1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-17-1997

Al Tech Spec Steel v. Algheny Intl Credit

Precedential or Non-Precedential:

Docket 95-3415

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1997

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1997 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Al Tech Spec Steel v. Algheny Intl Credit" (1997). 1997 Decisions. Paper 16.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/16
1

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

____________ 

No. 95-3415 

____________ 

AL TECH SPECIALTY STEEL CORPORATION, 

Appellant 

v. 

ALLEGHENY INTERNATIONAL CREDIT CORPORATION; 

SUNBEAM CORPORATION; SUNBEAM HOLDINGS, INC., 

ALMET/LAWNLITE, INC; CHEMETRON CORPORATION; 

INTERGRATED SPECIALTIES, INC.; 

ALLEGHENY INTERNATIONAL (USA), INC.; 

AL INDUSTRIAL PRODUCTS, INC.; 

ALLEGHENY INTERNATIONAL EXERCISE, CO.; 

WOODSHAFT, INC.; CHEMETRON INVESTMENTS, INC., 

INFOWSITCH, INC.; ELISKIM, INC. 

____________________ 

ON APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF PENNSYLVANIA 

(D.C. Civil No. 93-01445) 

____________________ 

Argued: May 6, 1996 

Before: GREENBERG, ALITO, and MCKEE, Circuit Judges: 

(Opinion Filed: January 17, 1997 ) 

____________________ 

 

 David P. Flynn, Esq. 

 Kevin M. Hogan, Esq. (Argued) 

 Phillips, Lytle, Hitchcock, 

 Blaine & Huber 

 3400 Marine Midland Center 

 Buffalo, New York 14203 

 Attorneys for Appellant

 William L. Gardner, Esq. 

 Anthony C. Roth, Esq. (Argued) 

 Morgan, Lewis & Bockius LLP 

 1800 M Street, N.W. 

 Washington, D.C. 20036 

 Attorneys for Appellee

 
2

____________________ 

OPINION OF THE COURT 

____________________ 

ALITO, Circuit Judge: 

 This is an appeal from a district court order affirming 

the bankruptcy court's disallowance of AL Tech Specialty Steel 

Corporation's ("AL Tech") claim against Allegheny International, 

Inc. ("Allegheny International") in Allegheny International's 

Chapter 11 proceeding. AL Tech's claim was based on certain 

environmental liabilities, under the federal Comprehensive 

Environmental Response, Compensation, and Liability Act 

("CERCLA") and the New York Oil Spill Act, at two steel plants 

that it purchased from Allegheny International's corporate 

predecessor in 1976. The bankruptcy court held that AL Tech's 

claim was not barred by either § 502(c) or § 502(e)(1)(B) of the 

Bankruptcy Code, 11 U.S.C. §§ 502(c),(e)(1)(B), and it estimated 

the total remediation cost at the two plants for which Allegheny 

International might share responsibility at $12,792,000. The 

bankruptcy court also ruled that Allegheny International's 

equitable share of AL Tech's federal liabilities was zero, 

primarily because of a dollar-for-dollar discount taken off the 

purchase price by the current owner of AL Tech's stock in 1989. 

It further held that the New York statute created a private right 

of action but that any action that AL Tech could bring against 

Allegheny International under the New York statute was time-
3

barred. The district court affirmed the bankruptcy court's order 

in all respects. 

 We conclude that there was insufficient evidence before 

the bankruptcy court to support the finding of a dollar-fordollar discount in the 1989 purchase of AL Tech by its current 

corporate parent and that any discount that may have been given 

accrued to the benefit of AL Tech's parent and not to AL Tech. 

We therefore reverse the order of the district court as it 

relates to Allegheny International's equitable share of AL Tech's 

federal environmental liabilities. We also conclude that the 

bankruptcy court applied the wrong limitations period in 

assessing the portion of AL Tech's claim that relied on the New 

York statute. However, in light of a 1995 decision by the New 

York Court of Appeals on the availability of a private right of 

action under the New York statute, we remand that issue for 

application of the holding of that decision to the present case. 

 We affirm the order of the district court as it relates to §§ 

502(c) and 502(e)(1)(B) and the bankruptcy court's estimation of 

remediation costs to be allocated between AL Tech and Allegheny 

International. 

I. 

 The factual and procedural history of this case may be 

summarized as follows. AL Tech bought two steel plants in 

Dunkirk and Watervliet, New York, from Allegheny International's 

predecessor, Allegheny Ludlum Industries ("Allegheny Ludlum"), in 

1976. (Allegheny Ludlum had owned and operated the plants since 

1937.) Since then, AL Tech's stock has been sold three times: in 
4

1981, to GATX Corporation; in 1986, to Rio Algom, Inc. and Rio 

Algom Limited (collectively "Rio Algom"); and most recently (in 

1989) to Sammi Steel Company, Limited ("Sammi"). Environmental 

assessments of the two plants performed in the mid- and late 

1980s revealed numerous areas of contamination with oil, 

polychlorinated biphenyls ("PCBs"), and other hazardous 

substances that would require costly remediation in order to come 

into compliance with applicable environmental statutes and 

regulations. 

