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Contract Interpretation – EPA Investigation Costs

By: Derek Hawkins//September 28, 2015//

Contract Interpretation – EPA Investigation Costs

By: Derek Hawkins//September 28, 2015//

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Civil

7th Circuit Court of Appeals

Officials: BAUER, KANNE, and WILLIAMS, Circuit Judges

Contract Interpretation – EPA Investigation Costs

No.14-3634 Peoples Gas Light and Coke Company v. Beazer East, Inc.

Indemnification clause agreement entered between appellant and defendant-appellee’s predecessor barred recovery of costs related to environmental investigation.

“Federal courts look to whether a pre-CERCLA indemnification clause is specific enough to include CERCLA liability or general enough to include any and all environmental liability. Beazer East, 34 F.3d at 211. The 1920 agreement contains clear and unequivocal language that Koppers’ obligation to operate the coke plant is assumed “without liability of any character on the part of ‘Koppers’” (emphasis added). This is precisely the kind of broad and general release language that has been construed by courts to encompass CERCLA liability. See E.I. Du Pont de Nemours and Co. v. United States, 365 F.3d1367, 1373 (Fed. Cir. 2004)(holding that an indemnification clause reciting the government’s agreement to hold a contractor “harmless against any loss, expense, or damage” arising out of the performance of certain work and not due to the personal failure of the contractor to exercise good faith covered CERCLA liability); SmithKline Beecham Corp.,89 F.3d at 159–60 (holding that a contract that indemnified the buyer against “all material liabilities relating to the conduct of the business prior to the First Closing Date … which are not assumed by the Buyer” under a different subsection contained the “sort of broad language in pre-CERCLA contracts” that encompasses CERCLA liability); Purolator Prods. Corp. v. Allied Signal, Inc., 772 F. Supp. 124 (W.D. N.Y. 1991) (holding that a provision indemnifying for “all liabilities and obligations … relating to or arising out of the Assets” was expansive enough to include CERCLA liability); American Nat’l Can Co. v. Kerr Glass Mfg. Corp., No. 89-C-0168, 1990 WL 125368, *3 (N.D. Ill. August 22, 1990) (indemnity provision covering “any claim of any kind or nature whatsoever with respect to the business … arising out of the facts or events occurring prior to the Closing Time” was sufficiently broad to encompass future CERCLA liability). It is readily apparent from a plain reading of paragraph 48 that the parties sought to release Koppers from all future claims, including environmental liability, arising out of Koppers’ operation of the plant. Accordingly, we agree with the district court that the language of the 1920 agreement bars Peoples’ claim for contribution from Koppers under CERCLA § 113(f)(3)(B).”

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.

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