The Honorable Harry F. Barnes, United States District Judge 1

for the Western District of Arkansas.

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No. 95-3270

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Lion Oil Company, Inc., *

*

Appellant, *

* Appeal from the United States

v. * District Court for the

* Western District of Arkansas.

Tosco Corporation, *

*

Appellee. *

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 Submitted: May 13, 1996

 Filed: July 19, 1996

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Before BOWMAN, Circuit Judge, HENLEY, Senior Circuit Judge, and

WOLLMAN, Circuit Judge.

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WOLLMAN, Circuit Judge.

Lion Oil Company (Lion Oil) appeals the district court's grant of

1

judgment on the pleadings to Tosco Corporation (Tosco) denying Lion Oil's

claim that Tosco indemnify it for costs associated with the cleanup of

property located on an oil refinery site pursuant to the Comprehensive

Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601

et seq. (CERCLA). We affirm.

I.

Tosco operated an oil refinery located on approximately 385 acres

near El Dorado, Arkansas, from 1972 to 1985. To handle hazardous materials

generated during this period, Tosco constructed
 Lion Oil was known as XYZ Inc. at the time of the

2

transaction.

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two hazardous waste management units (HWMUs) regulated pursuant to the

Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§ 6901 et seq.,

and several solid waste management units (SWMUs). On March 22, 1985, Lion

Oil purchased the refinery from Tosco. Section 2.8(d) of the Asset

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Purchase and Sale Agreement (the Agreement) entered into by the parties on

that same date specifically provided that:

Tosco hereby agrees to indemnify and hold harmless [Lion Oil]

. . . for any and all (1) civil, legal and administrative

costs; (2) fines and penalties; (3) response, remedial and

clean-up costs, and (4) other costs or liability arising from

any sudden or non-sudden harm to the environment or public

health resulting from actions of Tosco prior to the Closing

Date. . . . Costs which result from harm inflicted or

discovered after the Closing Date, but which are the

consequence of actions taken by Tosco prior to this date, shall

be indemnified by Tosco. 

The clean-up costs which Tosco agrees to indemnify include, but

are not limited to, all studies, site assessments, and any and

all other efforts taken to determine the extent of harm to

public health or the environment and/or to identify possible

remedial alternatives that could ameliorate such harm. Cleanup costs include costs incurred directly by [Lion Oil] or by

employees, agents, or contractors hired by [Lion Oil]. 

. . .

Under this clause, [Lion Oil] shall be indemnified for all

liability and costs incurred under common law (federal or

state) or existing local, state or federal statutes that

protect public health and/or the environment, including but not

limited to, the following federal statutes: the Comprehensive

Environmental Response, Compensation and Liability Act of 1980

42 U.S.C. Sec. 9601-9657[] . . . .

The liability of Tosco pursuant to this Section 2.8 (d) shall

expire at the end of four (4) years after Date of Closing and

shall not exceed a total of $1,000,000 in the aggregate. . . .
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In August 1986, the parties executed an Amendment and Release (the

Release). In exchange for Tosco's agreement to accept at a discount

prepayment by Lion Oil of Lion Oil's remaining note obligation for the

purchase price, the Release provided that:

Lion [Oil] hereby extinguishes, discharges, releases and

abandons any and all rights and claims against Tosco which it

has or may have pursuant to the provisions of subsection 2.8(d)

of the March 22 Agreement, or to the extent any such claims

would be covered by the provisions of said subsection 2.8(d)

even though also potentially covered within the general

indemnification provisions of subsection 2.8(a), . . . whether

now existing or arising in the future, at common law, or in

equity, or created by any rule of law, regulatory order,

statute or otherwise, and whether known or unknown.

In November 1988, Lion Oil decided to close the two HWMUs and filed

for a RCRA post closure permit. The permit, which was approved in

September 1990, required Lion Oil to conduct post-closure maintenance and

monitoring of the HWMUs. In addition, the permit required Lion Oil to

investigate and correct any potential leakage of hazardous materials from

the SWMUs, in violation of CERCLA. A preliminary investigation disclosed

potential releases of hazardous waste from approximately eighteen SWMUs,

some of which had been constructed by Tosco. Lion Oil estimates that it

may cost as much as $30,000,000 to bring the SWMUs into compliance with

CERCLA.

