_____________ Nos. 95-1309 & 95-1338

_____________ Gopher Oil Co., a Minnesota * corporation, * * Plaintiff-Appellant/ * Cross Appellee, * Appeals from the United States * District Court for the v. * District of Minnesota. * Roger E. Bunker, Personal * Representative of the Estate * of Germaine S. Romness, * * Defendant-Appellee/ * Cross Appellant. *

_____________ Submitted: November 13, 1995 Filed: May 29, 1996

_____________ Before HANSEN, JOHN R. GIBSON, and MURPHY, Circuit Judges.

_____________ HANSEN, Circuit Judge.
Gopher Oil brought this declaratory judgment action seeking a declaration that the Germaine Romness estate (the estate) is liable for a rel ease of hazardous substances to the extent of Gopher Oil's liabilit y under the Comprehensive Environmental Response, Compensation, and Liabilit y Act of 1980 (CERCLA), as amended, 42 U.S.C. §§ 9601-9675; the Minnesot a Enviro nmental Response and Liability Act (MERLA), Minn. Stat. Ann. § § 115B.0 1-115B.24 (West 1987 & Supp. 1994-95); and Minnesota common la w principles of tort an d contract. The district court granted the estate's motion to dismiss for lack of subject matter jur isdiction, concluding that

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the claims were not yet ripe. We affirm in part and reverse and remand in part.

I. BACKGROUND

The United States Environmental Protection Agency (EPA) determine d that a release of hazardous substances occurred at a dump site in Brooklyn Park, Minnesota, and expended response costs of over $1,373,000 to clean up the area. As authorized by CERCLA, in January 1994, the EPA demanded reimburs ement for the entire cost of the cleanup from each of te n potentially responsible parties (PRPs), a list including Gopher Oil but no t the defendant in this suit. A representative of the EPA informed Gopher Oil that the EPA anticipated referring this matter to the Department o f Justice and expected a CERCLA suit to be brought during the first quarter of 1995.
Gopher Oil brought this declaratory judgment suit in September 1994, seekin g a declaration that the now-deceased owner of a predecesso r corpor ation actually caused the release and that the deceased owner' s estate is liable for the sum demanded by the EPA. Specifically, Gophe r Oil's complaint asser ts that when the release occurred in the 1960's, the Brooklyn Park dump site was owned and operated by a corporation known as Gopher State Oil, whose sole shareholders were Charles and Germain e Romn ess. In 1973, Bame Oil acquired Gopher State from the Romnesse s through a stock acquisition. As part of the sto ck transfer, the Romnesses agreed to indemnify Bame with respect to any of Gopher State's liabilities existi ng at closing. Shortly thereafter, Bame Oil distributed Gophe r State's assets to itself, assuming all liabilities, known or unknown. Bam e Oil then changed its own name to Gopher Oil.

Gopher St ate's owners, the Romnesses, have both died. The Germaine Romness estate remains open, however, pending this litigation which follow s the litigation of a third-party complaint

### Gopher Oil sought here to avoid the probate limitations 1 

### problems encountered in the Stillwater dump site litigation by filing a timely probate claim within four months of receiving the EPA's demand letter, in accordance with Minn. Stat. § 524.3-803, and filing this declaratory judgment action within 60 days of the estate's disallowance of the claim, in accordance with Minn. Stat. § 524.3-806(a). 3 by Gopher Oil against the estate in state court. The state cour t litigation involved a dump site near Stillwater, Minnesota, which was owne d by th ird parties who alleged that Gopher State Oil deposited waste oi l sludge on the site. The third-party owners and operators of the dumpsite obtained a ruling that Gopher Oil is liable as asuccessor corporation for the acts of Gopher State. See State v. Gopher Oil Co. , Nos. C1-95-738 & C2- 95-733, 1995 WL 687688 (Minn. Ct. App. Nov. 21, 1995) (unpublished)

. In the same litigation, Gopher Oil brought a thi rd-party complaint against the Romness estate, which the state district court dismissed due t o limitation periods se t forth in the probate code. The Minnesota Court of Appeals affirmed the dismissal of the third-part y complaint on a different ground, concluding th at the Rommnesses' agreement to indemnify Gopher Oil did not contemplate l iability under later-enacted environmental statutes, thus precluding Gopher Oil's indemnification claim. See State v. Gopher Oil Co. , No. C8-94-225, 1994 WL 328631 (Minn. Ct. App. July 12, 1994 ) (unpublished). The Minnesota Supreme Court denied further review.

