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Olin Corp. v. Yeargin, Inc.

Citation: 28 ELR 21362
No. 97-5606, 146 F.3d 398/46 ERC 1801/(6th Cir., 06/09/1998)

The court holds that a chlorine manufacturer may bring contractual indemnification claims against a contractor for environmental costs, fines, and penalties incurred after the contractor's employees were exposed to mercury at the manufacturer's facility. The employees and their spouses, who also were exposed to mercury, settled their claims of trespass and nuisance to real property, fraudulent misrepresentation, and personal injury with the manufacturer. The court first holds that the indemnification clause in the contract between the manufacturer and the contractor is too equivocal to impose a duty of indemnification on the contractor for the manufacturer's negligence. The court next holds that the manufacturer is not entitled to indemnification from the contractor in connection with the settlement agreement. The manufacturer is not entitled to reimbursement on the fraudulent misrepresentation claim because the alleged fraudulent conduct was committed by the manufacturer, not the contractor. Regarding the remaining two claims for property damage and personal injury, the manufacturer was only responsible for settling its portion of liability under Tennessee's doctrine of comparative negligence. Thus, any payment the manufacturer made on behalf of the contractor would have been voluntary, and the contractor is not liable for a voluntary payment because it expressed no knowledge or approval.

The court also rejects the manufacturer's claim for contribution under § 29-11-102(b) of the Tennessee Uniform Contribution Among Tortfeasors Act. This right of contribution only exists in favor of a tortfeasor who has paid more than his proportional share of liability, and, under applicable law at the time of the settlement, the manufacturer was only responsible for resolving claims attributable to its own fault. Furthermore, there is no record evidence suggesting that the claims were extinguished by the settlement as required by the statute. The court last holds that, while there is no specific reference in the indemnification clause to environmental liability, the language is sufficiently broad to encompass the various costs, fines, and penalties the chlorine manufacturer incurred in connection with its violations of federal and state environmental statutes such as the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Air Act, and the Occupational Safety and Health Act. Because the violations of the environmental statutes and regulations caused property damage and personal injuries, the court finds that the terms "property damage" and "personal injury" extend, as specified by the indemnity provision, to "all loss, damage, liability, claims, demands, costs, or suits of any nature whatsoever" that occur as a result of the project, including losses resulting from the release of hazardous substances.

Counsel for Plaintiff
Gregory M. Leitner
Leitner, Williams, Dooley & Napolitan
Pioneer Bldg., 3d Fl., Chattanooga TN 37402
(423) 265-0214

Counsel for Defendant
Edmund M. Kneisel
Kilpatrick & Stockton
1100 Peachtree St., Ste. 2800, Atlanta GA 30309
(404) 873-2127

Before Contie and Moore, JJ.