Valbruna Slater Steel Corporation, et al., Plaintiffs-Appellees, Cross-Appellants,
Joslyn Manufacturing Company, et al., Defendants-Appellants, Cross-Appellees.
May 16, 2019
Appeals from the United States District Court for the
Northern District of Indiana, Fort Wayne Division. No.
l:10-cv-00044-JD - Jon E. DeGuilio, Judge.
Bauer, Hamilton, and St. Eve, Circuit Judges.
EVE, CIRCUIT JUDGE.
case is about an on-and-off, decades-long effort to stop an
Indiana steel mill's pollution. Valbruna Slater Steel
purchased the mill (or the "site") in 2004, and it
quickly got to work on needed, but costly, cleanup efforts.
Valbruna then sued Joslyn Manufacturing Company, which last
operated the site in 1981, to recover costs under both the
Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) and Indiana's Environmental Legal
Actions statute (ELA).
fault is undisputed; its operation of the site started the
pollution problems. But Joslyn defended itself in the
district court on claim-preclusion, statute-of-limitations,
and contribution grounds. The district court decided the
CERCLA claim was not precluded, but the ELA claim was. It
also decided the suit was timely. The district court,
however, did impose equitable contribution on Valbruna,
requiring it to pay for a quarter of the past and future
costs incurred during the site's cleanup. Joslyn appeals
and Valbruna cross-appeals. We affirm across the board.
steel manufacturer, owned and operated the site, located in
Fort Wayne, Indiana, from 1928 to 1981. Joslyn's
operation polluted nearby soil, sludge, and, as a result,
groundwater. In 1981, Joslyn sold the site to Slater Steels
Corporation through an Asset Purchase Agreement. After
acquiring the site, Slater set to work with cleanup efforts.
Slater did so, the record suggests, upon pressure from
regulators and to bring the site into compliance with the
Resource Conservation and Recovery Act of 1976. See
42 U.S.C. § 6901 et seq.
1981 to 1987, Slater excavated sludge and contaminated soil
from two areas on the site: an impoundment area and a waste
pile. The excavation, however, did not remove all
contaminates. In 1988, Slater signed an agreement with the
EPA, which permitted monitoring of the site until the Indiana
Department of Environmental Management (IDEM) could certify
the closure of the polluted areas. In 1991, Slater undertook
more work, this time capping the excavated impoundment area
with a concrete lid to prevent runoff. Slater also
implemented a ground-water detection program. IDEM then
issued a certification of completion for the work Slater had
started, though IDEM recognized that more work was ongoing
and necessary at the site.
repeatedly tried to get Joslyn to pay for the cleanup work it
had done, to no avail. In 1988 and again in 1994, Slater sent
Joslyn a demand letter explaining that Joslyn was responsible
for the cleanup under their agreement. Joslyn disagreed,
telling Slater that it had assumed responsibility for the
costs. Slater escalated its demand in 1999. With another
demand letter, it sought costs not just per the agreement,
but under CERCLA and the ELA statute as well. Joslyn again
declined to pay for the cleanup.
dispute headed to court. In 2000, Slater sued Joslyn in an
Indiana state court seeking (1) indemnification under the
agreement and (2) costs under the ELA statute. Slater did not
bring a CERCLA claim in its state-court suit-nor could it.
Federal courts have exclusive jurisdiction over CERCLA
claims. 42 U.S.C. § 9613(b).
state-law claims ultimately failed. First, in 2001, the trial
court ruled that the ELA statute-enacted in 1998- could not
be retroactively enforced. (Later, in different litigation,
the Indiana Supreme Court supported retroactive application.
See Cooper Indus., LLC v. City of South Bend, 899
N.E.2d 1274, 1285 (Ind. 2009). But for Slater's purposes,
its ELA claim was over.) Then, in 2003, Slater filed for
bankruptcy and stopped cooperating in discovery. When it
failed to produce its environmental manager for a deposition,
Joslyn moved to dismiss for want of prosecution under Indiana
Trial Rule 41(E). The trial court granted that motion in
2004, with the state suit pending, Valbruna purchased the
site at a competitive bankruptcy auction. It paid $6.4
million. Before finalizing the deal, and apparently
recognizing the ongoing pollution hazards, Valbruna
negotiated with IDEM. Valbruna and IDEM agreed to a
Prospective Purchase Agreement (PPA). Under the PPA, both
parties agreed to put down $500, 000 each, the total of which
would go toward cleanup if Valbruna won the auction.
