ASARCO LLC v. Union Pacific Railroad

FILED
United States Court of Appeals
Tenth Circuit
June 23, 2014
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
ASARCO LLC, a Delaware limited
liability company,
Plaintiff - Appellant,
v. No. 13-1435
UNION PACIFIC RAILROAD
COMPANY, a Delaware corporation;
UNION PACIFIC CORPORATION, A
Utah corporation; PEPSI-COLA
METROPOLITAN BOTTLING CO.,
INC., a New Jersey corporation;
BOTTLING GROUP, LLC, a
Delaware limited liability company,
Defendants - Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:12-CV-03216-REB-MJW)
E. Duncan Getchell, Jr. of McGuire Woods, LLP, Richmond, Virginia, (Gregory
Evans and Laura G. Brys of Integer Law Corporation, Los Angeles, California;
Stephen A. Bain and Samuel S. Bacon of Welborn Sullivan Meck & Tooley, P.C.,
Denver, Colorado, on the briefs), for Plaintiff-Appellant.
Carolyn McIntosh of Patton Boggs LLP, Denver, Colorado, (Christa Lee Rock of
Patton Boggs LLP; Jonathan H. Steeler, Julie A. Rosen and Richard C. Kaufman
of Ryley Carlock & Applewhite, Denver, Colorado, with her on the brief), for
Defendants-Appellees.
Before BRISCOE, Chief Judge, MCKAY and PHILLIPS, Circuit Judges.
BRISCOE, Chief Judge.
The plaintiff, ASARCO LLC (“ASARCO”), appeals the district court’s
dismissal of its complaint. ASARCO sought contribution from Union Pacific
Railroad Company, Union Pacific Corporation (collectively “Union Pacific”),
Pepsi-Cola Metropolitan Bottling Co., Inc., and Bottling Group, LLC (collectively
“Pepsi”) under the Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”). The district court ruled that ASARCO’s direct
contribution claim was time-barred under CERCLA § 113 (42 U.S.C. § 9613);
that post-bankruptcy ASARCO was not a subrogee of pre-bankruptcy ASARCO;
and that ASARCO could not bring a subrogation claim. ASARCO appeals all
three of these rulings. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we
affirm the district court’s dismissal.
I. BACKGROUND
This case stems from pollution at a four-square-mile area in Denver known
as the Vasquez Site. Debtor-ASARCO, Union Pacific, and Pepsi all operated at
the site, allegedly contributing to the release of hazardous substances there. 1 The
1
For ease of understanding, we will use the term “debtor-ASARCO” to
refer to the company that existed prior to and during the bankruptcy process, and
(continued...)
2
Environmental Protection Agency (“EPA”) brought a CERCLA action against
debtor-ASARCO, which was still pending when debtor-ASARCO filed for
Chapter 11 bankruptcy on August 9, 2005, in the United States Bankruptcy Court
for the Southern District of Texas. In 2006, the EPA filed proofs of claim in
debtor-ASARCO’s bankruptcy case, seeking recovery of its expenses for cleaning
up the Vasquez Site. 2 In 2009, debtor-ASARCO moved for approval of a
settlement in which it agreed to pay “over $1.5 million to resolve its CERCLA
liabilities at the Vasquez Site (‘Vasquez Site Settlement’).” App’x at 15.
The Settlement Agreement
The settlement stated that it was “intended to serve as a comprehensive
settlement of the claims by the Governments against [debtor] ASARCO with
respect to all past costs and any potential future costs incurred by the
Governments (including, but not limited to, response costs . . . )” of several sites,
including the Vasquez Site. Id. at 185. 3 The agreement was “not conditioned
upon confirmation of any particular plan of reorganization.” Id. The agreement
1
(...continued)
the terms “ASARCO” and “reorganized ASARCO” to refer to the company that
existed after the bankruptcy plan became effective.
2
The full amount of EPA’s filed proofs of claim for the Vasquez Site was
$3,439,481, plus interest. App’x at 160.
