802 F.3d 876
7th Cir.2015Background
- In 1920 Peoples and Koppers (Beazer’s predecessor) entered a contract creating Chicago By-Product Coke Co. (Coke); Koppers agreed to finance, build, and operate a coke plant at Crawford Station, with Coke issuing bonds and Peoples purchasing the plant’s gas and coke.
- Koppers operated the plant until 1938; Peoples later acquired Coke’s assets and some site land; decades later EPA and Illinois EPA oversaw investigations and removal actions at Crawford Station.
- Peoples executed three administrative settlement agreements with EPA (2007 AOC, 2008 AOC, 2011 AOC) and incurred over $70 million in investigation/removal costs.
- In 2014 Peoples sued Beazer under CERCLA: Count I (cost recovery under §107) and Count II (contribution under §113(f)(3)(B)). Beazer moved to dismiss, arguing a 1920 contract released Koppers from liability and that some claims were time‑barred.
- The district court dismissed Count I (holding Peoples had an administrative settlement and thus only a contribution claim), dismissed with prejudice contribution claims tied to the 2007/2008 AOCs as time‑barred, and dismissed contribution to the extent based on Koppers’ operator liability; Peoples voluntarily dismissed remaining ownership‑based claim and appealed.
- On appeal the Seventh Circuit addressed whether the 1920 agreement bars contribution liability for Koppers’ operator role and whether 2007/2008 AOC claims were time‑barred; the court affirmed dismissal based on the 1920 agreement and did not reach the statute‑of‑limitations issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1920 contract precludes CERCLA contribution for Koppers’ operator liability | The 1920 agreement did not clearly and unambiguously release environmental/CERCLA liabilities and thus does not bar contribution | The 1920 agreement releases Koppers "without liability of any character," so it bars future environmental/CERCLA contribution claims | The contract unambiguously releases Koppers of all liability for operation; contribution claims barred |
| Whether pre‑CERCLA indemnities must be "unqualified" to cover CERCLA liability | Pre‑CERCLA releases must be expressly unqualified to cover CERCLA; paragraph 48 is not sufficiently specific | Federal precedent permits broad pre‑CERCLA indemnities that are general enough to include environmental liability | Broad language ("without liability of any character") is sufficient to encompass CERCLA contribution |
| Whether the second sentence of paragraph 48 is an express assumption of liability | The sentence (Koppers assumes responsibility for operation/maintenance) shows Koppers expressly assumed operational liabilities | The sentence describes scope of Koppers’ operative duties, not a retention of liability; Coke bears expenses/losses | The clause describes limited operational duties and is harmonized with the release; it does not negate the release language |
| Whether the court needed to address §113(f) claims tied to 2007/2008 AOCs given the contract ruling | Plaintiffs argued the statute‑of‑limitations ruling was erroneous and should be addressed | Defendant argued contract ruling disposed of the case and made limitation analysis unnecessary | Because the contract bars contribution, the court declined to reach the statute‑of‑limitations issue for the 2007/2008 AOCs |
Key Cases Cited
- Burlington Northern & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (describing CERCLA’s purpose and liable party classes)
- PMC, Inc. v. Sherwin‑Williams Co., 151 F.3d 610 (parties may allocate CERCLA expenses by contract)
- Kerr‑McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321 (pre‑CERCLA indemnity enforceable if it covers later liability)
- Harley‑Davidson, Inc. v. Minstar, Inc., 41 F.3d 341 (§107(e)(1) allows indemnities though it preserves government’s remedies)
- SmithKline Beecham Corp. v. Rohm & Haas Co., 89 F.3d 154 (broad pre‑CERCLA language can encompass CERCLA liability)
- Beazer East, Inc. v. Mead Corp., 34 F.3d 206 (analysis of contractual scope for environmental liabilities)
- E.I. Du Pont de Nemours & Co. v. United States, 365 F.3d 1367 (government indemnity clause construed to include CERCLA liability)
- LaSalle Nat’l Trust, N.A. v. ECM Motor Co., 76 F.3d 140 (apply state contract law to construe indemnity clauses)
- Thompson v. Gordon, 241 Ill.2d 428 (Illinois rule against interpreting contracts to render clauses meaningless)