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ELF ATOCHEM NORTH AMERICA v. UNITED STATES

November 1, 1994

ELF ATOCHEM NORTH AMERICA
v.
UNITED STATES OF AMERICA, et al. UNITED STATES OF AMERICA v. WITCO CORPORATION



The opinion of the court was delivered by: J. CURTIS JOYNER

 JOYNER, J.

 NOVEMBER 1, 1994

 Before us today are cross-motions to dismiss and/or for summary judgment with respect to the United States' Counterclaim against Elf Atochem North America, Inc. This Court has described the facts of these consolidated actions in other opinions and they will not be repeated at length here. Briefly, Elf and the United States Environmental Protection Agency (EPA) settled claims the EPA brought against Elf under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-75 (1983 & Supp. 1994), for contamination existing at a one-time DDT factory owned by Elf's predecessor in interest. In docket number 92-7458, Elf now sues the United States of America for contribution. Its claim is based on the fact that during World War Two much of the equipment used to manufacture the DDT was leased from a defunct United States agency known as the Defense Plant Corporation (DPC). *fn1"

 Standards

 In considering a motion for summary judgment, the court must consider whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The court must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 In making this determination, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Id. at 256. Once the moving party has met the initial burden of demonstrating the absence of a genuine issue of material fact, the non-moving party must establish the existence of each element of its case. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990), cert. denied, 499 U.S. 921, 113 L. Ed. 2d 246, 111 S. Ct. 1313 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)).

 This litigation concerns the interpretation of an indemnity clause. This is a question of law, and therefore, is suitable for resolution by summary judgment. Hatco Corp. v. W.R. Grace & Co., 801 F. Supp. 1309, 1318 (D.N.J. 1992). We apply general federal contract law because the federal government is a party to the contract. North Side Lumber Co. v. Block, 753 F.2d 1482, 1484 (9th Cir.), cert. denied, 474 U.S. 931, 88 L. Ed. 2d 271, 106 S. Ct. 265 (1985).

 Discussion

 The DPC's counterclaim against Elf is based on an indemnity clause in the Agreement of Lease signed in 1944. This clause provides:

 
Fourteen: Lessee agrees to save Defense Corporation harmless against any liability whatsoever because of accidents or injury to persons or property occurring in the operation or use of the [leased] Machinery by Lessee. Lessee also agrees that during the term of this lease or any extension thereof, it will procure and maintain at its cost public insurance and property damage insurance in such amounts and with such companies as Defense Corporation shall approve or require. The policies evidencing such insurance shall name Defense Corporation as an assured and shall be delivered to Defense Corporation.

 The DPC argues that this indemnity clause covers liability under CERCLA, whereas Elf argues that for a number of reasons, it does not. Because we find that the clause itself is not ambiguous and that the clause's terms do not extend to cover CERCLA actions, we do not address most of Elf's arguments.

 In the Third Circuit, private indemnity clauses are effective to allocate CERCLA costs, but cannot transfer actual liability from one party to another. Beazer East v. Mead Corp., 34 F.3d 206, 1994 WL 487889, at * 4 (3d Cir. 1994); Tippins Inc. v. USX Corp., 37 F.3d 87, 1994 U.S. App. LEXIS 24550, at n.4 (3d Cir. 1994); 42 U.S.C. § 9607(e)(1).

 In order for a pre-CERCLA indemnification clause to cover CERCLA liability, courts have uniformly held that the clause must be either "[1] specific enough to include CERCLA liability or [2] general enough to include any and all environmental liability which would, naturally, include subsequent CERCLA claims." Beazer, 34 F.3d 206, 1994 WL 487889, at * 4; The clause must be clear and unequivocal. Hatco, 801 F. Supp. at 1321; Purolator Prods. v. Allied-Signal, 772 F. Supp. 124, 131 (W.D.N.Y. ...


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