In April 1994, Lion Oil brought suit against Tosco, seeking

contribution under CERCLA for the clean-up costs of the property. In May

1995, Tosco filed a motion for judgment on the pleadings, which the

district court granted. 

II.

Lion Oil contends that the district court erred in concluding that

the Agreement and the Release combined to constitute a general
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release of Tosco's CERCLA liability. Lion Oil alleges that the district

court should have allowed the admission of extrinsic evidence to

demonstrate the parties' actual intent in drafting the documents.

We review de novo the district court's grant of a motion for judgment

on the pleadings. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir.

1990). Judgment on the pleadings is appropriate if the moving party

clearly establishes that there are no material issues of fact and that he

is entitled to judgment as a matter of law. National Car Rental v.

Computer Associates, 991 F.2d 426, 428 (8th Cir.), cert. denied, 114 S. Ct.

176 (1993). Under this strict standard, we accept as true all facts pled

by the non-moving party and draw all reasonable inferences from the

pleadings in his favor. Id.

CERCLA provides that a former owner or operator of a facility is

jointly and severally liable for cleanup associated with hazardous waste

sites. 42 U.S.C. § 9607(a). CERCLA does, however, permit one party to

insure, hold harmless, or indemnify another party for liability under the

statute. § 9607(e); see also Fisher Dev. Co. v. Boise Cascade Corp., 37

F.3d 104, 107 (3d Cir. 1994) (parties may allocate among themselves

financial burden for cleaning up hazardous waste site under CERCLA).

Courts will enforce a contract allocating CERCLA liability when "the

provisions [of the contract] evince a clear and unmistakable intent of the

parties to do so." Keywell Corp. v. Weinstein, 33 F.3d 159, 165 (2d Cir.

1994).

Lion Oil contends that the contracts are ambiguous and that extrinsic

evidence should therefore have been admitted to show the true intention of

the parties. Specifically, Lion Oil seeks to offer evidence to show that

Section 2.8(d) was meant to cover only the two HWMUs and was not a general

limitation on potential CERCLA liability for the SWMUs.
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Under Arkansas law, which the parties agree governs the contracts,

the language contained in the contract is the best evidence of the parties'

intentions. First Nat'l Bank v. Griffin, 832 S.W.2d 816, 818-19 (Ark.

1992), cert. denied, 113 S. Ct. 1280 (1993). Thus, we first look to the

contract itself to determine if it is ambiguous -- not to extrinsic

evidence offered to contradict the plain meaning of the contract. Id.

The district court found that "[t]he Purchase Agreement and the

Release are clear, unequivocal and unambiguous in their allocation of

Tosco's liability and its release therefrom." We agree that the plain

language contained in the contracts compels such a result. The Agreement

contained a broad indemnity provision that encompassed environmental harm

caused by Tosco. Indeed, Section 2.8(d) specifically referred to CERCLA.

The Release absolves Tosco from all obligations under Section 2.8(d). In

these circumstances, the Agreement and Release unequivocally combine to

allocate to Lion Oil any potential liability arising under CERCLA. The

parol evidence rule prohibits the admission of extrinsic evidence to alter

these otherwise unambiguous contracts. Griffin, 832 S.W.2d at 818-20; see

also Rainey v. Travis, 850 S.W.2d 839, 840 (Ark. 1993) (extrinsic evidence

not admissible when agreement is unambiguous on its face). 

We note that this is not a case in which an unsophisticated party

hastily entered into a contract. It is clear that Lion Oil was aware that

the purchase of an oil refinery involved a risk of significant potential

environmental liability, as exhibited in the detailed provisions of the

Agreement. As the district court recognized, "The fact that hindsight may

have proven the Agreement to be a bad business decision for Lion Oil does

not negate its validity."

The judgment is affirmed.
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A true copy.

Attest:

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