Judges Flaum, Tinder, and Hamilton did not participate in 1

the consideration of the request for rehearing. 

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 11-1501 and 11-1523

NORMAN W. BERNSTEIN, et al.,

Plaintiffs-Appellants/Cross-Appellees,

v.

PATRICIA A. BANKERT, et al.,

Defendants-Appellees,

AND

AUTO OWNERS MUTUAL INSURANCE COMPANY,

Defendant-Appellee/Cross-Appellant.

Appeals from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:08-cv-00427—Richard L. Young, Chief Judge.

ARGUED OCTOBER 31, 2011

DECIDED DECEMBER 19, 2012

AMENDED JULY 31, 20131
2 Nos. 11-1501 and 11-1523

The Honorable Jon E. DeGuilio, Judge of the United States 2

District Court for the Northern District of Indiana, sitting by

designation.

Before KANNE and WILLIAMS, Circuit Judges, and

DEGUILIO, District Judge.2

DEGUILIO, District Judge. This appeal is the latest

chapter in the story of the Environmental Chemical and

Conservation Company (“Enviro-Chem”), a defunct

Indiana corporation with an expensive environmental

legacy. Enviro-Chem conducted waste-handling and

disposal operations at three sites north of Zionsville,

Indiana, until it closed its doors in the early 1980s, and

it left considerable amounts of pollutants behind. The

plaintiffs in this action are the trustees of a fund created

to finance and oversee the cleanup project at one of

those three sites. The defendants are the former owners

of the site, their corporate entities (including EnviroChem), and their insurers, none of whom have paid into

the trust despite an alleged obligation to do so. The

plaintiffs sued to recover cleanup costs under the Comprehensive Environmental Response, Compensation and

Liability Act (“CERCLA”), the Indiana Environmental

Legal Actions Statute (“ELA”), and more. The district

court dismissed all claims at the summary judgment

stage, and the plaintiffs appealed. In response, one of the

insurance companies targeted by the plaintiffs filed a

conditional cross-appeal, hoping to preserve a favorable

outcome even in the event of a reversal of the district

court’s final judgment.
Nos. 11-1501 and 11-1523 3

On December 19, 2012, this panel decided both

appeals, affirming in part and reversing in part the

district court decision and remanding the case for

further proceedings on the reinstated claims. Bernstein v.

Bankert, 702 F.3d 964 (7th Cir. 2012). The defendantsappellees requested a panel rehearing, and the Environmental Protection Agency joined their request as amicus

curiae. While we conclude that the arguments advanced

by the parties do not warrant reconsideration of

our decision, we grant rehearing, in part, to address

some issues raised by the EPA. Specifically, the EPA

identified certain passages of our original opinion which

suggested that a party may never structure a settlement

agreement with the EPA in such a way as to resolve

their liability immediately upon execution of that agreement. That is not the case. A party responsible for

an instance of environmental contamination may

obtain an immediately effective release from the EPA

in a settlement, or it may obtain only a performancedependent conditional covenant not to sue with an accompanying disclaimer of any liability. Whether,

and when, a given settlement “resolves” a party’s liability

to the EPA within the meaning of 42 U.S.C. § 9613(f)(3)(B)

is ultimately a case-specific question dependant on the

terms of the settlement before the court. In this case,

the terms of the administrative settlement did not

provide for a resolution upon entering into the agreement. The following constitutes this panel’s amended

opinion superseding our prior opinion and resolving

the appeals in both Nos. 11-1501 and 11-1523.
4 Nos. 11-1501 and 11-1523

BACKGROUND

The appellants—plaintiffs below—are the trustees of

the Third Site Trust Fund (“Trustees”). Third Site is a

CERCLA site located about five miles north of Zionsville,

Indiana. Along with two other CERCLA sites in close

proximity—the Enviro-Chem Site to the north and the

Northside Sanitary Landfill (“NSL”) to the northeast—

Third Site was owned and operated by the Bankert

family and their corporate entities at all times relevant

to this litigation. Up until the early 1980s, Enviro-Chem,

one of those entities, was engaged in brokering and

recycling industrial and commercial wastes at all three

sites. It is undisputed that Enviro-Chem’s operations

extended to Third Site; historical aerial photographs

depict Third Site being used for tank and drum storage,

and former Enviro-Chem employees have indicated

that Third Site hosted waste handling and disposal operations.

