UNITED STATES OF AMERICA v. The Marmon Group LLC

Filing 80

MEMORANDUM DECISION DENYING 38 MOTION for Summary Judgment filed by Marmon Holdings Inc, Marmon Wire & Cable Inc, 42 MOTION for Summary Judgment on the Issue of the Liability of Defendant Marmon Holdings, Inc. to Pay Group R Co., Inc.'s Liability Under CERCLA filed by United States of America, 39 MOTION for Summary Judgment on the Issue of Group R's Liability Under CERCLA filed by United States of America. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (dmc)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

THE UNITED STATES OF AMERICA
Case No. 2:10-CV-00526-EJL
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.

MARMON HOLDINGS, INC. and
MARMON WIRE & CABLE, INC.,
Defendants.

INTRODUCTION
Pending before the Court are cross motions for summary judgment (Dkt. 38, 39
and 42).Having fully reviewed the record, the Court finds that the facts and legal
arguments are adequately presented in the briefs and record. Accordingly, in the interest
of avoiding further delay, and because the Court conclusively finds that the decisional
process would not be significantly aided by oral argument, this matter shall be decided on
the record before this Court without oral argument.

For the reasons explained below, the

Court will deny the motions for summary judgment and the matter will proceed to a
bench trial.

MEMORANDUM DECISION AND ORDER - 1

BACKGROUND
This case concerns Defendants’ liability under the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”) for mining related pollution
within the Bunker Hill Mining and Metallurgical Complex Superfund Site (“Bunker Hill
Superfund Site”) in northern Idaho.
In 1927, Golconda Lead Mines, Inc. founded the Golconda Mine and Mill near
Lake Coeur d’Alene. The Government maintains that the operation of the mine resulted
in the release of hazardous substances into the Coeur d’Alene Basin watershed. This
Court is very familiar with the Superfund designation and mining history of the Coeur
d’Alene Basin based numerous actions filed in Federal Court including the CERCLA
action in United States v. Asarco, et al, Civ. Case 96-122-N-EJL. In this case, the first
legal hurdle the Government must establish is that the Defendants are liable parties under
CERCLA.
It appears undisputed that through a series of mergers and name changes, the
Government argues Golconda Lead Mines, Inc. became RegO Group, Inc. (“RegO”)
which in 1992 changed its name to Group R. Co., Inc. (“Group R”). Defendants do not
argue the existence of RegO and Group R, but argue that there were other corporate
transfers of Golconda mining assets that did not involve the Defendants.
The Court finds the following corporate history relevant to the motions for
summary judgment:

MEMORANDUM DECISION AND ORDER - 2

1. Golconda Lead Mines, Inc. (“Golconda”) was incorporated in Idaho in 1927
and operated the Golconda Mine and Mill (the “Golconda Site”) until the 1950s. The
Golconda Site is located east of Wallace, Idaho. Mining operations at the Golconda site
ceased in the 1950s. Golconda continued in business and acquired investments in other
mining companies.
2. In 1970, Golconda incorporated a subsidiary in Idaho called Golconda Mining
Corporation (“GMC”). GMC succeeding to Golconda’s mining assets including the
Golconda Site.
3. Also in 1970, the parent corporation Golconda merged with Astro Controls,
Inc. with “Golconda Corporation” being the surviving entity. As a result of the merger,
Golconda Corporation acquired several manufacturing companies having no connection
to mining activities.
4. In 1976, Harry Magnuson, who was a director, shareholder and officer of
Golconda Corporation, purchased the assets of the subsidiary GMC including GMC
securities, the mill and associated real estate more particularly described in Exhibit A of
the corporate minutes for $175,000. Rodburg Decl. Ex. J, Dkt. 38- 5. Defendants
maintain that this purchase included all of the Golconda Site and that since 1976,
Golconda Corporation had no ownership or control over the Golconda Site or any of its
mining activities in the Coeur d’Alene Basin. While the Government does not dispute
that GMC purchased certain mining assets, the Government maintains that
Group R was a successor in interest to the Golconda Corporation which was also an
MEMORANDUM DECISION AND ORDER - 3

