Georgia-Pacific Consumer Products, LP v. International Paper Co.

566 F. Supp. 2d 246, 38 Envtl. L. Rep. (Envtl. Law Inst.) 20187, 68 ERC (BNA) 1020, 2008 U.S. Dist. LEXIS 54045, 2008 WL 2789907
CourtDistrict Court, S.D. New York
DecidedJuly 16, 2008
Docket07-Civ-9627(SHS)
StatusPublished
Cited by16 cases

This text of 566 F. Supp. 2d 246 (Georgia-Pacific Consumer Products, LP v. International Paper Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Georgia-Pacific Consumer Products, LP v. International Paper Co., 566 F. Supp. 2d 246, 38 Envtl. L. Rep. (Envtl. Law Inst.) 20187, 68 ERC (BNA) 1020, 2008 U.S. Dist. LEXIS 54045, 2008 WL 2789907 (S.D.N.Y. 2008).

Opinion

OPINION AND ORDER

SIDNEY H. STEIN, District Judge.

In this action, the Court must chose between two competing interpretations of a 1972 contract for the sale of several paper mills and associated properties by *248 Federal Paper Board Company (“Federal”) — a predecessor of defendant International Paper Company — to Riegel Products Corporation (“RPC”) — a predecessor of plaintiff Georgia-Pacific Consumer Products, LP. As part of the consideration it provided to Federal, RPC agreed to assume certain liabilities associated with the transferred assets. Georgia-Pacific and International Paper now dispute whether the liabilities assumed by RPC under the 1972 contract include the costs of cleaning up environmental contamination where those liabilities were imposed by a statute enacted in 1980, nearly a decade after the sale. Plaintiff seeks a declaration that RPC did not assume the liabilities. Defendant moves to dismiss the complaint on the ground that the four corners of the contract unambiguously demonstrate that RPC did assume the liabilities. Pointing to the same contractual language, plaintiff opposes defendant’s motion and moves for summary judgment in its favor. Given the intention of RPC and Federal as unambiguously expressed within the four corners of the contract that RPC assume only those liabilities existing on the closing date in 1972, the Court finds as a matter of law that RPC did not contractually assume the liabilities at issue in this case. Accordingly, defendant’s motion to dismiss the complaint is denied and plaintiffs motion for summary judgment is granted.

I. BACKGROUND

This action involves the sale of several properties located in Warren and Hunter-don Counties in New Jersey, including four paper mills opened between the years 1863 and 1903 and a landfill opened in 1938 to receive waste from the paper mills (collectively the “New Jersey Operations”). (Compl. ¶¶ 10-11.) Federal and RPC executed a written contract to sell the New Jersey Operations on February 23, 1972 (the “Purchase Agreement”). (Id. ¶¶ 13-18.) The Purchase Agreement is attached as exhibit 1 to the declaration of Joseph Serino in support of defendant’s motion to dismiss (the “First Serino Deck”).

Under the Purchase Agreement, Federal promised that on the closing date it would transfer to RPC the New Jersey Operations “together with all assets and properties of Federal ... directly attributable to the New Jersey Operations on the Closing Date,” with certain exceptions not relevant here. (Purchase Agreement § 1.) The contract further provided:

The consideration to be paid by RPC for the transfer of the Properties to it shall be (i) the payment by RPC to Federal of $6,770,018.00 ... and (ii) the assumption by RPC of the liabilities of Federal directly attributable to the New Jersey Operations on the Closing Date, including, but not by way of limitation, those listed in Schedule B attached hereto ... but excluding those expressly excluded in this Agreement or listed in Schedule C attached hereto.

(Id.) Neither Schedule B, entitled “NonExclusive List of Liabilities Assumed,” nor Schedule C, entitled “Liabilities — Not Assumed,” refers to liabilities related to environmental cleanup costs. The closing date in the agreement was April 3, 1972. (Id. § 2.)

The Purchase Agreement set forth a closing procedure under which RPC was required to provide “a written instrument of assumption by RPC of the liabilities and obligations of Federal to be assumed pursuant to Section 1 hereof in the form attached hereto as Annex A.” (Purchase Agreement § 2(c).) Annex A is entitled “Assumption” and confirms RPC’s assumption of certain liabilities (the “Assumption Agreement”). In relevant part, the Assumption Agreement states that,

*249 RPC ... in consideration of the ... sale ... to it of [the New Jersey Operations] ... does hereby assume, pursuant to Section 1 of the Agreement ... all of Federal’s debts and liabilities of every kind, character or description, whether known or unknown, whether disclosed or undisclosed, whether accrued, absolute, contingent or otherwise, and whether or not reflected or reserved against in Schedules A or B to the Agreement and which are directly attributable to the New Jersey Operations, as the same exist on the date hereof, and does hereby agree to pay, perform and discharge, when due, all of the said debts and liabilities.

(Annex A to Purchase Agreement at 1, Ex. 1 to First Serino Decl.)

On the closing date, RPC executed and delivered the Assumption Agreement. (Compl. ¶ 16; Executed Assumption Agreement included in Ex. 1 to First Seri-no Decl. at 2.) For ease of reference, the Court will refer to the Purchase Agreement and the Assumption Agreement collectively as the “Agreement.” By its own terms, the Agreement is to be governed by New York law. (Purchase Agreement § 20(e).)

In 1980, eight years after the Purchase Agreement was executed, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et seq., became law. Among other things, CERCLA imposes strict liability on facility owners for certain costs associated with the cleanup of hazardous materials released into the environment. 42 U.S.C. § 9607; see generally Prisco v. A & D Carting Corp., 168 F.3d 593, 602-03 (2d Cir.1999) (describing strict liability for environmental response costs imposed on “potentially responsible parties” under CERCLA). The United States Environmental Protection Agency (“EPA”) has discovered hazardous substances on the New Jersey Operations properties and has determined that both Georgia-Pacific and International Paper are potentially responsible parties pursuant to CERCLA. (Compl. II2; Decl. of Ingo Sprie in Support of Pl.’s Mot. for Summary Judgment (“First Sprie Decl.”) ¶¶ 10, 9 and Ex. G.) Georgia-Pacific has entered into an Administrative Settlement Agreement with EPA that requires Georgia-Pacific to conduct a remedial investigation and feasibility study into the extent of contamination at one of the properties. (Compl. ¶ 2; Ex. H to First Sprie Decl.) In addition, EPA has issued a Unilateral Administrative Order to International Paper “requiring International paper] to participate in the performance of the remedial investigation and feasibility study ... as well as certain removal activities.” (Letter from EPA to Brian Heim, Senior Counsel, Environment, Health and Safety, International Paper Company, dated December 31, 2007 at 1, Ex. F to Decl. of Ingo Sprie in Opposition to Def.’s Rule 56(f) Request (“Second Sprie Decl.”).)

Georgia-Pacific maintains that it is not liable for CERCLA clean up costs because the Purchase Agreement did not obligate RPC to assume Federal’s CERCLA liabilities. (Compl. ¶ 28.) 1 Georgia-Pacific intends to seek contribution from International Paper to the extent Georgia-Pacific pays more than its equitable share of *250

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566 F. Supp. 2d 246, 38 Envtl. L. Rep. (Envtl. Law Inst.) 20187, 68 ERC (BNA) 1020, 2008 U.S. Dist. LEXIS 54045, 2008 WL 2789907, Counsel Stack Legal Research, https://law.counselstack.com/opinion/georgia-pacific-consumer-products-lp-v-international-paper-co-nysd-2008.