3
The bankruptcy court referred to it as the “Miscellaneous Federal and
State Environmental Settlement Agreement.” App’x at 231. It was one of five
settlements that together resolved $3.5 billion of environmental claims against the
bankruptcy estate. Id. at 234.
3
stated it was subject to a public notice and comment period and “subject to
approval by the Bankruptcy Court pursuant to Bankruptcy Rule 9019.” Id. at 213.
The agreement stated it bound “the parties” and “any reorganized debtors under a
confirmed plan of reorganization (the ‘Reorganized Debtors’), and any trustee . . .
appointed in the Bankruptcy Case.” Id. at 193.
Paragraph eight stated, in relevant part:
In settlement and full satisfaction of all claims and
causes of action of the United States on behalf of the
[EPA] against Debtors with respect to any and all costs
of response incurred, or to be incurred, in connection
with . . . the Vasquez Boulevard/I-70 Site . . . the
United States on behalf of the EPA shall have an
allowed general unsecured claim in the total amount of
$55,402,390, which shall be allocated as follows: . . .
(iv) Vasquez Boulevard/I-70 Site - $1.5 million . . . .
Id. at 193-94 (emphasis added). 4 The agreement contained covenants not to sue
the debtors and reorganized debtors, but did not release any other party from
liability. The agreement granted the debtors and reorganized debtors protection
from contribution actions by other potentially responsible parties (“PRPs”) under
CERCLA § 113(f)(2) (42 U.S.C. § 9613(f)(2)) “for matters addressed in this
Settlement Agreement,” including “all costs of response incurred or to be incurred
by the United States or any other person relating to or in connection with” the
4
The settlement resolved claims by the EPA and the state of Colorado but
not claims by Denver’s local governments, which were also excluded from the
scope of the contribution protection.
4
Vasquez Site. Id. at 207-08.
On June 5, 2009, the bankruptcy court entered an order approving the
settlement agreements. The court had evaluated the settlements and determined
they were “(i) [] fair, equitable, and in the best interests of the estate; (ii) [] well
within the range of reasonableness; and (iii) [] fair, reasonable, and consistent
with the purposes of environmental law, including [CERCLA].” Id. at 236-37.
The court noted that the settlements contained “comprehensive covenant[s] not to
sue for civil environmental liability associated with these sites” as well as
protection from contribution actions by other PRPs for the covered sites. Id. at
249. The bankruptcy court analyzed the settlements under the standard of Federal
Rule of Bankruptcy Procedure 9019, which considered whether the settlements
were “fair, equitable, and in the best interest of the estate.” Id. at 250. The
bankruptcy court then evaluated whether the agreements were “reasonable, fair,
and consistent with [CERCLA’s] statutory aims.” Id. at 301. The court
concluded that the settlements also met this standard.
The Bankruptcy Plan
The seventh amended plan of reorganization (“the bankruptcy plan” or “the
plan”) was confirmed on November 13, 2009, by the United States District Court
for the Southern District of Texas, and became effective on December 9, 2009.
The plan defined “ASARCO” as “ASARCO LLC.” Id. at 421. “ASARCO LLC”
was defined as “a Delaware limited liability company and one of the Debtors
5
herein.” Id. at 422. “ASARCO Protected Parties” included the debtors and
Reorganized ASARCO. Id. “Reorganized ASARCO” was defined as “ASARCO
and/or any of its successors, successors-in-interest, and assigns . . . on or after the
Effective Date.” Id. at 447. It defined the “Effective Date” of the bankruptcy
plan as “the first Business Day upon which all of the conditions to occurrence of
the Effective Date contained in Article 9.1 of the Parent’s Plan have been
satisfied . . . .” Id. at 434.
