Cooper Industries, LLC v. Toastmaster Inc. et al

Filing 50

MEMORANDUM AND ORDER. (See Full Order.) IT IS HEREBY ORDERED that the motion to dismiss 30 filed by counter defendant Cooper is granted only as follows: counter claimant Spectrum's claims related to "other sites," as set out above, are dismissed for lack of jurisdiction. In all other respects, the motion to dismiss is denied. IT IS FURTHER ORDERED that the motion to dismiss 37 filed by counter defendant Employers Insurance of Wausau is denied in part and granted in part as set out above, and counter claimant Spectrum's claims against Wausau are dismissed without prejudice, except with respect to those claims related to "other sites," which are dismissed for lack of jurisdiction. IT IS FURTHER ORDERED th at counter claimant Spectrum shall file its amended counterclaim against Wausau by no later than December 16, 2016. The amended counterclaim shall also delete any claims related to "other sites" against both counter defendants as they have been dismissed. IT IS FURTHER ORDERED that this case will be set for a scheduling conference by separate Order. That conference will take place on the record in the courtroom, and counsel will be required to appear in person for the conference. No telephone participation will be permitted. Any requests to reset the scheduling conference shall be made by written motion, indicate whether all parties consent, and include proposed alternative dates acceptable to all parties. No motion to continue the scheduling conference will be considered unless the parties have first agreed upon proposed alternative dates. IT IS FURTHER ORDERED that the motion for hearing 48 is denied as moot. Signed by District Judge Catherine D. Perry on 11/28/2016. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION
COOPER INDUSTRIES, LLC,
Plaintiff,
vs.
SPECTRUM BRANDS, INC.,
Defendant/Counter Plaintiff,
vs.
COOPER INDUSTRIES, LLC, et al.,
Counter Defendants.

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Case No. 2:16 CV 39 CDP

MEMORANDUM AND ORDER
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.

1

Toastmaster was dismissed as a defendant pursuant to a joint stipulation filed by the parties on
September 29, 2016 [Doc. # 39].

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

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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

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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 mid1970s.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 limitations4 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
2

That insurance company was not a party to the Asset Purchase Agreement, either.

3

The Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §
9601 et seq.
4

The parties agree that New York law applies to the interpretation of the Asset Purchase
Agreement.

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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,
5

The purpose of a motion to dismiss under Federal Rule of Civil Procedure 16(b)(6) is to test the
legal sufficiency of the complaint. When considering a 12(b)(6) motion, the court assumes the
factual allegations of a complaint are true and construes them in favor of the plaintiff. Neitzke v.
Williams, 490 U.S. 319, 326-27 (1989). To survive dismissal, a complaint must contain “more
than labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); accord Ashcroft v. Iqbal, 556 U.S. 662,
678-79 (2009). The issue in considering such a motion is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to present evidence in support of the claim.
Neitzke, 490 U.S. at 327.

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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

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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.
6

To the extent Wausau reiterates the arguments made by Cooper, they are denied in part and
granted in part for the same reasons stated above.

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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
dismissal, as no proposed amended counterclaim has been filed, but I will grant
Spectrum leave to amend its counterclaim against Wausau. The current claims
against Wausau are dismissed without prejudice.
With respect to the remaining counterclaims, I question the judicial
efficiency and propriety of litigating and trying coverage issues relating to all three
sites in this case. As stated above, the nature and extent of the coverage issues are
highly fact and site specific. For this reason, I am considering severing the
counterclaims relating to the Kirksville and Laurinburg sites and am ordering the
parties to discuss this issue when they meet and confer about their proposed
discovery schedule for this case. The parties should be prepared to discuss this
issue at the Rule 16 conference, which will be set by separate Order. They should

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also be prepared to discuss whether severance and transfer of the Laurinburg site
counterclaim to North Carolina is appropriate. The parties should also discuss the
possibility of staying one or more claims pending the resolution of others. I
understand Wausau’s argument that insurance coverage issues are typically
litigated after liability is established, but in this circumstance where a party is
arguing the existence of insurance as a predicate to liability, it may make sense to
resolve the coverage issues first. Despite the anticipated amended counterclaim
and corresponding motion to dismiss that will likely be filed by Wausau, I am still
going to set this case for a scheduling conference and I expect Wausau to
participate fully in the preparation of the scheduling plan and attend the scheduling
conference. Finally, I want the parties to seriously discuss the prospect of early
mediation in this case, as it seems ripe for such a referral and it is my intention to
enter such an Order absent good cause shown.
Accordingly,
IT IS HEREBY ORDERED that the motion to dismiss [30] filed by
counter defendant Cooper is granted only as follows: counter claimant Spectrum’s
claims related to “other sites,” as set out above, are dismissed for lack of
jurisdiction. In all other respects, the motion to dismiss is denied.
IT IS FURTHER ORDERED that the motion to dismiss [37] filed by
counter defendant Employers Insurance of Wausau is denied in part and granted in

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part as set out above, and counter claimant Spectrum’s claims against Wausau are
dismissed without prejudice, except with respect to those claims related to “other
sites,” which are dismissed for lack of jurisdiction.
IT IS FURTHER ORDERED that counter claimant Spectrum shall file its
amended counterclaim against Wausau by no later than December 16, 2016. The
amended counterclaim shall also delete any claims related to “other sites” against
both counter defendants as they have been dismissed.
IT IS FURTHER ORDERED that this case will be set for a scheduling
conference by separate Order. That conference will take place on the record in
the courtroom, and counsel will be required to appear in person for the
conference. No telephone participation will be permitted. Any requests to
reset the scheduling conference shall be made by written motion, indicate
whether all parties consent, and include proposed alternative dates acceptable
to all parties. No motion to continue the scheduling conference will be
considered unless the parties have first agreed upon proposed alternative
dates.
IT IS FURTHER ORDERED that the motion for hearing [48] is denied
as moot.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 28th day of November, 2016.
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