After the state trial court had dismissed Gopher Oil's third-part y complaint in the Stillwater dump site litigation on the basis of probate limitations, Gopher Oil brought the present federal declaratory judgment action against the estate relating to the Brooklyn Park dump site. Count 1

one of this suit alleges that the estate is a responsible party unde r CERCLA to the extent of Gopher Oil's CERCLA liability, and count two sets forth the same claim under MERLA. Count three seeks a declaration that th e estate has primary to rt liability to the extent of Gopher Oil's liability to

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the EPA or any other party because the Romnesses were the active owners at the time of the release. Count four alleges that

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Gopher Oil is entitled to indemnity based upon the indemnity agreemen t executed b y the Romnesses in the 1970's when Bame Oil acquired Gophe r State. Thus, this de claratory judgment action involves the same parties, the s ame indemnification agreement, and most of the same claims as th e third-party complaint in the Stillwater dump site litigation.

The dist rict court granted the estate's motion to dismiss all fou r counts for lack of subject matter jurisdiction, concluding that the claims were not ripe because there was no actual controversy. Specifically, the court stated as follows:

It is apparently clear that the plaintiff did receive th e letter almost a full yea r ago which warned it that it would be a potentially liable par ty. The plaintiff then commenced this suit in expectation that it would be named a defend ant based on appr oximatelyten months later a telephone call warning i t again. In order to bring its claims in this court, however , the plaintiff must allege an actual controversy.
The me re possibility of being named a defendant a s re sponsible party does not constitute the actual controvers y which is required. This Court recognizes that the EPA, and the United States on its behalf, for any number of reasons, ma y well and yet decline to sue Gopher Oil, or they may select yet ano ther among the ten, or others beyond those listed a s potential defendants. They may also defer simply on the fact that this case is too small or any one of a number of reasons, which they seem to be able to come up with at a mom ent's notice and somehow the cases do not get sued. In the event they are to be sued, those are another issue, but this Court at thi s time cannot find the requisite immediacy, and in this Court's viewthere is little hardship to the plaintiff in withholding the Court's consideration.
(Tr. on Def.'s Mot. to Dismiss, Appellant's Addend. at 26-27.)

Durin g the hearing, the district court also alternatively grante d partial summary judgm ent to the estate on the ground that the doctrine of collateral estoppel bars the MERLA claim, the tort

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claim, and the indemnity claim due to the prior state court litigation

. However, the district court explicitly declined to rule alternatively on the C ERCLA claim, which was not litigated in the Minnesota state cour t suit.

Gop her Oil appeals the dismissal of its complaint for lack o f jurisdiction. The estate cross appeals, arguing that the complaint also should have been dismissed because Gopher Oil's assumption of Gophe r State 's liabilities bars the claims and the complaint fails to state a
cause of action under CERCLA, MERLA, or principles of contractua l indemnity. At oral argument before this court, the parties disclosed that Gophe r Oil had entered into a tolling agreement with the Department o f Justic e to facilitate discussions and possible settlement of th e govern ment's demand for reimbursement. The agreement states that "th e United States may terminate settlement negotiations and commence suit at anytime." (Tolling Agreement at 3.) More recently, we received notice that on March 25, 1996, the government filed a CERCLA cost-recovery suit against Gopher Oil and four other potentially re sponsible parties, but not including the Romness estate.