The bankruptcy plan stated that all environmental unsecured claims,
including the Vasquez Site claim, would be paid in full on the effective date. On
the effective date of the plan, except as otherwise stated in the plan, reorganized
ASARCO would be vested with “all of ASARCO’s and its Estate’s property and
assets,” id. at 368 (section 10.12), as well as “[a]ny and all claims and causes of
action that were owned by ASARCO or its Estate as of the Effective Date,” id. at
369 (section 10.13), with reorganized ASARCO as “the only Entity entitled to
pursue such claims or causes of action.” Id. The “Schedule of Preserved
Litigation Claims” specifically reserved claims against other PRPS for
contribution for environmental damages. Id. at 399, 402, 406. Section 10.11
stated that “Reorganized ASARCO shall continue its existence after the Effective
Date,” and that “[t]he equity interests in Reorganized ASARCO shall continue to
be held by ASARCO USA Incorporated.” Id. at 368. Section 12.3 stated that
“[e]xcept as otherwise expressly provided in the Parent’s Plan, none of the
6
ASARCO Protected Parties shall be deemed a successor or successor-in-interest
to any of the Debtors or to any Entity for which Debtors may be held legally
responsible . . . .” Id. at 378. The plan’s treatment of claims functioned as
satisfaction for all claims against the debtor or the estate, except as otherwise
provided in the plan. Id. at 371.
History of Current Lawsuit
ASARCO filed this lawsuit against Union Pacific and Pepsi on December
10, 2012. ASARCO alleged that it paid more than its fair share of the costs for
the Vasquez Site, and because Union Pacific and Pepsi also allegedly contributed
to the pollution at the Vasquez Site, they owed ASARCO for a portion of the
remediation costs. ASARCO brought two claims: 1) a direct contribution claim
under CERCLA § 113(f), codified at 42 U.S.C. § 9613(f)(1); and 2) a contribution
claim as debtor ASARCO’s subrogee under CERCLA §§ 107, 112, and 113,
codified at 42 U.S.C. §§ 9607, 9612, and 9613, respectively. Union Pacific and
Pepsi filed motions to dismiss. In response, ASARCO withdrew its reliance on
CERCLA § 112.
The magistrate judge assigned recommended dismissing both counts. As
regards the contribution claim (count I), the magistrate judge found that the action
was untimely: the statute of limitations began on June 5, 2009, when the
bankruptcy court approved the settlement agreement, but the complaint was not
filed until December 10, 2012, over three years later. “The plain language of
7
CERCLA § 113(g)(3)(B) prohibits a contribution action more than three years
after ‘the date . . . of entry of a judicially approved settlement.’” Id. at 1113
(quoting 42 U.S.C. § 9613(g)(3)(B)). The bankruptcy court approved the
settlement on June 5, 2009, and it was effective on that day by its own terms.
“Furthermore, contrary to plaintiff’s assertion, ‘the date a settling party makes
payment is irrelevant.’” Id. (quoting ASARCO LLC v. Atl. Richfield Co., No.
CV 12-53-H-DLC, 2012 WL 5995662, at *2 (D. Mont. Nov. 30, 2012)). The
magistrate judge was persuaded by Atlantic Richfield and ASARCO LLC v.
Xstrata PLC, No. 2:12-CV-527-TC, 2013 WL 2949046 (D. Utah June 14, 2013),
which both “similarly discounted plaintiff’s argument that in the bankruptcy
context ‘entry of a judicially approved settlement’ means approval of the
Bankruptcy Plan.” Id. at 1114.
The magistrate judge provided two reasons for dismissing the subrogated
contribution claim (count II). First, the magistrate judge rejected ASARCO’s
argument that as the reorganized debtor, it was “a separate legal entity from the
former Debtor” who then “paid the Debtor’s CERCLA liability.” Id. Citing
Cross Media Marketing Corp. v. CAB Marketing, 367 B.R. 435, 451 (Bankr.
S.D.N.Y. 2007), the magistrate judge evaluated the bankruptcy plan to decide if it
established the plaintiff was the same entity as the debtor. Id. at 1115. The
magistrate judge noted that the bankruptcy plan:
(1) defines “Reorganized Asarco,” which is plaintiff
8
here, to be one and the same as the Debtor as of the
Effective Date. It defines “Reorganized ASARCO” as
“ASARCO and/or any of its successors . . . on or after
the Effective Date . . . and defines “ASARCO” as
“ASARCO LLC” which is “a Delaware limited liability
company and one of the Debtors herein” . . .
