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Caldwell Trucking PRP v. Rexon Technology Corp.

August 31, 2005

CALDWELL TRUCKING PRP, AN ORGANIZATION OF DEFENDANTS IN CIVIL ACTION NO. 94-1473 (WGB) (D.N.J.) FOR THEMSELVES AND ON BEHALF OF OTHER SETTLING DEFENDANTS WHOSE CONTRIBUTION CLAIMS THEY MAY ASSERT PURSUANT TO AN ASSIGNMENT OF RIGHT APPELLANTS
v.
REXON TECHNOLOGY CORP; PULLMAN TRANSPORTATION COMPANY; S.B. THOMAS INC.; ADT AUTOMOTIVE, INC., (PARENT TO SKYLINE AUTOMOTIVE EXCHANGE); AERO METAL PRODUCTS CORP., (SUBSIDIARY OF HILLSIDE SPINNING & STAMPING CO.); AIRE-SCIENCES INC., (SUCCESSOR-IN-INTEREST TO EDO-AIR DIVISION OF EDO CORPORATION); ALFA MACHINE & TOOL CO., INC.; ALLEN BRADLEY COMPANY, INC., (SUCCESSOR-IN-INTEREST TO THETA INSTRUMENTS CORP.); AMERICAN TELEPHONE & TELEGRAPH CO., (SUCCESSOR-IN-INTEREST TO WESTERN ELECTRIC CO.); ANDERSON & VREELAND, INC., (INDIVIDUALLY AND AS SUCCESSOR-IN-INTEREST TO WILLIAMSON & CO., INC.); ANJUL INC.; ARCS FABRICATORS INC.; ASSOCIATED TESTING LABORATORIES; BAUREIS REALTY CO., INC.; BAXTER RUBBER CO., INC.; BECTON DICKINSON & COMPANY; BEE CHEMICAL CO., INC., (WHOLLY-OWNED SUDSIDIARY OF MORTON INTERNATIONAL, INC.; BELL MOLDED PRODUCTS INC.; BILTRITE TOOL & DIE; BLOOMFIELD MANUFACTURING CO., INC.; BROWNING-FERRIS INDUSTRIES OF PATERSON NEW JERSEY, INC.; CANTEL INDUSTRIES, INC., (SUCCESSOR-IN-INTEREST TO CHAROZ-CARSON CORP.); CARTRIDGE ACTUATED DEVICES, INC.; CHEM SYSTEM, INC.; CHRONOS RICHARDSON, INC., (SUCCESSOR-IN-INTEREST TO HOWE-RICHARDSON COMPANY, INC.); COBEHN, INC; COLTEC INDUSTRIES, INC., (FORMERLY KNOWN AS COLT INDUSTRIES, INC., CRUCIBLE STEEL DIVISION, SUCCESSOR-IN-INTEREST TO CRUCIBLE SPECIALTY METALS CO.); CONOPCO, INC., (SUCCESSOR-IN-INTEREST TO GOOD HUMOR CORP.); COOK & DUNN PAINT CORP.; CRANE CO., INC.; CWC, INC., (SUCCESSOR-IN-INTEREST TO CULLIGAN WATER CONDITIONING COMPANY OF NORTH JERSEY, INC.); DELTA SALES CO., INC.; AIROYAL DIVISION, (SUCCESSOR-IN- INTEREST TO AIRROYAL ANUFACTURING CO., INC.); EASTERN CYCLONE INDUSTRIES, INC.; FAIRFIELD FILTER CORP.; FAIRFIELD TEXTILES CORP., (INDIVIDUALLY AND AS SUCCESSOR-IN-INTEREST TO OTTEX, INC.); FLM GRAPHICS CORPORATION; FOLANDER SHEET METAL CO., INC.; FORD MOTOR COMPANY, INC.; FROELICH/GREENE COLORPRESS, INC., (SUCCESSOR-IN-INTEREST TO