Spectrum Brands, Inc. v. Compton's, LLC et al
Filing
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OPINION MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Plaintiffs Motion for Summary Judgment [Doc. No. 54] is GRANTED as to Counts I, II, III, and IV and DENIED as moot as to Count V. IT IS FURTHER ORDERED that the motion of Defendants to Strike Exh ibit S - Expert Report of Judith Spry [Doc. No. 60] is DENIED as moot. IT IS FURTHER ORDERED that Plaintiff shall submit its request for relief to the Court, including proof of damages and affidavits in support of attorney fees and a statement of cos ts within 10 days of this order.IT IS FURTHER ORDERED that Defendants shall respond to Plaintiffs request for relief and supporting exhibits within 10 days of their submission.Final judgment to be entered upon determination of damages. 92 54 54 60 56 ( Response to Court due by 8/31/2018.) Signed by District Judge Henry Edward Autrey on 8/21/18. (CLA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION
SPECTRUM BRANDS, INC.,
Plaintiff,
v.
COMPTON’S, LLC et al.,
Defendant.
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Case No. 2:16CV30 HEA
OPINION, MEMORANDUM AND ORDER
This diversity case is before the Court on the motion of Plaintiff for
summary judgment on all counts of the First Amended Complaint [Doc. No. 54]
and Defendants’ Motion to Strike Exhibit S-Expert Report of Judith Spry [Doc.
No. 60]. Defendant opposes the Motion for Summary Judgment and Plaintiff
opposes the Motion to Strike. For the reasons set forth below, summary judgment
is granted as to Counts I-IV of the Complaint and denied as moot as to Count V.
The motion to strike the expert report of Judith Spy is denied as moot.
Facts and Background
In 2011, Defendant Compton’s LLC (“CLLC”) purchased real property
located in Macon, Missouri (“Macon Site”) which had been contaminated with the
hazardous material trichloroethylene (“TCE”) incident to the manufacture of small
appliances. This contamination occurred before either party to this suit had an
interest in the property. CLLC purchased the Macon Site pursuant to a written
contract entitled “2011 Property Transfer Agreement (with Assignment and
Assumption of Environmental Liabilities)” (“2011 Agreement”). The 2011
Agreement was executed by Spectrum Brands, Inc. (“Spectrum” or “Plaintiff”) and
CLLC but was the subject of an amendment in May 2012, identifying Toastmaster,
Inc. as the correct seller and assigning Spectrum’s rights and obligations to
Toastmaster, Inc. However, subsequent to 2011, Toastmaster, Inc. was merged
into Spectrum, with Spectrum being the surviving entity.
Under the terms of the 2011 Agreement, CLLC assumed all environmental
obligations and agreed to perform all environmental remediation associated with
the Macon Site. Defendant Richard Compton (“Compton”), who operates a
furniture and appliance liquidation business out on the Macon Site, executed a
contemporaneous personal guarantee (“2011 Guaranty”) to fulfill CLLC’s
obligations under the 2011 Agreement if CLLC failed to do so.
In 2015, in response to a demand by the United States Environmental
Protection Agency (“EPA”) that Spectrum and CLLC address the environmental
contamination at the Macon Site, CLLC entered into a second agreement with
Spectrum, entitled “Former Macon, Missouri Toastmaster Facility Environmental
Work and Indemnity Agreement” (“2015 Agreement”). The 2015 Agreement
supplemented, but did not supplant, the 2011 Agreement. Under the 2015
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Agreement, CLLC again agreed to perform environmental remediation at the
Macon Site. Compton personally guaranteed CLLC’s performance under the 2015
Agreement.
Both the 2011 Agreement and the 2015 Agreement acknowledge that
Spectrum would have no adequate remedy at law for Defendants’ failure to
perform the environmental remediation on property that the Defendants own or
control, and thus both Agreements expressly state that in the event of a breach
Spectrum is entitled to an order for specific performance. Defendants also agreed
to indemnify Spectrum for any costs it incurred relating to environmental
contamination at the Macon Site.
Before Spectrum acquired an interest in the Macon Site, environmental
investigation and remediation was underway, overseen by the Missouri
Department of Natural Resources (“MDNR”) as part of its Brownfields Voluntary
Cleanup Program (“VCP”). Prior to its sale to CLLC, Spectrum maintained the
Macon Site in the VCP. Defendants were aware of the environmental conditions
on the Macon Site; as part of the 2011 Agreement, CLLC agreed to assume all
environmental liability and perform all needed remediation, including continuing
the investigation and remediation required by MDNR under the VCP.