Valbruna won the auction, its purchase contract granted
Valbruna the right to intervene in Slater's pending
state-court suit. Valbruna never did so. Valbruna, instead,
set out to perform more cleanup in 2005, as the PPA required.
IDEM approved Valbruna's cleanup plan, but the plan
budgeted to (and ultimately would) deplete more than the
$500, 000 Valbruna set aside. In 2007, with work ongoing,
IDEM again reviewed the site, and ordered even more cleanup.
with how much the cleanup cost, Valbruna filed this suit in
2010 against Joslyn in federal court. Valbruna claimed cost
recovery pursuant to § 107 of CERCLA, 42 U.S.C. §
9607(a), and the ELA statute, Ind. Code §§
13-30-9-2-3. Valbruna also sought a declaratory judgment
regarding Joslyn's liability. Joslyn counterclaimed for
contribution under § 113(f). 42 U.S.C. § 9613(f).
Valbruna did not cause the pollution, Joslyn admitted, but
under § 107(a)(1), a facility's owner, like
Valbruna, may be liable for cleanup costs.
moved to dismiss on claim-preclusion grounds, citing the
earlier state-court suit between it and Slater. The district
court converted that motion to one for summary judgment. It
granted the motion with respect to the ELA claim, concluding
that Slater and Valbruna were in privity, but it denied the
motion on the CERCLA claim. The court explained, in a revised
ruling, that because CERCLA is an exclusively federal claim
there could be no claim preclusion based on the failure to
raise it in an earlier state-court suit.
then tried to defeat the CERCLA claim on a different ground.
It filed a motion for summary judgment arguing that the claim
was time-barred because it was brought more than six years
after the start of "remedial action" -Slater's
earlier cleanup, according to Joslyn. 42 U.S.C. §
9613(g)(2). The district court disagreed. In a thorough
opinion, the district court decided, as a matter of law, that
Slater's cleanup was "removal" and therefore
the relevant limitations period had not tolled. Compare
id. § 9613(g)(2)(A) (time limits for removal
actions) with (B) (time limits for remedial
actions). Joslyn attempted to amend its answer, adding the
claim-preclusion and statute-of-limitations defenses for
which it had already filed summary-judgment motions. The
magistrate judge granted Joslyn leave to amend but struck the
defenses, concluding that the district court's earlier
decisions settled that those defenses did not apply as a
matter of law. Joslyn asked for reconsideration, which the
magistrate judge denied.
was undeterred. It filed another motion for summary judgment,
without first seeking leave as the court had told it to.
Again, Joslyn argued its already-stricken claim-preclusion
and statute-of-limitations defenses. Valbruna then sought a
declaration that Joslyn was liable under § 107(a) of
CERCLA. The district court denied Joslyn's successive
motion and granted Valbruna's motion, finding that there
was no question that Joslyn, as the initial polluter, was
left only two issues: damages and contribution under CERCLA.
The case went to a bench trial in two phases on those issues.
As for damages, after trial the district court concluded that
Valbruna had incurred $2, 029, 871.09 in costs while
remediating the site. It then reduced that amount by $500,
000, believing that it would be unfair for Valbruna to
recover that sum twice, as it had been contemplated in
Valbruna's purchase price and the PPA. As for
contribution, the district court apportioned liability for
past and future costs: 75% for Joslyn, 25% for Valbruna. The
district court justified Valbruna's share by citing its
assumed risk in purchasing an old metal-production site with
well-known pollution problems.
appealed and Valbruna cross-appealed.
parties on appeal continue their dispute over who should pay
what for the site's costly clean up. The answer turns on
issues of preclusion, timeliness, and the district
court's discretion in equitably allocating costs. We will
address those issues and the parties' appeals in turn.