Cytec Industries Inc. v. Allnex (Luxembourg) and CY S.C.A.

Filing 138

MEMORANDUM AND ORDER. Cytec's motion for summary judgment is GRANTED and Allnex's motion for summary judgment is DENIED. The Clerk is directed to terminate those motions. (Docket #98, 102.) The Clerk is directed to terminate the parties 9; motions in limine as moot. (Docket #95, 106, 109.) Within fourteen days, Cytec shall submit to the Court a proposed judgment on notice. SO ORDERED. Terminating as moot 95 Motion in Limine; Denying 98 Motion for Summary Judgment; Granting 102 Motion for Summary Judgment; Terminating as moot 106 Motion in Limine; Terminating as moot 109 Motion in Limine. (Signed by Judge P. Kevin Castel on 6/19/2017) (rjm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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CYTEC INDUSTRIES INC.,
Plaintiff,
-against-

14-cv-1561 (PKC)
MEMORANDUM
AND ORDER

ALLNEX (LUXEMBOURG) & CY S.C.A.,
Defendant.
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CASTEL, U.S.D.J.
This is a dispute between buyer and seller of a business over contractual liabilities
for environmental remediation costs at a site in Kalamazoo, Michigan. The parent company of
Allnex (Luxembourg) & Cy S.C.A. (“Allnex”) entered into a Stock and Asset Purchase
Agreement (the “Agreement”) for the purchase of the coating resins business owned by Cytec
Industries Inc. (“Cytec”). Almost immediately, a disagreement arose as to whether Cytec or
Allnex was the party responsible for environmental remediation of the Kalamazoo chemical
production facility. Sulfuric acid and liquid alum had historically been manufactured at that site,
and while those chemicals were not used to make coating resins, both parties knew that
contamination liabilities were associated with the Kalamazoo facility.
As part of the Agreement, Allnex agreed to “assume . . . discharge or perform
when due all the Assumed Liabilities” set forth by the Agreement. “Assumed Liabilities” is a
defined term. It includes “all Liabilities” of Cytec, “to the extent related to, or used or held in
connection with” the coating resins business, and specifically “all such Liabilities to the extent
relating to Environmental Laws with respect to any facilities located in the United States . . . .”
Cytec seeks declaratory judgment that Allnex is responsible for all remediation costs at the

Kalamazoo site. Allnex contends that the Agreement’s definition limits environmental liabilities
to contamination directly caused by the manufacture of coating resins.
Discovery in this case is closed and both sides move for summary judgment.
Their dispute turns principally on the interpretation of unambiguous contractual language. For
reasons that will be explained, the Court concludes that the Agreement unambiguously provides
that Allnex assumed all liabilities for remediation of the Kalamazoo site. Cytec’s motion for
summary judgment is therefore granted, and Allnex’s motion is denied.
BACKGROUND.
A. Cytec’s Sale of Its Coating Resins Business.
Cytec was formed in 1993, when it was spun off from American Cyanamid
Company (“ACY”). (Pl. 56.1 ¶ 1; Def. 56.1 Resp. ¶ 1.) When Cytec was formed, it acquired
various chemical manufacturing facilities, including the one located in Kalamazoo, Michigan.
(Pl. 56.1 ¶ 2; Def. 56.1 Resp. ¶ 2.) Cytec assumed all environmental liabilities for those sites.
(Pl. 56.1 ¶ 3; Def. 56.1 Resp. ¶ 3.)
In January 2012, Cytec began to market the sale of its coating resins business (the
“Business”). (Def. 56.1 ¶ 7; Pl. 56.1 Resp. ¶ 7.) In prior public statements, Cytec had mentioned
“weakening demand” for coating resins products and the possibility of selling the Business. (Pl.
56.1 ¶ 20; Def. 56.1 Resp. ¶ 20.) The Business was not a separate, standalone entity within
Cytec, but a financial-reporting segment that included various coating resins products. (Def.
56.1 ¶¶ 8, 15; Pl. 56.1 Resp. ¶¶ 8, 15.) During the sales process, the Business was often referred
to by the name “Monarch.” (Def. 56.1 ¶ 9; Pl. 56.1 Resp. ¶ 9.)
In preparation for the sale of the Business, Cytec created pro forma financial
statements that were audited by KPMG. (Def. 56.1 ¶ 10; Pl. 56.1 Resp. ¶ 10; Pl. 56.1 ¶¶ 25-26;