As required by the 2011 Agreement, Defendants notified MDNR shortly
after their purchase of the Macon Site of the change in ownership and their intent
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to assume responsibility under the VCP. Shortly thereafter, however, Defendants
ceased the ongoing investigation required under the VCP. As a result, MDNR
terminated the Macon Site from the VCP. Compton testified during his deposition
that it was his decision to quit testing the wells, a requirement under the VCP.
In May and July 2014, MDNR conducted sampling within the Macon Site
buildings and nearby residences to investigate whether the TCE contamination at
the Macon Site might present a vapor intrusion risk. MDNR reported its findings
to the EPA, who, in turn, installed vapor mitigation systems in two residences with
elevated levels of TCE. EPA then demanded that CLLC and Spectrum,
individually or collectively, undertake additional vapor intrusion investigation of
the facility and the surrounding neighborhood. Spectrum, in turn, and pursuant to
the 2011 Agreement, demanded CLLC complete the actions required by EPA.
To address EPA’s concerns, EPA, Spectrum, and CLLC entered into an
Administrative Settlement and Order of Consent (“ASAOC”). The ASAOC
specifies that CLLC undertake the primary role in performing the requirements of
the ASAOC; Spectrum has secondary responsibility under the ASAOC should
CLLC fail to perform.
Concurrent to the ASAOC, Spectrum and Defendants entered into the 2015
Agreement, where CLLC again agreed (and Compton again personally guaranteed)
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to “perform and fulfill all obligations required under the ASAOC within the time
periods required by the ASAOC.”
On February 2, 2016, EPA sent a letter to Spectrum and CLLC notifying
them that the Macon Site was out of compliance and directing Spectrum to conduct
the work under the ASAOC as a result of CLLC’s nonperformance. Spectrum
engaged Environmental Resources Management, Inc. and other vendors to further
investigate the TCE levels at the Macon Site and the adjacent neighborhood.
Defendants have never reimbursed Spectrum for any costs it incurred fulfilling the
ASAOC requirements, and unless Defendants perform future remediation required
under the ASAOC, EPA will require Spectrum to undertake that remediation as
well.
As for Defendants’ remediation attempts, CLLC self-installed seven subslab blower units in the Compton building and opened doors to increase
ventilation. The efforts fell short, and EPA notified Compton on February 16,
2017 that TCE levels within the Compton building were still unacceptable and
further mitigation was necessary.
Pursuant to this litigation, Spectrum retained Judith Spry (“Spry”) to
perform an expert damages analysis and give testimony related to damages in this
matter. Spry opined that Spectrum incurred over $1.4 million in damages
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regarding the Macon Site, and estimated expected future damages if Defendants
failed to perform the required remediation.
Plaintiff seeks redress for the alleged (1) breach of the 2011 Agreement by
CLLC and Compton (Count I); (2) breach of the 2015 Agreement by CLLCC and
Compton (Count II); (3) breach of the 2011 Agreement against Compton as
Guarantor (Count III); and (4) breach of the 2015 Agreement against Compton as
Guarantor (Count IV). Plaintiff also seeks a declaratory judgment defining the
parties' rights and responsibilities under the 2011 Agreement and 2015 Agreement
(collectively, “Agreements”) (Count V). Plaintiff seeks summary judgment on
these five counts. Defendant seeks to strike Spry’s expert report.
I.
Summary Judgment
Counts I-IV of the Complaint assert breach of contract claims against CLLC
and Compton personally (as Guarantor), each, for: (1) failure to perform certain
contractual obligations owed under the Agreements and (2) failure to indemnify
Spectrum for environmental remediation costs Spectrum incurred when CLLC and
Compton failed to perform under the Agreements. Plaintiff moves for summary
judgment on Counts I-IV, arguing that the material facts as to the existence of the
contracts and the breach thereof are undisputed. Plaintiff’s arguments are well
taken, and their motion for summary judgment is granted as to Counts I-IV. Count
V is denied as moot.
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Summary Judgment Standard
The Court may grant a motion for summary judgment if the movant shows
that there is no genuine dispute as to any material fact and that the moving party is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The
substantive law determines which facts are critical and which are irrelevant. Only
disputes over facts that might affect the outcome will properly preclude summary
judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986). Summary judgment is not proper if the evidence is such that
a reasonable jury could return a verdict for the nonmoving party. Id.
