797 F. Supp. 2d 452
D. Del.2011Background
- ICIA operated a Santa Ana, California site and used Teflon recycling with perchloric acid, causing groundwater contamination.
- Asset transfer in 1991 split liabilities: APA allocated Assumed Liabilities to KSP and Retained Liabilities (including environmental) to ICIA; TSA continued Teflon cleaning for ~8 months post-Closing.
- KSP/KSC relationship: Kawasaki Steel Corporation (now JFE) is successor to KSC; Framework Agreement guaranteed KSP’s performance under the APA.
- GE discovered perchlorate contamination by 2002; JFE paid costs for GE-related remediation; SABIC later acquired GE’s Santa Ana assets and assigned rights to JFE.
- Question at trial: whether APA §12.02 indemnification with a 10-year limit covers CERCLA/enviro liabilities and whether JFE/SABIC claims are timely; court also considers breach of contract claims under APA, TSA, and Framework Agreement.
- SABIC, as successor to KSP, assigned its rights to JFE; SABIC lacks standing to bring CERCLA/contract claims herself.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does APA §12.02 indemnification cover CERCLA liabilities? | JFE argues indemnity includes CERCLA (broad 'Environmental Law'); §12.02 not exclusive remedy. | ICIA contends indemnification is sole remedy and 10-year cap applies to all enviro claims. | Indemnification covers CERCLA claims; 10-year limit applies only to indemnification claims, not all remedies. |
| Is JFE bound by APA’s 10-year indemnity period for CERCLA claims brought on its own behalf? | JFE asserts non-signatory standing via Framework/related parties; CERCLA claims survive beyond 10 years for non-signatories. | CERCLA indemnity under APA applies to signatories; JFE/related parties cannot bypass term. | JFE’s CERCLA indemnity claims are untimely under APA §12.02 as notice was given after ten years. |
| Does SABIC have standing to pursue CERCLA costs directly or via assignment? | SABIC assigned rights to JFE; could recover via assignment; SABIC itself lacks standing because of assignment. | SABIC as successor to KSP may enforce rights; assignment to JFE should not create standing issues for SABIC. | SABIC lacks standing; summary judgment for Defendants on Count III and Count V where SABIC asserted claims. |
| Is the APA’s Retained Liabilities provision the sole remedy for environmental liabilities under the contract? | §1.02 requires ICIA to retain Retained Liabilities indefinitely; conflicts with indemnity but does not nullify other remedies. | Indemnification is the sole remedy to environmental liabilities under the contract. | Remedies are not expressly exclusive; APA §12.02 applies to indemnification, not as the sole remedy for all claims. |
| What statute of limitations governs the breach of contract claims (Counts VI–VIII)? | Ohio law with 15-year limit applies due to transfer from Ohio; Restatement §142(2) analysis favors longer period. | Delaware law applies; 3-year limit under 10 Del. C. §8106 governs breach claims. | Ohio’s 15-year statute applies under Restatement (second) conflict of laws; breach claims timely. |
Key Cases Cited
- Fisher Dev. Co. v. Boise Cascade Corp., 37 F.3d 104 (5th Cir. 1994) (CERCLA allocation allowed via broad indemnities)
- DRR, L.L.C. v. Sears, Roebuck & Co., 949 F. Supp. 1132 (D. Del. 1996) (indemnity provisions can cover environmental claims)
- Horsehead Indus., Inc. v. Paramount Comm'ns, Inc., 258 F.3d 132 (3d Cir. 2001) (CERCLA liability allocation in asset transfers)
- SmithKline Beecham Corp. v. Rohm and Haas Co., 89 F.3d 154 (3d Cir. 1996) (indemnity provisions can transfer CERCLA costs)
- GNB Battery Techs., Inc. v. Gould, Inc., 65 F.3d 615 (7th Cir. 1995) (broad indemnification includes CERCLA liabilities)
- Interim Healthcare v. Spherion Corp., 884 A.2d 513 (Del. Super. Ct. 2005) (necessity of express remedy exclusivity in contracts)
- CertainTeed Corp. v. Celotex Corp., 2005 WL 217032 (Del. Ch. Apr. 2005) (sole and exclusive remedy requires express language (no pin cite))
- E*Trade Fin. Corp. v. Deutsche Bank AG, 374 Fed. Appx. 119 (2d Cir. 2010) (Restatement §142 approach to choice-of-law and limitations)