 After Allegheny International filed a bankruptcy 

petition in 1988, AL Tech filed a timely proof of claim, alleging 

that Allegheny International was liable for a share of the 

incurred, contingent, and unliquidated response costs required to 

remediate the contamination at the two plants. The bankruptcy 

court initially denied the claim, but its decision was reversed 

by the district court, In re Allegheny Int'l, Inc., 126 B.R. 919 

(W.D. Pa. 1991), and a panel of this court affirmed by judgment 

order, Allegheny Int'l, Inc. v. AL Tech Specialty Steel Corp., 

950 F.2d 721 (3d Cir. 1991) (table). The case was remanded to 

the bankruptcy court for a trial to allow for estimation and 

allocation of AL Tech's claim. 

 On the basis of evidence presented at that 1992 trial, 

the bankruptcy court (1) estimated the allowable liabilities at 

$12,792,000, (2) found that Sammi had received a $22 million 

discount (3) held, primarily for that reason, that Allegheny 

International's equitable share of the cleanup costs was zero, 

and (4) held that AL Tech's Oil Spill Act claim was time-barred 
5

by the applicable limitations period. In re Allegheny Int'l, 

Inc., 158 B.R. 361 (Bankr. W.D. Pa. 1993). The district court 

affirmed the bankruptcy court's order in its entirety. AL Tech 

Specialty Steel Corp. v. Allegheny Int'l, Inc., No. 93-1445 (W.D. 

Pa. June 27, 1995). This appeal followed. 

 On appeal, AL Tech argues that there was no discount; 

that if there was one, it was received by Sammi, not AL Tech; 

that the bankruptcy court abused its discretion in focusing on 

only one equitable factor when it concluded that Allegheny 

International's equitable share was zero; that the bankruptcy 

court erred in finding that AL Tech failed to prove that 

Allegheny International was responsible for any of the PCB 

contamination at one of the contaminated sites, Willowbrook Pond; 

that the bankruptcy court underestimated response costs at 

Willowbrook Pond (at $1.3 million, versus AL Tech's estimate of 

approximately $14 million); and that the bankruptcy court applied 

the wrong limitations period and used the wrong triggering event 

in holding AL Tech's Oil Spill Act claim to be time-barred. 

 Allegheny International disagrees on every point and 

raises two independent grounds for affirming the district court: 

first, that AL Tech's claim is barred by Bankruptcy Code § 

502(e)(1)(B) because it is a contingent co-liability to the 

government, rather than a direct claim against Allegheny 

International; and second, that it should be disallowed pursuant 

to Bankruptcy Code § 502(c) because AL Tech has not taken 

sufficient steps to remove the contingencies (i.e., has not done 

enough to assess and clean up the contamination since 1976). We 
6

address Allegheny International's arguments first and then turn 

to AL Tech's arguments. 

II. 

 Section 502(e)(1)(B) of the Bankruptcy Code provides: 

(e)(1) . . . [T]he court shall disallow any claim for 

reimbursement or contribution of an entity 

that is liable with the debtor on or has 

secured, the claim of a creditor, to the 

extent that -- 

. . . 

(B) such claim for reimbursement or contribution is 

contingent as of the time of allowance or 

disallowance of such claim for reimbursement 

or contribution. 

11 U.S.C. §§ 502(e)(1), (e)(1)(B). 

 Allegheny International argues that § 502(e)(1)(B) bars 

AL Tech's claim. The bankruptcy court originally agreed with 

Allegheny International, but in its 1991 decision, the district 

court held that this section barred only contingent claims on 

which the claimant and the debtor are co-liable to a third party 

and that to the extent that AL Tech's claim against Allegheny 

International was based on CERCLA, 42 U.S.C. §§ 9601 et seq.,

1 it 

was not excluded because it was a direct claim against Allegheny 

International. 126 B.R. at 923-24. This court affirmed the 

district court's order by judgment order. 950 F.2d 721 (3d Cir. 

