442 B.R. 236
Bankr. S.D.N.Y.2011Background
- The Debtors object to Private Party Claims for future environmental remediation costs under 502(e)(1)(B).
- The EPA and state agencies filed CERCLA-based claims totaling about $5.5 billion; settlements later resolved some claims.
- Settlement with the U.S. and ten states formed a custodial environmental trust and resolved injunctive obligations at Kalamazoo Site; MHLLC received CERCLA 113(f)(2) protection.
- Private Party Claims total approximately $1.1 billion; three claimants argued they were not contingent and should be allowed for future costs.
- Parties focus on Kalamazoo Site (Georgia-Pacific, Weyerhaeuser) and Mt. Airy/Southern Pines sites (Hamilton Beach) plus related allocations.
- Court analyzes 502(e)(1)(B) elements (reimbursement or contribution, contingency, co-liability) in light of CERCLA provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Private Party Claims for future costs may be disallowed | Georgia-Pacific, et al. argue not contingent and thus not disallowed. | Debtors contend these are contingent reimbursement/contribution claims and must be disallowed. | Yes; future-cost claims are contingent and disallowed except for amounts already paid. |
| Contingency element under 502(e)(1)(B) for PRP contributions | Claimants contend no contingency as liability exists now. | Debtors contend amounts are undetermined and contingent until paid. | Contingent; past costs non-contingent, but future costs contingent. |
| Co-liability requirement for reimbursement or contribution | Claimants maintain they are co-liable with the Debtors for cleanup costs. | Debtors argue lack of proper co-liability basis for future costs. | Co-liability satisfied; private claimants share liability with the Debtors at Kalamazoo and Mt. Airy/Southern Pines sites. |
| Reimbursement or contribution framing under 502(e)(1)(B) | Claims are for reimbursement/contribution and should be allowed. | Statutory framing covers reimbursement/contribution and should disallow future-cost claims. | Claims are reimbursement/contribution; future costs disallowed. |
Key Cases Cited
- Chateaugay Corp., 944 F.2d 997 (2d Cir. 1991) (contingency of CERCLA claims depends on scope/amount, not merely existence)
- Manville Forest Products Corp., 209 F.3d 125 (2d Cir. 2000) (contingent liability where amount/parameters undetermined)
- Cottonwood Canyon Land Co., 146 B.R. 992 (Bankr. D. Col. 1992) (disallowing 107(a) reimbursement/contribution to avoid double recovery)
- Eagle Picher Indus. Inc., 164 B.R. 265 (S.D. Ohio 1994) (disallowing future-cost contributions to prevent duplicative payments)
- APCO Liquidating Trust, 370 B.R. 625 (Bankr. D. Del. 2007) (contingency on undetermined future costs in environmental claims)
- In re Wedtech Corp., 87 B.R. 279 (Bankr. S.D.N.Y. 1988) (contingent indemnification claims addressed in 502(e)(1)(B))
- In re Allegheny Int'l, Inc., 126 B.R. 919 (W.D. Pa. 1991) (trust mechanism and duplicative recovery concerns in 502(e)(1)(B) context)
- U.S. v. Atlantic Research Corp., 551 U.S. 128 (2007) (distinction between cost recovery under 107(a) and contribution under 113(f))
- Chevron Northern Railway Co. v. Burlington Northern, U.S. , 129 S. Ct. 1870 (2009) (apportionment in superfund context; joint/several liability considerations)