Clean Harbors, Inc. v. Union Pacific Corporation

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
CLEAN HARBORS, INC.,
Plaintiff,
C.A. No. NlSC-O7-081 l\/IMJ CCLD
V.
UNION PACIFIC CORPORATI()N,
Defendant.
Subrnitted: September 18, 2017
Decided: Novernber 15, 2017
OPINION
Richard L. Renck, Esq., Christopher M. Winter, Esq., Mackenzie M. Wrobel, Esq.,
Duane Morris LLP, Paul L. Feldman, Esq. (Argued), Gary S. Matsko, Esq. (Argued),
Christopher J. Marino, Esq., Davis Malm & D’Agostine, P.C. Attorneys for Plaintiff
Clean Harbors, Inc.
Ann L. Al-Bahish, Esq. (Argued), Lauren K. Valastro, Esq., Kelley Drye/Jackson
Gilrnour & Dobbs, Norton A. Colvin, Jr., Esq., Mitchell C. Chaney, Esq., Colvin,
Chaney, Saenz & Rodriguez, LLP, Stephen B. Brauerman, Esq., Sara E. Bussiere,
Esq., Bayard, P.A., Jarnes W. Semple, Cooch and Taylor, P.A. Attorneys for
Defendant Union Pacific Corporation.
JOHNSTON, J.
FACTUAL AND PROCEDURAL CONTEXT
Before the Court are post-trial motions related to a breach of contract case.
Plaintiff Clean Harbors, Inc. (“Clean Harbors”) sued Union Pacific Corporation
(“UPC”), for breaching an environmental indemnity provision in a stock purchase
contamination from a hazardous waste facility its predecessor purchased from UPC.
On a motion for summary judgment, this Court ruled that Clean Harbors was entitled
to indemnification under the SPA.l The parties went to trial to determine the
reasonableness of the extent of cleanup performed by Clean Harbors, whcthcr Clean
Harbors complied with the SPA’s notice provisions, and the amount of
indemnification UPC owed Clean Harbors. At trial, the jury found that both parties
breached the contract, but awarded Clean Harbors $9,180,445.76 and UPC $0.
UPC now moves for a new trial based on issues it raises with the jury’s verdict,
the jury instructions, and the jury verdict form.
Clean Harbors has filed two motions of its own. lt moves for attorneys’ fees
and costs and for prejudgment interest.
MOTION FOR NEW TRIAL STANDARD
To warrant granting a motion for a new trial, “the verdict must be manifestly
and palpably against the weight of the evidence or for some reason, or combination
ofreasons, justice would miscarry if it were allowed to stand.”2 Delaware law gives
great deference to jury verdicts.3 “In the face of any reasonable difference of
opinion, courts will yield to the jury’s decision.”4 When the court considers a motion
1 Clean Harbors v. Unl``on Pacifz``c Corporatz``on, 2017 WL 1175664, at *5 (Del. Super.).
2 Broderl``ck v. Wal-Mart Stores, Inc., 2002 WL 388117, at *1 (Del. Super.).
3 Brittingham v. Layfzeld, 2008 WL 4946217, at *3 (Del.).
4 Id.
for a new trial, “there is a presumption that the jury verdict is correct.”5
ANALYSIS
UPC’s Motion for New Trial
At the conclusion of the trial, the jury completed a verdict form. Question 1
asked: “Did Union Pacific breach the contract?” The jury selected “YES.” Question
2 asked: “Did Clean Harbors breach the contract?” The jury selected “YES.”
Question 3 asked: “ONLY if you answered ‘YES’ to Question 1: What was the total
reasonable cost of the environmental clean-up?” In response, the jury wrote
“$9,180,445.76.” Question 4 asked: “ONLY if you answered ‘YES’ to Question 2:
What amount would fairly and reasonably compensate Union Pacific for Clean
Harbors’ breach of contract?” In response, the jury wrote “$0.”