1991)(table). On remand, the bankruptcy court considered itself 

bound by the district court's 1991 decision under the "law of the 

 

1. The parties did not brief the applicability of § 502(e)(1)(B) 

to AL Tech's Oil Spill Act claim in the earlier appeal to the 

district court. In the present appeal, Allegheny International 

has again focused its arguments on the applicability of § 

502(e)(1)(B) to CERCLA claims, leaving the Oil Spill Act claim 

virtually unaddressed. We thus read Allegheny International's 

argument as limited to AL Tech's CERCLA claim. 
7

case" doctrine, and it thus declined Allegheny International's 

invitation to revisit the issue in light of two 1992 bankruptcy 

court decisions, In re Cottonwood Canyon Land Co., 146 B.R. 992 

(Bankr. D. Colo. 1992), and In re Eagle-Picher Indus., Inc., 144 

B.R. 765 (Bankr. S.D. Ohio 1992), aff'd, 164 B.R. 265 (S.D. Ohio 

1994). 158 B.R. at 367. 

 In this appeal, Allegheny International urges us to 

reexamine the question whether AL Tech's claim is barred by § 

502(e)(1)(B), but under the law of the case doctrine, we believe 

that it would be inappropriate for us to do so. Under the law of 

the case doctrine, an appellate court should generally decline to 

reconsider a question that was decided in a prior appeal. See 18 

Charles A. Wright, et al., Federal Practice and Procedure § 4478, 

at 788 (1981 & 1996 Supp.). "The doctrine is not a 

jurisdictional limitation; rather, it `merely expresses the 

practice of courts generally to refuse to reopen what has been 

decided.'" Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 

1131, 1134 (D.C. Cir. 1994) (quoting Messenger v. Anderson, 225 

U.S. 436, 444 (1912)). Accordingly, it is appropriate for an 

appellate court to reconsider a decision made in an earlier 

appeal in exceptional circumstances, such as where there has been 

an intervening change in the law, where new evidence has become 

available, or where reconsideration is necessary to prevent clear 

error or a manifest injustice. 18 Charles A. Wright, et al., 

supra, § 4478, at 790. 

 In this case, the panel that heard the prior appeal 

necessarily decided that AL Tech's claim was not barred by § 
8

502(e)(1)(B). The law of the case doctrine applies to this 

decision even though it was rendered by judgment order because 

that doctrine "applies both to issues expressly decided by a 

court in prior rulings and to issues decided by necessary 

implication." Bolden v. SEPTA, 21 F.3d 29, 31 (3d Cir. 1994); 

see also United States v. Local 560 (I.B.T.), 974 F.2d 315, 329-

30 (3d Cir. 1992) (applying doctrine to judgment order). 

 Moreover, we do not believe that there are exceptional 

circumstances here that make it appropriate to reconsider the 

prior panel's decision. While Allegheny International points to 

two intervening bankruptcy court decisions that disagree with the 

district court's decision in this case, those decisions do not 

represent the type of authority necessary to invoke the exception 

that applies when there has been an intervening change in the 

law. Nor do those decisions convince us that a refusal to 

reconsider the issue would amount to clear error or a manifest 

injustice. 

 We likewise reject Allegheny International's argument 

that this court's opinion in In re Penn Cent. Transp. Co., 944 

F.2d 164 (3d Cir. 1991), cert. denied, 503 U.S. 906 (1992), 

represents an intervening change in the law sufficient to relax 

the usual strictures of the law of the case doctrine. There are 

two problems with Allegheny International's argument. First, 

while the decision in Penn Central came after the district 

court's 1991 decision, it was handed down more than two months 

before the filing of judgment order by which this court affirmed 

the district court's order. Second, the Penn Central decision 
9

did not directly address the issue at hand but rather concerned 

the government's ability to assert CERCLA claims against a 

reorganized debtor where the consummation order, which protected 

the reorganized debtor against lawsuits based on the debtor's 

activities, predated the enactment of CERCLA. Accordingly, we 

believe that it is inappropriate in this case to reconsider the 

merits of Allegheny International's § 502(e)(1)(B) argument. 

 Allegheny International also argues that § 502(c) of 

the Bankruptcy Code precludes estimation of AL Tech's claim 

because AL Tech has not taken sufficient steps to remove the 

contingencies in its claim, i.e., has not done enough to assess 

and remediate the various contamination problems at its plants. 

We agree with the district court that this argument must fail. 

The cases that Allegheny International cites do not support its 

position. All three cases, Kessler v. Jefferson Storage Corp., 

125 F.2d 108 (6th Cir. 1941), In re Hot Springs Broadcasting, 

Inc., 210 F. Supp. 533 (W.D. Ark. 1962), and In re KDI Corp., 119 

B.R. 594 (Bankr. S.D. Ohio 1990), concern § 57(d) of the 

Bankruptcy Act of 1898, which provided that unliquidated claims 

were not to be allowed where liquidation would unduly delay the 

administration of the estate. Thus, a claimant had the burden of 

liquidating its claim as a condition precedent to its allowance. 

