485 B.R. 310
Bankr. D. Del.2013Background
- Debtors LandSource and affiliates filed Chapter 11; Berco asserted an $800,000 claim for cleanup and taxes related to a leased oil/gas site.
- Plan provided for cure amount of $0; Berco objected that cure should be $800,000.
- Berco’s claim objected to as part of the Fifth Omnibus to claims; disputes centered on environmental cleanup costs and tax allocations.
- Court set discovery, mediation, and dispositive motion deadlines; cross-motions for summary judgment filed by Newhall and Berco.
- Court granted Newhall’s summary-judgment motion in part (no reimbursement for environmental cleanup costs under the Lease) and denied in part (tax reimbursement issues remain), overruling evidentiary objections.
- Final order granted in part the summary judgment and scheduled a hearing on remaining tax-claim issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Berco's environmental cleanup costs are reimbursable | Berco argues Newhall must reimburse under lease indemnity/contribution; Newhall misstates as-is condition. | Lease imposes Berco’s responsibility for cleanup and implementation; Newhall contends as-is/Disclosure defenses limit Berco. | Partially granted: cleanup costs reimbursement denied; indemnity not established. |
| Whether CERCLA applies to the Environmental Incident | CERCLA applies; cleanup costs fall within liability. | Petroleum/crude oil excluded from CERCLA hazardous substances; CERCLA not applicable here. | Denied: CERCLA does not apply to crude oil spills under the facts. |
| Whether Newhall must reimburse Berco from insurance | Insurance should cover cleanup costs as costs recoverable under policy. | Berco’s failure to obtain insurance shifts no obligation to Newhall; insurance not a basis to compel reimbursement. | Denied: no basis to reimburse from Newhall’s insurance. |
| Whether Lease Fund can be used to reimburse environmental costs | Lease Fund should reimburse Berco for cleanup. | Fund serves security/abandonment/restoration, not reimbursement of cleanup costs. | Granted: cannot reimburse from Lease Fund; costs must be borne otherwise. |
| Tax obligations under the Lease—whether Berco or Newhall bears responsibility | Berco seeks reimbursement for taxes paid by Berco as required by Lease provisions. | Lease sections allocate taxes between Berco and Newhall; factual dispute on whether payments satisfied obligations. | Denied in part: issues of tax payment remain for trial. |
Key Cases Cited
- Allegheny Int’l, Inc. v. 954 F.2d 167, 954 F.2d 167 (3d Cir.1992) (shifting burdens of proof in claims objections)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment standard; no genuine dispute)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (genuine issue of material fact; evidence in light most favorable to nonmovant)
- Lingsch v. Savage, 213 Cal.App.2d 729 (Cal.App.2d 1963) (as-is clauses; fraud/disclosure exceptions)
- Shapiro v. Hu, 188 Cal.App.3d 324 (Cal.Ct.App.1986) (as-is disclosure limitations; fraud exception)
- Renner v. Huntington-Hawthorne Oil & Gas Co., 39 Cal.2d 93 (Cal.1952) (lease interpretation; contract language governs)
- In re Indian Palms Assoc., Ltd., 61 F.3d 197 (3d Cir.1995) (judicial notice of docket documents in bankruptcy)