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Silgan White Cap Americas, LLC v. Alcoa Closure Systems

April 29, 2009


The opinion of the court was delivered by: Judge Nora Barry Fischer



This action arises out of a dispute between Plaintiff Silgan White Cap Americas, LLC ("Plaintiff" or "Silgan") and Defendants Alcoa Closure Systems and Alcoa, Inc. (collectively "Alcoa" or "Defendants") regarding the parties' respective environmental liabilities at a manufacturing facility located in Richmond, Indiana. Silgan has brought claims against Alcoa under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9613, for cost recovery and contribution from Alcoa for certain environmental clean up costs and also seeks a declaratory judgment regarding future costs. (Docket No. 1). Alcoa has filed a motion to dismiss these claims pursuant to Rule 12 of the Federal Rules of Civil Procedure. (Docket No. 18). Based on the following, Alcoa's motion is denied.


A. Allegations in Silgan's Complaint

The site at the center of this litigation is a manufacturing facility ("the facility") located in Richmond, Indiana. (Doc. No. 1 ¶ 2). Alcoa, through its corporate predecessors, owned the facility from approximately 1947 to April 1, 1997. (Doc. No. 1 ¶ 15). Alcoa sold the facility to Silgan on April 1, 1997 pursuant to an Acquisition Agreement, which is further detailed below. (Id. at ¶ 16). Silgan alleges that "[h]azardous substances deriving from Alcoa's manufacturing operations were released or threatened to be released at or from" the facility, and that the Indiana Department of Environmental Management ("IDEM") has alleged that these hazardous substances are present in the groundwater and soil at the site and have migrated off-site to adjoining property via groundwater. (Id. at ¶¶ 17, 19). The hazardous substances included volatile organic compounds, semi-volatile organic compounds, certain metals, polycholorinated biphenyls and petroleum. (Id. at ¶ 18). These substances were contained in approximately nineteen underground storage tanks at the facility, arranged in two clusters. (Id. at ¶ 20). Silgan avers that unauthorized releases from tanks in both clusters resulted in documented soil and groundwater contamination as early as 1986. (Id. at ¶ 6).

Silgan also alleges that "[s]hortly after Alcoa sold the Facility to Silgan, Alcoa entered the Indiana Voluntary Remediation Program ("VRP") and agreed to undertake investigation and necessary cleanup of the soil and groundwater contamination at the Site." (Id. at ¶ 21). However, Silgan maintains that Alcoa did not submit a site investigation report or prepare a remedial work plan acceptable to IDEM for a period of nine (9) years after entering into the program. (Id.). Silgan further avers that Alcoa's initial work plan submitted in June of 2000 was rejected by IDEM "due to significant deficiencies." (Id.). As a consequence, Silgan contends that Alcoa "failed to institute any remedial action to remove any potential sources of contamination emanating from the Site during this nine year period" and that Silgan undertook its own actions to remediate the Site including submitting a Proposed Interim Remedial Action Plan to IDEM on November 13, 2006.

(Id.). Silgan and IDEM engaged in certain correspondence regarding the Proposed Plan and on February 9, 2007, an administrative settlement was reached which Silgan alleges that their agreement "provides for the performance of response work by Silgan and reimbursement of response costs incurred by IDEM at or in connection with the releases of hazardous substances and petroleum at or from the Facility." (Id. at ¶¶ 24-26). Pursuant to this settlement,

Silgan agreed to undertake certain specific activities with respect to the Site, including but not limited to, the following: (1) development of a Further Site Investigation ("FSI") Work Plan in accordance with IDEM's January 20, Letter; (2) implementation of the FSI Work Plan once it has received IDEM's approval; (3) development of a Feasibility Study, if requested by IDEM; (4) development and implementation of a Remediation Work Plan ("RWP"), once it has received IDEM's approval; (5) submittal of a RWP Completion Report once the RWP has been implemented; (6) performance of any additional work deemed necessary by IDEM based on the approved RWP and the Completion Report; (7) recording and adherence to an IDEM-approved environmental restrictive covenant; (8) maintenance of any corrective measures or institutional controls; and (9) payment of IDEM's response costs. (Id. at ¶ 28). Finally, Silgan avers that it has expended certain costs in undertaking these actions, claiming it has spent in excess of $500,000. (Id. at 29).

