978-1285770178 Case Printout Case CPC-25-06 Part 2

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Before MOTZ, KING, and DIAZ, Circuit Judges.

Affirmed by published opinion. Judge MOTZ wrote the opinion, in which Judge KING and Judge DIAZ joined.

Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601–9675 (2006). PCS

counterclaimed and also brought third-party contribution actions against parties with past and current connections to

the site. The district court bifurcated the case for trial. At the conclusion of the first bench trial, it found PCS a po-

tentially responsible party jointly and severally liable for response costs at the site. At the conclusion of the second

bench trial, the court found some of the other parties, including Ashley, potentially responsible parties, each liable

the National Contingency Plan. 42 U.S.C. §§ 9601(9), (22), 9607(a); see ABB Indus. Sys., Inc. v. Prime Tech., Inc.,

of federal common law.” Monsanto, 858 F.2d at 171–72. Under these principles, apportionment is available only

when a PRP proves that “there is a reasonable basis for determining the contribution of each cause to a single harm.”

Burlington Northern, 556 U.S. at 614, 129 S.Ct. 1870 (quoting Restatement (Second) of Torts § 433A(1)(b) (1963–

Chem. & Solvent Co., 184 F.3d 373, 385 (4th Cir.1999). FN1

Central to this CERCLA case is the history of the site at issue here—approximately forty-three acres located in

Charleston, South Carolina. As a result of decades of phosphate fertilizer production, the westernmost thirty-four

Planters Fertilizer & Phosphate Company, now known as Ross Development Corporation, purchased the site in

1906. Planters manufactured phosphate fertilizer at the site by reacting sulfuric acid with phosphate rock. Planters

produced the sulfuric acid for the process on-site, and stored the acid in lead-lined tanks. Prior to the 1930s, Planters

used pyrite ore as the primary fuel for its sulfuric acid production. The burning of pyrite ore generated a pyrite slag

equipment—to Columbia Nitrogen Corporation (“Old CNC”).

Old CNC continued operations of the acid and fertilizer plants until 1970 and 1972, respectively. Although Old

CNC did not use pyrite ore, its superphosphate fertilizer production generated dust that contained elevated levels of

arsenic and lead, and contributed to arsenic and lead soil contamination on the site. During its operations, Old CNC

The site remained inactive until 1977, when Old CNC began to dismantle the remaining structures, a process

completed in January 1981. All told, Old CNC’s construction and demolition activities between 1971 and 1981 af-

Old CNC did not limit its fertilizer production to the site. Rather, while owning the site, Old CNC also owned

and operated an ammonia and nitrogen fertilizer plant in Augusta, Georgia. In 1986, over a year after Old CNC had

sold its Charleston site, Old CNC’s parent corporations, Koninklijke DSM N.V. and DSM Chemicals North America

(collectively “DSM Parties”), decided to shut down Old CNC to benefit from a $100 million tax advantage in the

Netherlands. To do so, Old CNC sought a buyer for certain “Assets” and its “Acquired Business,” including its Au-

New CNC accepted the acquired business and assets “as is.” After closing, New CNC immediately changed its name

to “Columbia Nitrogen Corporation”—the same name under which Old CNC operated. At the same time, Old CNC

initiated the process of liquidation and dissolution.

After the acquisition, New CNC continued producing ammonia– and nitrogen-based fertilizers at the Augusta

Holcombe and Fair intended to subdivide and lease the site, and the record contains no evidence that Holcombe

and Fair introduced any new hazardous substances to the site. However, even after learning of the possibility (and

ultimate existence) of hazardous substances on the site, Holcombe and Fair undertook site-wide earth-moving activi-

ties, including the construction of a street extension, the addition of water and sewer lines, excavation and grading,

First, in December 1987, Holcombe and Fair sold three acres of the site to Max and Marlene Mast. The Masts sold

their parcel to Allwaste Tank Cleaning, Inc., in August 1988. Allwaste operated a shipping container cleaning and

storage business and in 1991 leased two additional acres from Holcombe and Fair for storage. As part of its opera-

In December 1990, Holcombe and Fair contracted to sell two acres of the site to Robin Hood Container Express

(“RHCE”). In December 1991, RHCE directed and paid for the excavation of a 1380–cubic–foot pond, two asphalt

driveways, and extended sewer and water lines on the site. Contractors for RHCE also stripped six inches of topsoil

and graded and proof-rolled the land. A month later, Holcombe and Fair conveyed the two-acre parcel to RHCE’s

president, Robin Hood, who leased it to RHCE to operate a dropyard. During its tenure, RHCE filled in the pond,

Finally, in November 2003, Holcombe and Fair sold their remaining 27.62 acres of the site to Ashley II of

Charleston, Inc., for $2.7 million. Ashley purchased the site to include it as a portion of its Magnolia Develop–

ment—a sustainable, mixed-use project. As with other parcels within the project, Ashley purchased the site with

knowledge of, and the intent to remediate, the contaminated soils.

