Continental Holdings, Inc. v. Crown Holdings Incorporated

Filing 55

MEMORANDUM OPINION - A separate order will be entered in accordance with this memorandum opinion. Ordered by Senior Judge Lyle E. Strom. (GJG)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
CONTINENTAL HOLDINGS, INC.,
successor to CONTINENTAL CAN
COMPANY, INC.,

)
)
)
)
Plaintiff,
)
)
v.
)
)
CROWN HOLDINGS INCORPORATED, )
CROWN CORK & SEAL COMPANY,
)
INC., and CROWN BEVERAGE
)
PACKAGING, INC.,
)
)
Defendants.
)
______________________________)

8:09CV362

MEMORANDUM OPINION

This matter is before the Court upon plaintiff’s motion
for reconsideration or, in the alternative, to alter or amend
judgment (Filing No. 50).

Plaintiff requests that the Court

reconsider, or in the alternative, alter or amend its memorandum
opinion dated January 13, 2011 (Filing No. 48) and corresponding
judgment (Filing No. 49) granting defendants’ motion for summary
judgment (Filing No. 38).

Upon review of the motion, briefs, and

relevant law, the Court finds plaintiff’s motion should be
denied.
I.

STANDARD OF REVIEW
The Eighth Circuit has held that a motion for

reconsideration “is typically construed either as a Rule 59(e)
motion to alter or amend the judgment or as a Rule 60(b) motion
for relief from judgment.”

Auto Servs. Co., Inc. v. KPMG, KKP,

537 F.3d 853, 855 (8th Cir. 2008).

A Rule 59(e) motion is

properly granted, among other things, where it is necessary to
“correct manifest errors of law or fact upon which the judgment
is based” and/or “to protect manifest injustice.”

WRIGHT & MILLER ,

FEDERAL PRACTICE & PROCEDURE , § 2810.1, p. 124 (1995).

Similarly,

the Court may grant relief under Rule 60(b) due to, among other
things, “mistake, inadvertence, surprise, or excusable neglect.”
Fed. R. Civ. P. 60(b)(1).
II.

DISCUSSION
A. Motion for reconsideration
Plaintiff argues the Court should reconsider its

finding that Retired United States District Court Judge John C.
Lifland’s interpretation of Section 10.3(a)(iv) of the 1990 Stock
Purchase Agreement (“SPA”) provided in his October 17, 2010, JAMS
Arbitration order is binding on this Court.

Plaintiff claims

that in the order, Judge Lifland expressly recognized that both
plaintiff’s interpretation of Section 10.3(a)(iv) and defendants’
interpretation of that section are “plausible.”
1.B., p. 2, Filing No. 39-9).

(Crown Exhibit

In light of this language,

plaintiff asserts that Judge Lifland explicitly found that the
language of the SPA is ambiguous, and pursuant to New York law,
that finding presents a question of fact that may not be resolved
on summary judgment.

Cooling Towers Specialties Inc. v. Yaro

Enters, Inc., 89 N.Y.S.2d 347, 348 (NY App. Div. 209).

It is

plaintiff’s position that once Judge Lifland determined that the

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contractual language was ambiguous, his order finding defendants’
interpretation of Section 10.3(a)(iv) of the SPA as being correct
is not allowed under the provisions of New York law.
Plaintiff’s characterization of the word “plausible”
from Judge Lifland’s order as evidence of a specific finding that
the language of the SPA is ambiguous takes the word out of
context of the order as a whole.

In the order, Judge Lifland

explained his conclusions concerning the dispute surrounding
Section 10.3(a)(iv) of the SPA in a thorough, step-by-step
manner, beginning with plaintiff’s interpretation of Section
10.3(a)(iv).

Judge Lifland demonstrated that at initial glance,

plaintiff’s interpretation of Section 10.3(a)(iv) is “plausible,”
but such interpretation does not make sense when one reads
Section 10 in its entirety.

Judge Lifland then demonstrated how

defendants’ interpretation of Section 10.3(a)(iv) is correct when
one reads Section 10 as a whole.

In this context, the Court does

not read Judge Lifland’s use of the word “plausible,” as an
explicit finding that the language of the SPA is ambiguous.
Therefore, the Court finds it committed no error in finding Judge
Lifland’s interpretation of Section 10.3(a)(iv), which is within
the provisions of New York law, is binding on this Court under
the doctrine of collateral estoppel.

Plaintiff’s motion, insofar

as it speaks to reconsideration, will be denied.

