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Southdown v. Allen

ELR Citation: 31 ELR 20313
Nos. CV-96-J-3300-S, 119 F. Supp. 2d 1223/(N.D. Ala., 11/07/2000)

The court holds that the former owner of all shares of a stock in a hazardous waste recycling facility is solely liable for the facility's cleanup based on the terms of a stock purchase agreement it entered into with the purchaser of the facility's stock. The parties entered into a remediation agreement as a condition precedent to the stock purchase agreement. The remediation agreement contained a clause stating that the seller would bear the sole expense for remediating the facility. The court first holds that the term "sole expense" as used in the agreement is not ambiguous. There is no basis for the proposition that "sole expense" is subject to more than one reasonable interpretation. Under the agreement, "sole" means its ordinary meaning of only one. Therefore, the former owner contracted to be solely liable for remediating the site. The court next holds that the former owner does not retain the right to pursue contribution actions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Whatever right the former owner may have had under CERCLA to sue for contribution was absorbed by the former owner's promise to remediate the site at its sole expense. In numerous places within the remediation agreement, the former owner could have stated it was not waiving its CERCLA remedies. The court then holds that the former owner cannot bring CERCLA §§107 and 113 cost recovery and contribution claims against customers of the facility because it explicitly contracted to remediate the site at its own expense. To establish CERCLA liability, the former owner must show that a release of a hazardous substance caused it to incur response costs. However, a release or threatened release is not what caused the incurrence of response costs by the former owner. Rather, the remediation agreement as part of the sale caused the response costs. Thus, the former owner cannot establish a prima facie case to maintain a private-party CERCLA action.

Counsel for Plaintiff
Richard E. Davis
Cabaniss, Johnston, Gardner, Dumas & O'Neal
Park Place Tower
2001 Park Pl. N., Ste. 700, Birmingham AL 35283
(205) 716-5200

Counsel for Defendant
Charles R. Driggars
Sirote & Permutt
2311 Highland Ave. S., Birmingham AL 35205
(205) 930-5100