owner or operator of the Golconda Site and therefore Group R is also liable under
CERCLA.
5. In January 2012, the Court approved a Consent Decree between GMC and the
United States settling GMC’s CERCLA liability. See United States e al. v. Alice
Consolidated Mines, Inc., et al., Civil Case No. 11-446-C-EJL, Dkt. 6. In that Consent
Decree on page 3, the United States agreed:
Golconda Mining Corporation, incorporated in Idaho in 1970, owned or
operated and continues to own or operate mining or milling related
properties within the Site, including the Golconda Mine and Mill site.
The Consent Decree was an “ability to pay” settlement with certain defendants and
specifically stated the settlement was not equal to the response costs incurred or will be
incurred. Therefore, the Government maintains it should also be able to see response
costs from other owners of Golconda prior to GMC.
6. In 1977, Golconda Corporation, an Idaho corporation, merged into RegO
Company, a Delaware corporation.
7. In 1978, RegO Company changed its name to The RegO Group, Inc. (“RegO”).
Defendants maintain that RegO was the holding company for the manufacturing entities
and subsidiaries acquired in the Astro Controls Inc. merger in 1970.
8. It appears RegO was a wholly owned subsidiary of Group R Co. Inc. (“Group
R”) (but the Court is unclear on when this ownership interest by Group R began or the
exact date RegO changed its name to Group R).

MEMORANDUM DECISION AND ORDER - 4

9. It appears undisputed that in 1985, Defendant Marmon Wire & Cable, Inc.
(“Marmon Wire”) became the sole shareholder of Group R.1
9. Between 1986 and 1988, it is undisputed that RegO made dividend payments to
Group R Co, Inc. and in turn Group R made dividend payments to Marmon Wire in the
about of $42 million. The Government argues these dividend payments made Group R
insolvent.
10. Group R also made a dividend of its stock interest in Anderson Copper &
Brass to Marmon Wire in 1987.
11. It is undisputed that Marmon Wire is wholly owned by Defendant Marmon
Holdings, Inc. (“Marmon Holdings”).
12. Group R, a Delaware corporation, filed a certificate of dissolution with that
state in 2003.
13. Marmon Holdings, as the sole shareholder of Group R, signed a Plan of
Liquidation with Group R. The Plan of Liquidation included a “Plan of Distribution to
Creditors.”
14. It is undisputed that Group R transferred its only asset, the RegO Residual
Trust to Marmon Holdings. The value of the asset is disputed by the parties. Marmon

1

A predecessor to Marmon Wire acquired 85% of Group R’s (then Golconda
Corporation) stock in 1974. In 1985, Marmon Wire purchased the remaining 15% and became
Group R’s sole shareholder.
MEMORANDUM DECISION AND ORDER - 5

Holdings argues the value is the book value of zero and the United States argues the value
is what the interest was sold for in 2008 which was $44 million.
As to the history of the Environmental Protection Agency’s (“EPA”) actions and
notifications for the Coeur d’Alene Basin and the Golconda Site, the Court makes the
following undisputed factual findings:
In 1980, CERCLA was enacted. in 1983 the EPA designated the Bunker Hill
Superfund Site on its CERCLA National Priorities List and noticed the listing in the
Federal Register. The EPA divided the Site into three operable units.
The EPA issued a Record of Decision for Operable Unit 1 in 1991 and Operable
Unit 2 in 1992.
EPA issued an interim Record of Decision for Operable Unit 3 in 2002. Unit 3
includes the former Golconda Mine and Mill operation.
It is undisputed that there was correspondence between the United States, Reg O
Inc., Group R and Marmon Holdings between 1991 -1998 regarding the Golconda site.
Defendants claim the United States never provided RegO or Group R with any actual
notice of a potential CERCLA claim against it prior to any dividend payments being
made by RegO and Group R.
Specifically, in 1991, the United States copied RegO in correspondence to GMC
alleging inadequate response by GMC to prior EPA requests for documents. RegO
responded to the letter on June 19, 1991, providing the corporation history the Golconda

