GOODYEAR TIRE AND RUBBER COMPANY, Plaintiff-Appellant, v. LOCKHEED MARTIN CORPORATION, Defendant-Appellee.
No. 14-4078.
United States Court of Appeals, Sixth Circuit.
July 30, 2015.
V.
For the reasons set forth above, we affirm as to the adversary proceeding and the allowed amount of Liggett‘s claim and leave unresolved the confirmation issue pending further submissions.
BEFORE: BOGGS and KETHLEDGE, Circuit Judges; and BLACK, District Judge.*
In 1987, Goodyear Tire & Rubber Company (“Goodyear“) entered into an Asset Purchase Agreement (the “Agreement“) with Loral Corporation whereby Loral agreed to buy all assets and assume all liabilities of a Goodyear affiliate. One of the assets covered by the Agreement was the Airdock, a massive facility built in Akron, Ohio in 1929 to manufacture and house blimps. In 1997, Loral merged with Lockheed Martin Corporation (“Lockheed“), and Lockheed took ownership of the Airdock.
In 2003, Lockheed discovered that the Airdock‘s original siding was contaminated with non-liquid polychlorinated biphenyls (“PCBs“), a chemical substance that is now considered to be hazardous waste. Lockheed notified the Environmental Protection Agency and entered into a consent agreement that required Lockheed to clean up the PCB contamination and remove the Airdock‘s siding. Lockheed has spent tens of millions of dollars on the cleanup and will need to spend millions more to complete it.
In an attempt to recover the cleanup costs, Lockheed sued Goodyear in 2010 under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA“),
The dispute now returns to us for a second time. After its victory in the Airdock Litigation, Goodyear sought to recover under the Asset Purchase Agreement‘s indemnification provisions for the litigation expenses and attorney‘s fees that it incurred in defending against Lockheed‘s initial suit. The district court below ruled that the expenses did not fall within Lockheed‘s indemnification obligations and granted summary judgment to Lockheed. For the reasons given below, we affirm.
I
A
In our opinion regarding the dispute over the cleanup costs in the Airdock Litigation, we described the factual background as follows:
In 1929, the Goodyear Zeppelin Corporation built the Airdock, a facility used to manufacture and house blimps. For the Airdock‘s siding, Goodyear Zeppelin installed coated steel sheets known as Robertson Protected Metal. The coating on these sheets contained polychlorinated biphenyls (“PCBs“), a chemical substance now considered to be hazardous waste. See
15 U.S.C. § 2605(e) .Goodyear Zeppelin later sold the Airdock to Goodyear Tire & Rubber Company. Shortly thereafter, Goodyear leased the Airdock to its wholly owned subsidiary, Goodyear Aerospace Corporation (“GAC“). Goodyear continued to lease the Airdock to GAC for the next 46 years.
On March 13, 1987, Goodyear and GAC entered into a written agreement with Loral Corporation, under which Loral agreed to buy all of GAC‘s assets and assume all of GAC‘s liabilities (the “Asset Purchase Agreement“). Although Goodyear, rather than GAC, held legal title to the Airdock, Goodyear transferred it to Loral pursuant to the Agreement. Ten years later, Loral merged with Lockheed, and Lockheed became the Airdock‘s owner.
Lockheed later sued Goodyear, seeking to recover the cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA“),
Goodyear moved for summary judgment. In support, Goodyear pointed out that CERCLA and Ohio law each allow a company to transfer its environmental liability to another party by contract. See
The district court agreed with Goodyear‘s interpretation of the Agreement and granted summary judgment in its favor. Lockheed Martin Corp. v. Goodyear Tire & Rubber Co., 529 F. Appx. 700, 701-02 (6th Cir. 2013).
