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Cooper Industries, LLC v. Spectrum Brands, Inc.

United States District Court, E.D. Missouri, Northern Division

November 28, 2016

COOPER INDUSTRIES, LLC, Plaintiff,
v.
SPECTRUM BRANDS, INC., Defendant/Counter Plaintiff,
v.
COOPER INDUSTRIES, LLC, et al., Counter Defendants.

          MEMORANDUM AND ORDER

          CATHERINE D. PERRY, UNITED STATES DISTRICT JUDGE

         In 1980, the predecessor of plaintiff Cooper (McGraw Edison) sold some property and plant sites to the predecessor of defendant Spectrum Brands, Inc. (Toastmaster)[1] under an Asset Purchase Agreement. One of these plants is located in Macon, Missouri. After the sale, environmental contamination was discovered at the Macon site and remediation began. At issue in this case is who ultimately bears the cleanup costs under the terms of the agreement, which provides that Toastmaster assumes certain of McGraw Edison's liabilities, while other liabilities are excluded.

         Under the Asset Purchase Agreement, Toastmaster (and later Spectrum) assumed McGraw Edison's liability for “debts, duties, obligations, contracts, leases and civil liabilities of, or claims against, McGraw Edison . . . arising out of or with respect to . . . the operations of the business prior to the closing.” (Section 4.1 of the Asset Purchase Agreement). [Doc. #1-1 at 12-13]. However, Spectrum did not assume the following liabilities: liabilities and obligations of McGraw Edison “to the extent to which McGraw Edison is entitled to be reimbursed, indemnified, or otherwise protected, in whole or in part, by insurance . . . .;” liabilities for “damages on account of injury (real or alleged) to persons or damage (real or alleged) to property arising from events or occurrences prior to” the closing date resulting from the possession or use of any products made by McGraw Edison; and, “all liabilities, claims, damages . . . and all expenses, including attorneys' fees” arising out of these excluded liabilities. (Asset Purchase Agreement, Section 4.2). [Doc. #1-1 at 13-15].

         Cooper alleges that the cost of remediating the Macon site should be covered by Spectrum, and it filed the instant complaint seeking a declaratory judgment that Spectrum is obligated to defend and indemnify Cooper for any liability arising from the Macon site. Cooper also brings claims for breach and anticipatory breach of contract against Spectrum for Spectrum's refusal to defend and indemnify Cooper for costs already incurred, and for Spectrum's anticipated refusal to do the same for future costs that may be incurred by Cooper related to the Macon site.

         Spectrum interprets the Asset Purchase Agreement to exclude its responsibility for cleanup costs not only at the Macon site, but also for other sites subject to the Asset Purchase Agreement. These sites include plants located in Kirksville, Missouri and Laurinburg, North Carolina, both of which are subject to ongoing environmental remediation measures. Spectrum alleges that it is has sought defense and indemnification costs from Cooper for these three sites, but that Cooper has denied liability and indemnification with respect to each site.

         Spectrum brings a counterclaim for breach of the Asset Purchase Agreement against Cooper and Cooper's insurance company, Employers Insurance Company of Wausau, for their refusal to provide Spectrum with defense and indemnification for costs incurred in connection with remediation of not only the Macon site, but also for the sites located in Kirksville and Laurinburg as well as unspecified “other sites also subject to the Asset Purchase Agreement.” Spectrum also brings its own anticipatory breach of contract claims against Cooper and Wausau for their anticipated refusal to indemnify and defend Spectrum for future costs associated with the Macon, Kirksville, and Macon sites, as well as the unspecified “other sites.” (Counts I and II of the Counterclaim). Spectrum also seeks a declaration that the Asset Purchase Agreement requires Cooper and Wausau to indemnify and defend Spectrum for costs related to the sites. (Count III).

         Wausau is not a party to the Asset Purchase Agreement, but its predecessor issued insurance policies to McGraw Edison from the late 1950s through the mid-1970s.[2] Spectrum alleges that one or more of these policies apply to the claims it makes in this case, and therefore under Section 4.2 of the Asset Purchase Agreement Cooper is obligated to indemnify Spectrum.