MEMORANDUM DECISION AND ORDER - 6

site and advising the EPA Group R is not conducting business any longer. Group R was
not dissolved at this time.
In 1997, the EPA tendered Information Requests pursuant to § 104 of CERCLA to
Group R.
In August of 1997, the United States moved to amend the complaint in United
States v. Asarco, et al., Civ. Case No. 96-122-N-EJL, Dkt. 222, to add twenty-three
defendants including Group R. This motion was denied without prejudice by the Court in
March of 1998. Id. at Dkt. 340.
Defendants claim the United States did not communicate with Group R, Marmon
Wire or Marmon Holdings regarding the Golconda Site again until 2008.
The Complaint in this matter was filed October 26, 2010, Dkt. 1. The United States
brings suit against Marmon Holdings, seeking recovery of costs incurred in the clean-up
of Unit 3 under 42 U.S.C. § 9607(a). The Court previously denied a motion to dismiss
(Dkt. 25). The Court held that the language of the Plan of Liquidation was ambiguous
and that extrinsic evidence can be considered as evidence of the parties’ intent to
determine what section of Delaware corporation law the companies were attempting to
dissolve the company pursuant to. Additionally, the Court needed additional discovery
on whether Marmon Holdings assumed direct liability for claims against Group R.
The parties stipulated to the dismissal of the second claim pursuant to the Fair
Debt Collection Practices Act (Dkt. 63), so the Court will not address this claim.

MEMORANDUM DECISION AND ORDER - 7

LEGAL STANDARD
Summary judgment is appropriate where a party can show that, as to any claim or
defense, “there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). One of the principal purposes of the
summary judgment “is to isolate and dispose of factually unsupported claims . . . .”
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is “not a disfavored procedural
shortcut,” but is instead the “principal tool[ ] by which factually insufficient claims or
defenses [can] be isolated and prevented from going to trial with the attendant
unwarranted consumption of public and private resources.” Id. at 327.
“[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the requirement is
that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247-48 (1986). Material facts are those that may affect the outcome of the case. See
id. at 248.
The moving party is entitled to summary judgment if that party shows that each
issue of material fact is not or cannot be disputed. To show the material facts are not in
dispute, a party may cite to particular parts of materials in the record, or show that the
materials cited do not establish the presence of a genuine dispute, or that the adverse party
is unable to produce admissible evidence to support the fact. Fed. R. Civ. P.
56(c)(1)(A)&(B); see T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d
626, 630 (9th Cir. 1987) (citing Celotex, 477 U.S. at 322). The Court must consider “the
MEMORANDUM DECISION AND ORDER - 8

cited materials,” but it may also consider “other materials in the record.” Fed. R. Civ. P.
56(c)(3).
Material used to support or dispute a fact must be “presented in a form that would
be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). Affidavits or declarations submitted
in support of or opposition to a motion “must be made on personal knowledge, set out
facts that would be admissible in evidence, and show that the affiant or declarant is
competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4).
The Court does not determine the credibility of affiants or weigh the evidence set
forth by the non-moving party. All inferences which can be drawn from the evidence
must be drawn in a light most favorable to the nonmoving party. T.W. Elec. Serv., 809
F.2d at 630-31 (internal citation omitted).
Rule 56(e)(3) authorizes the Court to grant summary judgment for the moving
party “if the motion and supporting materials–including the facts considered
undisputed–show that the movant is entitled to it.” The existence of a scintilla of evidence
in support of the non-moving party’s position is insufficient. Rather, “there must be
evidence on which the jury could reasonably find for the [non-moving party].” Anderson
v. Liberty Lobby, 477 U.S. at 252.

MEMORANDUM DECISION AND ORDER - 9

ANALYSIS
A. CERCLA Liability
The Court finds there are genuine issues of material fact regarding whether or not
“hazardous substances” as defined by CERCLA were or were not released at the mining
site and whether those releases continue in to the present time. The Court will weigh the
testimony provided at trial on this issue, but the parties on are notice that this Court is
very familiar with the Coeur d’ Alene Basin’s long history of mining and mine tailing
releases as well as the EPA’s clean up efforts in the Coeur d’Alene Basis based on other
lawsuits that have been filed in the District of Idaho. While the Court will reserve its
ruling on whether the Golconda Site released “hazardous substances.” the record before
the Court on summary judgment supports the likelihood that the Court will determine that
“hazardous substances” have been released from this site and that the EPA has incurred at
least some response costs due to the releases from the Golconda site.