The Jury’s Verdict on the Total Reasonable
Cost of the Environmental Clean-Up is
Not Against the Great Weight of the Evidence
UPC argues that the jury’s response to Question 3_that the reasonable cost
of cleanup for the Wichita Facility was $9,180,445.76_went against the great
weight of the evidence presented at trial. lt contends that the evidence at trial
demonstrated that Clean Harbors accrued most of its claimed damages by pursuing
an unnecessarily expensive cleanup process chosen only to meet the indemnity
deadline. Clean Harbor counters by noting that its numerous expert and lay
5 Daub v. Daniels, 2013 WL 5467497, * 1 (Del. Super.).
3
deadline. Clean Harbor counters by noting that its numerous expert and lay
witnesses presented evidence in support of its contention that its cleanup efforts were
reasonable in scope and cost.
The Court can only set aside a verdict for being against the great weight of the
evidence if “the evidence preponderates so heavily against the jury verdict that a
”6 No such drastic evidentiary
reasonable jury could not have reached the result.
imbalance existed in this case. Instead, the jury heard and considered a classic battle
of the experts and the verdict demonstrates that the jury found Clean Harbors’
evidence more persuasive Additionally, the verdict demonstrates that the jury did
not completely adopt Clean Harbors’ version of events while ignoring UPC’s
contentions Consistent with UPC’s evidence that certain costs were not reasonable,
the jury reduced Clean Harbors’ request for relief by $1,500,000.7
Considering the evidence heard at trial, the Court finds that the credibility of
UPC’s witnesses, as opposed to Clean Harbors’ witnesses, presents, at most, a
“reasonable difference of opinion.”8 Therefore, the Court must “yield to the jury’s
decision.”9 The Court finds the jury’s verdict was not against the great weight of the
evidence.
6 Storey v. Camper, 401 A.2d 458, 465 (Del. 1979).
7 May 24, 2017 Trial Tr., 141 :4_5 (“[T]he total cleanup cost that Clean Harbors is asking for is
the $10,680,445.”). The jury awarded Clean Harbors $9,180,445.7_6.
8 Daub v. Daniels, 2013 WL 5467497, * l (Del. Super.).
9 Id.
The JLlly Verdict Fol‘m
Did Not Confuse the Jury
UPC also argues that the verdict form confused the jury on the issue of
damages, because it asked for the “total reasonable cost” of the clean-up without
specifying a time period. The SPA indemnified Clean Harbors for expenses,
incurred up to 2014, for cleaning up contamination that existed at the time of the
SPA in 1994. UPC argues that the jury’s verdict may have included costs outside of
that indemnification period.10 However, neither party argued or presented evidence
that Clean Harbors’ claim for damages included clean-up costs incurred after 2014.
Indeed, both parties’ opening and closing arguments reminded the jury only to
consider damages within the indemnification period.ll
10 UPC further contends that the Court’s verbal directive to the jury regarding the total cost~that
the Court “would do the math and figure it out”_confused the jury, because it led the jury to
believe it could not subtract expenses outside of the indemnification period from its verdict.
May 24, 2017 Trial Tr., at 256:20-257:3. This argument fails because, in context, it is clear the
Court was instructing the jury to refrain from performing contractually mandated calculations,
not instructing the jury to include costs outside of the indemnification period. See id. (telling the
jury, “[d]on’t subtract anything that was paid . . . don’t figure out 80 percent” in reference to
UPC’s 80% responsibility for the costs under the SPA, minus a prior UPC payment needed to
calculate the final amount owed).
11 May 24, 2017 Trial Tr., 143:5-14 (“Your job is to give us the whole picture: What was the
reasonable amount that should have been spent from . . . the notice in ’98 until December 31,
2014.”); Id. at 223 : 14-19 (“No one disputes that there had been contamination in this facility
before 1994, but that’s all the railroad was responsible for under the agreement and under the
document.”); May 9, 2017 Trial Tr., 12:6-7, 13:17-19 (“It had to relate to contamination that
existed as of December 31, 1994 . . . This was an indemnification that lasted for 20 years.”);
43:1_3 (“[E]xpenditures for environmental liabilities only lasted for 20 years after the closing
date of the transaction, which was December 31 of 1994.”).