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B. Motion to alter or amend judgment
In the alternative, plaintiff claims that this Court
did not address, in its memorandum opinion and corresponding
judgment whether plaintiff is obligated to defend or indemnify
defendants for claims arising out of “active metal can plants
sold under the SPA,”1 and requests that the Court clarify this
issue by amending its order and judgment to include the following
language:
[Plaintiff] is not obligated to
defend or indemnify [defendants],
or any other [defendants]
affiliate, for any third party
claims that arise from the food and
beverage metal can business and the
metal can technology of the
Companies and Subsidiaries (as
those terms are defined in the SPA)
as they existed at the time of the
SPA and which were sold pursuant to
the SPA.2
Plaintiff seeks clarification on this issue given the 20 years of
litigation between the parties over the meaning of the SPA, and

1

As plaintiff raises no issues in its motion concerning
“plants that were closed (inactive) at the time of the SPA,” the
Court finds plaintiff concedes that the Court has addressed its
obligations surrounding “plants that were closed (inactive) at
the time of the SPA.” The Court construes the phrase “plants
that were closed (inactive) at the time of the SPA” to mean “past
businesses” as described in Section 10.3(a)(iv) of the SPA.
2

Pursuant to this language, the Court finds that
plaintiff’s use of the phrase “active metal can plants sold under
the SPA” means “the food and beverage metal can business and the
metal can technology of the Companies and Subsidiaries (as those
terms are defined in the SPA) as they existed at the time of the
SPA and which were sold pursuant to the SPA.”
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indeed plaintiff did pray for clarification for their obligations
pursuant to Section 10 of the SPA -- which includes this issue.
The Court rejects plaintiff’s assertion, however, that the Court
did not address this issue in its previous memorandum opinion and
corresponding judgment.
In its amended complaint, plaintiff prays to this Court
for a judgment declaring the rights, duties and legal obligations
of plaintiff and defendants with regard to plaintiff’s
obligations pursuant to the provisions of Section 10 of the SPA.
In doing that, plaintiff prays that the Court’s judgment declare
that plaintiff is not obligated to defend or indemnify defendants
or any defendant affiliate for any third party claims, which
claims arise from the Business (as defined in the SPA).
(Plaintiff’s Amended Complaint, p. 2, Filing No. 8).

In asking

for such relief, plaintiff directs the Court to quoted language
of Section 10.3(a)(iv) of the SPA and illustrates that a dispute
exists between the parties concerning such language.

The dispute

encompasses plaintiff’s obligation to defend and indemnify
defendants from certain “third party claims” which the plaintiff
defines as “various occupational exposure lawsuits.”

Plaintiff

further explains that among the “third party claims” are third
party claims “relating to the Business,” third party claims that
do not “relate to the Business,” and third party claims that, at
the time of receipt by plaintiff, the parties did not know

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whether the third party claim “related to the Business” or did
not “relate to the Business.”

(Plaintiff’s Amendment Complaint,

p. 2, Filing No. 8).
As plaintiff’s amended complaint identified and the
parties demonstrated to this Court at the summary judgment level,
the dispute over indemnity obligations of “third party claims
relating or not relating to the Business” concerns Section
10.3(a)(iv) of the SPA.

Section 10.3(a)(iv) provides:

(a) Seller agrees to indemnify
Buyer and its affiliates against
and hold Buyer and its affiliates
(including, after the Closing Date,
the Companies and the Subsidiaries
and their successors and assigns)
harmless from all Liabilities
arising out of . . .
(iv) all Liabilities relating to
past or existing businesses of the
Companies and Subsidiaries other
than the Business (other than
Liabilities expressly assumed by
Buyer pursuant to Section 5.9(b)),
including, without limitation,
[1] the contingent liabilities
referred to in Note 9 to the
Companies’ Balance Sheet and
[2] all Liabilities with
respect to any previous
reorganization, restructuring,
sales or dispositions of stock or
assets of subsidiaries or assets of
divisions or lines of business of
the Companies or the Subsidiaries
(or their predecessors) and the
reorganization contemplated
by Schedule 5.1, Section 5.11(b),
and
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[3] all Liabilities created by
any by-law, certificate of
incorporation provision or
agreement relating to the
indemnification of any person who
was an officer or director of any
of the Companies or Subsidiaries
prior to the Closing and who is an
officer or direct of PKS or a
subsidiary of PKS immediately
following the Closing . . .
(emphasis, line breaks, and bracketed numbers added).