B. Successor Liability
1. General Overview
Under the Government’s first claim for relief, it alleges that Group R was an
“owner” and “operator” of the Golconda Site for CERCLA liability purposes through its
ownership and operation of Golconda Corporation and Marmon Holdings is a “successorin-interest” of the Golconda Corporation via its ownership of Group R and its
MEMORANDUM DECISION AND ORDER - 10

participation in Group R’s Plan of Liquidation. The Government contends that the
language of Group R’s Plan of Liquidation is sufficient to render Marmon Holdings liable
under CERCLA as the language supports a finding that Marmon Holdings assumed all
the assets and liabilities of Group R.
Marmon Holdings argues the Government’s position is a misapplication of the
language in the Plan of Liquidation and Marmon Holdings did not expressly or impliedly
assume the liabilities of Group R when it was dissolved. Marmon Holdings maintains
Group R complied with Delaware corporate dissolution statutes and can no longer be
sued since the current action was not brought within the three-year window for suing a
dissolved corporation.
The Government responds that Marmon Holdings is subject to a ten-year window
of liability because it expressly or impliedly assumed all the liabilities of Group R in the
Plan of Liquidation, had knowledge of a potential CERCLA claim when Group R was
dissolved in 2003 and failed to provide a plan for payment of these potential liabilities.
The United States claims Group R did not comply with Delaware’s safe harbor
dissolution statute and the Plan of Liquidation should be interpreted in favor of potential
claimants known or reasonably foreseeable at the time the Plan of Liquidation was
executed.
As a preliminary matter, Defendants correctly note that the Ninth Circuit has not
resolved whether state law or federal common law governs successor liability under
CERCLA. See Atchison, Topeka & Santa Fe Ry. Co. v. Brown & Bryant, Inc., 159 F.3d
MEMORANDUM DECISION AND ORDER - 11

358, 364 (9th Cir. 1998). As in Atchison, this Court need not decide whether federal or
state law controls, because the Amended Complaint alleges that Marmon Holdings
expressly assumed liability through the Plan of Liquidation. Express assumption of
liability is a standard basis for successor liability recognized both in federal common law
and in Delaware law. See id. at 361 (holding under federal common law, successor
liability is created when “[t]he purchasing corporation expressly or impliedly agrees to
assume the liability.”); Great American Ins. Co. of New York v. TA Operating Corp., No.
06 Civ. 13230, 2008 WL 1848946, at *3 (S.D.N.Y. April 24, 2008) (recognizing that
under Delaware law liability attaches when “the successor expressly or impliedly
assumed such liability.”).
In order to analyze the arguments of the parties, the Court needs to discuss the
corporate dissolution process under Delaware law. Delaware corporate law was amended
in 1987 to add “safe harbor” dissolution provisions. In general pursuant to Tit. 8 Del
Code § 279, provides all dissolved corporations shall be continued for three years from
the date of expiration to wind up its affairs and the Court of Chancery can extend the
period of time for the purpose of prosecuting and defending lawsuits. Section 279 also
provides that any action, suit or proceeding begun against the corporation either prior to
or within the three year window, shall not abate by reason of the dissolution of the
corporation. It is undisputed that the United States did not seek and extension of the three
year window or initiate its claims against Group R or Marmon Holdings within three
years from the date of dissolution in 2003.
MEMORANDUM DECISION AND ORDER - 12

Pursuant to Delaware law, a corporation may elect to give notice pursuant to Del.
Code Ann. tit. 8, § 280 to “all persons having a claim against the dissolved corporation. . .
.” There are specific requirements to be included in the notice as well as a duty to publish
the notice. Id. If the notice statute is complied with, no new claims against the
corporation can be filed after a certain deadline.
If a dissolved corporation does not follow the notice requirements of § 280 as well
as the requirements of § 281(a), then the dissolved corporation does not have the
protections of the “safe harbor” from claimants. It is undisputed in this case that Group R
did not follow the notice requirements of § 280.
Therefore the Court must determine if Group R complied with the requirements of
§ 281(b) which provides:
A dissolved corporation or successor entity which has not followed the
procedures described in § 280 of this title shall, prior to the expiration of the
period described in § 278 of this title, adopt a plan of distribution pursuant
to which the dissolved corporation or successor entity (I) shall pay or make
reasonable provision to pay all claims and obligations, including all
contingent, conditional or unmatured contractual claims known to the
corporation or such successor entity, (ii) shall make such provision as will
be reasonably likely to be sufficient to provide compensation for any claim
against the corporation which is the subject of a pending action, suit or
proceeding to which the corporation is a party and (iii) shall make such
provision as will be reasonably likely to be sufficient to provide
compensation for claims that have not been made known to the corporation
or that have not arisen but that, based on facts known to the corporation or
successor entity, are likely to arise or to become known to the corporation
or successor entity within 10 years after the date of dissolution. The plan of
distribution shall provide that such claims shall be paid in full and any such
provision for payment made shall be made in full if there are sufficient
assets. If there are insufficient assets, such plan shall provide that such
claims and obligations shall be paid or provided for according to their
MEMORANDUM DECISION AND ORDER - 13

priority and, among claims of equal priority, ratably to the extent of assets
legally available therefor. Any remaining assets shall be distributed to the
stockholders of the dissolved corporation.

