Olin Corp. v. P.H. Glatfelter Co. ( 2010 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-2252
OLIN CORPORATION,
Plaintiff - Appellee,
v.
P.H. GLATFELTER COMPANY, a/k/a Glatfelter, d/b/a Glatfelter
Company,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Lacy H. Thornburg,
District Judge. (1:06-cv-00367-LHT)
Argued: December 2, 2009 Decided: March 5, 2010
Before TRAXLER, Chief Judge, and SHEDD and DAVIS, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Adam Howard Charnes, KILPATRICK & STOCKTON, LLP,
Winston-Salem, North Carolina, for Appellant. Craig C. Martin,
JENNER & BLOCK, Chicago, Illinois, for Appellee. ON BRIEF:
Betsy Cooke, Stephen R. Berlin, KILPATRICK & STOCKTON, LLP,
Raleigh, North Carolina, for Appellant. Philip S. Anderson,
LONG, PARKER, WARREN, ANDERSON & PAYNE, PA, Asheville, North
Carolina; Barry Levenstam, Amanda S. Amert, Melissa L. Dickey,
JENNER & BLOCK, Chicago, Illinois, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
This appeal arises from a declaratory judgment/breach of
contract action with respect to a contractual indemnity
provision. We affirm.
Appellee Olin Corporation (“Olin”) purchased the Ecusta
Paper Mill in Pisgah Forest, North Carolina in 1949. Over the
years thereafter, Olin disposed of waste products containing
mercury, which resulted from certain of its manufacturing
processes, both on-site and in wastewater that flowed onto
nearby property. In 1973, the Environmental Protection Agency
pressed regulatory actions intended to require Olin to address
and/or reduce its discharge of mercury. In part as a result,
Olin ceased the extant manufacturing processes and substituted
purchased chemicals.
In 1985, senior officers of Olin’s Ecusta Division,
including Garza Baldwin (President), Robert Cunningham, Jr.
(Chief Legal Officer and Vice President of Human Resources and
Public Affairs), and Robert Gussman (Environmental Director),
together with several investors, purchased the Ecusta Mill from
Olin, forming Ecusta Corporation. Olin acquired an interest in
the newly-formed entity but did not involve itself in
operations. Baldwin, Cunningham, and Gussman assumed
substantially the same leadership positions in Ecusta
Corporation as they had held in the Ecusta Division of Olin. In
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1987, Appellant P.H. Glatfelter Company (“Glatfelter”) acquired
the Ecusta Corporation through a stock purchase transaction, in
which Glatfelter assumed certain of Ecusta Corporation’s
liabilities. Baldwin remained involved in the business and
served on Glatfelter’s Board of Directors. Cunningham and
Gussman remained involved as well, and served in the same
capacities in which they served for Ecusta Division and Ecusta
Corporation.
The contractual rights and obligations of Olin and
Glatfelter are governed by a July 24, 1985, Purchase Agreement
(“the Agreement”). The Agreement provides that Glatfelter (as
successor-in-interest to Ecusta Corporation) must indemnify Olin
for certain environmental liabilities under prescribed
circumstances. As constituent parts of the Agreement, the
representations and warranties of Olin’s officers, and the so-
called Environmental Disclosure Statement (“EDS”) underscore
Olin’s obligations in divulging the existence of mercury at
Ecusta Mill to Glatfelter. (The mill property has changed hands
several times in the last decade.)
On or about January 23, 2006, the North Carolina Department
of Environment and Natural Resources (“NCDENR”) notified Olin
and Glatfelter (among others) that it planned to take action
concerning Ecusta Mill under the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et
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seq. (“CERCLA”). The NCDENR notice identified five Recognized
Environmental Concerns (“RECs”) at Ecusta Mill that would
require clean-up. Pursuant to the Agreement, Glatfelter agreed
to indemnify Olin with respect to four of the five RECs. It
refused to indemnify Olin for the costs related to remediation
of mercury contamination released from the Ecusta Mill’s
Electro-Chemical Building.
