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Asarco, LLC v. Atlantic Richfield Co.

ELR Citation: 46 ELR 20074
Nos. 2016 MT 90, (Mont., 04/12/2016)

The Supreme Court of Montana upheld a lower court decision dismissing a smelting company's state-law claims against an oil refinery in connection with costs incurred remediating a former lead smelting site in East Helena, Montana. The refinery sold the site to the smelting company in 1972. Under the sales agreement, the refinery agreed to indemnify the smelting company for liabilities arising out of the refinery's operations. In the 1980s, EPA added the site to the NPL, and in the 1990s, EPA and the smelting company entered into several consent decrees regarding remediation at the site. In 2012, the company filed a CERCLA suit against the refinery seeking contribution for costs incurred remediating the site, but the federal district court dismissed the claims. The smelting company then filed state-law claims, but the lower court determined that claim preclusion barred those claims. The state's highest court affirmed. It is undisputed that the parties are the same, that the capacities of the parties are the same, and that the federal district court entered a final judgment on the merits. In addition, the record demonstrates that the subject matter of both cases arose from the same underlying basis--the refinery's responsibility for contamination at the site. Moreover, the federal district court could have exercised supplemental jurisdiction over the smelting company's state-law claims. The state-law claims, therefore, are barred. The company argued its claims cannot be barred by claim preclusion because the refinery "fraudulently concealed" information that gave rise to the state law claims. But the court has not recognized a blanket "fraud exception" to claim preclusion, and the record shows that the company knew the facts underlying its state-law claims before the federal court entered judgment.