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Def. 56.1 Resp. ¶¶ 25-26.) Because the coating resins business was not a standalone company,
Cytec chose which subsidiaries, assets and liabilities would be part of the sale. (Pl. 56.1 ¶ 27;
Def. 56.1 Resp. ¶ 27.) The pro forma financial statements detailed the Business’s environmental
liabilities, among other things. (Def. 56.1 ¶ 10; Pl. 56.1 Resp. ¶ 10.)
The pro forma financial statements stated that “[o]ur most significant
environmental liabilities relate to remediation and regulatory closure obligations at
manufacturing sites now or formerly owned by us.” (Pl. 56.1 ¶ 29; Def. 56.1 Resp. ¶ 29.) The
statements included an “aggregate environmental related accrual” of liabilities of $32.9 million
as of December 31, 2011, and $35.1 million as of June 30, 2012. (Pl. 56.1 ¶ 30; Def. 56.1 Resp.
¶ 30.) A Form 10-Q filing of August 2012 and a due diligence report authored by Ernst &
Young listed the same figures. (Pl. 56.1 ¶¶ 31, 40; Def. 56.1 Resp. ¶¶ 31, 40.) Those figures
included $3.1 million “in accrued expenses with the remainder included in other noncurrent
liabilities.” (Def. 56.1 ¶ 13; Pl. 56.1 Resp. ¶ 13; see also Pl. 56.1 ¶ 40; Def. 56.1 Resp. ¶ 40
(Ernst & Young report listed $3.1 million in current liabilities and $32 million in non-current
liabilities).)
Cytec commissioned environmental assessments of its properties, including
“Phase I” assessments of known environmental concerns and “Phase II” assessments of potential
environmental concerns. (Pl. 56.1 ¶¶ 32-35; Def. 56.1 Resp. ¶ 32-35.) Regarding the
Kalamazoo facility, the Ernst & Young due diligence report stated that “Cytec will transfer the
overall site including the land and buildings to Monarch with the exception of” certain assets
“for KM Polymer facility only.” (Pl. 56.1 ¶ 38; Def. 56.1 Resp. ¶ 38.) The Ernst & Young
report also stated: “Monarch maintains liabilities to address environmental related exposures.
Such liabilities are maintained at the site level . . . . Certain of the Monarch sites have a long

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history of chemical operations, which has resulted in some cases in legacy groundwater and soil
contamination.” (Pl. 56.1 ¶ 39; Def. 56.1 Resp. ¶ 39.) The same report identified reserves of
$0.9 million for the Kalamazoo facility. (Pl. 56.1 ¶ 41; Def. 56.1 Resp. ¶ 41.)
B. Advent’s Successful Bid to Acquire the Business.
Advent International Corporation (“Advent”) is a private equity firm with a
controlling interest in defendant Allnex. (Def. 56.1 ¶ 4; Pl. 56.1 Resp. ¶ 4.) Advent began to
consider acquiring the Business in early 2012, and eventually submitted a total of three bids.
(Def. 56.1 ¶¶ 16-17; Pl. 56.1 Resp. ¶¶ 16-17.) During the negotiation and due diligence process,
Advent retained the services of outside counsel and an environmental consulting firm, among
other advisors. (Pl. 56.1 ¶¶ 52, 58; Def. 56.1 Resp. ¶¶ 52, 58.) The eventual Agreement was
negotiated at arm’s length between sophisticated parties.
As part of the bidding process, Advent reviewed a Confidential Information
Memorandum prepared by Cytec, a draft Stock and Asset Purchase Agreement prepared by
Cytec and performed due diligence through a Virtual Data Room, which included Phase II
environmental assessments of the Business’s sites. (Pl. 56.1 ¶¶ 43-48, 56-57; Def. 56.1 Resp. ¶¶
43-48, 56-57.) Advent and other bidders submitted questions to Cytec during the due diligence
phase. (Pl. 56.1 ¶¶ 74-77; Def. 56.1 Resp. ¶¶ 74-77.)
Advent retained Environ Germany GmbH (“Environ”) to analyze the Business’s
environmental liabilities. (Pl. 56.1 ¶¶ 58, 78; Def. 56.1 Resp. ¶¶ 58, 78.) For the Kalamazoo
facility, Environ reviewed Phase I and Phase II reports, and a May 2012 summary of the site’s
“waste management units.” (Pl. 56.1 ¶ 66; Def. 56.1 Resp. ¶ 66.) The Phase I report noted that
the Kalamazoo facility had “[t]wo historic sulfuric acid spill areas,” and that based on the site’s
“long industrial history” of using and storing other hazardous chemicals, “the potential for

