ASARCO, LLC, Plаintiff-Appellant, v. UNION PACIFIC RAILROAD COMPANY, a Utah corporation; UNION PACIFIC CORPORATION, Defendants-Appellees
No. 13-35356
United States Court of Appeals, Ninth Circuit
August 27, 2014
D.C. No. 2:12-cv-00283-EJL
Opinion by Judge Carney
Argued and Submitted July 10, 2014—Seattle, Washington
Filed August 27, 2014
Before: A. Wallace Tashima and Mary H. Murguia, Circuit Judges, and Cormac J. Carney, District Judge.*
Environmental Law
The panel reversed the dismissal of a mining company‘s action under
The panel held that the mining company‘s claim was not barred by CERCLA‘s three-yeаr statute of limitations for claims seeking contribution after entry of a judicially approved settlement. The panel held that even though the first amended complaint included allegations that were expressly disclaimed in the original complaint, it related back to the date of the original complaint under
The panel held that the mining company‘s claim was not unambiguously barred by a prior agreement that settled the defendant‘s claims against the mining company at the same site. The panel concluded that a “mutual release” provision in the parties’ settlement agreement did not unambiguously release the claim in this case.
Gregory Evans (argued) and Laura G. Brys, Integer Law Corporation, Los Angeles, California; Linda R. Larson, Russell C. Prugh, and Meline G. MacCurdy, Marten Law PLLC, Seattle, Washington, for Plaintiff-Appellant.
Carolyn McIntosh (argued) and Maxine Martin, Patton Boggs LLP, Denver, Colorado; Ausey H. Robnett III, Paine Hamblen LLP, Coeur d‘Alene, Idaho; Gail L. Wurtzler, Davis Graham & Stubbs LLP, Denver, Colorado, for Defendants-Appellees.
OPINION
CARNEY, District Judge:
ASARCO, LLC (“Asarco“) appeals the district court‘s dismissal of its contribution action brought under
BACKGROUND
Asarco and Union Pacific both participated in nearly a century of mining operations in the Coeur d‘Alene River watershed, a 1,500-square-mile area located in Idaho‘s northern panhandle. Asarco operated over 20 mines in the Coeur d‘Alene site, and Union Pacific built rail lines and transported ore and other materials for the region‘s mining and smelting facilities. In 1983, the Environmental Protection Agency (“EPA“) listed the Coeur d‘Alene site on the CERCLA National Priorities List. Since then the site has undergone over 30 years of cleanup efforts by the EPA, the State of Idaho, and potentially responsible parties, including Asarco and Union Pacific.
In the 1990s, the United States, the State of Idaho, and the Coeur d‘Alene Tribe each filed various claims against Asarco and other mining companies fоr response costs and natural resource damages at the Coeur d‘Alene site. These actions were consolidated in 2003 and, after a 78-day trial, Judge Lodge of the United States District Court for the District of Idaho issued an order apportioning liability based on the volume of mining waste released into the basin‘s waterways. Asarco was found at least 22 percent responsible. Coeur d‘Alene Tribe v. Asarco, Inc., 280 F. Supp. 2d 1094, 1121 (D. Idaho 2003).
In 2005, before the damages portion of the consolidated case was concluded, Asarco filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Through bankruptcy, Asarco sought to resolve approximately
Union Pacific‘s proofs of claim sought a general unsecured claim for payment of freight charges and response costs at numerous sites, including $52 million in CERCLA response costs Union Pacific had paid at the Coeur d‘Alene site. In 2008, the parties entered into a settlement agreement (the “UP Settlement“), which resolved “all the claims by UP or claims which UP could have filed against ASARCO,” and allowed Union Pacifiс a general unsecured claim of about $4 million. Upon the parties’ joint motion, the bankruptcy court approved the settlement.
The UP Settlement contains a “mutual release” provision, which states in relevant part:
ASARCO agrees . . . to hereby release, remise, and discharge UP . . . from any and all damages, losses, expenses, costs, liabilities, claims, demands, suits, causes of action, and complaints, of any kind, character or description, in law or in equity, whether known or unknown, arising out of or in any way connected with . . . Remaining Sites Costs. (Emphasis added.)