         Counts IV and V are brought solely against Cooper and seek cost recovery, contribution, and a declaratory judgment under provisions of the federal environmental statute commonly known as CERCLA.[3]

         Cooper moves to dismiss Counts I through III of the counterclaim for failure to state a claim, arguing that Spectrum's breach of contract and indemnification claims are barred both by the relevant statute of limitations[4] and the Asset Purchase Agreement. Cooper contends that Spectrum's claim for cost recovery under CERCLA fails with respect to the Macon and Kirksville sites because Spectrum has settled with the relevant government authorities with respect to these sites, which limits it to contribution damages only. Cooper further claims that Spectrum does not adequately allege the requisite elements for arranger liability under CERCLA. Finally, Cooper contends that Spectrum's request for relief as to unspecified “other sites” amounts to a request for an improper advisory opinion and should therefore be dismissed for lack of a case or controversy.

         Having carefully reviewed Spectrum's counterclaim against Cooper under the relevant standards, [5] I conclude that Spectrum's claims as to the Macon, Kirksville, and Laurinburg sites survive dismissal at this time. Whether Spectrum may ultimately prevail on its claims or be entitled to all the relief it seeks is not properly before me at this stage of the proceedings. With respect to these sites, Spectrum has stated claims that are plausible on their face and is therefore entitled to present evidence supporting them. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) (complaint survives dismissal if factual allegations, accepted as true, state a clam “that is plausible on its face.”).

         The same cannot be said, however, with respect to unidentified “other sites.” Those who invoke federal subject-matter jurisdiction must “demonstrate an actual, ongoing case or controversy within the meaning of Article III of the Constitution.” Republican Party of Minn. v. Klobuchar, 381 F.3d 785, 789-90 (8th Cir. 2004). Ripeness is a justiciability doctrine that serves “to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.” Pub. Water Supply Dist. No. 10 of Cass Cnty., Mo. v. City of Peculiar, 345 F.3d 570, 572 (8th Cir. 2003) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967)). “It is well settled that the ripeness inquiry requires the examination of both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Peculiar, 345 F.3d at 572-73. A claim is not ripe if the alleged injury “rests upon future contingent events that may not occur as anticipated, or indeed may not occur at all.” KCCP Trust v. City of North Kansas City, 432 F.3d 897, 899 (8th Cir. 2005).

         Here, Spectrum's claims based on Cooper and Wausau's alleged future refusal to indemnify it for possible cleanup costs associated with unidentified “other sites” is too speculative to establish an actual case or controversy. Such a claim rests upon future contingent events that may not even occur and amounts to an improper request for an advisory opinion. This is particularly true where the existence, nature, and extent of any indemnification may rest, in part, on the circumstances surrounding the contamination. Moreover, Spectrum has suffered no injury as it has not discovered contamination, incurred cleanup costs, or sought indemnification with respect to these other unspecified sites. Without a specific, contaminated site to consider, it is impossible for the Court to determine whether Spectrum is entitled to any of the relief it seeks. Spectrum's claims relating to “other sites” are dismissed on ripeness grounds.

         Wausau has also filed a motion to dismiss, parroting the same arguments made by Cooper and adding one of its own.[6] Wausau also moves for dismissal of all claims brought against it because it is not a party to the Asset Purchase Agreement. I agree that Spectrum's claims against Wausau as currently pled must be dismissed because Wausau cannot be sued for breaching an agreement to which it is not a party. In its counterclaim, Spectrum alleges that Wausau breached the 1980 Asset Purchase Agreement. Despite these allegations, in its opposition to dismissal Spectrum effectively concedes that Wausau cannot be held liable for breaching a contract to which it is not a party. (“Spectrum is not seeking to hold Wausau liable for breach of contract.”) [Doc #45 at p.7 fn.4]. Instead, Spectrum argues that Wausau “is a party to that count because its interests will be adjudicated . . . .” Spectrum advances the theory that Wausau should be a party to this lawsuit because the Asset Purchase Agreement provides that Cooper retained responsibility for any liabilities to the extent to which it “is entitled to be reimbursed, indemnified, or otherwise protected, in whole or in part, by insurance.” Because Spectrum thinks that the policies provided by Wausau may apply to some or all of the sites at issue, it alleges that Wausau (and the corresponding issue of its insurance coverage) is properly joined in this case.

         Whether Wausau can or must be joined in this case in some capacity by one or more parties is a distinct question from whether Spectrum can state a claim against Wausau for breaching the Asset Purchase Agreement, which it clearly cannot. I will not speculate on what claim or claims, if any, may properly be brought against Wausau in this case or whether even litigating the existence of insurance to determine Cooper's potential liability necessarily requires the participation of Wausau. In opposition to dismissal, Spectrum requests leave to amend its counterclaim to assert “a separate declaratory count” against Wausau. I express no opinion at this time on whether such a claim will ultimately survive ...


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