All-waste conveyed the parcel to Ashley in May 2008.

In investigating and remediating the site, Ashley to date has incurred response costs totaling at least

$194,000.FN3

PCS denied liability as a successor corporation to Old CNC, and in the alternative filed a contribution counter-

claim under 42 U.S.C. § 9613(f) against Ashley and third-party claims against Ross, the DSM Parties, Holcombe

and Fair, Allwaste, RHCE, and the City of Charleston. Those parties in turn filed counter– and cross-claims against

On September 28, 2007, after a bench trial on PCS’s liability, the court held that PCS was a corporate successor

to Old CNC, and thus jointly and severally liable to Ashley for response costs as a PRP for the site. A year later, the

presiding judge disqualified himself from further participation in the case, and the case was reassigned to another

judge. On June 2, 2009, the successor judge denied PCS’s motion to vacate the original judge’s order as to PCS’s

liability. Shortly thereafter, the court granted summary judgment to the DSM Parties, holding them not liable be-

These appeals followed. On appeal, no party disputes that Ashley incurred response costs for the cleanup of

hazardous substances at the site that were consistent with the National Contingency Plan. Rather, the parties solely

dispute whether and to what amount each is liable for response costs at the site.

II.

hazardous substances at the “facility”; and (4) any “person” who accepts hazardous substances “for transport to dis-

posal or treatment facilities, incineration vessels or sites.” 42 U.S.C. § 9607(a)(1)-(4); Nurad, 966 F.2d at 841. The

classes of PRPs have an undeniably broad reach. See United States v. Atl. Research Corp., 551 U.S. 128, 136, 127

S.Ct. 2331, 168 L.Ed.2d 28 (2007). But they nonetheless remain subject to the limitations of derivative liability in-

herent in corporate law. See United States v. Bestfoods, 524 U.S. 51, 62–64, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998).

With these principles in mind, we review the district court‘s determinations of PRP status de novo. See Pneumo

Abex Corp. v. High Point, Thomasville & Denton R.R. Co., 142 F.3d 769, 773 (4th Cir.1998). We first consider

PCS’s appeal of the determination that it is a PRP. Then, we turn to the multiple challenges to the determinations of

[4] Under CERCLA, successor corporations may be liable for the actions of their predecessors. United States v.

Carolina Transformer Co., 978 F.2d 832, 837 (4th Cir.1992). However, as at common law, a corporation that ac–

quires the assets of another corporation typically does not acquire its liabilities, unless “(1) the successor expressly

or impliedly agrees to assume the liabilities of the predecessor; (2) the transaction may be considered a de facto

site under the 1986 Acquisition Agreement. In doing so, we review the district court’s applications of contract prin-

ciples de novo, and its findings of fact with respect to extrinsic evidence for clear error. Hendricks v. Cent. Reserve

Life Ins. Co., 39 F.3d 507, 512–13 (4th Cir.1994). Under the Acquisition Agreement‘s choice of law provision, we

apply New York contract law.

as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance, and a

sensible meaning of words should be sought.

William C. Atwater & Co. v. Panama R.R. Co., 246 N.Y. 519, 159 N.E. 418, 419 (1927). Thus, when consider-

ing isolated, potentially conflicting provisions, so long as a contract “makes clear the parties’ over-all intention,” a

Applying these principles, the district court initially held, as Ashley maintained, that New CNC unambiguously

assumed Old CNC’s CERCLA liabilities for the Charleston site under the Acquisition Agreement. We cannot agree.

unknown, future CERCLA liability. The liability assumed, however, was only that “arising out of or in connection

with the Acquired Business or the Purchased Assets.”

It is undisputed that the phrase “arising out of or in connection with” would transfer liabilities from businesses

or assets no longer owned by a seller in a stock sale. But typically this phrase does not transfer such liabilities in an

This ambiguity also defeats PCS’s contention that the Acquisition Agreement clearly provides that New CNC

did not assume Old CNC’s CERCLA liabilities for the site. For PCS can point to no language in the Agreement

which clarifies that, even if this were an atypical stock-like asset sale, New CNC assumed no CERCLA liabilities

for the site.

only the certain obligations “relating to the Acquired Business and Purchased Assets” but also those “applicable to

the Seller.” Where a general provision like that at the outset of § III conflicts with a specific provision like that in §

3.4, “the specific provision controls.” Muzak Corp., 150 N.Y.S.2d 171, 133 N.E.2d at 690.