(2) continues the Debtor’s corporate existence as
Reorganized Asarco; it provides that “Reorganized
ASARCO shall continue its existence after the Effective
Date” and the “equity interests in Reorganized ASARCO
shall continue to be held by ASARCO USA
Incorporated” . . .
(3) vests the claims and causes of action of the Debtor
and the Estate in Reorganized ASARCO . . . [citing plan
sections 10.12 and 10.13] and
(4) maintains the Debtor’s identical equity owners in
Reorganized Asarco [citing plan section 10.11].
Id. at 1115-16. The magistrate judge held that “the Debtor and plaintiff ASARCO
LLC are not separate legal entities for the purposes of pursuing post-confirmation
subrogation claims. Having paid its own debt, plaintiff is not entitled to assert a
subrogation claim.” Id. at 1114. The magistrate judge also held that “CERCLA §
113(f) provides plaintiff its exclusive remedy.” Id. at 1116. The magistrate judge
agreed “that the Supreme Court and every federal circuit court to consider the
issue have held that a party which ‘pays money to satisfy a settlement agreement
or a court judgment’ is limited to a § 113(f) contribution claim and ‘cannot
simultaneously seek to recover the same expenses under § 107(a).’” Id. at 1116-
17 (citation omitted). The district court adopted the magistrate judge’s
recommendations and dismissed the complaint in its entirety.
9
II. ANALYSIS
ASARCO contends that the district court erred in granting the defendants’
motions to dismiss ASARCO’s complaint. A district court’s dismissal under Rule
12(b)(6) is reviewed de novo. S.E.C. v. Shields, 744 F.3d 633, 640 (10th Cir.
2014); see also Hernandez v. Valley View Hosp. Ass’n, 684 F.3d 950, 957 (10th
Cir. 2012) (“We review de novo the dismissal of an action under Rule 12(b)(6)
based on the statute of limitations.” (citation omitted)). “We accept as true all
well-pleaded factual allegations in the complaint and view them in the light most
favorable to the [plaintiff].” Shields, 744 F.3d at 640 (quoting Burnett v. Mortg.
Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013)). 5
A. Did the district court err in ruling the contribution claim was untimely?
ASARCO’s first argument on appeal is that its claim for contribution was
not barred by the statute of limitations. CERCLA § 113(f) allows a PRP to bring
a contribution claim against other PRPs under certain circumstances. 6 The statute
5
We, like the district court, have relied on relevant documents from
ASARCO’s bankruptcy case. See Pace v. Swerdlow, 519 F.3d 1067, 1072-73
(10th Cir. 2008) (“[A] document central to the plaintiff’s claim and referred to in
the complaint may be considered in resolving a motion to dismiss.” (citation
omitted)); see also Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1219 n.2
(10th Cir. 2011) (taking judicial notice of documents in a separate district court
case under Federal Rule of Evidence 201).
6
“[CERCLA] § 113 provides two express avenues for contribution: §
113(f)(1) (‘during or following’ specified civil actions) and § 113(f)(3)(B) (after
an administrative or judicially approved settlement that resolves liability to the
United States or a State).” Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S.
(continued...)
10
of limitations provides:
No action for contribution for any response costs or
damages may be commenced more than 3 years after–
(A) the date of judgment in any action under this chapter
for recovery of such costs or damages, or
(B) the date of an administrative order under section
9622(g) of this title (relating to de minimis settlements)
or 9622(h) of this title (relating to cost recovery
settlements) or entry of a judicially approved
settlement with respect to such costs or damages.
42 U.S.C. § 9613(g)(3) (emphasis added).
ASARCO argues that the bankruptcy court’s order approving the Vasquez
Site Settlement, entered on June 5, 2009, does not constitute “a final judicially
approved settlement” because “[t]hat approval is preliminary and subject to a
confirmation process culminating in a confirmation order (which . . . was required
to be . . . entered by the Texas Court, rather than the Bankruptcy Court) finally
fixing the amount of the claim to be paid and determining the party that will be
liable” for paying the claim. Appellant’s Br. at 13. According to ASARCO, at
the time of the June 5, 2009, order, “the amount of the payable claim was not set,
and the party responsible for its payment was unknown.” Id.