A moving party always bears the burden of informing the Court of the basis
of its motion. Celotex, 477 U.S. at 323. Once the moving party discharges this
burden, the nonmoving party must set forth specific facts demonstrating that there
is a dispute as to a genuine issue of material fact, not the mere existence of some
alleged factual dispute. Anderson, 477 U.S. at 247. The nonmoving party may not
rest upon mere allegations or denials of its pleadings. Anderson, 477 U.S. at 256.
In passing on a motion for summary judgment, the Court must view the facts
in the light most favorable to the nonmoving party, and all justifiable inferences
are to be drawn in its favor. Anderson, 477 U.S. at 255. The Court’s function is
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not to weigh the evidence but to determine whether there is a genuine issue for
trial. Id. at 249.
Summary judgment is appropriate when, viewing the facts and inferences in
the light most favorable to the nonmoving party, the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine
dispute as to any material fact and that the movant is entitled to judgment as a
matter of law.
In order to survive a motion for summary judgment, “the nonmoving party
must ‘substantiate his allegations with sufficient probative evidence [that] would
permit a finding in [his] favor based on more than mere speculation, conjecture, or
fantasy.’” Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 801 (8th Cir.
2011) (quoting Putman v. Unity Health Sys., 348 F.3d 732, 733–34 (8th Cir. 2003))
(internal quotation marks omitted).
At the summary judgment stage, “a party may object that the material cited
to support or dispute a fact cannot be presented in a form that would be admissible
in evidence.” Fed. R. Civ. P. 56(c)(2). When such an objection is made, the
burden is on the proponent of the evidence to show that the material is admissible
as presented or to explain the admissible form that is anticipated. Rule 56 advisory
committee's note. However, the Eighth Circuit has held that it is not an abuse of
discretion for a District Court to overrule such an objection when the objecting
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party “does not even attempt to argue that the [objectionable materials] could not
[be] presented in an admissible form at trial.” Gannon Int'l, Ltd. v. Blocker, 684
F.3d 785, 793 (8th Cir. 2012). Moreover, “the standard is not whether the
evidence at the summary judgment stage would be admissible at trial—it is
whether it could be presented at trial in an admissible form.” Id. (emphasis added).
Breach of Contract
Under Missouri law, to state a claim for breach of contract, plaintiff “must
establish the existence of a valid contract, the rights of plaintiff and obligations of
defendant under the contract, a breach by defendant, and damages resulting from
the breach.” Gillis v. Principia Corp., 832 F.3d 865, 871 (8th Cir. 2016) (quoting
Lucero v. Curators of Univ. of Mo., 400 S.W.3d 1, 5 (Mo. Ct. App. 2013). “If the
contract is unambiguous, then the intent of the parties is to be gathered from the
contract alone, and any extrinsic or parol[] evidence as to the intent and meaning of
the contract must be excluded from the court's review.” Chavis Van & Storage of
Myrtle Beach, Inc. v. United Van Lines, LLC, 784 F.3d 1183, 1188 (8th Cir. 2015).
(quoting Lafarge N Am., Inc. v. Discovery Grp LLC, 574 F.3d 973, 979 (8th Cir.
2009)) (alteration in original).
“Under Missouri law, summary judgment is appropriate [in a contract case]
where the language of the contract is clear and unambiguous such that the meaning
of the portion of the contract in issue is so apparent that it may be determined from
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the four comers of the document.” Id. (quoting Deal v.Consumer Programs, Inc.,
470 F.3d 1225, 1229 (8th Cir. 2006)) (alteration in original). “The burden of proof
rests with the party claiming breach of contract.” Id. at 1189 (quoting Scheck
Indus. Corp. v. Tarlton Corp., 435 S.W.3d 705, 723 (Mo. App. E.D. 2014)).
II.
Discussion
Counts I & II: Breach by CLLC
Defendants does not dispute that the 2011 Agreement is a valid and binding
contract, however, Defendants argue that the contract is between CLLC and
Toastmaster, not CLLC and Spectrum. This argument, which was not raised
before the summary judgment stage, is a red herring which can only serve to delay
the inevitable. The 2015 Agreement, which Defendants acknowledge as a valid
contract between CLLC, Compton (as Guarantor), and Spectrum reads that:
In any future proceeding, whether to enforce this Agreement, the
Sales Contract [defined as the 2011 Agreement], the Guaranty
Agreement, or otherwise, CLLC and Compton shall not assert that
SBI is not entitled to indemnification under the Sales Contract and
Guaranty Agreement for such Loss and Compton agrees to guarantee
CLLC’s performance of its indemnity obligations.