In the Airdock Litigation appeal, we agreed with the district court that the Agreement transferred Goodyear‘s liability for the cleanup to Loral and thereby to Lockheed when it merged with Loral. Id. at 705. After noting that CERCLA and Ohio law each allow companies to transfer environmental liability by contract, we determined that the Airdock was an “asset[] ... of GAC” for the purposes of the Agreement and that “[t]he Agreement therefore transferred Goodyear‘s liability for cleaning up the Airdock” to Lockheed. Id. at 702, 705.
B
Fresh off of its victory in round one, Goodyear filed a complaint on November 5, 2013, seeking indemnification from Lockheed for the fees, costs, and expenses incurred in defending the Airdock Litigation. Goodyear argued that its expenses from the Airdock Litigation fell within § 6.19.2 of the Asset Purchase Agreement, which sets out Loral‘s—and therefore Lockheed‘s—obligations to indemnify Goodyear for various expenses. The district court disagreed and held that Goodyear‘s expenses were not covered by § 6.19.2 as a matter of law. Goodyear Tire & Rubber Co. v. Lockheed Martin Corp., No. 5:13 CV 2465, 2014 WL 4852129, at *7 (N.D. Ohio Sept. 29, 2014). The court granted summary judgment in
II
We review a district court‘s grant of summary judgment de novo. Borman, LLC v. 18718 Borman, LLC, 777 F.3d 816, 821 (6th Cir. 2015). Summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Our interpretation of the Asset Purchase Agreement is governed by Ohio law. Under Ohio law, “contract interpretation is a matter of law subject to de novo review on appeal.” United States v. Ohio, 787 F.3d 350, 353 (6th Cir. 2015) (citing City of St. Marys v. Auglaize Cnty. Bd. of Comm‘rs., 115 Ohio St. 3d 387, 875 N.E.2d 561, 568 (2007)). As is our general approach in contract disputes, “our role is to give effect to the intent of the parties.” Sunoco, Inc. (R & M) v. Toledo Edison Co., 129 Ohio St. 3d 397, 953 N.E.2d 285, 292 (2011). We will read the provisions of the contact as a whole and derive the parties’ intent from the contract‘s plain meaning. Ibid.
III
A
The Asset Purchase Agreement includes cross-indemnification provisions reflecting Goodyear‘s (and GAC‘s) indemnification obligations to Loral (and Lockheed), and Loral‘s (and Lockheed‘s) indemnification obligations to Goodyear (and GAC).1 In order to fulfill its obligation to read the Agreement as a whole and give effect to each of its provisions, see Saunders v. Mortensen, 101 Ohio St. 3d 86, 801 N.E.2d 452, 455 (2004), the district court read the cross-indemnification provisions together. See Goodyear, 2014 WL 4852129, at *5.
Section 6.19.2 sets out Lockheed‘s indemnification obligations to Goodyear in part as follows:
Loral agrees to indemnify and hold GAC and Goodyear ... harmless from and against, and upon their respective demand to pay or reimburse them ... for any claim arising out of the operations of GAC subsequent to the Closing Date....
(emphasis added). Section 6.19.1, in contrast, sets out Goodyear‘s indemnification obligations to Lockheed. That provision states:
GAC and Goodyear, jointly and severally, agree to indemnify and hold Loral ... harmless from and against, and upon their demand to pay or reimburse them for ... any claims, actions, suits or proceedings ... relating to contamination or adverse effect on the environment ... caused by, attributable or relating to or arising out of the operation, use, control or ownership on or prior to the Closing Date of the [Airdock]....
(emphases added). The parties agree that the Airdock Litigation constitutes a “claim” for these purposes but dispute whether that claim “ar[ose] out of the operations” of the Airdock prior or subsequent to the Agreement‘s closing date in 1987.