 By contrast, § 502(c) of the Bankruptcy Code specifically 

provides for estimation, for purposes of allowance, of such 

unliquidated claims. The three cases are also factually 

distinguishable from the present case; for instance, the claimant 

in KDI Corp. was denied permission to amend a claim filed 12 
10

years earlier, after it had waited eight years before even 

seeking permission to amend. As the bankruptcy court noted, the 

law does not require that all contingencies be removed, and AL 

Tech has taken some steps to remove the contingencies in its 

claim. 

III. 

 AL Tech's principal arguments on appeal concern the 

bankruptcy court's determination of Allegheny International's 

equitable share of AL Tech's allowable CERCLA liabilities. After 

estimating AL Tech's response costs to total $12,792,000, the 

bankruptcy court proceeded to determine Allegheny International's 

equitable share of those costs pursuant to § 113(f) of CERCLA, 

which authorizes a court to allocate response costs among 

responsible parties "using such equitable factors as [it] 

determines are appropriate." 42 U.S.C. § 9613(f). The court 

considered a number of factors, but its ultimate conclusion -- 

that Allegheny International's equitable share was zero -- was 

based on its findings that Sammi was fully aware of AL Tech's 

future environmental liabilities and that, as a result, Sammi 

"discounted the purchase price dollar for dollar until the total 

purchase price was $1.00" and thus "held no real expectation that 

[Allegheny International] would pay for any portion of the 

remediation costs." 158 B.R. at 383. AL Tech argues that there 

is no record evidence, let alone sufficient evidence, to support 

such findings and that, even if there were such a discount, the 

beneficiary of that discount was not AL Tech, the claimant in 

this case, but Sammi. 
11

 With respect to this issue, the following facts are 

undisputed or at least beyond dispute under a clearly erroneous 

standard. Sammi was aware of $22 million in environmental 

liabilities on the part of AL Tech when it purchased AL Tech's 

stock in 1989. An agreement among Rio Algom, Sammi, and AL Tech 

provided for an adjustment to the purchase price in the event of 

changes in AL Tech's net worth. At the time of the sale, AL Tech 

and Sammi "accrued" $22 million in expenses to cover future 

environmental liabilities; these were charged against sales 

during the first seven months of 1989. This substantially 

reduced the net worth of AL Tech,2 and after litigation and 

arbitration over the propriety of this accounting procedure, Rio 

Algom was required to pay Sammi in excess of $5 million to assume 

ownership of AL Tech.3 Of this amount, $2.4 million was awarded 

to Sammi to account for the increased environmental liabilities. 

 AL Tech argues that there was insufficient evidence to 

show that Sammi reduced the sale price dollar for dollar to 

account for the $22 million in liabilities of which it was aware 

at the time of the transaction. Allegheny International relies 

on the testimony of two officers of AL Tech: Ronald Hansen, the 

chief financial officer, and James Mintun, the chief executive 

officer. Both Hansen and Mintun testified that the environmental 

 

2. AL Tech points out that the net worth of its stock on the 

date of purchase was approximately negative $16 million. A. 

1515. Thus, it argues, even considering the subsequent 

adjustment in the purchase price, Sammi overpaid for AL Tech's 

stock by some $11 million. 

3. The parties cite a figure of $5.3 million, while the 

bankruptcy court quoted the figure of $6.5 million. 
12

liabilities reduced AL Tech's value and reduced the purchase 

price, A. 301, 303, 325-27, and Hansen testified that these 

liabilities brought the purchase price down "[a]pproximately 

dollar for dollar." A. 327. However, Hansen also testified that 

he had "absolutely no idea whatsoever how [the purchase price] 

was arrived at," A. 335, and had not come to know the reason for 

the one dollar purchase price, A. 322, and Mintun likewise 

testified that he had no knowledge of how the price was arrived 

at. A. 398. Mintun also testified that neither he nor Hansen 

participated in any of the discussions concerning the price to be 

paid for AL Tech, A. 398-99, and Hansen testified that he had no 

involvement in determining what the purchase price would be. A. 

323; see also A. 335 (Hansen testifying that he "[did] not know 

specifically what Sammi paid in fact for AL Tech or what was 

going through their mind and how they arrived at that"). 

 Also of some relevance is the fact that the agreement 

for the sale of AL Tech to Sammi makes reference to the proof of 

claim that AL tech had filed against Allegheny International. A. 

1415.4 Allegheny International points out that this claim was 

 

4. In a reference to possible recoupment from GATX, the notes 

accompanying AL Tech's financial statements also refer to its 

management's belief that: 

part of [the $22 million] environmental liability may 

be recovered through negotiations or 

litigation with certain of the Company's 

previous owners. Because of the uncertainty, 

no recognition has been given to a recovery 

of these liabilities in the accompanying 

financial statements. 