At the time of the 2015 Agreement, Defendants clearly acted knowing that
Spectrum, not Toastmaster, was the party in interest to the 2011 Agreement.
Moreover, in responding to Defendants’ claim that Toastmaster might be the actual
party in interest, Plaintiff attached merger documents from the Florida and
Delaware Departments of State showing Toastmaster’s merger into Applica
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Consumer Products, Inc., and Applica Consumer Products, Inc.’s merger into
Spectrum Brands, Inc., respectively. In both mergers, the documents show, the
assets and liabilities of the merging corporation were subsumed by the surviving
corporation. There is no real controversy over Spectrum’s status as the party in
interest to the 2011 Agreement.
CLLC’s obligations are unambiguously set forth and acknowledged in the
2011 Agreement whereby CLLC agreed to “assume, pay and be responsible for all
Environmental Clean-Up Liability, Claims, [and] Clean-Up Costs . . . associated
with the Property.” These obligations applied to costs and environmental clean-up
which existed at the time of signing the 2011 Agreement as well as those that
“hereafter arise,” are “imposed,” or are “incurred” in the future. Further, “Cleanup” is defined in part as “includ[ing] participation in a state voluntary program
governing the investigation and cleanup of Pollution Conditions,” referring to the
VCP through MDNR. CLLC agreed to “expeditiously perform all Clean-up and
pay all Clean-Up Costs required in order to obtain a written determination ("NFA
Letter") from [MDNR].” Finally, pursuant to Section 10.1 of the 2011 Agreement,
CLLC agreed to indemnify Spectrum from and against all liabilities, claims, and
costs relating to its obligations.
CLLC (and Compton as Guarantor) entered into the 2011 Agreement with
knowledge that the Macon Site was contaminated with TCE and would require
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monitoring and future remediation. CLLC knowingly assumed all environmental
responsibility and agreed that specific performance of these obligations and
indemnification of any costs incurred by Spectrum would result should CLLC
breach the contract.
Similarly, CLLC does not dispute that the 2015 Agreement is a valid and
binding contract, nor does Compton dispute that he singed the 2015 Agreement as
Guarantor. CLLC’s obligations are unambiguously set forth in the 2015
Agreement and acknowledged by CLLC. Noting the ASAOC entered into by the
EPA, Plaintiff, and CLLC, the 2015 Agreement obligates CLLC to “perform and
fulfill all obligations required under the ASAOC within the time periods required
by the ASAOC.” CLLC knowingly assumed responsibility for performing the
ASAOC and agreed that specific performance of these obligations would result
should CLLC breach the contract. CLLC further agreed that it would indemnify
Spectrum against all costs incurred by Spectrum regarding the ASAOC.
Defendants claim that they are currently engaged in remediation efforts, and
that summary judgment should be denied because “the success of those efforts is
an open question.” However, since Defendants purchased the Macon property in
2011, the MDNR terminated the site from the VCP, the EPA became involved, and
the EPA demanded that CLLC complete the actions outlined in the ASAOC, with
Spectrum possessing the secondary obligation of performing under the ASAOC
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should CLLC fail to perform. Defendant did not comply with the requirements of
the MDNR’s VCP. Defendant’s current remediation efforts do not fulfill those
requirements demanded by the EPA under the ASAOC. Defendant’s inaction and
non-compliance with directives of environmental agencies is clearly a breach of
the Agreements. Spectrum has incurred money damages working toward
compliance where CLLC has failed to do so, and will incur more costs if CLLC
does not comply with the ASAOC. CLLC has not offered any valid legal defense
for its breach nor are there any material facts in dispute that would affect the
outcome of the breach of contract claims against CLLC.
The language of the 2011 and 2015 Agreements clearly and unambiguously
establish liability on Counts I and II as a matter of law. See Whittaker v. Kornegay,
2016 WL 206477 (W.D. Mo. Jan. 15, 2016) (granting summary judgment on the
plaintiff’s breach of contact claim where the defendant did not dispute the validity
of the agreement and defendant failed to pay the monies owed); Vantage Credit
Union v. Chisholm, 447 S.W.3d 740, 746-47 (Mo. App. E.D. 2014) (same).
Accordingly, Plaintiff’s Motion is granted as to Counts I and II.
