Jump to Navigation
Jump to Content

Southland Corp. v. Ashland Oil, Inc.

Citation: 19 ELR 20733
No. No. 88-0700, 696 F. Supp. 994/28 ERC 1805/(D.N.J., 10/06/1988)

The court holds that the seller of a chemical manufacturing plant is liable to the purchaser for contribution under § 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for response costs incurred or to be incurred as a result of the dumping of hazardous waste during the time that the seller owned the plant. The court holds that the seller is a responsible party under CERCLA § 107(a)(2). It is undisputed that the plant is a "facility" under CERCLA § 101(9), the seller owned and operated the plant, and the seller disposed of vast amounts of hazardous waste. The court holds that plaintiff has met its burden in this action for a declaration of liability of showing that it incurred response costs that were necessary and consistent with the national contingency plan. The court holds that the agreement of sale does not bar plaintiff's CERCLA claims. CERCLA § 107(e)(1) expressly preserves the right of private parties to contractually transfer the financial responsibility arising from CERCLA liability. The court holds, however, that the agreement of sale here fails to transfer CERCLA liability to the purchaser. The agreement's "as is" clause precludes only claims based on breach of warranty. The provision requiring the seller to remove any waste material costing over $ 5,000 to remove upon notice from the buyer is merely a promise to do an act. The indemnification provision bars only those breach of contract claims based on indemnity and failure to remove hazardous waste. Although the agreement of sale was executed two years prior to CERCLA's enactment, some clear transfer or release of CERCLA-like liability is required. The agreement of sale contains no language expressly releasing the seller from future liabilities based on its hazardous waste disposal practices. The court holds that the buyer's status as a potentially liable party does not bar it from recovery under CERCLA § 107(a). The court holds that the seller's equitable defenses are not applicable in an action for a declaration of liability. The court holds that the buyer's claim for declaratory relief is ripe. Response costs have been incurred at the site, and declaratory judgment actions for future response costs are permissible. The court holds that the seller's obligations under the agreement's indemnity provision terminated two years after the closing date under the terms of the agreement. Whether the buyer filed a timely notice of claim is irrelevant, since any cause of action based on breach of the indemnity provision accrued in 1980 when the seller failed to respond to the buyer's claim and is thus barred by New Jersey's six-year statute of limitations.

[A subsequent decision in this litigation is published at 19 ELR 20738.]

Counsel for Plaintiff
Christopher R. Gibson
Archer & Greiner
One Centennial Square, Haddonfield NJ 08033
(609) 795-2121

Counsel for Defendants
Kenneth H. Mack
Picco, Mack, Kennedy, Jaffe, Perrella & Yoskin
240 W. State St., Trenton NJ 08608
(609) 393-2400