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Taracorp, Inc. v. NL Indus., Inc.

ELR Citation: 26 ELR 20570
Nos. No. 95-1876, 73 F.3d 738/41 ERC 1961/(7th Cir., 01/11/1996)

The court holds that the seller of a lead smelting facility must indemnify the facility's purchaser for the purchaser's Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) liability at a site to which the purchaser sent spent batteries to be broken up before smelting them at the facility. An indemnification agreement between the parties provides that the seller agrees to indemnify the purchaser for all liabilities asserted against the purchaser related to environmental hazards associated with the smelting facility. An indemnification agreement the parties signed with respect to another facility provides that the seller agrees to indemnify the purchaser for environmental hazards located at, on, or near that facility. The court holds that when parties to the same contract use such different language to address parallel issues, it is reasonable to infer that they intend this language to mean different things. Thus, the court rejects the district court's conclusion that the two contracts mean the same thing. Because the agreement at issue developed under the shadow of potential CERCLA liability, such broad language appears to intend coverage for the full range of CERCLA liability. The court holds that the preamble to the agreement, which only refers to claims predating the CERCLA claim the U.S. Environmental Protection Agency brought against the purchaser, does not limit the scope of the agreement to then-existing environmental claims. The fact that specific environmental claims provide the occasion for entering into an indemnity agreement implies little about the prospective scope of that agreement. Even if there were a conflict between the general preamble language and the specific indemnification provision, the indemnification language would prevail. The court rejects the seller's argument that the agreement's reference to the facility, rather than to the business at the facility, demonstrates that the indemnity provision was intended to apply only to environmental contamination actually on the property. That interpretation would render one of the exceptions to the indemnity provision superfluous.

Counsel for Plaintiff
Reed Osland
Kirkland & Ellis
200 E. Randolph St., Ste. 5800, Chicago, IL 60601
(312) 861-2166

Counsel for Defendant
Malcolm H. Brooks
McBride, Baker & Coles
500 W. Madison St., 40th Fl., Chicago, IL 60661
(312) 715-5700

Before FLAUM, EASTERBROOK, and D. WOOD, Circuit Judges.