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RSR Corp. v. East Asiatic Co.

May 12, 1997

RSR CORPORATION, QUEMETCO, INC., AND QUEMETCO, REALTY, INC. APPELLANT,
v.
EAST ASIATIC COMPANY, LTD., EAC U.S.A., INC. (FORMERLY KNOWN AS EAST ASIATIC COMPANY, INC. AND AS HEIDELBERG EASTERN, HEIDELBERG NORTH AMERICA, AND HEIDELBERG U.S.A., INC., RESPONDENTS.



Appeal from Superior Court of King County. Docket No: 94-2-18294-3. Date filed: 12/15/95. Judge signing: Hon. John M. Darrah.

Authored by H. Joseph Coleman. Concurring: William W. Baker, Faye C. Kennedy.

The opinion of the court was delivered by: Coleman

COLEMAN, J. -- The Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et. seq., commonly known as CERCLA or "Superfund," permits parties to execute indemnity agreements allocating responsibility for environmental cleanup. See, e.g., Scott Galvanizing, Inc. v. Northwest EnviroServices, Inc., 120 Wash. 2d 573, 582, 844 P.2d 428 (1993). We are asked to decide whether, under New York law, such an agreement existed here. Based on the plain and unambiguous contract documents, we find no such indemnity. We therefore affirm the grant of summary judgment for East Asiatic.

FACTS

In 1972, RSR Corporation purchased a lead recycling facility on Harbor Island through a subsidiary called Quemetco, Inc. Two years later the FTC filed a complaint against RSR, asserting that the company's lead plant acquisitions violated antitrust laws. In 1981, the FTC ordered RSR to divest the Seattle plant to an acquirer who would use the plant for lead recycling.

In 1982, East Asiatic subsidiary Bergsoe Metal Corporation, an Oregon competitor of RSR, began negotiating with RSR for the purchase of the plant. In negotiating the contract, both parties were concerned about the then newly enacted CERCLA, which provides for strict liability for hazardous waste cleanup on past and present owners and operators of a site. On October 25, 1982, East Asiatic offered RSR $1,200,000 for the plant. The offer included a request that RSR indemnify East Asiatic. RSR rejected the indemnification provision.

On February 23, 1983, East Asiatic modified its offer: "You have indicated you will not sell the Seattle plant with indemnification and feel the FTC order does not require such indemnification." Based on RSR's insistence that there be no indemnification, East Asiatic offered $500,000 subject to the following additional provision: "Nothing in this agreement shall release from any liability may have under law to [East Asiatic] or others relating to [RSR's] prior ownership or use of the property conveyed herein." The parties agreed to the application of New York law to the contract.

On November 30, 1983, the parties signed the following letter from RSR to East Asiatic, which they agree became a part of the contract:

This letter confirms our understanding that as of the closing today of the transaction covered by the Offer and Agreement to Purchase dated October 25, 1982 (the Agreement) between you and our wholly-owned subsidiaries, Ouemetco, Inc. and Quemetco Realty Inc., you have assumed all responsibility for compliance with 40 CFR 265 (Sub part H) and parallel Washington State requirements relating to closure and post-closure of the Seattle plant covered by the Agreement and the seepage pond located thereon as established by the U.S.

Environmental Protection Agency and/or the Washington Department of Ecology.

It is our further understanding that you will be responsible for all other obligations of a landowner or plant operator under (1) the Federal Solid Waste Disposal Act as amended by the Federal Resource Conservation and Recovery Act of 1976; (2) the Washington Hazardous Waste Disposal Act of 1976 as amended and (3) the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980.

Please confirm the above by signing the duplicate of this letter.

On December 9, 1983, the parties also executed a warranty deed, which stated in pertinent part:

Nothing herein shall affect the Grantee's rights to assert any claim under the Superfund Act (Comprehensive Environmental Response, Compensation, and Liability Act of 1980). It is the intention of the parties hereto that the Premises are being conveyed subject to any liability, lien, or encumbrance in existence at the date hereof affecting the ownership, use, or enjoyment of the Premises; but nothing herein contained is intended ...


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