COLORPRESS, INC.); GARFIELD INDUSTRIES INC.; GEC MARCONI ELECTRONIS SYSTEMS CORPORATION, (SUCCESSOR-IN-INTEREST TO KEARFOTT DIVISION OF THE SINGER COMPANY, INC.); GENERAL HOSE PRODUCTS, INC.; GENERAL WAYNE GLASS, INC.; HERCULES, INC., (SUCCESSOR-IN-INTEREST TO ESGRAGH, INC.); HILLSIDE SPINNING AND STAMPING CO., INC., (PARENT CORPORATION TO AERO METAL PRODUCTS CORP.); HOFFMANN-LA ROCHE, INC.; SOLBERN DIVISION, SUCCESSOR-IN-INTEREST TO SOLBERN CORP.; HOWDEN GROUP AMERICA, INC., (PARENT TO HOWDEN FOOD EQUIPMENT, INC., SOLBERN DIVISION SUCCESSOR-IN-INTEREST TO SOLBERN CORP.); HURCO MANUFACTURING CO., DIVISION OF HURCO COMPANIES, INC. (SUCCESSOR-IN-INTEREST TO ELTEE ENTERPRISES, INC. AND ELTEE PULSITRON, INC.); INDUSTRIAL BRUSH CO., INC; INGERSOLL-RAND COMPANY, INC.; JAYSON OIL COMPANY, (SUCCESSOR-IN- INTEREST TO HULTS SERVISOFT WATER SERVICE, INC.); JERSEY SPECIALTY CO., INC.; K&N NAMEPLATE, INC.; KONNER CHEVROLET, INC.; KREISLER INDUSTRIAL CORP; L.F.E. & C., INC., (SUCCESSOR-IN- INTEREST TO WEST ESSEX PLUMBING SERVICE); LAWSON PRODUCTS, ; LEWIS STUDIOS, INC; LITTON INDUSTRIES, INC.; MELLONICS SYSTEM DEVELOPMENT DIVISION, (SUCCESSOR-IN-INTEREST TO INFORMATICS GENERAL CORP.); MARVEL MANUFACTURING CO., INC.; MERRIMAC INDUSTRIES, INC., ALSO KNOWN AS MERRIMAC RESEARCH AND DEVELOPMENT, INC.; MONTE SANO & COMPANY, INC.; MYLES F. KELLEY, INC., (SUCCESSOR-IN-INTEREST TO PINEBROOK LUMBER CO.); NATIONAL PRECISION TOOL CO., INC.; NEW JERSEY BELL TELEPHONE CO; PENTEL OF AMERICA, LTD; PIO COSTA ENTRERPRISES; PPG INDUSTRIES, INC.; PYMAH CORPORATION, (PARENT CORPORATION TO INFO-CHEM, INC., A SUBSIDIARY); R&L SHEET METAL CO., INC.; RADIATION SYSTEMS, INC.; ANGHEL LABORATORIES DIVISION, (SUCCESSOR-IN-INTEREST TO ANGHEL LABORATORIES, INC.); RAPP WELDING & DIESEL SERVICES, INC.; RELIANCE ELECTRICAL,CO., INC.; REPUBLIC TOOL & MANUFACTURING CO., INC.; RUDOLPH RESEARCH CORP.; SEARS ROEBUCK & CO., INC.; SMITHS INDUSTRIES AEROSPACE & DEFENSE SYSTEMS, INC., (SUCCESSOR-IN-INTEREST TO CONRAC CORP., SYSTEMS EAST DIVISION); SUMCO INC.; SUMMIT SCIENTIFIC CORP.; THE EVANS PARTNERSHIP, DOING BUSINESS AS EVANS SHURE CONSTRUCTION; 350 PASSAIC ASSOCIATIONS, INC., (SUCCESSOR-IN-INTEREST TO ELECTRO-NUCLEONICS, INC.); TILTON RACK & BASKET CORP.; TITANIUM METALS CORPORATION; TRW, INC.; UNIMATIC