The

dispute surrounds the emphasized language of Section 10.3(a)(iv),
and this dispute was previously clarified through Judge Lifland’s
interpretation of Section 10.3(a)(iv) in his arbitration order,
which the Court found was binding on this Court.

Judge Lifland

came to this conclusion in his opinion:
Accordingly, the Arbitrator
concludes from the intrinsic
evidence (the language of the SPA)
that the correct reading of “other
than the Business” as it appears in
Section 10.3(a)(iv) is “other than
[the food and beverage metal can
business and the metal can and can
end technology of the Companies and
their subsidiaries as they existed
at the time of the SPA and which
were sold pursuant to the SPA].
The correct construction is
therefore that “existing
businesses” is modified by “other
than the Business” and “past
businesses” is not. In other
words, Liabilities related to
existing businesses not being sold
(i.e., businesses “other than the
Business”) were retained by
[plaintiff], a perfectly rational
arrangement because it would make
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no sense for [defendants] to
acquire responsibility for
Liabilities when it did not acquire
the business generating such
Liabilities.
(Crown Exhibit 1.B., p. 5, Filing No. 39-9) (emphasis added).
Judge Lifland found that “existing businesses” is
modified by the phrase “other than the Business,” and “past
businesses” is not.

Thus, pursuant to Section 10.3(a)(iv) of the

SPA, plaintiff must indemnify defendants for 100% of liabilities
related to (1) businesses that were “past businesses” at the time
of the SPA, and (2) businesses that were “existing businesses” at
the time of the SPA.
“existing businesses.”

There is an exception, however, concerning
Plaintiff does not have to indemnify

defendants for 100% of liabilities related to “the food and
beverage metal can business and the metal can and can end
technology of the Companies and their Subsidiaries as they
existed at the time of the SPA and which were sold pursuant to
the SPA.”

Thus, if liabilities arise concerning a business that

was an “existing business” at the time of the SPA and that
business is part of “the food and beverage metal can business and
the metal can and can end technology of the Companies and their
Subsidiaries as they existed at the time of the SPA and which
were sold pursuant to the SPA,” plaintiff does not have to
indemnify defendants for 100% of the liabilities related to that
business.

Instead, as Judge Lifland explained, plaintiff only

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has to indemnify defendants for 50% of such liabilities (See
Crown Exhibit 1.B., p. 3-4 Filing No. 39-9).
Liabilities concerning the food and beverage metal can
business and the metal can and can end technology of the
Companies and their Subsidiaries as they existed at the time of
the SPA and which were sold pursuant to the SPA are subject to a
separate indemnity provision provided in Section 10.3(a)(iii)3 of
the SPA, and this “Section provides for 50% indemnification,
rather than 100% indemnification set forth in Section
10.3(a)(iv).”

Id.

The distinction between Section 10.3(a)(iii)

and Section 10.3(a)(iv) and in effect, the indemnification amount
for liabilities concerning what was sold pursuant to the SPA and
what was not, is reflected in Schedule 3.16, which Section

3

Section 10.3(a)(iii) provides:
(a) Seller agrees to indemnify
Buyer and its affiliates against
and hold Buyer and its affiliates
(including, after the Closing Date,
the Companies and the Subsidiaries
and their successors and assigns)
harmless from all Liabilities
arising out of . . .
(iii) 50% of all Liabilities
arising out of the matters
described on Section 3.16 (but not
with respect to any exacerbation of
such matters occurring after the
Closing date by reason of actions
taken by Buyer or its affiliates)
(“Environmental Liabilities”) . . .

(emphasis and line break added).
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10.3(a)(iii) references.

Judge Lifland identified the relevant

portion of Schedule 3.16 to the parties:
“Notwithstanding anything to the
contrary contained in this Schedule
3.16, Buyer shall be entitled to
the indemnification provisions of
Section 10.3(a)(iv) of the Stock
Purchase Agreement, and Section
10.3(a)(iii) shall be inapplicable,
to the extent that any disclosure
made in this Schedule 3.16 relates
to past or existing business of the
Companies and Subsidiaries other
than the Business.”
Id. at 4.