In interpreting Lockheed‘s indemnification obligations under § 6.19.2, the district court applied the Nearest-Reasonable-Referent Canon to determine that the “subsequent to the Closing Date” language in that section modifies “operations of GAC,”2 and not “claim.” Id. at *6. Thus, the district court determined that “Lockheed‘s indemnification obligations are triggered by claims ‘caused by, attributable to or relating to or arising out of the operations of the Airdock after 1987—not by claims caused by or attributable to or relating to Airdock operations prior to closing—even if those claims may not be discovered or asserted until after closing.” Id. at *5. In the court‘s view, “[t]he cross-indemnification provisions of the [Agreement] contain clear and unambiguous lines of demarcation between pre-closing and post-closing operations,” and “the only reasonable interpretation of section 6.19.2 is that the time when a claim arises is determined by when the operations causing the claim occurred, or when the operations to which the claim is related to or attributable, occurred.” Id. at *6.
The district court then examined whether Lockheed‘s claim against Goodyear in the Airdock Litigation arose from operations of the Airdock prior or subsequent to the closing date of the Agreement in 1987. If the claim arose from operations prior to 1987, then the claim would fall outside Lockheed‘s indemnification obligations under § 6.19.2. If the claim arose from operations subsequent to 1987, then the claim would fall within § 6.19.2 and Goodyear could recover.
The district court ultimately held that “Lockheed‘s claims against Goodyear in the Airdock Litigation did not arise after the Closing Date,” and thus “those claims do not trigger Lockheed‘s indemnification obligations under section 6.19.2.” Id. at *7. The court reasoned that Lockheed‘s claim did not arise from post-closing operations or remediation costs from cleaning up the PCB contamination but rather from the pre-closing use of PCBs in the construction of the Airdock. See ibid. (“Lockheed‘s claims against Goodyear regarding PCB cleanup at the Airdock were attributable or related to—arose from—utilization of PCB containing materials in the construction of the Airdock and the continued presence of those hazardous materials in connection with the operation of the Airdock for over 50 years prior to the Closing Date.“).
B
On appeal, Goodyear seems not to dispute the district court‘s interpretation of the indemnity provisions. Rather, Goodyear takes issue with the district court‘s
1
In support of its assertion, Goodyear first argues that the basis for the consent agreement between Lockheed and the EPA regarding the PCB contamination and cleanup “was Lockheed‘s own post-closing operations at the Airdock,” and “Lockheed‘s liability therefore derived from its operations at the Airdock conducted years after the ink had dried on the [Agreement].” Ibid. “Thus,” the argument goes, “the costs sought by Lockheed associated with these proceedings ‘aris[e] out of post-closing, not pre-closing, operations.‘” Ibid.
The problem with Goodyear‘s argument is that, while the consent agreement and the associated cleanup may relate to post-closing activities (i.e., the continued presence of PCBs in the Airdock and their spread to the surrounding areas), the “operations” that gave rise to Lockheed‘s “claim” against Goodyear regarding that contamination occurred decades before the Asset Purchase Agreement‘s closing in 1987.
In the Airdock Litigation, Lockheed “argued that Goodyear was liable for the Airdock‘s cleanup costs because Goodyear contaminated the Airdock with PCBs.” Lockheed, 529 F. Appx. at 702 (emphasis added); see also Goodyear, 2014 WL 4852129, at *6 (“[I]n the Airdock Litigation, Lockheed sued Goodyear to recover for use and disposal of PCBs on the site during the decades that the Airdock was owned and operated by Goodyear and its predecessors/subsidiaries, all of which necessarily occurred prior to or on the Closing Date.“). In effect, Lockheed sought to impose liability on Goodyear because Goodyear operated the Airdock “at the time,”
Goodyear‘s reliance on the text of Lockheed‘s consent agreement with the EPA does not change the outcome. That agreement identifies the Robertson Protected Metal (“RPM“) used in the Airdock‘s construction as a “PCB Article” and a “PCB Item” as defined in
The consent agreement does suggest that Lockheed‘s violation of environmental regulations, and thus Lockheed‘s liability to the EPA, arose from Lockheed‘s post-closing operations at the Airdock. For the purposes of indemnification under the Asset Purchase Agreement, however, we are concerned with the operations that gave rise to Lockheed‘s claims against Goodyear for indemnification or contribution, not the operations that gave rise to the EPA‘s claims against Lockheed for unlawful use of PCBs. The consent agreement establishes that Lockheed improperly used and improperly disposed of PCBs after 1997, which are the post-closing operations that gave rise to Lockheed‘s liability to the EPA. It does not establish, however, that Lockheed was responsible for contaminating the Airdock with PCBs in the first place. That contamination, upon which Lockheed‘s claim in the Airdock Litigation was premised, resulted from the pre-closing operations of Goodyear.