Stated simply, this statute requires a dissolved corporation to adopt a plan of distribution
within three years of the date of dissolution which provides the dissolved corporation or
successor entity:
1. to pay or make reasonable provision to pay all claims and obligations, including
all contingent, conditional or unmatured contractual claims known to the
corporation or such successor entity;
2. to pay or make reasonable provision to pay all pending actions, suits or
proceedings; and
3. to make such provision as will be reasonably likely to be sufficient to provide
compensation for claims that have not been made known to the corporation or that
have not arisen but that, based on facts known to the corporation or successor
entity, are likely to arise or to become known to the corporation or successor entity
within 10 years after the date of dissolution.
It is this third requirement that the Government claims was not satisfied by the
Plan of Liquidation adopted by Group R. The disagreement between the parties turns on
interpretation of the 2003 Plan of Liquidation signed by Group R and Marmon Holdings.
The Plan of Liquidation includes a section titled “Plan of Distribution to Creditors,”
which restates in entirety the language of § 281(b) of Delaware's General Corporation
Law. This statutory language is followed by one sentence of unique language, which
provides that claims against Group R “may be made by obtaining an undertaking from
[Marmon Holdings] to return such part, or all, of any distribution(s) . . . as is necessary in

MEMORANDUM DECISION AND ORDER - 14

order to pay or provide compensation for such claims and obligations.”
The Government contends the unique language added to the Plan of Liquidation
beyond the statutory language of § 281(b) amounts to a direct assumption of liability by
Marmon Holdings. Defendants counter that this language, particularly when read in the
context of state law requirements concerning shareholder liability, only commits Marmon
Holdings to return disbursements in the event of a judgment against Group R itself.
Because the Plan of Liquidation was drafted by the parties under Delaware law,
the Court applies principles of contract interpretation from that state. “If a contract is
unambiguous, extrinsic evidence may not be used to interpret the intent of the parties.”
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1222 (Del. 1997). A
contract is ambiguous if it is “reasonably or fairly susceptible of different interpretations
or may have two or more different meanings.” Phillips Home Builders, Inc. v. Travelers
Ins. Co., 700 A.2d 127, 129 (Del. 1997) (quotations omitted). When there is ambiguity,
the reviewing court may consider extrinsic evidence of the parties’ intent. Eagle Indus.,
Inc., 702 A.2d at 1232.2
Whether the language of a contract is ambiguous is a question of law. In re U.S.
Financial Securities Litigation, 729 F.2d 628, 632 (9th Cir. 1984). The parties’ intent,

2

These principles of contract interpretation are the same as those that would be applied
under federal law. See Pierce Cnty. Hotel Emp. & Restaurant Emp. Health Trust v. Elks Lodge,
827 F.2d 1324, 1327 (9th Cir. 1987) (“Extrinsic evidence is inadmissible to contradict a clear
contract term, but if a term is ambiguous, its interpretation depends on the parties' intent at the
time of the contract's execution, in light of earlier negotiations, later conduct, related agreements,
and industrywide custom[.]”) (internal citations omitted).
MEMORANDUM DECISION AND ORDER - 15

determined through extrinsic evidence, is a question of fact. Id.
Applying these principles, the Court looks first to the plain language of the Plan of
Liquidation. The Court finds that there is ambiguity as to whether its language exposes
Marmon Holdings to direct liability. The Plan of Liquidation commits Group R to “make
such provision as will reasonably be likely to be sufficient” to compensate claims likely
to “arise or to become known to the Company within 10 years after the date of
dissolution.” The Plan of Liquidation then states that “[p]rovision for such claims and
obligations may be made by obtaining an undertaking from the sole stockholder” to return
distributions received during dissolution.”
As discussed in the Court’s Memorandum Decision and Order on the motion to
dismiss, this language might mean that Marmon Holdings is only obligated to return
distributions in the event of a judgment against Group R. But it might also be read to
mean Marmon Holdings “undertaking” commits it to direct liability for claims against
Group R once that corporate entity ceased to exist. The Plan of Liquidation is silent as to
whether Marmon Holding’s duty to provide compensation encompasses the duty to
defend against such claims. Because the language of the Plan of Liquidation is
susceptible to multiple reasonable interpretations, the Court finds it should consider
extrinsic evidence to determine the intent of the parties to the Plan of Liquidation: the
officers of Group R and the sole shareholder of Group R, Marmon Holdings.3