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impacts from discontinued operations cannot be ruled out.” (Pl. 56.1 ¶¶ 67-68; Def. 56.1 Resp.
¶¶ 67-68.) Environ concluded that the Kalamazoo facility’s possible liabilities included “[a]
historic sulfuric acid spill,” “waste generated by the former liquid alum manufacturing process,”
and pellets of vanadium pentoxide left by the former sulfuric acid plant. (Pl. 56.1 ¶ 72; Def. 56.1
Resp. ¶ 72.) Environ separately conducted an independent review and assessment of the
Business’s environmental reserves, known liabilities and potential liabilities, including known
environmental liabilities at the Kalamazoo facility. (Pl. 56.1 ¶ 78-81; Def. 56.1 Resp. ¶ 78-81.)
As noted, Advent submitted a total of three bids for the acquisition of the
Business. Its final offer was for a $1.175 billion all-cash acquisition of the Business. (Pl. 56.1 ¶
89; Def. 56.1 Resp. ¶ 89.) The final offer listed “environmental liabilities” of $35.1 million. (Pl.
56.1 ¶ 91; Def. 56.1 Resp. ¶ 91.)
The final Agreement was negotiated at arm’s length with the advice of outside
counsel. During the bidding process, Advent and its outside counsel proposed revisions to the
Agreement. (Pl. 56.1 ¶ 93; Def. 56.1 Resp. ¶ 93.) These proposed revisions included alterations
to the Agreement’s definition of “Assumed Liabilities.” (Pl. 56.1 ¶ 94; Def. 56.1 Resp. ¶ 94.)
Cytec’s outside counsel reviewed Advent’s proposed changes and rejected many of them. (Pl.
56.1 ¶ 95; Def. 56.1 Resp. ¶ 95.) Negotiations also took place in face-to-face meetings that
included the outside counsel for both Advent and Cytec. (Pl. 56.1 ¶¶ 110, 113; Def. 56.1 Resp.
¶¶ 110, 113.)
On October 8, 2012, Cytec’s board of directors approved the transaction as set
forth in the Agreement. (Pl. 56.1 ¶ 122; Def. 56.1 Resp. ¶ 122.) Cytec, and the Advent entity
that acquired the Business, “AcquiCo,” executed the Agreement that same day. (Pl. 56.1 ¶ 123;
Def. 56.1 Resp. ¶ 123.) AcquiCo was later renamed Allnex (Luxembourg) and Cy S.C.A. (Pl.

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56.1 ¶ 124; Def. 56.1 Resp. ¶ 124.) The transaction closed on April 3, 2013. (Def. 56.1 ¶ 28; Pl.
56.1 Resp. ¶ 28.)
C. The Parties’ Disagreements Concerning the Kalamazoo Site.
Shortly after the parties signed the Agreement, they began to dispute which of
them was responsible for expenses related to environmental remediation of the Kalamazoo
facility.
The Kalamazoo site had a manufacturing history that long predated its acquisition
by Cytec and its later sale to Allnex. From 1946 to 1975, Cytec’s predecessor, ACY,
manufactured sulfuric acid in Kalamazoo, during which time the site had two “spill areas” of
sulfuric acid. (Pl. 56.1 ¶¶ 4, 67; Def. 56.1 Resp. ¶¶ 4, 67.) A substance called liquid alum also
was manufactured at the facility, until its production was discontinued in 1985. (Pl. 56.1 ¶¶ 4-6;
Def. 56.1 Resp. ¶¶ 4-6.)
In 1998, the Michigan Department of Environmental Quality (“MDEQ”) issued
Cytec a Hazardous Waste Container Storage Operating License for the Kalamazoo facility. (Pl.
56.1 ¶ 7; Def. 56.1 Resp. ¶ 7.) Pursuant to the Operating License, Cytec began to remediate
historical contaminations at the Kalamazoo facility, specifically those caused by the manufacture
of sulfuric acid and liquid alum. (Pl. 56.1 ¶¶ 8-10; Def. 56.1 Resp. ¶¶ 8-10.)
Cytec began to manufacture KMP Polymers at the Kalamazoo facility in or about
2006. (Pl. 56.1 ¶ 11; Def. 56.1 Resp. ¶ 11.) It has continued to do so since the transaction
closed, as part of an arrangement that Cytec describes as unusual relative to other sites acquired
by Allnex. (Def. 56.1 ¶ 37; Pl. 56.1 Resp. ¶ 37; Pl. Mem. at 24.) Schedule 2.20(a) of the
Agreement contains descriptions of real property for each of the transferred sites, and partially
describes the Kalamazoo property as follows: “Current Operating Plant Site located in