Therefore, we cannot accept either party’s arguments that the Agreement unambiguously determines whether

extrinsic evidence offered by the parties during the bench trial, and alternatively found based on that evidence that

New CNC intended to and did acquire CERCLA liabilities for the site under the Acquisition Agreement. We review

a district court‘s factual finding as to intent for clear error. See Hendricks, 39 F.3d at 512. We can reverse only if,

court initially found that even if the “as if” clause in the Agreement did not evince the parties’ intent to enter into

something very akin to a stock sale, at the very least the clause was ambiguous. Thus, the court considered the ex-

trinsic evidence and found it demonstrated that the parties did intend to enter into an agreement “tantamount to a

stock sale,” i.e., “as if” meant “equivalent to.”

supported Ashley’s position that Old CNC transferred this liability to New CNC.

The district court also pointed to the extrinsic evidence that Old CNC discounted its sale price of $50 million by

sixty percent from book value, and discounted an additional $5 million from the sale price in exchange for New

CNC’s assumption of the business and assets “as is,” i.e., including unknown environmental liabilities. The court

Finally, the court found that New CNC intended to acquire “substantially all” of Old CNC—including its envi-

ronmental liabilities—evidenced by two other agreements that New CNC entered into at the same time as the Acqui-

sition Agreement. One of these agreements governed future advances, and the other contained guarantees signed by

the chairman of New CNC. In both, New CNC stated that it was purchasing “substantially all” of Old CNC’s liabili-

PCS maintains that the district court clearly erred in so finding. PCS first contends that, contrary to the district

court’s conclusions, Old CNC‘s foremost intent to dissolve for tax benefit purposes and its agreement to discount its

erations. Although these facts are helpful to PCS’s position, none require a finding in its favor.

Finally, PCS contends that, although Recital B describes the Agreement “as if” it were a stock sale, at the time

the Agreement was executed witnesses at trial “agreed” that the sale transferred only assets. If the undisputed evi-

dence at trial had established such contemporaneous “agreement” between Old CNC and New CNC, then PCS

ambiguous contract language, and the district court, as fact finder, found in favor of Ashley. We cannot conclude

that the court clearly erred in doing so. Here, as in many other cases, “both the intrinsic and extrinsic evidence of

intended reach of the agreement might have supported a contrary finding.” See Brown v. Balt. & Ohio R.R. Co., 805

F.2d 1133, 1140 (4th Cir.1986). But we are not “left with the definite and firm conviction that a mistake has been

committed.” Easley, 532 U.S. at 242, 121 S.Ct. 1452 (internal quotation marks omitted). Accordingly, we must af-

another party was a PRP under § 9607(a). See Minyard Enters., 184 F.3d at 385. We consider each defendant’s chal-

lenge to PRP status in turn, reviewing the district court’s ultimate determinations of PRP status de novo, and its fac-

tual findings underlying those determinations for clear error.

Fair accept that past owners or operators of a facility are liable for “secondary disposals”—that is, the movement or

dispersal of already-once-disposed hazardous substances through earth-moving or construction activities—that oc-

cur during their ownership or operation of the facility. See Tanglewood E. Homeowners v. Charles–Thomas, Inc.,

844–46 (interpreting “disposal” broadly to include passive acts, such as leaking or spilling).

Instead, Holcombe and Fair challenge the district court‘s finding that a secondary disposal actually occurred

during their ownership of the site. Holcombe and Fair argue that the court clearly erred because PCS offered no

“discrete proof” that Holcombe and Fair actually moved or dispersed contaminated soils during their earth-moving

stances [and] need not be proven by direct evidence.” Tosco Corp. v. Koch Indus., Inc., 216 F.3d 886, 892 (10th

Cir.2000); see also Franklin Cnty. Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 547

(6th Cir.2001).FN5 Thus, as with any other factual finding, we are bound to affirm any inference of CERCLA liabil–

ity if “plausible in light of the record viewed in its entirety.” See Davis v. Richmond, Fredericksburg & Potomac

R.R. Co., 803 F.2d 1322, 1327 (4th Cir.1986) (internal quotation marks omitted).

Accordingly, we affirm both the court’s finding that a disposal occurred during Holcombe and Fair’s ownership

of the site, and its holding that Holcombe and Fair are therefore PRPs for the site under 42 U.S.C. § 9607(a)(2).