent and sufficiently specific to conclude they describe the same property |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must permit reasonable inference of defendant’s liability)
- Williamson v. Curran, 714 F.3d 432 (documents attached to complaint considered when plaintiff relies on them)
- Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687 (defendant may submit a document referred to in complaint without converting a 12(b)(6) motion)
- Tierney v. Vahle, 304 F.3d 734 (consideration of incorporated documents outside breach claims)
- Columbia Club, Inc. v. American Fletcher Realty Corp., 720 N.E.2d 411 (Indiana law on covenants running with the land)
- Williams v. Indiana R.R. Co., 33 N.E.3d 1043 (tests for when affirmative covenants run with land under Indiana law)