5
UPC names only two instances from the three-week trial in which a witness
mentioned the cost of Clean Harbors’ clean-up after 2014. ln both instances, the
attorney elicited the testimony in a way that made clear that those expenses were not
within the indemnity period. UPC first points to a Clean Harbors employee’s
testimony that Clean Harbors spent, “[v]ery generally, about $2 million” on clean-up
after 1994.12 However, UPC fails to note that the witness provided this information
in response to the question, “And how much did it spend after 2014 outside of the
indemnl``fz``cation?”l3 Similarly, when a UPC witness stated that there was “4 more
million dollars’ worth of costs” in 2015, she prefaced that statement with an
explanation that she was describing the “Clean Harbor interim remedy” and that
“although [Clean Harbor is] recovering costs from Union Pacific in 2014 because
that ’s when the indemnity clock ended, the remedy actually went into 2015 . . . .”14
The Court finds those two minimal, contextualized references to post-2014 expenses
did not confuse the jury.
The Court also finds that the jury was not confused as to whether it should
have included costs arising out of pre-1994 contamination in its verdict, The Court
must not consider the “total reasonable cost” language of the verdict form in
isolation-“the entire instruction is considered with no statement to be viewed out
12 May 11, 2017 Trial Tr., at 89;12_14.
13 Id. (emphasis added).
14 May 22, 2017 Trial Tr., at, 136:15-20; 139:2-9 (emphasis added).
6
of context.”15 Jury lnstruction 7 provided important context. lt stated: “Under the
terms of the contract, Union Pacific is only obligated to indemnify Clean Harbors
for contamination at the Wichita Facility that arise out of or in connection with acts
or omissions occurring prior to December 31, 1994.” Given that plainly-stated
directive, and Delaware law’s presumption “that the jury followed the trial judge’s
instruction,”16 the Court holds the verdict form did not cause the jury to incorporate
damages outside the indemnity period into its verdict.
UPC raises an additional argument concerning the verdict form. lt claims that
Verdict Form Questions 3 and 4 caused prejudice against UPC because the questions
were not identical. However, Verdict Form Questions 3 and 4 were different in order
to make the jury’s task as clear as possible. Determining the amount UPC owed
required a calculation as mandated by the SPA, which, as previously discussed, the
Court did not want the jury to attempt to compute. Asking for the “total reasonable
cost of the environmental cleanup”_in other words, the input for the SPA
formula_removed a layer of complexity for the jury. lnstruction 9 informed the
jury what standard it should apply for reasonableness, and lnstruction 8 reminded
and explained to the jury Clean Harbors’ duty to mitigate damages, making the
meaning of Question 4 even clearer.
15 Haas v. Unitea' Technologies Corp., 450 A.2d 1173, 1170 (Del. 1982).
16 Reinco, Inc. v. Thompson, 906 A.2d 103, 112 n.20 (Del. 2006) (citing Fuller v. State, 860 A.2d
324, 329 (Dei. 2004)).
UPC requested the following language for what became Question 4: “What
sum of money, if any, if paid now in cash, would fairly and reasonably compensate
Union Pacific for its damages, if any, that resulted from such breach of contract?”
UPC’s proposed language is not substantively different fi'om the actual Question 4
on the final Verdict Form.
The Verdict Form asked the jury to make specific findings of fact. When
considered together with all of the instructions, the Verdict Form was neither
confusing nor prejudicial to UPC.