ASARCO contends that because the term “judicially approved settlement”
is not defined in CERCLA, it should be interpreted in light of “the purposes and
limitations of a contribution claim.” Id. at 15. ASARCO emphasizes that the
6
(...continued)
157, 167 (2004).
11
purpose of a contribution claim is to allow a PRP who has overpaid to recover
from other PRPs, and therefore, “until a party has actually paid (or knows that it
is obligated to pay) more than its fair share, it cannot know whether it has a
contribution claim against another potentially responsible party.” Id. at 14.
ASARCO argues that “for purposes of the accrual of a Section 113(f) contribution
claim, a settlement has not been ‘judicially approved’ until the date of the final
court action establishing who is obligated to pay the claim and how much is
required to be paid.” Id. at 15. According to ASARCO, it was not until the plan
became effective on December 9, 2009, that “the Debtor’s actual liability for the
$1.5 million claim was fixed and payment could, and was, made.” Id. at 17.
Without an effective plan, ASARCO argues that it could have paid “any amount
less than or equal to $1.5 million, including zero.” Id.
By our reading of CERCLA § 113(g)(3), ASARCO’s argument does not
reflect the plain language of the statute. The statute of limitations begins on the
“date of . . . entry of a judicially approved settlement with respect to such costs or
damages.” 42 U.S.C. § 9613(g)(3). The statute does not refer to the date
payment is required under the settlement. It only looks to the date the judicially
approved settlement is entered. Further, there is no indication that the date the
settlement payment is actually made is relevant for accrual purposes. 42 U.S.C. §
9613(f)(3)(B) (“A person who has resolved its liability to the United States or a
State for some or all of a response action or for some or all of the costs of such
12
action in an administrative or judicially approved settlement may seek
contribution from any person who is not party to a settlement referred to in
paragraph (2).”); cf. United States v. Colo. & E. R.R. Co., 50 F.3d 1530, 1538
(10th Cir. 1995) (“Contribution protection is conferred on the settling parties at
the time the settling parties enter into the agreement. . . . Because only the EPA
can rescind, . . . any information concerning whether the defendants remain in
compliance with the agreement is irrelevant.” (citation omitted)).
We conclude that the bankruptcy court’s approval of the Vasquez Site
Settlement on June 5, 2009, was a “judicially approved settlement” under
CERCLA § 113(g)(3). The bankruptcy court conducted an extensive analysis
regarding whether the compromises in the various settlements, including the
Vasquez Site Settlement, were appropriate under bankruptcy law and CERCLA.
The court used its authority under Federal Rule of Bankruptcy Procedure 9019,
which states: “On motion by the trustee and after notice and a hearing, the court
may approve a compromise or settlement. Notice shall be given to creditors, the
United States trustee, the debtor, and indenture trustees as provided in Rule 2002
and to any other entity as the court may direct.” Fed. R. Bankr. P. 9019(a). A
settlement approved under this rule must meet the ordinary definition of a
“judicially approved settlement.” 42 U.S.C. § 9613(g)(3)(B). There is nothing in
the term “judicially approved settlement” or the text of CERCLA § 113 to
indicate that there is any special or different rule which would apply in the
13
bankruptcy context. Here, a judicially approved settlement was entered on June
5, 2009, and therefore this action, brought more than three years after that date, is
untimely.
The cases ASARCO cites do not counsel a different result. ASARCO
contends that In re RNI Wind Down Corp., 369 B.R. 174, 184 (Bankr. D. Del.
2007), stands for the proposition that “contribution claims under CERCLA do not
accrue until payment is made.” Appellant’s Br. at 14. But RNI’s reference to
CERCLA dealt with whether a contribution claim would be contingent under 11
U.S.C. § 502(e), not when contribution claims accrue. 369 B.R. at 184. 7 RNI
provides no useful analysis for determining the statute of limitations for a cause
of action against non-debtor PRPs.