Enviro-Chem ceased operations in 1982, and shortly

thereafter the United States Environmental Protection

Agency (“EPA”) undertook an extended effort to clean

up the mess it left behind. The cleanup initially focused

on the Enviro-Chem Site and the NSL, but in 1987 and

1992 consultants collected soil, groundwater, seepage

soil and seepage water samples from Third Site. The

samples indicated elevated concentrations of volatile

organic compounds (“VOCs”) and semi-volatile organic

compounds (“SVOCs”) in the areas tested. Similarly,

surface water samples collected by the EPA in 1988 from

nearby Finley Creek showed elevated levels of VOCs
Nos. 11-1501 and 11-1523 5

immediately adjacent to and downstream from Third

Site. These results were consistent with additional

samples collected in 1985 and 1986 from surface seeps

discharging from Third Site and into Finley Creek. In

short, Third Site was polluted, and it was transferring

its pollutants to Finley Creek. Finley Creek flows south

into Eagle Creek Reservoir, and Eagle Creek Reservoir

supplies a portion of the drinking water for the City

of Indianapolis. The pollution of Finley Creek was therefore cause for real concern.

In 1996, the EPA countered the threat by issuing

a Unilateral Administrative Order (“UAO”) outlining

a plan to realign Finley Creek. The plan called for eliminating an oxbow, the top of which touched areas of

high contamination at Third Site, and for rerouting

the creek away from the site and to the south. The realignment project was designated a time-critical removal

project, and the respondents to the UAO completed

it in September 1996. Subject to periodic maintenance

inspections, the EPA approved their performance.

Having averted any significant corruption of the drinking water supply, the EPA turned its attention to

cleaning up Third Site itself. In October 1999, the EPA

entered into an Administrative Order by Consent (“AOC”)

with a number of respondents, each of whom was designated a potentially responsible party (“PRP”) for contamination at the site. The 1999 AOC was divided into

two separate parts: one dealing with “Non-Premium

Respondents” and one dealing with “Premium Respondents.” The Non-Premium Respondents agreed to under-
6 Nos. 11-1501 and 11-1523

take an Engineering Evaluation and Cost Analysis

(“EE/CA”) of removal alternatives for Third Site. They

also agreed to settle a trust—the Third Site Trust, of

which the appellants are Trustees—and to fund it to

the extent necessary to bankroll the EE/CA and any

additional necessary work. Through the Trust, they

would reimburse the EPA for past response and oversight costs as well as future oversight costs incurred

in conjunction with the EE/CA project. The Premium

Respondents, on the other hand, were alleged to be

de minimis contributors to the contamination at Third

Site. They were entitled to settle out with a defined, onetime monetary contribution to the Trust consistent with

42 U.S.C. § 9622(g).

The Non-Premium Respondents met their obligations

under the 1999 AOC and obtained EPA approval of the

final EE/CA report on October 24, 2000. No copy of the

EPA notice of approval was included in the record, and

we only know of it through affidavits submitted with

the parties’ summary judgment briefs. But, in any case,

the parties do not dispute that the 1999 AOC was

complied with fully to its completion. In 2001, subsequent to approving the work done under the 1999

AOC, the EPA issued an Enforcement Action Memorandum selecting one of the removal actions for the site

identified by the EE/AC and outlining cleanup objectives.

In November 2002, the parties entered into a second

AOC to perform the work called for by the Enforcement

Action Memorandum. For the most part, the 2002 AOC

tracked the form of the 1999 AOC. It included separate
Nos. 11-1501 and 11-1523 7

We use “the Bankerts” to refer collectively to Patricia A. 3

Bankert, both individually and in her capacity as personal

representative of the estate of Jonathan W. Bankert, Sr.;

Jonathan W. Bankert, Jr.; Gregory Bankert; and Enviro-Chem.

provisions addressing the responsibilities of Premium

and Non-Premium Respondents and contained the

same reservation of rights and conditional covenants not

to sue. Furthermore, the Non-Premium respondents

maintained the same responsibilities vis-a-vis the Trust,

which was once again assigned to manage the removal

effort. At the time this lawsuit was filed, the work to be

performed under the 2002 AOC was still ongoing, and

no EPA notice of approval had issued.

