Regents of the University of Minnesota v. United States of America et al
Filing
57
ORDER denying 48 Motion for Judgment on the Pleadings(Written Opinion) Signed by Senior Judge David S. Doty on 7/12/2018. (DLO)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 17-3690(DSD/KMM)
Regents of the University,
of Minnesota,
Plaintiff,
v.
ORDER
United States of America, and
E.I. du Pont de Nemours and Co.,
Defendants.
Rick E. Kubler, Esq., Richard C. Landon, Esq. and Gray Plant
Mooty, 80 South 8th Street, Suite 500, Minneapolis, MN 55402
and Daniel J. Herber, Esq., University of Minnesota, 360
McNamara Alumni Center, 200 Oak Street SE, Minneapolis, MN
55455, counsel for plaintiff.
Phillip R. Dupre and Lauren D. Grady, DOJ-Environment and
Natural Res. Div., Environmental Defense Section, P.O. Box
7611, Washington DC, 20044 and Friedrich A.P. Siekert, United
States Attorney’s Office, 300 South 4th Street, Suite 600,
Minneapolis, MN 55415, counsel for defendant United States of
America.
Stephanie R. Feingold, Esq. and Morgan Lewis & Bockus, 502
Carnegie Center, 2nd Floor, Princeton, NJ 08540, counsel for
defendant E.I. du Pont de Nemours and Company.
This matter is before the court upon the motion for judgment
on the pleadings by defendant United States of America.
Based on
a review of the file, record, and proceedings herein, and for the
following reasons, the court denies the motion.
BACKGROUND
This environmental dispute arises out of a contract between
plaintiff Regents of the University of Minnesota (University) and
the United States. During World War II, the United States operated
the Gopher Ordinance Works (GOW), a facility “designed to produce
smokeless cannon and rifle powder, oleum and other materials used
in the manufacture of smokeless powder.”
Compl. ¶¶ 3, 21.
The GOW
was located on 13,600 acres of land in Rosemount, Minnesota (Site).
Id. ¶¶ 2, 29.
The GOW was designed, constructed, and operated by
defendant E.I. du Pont de Nemours and Company (DuPont).
Id. ¶¶ 4,
30-31. Between November 1994 and August 1945, the GOW produced “an
estimated 29 million pounds of smokeless powder, 80 million pounds
of oleum and 51 million pounds of nitric acid.”
Id. ¶ 33.
After the war, the United States determined that it no longer
needed the GOW and transferred the Site to the University through
two quitclaim deeds and corresponding contracts for sale.1
6, 38.
Id. ¶¶
The first deed, executed in 1947, conveyed a 4,687-acre
parcel consisting largely of open space (1947 Parcel).
Countercl. ¶ 28.
Id. ¶ 43;
The second deed, executed in 1948, conveyed a
3,320-parcel that “contained most of the buildings, infrastructure,
and equipment transferred to the University” (1948 Parcel). Compl.
¶ 43; Countercl. ¶ 28. The instant motion only involves claims and
1
The court will not set forth all of the details leading to
the transfer of the land to the University or any post-deed
activities and tenancies immaterial to the present motion.
2
counterclaims relating to the 1948 Parcel.
The deed conveying the
1948 Parcel (1948 Deed) contains the following indemnification
provision:
By the acceptance of this instrument and as a further
consideration for this conveyance, the [University]
herein covenants and agrees for itself and its successors
and assigns to assume all risk for all personal injuries
and property damages arising out of ownership,
maintenance, use and occupation of the foregoing
property, and further covenants and agrees to indemnify
and save harmless the ... the United States of America
... against any and all liability claims, causes of
action or suits due to, arising out of, or resulting
from, immediately or remotely, the possible contaminated
condition, ownership, use, occupation or presence of the
[University], or any other person upon the property
lawfully or otherwise.
Answer and Countercl. Ex. 2 at 5.
The corresponding contract for sale (1948 Contract) includes
the following provision:
The [University] acknowledges that the above-described
property may be contaminated and it assumes all liability
and responsibility which may arise out of the said
contaminated condition, decontamination and use and
occupancy of the said property. The [University] further
agrees that it will perform at its sole expense any and
all decontamination work or functions found necessary in
order to render the above-described property free of any
and all dangers of explosives and suitable for general
usage.
Id. Ex. 5 at 4.
Since the mid-1980s, the Site has been subject to numerous
environmental studies and investigations, which have revealed the
release or threatened release of hazardous materials at the Site.
See Compl. ¶¶ 52-81; Countercl. ¶¶ 73-74.
3
The Minnesota Pollution
Control Agency has identified the University, the United States
Army Corps of Engineers, and DuPont as “responsible persons” under
the Minnesota Environmental Response and Liability Act (MERLA).
Compl. ¶¶ 75-76. According to the University, it has incurred more
than $3 million in “environmental investigation and other necessary
response costs in connection with the release or threatened release
of hazardous substances at the Site” and expects that amount to
increase.
Id. ¶ 82.
The University has unsuccessfully demanded
reimbursement from the United States.
Id. ¶ 83.
On August 11, 2017, the University commenced this suit seeking
damages and declaratory relief from the United States and DuPont
under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) and from DuPont under MERLA.