The Jury lnstruction 5 is a
Correct Statement of the Law and
Did Not Cause an lnconsistent Verdict
UPC argues that it is entitled to a new trial because Jury lnstruction 5
misstated the law by not being reasonably informative. lnstruction 5 stated, in
relevant part: “[T]o establish that Union Pacific breached the contract, Clean
Harbors must prove that . . . Clean Harbors substantially performed its obligations
under the contract . . . .” UPC asserts that this instruction was insufficient because
it should have included an additional instruction on material breach or a definitional
instruction for substantial performance
“A party is not entitled to a particular jury instruction but does have the
unqualified right to have the jury instructed on a correct statement of the substance
of the law.”17 “A trial court’s charge to the jury will not serve as grounds for
reversible error if it is ‘reasonably informative and not misleading, judged by
common practices and standards of verbal communication.”’18
The language of UPC’s proposed instruction for substantial performance
shows that the Court’s decision to exclude it did not mislead the jury. ln relevant
part, it reads: “A good-faith attempt to perform a contract, even if the attempted
performance does not precisely meet the contractual requirement is considered
complete if the substantial purpose of the contract is accomplished This means that
the contract has been completed in every significant respect.” Failing to inform the
jury that substantial performance exists when the “substantial purpose of the contract
is accomplished” is hardly misleading according to the “standards of verbal
communication.” Nor is it against common practices_the pattern jury instruction
for breach of contract does not include substantial performance as an element, much
less define it.19 The Court declined to explicitly state the obvious_that the law
defines a phrase in line with its common meaning This decision does not warrant a
new trial.
17 R.T. Vanderbilt C0. Inc. v. Galliher, 98 A.3d 122, 125 (Del. 2014).
18 Ross v. State, 2001 WL 129075 (Del.) (quoting Flamer v. State, 490 A.2d 104, 128 (Del.
1984)).
19 Del. P.J.l. Civ. § 19.20 (2000).
The Court also had no reason to independently instruct the jury on the concept
of material breach. Case law relied upon by UPC in its proposed instructions noted
that material breach and substantial performance are simply the inverse of one
another.20 lf a party substantially performs, there is no material breach; if there is a
material breach, the breaching party cannot have substantially performed.
lnstruction 5 already stated Clean Harbors’ obligation to substantially perform its
contract to prove UPC’s breach. Stating the same thing negatively_UPC did not
breach if Clean Harbors materially breached the contract_would have been
redundant The Court’s decision not to include a redundant instruction did not
mislead the jury.
The Court also did not err in declining to include the requested instructions,
because whether there is “sufficient evidence to warrant the requested instruction is
a matter within the sound discretion of the trial court.”21 UPC put on evidence in an
211 General Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 317 n.8 (3rd Cir. 2001)
(interpreting New Jersey law and concluding “we see no real or practical difference between a
conclusion that a party materially breached a contract, and a conclusion that the party failed to
substantially comply with its obligations under a contract. To decide otherwise would be simply
to engage in linguistic games”). lt appears no case applying Delaware law has yet stated this
logical inference, but Delaware courts applying other states’ laws have. See TA Operatz'ng LLLC
v. Comdata, Inc., 2017 WL 3981138, at *33 n.388 (“ln Tennessee, the termination of a
substantially complete contract constitutes a material breach of contract because substantial
completion of a project equates to substantial performance of the contract.”) (quoting Roy McAmis
Disposal Serv., Inc. v. Hz``wasee Sys., Inc., 613 S.W.2d 226, 228 (Tenn. Ct. App. 1979)); Hipcricket,
Inc. v. mGage, LLC, 2016 WL 3910837, at *12 n.143 (“[l]f it is determined that a breach is
material, or goes to the root or essence of the contract, it follows that substantial performance has
not been rendered, and further performance by the other party is excused.”) (quoting DC Farms,
LLC v. Conagra Foods Lamb Weston, Inc., 317 P.3d 543, 550 (Wash. App. 2014)).
21 Coles v. Spence, 202 A.2d 569, 570 (Del. 1964).
10
attempt to prove that Clean Harbors committed several material breaches_or, put
another way, failed to substantially perform its contract. lts evidence did not
persuade the jury. Though the jury found that Clean Harbors breached its contract,
it did not award UPC any damages This finding is not inconsistent with the trial
evidence.