Under the terms of the 1999 and 2002 AOCs and

the corresponding Trust Agreement, the Trustees are

empowered to hold and manage funds; to retain

engineers and others to carry out the work to be performed under the AOCs; to project future costs; to

obtain additional funds as needed from the settlors (i.e.,

the Non-Premium Respondents); and, subject to prior

approval, to bring suit against those who do not meet

their obligations to the Trust. The Bankert appellees3

were listed as Non-Premium Respondents under the

1999 and 2002 AOCs, but have not met their obligations

by paying into the Trust or otherwise.

On April 1, 2008, the Trustees filed a Complaint

against the Bankerts and their various insurers in the

Southern District of Indiana with six counts: Count I, a

CERCLA cost recovery action pursuant to 42 U.S.C.
8 Nos. 11-1501 and 11-1523

For reasons unknown to us, the Complaint did not include 4

a “Count VI.”

§ 9607(a); Count II, seeking a declaratory judgment

under CERCLA of the defendants’ joint and several

liability; Count III, a cost recovery action under the ELA,

codified at I.C. § 13-30-9-2; Count IV, negligence; Count V,

nuisance; and Count VII, seeking a declaratory judg- 4

ment of coverage against the insurers.

On May 30, 2008, one of the Bankerts’ former insurers,

Auto Owners Mutual Insurance Company (“Auto Owners”), moved to dismiss the Trustees’ Complaint against

it pursuant to Federal Rules of Civil Procedure 12(b)(6)

and 12(d). The coverage provisions of Auto Owners’s

policies with the Bankerts were previously litigated in

connection with cleanup efforts at the Enviro-Chem Site

in the 1980s, and Auto Owners argued that the favorable

judgment it obtained in that case precluded a finding

of coverage in this case. On September 17, 2008, the

district court converted the portion of Auto Owners’s

motion claiming preclusion to a motion for summary

judgment and permitted the parties to conduct discovery and submit additional briefing. On March 16, 2010,

the district court entered an order denying the motion.

On September 22, 2009, the Bankerts moved for

summary judgment on statute of limitations grounds.

The Trustees responded, and the Bankerts replied. On

December 10, 2009, the Trustees moved to strike a

portion of that reply or, in the alternative, for permission

to file supplemental briefing. The district court heard
Nos. 11-1501 and 11-1523 9

oral argument on August 3, 2010. On September 29, 2010,

the district court denied the Trustees’ motion to strike

and granted summary judgment in the Bankerts’ favor.

First, the district court found that the Trustees could

not bring a CERCLA cost recovery claim under 42 U.S.C.

§ 9607(a), which is what Count I of the Complaint purported to do. Instead, the district court construed

the Trustees’ CERCLA claim as one for contribution

pursuant to 42 U.S.C. § 9613(f). Next, the district court

found that the statute of limitations applicable to

that kind of CERCLA claim had run. This, in turn, invalidated the declaratory judgment request contained

in Count II. Finally, the district court found that the

statute of limitations had run with respect to each of the

Trustees’ state law claims against the Bankerts. Counts I

through V were dismissed.

Next, the district court asked the parties to report on

the status of Count VII, which sought a declaratory judgment of coverage against Auto Owners and the other

insurers. All parties conceded that it was moot;

insurance coverage was a non-issue without a controversy over the underlying liability. On October 13,

2010, the Trustees moved the court to reconsider the

grant of summary judgment with respect to the ELA

claim and to certify the question to the Indiana

Supreme Court. On February 3, 2011, the district court

denied that motion and entered final judgment in favor

of the defendants, dismissing Count VII as moot

consistent with the parties’ positions. The Trustees filed

a timely notice of appeal on March 3, 2011, and Auto

Owners cross-appealed. We take up each appeal in turn.
10 Nos. 11-1501 and 11-1523