MANUFACTURING CORP.; VIBRA SCREW, INC.; WAVELINE, INC.; WELSH FARMS, INC.; WOOLSULATE CORPORATION; YELOF CORP, ALSO KNOWN AS D&J METAL FINISHING COMPANY, SUCCESSOR-IN-INTEREST TO FOLEY METAL FINISHING CO.; CALDWELL TOWNSHIP, A MUNICIPAL CORPORATION OF THE STATE, OF NEW JERSEY; CEDAR GROVE TOWNSHIP, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; MONTVIHIP, (PINEBROOK), A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; PASSAIC CITY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; TOTOWA BOROUGH, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; WAYNE TOWNSHIP, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; JOHN DOE DEFENDANTS, 1 THROUGH 50; JOHN DOE DEFENDANTS, A THROUGH Z; JOHN ROE DE FENDANTS, 1 THROUGH 10; AMERICAN SOUND & VIDEO CORPORATION, (SUCCESSOR-IN- INTEREST TO RKO TAPE CORP.); ASSOCIATED TESTING LABORATORIES, INC.; HAROLD BERNSTEIN, INDEMINTOR OF ADT AUTOMOTIVE, INC.; BOR CORP, FORMERLY DOTHAN AUTO EXCHANGE, INC.- INDEMNITOR OF ADT AUTOMOTIVE INC., FORMERLY HATFIELD AUTO AUCTION, INC., FORMERLY SKYLINE AUTO EXCHANGE, INC., FORMERLY KEYSTONE RECON CENTER, INC.; ESTATE OF FRANCIS L. CARTER, INDEMNITOR OF ADT AUTOMOTIVE, INC., CONRAC CORPORATION; EDO CORPORATION, PARENT OF EDO-AIR DIVISION; ENVIROSOURCE INC., SUCCESSOR TO SOLBERN CORPORATION; HENRY FULOP, INDEMNITOR OF ADT AUTOMOTIVE, INC., JOSEPH A. KEATING, INDEMNITOR OF ADT AUTOMOTIVE, INC.; R&F ALLOY WIRES, CO; HARRY MONTVILLE; MUNICIPAL UTILITIES AUTHORITY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; WAYNE TOWNSHIP BOARD OF EDUCATION, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; PINE BROOK BUILDING SUPPLY, CO., AMERADA HESS CORP; BREED CORP; C.M.W. CORPORATION; C.M.W.L. ASSOCIATES, L.P.; CHARLES MICHAEL REALTY COMPANY; DUTCH LANE DEVELOPMENT COMPANY; EVANS SHURE CONSTRUCTION; GUSMER & MARTIN, INC.; HARRIS & SANITATION; HEISLER MACINE & TOOL, INC.; MORRIS SEPTIC TANK, MORRIS SEPTIC TANK COMPANY, INC.; NORTH AMERICA PHILLIPS CORPORATION; ROXBURY TOWNSHIP; CHARLES EVANS DEVELOPMENT COMPANY; WITCO CORPORATION ADT AUTOMOTIVE, INC., (PARENT TO SKYLINE AUTOMOTIVE EXCHANGE); THE EVANS PARTNERSHIPS D/B/A EVANS SHURE CONSTRUCTION COMPANY; LITTON INDUSTRIES, INC.; PENTEL OF AMERICA, LTD.; SMITHS INDUSTRIES AEROSPACE & DEFENSE SYSTEMS, INC.; MYLES