II. DISCUSSION

We revie w de novo a dismissal for lack of subject matte r jurisdiction. Christopher Lake Dev. Co. v. St. Louis County , 35 F.3d 1269 , 1273 (8th Cir. 1994). The Declaratory Judgment Act provides that when an "actual controversy" exists, any federal court may declare the rights and other legal relations of any interested party. 28 U.S.C. § 2201. Thus, to seek a declaratory judgment, the plaintiff's claim must be ripe. The doctrine of ripeness is basically a matter of timing, which requires (1) "a sufficiently concrete case or controversy wit hin the meaning of Article III of the Constitution," and also, (2) "prudential considerations mus t jus tifythe present exercise of judicial power." Christopher Lake Dev

. Co. , 35 F.3d at 1272-73. In other

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words, to satisfy the actual controversy requirement of the Declarator y Judgme nt Act, there must exist "`a substantial controversy between th e parties having adverse legal interests, of sufficient immediacy and realit y to warrant the issuance of a declaratory judgment.'" Caldwell v. Gurley Refining Co. , 755 F.2d 645, 649 (8th Cir. 1985) (quoting Maryland Cas. Co.

v. Pac ific Coal & Oil Co. , 312 U.S. 270, 273 (1941)) (other citatio n omitted). "A live dispute must exist between the parties at the time of the court's hearing." Id. at 650.

The district court concluded that th e government's threat of suit in this ca se was too speculative to create an actual controversy betwee n Gopher Oil and the estate and that withholding a decision at this tim e would result in little hardship to Gopher Oil. We agree with the district court's assessment that the MERLA and the tort l iability claims (counts II
an d III) are not ripe for declaratory judgment because no actua l controversy exists. No facts indicate an immedi ate threat of either MERLA or tort liability. The district court properly dismissed these claims for lack of subject matter jurisdiction.
Given the latest developments in this case, however, we disagre e with the district court's assessment that the CERCLA and contractual indemnity claims (counts I and IV) are not ripe. The complaint seeks a declaration that the prior owners caused the release of hazardous substances and are liable to the EPA to the extent of Gopher Oil's existing liability. The estate argued that th ere was no actual controversy because Gopher Oil had not itself incurred r esponse costs and the government had not yet brought
a cos t-recovery action against Gopher Oil. This argument is no longe r valid.
The terms of CERCLA governing the ti ming of review prohibit judicial review of challenges to remedial action of the E PA until after the EPA has filed an action to recover response costs. 42

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U.S.C. § 9613(h)(1). See also Voluntary Purchasing Groups, Inc. v. Reilly , 889 F .2d 1380, 1389 (5th Cir. 1989) ("until the government initiates a cost-recovery action, a potential responsible pa rty cannot obtain judicial review of the agency action") (internal quotations omitted). Because the EPA now has initiated a cost-recovery action pur suant to 42 U.S.C. § 9607, this suit to determine liability between Gopher Oil and the estate is ripe for adjudication. While ripe, we leave to the d istrict court to determine whether CERCLA's obje ctive of avoiding piecemeal litigation would be best served if the subject matter of this declaratory judgment action were in
some way or manner determined in conjunction with the government's costrecovery action. See Voluntary Purchasing Groups , 889 F.2d at 1390 (notin g that one of CERCLA's objectives is to avoid piecemeal litigation).
Accordingly, while the district court may not have had subject matter jurisdictionat the time of the hearing, the present posture of the case presents a ripe CERCL A claim. We recognize that significant problems may exist concerning the sufficiency of the CERCLA claim, as suggested in the estate's cross appeal. Nevertheless, given our conclusion that this claim is now rip e, we express no opinion on the issues raised in the cros s appeal, leaving them instead to be considered inthe first instance by the district court with a view toward avoiding piecemeal litigation.

We ne xt consider the indemnity claim. Gopher Oil seeks indemnit y from the Romness estate on the basis of the 1973 contractual indemnit y agreement that the Ro mnesses signed when Bame Oil purchased Gopher State. "[T]he question of CERCLA liability and the interpretation of an y indemn ification agreement among the parties liable for the clean-up ar e inextricablyrelated." GNB Battery Tech., Inc., v. Gould, Inc. , 65 F.3d 615, 621 ( 7th Cir. 1995). We conclude that the contractual indemnit y claim, like the CERCL A claim, is ripe. As a result, we must consider the district

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court's alternative grant of summary judgment on the indemnity claim.

