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AM Int'l, Inc. v. Datacard Corp.

ELR Citation: 27 ELR 20503
Nos. 96-1621, 106 F.3d 1342/(7th Cir., 02/11/1997)

The court holds that the bankruptcy of a contaminated site's former owner does not discharge Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA) claims that the current owner brought to recover its cleanup costs and to compel future cleanup. The court first holds that a district court's factual finding that the current owner did not have sufficient information to tie the former owner to the site's environmental contamination before the former owner's bankruptcy was confirmed was not clearly erroneous. There had been no visible signs of contamination, soil testing, involvement by the U.S. Environmental Protection Agency (EPA), or publicized spills at the site. Thus, the district court's conclusion that the current owner's CERCLA claims had not been discharged was not an abuse of discretion. The court holds that a cleanup order directing the former owner to cleanup the site under RCRA §7002 was not discharged in bankruptcy. Only orders that can be converted into a monetary obligation are considered dischargeable claims for bankruptcy purposes. The court next holds that the current owner is not entitled to recover nonlitigation attorney fees under CERCLA §107 because the fees were incurred investigating the owner's own legal responsibilities, not in identifying other polluters. The court holds that the current owner, even as a CERCLA potentially responsible party and as a party not acting in the public interest, is a proper citizen suit plaintiff. RCRA's and CERCLA's plain language allow any person to bring citizen suits. The court next holds that the district court judgment in favor of the current owner's RCRA §7002(a)(1)(A) claim cannot stand. Ohio's EPA-approved hazardous waste program superseded federal regulations and as a result, the federal regulation cited by the current owner as the basis for its (a)(1)(A) claim was ineffective in Ohio at the time of the complaint. Turning to the current owner's RCRA §7002(a)(1)(B) citizen suit claim, the court holds that because the current owner's complaint contained both the (a)(1)(B) claim, which is subject to RCRA's 90-day delay period, and the (a)(1)(A) claim, which is immune from the delay requirement, the complaint is a hybrid and the current owner was therefore not required to wait 90 days before filing it. Although the (a)(1)(A) claim ultimately proved unsuccessful, it was not frivolous. Thus, the court holds that the district court properly granted the current owner injunctive relief on its (a)(1)(B) claim. The court remands for further explanation the district court's award of attorney fees to the current owner under RCRA because the district court did not note any jurisdiction for the award. The court holds that the district court did not abuse its discretion in denying the former owner's request to reopen discovery. Last, the court holds that the district court did not have jurisdiction to hear the former owner's disallowance defense under §502(e)(1)(B) of the Bankruptcy Code. The Delaware bankruptcy court that authorized the district court to settle liability issues remained the sole authority on bankruptcy issues such as the allowance of claims.

Counsel for Plaintiffs
Richard J. Kissel
Gardner, Carton & Douglas
Quaker Tower
312 N. Clark St., Ste. 3400, Chicago IL 60610
(312) 644-3000

Counsel for Defendant
Michael J. Wahoske
Dorsey & Whitney
220 S. 6th St., Minneapolis MN 55402
(612) 340-2600

Before RIPPLE, DIANE P. WOOD, and EVANS, Circuit Judges.