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Kalamazoo, MI. This is currently a shared site. The site will be owned by Monarch and Cytec
will have a ground lease to the property where the [KMP Polymers] unit is currently located and
the surrounding area.” (Agrmt. Disclosure Sched. at 508.) It does not appear that any of the
disputed liabilities relate to the manufacture of KMP Polymers.
In a letter to Cytec dated August 23, 2010, the MDEQ proposed a consent order
“to address the corrective action requirements” of the Kalamazoo facility. (Pl. 56.1 ¶ 144; Def.
56.1 Resp. ¶ 144.) Cytec and the MDEQ exchanged drafts of the consent order between 2010
and 2011, and Cytec entered into a consent order on March 6, 2013 (the “Consent Order”), about
a month before the transaction closed. (Pl. 56.1 ¶¶ 145-46; Def. 56.1 Resp. ¶ 145-46.) The
Consent Order applies to 14 waste management units (“WMUs”) and one area of concern
(“AOC”). (Pl. 56.1 ¶ 147; Def. 56.1 Resp. ¶ 147.) Under the Consent Order, Cytec agreed to
take corrective actions as to six WMUs that arose out of the production of sulfuric acid. (Pl. 56.1
¶ 148; Def. 56.1 Resp. ¶ 148.) All of the WMUs requiring corrective actions under the Consent
Order were identified in the Virtual Data Room provided by Cytec during the due diligence
process. (Pl. 56.1 ¶ 149; Def. 56.1 ¶ 149.)
On April 26, 2013, Allnex’s outside environmental counsel wrote to Cytec’s chief
litigation counsel with a proposed allocation of responsibility for the WMUs at the Kalamazoo
facility based on “the source of contamination and/or the uses of the areas/facilities that comprise
the WMUs (coating or non-coating).” (Pl. 56.1 ¶ 152; Def. 56.1 Resp. ¶ 152.) The letter
proposed that Allnex would pay remediation expenses that arose from the coating resins
business, and that Cytec would pay expenses that related to the historical manufacture of sulfuric
acid and liquid alum. (Pl. 56.1 ¶ 152; Def. 56.1 Resp. ¶ 152.)

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Cytec’s counsel rejected the proposed allocation “as well as any suggestion” that
Allnex “did not assume all environmental liabilities at the Kalamazoo facility under the
[Agreement].” (Pl. 56.1 ¶ 153; Def. 56.1 Resp. ¶ 153.) In a letter of March 26, 2014, Allnex’s
outside environmental counsel stated that pursuant to the Agreement, Allnex “is only responsible
for” WMUs “if, and only to the extent, contamination associated with such WMUs resulted from
the ‘Business’ (as that term is defined in the [Agreement]) as conducted by Cytec. Those
WMU’s that were not the result of operation of the Business are Excluded Liabilities.” (Pl. 56.1
¶ 154; Def. 56.1 Resp. ¶ 154.)
Cytec commenced this action on March 7, 2014. (Docket # 2.) Subject matter
jurisdiction is premised on diversity of citizenship. Of the four claims originally asserted, only
Cytec’s claim concerning the environmental liabilities remains unresolved.
SUMMARY JUDGMENT STANDARD.
Summary judgment “shall” be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Rule 56(a), Fed. R. Civ. P. A fact is material if it “might affect the outcome of the suit
under the governing law . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). On
a motion for summary judgment, the court must “construe the facts in the light most favorable to
the non-moving party and resolve all ambiguities and draw all reasonable inferences against the
movant.” Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d Cir. 2014) (quotation marks
omitted). It is the initial burden of the movant to come forward with evidence on each material
element of his claim or defense, demonstrating that he is entitled to relief, and the evidence on
each material element must be sufficient to entitle the movant to relief in its favor as a matter of
law. Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).