Counts III & IV: Breach by Compton as Guarantor
Under Counts III and IV, Spectrum also brings claims against Richard
Compton individually, as Guarantor, for breach of the Agreements. Under
Missouri law, whether a principal signing an agreement can be personally liable
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turns on whether “in view of the form of the signature …, the language of the so
called guaranty clause is sufficient to manifest a clear and explicit intent by the
[signatory] to assume a personal guaranty contract.” Cardinal Health 110, Inc. v.
Cyrus Pharm., LLC, 560 F.3d 894, 899 (8th Cir. 2009) (internal citations and
quotations omitted).
The 2011 Guaranty, signed in connection with the 2011 Agreement,
unequivocally states “Guarantor has agreed to guarantee the obligations of [CLLC]
pursuant to the [2011 Agreement], including without limitation, the environmental
obligations set forth in Sections 9.1, 9.2, and 9.3 thereof.” Further, the 2011
Guaranty includes unequivocal statements of individual liability for Compton in
Paragraphs 1, 2, and 7.
The 2015 Agreement also unequivocally sets forth the intent of the parties
for Compton to act as an individual guarantor to CLLC’s obligations. For instance,
pursuant to Paragraph 2.1 of the 2015 Agreement, “Compton, as guarantor, agrees
to perform and fulfill such obligations [under the ASAOC] should CLLC fail to
perform. Compton, as guarantor, also agrees to perform and fulfill all obligations
that CLLC has under this Agreement should CLLC fail to perform.”
Defendants do not dispute that the 2011 Agreement, 2011 Guaranty, and
2015 Agreement are valid and enforceable contracts. Compton signed the
Agreements on behalf of CLLC and also on behalf of himself personally. Under
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Missouri law, Compton is individually liable for CLLC’s obligations under the
Agreements. Because this Court determined that CLLC is liable for breaching the
Agreements as outlined in Counts I and II, that liability is equally attributable to
Compton personally as Guarantor as a matter of law. Accordingly, Plaintiff’s
Motion is granted as to Counts III and VI.
Count V: Declaratory Judgment.
Spectrum seeks a declaration that the contractual provisions in the
Agreements are valid and enforceable and require Defendants to perform
remediation and indemnify Spectrum for past remediation costs. See Fed. R. Civ.
P. 57 (allowing action for declaratory judgment regardless whether there is another
adequate remedy). The Court having previously determined that Defendant
breached the Agreement, this Count will be dismissed. See Amerisure Mut. Ins. Co.
v. Maschmeyer Landscapers, Inc., 2007 WL 2811080, *2 (E.D. Mo. Sept. 24,
2007) ("Adjudication of the breach of contract claim . . . render[s] the request for
declaratory judgment moot or redundant ... "). Accordingly, summary judgment on
Count V is denied as moot, and Count V is dismissed.
III.
Motion to Strike/Plaintiff’s Remedy
Defendants filed a Motion to Strike Exhibit S to Plaintiff’s Motion for
Summary Judgment. Exhibit S, entitled “Expert Report of Judith Spry” purports to
be an expert report on damages authored by Judith Spry, an accounting expert.
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Having granted Plaintiff’s Motion for Summary Judgment on Counts I-IV without
reliance on Exhibit S, this Court will deny Defendant’s Motion to Strike as moot.
However, clarification on the issues of Plaintiff’s requested relief and
damages is necessary. Plaintiff should submit its request for relief to the Court,
including proof of damages and affidavits supporting attorney fees and a statement
of costs. Defendant should respond to these filings. After consideration thereof,
judgment will be entered.
Conclusion
For the reasons set forth above, summary judgment is entered in favor of
Plaintiff on Counts I-IV, summary judgment as to Count V is denied, and Count V
is dismissed as moot, and Defendants’ Motion to Strike is denied as moot. Final
judgment will be entered upon the determination of damages.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion for Summary
Judgment [Doc. No. 54] is GRANTED as to Counts I, II, III, and IV and DENIED
as moot as to Count V.
IT IS FURTHER ORDERED that the motion of Defendants to Strike
Exhibit S - Expert Report of Judith Spry [Doc. No. 60] is DENIED as moot.
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IT IS FURTHER ORDERED that Plaintiff shall submit its request for
relief to the Court, including proof of damages and affidavits in support of attorney
fees and a statement of costs within 10 days of this order.
IT IS FURTHER ORDERED that Defendants shall respond to Plaintiff’s
request for relief and supporting exhibits within 10 days of their submission.
Final judgment to be entered upon determination of damages.
Dated this 21st day of August, 2018.
________________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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