Given this background, Silgan asserts the following three*fn1 causes of action against Alcoa under CERCLA: (1) a claim seeking recovery of response costs from Alcoa pursuant to section 107(a), 42 U.S.C. § 9607(a)*fn2 ; (2) a claim seeking contribution from Alcoa under section 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B)*fn3, for the costs incurred by Silgan in responding to the release and/or threatened release of hazardous substances at the site; and (3) a declaratory judgment that Alcoa is "liable for all or a portion of the costs incurred or paid, and to be incurred or paid, by Silgan, at, on, near, from, or in connection with the Site" pursuant to section 113(g), 42 U.S.C. § 9613(g)(2)*fn4 and 28 U.S.C. § 2201.*fn5

B. Acquisition Agreement

Pursuant to the sale of the facility from Alcoa ("Seller") to Silgan ("Buyer"), the parties entered into an Acquisition Agreement dated April 1, 1997. (Docket No. 19-2). The Agreement provides that Silgan agreed to purchase certain Assets*fn6 from Alcoa on an "AS IS, WHERE IS" basis for a total purchase price of $17,002,480, plus interest. (Id., §§ 2.1, 2.2). In addition, Silgan agreed to assume certain Assumed Liabilities*fn7 as defined therein and the parties agreed that: "other than the Assumed Liabilities, the Buyer shall not assume or be responsible for, and the Seller shall retain and remain responsible for, any and all obligations and liabilities of the Seller of any nature whatsoever, whether past, current or future, whether accrued, contingent, known or unknown." (Id. at § 2.1(b)).

The Agreement also contains two comprehensive indemnification provisions, at Articles XII, titled "Environmental Matters" and XIV, titled "Survival of Representations and Warranties; Indemnification." (Id. at art. XII, XIV). Section 14.7 delineates between the indemnification provisions in the two Articles, requiring that all claims related to environmental matters be governed by the indemnification provisions contained within Article XII. (Id. at § 14.7). Specifically, section 14.7 provides:

Section 14.7. Distinct from Article XII. Notwithstanding anything contained in this Article XIV, all claims for indemnification arising out of or related to environmental matters shall be solely covered by and subject to Article XII and the limitations set forth therein. The limitations, rights, and remedies contained in this [Article] XIV are distinguished from and in addition to those separately provided in Article XII. (Id.). Pursuant to section 12.6, the parties generally agreed that Alcoa would indemnify and save Silgan from and against any and all "Pre-Closing Environmental Liabilities"*fn8 and Silgan would indemnify and save Alcoa from and against any and all "Post-Closing Environmental Liabilities."*fn9

(Id. at 12.6(a)-(b)). Those terms are specifically defined to require indemnification for liabilities arising from any Applicable Law,*fn10 including CERCLA, 42 U.S.C. §§ 9601 et seq. (Id. at §§ 12.2(d), (e), (f)). In addition, Alcoa agreed to be responsible for the completion of certain remedial actions specified in the Agreement and indemnify Silgan for any liabilities arising from its completion of same including, inter alia, the investigation, identification and cleanup of PCBs, abatement of certain previously identified materials containing asbestos, as well as the preparation and filing of required toxic release inventory forms. (Id. at 12.6(c). The parties' respective indemnification obligations are subject to the procedures and limitations set forth in sections 12.7 and 12.8, which provide that:

Section 12.7. Procedures.

(a) The obligations of Seller and/or ALCOA to indemnify Buyer Indemnitees pursuant to Section 12.6(a) above shall be in effect only with respect to claims for indemnification made in writing thereunder from the ...

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