A. 1582. 
13

not identified as an asset on AL Tech's balance sheets. In 

addition, the schedule of the sale agreement in which it appears 

seems designed to disclose pending or threatened litigation that 

might result in judgments against AL Tech. See A. 1331. Still, 

on the basis of the sale agreement, it is clear that Sammi was 

aware of the existence of AL Tech's claim against Allegheny 

International. 

 A reduction in the purchase price of a facility is 

certainly a valid factor to be considered in allocating CERCLA 

response costs among responsible parties, see, e.g., Smith Land & 

Improvement Corp. v. Celotex Corp., 851 F.2d 86, 90 (3d Cir. 

1988), cert. denied, 488 U.S. 1029 (1989), and the amount of the 

discount is, of course, important, id. On the record before the 

bankruptcy court, however, we do not think that there was 

sufficient evidence to support a finding that the discount 

received by Sammi equalled $22 million. The testimony of Hansen 

and Mintun reflects, at best, informed speculation as to the 

existence and magnitude of any discount in the price paid by 

Sammi for AL Tech's stock. 

 An even more fundamental issue raised by AL Tech is 

whether any discount received by Sammi in its purchase of AL Tech 

from Rio Algom should be reflected in a dispute that involves 

neither Sammi nor Rio Algom, but rather AL Tech and Allegheny 

International. AL Tech point out that Smith Land and all of the 

other cases cited by Allegheny International and the bankruptcy 

court -- Amoco Oil Co. v. Borden, Inc., 889 F.2d 664 (5th Cir. 

1989); BTR Dunlop, Inc. v. Rockwell Int'l Corp., 1992 WL 159203 
14

(N.D. Ill. June 29, 1992); South Fla. Water Management Dist. v. 

Montalvo, 1989 WL 260215 (S.D. Fla. Feb. 15, 1989); and Southland 

Corp. v. Ashland Oil, Inc., 696 F. Supp. 994 (D.N.J.), modified 

on reconsideration, 1988 WL 125855 (D.N.J. Nov. 23, 1988) -- 

involved allocation between the seller and the purchaser of the 

subject property (or their successors, see Smith Land, 851 F.2d 

at 88). Here, the seller (Rio Algom) is not in the picture; 

Allegheny International's predecessor received full value for the 

plants when it sold them to AL Tech in 1976 for $23.5 million in 

cash and stock. A. 647-702 (purchase agreement). In addition, 

AL Tech, not Sammi, is the claimant here, and under traditional 

corporate law principles the two companies are considered 

separate entities. Thus, even if it is assumed that there was a 

discount in the 1986 sale, this discount would work against Sammi 

and in favor of Rio Algom, but it does not necessarily work 

against AL Tech and in favor of Allegheny International. 

 Allegheny International's counterargument is that the 

bankruptcy court properly disregarded corporate forms in light of 

AL Tech's status as a wholly-owned subsidiary of Sammi. 

Allegheny International cites several cases describing bankruptcy 

courts as courts of equity that will disregard legal fictions 

when justice requires. The problem here is that the bankruptcy 

court did not find that justice required that it regard Sammi and 

AL Tech as a single entity. In the absence of such a finding, it 

was error to assume, as the bankruptcy court appears to have 

done, that any windfall reaped by Sammi should be imputed to AL 

Tech. 
15

 Nor do we believe, on the record before us, that such a 

finding would be warranted. Allegheny International has pointed 

to no facts that would allow the piercing of the corporate veil. 

 Without sufficient facts of record to warrant veil-piercing, 

i.e., facts of sufficient dominance of the affairs of the 

subsidiary by the parent corporation, AL Tech and Sammi must be 

considered separate entities. See In re Cohn, 54 F.3d 1108, 

1116-17 (3d Cir. 1995); see also Mellon Bank, N.A. v. Metro 

Communications, Inc., 945 F.2d 635, 643 (3d Cir. 1991) ("[T]here 

is a presumption that a corporation, even when it is a wholly 

owned subsidiary of another, is a separate entity."), cert. 

denied, 503 U.S. 937 (1992). 

 AL Tech also argues that the bankruptcy court abused 

its discretion in relying exclusively on a single equitable 

factor -- the discount received by Sammi -- in deciding that 

Allegheny International's equitable share of the cleanup cost was 

zero. It is within the court's discretion to rely on a single 

factor, see Environmental Transp. Sys., Inc. v. ENSCO, Inc., 969 

F.2d 503, 509 (7th Cir. 1992), but here the court also considered 

several other factors, e.g., actual years of ownership and 

operation of the two plants, 158 B.R. at 383, Allegheny Ludlum's 

compliance with federal environmental laws that were in effect 

before it sold the plants to AL Tech, id. at 384, and AL Tech's 

less-than-enthusiastic cleanup efforts since the sale, id. 