As Judge Lifland found, plaintiff must indemnify

defendants for 50% of liabilities concerning the food and
beverage metal can business and the metal can and can end
technology of the Companies and their Subsidiaries as they
existed at the time of the SPA and which were sold pursuant to
the SPA.
The Court concludes that Judge Lifland’s binding
interpretation of the dispute surrounding Section 10.3(a)(iv) of
the SPA addresses whether plaintiff must indemnify defendants for
claims arising out of the food and beverage metal can business
and the metal can and can end technology of the Companies and
their Subsidiaries as they existed at the time of the SPA and
which were sold pursuant to the SPA.
The Court will not adopt plaintiff’s proposed
additional language in this memorandum and corresponding order,

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as it did not include similar language in its previous memorandum
and order, because this language does not correctly represent the
parties’ obligations pursuant to Section 10 of the SPA.
Plaintiff asks the Court to include this language:
[Plaintiff] is not obligated to
defend or indemnify [defendants],
or any other [defendants]
affiliate, for any third party
claims that arise from the food and
beverage metal can business and the
metal can technology of the
Companies and Subsidiaries (as
those terms are defined in the SPA)
as they existed at the time of the
SPA and which were sold pursuant to
the SPA.4

4

In its amended complaint, plaintiff also prays for a
judgment declaring that plaintiff is not required to defend or
indemnify defendants for any third party claims until defendants
can establish that said third party claims did not arise from the
Business (as defined in the SPA) and is entitled to collect any
monies plaintiff spent on any claims that plaintiff either
mistakenly defended or was not obligated to defend. Although,
plaintiff did not ask the Court to amend its previous memorandum
opinion and corresponding judgment with this language, the Court
wants the parties to be aware of the reasons the Court declines
to include such language.
The Court has made the parties aware of their legal
obligations pursuant to Section 10 of the SPA. If a specific
case arises or has arisen and the parties are engaged in a
factual dispute as to whether plaintiff must indemnify defendants
for that case pursuant to Section 10 of the SPA, they are
instructed to refer to Judge Lifland’s interpretation and the
Court’s memorandum opinions and corresponding orders to settle
their disagreement. The Court is not going to create a procedure
the parties must follow concerning all of the parties’
indemnification claims without knowing the specific facts of such
claims. Furthermore, specific procedures for indemnification
claims are set out in Section 10.4 of the SPA. That being said,
the Court is not going to award plaintiff “all monies” plaintiff
believes it is entitled to concerning this matter, as the
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The suggested language is inconsistent with Judge Lifland’s
interpretation because the language frees plaintiff of
obligations that are provided for in the provisions of Section 10
of the SPA.

As Judge Lifland demonstrated, the indemnification

language provided in Section 10.3(a)(iv) is subject to the other
language of the SPA creating exceptions to the parties’
indemnification obligations defined in Section 10.3(a)(iv).5
Specifically, Section 10.3(a)(iii) adds that plaintiff must
indemnify defendants for 50% of all liabilities that arise from
the food and beverage metal can business and the metal can
technology of the Companies and Subsidiaries (as those terms are
defined in the SPA) as they existed at the time of the SPA and
which were sold pursuant to the SPA.
Plaintiff’s suggested language is also confusing
because it uses the phrase “any third party claims” rather than
the word “all liabilities.”

Pursuant to plaintiff’s amended

complaint, plaintiff’s definition of “third party claims” is
“various occupational exposure lawsuits,” which includes various

specific facts of such instances allegedly entitling plaintiff to
a momentary award have not been put before the Court.
5

Indeed, the Court is aware of other language within the
SPA that speaks to the plaintiff’s indemnification obligations,
such as the “De Minimis” exception provided for in Section
10.3(b). The Court’s clarification on the issue presented in
this case is in not intended to undermine other relevant
provisions of the SPA (which to the Court’s knowledge, are not in
dispute).
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occupational exposure lawsuits relating to the Business, various
occupational exposure lawsuits that do not relate to the
Business, and various occupational exposure lawsuits that, at the
time of receipt by plaintiff, the parties did not know whether
the third party claim related to the Business or did not relate
to the Business.

To complicate matters more, “the Business” as

defined in Judge Lifland’s order is “the food and beverage metal
can business and the metal can and can end technology of the
Companies and their subsidiaries as they existed at the time of
the SPA and which were sold pursuant to the SPA.”

(Plaintiff’s

Amendment Complaint, para. 6, Filing No. 8; Crown Exhibit 1.B.,
p. 6 Filing No. 39-9).

The Court believes that including such

term (or any of the other language plaintiff proposed in its
amended complaint) in its order would (1) create confusion
between the parties due to its lengthy definition; and (2) would
be misleading to third parties unaware at first glance that the
term “third party claims” has a special definition created by the
plaintiff in this lawsuit.
A separate order will be entered in accordance with
this memorandum opinion.
DATED this 2nd day of May, 2011.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court
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