THE TRUSTEES’ APPEAL

The Trustees appeal the district court’s dismissal at the

summary judgment stage of their CERCLA and ELA

claims, as well as the dismissal of their declaratory judgment claim against Auto Owners. They also appeal the

district court’s denial of their motion to strike a portion

of the Bankerts’ summary judgment reply. They have

not appealed the district court’s dismissal of their state

law negligence and nuisance claims, and as a result

those claims are lost. We find that the Trustees have, in

fact, pled a timely CERCLA cost recovery claim, although

the scope of their recovery will be limited. As a result,

Counts I and II must be reinstated. Count III, claiming

contribution under the Indiana ELA, is timely as well.

Reinstating those claims means there is a live controversy over liability, and so we must reverse the

district court’s dismissal of Count VII as moot.

I. Counts I and II: CERCLA Claims

In Count I of their Complaint, the Trustees seek to

recover funds which the Bankerts allegedly owe to the

Third Site Trust pursuant to obligations created by the

1999 and 2002 AOCs. The Trustees characterize Count

I as a claim for cost recovery under 42 U.S.C. § 9607(a),

but the district court held: (1) that a § 9607(a) claim

was unavailable to the Trustees; (2) that their claim

must therefore be one for contribution under § 9613(f);

and (3) that the limitations period for a contribution

claim had run. Count II, seeking a declaratory judgment

of liability, is essentially a derivative claim; once the
Nos. 11-1501 and 11-1523 11

district court concluded that Count I was not timely,

Count II had to be dismissed as well.

We review a district court’s grant of summary judgment based on a statute of limitations de novo. Stepney

v. Naperville Sch. Dist. 203, 392 F.3d 236, 239 (7th Cir.

2004). To the extent we are called upon to review the

district court’s interpretation of the statute, the standard

of review is likewise de novo. Storie v. Randy’s Auto

Sales LLC, 589 F.3d 873, 876 (7th Cir. 2009). We are

mindful, too, of the deference typically accorded to

the summary judgment non-movant with respect to the

resolution of factual issues, but note that this dispute

is almost entirely a legal one, with the underlying

facts undisputed: the Bankerts argue that the Trustees

have advanced one type of CERCLA claim, and that it is

barred by the statute of limitations; the Trustees argue

that they have advanced another type of claim, and that

it is not. They are both partially correct, but the net

result is that the district court must be reversed with

respect to Count I. That, in turn, is enough to revive

Count II. Finally, we find no abuse of discretion in the

district court’s denial of the Trustees’ motion to strike

portions of the Bankerts’ summary judgment reply.

A. CERCLA and SARA Statutory Scheme

In 1980, Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act, 42

U.S.C. §§ 9601-9675, in response to the serious environmental and health risks posed by industrial pollution.

Burlington Northern and Santa Fe Ry. Co. v. United States,
12 Nos. 11-1501 and 11-1523

556 U.S. 599, 602 (2009) (citing United States v. Bestfoods,

524 U.S. 51, 55 (1998)). CERCLA is not known for its

clarity, or for its brevity. Exxon Corp. v. Hunt, 475 U.S. 355,

363 (1986) (noting CERCLA provisions are “not . . .

model[s] of legislative draftsmanship,” and its statutory

language is “at best inartful and at worst redundant”).

But its purpose, at least, is straightforward: the act was

designed to promote the timely cleanup of hazardous

waste sites and to ensure that the costs of such

cleanup efforts were borne by those responsible for the

contamination. Burlington Northern, 556 U.S. at 602 (citing

Consol. Edison Co. of N.Y. v. UGI Util., Inc., 423 F.3d 90, 94

(2d Cir. 2005)); Key Tronic Corp. v. United States, 511 U.S.

809, 819 n. 13 (1994) (“CERCLA is designed to encourage

private parties to assume the financial responsibility

of cleanup by allowing them to seek recovery from others.”). Relevant to this case, two CERCLA sections—42

U.S.C. §§ 9607(a) and 9613(f)—afford rights of action

to private parties seeking to recover expenses associated with cleaning up contaminated sites. Actions under

§ 9607(a) and § 9613(f) are governed by different statutes

of limitation, and we must decide under which section

the Trustees’ CERCLA claim falls before determining

whether it is time-barred.