UPC further contends that Jury lnstruction 5 led to inconsistent Verdict Form
responses ln both Questions 1 and 2, the jury wrote responded “YES” to whether
UPC and Clean Harbors, respectively, breached the contract. Jury lnstruction 5
required a party to establish it “substantially performed its obligations under the
contract” to prove the other party breached the contract. UPC argues both parties
could not have breached, as the jury indicated, and also have substantially
performed
This position would mean that under no circumstances could more than one
party breach a contract. Such a contention is inconsistent with contract law and
common sense. UPC essentially argues that a finding of substantial performance
precludes a finding of any breach, including one that is non-material. This is
contrary to the law. As previously explained, where there is a substantial
performance, there can be no material breach. This does not mean, however, that
substantial performance precludes a non-material breach. Parties suffering non-
material breaches are not excused from performance as they would be had they
ll
suffered a material breach, but they still may recover damages22 There is no
inconsistency in the jury finding that the parties both substantially performed the
contract and breached the contract.
The Jury Was Properlv lnstructed
Not to Consider Speculative Evidence
UPC argues Jury lnstruction 4 was improper. That instruction states:
l have determined, as a matter of law, that it would be speculative for
any expert or witness, to testify about what the government regulators
would or would not have done with a particular set of facts or
circumstances if they had only been asked Any such testimony that
you heard, or think you may have heard, during the course of this trial
should be ignored and disregarded Of course, this does not mean that
you should disregard testimony about what government regulators did
or did not do.
UPC argues that this instruction was inappropriate because it instructed the
jury to only consider the cleanup method Clean Harbors actually approved, not
alternative methods Clean Harbors could have approved_an improper exclusion of
valid expert testimony. UPC also contends that the Court should not have excluded
evidence of cleanup efforts at other sites ln response, Clean Harbors maintains that
lnstruction 4 properly directed the jury only to ignore speculative testimony. lt
contends that the excluded testimony would have consisted of guesswork rather than
22 Commonwealth Consl‘. C0. v. Cornerstone Fellowship Baptist Church, Inc., 2006 WL
2567916, at * 19 (Del. Super.) (“Although a material breach may allow the non-breaching party
to be excused from future performance, a non-material breach does not; instead, the non-
breaching party may recover any damages that it can prove.”) (quoting Restatement (Second) of
Contracts § 241 (1981)).
12
the application of known principles to a hypothetical scenario. Clean Harbors also
argues that the Court did not err in excluding evidence of cleanups at other sites,
because the ruling prevented a trial within a trial.
Contrary to UPC"s assertion, Instruction 4 did not instruct the jury to disregard
evidence of alternative clean-up approaches lnstead, it only instructed the jury to
ignore testimony “about what the government regulators would or would not have
done with a particular set of facts or circumstances if they had only been asked.”
This did not mislead jurors into ignoring what other efforts Clean Harbors could
have undertaken to mitigate UPC’s indemnification obligation UPC was not limited
in presenting evidence of alternative approaches The feasibility of more
circumscribed cleanup methods and what regulators may or may not have approved
are two distinct issues Speculation about what government regulators may have
done is not dispositive of the practical and fiscal reasonableness of the method Clean
Harbors selected
Additionally, the Court was correct to limit the scope of the trial to the facts
and circumstances of the actual site at issue. Allowing evidence of other sites would
have substantially extended the time required for trial and created a great risk of jury
3
confusion.2 The only relevant issue was what constituted a reasonable cleanup
23 Hoey v. State, 689 A.2d 1177, 1180 (Del. 1997) (“A trial within a trial, based entirely on
extrinsic evidence, invariably will lead to jury confusion.”).
13
method for this site. The jury heard extensive expert testimony as to what other
remediation methods would have worked on this site. lt was well within the Court’s
“broad discretion” to limit the trial to relevant evidence and to exclude evidence of
tenuous relevance24
Clean Harbors’ Motion for Attorneys’ Fees and Costs
Clean Harbors argues that as an indemnified party, it is entitled to recover the
fees and costs it incurred by suing to enforce its indemnification rights lt is UPC’s
position that Clean Harbors should not recover attorneys’ fees because the SPA does
not allow for it.
