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Gopher Oil Co. v. Bunker

ELR Citation: 26 ELR 21464
Nos. 95-1309, -1338, 84 F.3d 1047/43 ERC 1186/(8th Cir., 05/29/1996)

The court holds ripe for adjudication an oil company's action for a declaratory judgment that the estate of its predecessor's deceased owner is liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to the extent of the oil company's liability, for a hazardous substance release that occurred several years before the owner transferred the predecessor's stock to the oil company. As part of the stock transfer, the owner agreed to indemnify the oil company for any of the predecessor's liabilities "existing at closing." Subsequently, the U.S. Environmental Protection Agency (EPA) sought reimbursement for response costs incurred in cleaning up the dump site where the release occurred and notified the oil company that it was a potentially responsible party. The court first holds that the oil company's claims under the Minnesota Environmental Response and Liability Act (MERLA) and state tort law are not ripe for declaratory judgment. No facts indicate an immediate threat of either MERLA or tort liability. The court next holds that because EPA initiated a cost recovery action under CERCLA §107 during the pendency of the appeal, the suit to determine liability between the oil company and the estate is ripe for adjudication. The court, however, leaves to the district court's determination whether CERCLA's objective of avoiding piecemeal litigation would be best served if the estate's liability were determined in conjunction with the government's cost recovery action. The court next holds that the oil company's contractual indemnity claim, is also ripe. The court holds, however, that the district court correctly granted summary judgment on the ground that collateral estoppel bars relitigation of the indemnity issue. The Minnesota Court of Appeals had held in a previous action involving the same parties, the same indemnification agreement, most of the same claims as the declaratory judgment action, but a different dump site, that the limiting phrase of the indemnity agreement precludes liability under later-enacted statutes such as MERLA, enacted 10 years after the agreement. The court then holds that the phrase "existing at closing" also precludes liability under CERCLA, enacted seven years after the agreement.

Counsel for Plaintiff
Keith J. Broady
Abdo & Abdo
625 Marquette Ave., Minneapolis MN 55402
(612) 333-1526

Counsel for Defendant
James A. Beitz
Hagerty, Johnson, Albrightson & Beitz
701 4th Ave. S., Ste. 1700, Minneapolis MN 55415
(612) 349-9000

Before HANSEN, GIBSON, and MURPHY, Circuit Judges.