ASARCO next points to United States v. Scott’s Liquid Gold, Inc., 934 F.
Supp. 362 (D. Colo. 1996), which it claims supports its position because “an
agreement that ‘merely sets forth the initial distribution of costs’ but does not ‘fix
liability’ does not trigger the running of the statute of limitations on a CERCLA
7
RNI’s single reference to CERCLA was based on In re APCO Liquidating
Trust, which considered whether a proof of claim filed against the debtor in
bankruptcy was contingent or not. 370 B.R. 625, 636 (Bankr. D. Del. 2007).
Contrary to ASARCO’s argument, this proof of claim was based on a contribution
lawsuit that had already been resolved. Id. at 629 (“After a lengthy trial, the
Debtors were determined to be liable under [42 U.S.C. §] 9613(f)(1) for . . . 100%
of the City’s future source control costs to be incurred at 1001 E. Lincoln.”). The
only issue in In re APCO Liquidating Trust was whether that judgment was
contingent under 11 U.S.C. § 502(e) because the City had “not yet incurred any
future source control costs.” Id. at 636.
14
contribution claim.” Appellant’s Br. at 14 (quoting 934 F. Supp. at 365). In
Scott’s Liquid Gold, Inc., the United States, on behalf of the Department of the
Army, brought a contribution action against Scott’s Liquid Gold. 934 F. Supp. at
363. Scott’s Liquid Gold moved for summary judgment on the basis that the
contribution claim was untimely because of a 1987 Agreement between the Army
and the EPA. Id. at 364. The district court disagreed, apparently for two reasons.
First, the 1987 Agreement did not fix liability, which the district court found was
“a common factor linking the three events in [CERCLA] § 113(g)(3)(B).” Id. at
365. And second, the district court determined that even if the 1987 Agreement
had fixed liability, it had not been judicially approved, and thus it did not trigger
the statute of limitations. Id.
Scott’s Liquid Gold, Inc. is unpersuasive here. First, unlike the agreement
between the Army and the EPA, the settlement here between ASARCO and the
EPA was judicially approved. Second, the district court viewed the 1987
agreement as one that “merely set[] forth the initial distribution of costs
associated with the [remedial measure] among the participating parties,” but did
“not fix liability.” Id. 8 The settlement here differs greatly because not only did it
8
The district court opinion describes the 1987 Agreement as “a cooperative
agreement” between the Army, the EPA, and South Adams County Water and
Sanitation District (“SACWSD”), “for the design and construction” of the Klein
water treatment facility. Scott’s Liquid Gold, Inc., 934 F. Supp. at 363.
“Construction on the Klein WTF commenced on August 15, 1988.” Id. Under
(continued...)
15
specify an amount that ASARCO was liable for, $1.5 million, but also it
functioned as “full satisfaction of all claims and causes of action” by the EPA
against ASARCO for the response costs related to the Vasquez Site. Although
bankruptcy plans may propose paying allowed claims in part or in full, this does
not change the fact that at the time of the settlement, ASARCO was liable for the
determined sum of $1.5 million.
ASARCO also argues that “until a party has actually paid (or knows that it
is obligated to pay) more than its fair share, it cannot know whether it has a
contribution claim against another [PRP],” and cites to Durham Manufacturing.
Co. v. Merriam Manufacturing. Co., 294 F. Supp. 2d 251 (D. Conn. 2003).
Appellant’s Br. at 14. But the issue in Durham was that “[n]one of the triggering
events in CERCLA § 113(g)(3)” had occurred, and thus the district court was
faced with deciding what limitations period to apply to fill the statutory gap. 294
F. Supp. 2d at 275. The present case differs greatly from Durham. We are not
determining what statute of limitations applies to a factual scenario not described
in CERCLA § 113(g)(3); instead, we are deciding what § 113(g)(3) means.