3

It is clear from the language of the Plan of Liquidation that if Marmon Holdings is
directly liable, its liability is limited to the extent of distributions made to it during Group R’s
MEMORANDUM DECISION AND ORDER - 16

The Plan of Liquidation was signed by R.C. Gluth as a Director for Group R. Mr.
Gluth is deceased. The Plan of Liquidation was also signed by Marmon Holdings’
Secretary, Mr. Robert Webb. Mr. Webb has filed an affidavit indicating that it was not
the intention of Marmon Holdings to assume the liabilities of Group R.
As Defendants emphasize, Delaware law can also be looked to for intent given that
the Plan of Liquidation incorporates § 281(b) of Delaware’s General Corporation Law
nearly verbatim. See Del. Code Ann. tit. 8, § 281(b). Unfortunately, Delaware law does
not deal squarely with the issue before the Court. Section 281(b) operates against the
backdrop of § 278, which provides that a dissolved corporation continues to exist as a
legal entity for three years after its dissolution, solely “for the purpose of prosecuting and
defending suits.” § 278. Sections 280 and 281(b) offer two alternative avenues through
which a dissolved corporation may provide for potential claims by creditors during this
winding down period. The purpose of these statutes is to “balance the competing public
policy interests of ensuring that claimants against the corporation had a time period in
which to assert claims against the dissolved corporation and ensuring that directors,
officers, and stockholders of a dissolved corporation could have repose from claims
regarding the dissolved corporation.” Territory of U.S. Virgin Islands v. Goldman, Sachs
& Co., 937 A.2d 760, 789 (Del. Ch. 2007).
dissolution. Defendants assert that this limited liability is completely different than direct
CERCLA liability. The Court agrees and by analogy to a merger there is no reason that the
contractual assumption of liability cannot be limited in scope by the parties. See, e.g., Inamed
Corp. v. Medmarc Cas. Ins. Co., 258 F. Supp. 2d 1117, 1124-25 (C.D. Cal. 2002) (examining
terms of merger agreement to determine extent of successor liability).
MEMORANDUM DECISION AND ORDER - 17

The parties acknowledge there is an apparent gap in the corporate dissolution
statutory scheme of Delaware. Section 278 extends the life of a dissolved corporation for
three years, while § 281(b) requires that the corporation make provision for claims that
could arise against the dissolving corporation within ten years. When a corporation does
not comply with § 281(b) by making provision “reasonably likely to be sufficient,” and a
claim arises within the seven year window after the corporation has ceased to exist, it is
not clear who, if anyone, remains liable.
Delaware courts have yet to address this statutory gap. The Court cannot find any
Delaware case law that interprets § 281(b) as imposing successor liability in this
circumstance. However, the Court is also unable to find any precedent that squarely
refutes the Government’s interpretation. The Delaware courts have not resolved the
dissonance between the three year wind up period in § 278, and the ten year window in
which the dissolved corporation must make provision for claims under § 281(b).
In looking to the extrinsic evidence of the intent of parties executing the Plan of
Liquidation, the Court has been provided with the affidavits of Marmon’s General
Counsel at the time, Mr. Robert Webb, and outside attorney who drafted the Plan of
Liquidation, Ms. Miranda Mandel. These two individuals attest that it was not the intent
of Group R or the sole shareholder of Group R in 2003 Marmon Holdings, that Marmon
Holdings would assume all liabilities of Group R by adopting the undertaking provision
referenced in the Plan of Liquidation. The Government suggests the testimony of these
two individuals should not be given any weight as the explanations of the attorneys is
MEMORANDUM DECISION AND ORDER - 18

