United States v. Seymour Recycling Corp.

Citations: 686 F. Supp. 696; 19 Envtl. L. Rep. (Envtl. Law Inst.) 20523; 27 ERC (BNA) 2173; 1988 U.S. Dist. LEXIS 5481; 1988 WL 58426Docket: IP 80-457-C

Court: District Court, S.D. Indiana; June 8, 1988; Federal District Court

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In the case of United States v. Seymour Recycling Corporation, the U.S. District Court for the Southern District of Indiana addressed three motions: the Board of Aviation Commissioners and the City of Seymour both sought to dismiss cross-claims, while forty-nine generator defendants requested partial summary judgment. The court denied all three motions. The United States initiated this action in 1980 under the Resource Conservation and Recovery Act and the Clean Water Act to address hazardous waste at the Seymour site, naming Seymour Recycling Corporation, the City, and the Board due to their ownership interests. The Board, established to operate Freeman Army Air Field, leased the Seymour site to Seymour Recycling Corporation from 1970 to early 1980, during which it was used for hazardous waste treatment and disposal. Following the enactment of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 1980, the U.S. identified over 350 potentially responsible parties (PRPs) associated with the site. An amended complaint was filed in 1982 under CERCLA, seeking injunctive relief and cost recovery for response actions. The U.S. entered a consent decree with twenty-four major hazardous substance generators, which facilitated a partial cleanup of the site and included a covenant from the City and the Board not to sue these generators. The court approved this consent decree on December 15, 1982.

The Consent Decree included a non-suing covenant from the settling generators towards the United States and the State of Indiana but did not include a similar covenant against the City or the Board. In November 1982, the U.S. offered remaining potentially responsible parties (PRPs) the chance to settle their liability, allowing them to obtain a covenant not to sue in exchange for a pro rata payment based on their waste contribution to the Seymour site. Over 200 PRPs accepted, and in 1983, the U.S. issued Pro Rata Covenants Not to Sue, granting these PRPs the same liability protection as the settling generators, yet still lacking a reciprocal covenant protecting the City and the Board from lawsuits.

In return for signing the Pro Rata Covenants Not to Sue, the City and Board received a Covenant Not to Execute from the U.S. and Indiana, preventing them from enforcing any judgments against the City and Board. On January 4, 1984, the U.S. filed a second amended complaint asserting CERCLA claims against the City and Board and added 49 Generator Defendants who filed cross-claims for contribution against them.

On July 13 and 16, 1984, the Board and City filed motions to dismiss the cross-claims, arguing that their settlement barred these claims and that the defendants had not complied with the Indiana Tort Claims Act. The Court denied these motions, ruling that the Consent Decree and Covenant Not to Execute did not prevent the cross-claims, as they did not explicitly protect the City and Board from being sued. The Court concluded that the parties did not intend to shield the City and Board from contribution claims, highlighting the absence of protective language in the agreements.

The Court determined that the Covenant Not to Execute did not intend to prevent contribution claims against the City and the Board. The Covenant explicitly acknowledged that generators could file claims against these entities. Specifically, Paragraph 2 allows the United States and the State to argue the merits of claims from generators, affirming that the City and the Board could be considered owners and operators under federal pollution laws.

The settlement outlined in the Consent Decree and the Covenant did not bar the defendants' contribution claims contractually or statutorily. Under Section 113(f)(2) of CERCLA, a settlement does not discharge other potentially liable parties unless explicitly stated, and it merely reduces their potential liability by the settlement amount. The Court found that the settlement did not resolve the City and Board's liability to the United States and did not address issues related to contribution claims. Neither the Consent Decree nor the Covenant established whether the City or Board was responsible for cleanup costs.

The Covenant Not to Execute served as a procedural agreement allowing the United States and State to refrain from executing judgments against the City and Board, while leaving the resolution of their liability subject to contribution claims. Additionally, the defendants' alleged noncompliance with the Indiana Tort Claims Act does not impede their contribution claims, as these claims arise under the federal CERCLA statute, which preempts state tort claims.

The Generator Defendants' motion for summary judgment seeking a declaratory judgment for contribution from the City and the Board is denied as it is not ripe for adjudication. The Court concludes that the motion is premature because the Generator Defendants have not yet resolved their liability to the United States, which is a prerequisite for seeking contribution under Section 113(f) of CERCLA. Specifically, a party can only seek contribution after settling its liability with the United States or a state. The Court also notes that it is unable to predict the liability of the City and the Board due to several factors, including unresolved liability among all defendants and the absence of any payments made by the Generator Defendants toward settlement. Consequently, granting the motion would result in an advisory opinion lacking a factual or legal foundation. The Court denies the motions to dismiss from the Board of Aviation Commissioners and the City of Seymour, as well as the motion for partial summary judgment from the Generator Defendants.