42 U.S.C. § 9607(a), the first of the two sections in question, is the “cost recovery” provision of CERCLA. It

identifies four categories of potentially responsible

parties relative to any instance of contamination based

on their relationship to the contaminated site. See

§ 9607(a)(1)-(4). When a release or threatened release

of hazardous substances occurs, the PRPs are strictly
Nos. 11-1501 and 11-1523 13

The terms “removal action” and “remedial action” represent

5

the two primary forms of response contemplated by CERCLA:

(23) The terms “remove” or “removal” means the cleanup or

removal of released hazardous substances from the environment, such actions as may be necessary taken in the event

of the threat of release of hazardous substances into the

environment, such actions as may be necessary to monitor,

assess, and evaluate the release or threat of release of

hazardous substances, the disposal of removed material,

or the taking of such other actions as may be necessary

to prevent, minimize, or mitigate damage to the public

health or welfare or to the environment, which may otherwise result from a release or threat of release.

* * *

(24) The terms “remedy” or “remedial action” means those

actions consistent with permanent remedy taken instead

of or in addition to removal actions in the event of a

release or threatened release of a hazardous substance

into the environment, to prevent or minimize the release

of hazardous substances so that they do not migrate to

cause substantial danger to present or future public

health or welfare or the environment.

42 U.S.C. § 9601(23)-(24). Practically speaking, “removal actions

are ‘those taken to counter imminent and substantial threats to

public health and welfare,’ while remedial actions ‘are longer

term, more permanent responses.’ ” Morrison Enters., LLC v.

Dravo Corp., 638 F.3d 594, 608 (8th Cir. 2011) (quoting Minnesota

v. Kalman W. Abrams Metals, Inc., 155 F.3d 1019, 1024 (8th

Cir. 1998)). 

liable for “all costs of removal or remedial action5

incurred by the United States Government or a State or
14 Nos. 11-1501 and 11-1523

“The national contingency plan specifies procedures 6

for preparing and responding to contaminations and was

promulgated by the Environmental Protection Agency[.]”

United States v. Atl. Research Corp., 551 U.S. 128, 135 n. 3 (2007)

(citing Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 161 n.

2 (2004)); see also 40 C.F.R. § 300.1 et seq.

an Indian tribe not inconsistent with the national contingency plan[,] ” § 9607(a)(4)(A), as well as for “any 6

other necessary costs of response incurred by any

other person consistent with the national contingency

plan.” § 9607(a)(4)(B). The phrase “any other person,” as

used in § 9607(a)(4)(B), has been read literally to mean

any person other than the United States, a State, or an

Indian tribe—in other words, any person other than

the entities listed in subpart (A). See United States v. Atl.

Research Corp., 551 U.S. 128 (2007). Thus, § 9607(a)(4)(B)

grants one PRP the same rights as an innocent party to

sue another PRP for cleanup costs incurred in a

removal or remedial action. Id. In such cases, the defendant’s liability—although strict—need not be joint and

several. See Burlington Northern, 556 U.S. at 613-14.

Judicial apportionment is proper so long as the

defendant can demonstrate that there is a reasonable

basis for determining the contribution of each cause to a

single harm. Id. (citing United States v. Chem-Dyne Corp.,

572 F.Supp. 802, 810 (S.D. Ohio 1983); RESTATEMENT

(SECOND) OF TORTS § 433A(1)(b), p. 434 (1963-1964)). 

42 U.S.C. § 9613(f), on the other hand, is the “contribution” provision of CERCLA. Added to the statute by

the Superfund Amendments and Reauthorization Act
Nos. 11-1501 and 11-1523 15

One could reasonably conclude, based solely on the physical 7

structure of § 9613(f), that § 9613(f)(3)(B) does not create a

distinct, second cause of action for contribution, instead

(continued...)

of 1986 (“SARA”), it creates two distinct rights to contribution, each subject to its own prerequisites. The first

is codified at 42 U.S.C. § 9613(f)(1):

Any person may seek contribution from any other

person who is liable or potentially liable under section

9607(a) of this title, during or following any civil

action under section 9606 of this title or under section

9607(a) of this title.