However, it is clear to us that the bankruptcy court's ultimate 

conclusion can be justified only on the basis of the discount, as 

the bankruptcy court itself seemed to recognize. See id. at 383 
16

("[T]his court considers the discounted purchase price for the AL 

Tech steel plants to be the most compelling and dispositive 

allocation factor in this case."). Other factors may weigh in 

Allegheny International's favor, but they are insufficient to 

drive Allegheny International's equitable share down to zero. In 

other words, it was inconsistent with the sound exercise of its 

discretion for the bankruptcy court to rely, not simply on a 

single factor, but on a single factor where the factual finding 

underlying the factor was clearly erroneous. 

 AL Tech raises two arguments with respect to 

Willowbrook Pond, a cooling pond at the Dunkirk plant that is 

contaminated with PCBs.5 First, AL Tech argues that the 

bankruptcy court erred in concluding that it failed to prove, by 

a preponderance of the evidence, that Allegheny International (as 

successor to Allegheny Ludlum) is responsible for any of the PCB 

contamination. Second, AL Tech argues that the bankruptcy court 

committed reversible error in choosing Allegheny International's 

estimate of the response costs at Willowbrook Pond ($1.3 million) 

instead of AL Tech's estimate (approximately $14 million). 

 We find no fault in the bankruptcy court's 

determination on the liability question here. AL Tech presented 

no reports, analyses, or other documentation of the use of PCBcontaining materials at the plants during the period when the 

plants were owned by Allegheny Ludlum. AL Tech's evidence 

 

5. The sediments in the pond also contain high levels of nickel, 

but the dispute here concerns responsibility for, and remediation 

of, the PCB problem. 
17

consisted of the testimony of Edwin Diehl and Morton Parker, 

neither of whom could establish that the materials used by 

Allegheny International before the purchase of the plants by AL 

Tech contained PCBs. Mr. Diehl, AL Tech's Director of 

Engineering (and previously its Director of Environmental 

Affairs), pointed to a hydraulic fluid, first used in new rolling 

mill machinery in 1970, as the source of the PCBs in Willowbrook 

Pond. A. 437-40, 454, 457. He had no personal knowledge, 

however, as to whether the fluid contained PCBs. 

 Mr. Parker visited the Dunkirk plant in the mid-1970s 

to determine whether oils and greases that Allegheny Ludlum had 

collected from Willowbrook Pond were suitable for reclamation by 

his employer, Wallover Oil Company. A. 465-69. He testified 

that Allegheny Ludlum had recently switched to a new hydraulic 

fluid that did not contain PCBs, that the fluid previously used 

sank because it was heavier than water, and that fluids that 

contained PCBs also were heavier than water and sank. A. 467-69. 

 Mr. Parker also testified that his company rejected Allegheny 

Ludlum's oils and greases for reclamation and that, while PCB 

contamination was the reason for most such rejections, he did not 

recall the reason for rejecting Allegheny Ludlum's materials. A. 

470-72. Mr. Parker also could not recall the results of any 

chemical analyses done on the materials from Willowbrook Pond. 

A. 470. Nor could he recall the year in which he visited the 

plant or the name of anyone whom he met there. A. 466. Like Mr. 

Diehl, then, Mr. Parker could provide no specific information as 
18

to whether any materials used by Allegheny Ludlum before the 1976 

sale of the plants to AL Tech contained PCBs. 

 It may well be that Allegheny Ludlum used PCBcontaining materials during the relevant period, and it may be 

that the only reasonable explanation for the presence of PCBs in 

the pond sediments, based on the evidence adduced, is that 

Allegheny Ludlum dumped them there. But that is different from 

proving, by a preponderance of the evidence, that Allegheny 

International is responsible for at least some of the 

contamination. This AL Tech failed to do. In light of this 

conclusion, it is not necessary to reach AL Tech's second 

argument regarding Willowbrook Pond. 

IV. 

 We deal last with two related questions concerning AL 

Tech's claim under the New York Oil Spill Act, N.Y. Nav. Law §§ 

171-197 (McKinney 1989 & Supp. 1996). First, may AL Tech bring 

an action against Allegheny International under the Oil Spill 

Act? Second, is any such action time-barred? Because our 

decision concerning these questions of New York law is unlikely 

to have much precedential significance, we will deal with them in 

an abbreviated fashion. 

 A. Under White v. Long, 650 N.E.2d 836 (N.Y. 1995), a 

case not considered by either the bankruptcy court or the 

district court, it is clear that a property owner may under 

certain conditions sue a prior owner to recover cleanup costs. 

The claim in White was asserted under § 181(5), which provides as 

follows: 
19

Any claim by any injured person for the costs 

of cleanup and removal and direct and 

indirect damages based on the strict 

liability imposed by this section may be 

brought directly against the person who has 

discharged the petroleum, provided, however, 

that damages recoverable by any injured 

person in such a direct claim based on the 

strict liability imposed by this section 

shall be limited to the damages authorized by 

this section. 