ECF No. 1.
On
November 17, 2017, the United States answered the complaint and
filed counterclaims alleging that (1) the University breached the
1948
Deed
and
1948
Contract
by
seeking
reimbursement
for
environmental response costs and failing to indemnify the United
States against all lawsuits and claims relating to the 1948 Parcel;
(2) the University should be apportioned at least some of any
response costs found to be due under CERCLA; and (3) the University
should be held liable for all response costs incurred or that may
be incurred in connection with the Site.
ECF No. 24 ¶¶ 106-22.
DuPont answered the complaint, but has not filed counterclaims or
4
cross-claims.2
ECF No. 25.
The United States now moves for partial judgment on the
pleadings as to its defense to the University’s CERCLA claim
relating
to
counterclaim.
the
1948
Parcel
and
its
breach-of-contract
Specifically, the United States requests that the
court hold that the University is not entitled to recover its
response costs relating to the 1948 Parcel and that the University
is obligated to indemnify and hold harmless the United States for
all past, current, and future response costs relating to the 1948
Parcel.
DuPont has not joined in the motion.
DISCUSSION
I.
Standard of Review
The same standard of review applies to motions under Federal
Rules of Civil Procedure 12 (c) and 12(b)(6).
Ashley Cty., Ark. v.
Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).
Thus, to survive
a motion for judgment on the pleadings, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
Braden v. Wal–Mart Stores,
Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citation and internal
2
In January 2015, DuPont submitted a claim to the United
States requesting reimbursement for response costs and attorney’s
fees incurred under CERCLA relating to the Site. Countercl. ¶ 88.
In September 2017, DuPont requested indemnification from the United
States relating to this case.
Id. ¶ 89.
Those claims remain
pending.
5
quotation marks omitted).
“A claim has facial plausibility when
the plaintiff [has pleaded] factual content that allows the court
to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
Although a complaint need not contain detailed factual
allegations, it must raise a right to relief above the speculative
level.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“[L]abels and conclusions or a formulaic recitation of the elements
of a cause of action” are not sufficient to state a claim.
Iqbal,
556 U.S. at 678 (citation and internal quotation marks omitted).
II.
CERCLA Defense
The United States argues that it is entitled to judgment in
its favor on the University’s CERCLA claim because in the 1948
Contract, the University expressly assumed all liability relating
to condition of the 1948 Parcel.
“The
plain
language
of
the
contract
will
controlling if it is unambiguous on its face.”
States, 114 Fed. Cl. 736, 745 (2014).
be
viewed
as
Mata v. United
A contract is ambiguous if
it is “susceptible to more than one reasonable meaning.”
Id.
(quoting Barron Bancshares, Inc. v. United States, 366 F.3d 1360,
1375–76 (Fed. Cir. 2004)).
differing
interpretations
of
“The fact that the parties have
a
contract
standing alone, create an ambiguity.”
Id.
provision
does
not,
A contract will be
considered ambiguous only if “it sustains the interpretations
6
advanced by both parties to the suit.”
Id. (quoting Pacificorp
Capital, Inc. v. United States, 25 Cl. Ct. 707, 716 (1992)).
According to the United States, the 1948 Deed and Contract
obligate the University to cover any and all costs relating to
CERCLA claims.
The University argues, on the other hand, that the
contracts address only the risk of residual explosives rather than
general
environmental
liability.
The
court
finds
that
the
contracts, read as a whole, support both parties’ interpretations
and therefore are ambiguous.
the
University
contamination.
4.
assumed
Neither contract clearly states that
liability
relating
to
environmental
See Answer and Countercl. Ex. 2 at 5; id. Ex. 5 at
However, it is also not clear that environmental liability is
not encompassed within the provisions at issue.
Indeed, the
provisions are broadly written to suggest the intent to include
liability beyond the risks presented by residual explosives.
id. Ex. 2 at 5; id. Ex. 5 at 4.
See
But whether environmental
liability is included cannot be determined on the present record
absent additional factual development.3
The ambiguity is underscored by the fact that the contracts
pre-dated CERCLA by thirty years, which raises the question of
whether the parties were even cognizant of potential environmental
3
The parties dispute whether federal contract law allows the
court to consider extrinsic evidence in construing an unambiguous
contract.
Because the court determines that the contracts are
ambiguous, it need not resolve that issue.
7
contamination at the time.
Thus, the court cannot determine at
this early stage that the parties intended the provisions at issue
to include environmental liability.
As a result, the court must
deny the motion as to the University’s CERCLA claim.
III. Breach-of-contract Counterclaim
The United States also argues that it is entitled to judgment
on its breach-of-contract counterclaim because the University
breached the indemnification provision in the 1948 Deed by bringing
suit against the United States under CERCLA.4
As stated above, the court cannot conclude as a matter of law
that the 1948 Deed and Contract bind the University so broadly. As
a
result,
the
court
must
also
deny
the
motion
as
to
the
counterclaim.
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that the
motion for judgment on the pleadings [ECF No. 48] is denied.
Dated: July 12, 2018
s/David S. Doty
David S. Doty, Judge
United States District Court
4
The United States also argues that the University is
obligated to indemnify the United States in the claims against it
raised by DuPont.
8
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