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If the moving party meets its burden, “the nonmoving party must come forward
with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid
summary judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008). “A
dispute regarding a material fact is genuine ‘if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.’” Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d
Cir. 2000) (quoting Anderson, 477 U.S. at 248).
DECLARATORY JUDGMENT STANDARD.
Cytec seeks summary judgment for its claim of declaratory judgment pursuant to
28 U.S.C. § 2201. Cytec seeks a declaration “that Allnex is required to pay for all environmental
liabilities associated with contamination at the Kalamazoo, Michigan site at Closing as Assumed
Liabilities under the Agreement.” (Second Am. Compl’t ¶ 40.)
The Declaratory Judgment Act states in part:
In a case of actual controversy within its jurisdiction . . . any court
of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be
sought. Any such declaration shall have the force and effect of a
final judgment or decree and shall be reviewable as such.
28 U.S.C.A. § 2201(a). “The Declaratory Judgment Act confers on federal courts ‘unique and
substantial discretion in deciding whether to declare the rights of litigants.’” Peconic Baykeeper,
Inc. v. Suffolk County, 600 F.3d 180, 187 (2d Cir. 2010) (quoting Wilton v. Seven Falls Co., 515
U.S. 277, 286 (1995). “In order to decide whether to entertain an action for declaratory
judgment, we have instructed district courts to ask: (1) whether the judgment will serve a useful
purpose in clarifying or settling the legal issues involved; and (2) whether a judgment would
finalize the controversy and offer relief from uncertainty.” Duane Reade, Inc. v. St. Paul Fire &
Marine Ins. Co., 411 F.3d 384, 389 (2d Cir. 2005).
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The Court concludes that declaratory judgment would serve the useful purpose of
clarifying or settling the legal issues involving the liability for remediation of the historical
contamination of the Kalamazoo facility. Declaratory judgment would also finalize the parties’
controversy and offer relief from uncertainty as to the same issue.
DISCUSSION.
I.

New York Law Governs the Agreement.

The Agreement provides, in all-capitalized letters, that it “shall be governed by
and construed in accordance with the laws of the State of New York without regard to principles
of conflicts of law.” (Agrm’t § 8.8(a).) The Court therefore construes the Agreement pursuant
to New York law.
II.

Because the Contract Is Unambiguous, the Court Does Not Consider Parol
Evidence.

Both sides have asserted that the relevant provisions of the Agreement are
unambiguous, and that the Court can interpret the Agreement without considering parol
evidence. At the same time, Cytec and Allnex have each raised a battery of arguments about the
positions taken during the Agreement’s negotiation, and their internal understandings of which
party is responsible for the historical environmental liabilities of the Kalamazoo facility.
“Where the terms of a contract are clear and unambiguous, the intent of the
parties must be found within the four corners of the contract, giving a practical interpretation to
the language employed and reading the contract as a whole.” Ellington v. EMI Music, Inc., 24
N.Y.3d 239, 244 (2014); accord Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324 (2007)
(“Construction of an unambiguous contract is a matter of law, and the intention of the parties
may be gathered from the four corners of the instrument and should be enforced according to its

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terms.”); Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002) (“The best evidence of
what parties to a written agreement intend is what they say in their writing.”).
A court may consider extrinsic evidence of the parties’ intent only if it concludes
that the contract is ambiguous. Greenfield, 98 N.Y.2d at 569. “‘[A] contract is not rendered
ambiguous just because one of the parties attaches a different, subjective meaning to one of its
terms.’” Bank of New York Mellon v. WMC Mortgage, LLC, 136 A.D.3d 1, 9 (1st Dep’t 2015)
(quoting Bajraktari Mgt. Corp. v. American Int’l Grp., Inc., 81 A.D.3d 432, 432 (1st Dep’t
2011)); accord Johnson v. Lebanese Am. Univ., 84 A.D.3d 427, 435 (1st Dep’t 2011) (“[T]hat
one party to an agreement may attach a particular, subjective meaning to a term that differs from
the term’s plain meaning does not render the agreement ambiguous.”).
A contract is unambiguous if its language has “a definite and precise meaning,
unattended by danger of misconception in the purport of the agreement itself, and concerning
which there is no reasonable basis for a difference of opinion.” Greenfield, 98 N.Y.2d at 569-70,
(quotation marks and alteration omitted). “It is well settled that extrinsic and parol evidence is
not admissible to create an ambiguity in a written agreement which is complete and clear and
unambiguous upon its face.” W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 163
(1990) (quotation marks omitted). Courts should especially refrain from adding additional terms
when sophisticated parties enter into a contract negotiated at arm’s length by knowledgeable
counsel. See, e.g., Assured Guar. Mun. Corp. v. DLJ Mortg. Capital, Inc., 117 A.D.3d 450, 45051 (1st Dep’t 2014).
In this case, extrinsic and parol evidence are also precluded by the Agreement’s
broad merger clause. “[T]he purpose of a merger clause is to give full effect to the parol
evidence rule, which bars extrinsic evidence tending to vary the terms of the agreement in which

