Textileather Corporation v. GenCorp Inc.
697 F.3d 378
6th Cir.2012Background
- GenCorp owned a vinyl-manufacturing facility with RCRA units and later sold it to Textileather in 1990 under an Asset Purchase Agreement (APA).
- The APA allocated retained liabilities to GenCorp under Section 9.1.1 and 9.1.2 and required indemnification under Section 9.1.4.
- Textileather initiated RCRA closure proceedings, including soil sampling, cleanup standards, and groundwater monitoring, under OEPA oversight.
- OEPA issued Notices of Deficiency, prompting negotiations and a closure plan ultimately approved in 2001; OEPA monitoring continued.
- Textileather sought indemnity from GenCorp for closure costs; the district court granted GenCorp summary judgment that OEPA was not a third party and that there was no claim or action.
- On appeal, the Sixth Circuit held GenCorp liable on the contract interpretation and remanded for allocation of costs and damages; CERCLA liability allocation was also reviewed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is OEPA a third party under the APA? | Textileather argues OEPA is a third party under 9.1.1. | GenCorp contends OEPA is not a third party because it is a regulatory agency acting in a first-party regulatory capacity. | OEPA is a third party; its orders fall within 9.1.1. |
| Are OEPA closure actions demands for liability under the APA? | Textileather contends OEPA notices/closure actions are claims for liability. | GenCorp argues they are not demands for liability. | Yes; OEPA notices and closure actions are demands for liability covered by 9.1.1. |
| Does the APA allocate CERCLA liability to Textileather by broad 9.1.1/9.1.2 language? | Textileather asserts CERCLA liabilities are allocated to Textileather under the APA. | GenCorp argues CERCLA liability is not included beyond the retained liabilities. | APA allocation covers CERCLA liabilities; Textileather assumed CERCLA liabilities. |
| Does 9.1.1(a)(2)(B) carve out GenCorp liability for actions first asserted after the deal? | Textileather contends liabilities arising from actions Textileather was legally obligated to take fall within 9.1.1. | GenCorp argues liability is excluded if asserted after closing and directly from Textileather actions. | Liabilities arising from Textileather’s legally required actions to comply with OEPA orders fall under the exception to the exclusion. |
Key Cases Cited
- Anderson Development Co. v. Travelers Indemnity Co., 49 F.3d 1128 (6th Cir. 1995) (PRP-like disputes: EPA-mandated clean-up constitutes third-party liability)
- Professional Rental, Inc. v. Shelby Ins. Co., 599 N.E.2d 423 (Ohio Ct. App. 1991) (PRP notices are claims of liability; enforceability depends on steps to impose liability)
- White Consol. Indus., Inc. v. Westinghouse Elec. Corp., 179 F.3d 403 (6th Cir. 1999) (CERCLA allocation possible with broad or specific environmental language)
- PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610 (7th Cir. 1998) (pre-CERCLA contracts can allocate CERCLA liability when language is broad)
- Beazer E., Inc. v. Mead Corp., 34 F.3d 206 (3d Cir. 1994) (limited hold-harmless clauses and CERCLA interpretation guidance)
- Savedoff v. Access Grp., Inc., 524 F.3d 754 (6th Cir. 2008) (Ohio contract interpretation standard and determining intent from language)