(emphasis added). In Cooper Indus., Inc. v. Aviall Servs., Inc.,

543 U.S. 157 (2004), the Supreme Court held that the

italicized phrase has a limiting effect. “The natural meaning of this sentence is that the contribution may

only be sought subject to the specified conditions[.]” Id.

at 166 (emphasis added). To read the clause more expansively would render the italicized phrase superfluous, which the Court was loathe to do. Id. (citing Hibbs

v. Winn, 542 U.S. 88, 101 (2004)). In short, “[t]here is no

reason why congress would bother to specify conditions

under which a person may bring a contribution claim,

and at the same time allow contribution actions absent

those conditions.” Id. After Cooper, a contribution action

under 42 U.S.C. § 9613(f)(1) must be pre-dated by the

filing of a civil action pursuant to § 9606 or § 9607(a).

The second contribution right of action is codified at

42 U.S.C. § 9613(f)(3)(B):7
16 Nos. 11-1501 and 11-1523

(...continued) 7

simply modifying or further describing the conditions

under which a § 9613(f)(1) contribution action might be available. But the Supreme Court has foreclosed that reading.

See Cooper, 543 U.S. at 163 (“SARA also created a separate

express right of contribution, § 113(f)(3)(B) . . .”).

“Paragraph (2)” is CERCLA’s “contribution bar” provision, 8

stating: 

A person who has resolved its liability to the United States

or a State in an administrative or judicially approved

settlement shall not be liable for claims for contribution

regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially

liable persons unless its terms so provide, but it reduces

the potential liability of the others by the amount of the

settlement. 42 U.S.C. § 9613(f)(2). 

A person who has resolved its liability to the United States

or a State for some or all of a response action or for some

or all of the costs of such action in an administrative or

judicially approved settlement may seek contribution

from any person who is not party to a settlement

referred to in paragraph (2).8

(emphasis added). As the Supreme Court did with

respect to § 113(f)(1), supra, we read the italicized phrase

as a limiting provision: a § 9613(f)(3)(B) contribution

claim is only available to a person who has “resolved its

liability . . . in an administrative or judicially approved

settlement.” See also Consol. Edison Co., 423 F.3d at 95

(holding that the resolution of CERCLA liability is a

prerequisite to a § 9613(f)(3)(B) contribution action). To
Nos. 11-1501 and 11-1523 17

read the section as affording the same remedy to one

who has not resolved his liability would be nonsensical,

and it would render the limiting language superfluous.

The Supreme Court has long insisted that result should

be avoided wherever possible. See Cooper, 543 U.S. at 166;

United States v. Nordic Village, Inc., 503 U.S. 30, 35-36

(1992) (referencing the “settled rule that a statute must, if

possible, be construed in such fashion that every word

has some operative effect.”); Louisville & Nashville R. Co. v.

Mottley, 219 U.S. 467, 475 (1911) (“We must have regard

to all the words used by Congress, and as far as

possible give effect to them.”).

In summary, each CERCLA right of action carries with

it its own statutory trigger, and each is a distinct

remedy available to persons in different procedural

circumstances. See Atl. Research, 551 U.S. at 139 (citing

Consol. Edison Co., 423 F.3d at 99); see also Niagara

Mohawk Power Corp. v. Chevron USA, Inc., 596 F.3d 112, 122

(2d Cir. 2010). Where a person has been subjected to a

civil action under 42 U.S.C. §§ 9606 or 9607(a), he may

attempt to recover his expenditures through a contribution suit under 42 U.S.C. § 9613(f)(1). Where a person

has resolved his liability to the United States, or to a

state, for some or all of a response action or for some

or all of the costs of such action in an administrative or

judicially approved settlement, he may attempt to

recover his expenditures in a contribution suit pursuant

to 42 U.S.C. § 9613(f)(3)(B). If neither of those triggers

has occurred, a plaintiff does not have a claim for contribution under CERCLA. That does not mean he has no

remedy, however. Any time a person has incurred “neces-
18 Nos. 11-1501 and 11-1523

sary costs of response . . . consistent with the national

contingency plan[,]” CERCLA provides for a

§ 9607(a)(4)(B) cost recovery action. These are the plain

terms of the statute.