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the merger clause is included.” Garthon Bus. Inc. v. Stein, 138 A.D.3d 587, 591 (1st Dep’t
2016); accord Indigo Secured High Income Note, Ltd. v. HCI Secured Med. Receivables Special
Purpose Corp., 140 A.D.3d 589, 590 (1st Dep’t 2016) (“[T]he [agreement] is the best evidence of
the parties’ understanding and should be enforced according to its terms, especially in view of
[its] valid merger clause.”) (internal citation omitted). “Under the traditional rules of contract
law, the courts will enforce a clear and unambiguous merger clause . . . .” Friedman v. Ocean
Dreams, LLC, 56 A.D.3d 719, 720 (2d Dep’t 2008). “Merger clauses are not mere boilerplate.
They provide further protection for the interests of certainty and finality.” Torres v. D’Alesso,
80 A.D.3d 46, 53 (1st Dep’t 2010) (emphasis in original).
Here, the merger clause provides that the Agreement and related contracts
“contain the entire agreement between the parties hereto . . . .” (Agrmt. § 8.4.) It states in full:
This Agreement (including all Schedules and Exhibits hereto), the
Ancillary Agreements, the Restructuring Agreements, the
Confidentiality Agreement (to the extent it survives pursuant to
Section 4.2) and the Expense Agreement contain the entire
agreement between the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters. In the
event of any conflict between this Agreement and any agreement,
instrument or other document relating to the Pre-Signing
Restructuring Transactions or the Post-Signing Restructuring
Transactions, this Agreement shall prevail.
(Agrmt. § 8.4.)
Because the parties agreed to this merger clause, and because the terms of the
Agreement are unambiguous, the Court does not consider extrinsic or parol evidence when
interpreting the Agreement.

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III.

Allnex Assumed Liability for the Remediation of All Environmental Liabilities at the
Kalamazoo Site.
The parties’ dispute turns on the Agreement’s definition of the term “Assumed

Liabilities.”
Section 1.3 of the Agreement provides that “[o]n the terms and subject to the
conditions set forth herein, at the Closing, Buyer shall assume from Seller and its Affiliates
(other than the Transferred Subsidiaries) and discharge or perform when due all the Assumed
Liabilities . . . .” It is undisputed that under this provision, Allnex agreed to “discharge or
perform when due all the Assumed Liabilities . . . .”
The Court concludes that remediation of the historical environmental liabilities at
the Kalamazoo site falls under the definition of “Assumed Liabilities.” The Agreement defines
“Assumed Liabilities” as follows:
“Assumed Liabilities” means (i) all Liabilities of Seller [Cytec] and
its Affiliates (other than the Transferred Subsidiaries) to the extent
related to, or used or held in connection with, the Business as
conducted at any time by Seller and its Affiliates, including, for the
avoidance of doubt, all such Liabilities to the extent relating to
Environmental Laws with respect to any facilities located in the
United States (but excluding, for the avoidance of doubt, all
Liabilities to the extent relating to Environmental Laws with respect
to facilities located in Belmont, West Virginia, Coventry, Rhode
Island and Stamford, Connecticut), the Transferred Seller
Intercompany Payables and all Liabilities to the extent included as
Liabilities in the calculation of Actual Indebtedness; (ii) all
Liabilities of Seller under that certain Side Letter Agreement dated
May 11, 2012, by and between the PSA Buyer and Seller; and (iii)
all Liabilities related to the Asset Transfer Plans with respect to
Transferred Employees.
(Agrmt. at Annex I-5; emphasis added.)
This definition includes other defined terms. The Agreement’s definition of
“Business” is of particular importance, because Allnex assumed all liabilities of Cytec “to the