The UP Settlement defines “Remaining Sites Costs” tо mean “costs of response under CERCLA incurred by UP at the Remaining Sites,” including the Coeur d‘Alene site. (Emphasis added.)
The US CDA Settlement resolved Asarco‘s liability for all remaining response costs and natural resource damages associated with the Coeur d‘Alene site. Under the settlement, Asarco agreed that the United States would be entitled to general unsecured claims totaling about $482 million. For its part, the United States covenanted not to sue Asarco for further CERCLA costs “[w]ith respect to the Coeur d‘Alene Site.” The bankruptcy court approved the proposed settlement on June 5, 2009.
On June 5, 2012, Asarco filed the underlying contribution action, seeking to recoup from Union Pacific a share of the $482 million it paid under the US CDA Settlemеnt. Asarco alleged that it had paid more than its allocable share of costs at the Coeur d‘Alene site and demanded that Union Pacific pay “its equitable share of any overpayment of costs by Asarco.” Asarco‘s original complaint defined the Coeur d‘Alene site as “a 1,500-square mile area located in northern Idaho and eastern Washington,” including “a 21-square mile area around [the Bunker Hill mining] complex” and the upper and lower basins of the Coeur d‘Alene River. The original complaint provided that “[f]or purposes of this action, the Coeur d‘Alene Bаsin . . . excludes the drainage of the North Fork of the Coeur d‘Alene River.” Less than two months later, however, Asarco filed a First Amended Complaint
Union Pacific filed a motion to dismiss Asarco‘s FAC under
The district court acknowledged Asarco‘s argument that the defined term “Remaining Sites Costs” limited Asarco‘s release to claims for costs “incurred by UP,” but reasoned that if it read the agreement as “limiting the releases to only Union Pacific‘s claims” the releases would then “be anything but mutual.” ASARCO, LLC v. Union Pac. R.R., 936 F. Supp. 2d 1197, 1204 (D. Idaho 2013). The district court concluded that “[g]iven the scope of the definitions used in the FAC and the plain language of the [UP] Settlement, it is clear that the claim raised in the FAC is precluded by the mutual release language of the [UP] Settlement.” Id. at 1204–05. The district court therefore dismissed Asarco‘s action and declined to rule on Union Pacific‘s remaining defenses. Id. at 1206.
STANDARD OF REVIEW
We review de novo the district court‘s dismissal for failure to state a claim under
Dismissal under
ANALYSIS
I
We first consider whether Asarco‘s FAC is barred by CERCLA‘s three-year statute of limitations for claims seeking contribution after entry of a judiciаlly approved settlement. See
A
An otherwise time-barred claim in an amended pleading is deemed timely if it relates back to the date of a timely original pleading. Under
1
This case presents an issue of first impression in this Circuit: Can an amended pleading relate back if it includes
In so holding, we are mindful of two competing concerns. On the one hand, the rеlation back doctrine is to be liberally applied. See id.; see also Rural Fire, 366 F.2d at 362 (noting that
On the other hand, the purpose of the statute of limitations — protecting defendants from stale сlaims — is also to be respected. See Credit Suisse Sec. (USA) LLC v. Simmonds, 132 S. Ct. 1414, 1420 (2012); see also FDIC v. Conner, 20 F.3d 1376, 1385 (5th Cir. 1994). Amendments that significantly alter the pleadings could require the opposing party to start over and prepare the case a second time. 6A Wright et al., supra, § 1497. Consistent with the protective purpose of the statute of limitations, “[f]airness to the defendant demands that the defendant be able to anticipate claims that might follow from the facts alleged by the plaintiff.” Percy, 841 F.2d at 979.
