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Al Tech Specialty Steel Corp. v. Allegheny Int'l Credit Corp.

ELR Citation: 27 ELR 20691
Nos. No. 95-3415, 104 F.3d 601/43 ERC 2030/(3d Cir., 01/17/1997)

The court holds that a steel company's claims for damages under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the New York Oil Spill Act against a bankrupt company from which it purchased two steel plants should be allowed in bankruptcy court. The court first holds that under the law of the case doctrine it would be inappropriate for the court to reexamine the question of whether the steel company's claim is barred by §502(e)(1)(B) of the Bankruptcy Code, because the court has previously ruled that it is not.

The court next holds that the bankruptcy court erred in finding that the bankrupt company was not liable to the steel company for contribution under CERCLA. The bankruptcy court concluded that the steel company's parent company purchased the steel company's stock at a discount, based on the steel company's future environmental liabilities. Although a reduction in the purchase price is a valid factor to consider in allocating CERCLA response costs among responsible parties, the court found that there was insufficient evidence to support the finding that the discount equalled the amount found by the bankruptcy court. In addition, the steel company, not its parent, is the claimant here. Also, there was no reason to assume, as the bankruptcy court appears to have done, that any windfall reaped by the parent company should be imputed to the steel company. The bankruptcy court's reliance on this single factor was inconsistent with the sound exercise of its discretion. The court however, upholds the bankruptcy court's determination that the steel company failed to prove that the bankrupt company was liable for polychlorinated biphenyl contamination in a pond at one of the plant sites.

Turning to the state-law claim, the court holds that the steel company's claim for future remediation costs under the New York Oil Spill Act is not time barred. Finding that the action is for indemnity, the court holds that a six-year statute of limitations applies. The court remands the case to the district court for a determination of the bankrupt company's equitable share of the steel company's CERCLA response costs and for application of a New York Court of Appeals decision on the availability of a private right-of-action under the New York Oil Spill Act.

Counsel for Appellant
Kevin M. Hogan
Phillips, Lytle, Hitchcock, Blaine & Huber
3400 Marine Midland Center, Buffalo NY 14203
(716) 847-8400

Counsel for Appellees
Anthony C. Roth, William L. Gardner
Morgan, Lewis & Bockius
1800 M St. NW, Ste. 800, Washington DC 20036
(202) 467-7000

Before: GREENBERG, ALITO, and McKEE, Circuit Judges.