The district court held that the doctrine of collateral estoppe l prohibits the relitig ation of the indemnity claim because the state court judgment determined the claim adversely to Gopher Oil. Gopher Oil contend s that collateral estoppel does not apply because the state court considered contractual indemnity only in the context of MERLA liability, not CERCLA liability.

We rev iew a grant of summary judgment de novo, applying the sam e standar d as the district court. See Shannon v. Ford Motor Co. , 72 F.3 d 678, 681 (8th Cir. 19 96). Summary judgment is appropriate where there is no genuine dispute of material fact and the mova nt is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). See also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). We accor d full faith and credit to state court judgments, giving them the same preclusive effect in federal court as they would have in state court. See 28 U.S.C. § 1738; see also Teleconnect Co. v. Ensrud , 55 F.3d 357, 361 (8th Cir. 1995). Accordingly, we look to the law of Minnesota to determine the preclusive effect of the state court third-party complaint.

In Minnesota, collateral estoppel, or issue preclusion, "applie s where (1) the issue was identical to one in a prior adjudication; (2) ther e was a final judgment on the merits; (3) the estopped party was a party or in privit y with a party to the prior adjudication; and (4) the estoppe d party was given a full and fair opportunity to b e heard on the adjudicated iss ue." Johnson v. Consolidated Freightways, Inc. , 420 N.W.2d 608, 61 3 (Minn. 1988). Collateral estoppel is a flexible doctrine in Minnesot a which allows consideration of "whether its application would work a n injustice on the party against whom estoppel is urged." Id. at 613-14.

### 10 The Minne sota Court of Appeals addressed the merits of Gopher Oil's claim that it is entitled to indemnity from the estate for liability under environmental laws. The court of appeals affirm ed the state trial court's dismissal of Gopher Oil's indemnity claim, holding as follows:

The liabilities at issue in this case arise under e nvironmental laws enacted ten years a fter the agreement was executed. They wer e neither contemplated by the parties nor covered by th e agreement. The qualifying phrase "existing at clos ing" clearly limits Gopher State's liability.
State v. Gopher Oil Co. , No. C8-94-225, slip op. at 3 (Minn. Ct. App. July 12, 1994) (App. A-128). Gopher Oil correctly asserts that the Minnesota Court of Appeals was referring to Minnesota's environmental laws (MERLA), not CERCLA, when it determined that the environm ental liabilities at issue
were n ot contemplated by the indemnity agreement. Although CERCL A liability was not rai sed in the state court proceedings, we conclude that the state court's interpretation of the indemnity agreement applies with equal force to CERCLA liability. The court of appeals specificall y determ ined that the language of the indemnity agreement limits Gophe r State' s (and thus the estate's) liability by the phrase, liabilitie s "exis ting at closing." The state court held that this limiting phras e precludes liability u nder later enacted environmental laws such as MERLA, enacte d ten years after the agreement. Likewise, this determinatio n necessarily dictates that the phrase, "existing at closing," also preclude s liability under the environmental laws of CERCLA, enacted seven years afte r the agreement.

The inte nt of the indemnity agreement with regard to later enacte d environ mental laws is the identical issue that was fully litigated b y Gophe r Oil in the state court third-party complaint, and the issue wa s fina llydetermined on its merits adversely to Gopher Oil. Thus, th e district court correctly granted summary

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judgment on the ground that collateral estoppel bars relitigation of the indemnity issue.

III. CONCLUSION
Accordingly, we affirm the district court's dismissal of the MERL A and tort claims for lack of jurisdiction, and we affirm the distric t court's grant of summary judgment on the indemnity agreement claim. W e
reverse the dismissal of the CERCLA claim in light of the recently filed gove rnment cost-recovery suit and remand it for further consideration , without expressing any views on the merits or sufficiency of the CERCL A claim.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.