simply to avoid liability and avoids the reality that Group R and Marmon Holdings was
aware or should have been of a reasonably foreseeable CERCLA claim when Group R
was dissolved in 2003.
The Court finds there is a genuine issue of material fact regarding the intent of the
parties in language used in the Plan of Liquidation. The Court is concerned with the
affidavits of the attorneys for a number of reasons. First, for purposes of a motion for
summary judgment, the Court cannot weigh the credibility of the witnesses via their
affidavits. Second, it does appears that the statements are somewhat self-serving since
the attorneys are using hindsight to interpret their actions to avoid any liability to their
clients. Third, since the Plan of Liquidation was not a bilaterally negotiated agreement,
the “intent” of the drafter may not be relevant since any ambiguities in the Plan should
arguably be construed against the drafter. See Eagle Indus., Inc. v. DeVilbiss Health
Care, Inc., 702 A.2d 1228, 1232 (Del. 1997). Fourth, outside counsel admitted she was
not aware of a potential CERCLA claim when she drafted the Plan of Liquidation. Fifth,
there is evidence in the record that could support the Court finding that some corporate
officers involved were aware or should have been aware of a potential CERCLA claim at
the time Group R was dissolved in 2003. For these reasons, the Court finds the motion
for summary judgment on the issue of interpreting the Plan of Liquidation must denied.
The Court must hear the testimony and weigh the credibility of the witnesses to determine
if there was or was not an assumption of liabilities by Marmon Holdings.

MEMORANDUM DECISION AND ORDER - 19

2. Interpretation of Delaware Corporate Statutes
Additionally, the Court finds there are genuine issues of fact regarding the
alternative issue of if Marmon Holdings did not assume the liabilities of Group R, did
Group R’s Plan of Dissolution satisfy the Delaware statute’s “minimum requirements” of
§ 281(b) such that Plaintiff cannot seek to bring an action against Marmon Holdings as
the three year window has passed.
The recent Delaware opinion In the Matter of Krafft-Murphy Company, Inc., ___
A.3d ___, 2011 WL 5420808 (Del. Ch. Nov. 9, 2011), is helpful to the Court in setting
out how the Delaware corporate dissolution sections relate to each other. In KrafftMurphy, the court found if a corporation fails to follow one of the two alternative
statutory dissolution procedures, its directors may be subject to personal liability for
breach of fiduciary duties to later claimants against the company and “if former
shareholders may be liable for the full amount distributed to them in the dissolution.” Id.
at *7. The court also held the purpose of § 281(b) is “on creating an obligation for the
corporation to provide compensation for reasonably foreseeable future claimants.” Id. at
*12.
In reviewing the Plan of Dissolution along with the affidavits provided by
Defendants, the Court cannot determine if Group R did anything more than say it would
have a plan if claims were made against it after it dissolved. There is no other written
agreement that sets forth how Group R would reclaim the distributed assets from Marmon
Holdings if a claim was made. As a matter of law, the Court cannot determine without
MEMORANDUM DECISION AND ORDER - 20

additional testimony if the Plan of Dissolution satisfies Delaware law. If the Plan of
Dissolution does not satisfy the minimum requirements for the safe harbor dissolution,
then Marmon Holdings and Group R may not be able to claim the shields provided by the
statute.
Krafft-Murphy, also leaves open the question for this Court that even if the Court
determines if Plaintiff cannot recover against Marmon Holdings, it may be possible for
Plaintiff to ask a Delaware court to create a receiver for Group R so that Plaintiff can seek
a judgment against Group R and then with a judgment in hand, then seek to reclaim the
value of the assets distributed to Marmon Holdings.

3. Notice of Potential CERCLA claim
The Court finds the factual issue of whether Group R knew or should have known
of a potential CERCLA claim at the time it dissolved is disputed by the parties. If Group
R’s officers and directors, knew or should have of known of a potential claim, then this
will factor in to the Court’s analysis of the Plan of Dissolution and whether the plan
satisfied the Delaware safe harbor provisions for dissolving a corporation and if the ten
year window for future claims under § 281(b) applies making the present CERCLA claim
timely filed.

MEMORANDUM DECISION AND ORDER - 21

4. Value of Distribution to Marmon Holdings
The Court also finds genuine issues of material fact prevent summary judgment on
the issue of the value of the distributed assets to Marmon Holdings. If Plaintiff can
establish that Marmon Holdings can be sued as a successor in interest under the Delaware
corporate dissolution statutes and there is CERCLA liability, then it appears undisputed
that the liability of Marmon Holdings is limited to the value of the assets distributed to it
from Group R. Stated another way, it appears to the Court the parties agree that as a
matter of Delaware corporate law pursuant to § 282, the amount of liability would be
capped at the value of the distribution Marmon Holdings received from the dissolution of
Group R.
Group R distributed its sole asset to Marmon Holdings when it dissolved in 2003.
It appears undisputed that the distributed asset was the residual interest in the RegO
Claimants Trust. The value of the residual interest when it was distributed is disputed and
the Court will have to determine what value should be placed on that asset if the Plaintiff
is allowed to seek recovery from Marmon Holdings. Plaintiff argues the value of the
asset should be the $44 million it was sold for in 2008. Defendant argues it is the value as
of the date of dissolution and the value is much lower and may be zero. Marmon
Holdings objects to the 2008 transaction as being viewed as an arms length transaction
and that any increase in value from the date of distribution should be not considered by
the Court. Marmon Holdings also challenges the assumptions of Plaintiff’s expert on the
MEMORANDUM DECISION AND ORDER - 22