Generally, Delaware courts do not award attorneys’ fees unless specifically
provided for by contract or statute.25 However, the Delaware Supreme Court has
held that where “a party . . . is contractually entitled to be held harmless, that party
is entitled to its costs and attorneys’ fees incurred to enforce the contractual
indemnity provision.”26 The case law strongly suggests that the award of fees in the
presence of a hold harmless clause is not automatic. Rather, the contract must have
a broad indemnity clause that includes attorneys’ fees
24 Czech v. Smre, 945 A.2d 1088, 1095 (Del. 2008).
25 Honaker v. Farmers Mutual Ins. C0., 313 A.2d 900, 904 (Del. Super. 1973).
26 Delle Donne & Assocz``ates, LLP v. Mz'llar Elevator Service Co., 840 A.2d 1244, 1256 (Del.
2004).
14
Both the contracts in Delle Donne (the most recent Delaware Supreme Court
case to express this principle) and its predecessor, Pz``ke Creek,27 included broad
indemnity clauses explicitly including fees ln Pz'ke Creek, the court specifically
noted that the indemnification clause was “very broad in scope” when it provided
indemnification against “any liabilities and expenses, including attorney’s fees.”28
Likewise, the court in the later Delle Donne case also noted that the indemnity
provision was “very broad in scope” when it required the indemnitor to hold the
indemnitee harmless “from and against all expenses, including reasonable attorneys’
fees.”29 The Chancery Court and courts in other jurisdictions interpreting this aspect
of Delaware law repeatedly have noted the importance of the broad indemnification
language to the holdings in Pz``ke Creek and Delle Donne.30
Though vital to the analysis, the breadth of the indemnification language is
not the only consideration As a federal district court synthesizing Delaware law on
this subject concluded: “[A] broadly worded indemnification agreement for legal
27 Pike Creek Chiropractic Center, P.A. v. Robinson, 637 A.2d 418 (Del. 1994).
28 ld. at 422-23.
29 Delle Donne, 840 A.2d at 1256.
30 See Perconti v. T harmon Oil Corp., 2002 WL 982419, at *8 (Del. Ch.) (stating that Pike Creek
“teaches that a contractual indemnification provision, ‘very broad in scope,’ is construed under
Delaware law to include the right to recover the costs of successful efforts to vindicate those
indemnification rights,” but ultimately declining to apply Pike Creek to the corporate
indemnification context); Warren Drilling Co., Inc. v. Equitable Production Co., 621 Fed. Appx.
800, 807 (6th Cir. 2015) (“Pz``ke Creek makes clear that Delaware adopts the Alaska rule in the
context of indemnity clauses that require an indemnitor to hold the indemnitee harmless ‘against
any liabilities and expenses, including attorney’s fees’ that ‘result from any acts and [o]missions
of the indemnitor”); Plumrose (USA) Inc. v. Penske Truck Leasing C0., L.P., 2005 WL 2416331,
at *3 (N.D. lnd.) (noting the broad language of the indemnification clause in Pl'ke Creek).
15
7
expenses and attorneys’ fees will be read to encompass inter se claims unless the
parties provide otherwise in the agreement.”31
Home Insumnce Company v. American Insurance Group32 provides an
example of parties agreeing not to provide attorneys’ fees for enforcement costs
within a broadly worded indemnification clause. This Court declined to apply Pz``ke
Creek in a duty to defend action, despite an agreement to hold the indemnitee
harmless “from any and all claims,” because the indemnification clause at issue held
the indemnitee “harmless only in actions commenced against [indemnitee] alleging
that [indemnitor] was responsible for the injuries.”33 The Court found that because
“[t]he action seeking to enforce the duty to defend does not fall within that
contractual language,” Pike Creek did not apply and it awarded no costs and fees
associated with the action.34
Therefore, it would be proper to award attorneys’ fees in this case if the SPA’s
indemnity clause is analogous to the broad indemnity provision of Pike Creek
without containing a Home Insurance-style provision that evinces an intent to limit
31 Plumrose, 2005 WL 2416331, at *5.
32 2003 WL 22683008 (Del. Super.).
33 Id. at *5. The full language of the Home Insurance indemnity clause is: “Abacus Security
Services hereby agrees to defend, indemnify and hold harmless [Dover Mall] from any and all
claims against [Dover Mall] alleging that injury to person or property was directly caused by
Abacus Security Services or its employees.” Id. at *l.