ASARCO also cites Ziino v. Baker, 613 F.3d 1326 (11th Cir. 2010), in
8
(...continued)
this agreement, “the Army paid SACWSD $289,038 . . . for the construction of
the facility, and six million dollars for the operation and maintenance of the
facility. The Army paid an additional $975,000 to the EPA to connect users to the
Klein WTF.” Id.
16
support of its position that the effective date of the bankruptcy plan started the
statute of limitations. ASARCO argues that the June 5, 2009, order was just
“allowing a proof of claim,” which is the first step, and not “a final order or
judgment liquidating damages and requiring payment.” Appellant’s Br. at 17.
The plaintiff, Robert Ziino, filed suit to enforce his allowed bankruptcy claim.
Ziino, 613 F.3d at 1328. The Eleventh Circuit held that an allowed bankruptcy
claim did not constitute a “money judgment” under Federal Rule of Civil
Procedure 69. Id. at 1328-29. ASARCO relies heavily on the Eleventh Circuit’s
language concerning the distinction between allowed claims and money
judgments. Id. at 1328 (citation omitted) (“An allowed claim in bankruptcy
serves a different objective from that of a money judgment–it permits the
claimant to participate in the distribution of the bankruptcy estate. [T]he
assertion of a claim in bankruptcy is, of course, not an attempt to recover a
judgment against the debtor but to obtain a distributive share in the immediate
assets of the proceeding.”). However, the question presented here is not whether
the June 5, 2009, order would satisfy Rule 69, but whether it is a judicially
approved settlement under CERCLA § 113(g)(3). The statute draws no
distinction between settlements based on their similarity to allowed claims or
money judgments, nor does it indicate that settlements are not truly “entered”
until payment is required. Rather, as § 113(g)(3) is applied here, the statute of
17
limitations began to run on June 5, 2009. This action is therefore untimely. 9
B. Did the district court err in ruling ASARCO was not a subrogee?
ASARCO’s second issue on appeal is that the district court incorrectly held
that ASARCO, the post-bankruptcy entity, was not the subrogee of debtor-
ASARCO. Black’s Law Dictionary defines subrogation as the “substitution of
one party for another whose debt the party pays, entitling the paying party to
rights, remedies, or securities that would otherwise belong to the debtor.”
Black’s Law Dictionary (9th ed. 2009), subrogation. It is an “equitable
assignment” that “comes into existence when the surety becomes obligated . . .
but such right of subrogation does not become a cause of action until the debt is
fully paid.” Id. The appellees point out that “‘[a] person’s payment of his own
debt rather than of another’s obligation does not entitle the person to
subrogation.’” Appellees’ Br. at 38 (quoting In re Wingspread Corp., 145 B.R.
784, 789 (S.D.N.Y. 1992)). 10 ASARCO argues that the district court was
9
As Union Pacific and Pepsi note, three district courts have also concluded
that the date the judicially approved settlement agreement was entered is the
proper date, not the date the bankruptcy plan was approved or became effective.
ASARCO LLC v. Goodwin, No. 12-cv-3749 (S.D.N.Y. Sept. 18, 2013), appeal
pending, No. 13-3954 (2d Cir.); ASARCO LLC v. Xstrata PLC, No. 2:12-CV-
527-TC, 2013 WL 2949046, at *3-4 (D. Utah June 14, 2013); ASARCO LLC v.
Atlantic Richfield Co., No. CV 12-53-H-DLC, 2012 WL 5995662, at *2 (D.
Mont. Nov. 30, 2012).
10
Neither party has addressed whether federal or state law provides the
elements for subrogation in this case. See United States v. Kimbell Foods, Inc.,
440 U.S. 715, 727-29 (1979) (discussing issues relevant to deciding “[w]hether to
(continued...)
18
incorrect in holding that reorganized ASARCO and debtor ASARCO were the
same entity.