N.Y. Nav. Law § 181(5) (McKinney Supp. 1996). 

 Another provision of the Act defines a "claim" as "any 

claim by an injured person, who is not responsible for the 

discharge." N.Y. Nav. Law § 172(3) (McKinney Supp. 1996) 

(emphasis added). Noting this definition, the New York Court of 

Appeals wrote in White: 

Although even faultless owners of 

contaminated lands have been deemed 

"dischargers" for purposes of their own 

section 181(1) liability,[6] where they have 

not caused or contributed to (and thus are 

not "responsible for") the discharge, they 

should not be precluded from suing those who 

have actually caused or contributed to such 

damage. To preclude reimbursement in that 

situation would significantly diminish the 

reach of section 181(5). 

650 N.E.2d at 838 (footnote added). 

 Since neither the bankruptcy court nor the district 

court has applied White to the facts of this case, we remand AL 

Tech's Oil Spill Act claim so that this can be done.7 

 

6. This provision states in pertinent part that "[a]ny person 

who has discharged petroleum shall be strictly liable, without 

regard to fault, for all cleanup and removal costs and all direct 

and indirect damages, no matter by whom sustained, as defined in 

this section." N.Y. Nav. Law § 181(1)(McKinney Supp. 1996). 

7. AL Tech originally argued that its claim arose under N.Y. 

Nav. Law § 176(8), which provides: 
20

 B. On the issue of the statute of limitations, under 

the New York Court of Appeals' decision in State v. Stewart's Ice 

Cream, Inc., 473 N.E.2d 1184 (N.Y. 1984), it appears that AL 

Tech's claim is governed by the six-year limitations period for 

actions on express or implied contracts, N.Y. Civ. Prac. L. & R. 

§ 213(2) (McKinney 1990). In Stewart's Ice Cream, the state paid 

for the cleanup and removal of discharged petroleum and then 

sought to recover its expenses from the party that caused the 

discharge. The New York Court of Appeals concluded that the 

state's claim was one for indemnity and that liability on an 

indemnity claim "theoretically springs from an implied contract." 

 Id. at 1186. The court further held that the state's claim was 

not covered by the three-year limitations period for actions to 

recover on a liability created or imposed by a statute, N.Y. Civ. 

Prac. L. & R. § 214(2) (McKinney 1990), because that provision 

(..continued) 

Notwithstanding any other provision to the contrary . . 

. every person providing cleanup, removal of 

discharge of petroleum or relocation of 

persons pursuant to this section shall be 

entitled to contribution from any other 

responsible party. 

 AL Tech now argues that its claim arises "under both 

Section 176(8) and Section 181(5)," see Appellant's Br. at 46 

n.22, and that White v. Long, supra, which was based on § 181(5), 

"settled definitively" its right to bring a private action. 

Appellant's Br. at 44 n.20. AL Tech does not argue that there is 

any difference between the right of action created by § 181(5) 

and the right of action that it has asserted under § 176(8). We 

therefore do not decide whether there is an independent private 

right of action under § 176(8) or whether any such action differs 

in scope from the right of action under § 181(5). On remand, the 

bankruptcy and district courts need only apply White to the facts 

of this case. 

 
21

applies only to liability not recognized in the common or 

decisional law and because it could not be said that the state's 

claim "would not exist but for the statute." Stewart's Ice 

Cream, 473 N.E.2d at 1187. 

 In this case, AL Tech's claim appears to be in the 

nature of a claim for indemnity. Stewart's Ice Cream is arguably 

distinguishable on the ground that there the court held that the 

Oil Spill Act did not "expressly provide for an indemnity action 

such as [the one brought by the state]," 473 N.E.2d 1186, whereas 

here § 181(5) does expressly provide for AL Tech's claim. 

However, Stewart's Ice Cream made this point to refute the 

argument that N.Y. Civ. Prac. L. & R. § 214(2) furnished the 

applicable statute of limitations. Since Allegheny International 

does not contend this provision applies here, this arguable 

distinction need not concern us.8 Thus, we hold that Stewart's 

Ice Cream governs here. See 145 Kisco Ave. Corp. v. Dufner 

Enters., Inc., 604 N.Y.S.2d 963 (App. Div. 1993). 

 

8. Moreover, while § 181(5) expressly authorizes Al Tech's 

claim, the right of indemnity also has roots in common law, 

although it is also sometimes imposed by statute. See 23 N.Y. 

Jur. 2d Contribution, Indemnity, and Subrogation § 2 (1982). 

 The conclusions reached above also follow if AL Tech's claim 

is characterized as one for contribution rather than indemnity. 