Thereafter, Olin sued Glatfelter in the United States
District Court for the Western District of North Carolina.
After several preliminary matters had been attended to by the
court and the completion of discovery, Olin moved for summary
judgment.
The district court issued a carefully-reasoned memorandum
opinion in which it granted summary judgment to Olin. Olin Corp.
v. P.H. Glatfelter Co., No. 1:06CV367, 2008 WL 4596262,
(W.D.N.C. Oct. 14, 2008). The court first determined, inter
alia, that, as to Olin’s request for a declaratory judgment, the
EDS specifically and unambiguously “refer[red]” to the
“disposition” of mercury. Id. at *6-8. Moreover, “the Agreement
with its accompanying EDS obligated [Glatfelter] to indemnify
Olin for the costs of cleanup described in RECs 1 and 5.” Id.
at *8-10. Second, the district court determined that
Glatfelter’s counterclaims for fraud, negligent
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misrepresentation, and unfair and deceptive trade practices were
time-barred. Id. at *10-11.
Glatfelter noted its timely appeal to this court. We review
the district court's grant of summary judgment de novo. Meson
v. GATX Tech. Servs. Corp., 507 F.3d 803, 806 (4th Cir. 2007)
(citation omitted). Summary judgment is proper only where “there
is no genuine issue as to any material fact” and the moving
party is “entitled to judgment as a matter of law.” Id.(citation omitted).
By its terms, the Agreement would “be governed by, and
construed in accordance with, the laws of the State of New
York.” (J.A. 688). We discern no error by the district court in
its summary judgment order.
First, “[i]t is the primary rule of construction of
contracts . . . that when the terms of a written contract are
clear and unambiguous, the intent of the parties must be found
therein.” Mazzola v. County of Suffolk, 533 N.Y.S.2d 297, 297
(N.Y. App. Div. 1988) (internal quotation marks and citation
omitted). “The words and phrases used in an agreement must be
given their plain meaning so as to define the rights of the
parties.” Id. (citation omitted). Here, the terms “referred
to” and “disposition” have plain and unambiguous meanings, and
the disposition of mercury is referred to throughout the EDS.
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Second, under New York's policy of strict interpretation of
indemnification clauses, a court must examine whether
Glatfelter’s intention to indemnify “can be clearly implied from
the language and purpose of the entire agreement and the
surrounding facts and circumstances.” Hooper Assocs., Ltd. v.
AGS Computers, Inc., 74 N.Y.2d 487, 491-92 (1989). That test is
satisfied here. For example, Baldwin, Cunningham, and Gussman
were aware of issues regarding Ecusta Mill’s mercury
contamination. Accordingly, their subsequent employers, Ecusta
Corporation and then Glatfelter, of which they were high-ranking
officers, are charged with such knowledge and thus also were
aware that the EDS “referred to” the disposition of mercury.
J.A. 2642-43. Accordingly, Glatfelter was on notice of the
mercury disposal. Cf. United States v. Hooker Chems. & Plastics
Corp., 850 F.Supp. 993, 1059 (W.D.N.Y. 1994) (noting that
“[e]ven for latent defects, the seller’s duty terminated when a
new owner discovered or should reasonably have discovered and
had a reasonable opportunity to abate the condition”).
Third, under North Carolina law, Glatfelter’s tort
counterclaims are time-barred because it reasonably should have
been aware of the disposition of the mercury years before it
decided to bring its claims. See, e.g., Sullivan v. Mebane
Packaging Group, Inc., 158 N.C. App. 19, 28 (2003) (noting that
we have held that knowledge of information should be imputed to
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investors who possess documents apprising them of the risks
associated with the investments).
In sum, upon our careful consideration of the record,
briefs, oral argument by the parties, and applicable law, we
affirm on the basis of the opinion of the district court. Olin
Corp. v. P.H. Glatfelter Co., No. 1:06CV367, 2008 WL 4596262,
(W.D.N.C. Oct. 14, 2008).
AFFIRMED
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