valuation. These disputed facts must be resolved after the Court has heard the testimony
regarding the valuation of the residual interest by both experts.

5. Transfer of Mining Assets
The next genuine issue of material fact that prevents summary judgment is whether
there can be one or more successors in interest. Defendants maintain the Court should
follow the corporation that continued to manage and own the mining property, not the
shareholder of a corporation that briefly owned the mining property as well as other assets
and did not specifically operate the mine. CERCLA casts a wide net for liability of any
former “owner or operator” of a mining site that has been determined to have been
responsible for hazardous substance releases. In re Acushnet River & New Bedford
Harbor, 712 F. Supp. 1010 (D. Mass. 1989), the court held that Congress certainly did
not intend to deny the government recourse against polluters simply because intervening
transactions might make the corporate entity that caused the pollution unavailable to meet
the costs of remediation. See also, Louisiana -Pacific Corp. v. ASARCO, Inc., 909 F.2d
160, 1261 (9th Cir. 1990).
While the Court finds the evidence is not generally disputed regarding historical
mining operations at the Golconda Site, the Court also finds the record in this matter is
disputed regarding what mining assets were sold or transferred to Harry Magnuson and
whether the settlement in 2012, resolved all CERCLA claims related to the Golconda
Site. Therefore summary judgment on the issue of liability under CERCLA must be
MEMORANDUM DECISION AND ORDER - 23

denied. The parties must clarify through specific evidence what mining assets were
owned by Group R (or its predecessors) and for what amount of time did Group R (or its
predecessors) own the mining assets. If hazardous substances were released from the
mining site during the ownership of the site by Group R or its corporate predecessors,
potential CERCLA liability attaches to Group R as a successor in interest and potentially
to Marmon Holdings as the shareholder of Group R who received assets from the
dissolved corporation.

6. Laches
Finally, the issue of a laches defense is based on disputed issues of fact and
summary judgment cannot be granted on this issue. . Laches is an equitable defense but
is based on what knowledge the plaintiff had in delaying a legal claim. Petrella v. MetroGoldwyn-Mayer, Inc., ___ F.3d ___, 2012 WL 3711706 (9th Cir. Aug. 29, 2012).
Dismissal based on laches is appropriate when “(1) the plaintiff delayed in initiating the
lawsuit; (2) the delay was unreasonable; and (3) the delay resulted in prejudice.” Id.
Here, it is disputed by the parties if the United States was or was not dilatory in filing the
present action and whether the delay was unreasonable. The United States claims without
knowledge of the dissolution by Group R, it was prevented from filing the action earlier.
Marmon Holdings points out that the United States could have filed this lawsuit when it
was not allowed to add Group R as a defendant to another Coeur d’Alene Basin case.
There are certainly facts that can be interpreted to support a finding the Plaintiff has been
MEMORANDUM DECISION AND ORDER - 24

dilatory, but there are also facts to support a finding that while there was a delay, the
delay was not beyond the statutory limits for CERCLA actions.

CONCLUSION
For the reasons stated above, the genuine issues of material fact exist that prevent
the Court from granting any of the motions for summary judgment and the matter must
proceed to trial.

ORDER
IT IS ORDERED:
1. Defendants’ Motion for Summary Judgment (Dkt. 38) is DENIED.
2. Plaintiff’s Motion for Summary Judgment on Issue of Group R’s Liability (Dkt.
39) is DENIED.
3. Plaintiff’s Motion for Summary Judgment on Issue of Liability of Defendant
Marmon Holdings, Inc. To Pay Group R Co. Inc’s Liability under CERCLA (Dkt. 42) is
DENIED.

DATED: December 5, 2012

Honorable Edward J. Lodge
U. S. District Judge

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