F. KELLY, INC.; MONTE SANO AND COMPANY, INC.; BILTRITE TOOL & DIE, CO.; PIO COSTA ENTERPRISES; GUSMER & MARTIN, INC.; AERO METAL PRODUCTS CORP.; BREED CORPORATION; FAIRFIELD FILTER CORP.; WITCO CORPORATION; JERSEY SPECIALTY CO., INC.; TOTOWA BOROUGH; ASSOCIATED TESTING LABORATORIES, INC.; THE PULLMAN TRANSPORTATION COMPANY, DEFENDANTS/THIRD-PARTY PLAINTIFFS
v.
STORA KOPPARBERG; TELEMAX; T.J. LIPTON; TRW, INC.; UCKO; UNIVERSAL STORAGE WAREHOUSE; WOMETCO, INC.; YALE SECURITY, INC.; INTERSTATE ELECTRONICS CORPORATION; CONRAC TECHNOLOGY CORPORATION; CONRAC ELECTRON, INC.; BELGARVE INDUSTRIES; CONRAC DISPLAY PRODUCTS, INC.; MARK IV HOLDINGS, INC.; HOWDEN FLUID SYSTEM, INC.; BOR CORP, FORMERLY SKYLINE AUTO EXCHANGE, INC.; BOR CORP., FORMERLY HATFIELD AUTO AUCTION, INC.; BOR CORP, FORMERLY KEYSTONE RECON CENTER, INC.; SKORB CORP., FORMERLY HATFIELD AUTO TRANSPORT, INC.; BOR CORP, FORMERLY JOHNSTON AUTO AUCTION, INC.; BOR CORP, FORMERLY DOTHAN AUTO EXCHANGE, INC.; AUCTION ADVISORS, LTD.; LOUIS STERN; JAMES K. WOLOSOFF; THE EVANS PARTNERSHIP, D/B/A EVANS SHURE CONSTRUCTION COMPANY; ADDRESS O GRAPH, INC.; ARIES CORPORATION; ASTLETT; BARD PARKER, A DIVISION OF BECTON-DICKINSON AND COMPANY; BECTON-DICKINSON AND COMPANY; DIGITAL ELECTRONIC SYSTEM, INC.; EQUITAMATICS, INC.; EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, EQUITABLE LIFE COMPANY; GOOD HUMOR CORPORATION; HONEYWELL, INC.; INTERNATIONAL BUSINESS MACHINE CORP; INFORMATICS, INC.; MEMOREX CORPORATION; PHILLIPS PETROLEUM COMPANY; RAPIDATA, INC.; RICOH CORPORATION; SINGER COMPANY, THE SINGER COMPANY; SPERRY RAND CORPORATION; STERLING SOFTWARE, INC.; STANDARD PUBLISHING CO.; CONRAC CORPORATION; JOHN DOE; CORPORATIONS 1-10; PINE BROOK BUILDING SUPPLY, CO., INC.; LOUIS MALACHOWSKY; ROBERT MALACHOWSKY; MACY'S EAST, INC.; DRAGHI A.W. GROUND PRODUCTS CO.; ANTON COMPANY, A NEW JERSEY LIMITED PARTNERSHIP; GEORGE O'CONNOR; RUTH ANN O'CONNOR; OKON CORPORATION; CALDWELL TRUCKING COMPANY, THIRD-PARTY DEFENDANTS
v.
HAROLD BERNSTEIN; HENRY FULOP; JOSEPH A. KEATING; ESTATE OF FRANCIS L. CARTER; JOHN DOES A THROUGH Z; JOHN ROES A THROUGH Z; ABC CORPORATIONS AND/OR PARTNERSHIPS A THROUGH Z, FOURTH-PARTY DEFENDANTS
THE PULLMAN COMPANY, REXON TECHNOLOGY CORPORATION AND MARK IV INDUSTRIES, INC., APPELLANTS