It appears well settled under New York law that contribution, 

like indemnity, is based on an implied contract. Hard v. Mingle, 

99 N.E. 542, 544 (N.Y. 1912); Blum v. Good Humor Corp., 394 

N.Y.S.2d 894, 896 (App. Div. 1977). Furthermore, contribution 

existed at common law. Mingle, 99 N.E. 542. Consequently, the 

six-year limitations period for actions on contracts would apply. 

 Blum, 394 N.Y.S.2d at 896; Liberty Mut. Ins. Co. v. Société 

Coiffure, Inc., 50 N.Y.S.2d 40, 41 (Sup. Ct. N.Y. Cty. 1944). 

 
22

 We reject Allegheny International's argument that AL 

Tech's claim is subject to the three-year statute of limitations 

for actions to recover for damages or injuries to property. See

N.Y. Civ. Prac. L. & R. § 214(4) (McKinney 1990). The cases upon 

which Allegheny International principally relies9 -- State v. 

King Serv., Inc., 563 N.Y.S.2d 331 (App. Div. 1990), and Town of 

Guilderland v. Texaco Ref. & Mktg., Inc., 552 N.Y.S.2d 704 (App. 

Div. 1990) -- involved claims that differ from those asserted by 

AL Tech. The claim in Town of Guilderland was explicitly for 

property damage, viz., damage to the town's sewer system that 

resulted from an explosion of fumes from gasoline that had leaked 

into the sewers, rather than one for reimbursement of cleanup 

costs. The claim at issue in King Service was also one for 

direct damages under § 190 of the Act, which covers actions 

against insurers. See N.Y. Nav. Law § 190 (McKinney 1989). On 

balance, we believe that Stewart's Ice Cream is a closer fit in 

this case than the decisions on which Allegheny International 

relies. We thus hold that the statute of limitation for AL 

Tech's Oil Spill Act claim is six years. 

 

9. Allegheny also cites two additional cases that are of limited 

relevance to the present appeal: Victorson v. Bock Laundry Mach. 

Co., 335 N.E.2d 275 (N.Y. 1975), which applied the three-year 

limitations periods for actions for property damage and personal 

injury to cases based on strict product liability; and P.B.N. 

Assocs. v. Xerox Corp., 529 N.Y.S.2d 877 (App. Div. 1988), order 

modified on reargument, 575 N.Y.S.2d 451 (App. Div. 1991), which 

applied the three-year limitations period for actions for 

property damage to an action for waste stemming from an oil 

spill. Neither case involved the Oil Spill Act or an action for 

indemnity or contribution. 
23

 Furthermore, it is settled law in New York that an 

action for indemnity or contribution does not generally accrue 

until the payment is made by the party seeking recovery. Bay 

Ridge Air Rights, Inc. v. State, 375 N.E.2d 29 (N.Y. 1978). AL 

Tech may thus seek to recover cleanup costs under the Oil Spill 

Act that it incurred within six years prior to its filing of its 

proof of claim against Allegheny International. To the extent 

that AL Tech is seeking to recover for future remediation 

costs,10 the limitations period has not yet begun.11 

V. 

 For the reasons stated above, we reverse the order of 

the district court as it relates to the bankruptcy court's 

finding of a discount in the price paid by Sammi in 1989 and as 

it relates to the bankruptcy court's determination of Allegheny 

International's equitable share of AL Tech's allowable response 

costs, and we remand for reconsideration of equitable allocation 

without the discount. We reverse the order of the district court 

as it relates to the limitations period applicable to AL Tech's 

 

10. The bankruptcy court appears to have allowed only those 

costs related to future remediation efforts. 

11. The bankruptcy court disallowed as time-barred only AL 

Tech's claim related to the Oil Contamination Area. 158 B.R. at 

377-78. However, AL Tech's claims related to three other areas -

- the Pump House and Aboveground Fuel Tank, the Underground Fuel 

Tanks, and the Kromma Kill -- are also based on petroleum 

contamination. 158 B.R. at 368. Given CERCLA's petroleum 

exclusion, see 42 U.S.C. § 9601(14), the Oil Spill Act may be the 

only basis for liability at those locations. We thus point out 

that our conclusion concerning the applicable limitations period 

applies to any of AL Tech's claims involving petroleum 

contamination. 
24

claim under the New York Oil Spill Act, and we remand for 

application of the standard set out in the New York Court of 

Appeals' decision in White v. Long to the facts of this case. We 

affirm the order of the district court as it relates to the 

bankruptcy court's determination that Bankruptcy Code §§ 502(c) 

and 502(e)(1)(B) do not bar AL Tech's claim and as it relates to 

the bankruptcy court's determination that AL Tech failed to prove 

that Allegheny International was responsible for any of the 

cleanup costs at Willowbrook Pond. 
25