34 Ia’. at *5.
16
the award of attorneys’ fees to specific scenarios The Court turns to the SPA to
make this determination
Section 9.1 of the SPA addresses costs and expenses lt states: “Except as
otherwise expressly provided in this Agreement, each party hereto shall pay all of
its own fees and expenses as to the negotiation, preparation, execution and
performance of this Agreement, including the fees and expenses of its own counsel
. .” However, this blanket statement does not end the inquiry because another
section expressly provides for payment of attorneys’ fees35
Section 3.23.3(b) defines “Environmental Liabilities” broadly to include
attorneys’ fees
“Environment Liabilities” means any and all costs . . expenses
(including charges and assessments and expenses and costs of
investigating, preparing or defending any action or proceeding) . . .
court costs and attorneys’ fees incurred or imposed (i) pursuant to any
agreement, order, notice of responsibility, directive . . . attributable to,
connected with or arising out of or under Environmental Laws or (ii)
pursuant to any claim by a government authority or other person for
personal injury, property damage, damage to natural resources,
remediation or response costs arising out of, connected with or
attributable to, any Hazardous Substance.
35 Section 11.8 also mentions attorneys’ fees lt defines “Claim” broadly as “including, in each
case, interest, penalties reasonable attorneys’ fees and other costs and expenses for investigating
or defending any actions or threatened actions disbursements settlement costs deficiencies levies
and duties.” However, the appearance of the term “attorneys’ fees” in Section 8.10_which
exclusively governs the SPA’s indemnification provisions_is in the phrase “Third Party Claim.”
As this is a claim between the contracting parties its appearance there is not useful for this analysis
17
This definition is critical to understanding Section 8.10 of the SPA, which
directly addresses Union Pacific’s environmental indemnification obligations
Section 8.10’s preamble states that UPC “shall have no liability or obligation to
indemnify . . . except as specifically set forth in this Section 8.10.” 8.10(a) continues:
Union Pacific shall reimburse, indemnify, defend and hold harmless
[Clean Harbors] from against and in respect of 80% of all
Environmental Liabilities that may be imposed upon asserted against
or incurred by [Clean Harbors] and which . . . are attributable to a Third
Party Claim.
Referring to the relevant language from the Section 3.23.3(a) definition of
Environmental Liability, this dispute turns on UPC’s agreement “to indemnify and
hold harmless” Clean Harbors from “any and all costs . . . expenses . . . court costs
and attorneys’ fees incurred or imposed . . . pursuant to any . . . order . . . attributable
to . . . Environmental Law or pursuant to any claim by a government authority or
other entity . . . for . . . remediation or response costs” which are “attributable to a
Third Party Claim.”
The Court finds that the SPA does not allow for recovery of attorneys’ fees
for this dispute. Though the SPA contains broad “any and all” language in a manner
similar to the clauses in Pike Creek and Delle Donne, the SPA contains an
agreement, like that in Home Insurance, that attorneys’ fees may only be recovered
in a particular type of action, which does not include the one at issue here.
18
The Section 3.23.3(b) definition of Environmental Liabilities demonstrates
that UPC only agreed to indemnify Clean Harbors against claims brought by third
parties_not claims between the two contracting parties UPC agreed to indemnify
Clean Harbors for “expenses (including charges and assessments and expenses and
costs of investigating, preparing or defending any action or proceeding).” (emphasis
added). The use of the word “defending” shows that the agreement intends to
indemnify Clean Harbors from actions brought against it by another party_not to
pay for actions Clean Harbors brings against UPC. Similarly, in Section 8.10, UPC
agreed to indemnify Clean Harbors for “Environmental Liabilities imposed upon,
asserted against or incurred” by Clean Harbors Once again, the SPA is providing
indemnification for actions brought against Clean Harbors not actions brought by
Clean Harbors
Section 3.23.3(b) goes on to make this even clearer when it names the only
two situations in which UPC is responsible for “any and all” of Clean Harbors’
attorneys’ fees UPC is responsible for fees “incurred or imposed pursuant to any
agreement, order, notice of responsibility, directive . . . attributable to, connected
with or arising out of or under, Environmental Laws” or for fees incurred or imposed
“pursuant to any claim by a government authority or other entity or person for
personal injury, property damage, damage to natural resources remediation or
19
response costs arising out of, connected with or attributable to, any Hazardous
Substance.”