Our decision in Rural Fire Protection Co. v. Hepp is instructive. There, the plaintiffs’ timely original complaint claimed unpaid wages under the Fair Labor Standards Act for pay periods between September 5, 1959, and April 30, 1960. 366 F.2d at 361. During trial, and after the statutory limitations period had expired, plaintiffs were granted leave to amend their complaint to claim wages for an additional pay period from April 30 to May 19, 1960. Id. Ruling on the defendants’ statute of limitations argument, we reasoned that “there [could] be no question but that the amended pleading was based on the same transaction, was to be proved by the same kind of evidence (appellant‘s time records), and did not take appellant by surprise.” Id. at 362. The amendment, therefore, related back. Id.
We think not, for such a rule would clearly be inconsistent with the limited role
Of course, Union Pacific is correct that notice is an essential element in the relation back determination. But
Accordingly, we hold that even where an amendment trenches on factual ground that the original pleading said would be off limits, the standard is the same. In such cases, the standard to be applied is
2
Applying the
[f]or purposes of this action, the Coeur d‘Alene Basin refers to the watershed of the South Fork of the Coeur d‘Alene River, the main stem of the Coeur d‘Alene River and its
floodplain, including the lateral lakes and associated wetlands, and Lake Coeur d‘Alene, but excludes the drainage of the North Fork of the Coeur d‘Alene River. (Emphasis added.)
Less than two months later, Asarco filed its FAC, which redefined the “Coeur d‘Alene Basin” to encompass the “the watersheds of the North Fork and the South Fork of the Coeur d‘Alene River, the main stem of the Coeur d‘Alene River and its floodplain, including the lateral lakes and associated wetlands, and Lake Coeur d‘Alene.” (Emphasis added.)
Notwithstanding that changе, we conclude that Asarco‘s original complaint clearly put Union Pacific on notice of the conduct, transaction, or occurrence set forth in the FAC. Both pleadings concern Asarco‘s and Union Pacific‘s historical activities at the “Coeur d‘Alene Site” — “a 1,500-square mile area located in northern Idaho and eastern Washington.”1 Both pleadings seek contribution based on the same consent decree, which resolved Asarco‘s liability for CERCLA response costs in the entire Coeur d‘Alene basin. And, in order to determine the scope of Union Paсific‘s contribution protection, both pleadings would inevitably require an assessment of Union Pacific‘s consent decrees settling claims for cleanup costs in the Coeur d‘Alene basin. These factual overlaps are more than enough. Asarco‘s FAC will doubtless “be proved by the ‘same kind of evidence‘” that would have been offered in support of its original
Liberally applying
B
Of course, relation back does not help Asarco if the original complaint was not timely in the first instаnce. CERCLA
Under
Union Pacific argues that CERCLA
Moreover, Union Pacific‘s reliance on
[t]he limitation period shall run from the latest of . . . the date on which the judgment became final . . . [,] the date on which the impediment to filing an application . . . is removed, . . . the date on which the constitutional right asserted was initially recognized by the Supreme Court, . . . or . . . the date on which the factual predicate of the claim . . . could have been discovered.
Union Pacific points to nothing in CERCLA‘s language or legislative history that suggests that Congress intended to deviate from
Having determined that Asarco‘s FAC was timely, we now consider whether it is barred by the UP Settlement‘s “mutual release” provision. The meaning of a settlement agreement is, as with all contracts, a question of law subject to de novo review. City of Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).
The parties’ key dispute is whether the UP Settlement unambiguously releases Asarco‘s claim here against Union Pacific.2 If the settlement agreement is ambiguous, then interpretаtion of the agreement presents a fact issue that cannot be resolved on a motion to dismiss. See State Farm Mut. Auto. Ins. Co. v. Fernandez, 767 F.2d 1299, 1301 (9th Cir. 1985) (“The interpretation of a contract presents a mixed question of law and fact. The existence of an ambiguity must be determined as a matter of law. If an ambiguity exists, a question of fact is presented.” (citations omitted)); see also Scott, 746 F.2d at 1378 (affirmative defenses may not be asserted by motion to dismiss if they raise disputed issues of fact); 11 Richard A. Lord, Williston on Contracts [“Williston“] § 33:42 (4th ed. 2014) (“[T]here is unanimity” that evidence of the surrounding circumstances is necessary “when an ambiguity . . . exist[s].“).
