Gellert v. Coltec Industries, Inc.
Citation: 42 ELR 20232
No. 09-11582, (Bankr. Ct. D. Del., 10/31/2012) (Walrath, J.)
A bankruptcy court denied a company's motion to dismiss a bankruptcy trustee's CERCLA §107 claim against it for response costs incurred by the debtor to EPA, New York, and a manufacturer as a result of the debtor's settlement of their CERCLA claims. The company argued that the trustee cannot recover under §107 because the debtor did not incur any cleanup costs of its own but rather only reimbursed others for the cleanup costs they incurred. The U.S. Supreme Court has held that satisfying a settlement agreement or court judgment that reimburses other parties for the costs those parties incurred cleaning up the site are not considered costs "incurred" in cleaning up the site for purposes of §107. But in Agere Systems, Inc. v. Advanced Environmental Technology Corp., 602 F.3d 204 (3d Cir. 2012), the Third Circuit upheld a §107 claim for payments made pursuant to a settlement agreement where the plaintiff contributed to a trust with others pursuant to a consent decree to fund "on-going" cleanup. The trustee therefore asserted that it can recover from the company under §107 because the debtor is not merely reimbursing EPA, New York, and the manufacturer for past costs they incurred but also for costs to be incurred in the future. The court agreed, ruling that the general rule that payments satisfying a settlement agreement are not deemed "costs incurred" does not apply.