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extent related to, or used or held in connection with, the Business . . . .” (Agrmt. at Annex I-5.)
As defined by the Agreement, “‘Business’ means the worldwide business of researching,
developing, manufacturing, toll manufacturing, marketing and selling liquid coating resins and
coating additives, powder coating resins, radiation cure monomers and resins, phenolics and
amino cross-linkers and isocyanates (including TMXDI), in each case as conducted by Seller’s
coating resins financial reporting segment . . . .” (Agrmt. at Annex I-6.)
Although the definition of “Business” is specifically limited to coating resins
products, “Assumed Liabilities” is defined as “all Liabilities of Seller . . . to the extent related to,
or used or held in connection with, the Business . . . .” (Agrmt. at Annex I-5; emphasis added.)
“Liabilities” is broadly defined as “any and all debts, liabilities commitments and obligations of
any kind, whether due or to become due, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown,
determined, determinable or otherwise, whenever or however arising . . . .” (Agrmt. at Annex I12.) The phrase “related to, or used or held in connection with” is also broad in scope. Allnex
agreed to assume “any and all” liabilities and obligations “of any kind” that “related to,” were
“used,” or “held in connection with” the coating resins business. These liabilities could come in
many varieties, and are not narrowly limited to liabilities that occurred exclusively from the
manufacture and production of coating resins.
Cytec places particular emphasis on the phrase “held in connection with.” It notes
that Webster’s Third New International Dictionary (2002), at 1078, defines “held” as “to retain
in one’s keeping; maintain possession of : not give up or relinquish : possess, have . . . .” The
Oxford English Dictionary online defines “held” as a past tense of “hold,” with the definition of
“hold” being “[t]o have or keep as one’s own absolutely or temporarily; to own, have as

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property; to be the owner, possessor, or tenant of; to be in possession or enjoyment of.” 1 These
definitions are consistent with common usage of the word “held” and a straightforward reading
of its use in the Agreement. In agreeing to assume “any and all” liabilities that were “held in
connection with” the coating resins business, Allnex agreed to “discharge or perform when due”
(Agrmt. § 1.3) those liabilities. It did so without qualification, and liabilities “held” by the
“Business” for the remediation of historical environmental contamination fall comfortably within
the definition of “Assumed Liabilities.”
The terms “related to” and “used” are similarly broad. In agreeing to assume
“any and all” liabilities “related to” the coating resins business, Allnex did not confine itself to
liabilities directly resulting from the manufacture and production of coating resins. The
historical liabilities at the Kalamazoo site “related to” the “Business” because they historically
existed at one of the Business’s coating resins production sites, which Allnex acquired. That
same facility was “used” by the “Business.” The parties could have contracted for a narrower
definition of “Assumed Liabilities,” one that encompassed only those liabilities directly
attributable to the manufacture of coating resins. They did not do so.
Allnex argues that the immediately-following language provides for a more
limited transfer of liability. The definition proceeds to state that Allnex would assume liabilities
“including, for the avoidance of doubt, all such Liabilities to the extent relating to Environmental
Laws with respect to any facilities located in the United States . . . .” (Agrmt. at Annex I-5.)
According to Allnex, the word “such” narrowly limits liabilities to those arising from the
“Business.” (Id. at 24.) As articulated by Allnex: “‘[S]uch Liabilities’ means liabilities of the
kind mentioned in the preceding clause – those liabilities ‘to the extent related to, or used or held

1

See http://www.oed.com/view/Entry/87689?rskey=Z3oSLH&result=7&isAdvanced=false#eid

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in connection with, the Business.’” (Id.) Allnex observes that the word “such” often performs a
limiting function. See, e.g., Kolbe v. Tibbetts, 22 N.Y.3d 344, 353 (2013) (“The phrase ‘at such
time as the employee retires’ is most logically read to qualify the immediately preceding
phrase . . . .”).
Allnex’s argument is based on a convoluted reading of the Agreement’s
unambiguous language. The parties agreed that the Assumed Liabilities would “includ[e], for
the avoidance of doubt, all such Liabilities to the extent relating to Environmental Laws with
respect to any facilities located in the United States . . . .” As noted, “all such Liabilities” would
include “any and all debts, liabilities, commitments and obligations of any kind” (Agrmt. at
Annex I-12) that were related to, used or held by the coating resins business. The “Assumed
Liabilities” definition specifically provides that these “Liabilities” include those “relating to
Environmental Laws” with respect to United States facilities. (Agrmt. at Annex I-5.) The
Agreement defines “Environmental Law” as “any Law, Governmental Authorization, Order or
legally binding policy or guideline relating to (i) the protection of the environment (including
soil . . . land surface or subsurface strata . . .)” or “(ii) the use, storage, . . . release or disposal of,
any Hazardous Substance . . . .” (Agrmt. at Annex I-8-9.)
Rather than limiting “Liabilities” to contaminations directly traceable to coating
resins production, the language relied on by Allnex specifically encompasses liability under the
“Environmental Laws.” Therefore, incorporating the defined terms, the definition of “Assumed
Liabilities” specifies, “for the avoidance of doubt,” that Assumed Liabilities include “any and all
. . . liabilities . . . and obligations of any kind” specifically “relating to” “any Law” or “Order”
“relating to . . . the protection of the environment,” or “the use, storage . . . release or disposal of,