We conclude that the UP Settlement is ambiguous. The agreement‘s “mutual release” provision states, in relevant part:
ASARCO agrees . . . to hereby release, remise, and discharge UP . . . from any and all damages, losses, expenses, costs, liabilities, claims, demands, suits, causes of action, and complaints, of any kind, character or description, in law or in equity, whether known or unknown, arising out of or in any way connected with . . . Remaining Sites Costs. (Emphasis added.)
Significantly, “Remaining Sites Costs” are separately defined in the agreement as “costs of response under CERCLA incurred by UP at the Remaining Sites,” (emphasis added), and “Remaining Sites” are in turn defined to include the Coeur d‘Alene site. Read together with these definitions, the “mutual release” provision releases all claims held by Asarco that arise out of or are in any way connected with Coeur d‘Alene response costs incurred by Union Pacific. The agreement does not explicitly release Coeur d‘Alene response costs incurred by Asarco.
Generally, “language will be deemed ambiguous when it is reasonably susceptible to more than one interpretation.” 11 Williston § 32:2. Here, the release provision could plausibly mean, as Union Pacific reads it, that Asarco‘s contribution claim against Union Pacific is released because the claim is broadly related to CERCLA response costs incurred by Union Pacific. But this is not the only reasonable interpretation. The release provision could also plausibly mean that Asarco‘s contribution claim against Union Pacific is reserved, not released, because the claim only relates to response costs incurred by Asarco. After all, the limitation to costs incurred by Union Pacific could have easily been replaced with “incurred by UP or Asarco,” had that been the parties’ intent.
Asarco‘s interpretation is supported by the agreement‘s repeated references to the release of Union Pacific‘s claims. The agreement states that it is “intended to serve as a comprehensive settlement of all the claims by UP or claims which UP could have filed against ASARCO with respect to . . . Remaining Sites Costs,” (emphasis added), and that “the mutual releases set forth in Section [V] apply to all claims UP may have filed, or had a right to file, in the ASARCO Chapter 11 case” and not to “any matters other than those expressly specified therein.” It also notеs that it is an agreement “[i]n settlement and satisfaction of all claims and causes of action of UP . . . .” (Emphasis added.)
Union Pacific‘s interpretation, by contrast, is inconsistent with these references and renders superfluous the phrase “incurred by UP” in the definition of Remaining Sites Costs. See 11 Williston § 32:5 (“[E]very word, phrase or term of a contract must be given effect,” and courts should avoid accepting interpretations that “render[] part of the writing superfluous.“). And while it is true that the “mutual release” provision extends to “any and all claims” that are “in any way connected with” Remaining Sites Costs, “it is an accepted principle that general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given.” Id. § 32:10; see also id. (“[S]pecific words [in a release] will limit the meaning of general words if it appears from the whole agreement that the parties’ purpose was directed solely toward the matter to which the specific words or clause relate.“). Here, the release‘s general “in any way
Reading the contract the way Asarco suggests does not, as the district court found, render the release “anything but mutual.” ASARCO, 936 F. Supp. 2d at 1204. To the contrary, the release of both parties’ claims regarding response costs incurred by Union Pacific — the subject of the parties’ settlement — has the effect of preventing both parties from later claiming that their compromise amount as to those costs was too high or too low in light of later developments.
We therefore conclude that the UP Settlement is ambiguous because it can be reasonably understood to releasе only claims involving Remaining Sites Costs incurred by Union Pacific. It was error for the district court to conclude otherwise.3
CONCLUSION
Although we agree with the district court that Asarco‘s FAC was timely, we conclude that the district court erred by dismissing Asarco‘s contribution claim on the basis of an ambiguous settlement agreement. We therefore reverse the district court‘s dismissal of Asarco‘s contribution action and remand for further proceedings consistent with our opinion.
REVERSED and REMANDED.