The SPA does not define “pursuant to.” “[W]hen the language of a . .
contract is clear and unequivocal, a party will be bound by its plain meaning . . . .”36
“Under well-settled case law, Delaware courts look to dictionaries for assistance in
determining the plain meaning of terms which are not defined in a contract.”37
Black’s Law dictionary defines “pursuant to” as “in compliance with; in accordance
with; under.”38
This Court previously has ruled as a matter of law that the Clean Harbors
remediation work at the center of this dispute is an Environmental Liability
attributable to a Third Party Claim pursuant to Section 8.10(a).39 However, there is
a fine, but dispositive, distinction between Clean Harbors’ remediation costs and the
attorneys’ fees incurred in this dispute. Clean Harbors incurred remediation costs in
the underlying dispute in compliance with-that is “pursuant to”_directives from
government agencies Those costs fit within the precise definition of Environmental
Liability under the SPA for indemnification Had Clean Harbors incurred attorneys’
fees in order to comply with the government agencies’ directives those costs would
36 Lorillara' Tobacco Co. v. American Legacy Foundation, 903 A.2d 728, 738 (Del. 2006)
(citations omitted).
37 Rhone-Poulenc Basl``c Chernicals Co. v. American Motorl'sts Ins. Co., 616 A.2d 1192, 1195-96
(Del. 1992).
38 Black’s Law Dictionary (10th ed. 2014).
39 Clean Harbors v. Unl'on Pacific Corporation, 2017 WL 1175664, at *4 (Del. Super.).
20
have fit within the definition as well. However, the costs Clean Harbors has incurred
in this action-an enforcement action between the two contracting parties_were
not incurred “in compliance” with one of the two scenarios enumerated by the SPA
as indemnified Clean Harbors did not bring this suit to comply with the government
directives; it brought it on its own initiative. Like the action in Home Insurance, this
action simply “does not fall within [the SPA’s] contractual language.”40
Section 8.10’s statement that UPC holds Clean Harbors harmless for
Environmental Liabilities “attributable to Third Party Claims” does not alter this
conclusion Though “attributable to” suggests a breadth that may encompass
derivative actions such as the present one, the definition of “Environmental
Liabilities” is Clean Harbors’ only plausible basis for recovering attorneys’ fees
The definition of “Environmental Liabilities” as discussed, specifically limits
attorneys’ fees incurred “pursuant to” two narrowly defined types of third party
actions With that in mind, it is clear that “attributable to Third Party Claims,” is
a_redundant, perhaps inartfully drafted_statement emphasizing that there is no
indemnification for claims between the two contracting parties
UPC agreed to hold Clean Harbors harmless only for suits arising in specific
circumstances brought by third parties not for an enforcement action between the
two contracting parties Pike Creek and Delle Donne are inapplicable to an
40 Home Insurance, 2003 WL 22683008, at *5.
21
indemnification provision with such limiting language.41 The Court awards Clean
Harbors no attomeys’ fees
Clean Harbors’ Motion for Prejudgment lnterest
The Court holds that this motion is stayed as premature. The Court will
determine the amount of prejudgment interest at the time a final judgment is entered
CONCLUSION
Union Pacific Corporation’s Motion for a New Trial is hereby DENIED. The
jury’s verdict was not against the great weight of the evidence, the jury instructions
were proper, and the jury verdict form did not confuse the jury or cause UPC to
suffer prejudice.
Clean Harbors’ Motion for Attorneys’ Fees is hereby DENIED. The
language of the SPA does not allow for recovery of attorneys’ fees in an action to
enforce the agreement’s indemnification clause.
Clean Harbors’ Motion for Prejudgment lnterest is hereby STAYED. The
Court will determine the amount of prejudgment interest at the time a final judgment
is entered
IT IS SO ORDERED.
41 lai
22