ASARCO first relies on the “general proposition of bankruptcy law” that
“once a plan is confirmed and becomes effective, the ‘debtor’ ceases to exist and
‘the reorganized debtor is a new entity not subject to the jurisdiction of the
bankruptcy court, except as provided in the plan.’” Appellant’s Br. at 25 (quoting
In re Briscoe Enters., Ltd., II, 138 B.R. 795, 809 (N.D. Tex. 1992), rev’d on other
grounds, 994 F.2d 1160 (5th Cir. 1993). ASARCO supports this contention with
several cases that have stated, in various precise phrases, that the reorganized
debtor is legally distinct from the debtor-in-possession.
However, these cases dealt with bankruptcy jurisdiction, not subrogation.
For example, in Briscoe, the district court evaluated whether to affirm the
bankruptcy court’s confirmation of the bankruptcy plan. 138 B.R. at 801. The
appellant opposed the bankruptcy plan in part because it gave fee-approval
authority to trustees not under the bankruptcy court’s supervision. Id. at 809.
The district court did not find this to be problematic, however, because “upon
10
(...continued)
adopt state law or to fashion a nationwide federal rule” when resolving disputes
regarding federal programs); United States v. Hardage, 985 F.2d 1427, 1433 n.2
(10th Cir. 1993) (applying Kimbell to conclude state law applies to determine the
meaning of indemnification provisions, as applied in a CERCLA case). We
decline to raise this unbriefed issue sua sponte. See Flying J Inc. v. Comdata
Network, Inc., 405 F.3d 821, 831 n.4 (10th Cir. 2005).
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plan confirmation, a debtor is no longer a debtor in possession and the bankruptcy
estate ceases to exist.” Id. It was in this context that the district court stated that
“the reorganized debtor is a new entity and not subject to the jurisdiction of the
bankruptcy court, except as provided in the plan.” Id. The district court held that
“approval of fees for post-confirmation services is not required.” Id. The district
court clearly used the term “entity” to note the change in status that occurs upon
plan confirmation. This discussion in Briscoe does not speak to whether a
reorganized debtor that pays debts under a bankruptcy plan is paying its own
debts or the debts of another.
ASARCO attempts to salvage its subrogation argument by contending that
“a court should look to the substantive effect of the plan—ignoring
formalism—when determining whether a debtor and reorganized entity are
separate.” Appellant’s Br. at 27 (citing Cross Media, 367 B.R. at 451). However,
ASARCO has not shown that the bankruptcy plan created a new corporate entity.
ASARCO’s only argument is that the plan states that reorganized ASARCO is not
“responsible for any successor or transferee liability of any kind or character.”
App’x at 378. ASARCO argues that if reorganized and debtor ASARCO were
truly the same entity, this provision would be unnecessary. But this provision by
itself cannot create a new corporation. ASARCO argues that “the Debtor ceased
to exist on the Effective Date, ASARCO was created on the Effective Date, and
the former Debtor and ASARCO are distinct legal entities.” Appellant’s Br. at
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29. Nothing in the bankruptcy plan supports the contention that there was a
dissolution of one ASARCO and the formation of a new corporation named
ASARCO. In fact, the bankruptcy plan points to just the opposite conclusion. As
recounted by the magistrate judge, the plan has ASARCO continuing in its same
corporate form after plan confirmation.
C. Did the district court err in ruling that CERCLA § 113(f) provided
ASARCO’s exclusive remedy?
ASARCO’s final argument is that it was error to dismiss its subrogated
contribution claim on the basis that CERCLA § 113(f) is its exclusive remedy.
ASARCO agrees that it cannot bring both a CERCLA § 113(f) contribution claim
and a CERCLA § 107(a) cost-recovery claim, but contends it has not brought a §
107(a) claim. ASARCO states that both of its counts are for contribution; it is
just that count II does so based on a theory of subrogation. ASARCO is correct
that it is not bringing a CERCLA § 107(a) cost-recovery action, and thus the
authority cited by the magistrate court is inapplicable. This issue is moot,
however, because ASARCO is not a subrogee.
Because ASARCO’s direct contribution claim is time-barred and ASARCO
is not a subrogee, we AFFIRM the district court’s order.
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