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any Hazardous Substance . . . .” 2 (Agrmt. at Annex I-5, I-8-9, I-12.) The language cannot be
construed as limiting “Assumed Liabilities” only to liabilities that directly arose from the
production of coating resins. It comfortably includes historical liabilities, such as those subject
to remediation in Kalamazoo.
This construction of the Agreement is further supported by the location-specific
carve-out for facilities in Belmont, West Virginia, Coventry, Rhode Island and Stamford,
Connecticut. (Agrmt. at Annex I-5.) The definition provides for the transfer of liabilities
“including, for the avoidance of doubt, all such Liabilities to the extent relating to Environmental
Laws with respect to any facilities located in the United States (but excluding, for the avoidance
of doubt, all Liabilities to the extent relating to Environmental Laws with respect to facilities
located in Belmont, West Virginia, Coventry, Rhode Island and Stamford, Connecticut) . . . .”
(Agrmt. at Annex I-5.) The use of the word “such” does not perform a limiting function, but
rather, “for the avoidance of doubts,” expressly transfers the Business’s environmental liabilities
generally, with location-specific exceptions for the Belmont, Coventry and Stamford sites.
Environmental liabilities for these three sites are separately identified in the Agreement’s
definition of “Excluded Liabilities,” but historical environmental liabilities are not. (Agrmt. at
Annex I-9.)
This construction of “Assumed Liabilities” is also consistent with section 2.7 of
the Agreement, which states that the financial statements “fairly represent: in all material
respects . . . the Assumed Liabilities . . . .” (Agrmt. § 2.7.) As set forth in the financial

The term “Hazardous Substance” “means any substance that is listed, defined, designated or classified as
hazardous, toxic or otherwise harmful under any Environmental Law, including petroleum products and byproducts,
asbestos-containing material and polychlorinated biphenyls.” (Agrmt. at Annex I-11.) The parties have not
discussed this definition, but, again, this is a broad definition, one covering “any substance” deemed harmful “under
any Environmental Law.

2

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statements, the Business’s “most significant environmental liabilities relate to remediation and
regulatory closure obligations at manufacturing sites now or formerly owned by us. . . . As of
June 30, 2012 and December 31, 2011, the aggregate environmental related accruals were $35.1
and $32.9, respectively, of which $3.1 is included in accrual expenses with the remainder
included in other noncurrent liabilities.” (Harkness Dec. Ex. 3 at 14.) In agreeing that the
financial statements “fairly represent[ed]” the Assumed Liabilities “in all material respects,”
Allnex and Cytec did not differentiate the aggregate environmental accruals from some smaller
subset thereof.
Lastly, Allnex argues that this Court concluded at the motion to dismiss stage that
Allnex is responsible only for those liabilities directly attributable to the coating resins business.
See Cytec Indus., Inc. v. Allnex (Luxembourg) & Cy S.C.A., 2015 WL 3762592, at *13-14
(S.D.N.Y. May 15, 2015). But the Court’s decision denying Allnex’s motion to dismiss did not
purport to interpret the definition of “Assumed Liabilities,” and merely concluded that Cytec had
plausibly alleged that some portion of the disputed liabilities were attributable to the Business.
See id. at * 14 (“It appears that Allnex is correct that the Agreement limits its responsibility to
liabilities ‘related to, or used or held in connection with, the Business . . . .’ (Agrmt. Annex I–5.)
However, the Court is unable to determine, at the Rule 12(b)(6) stage, which portions of the
disputed liabilities at the Kalamazoo site are so related.”). Allnex’s assertion that this Court had
previously decided this issue in its favor is meritless.
CONCLUSION.
Cytec’s motion for summary judgment is GRANTED and Allnex’s motion for
summary judgment is DENIED. The Clerk is directed to terminate those motions. (Docket # 98,

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102.) The Clerk is directed to terminate the parties’ motions in limine as moot. (Docket # 95,
106, 109.)
Within fourteen days, Cytec shall submit to the Court a proposed judgment on
notice.
SO ORDERED.

Dated: New York, New York
June 19, 2017

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