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Civ. No. 95-cv-01690) District Judge: Honorable Dennis M. Cavanaugh.

The opinion of the court was delivered by: Weis, Circuit Judge.

PRECEDENTIAL

Argued May 2, 2005

Before: NYGAARD, AMBRO and WEIS, Circuit Judges.

OPINION

In this appeal we conclude that the text of a retention of liabilities provision in a stock purchase agreement requires assumption of CERCLA responsibilities by the seller, rather than simply indemnification. We also decide that prejudgment interest and the cost of an experimental treatment process are reasonable in a contribution suit under CERCLA section 113. 42 U.S.C. § 9613.

I.

Caldwell Trucking Company provided liquid waste disposal service at its premises in Fairfield, New Jersey. From 1948 to 1974, the waste was deposited in several lagoons on the site, but, beginning in 1975, it was stored in tanks and from there taken to ocean disposal facilities.

Defendant Rexon had plants in Fairfield and Wayne, New Jersey where it manufactured electronic components and fuses for military applications. These activities involved the use of de-greasing substances, which are classified as hazardous materials. Beginning in 1960, Caldwell Trucking provided Rexon with waste disposal for all types of materials in the septic tanks on its properties.

The EPA listed the Caldwell property on the National Priorities List of Superfund Sites in 1983 and issued Records of Decisions in 1986 and 1989, calling for remediation of the contamination present there. Caldwell Trucking and nine other firms (the "Caldwell Group" or "Group") acceded to a consent decree in 1994 providing for remediation and reimbursement to federal and state governments for previously incurred expenses. The Group, the plaintiff here, sought contribution from the many customers of the Caldwell Trucking Company. Most of the claims were settled, but because of a dispute over the interpretation of an agreement between defendants Rexon and the Pullman Company, the claim involving them continued.

At various times, Rexon's stock had been owned by several parent companies.*fn1 Relevant to the case at hand was the purchase by defendant Pullman Corporation in October of 1984 and the sale of all of the stock to a new parent corporation in April 1989. The new parent corporation continued operations using the Rexon name until Rexon was dissolved on June 30, 1995. In the interest of clarity, we will use the name of Rexon, despite its varying parentage, to designate the manufacturing entity found to have contributed to the pollution.

II.

On April 6, 1995, the Caldwell Group filed this suit against Pullman Company, Rexon and the other alleged responsible entities. Rexon's registered agents in New Jersey and Delaware were served with process on April 17, 1995 and May 30, 1995, respectively.

The District Court entered summary judgment on liability in favor of the Caldwell Group against Rexon and Pullman. The critical dispute in that phase of the case was the interpretation of a provision in the 1989 stock purchase agreement assigning responsibility for environmental claims against Pullman and Rexon. The District Court defined the issue as whether Pullman was directly liable or whether it was "merely limited to an exclusive indemnification of Rexon."

Particularly important to the District Court's ruling is paragraph § 1.05, captioned "Seller's Retention of Certain Liabilities," in which Pullman "agrees to assume and become liable for, and pay, perform and discharge and to indemnify...." As the District Court construed the agreement, the parties intended to attribute direct liability to Pullman for a wide range of costs associated with violations of, or noncompliance with, "Environmental Laws as of or prior to the closing date" of the sale in 1989.

The Caldwell Group's claims and the judgment in its favor are not based on the parent/subsidiary relationship between Pullman and Rexon, but rather on Pullman's contractual assumption of responsibility. The District Court pointed out that Rexon had become responsible for its dumping from 1962 to 1982 at the Caldwell site, even though the damage had not become manifest until 1986, three years before the sale. The Court ruled that the contractual provision made Pullman directly liable to the Caldwell Group for Rexon's obligations.

Following the entry of summary judgment on liability against Rexon and Pullman, the Court conducted a bench trial to determine the amount of damages. In extensive findings of fact, the Court considered such matters as the appropriate remediation, the proper costs, and the ingredients in the waste generated by Rexon. These factors led to an allocation of expenses among the other waste generators and Rexon.

The Court directed that Pullman should contribute an 8.05% allocation share amounting to $1,873,560.08 and entered judgment in favor of the Caldwell Group for that amount against Pullman, Rexon and Mark IV Industries,*fn2 jointly and severally, plus prejudgment interest and attorneys' fees.

Pullman, Rexon and Mark IV Industries have appealed, alleging numerous errors in the District Court proceedings. Pullman contends that, under the stock purchase agreement, it did not indemnify Rexon or assume its liabilities other than those existing at its own premises, that Caldwell has no right to a direct action, and that the allocation was erroneous. Morever, it is asserted that the cost of one of the remedial means used should not have been permitted, ...


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