2
Goodyear next argues that the fact that Lockheed sought to hold Goodyear liable for cleanup and remediation costs incurred post-closing suggests that Lockheed‘s claim necessarily arose from post-closing operations. In the Airdock Litigation, Lockheed sought to recover from Goodyear “all necessary costs” incurred in response to the consent agreement and PCB cleanup, as well as response costs Lockheed “may incur in the future at the Airdock.” Goodyear maintains that this demonstrates a connection between Lockheed‘s claim and its post-closing operations. See Appellant Br. 23. For similar reasons, this argument fails.
There is no doubt that Lockheed incurred (and will continue to incur) costs in remediating the PCB contamination after the closing date. Similarly, it is reasonable to assume that the extent of the damages associated with the contamination increased post-closing as the contamination spread. The extent of the damages, however, does not affect the underlying basis for Lockheed‘s claim in the Airdock Litigation for the purposes of the indemnification provisions. Rather, the only question under § 6.19.2 and § 6.19.1 is what “operations” gave rise to Lockheed‘s claim in the first place. Whether Lockheed discovered and began remediating the contamination in 1987, 2003, or 2019, the operations that gave rise to the resulting claim—i.e., the construction of the Airdock causing its contamination with PCBs—remain the same.
Goodyear‘s argument, in fact, would undermine the effect of the Asset Purchase Agreement‘s cross-indemnification provisions. Goodyear suggests that Lockheed‘s claim in the Airdock Litigation necessarily arose from Lockheed‘s post-closing operations at the Airdock because Lockheed sought contribution for costs arising after closing. See Appellant Br. 24-25. However, Loral/Lockheed only took over control of the Airdock upon the closing of the Asset Purchase Agreement in 1987, and thus Loral/Lockheed, by definition, could only incur—and thereafter seek indemnification or contribution for—cleanup and remediation costs arising after closing. Under Goodyear‘s reading of the indemnification provisions, then, every claim by Lockheed would arise from post-closing operations and fall within Lockheed‘s indemnification obligations under § 6.19.2, and no claim by Lockheed would fall within Goodyear‘s indemnification obligations
3
In a final attempt to recoup costs from Lockheed, Goodyear argues for the first time on appeal that § 6.19.2 establishes that Lockheed is responsible for Goodyear‘s losses if they resulted “in whole or in part” from any claim arising out of the post-closing operations of the Airdock. Appellant Br. 26 (emphasis added). This argument would seem to fail in light of our conclusion above that the construction operations that gave rise to Lockheed‘s claim in the Airdock Litigation occurred prior to closing. In any event, Goodyear did not present this theory before the district court, and the record does not enable us to determine whether or to what extent Lockheed‘s post-closing use of the Airdock contributed “in part” to Goodyear‘s defense costs in the Airdock Litigation. We therefore need not address this argument further. Cf. Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 552 (6th Cir. 2008) (“[A]n argument not raised before the district court is waived on appeal to this Court.“).
IV
In conclusion, we hold that Lockheed‘s claim in the Airdock Litigation arose from pre-closing operations of the Airdock and thus falls outside Lockheed‘s indemnification obligations under § 6.19.2 of the Asset Purchase Agreement. We therefore AFFIRM the district court‘s judgment.
UNITED STATES of America, Plaintiff-Appellee, v. Albert FRANKLIN, Jr., Defendant-Appellant.
No. 14-5093.
United States Court of Appeals, Sixth Circuit.
July 31, 2015.