B. Classifying the Trustees’ CERCLA Claim

The next step is to apply the statutory scheme to the

facts to determine which sort of claim, or claims, the

Trustees have advanced, and whether it is barred by the

applicable statute of limitations. In Count I of the Complaint, the Trustees seek to recover the costs they

incurred pursuant to the 1999 and 2002 AOCs. In

order to determine which kind of CERCLA claim Count I

states, we must take a closer look at the undisputed

documentary evidence presented, particularly the

AOCs themselves. In doing so, we find that the Trustees

have stated a cost recovery claim under § 9607(a), but

only with respect to costs incurred pursuant to the

2002 AOC. At this point, costs incurred pursuant to the

1999 AOC could only be recovered through a contribution claim, which is time-barred.

1. The 1999 AOC

Under the 1999 AOC, the Non-Premium Respondents

took on significant responsibilities. They agreed to undertake the EE/CA study of removal alternatives for Third
Nos. 11-1501 and 11-1523 19

An EE/CA is classified as a “removal action” by the EPA. 9

See 40 C.F.R. § 300.415(b)(4)(i). 

Both the case law and the administrative materials 10

addressing CERCLA frequently switch back and forth between

referring to sections of the act by their section number, as

enacted, and their section number, as codified. “Section 107(a)”

(continued...)

Site, to develop and submit an EE/CA report to the EPA,9

and to settle and fund the Third Site Trust. They also

agreed to reimburse the federal government for the

EPA’s past response and oversight costs, for any future

oversight costs incurred in conjunction with the EE/CA

project, and for an amount certain to be expended by

the Department of the Interior in addressing natural

resource damages at Third Site. The 1999 AOC laid out

deadlines for the Non-Premium Respondents to meet

their obligations, and made clear that no release from

CERCLA liability would occur until those obligations

were met:

Except as expressly provided in Section XIII

(Covenant Not to Sue), nothing in this Order constitutes a satisfaction of or release from any claim or

cause of action against the Respondents or any

person not a party to this Order, for any liability

such person may have under CERCLA, other statutes,

or the common law, including but not limited to

any claims of the United States for costs, damages

and interest under Sections 106(a) or 107(a) or

CERCLA, 42 U.S.C. §§ 9606(a), 9607(a).10
20 Nos. 11-1501 and 11-1523

(...continued) 10

of CERCLA, for example, was codified at 42 U.S.C. § 9607(a);

“Section 113(f)” corresponds to § 9613(f), etc. For ease of

reference, we refer to CERCLA sections by their designation within the United States Code. 

The covenants not to sue referred to in the disclaimer

above were expressly conditioned on the Respondents’

fulfillment of their obligations under the Order:

Except as otherwise specifically provided in this

Order, upon issuance of the [Notice of Completion],

U.S. EPA covenants not to sue Respondents for

judicial imposition of damages or civil penalties or to

take administrative action against Respondents for

any failure to perform actions agreed to in this Order[.]

* * *

[I]n consideration and upon Respondents’ payment

of [the EPA’s response costs], U.S EPA covenants

not to sue or take administrative action against Respondents under Section 107(a) of CERCLA[.]

And, most explicitly, as modified by the attached errata

sheet:

These covenants are conditioned upon the complete

and satisfactory performance by Respondents of

their obligations under this Order.

Moreover, just as the EPA refused to give up its rights

to sue the Respondents, the Respondents refused to

consider the Order to be an admission of liability on

their part:
Nos. 11-1501 and 11-1523 21

Respondents’ agreement to comply with and be

bound by the terms of this Order and not to contest

the basis or validity of this Order or its terms shall

not constitute any admission of liability by any (or

all) of the Respondents nor any admission by Respondents of the basis or validity of U.S. EPA’s findings, conclusions or determinations contained in

this Order.

Under the plain language of the AOC, with respect to

the Non-Premium Respondents, the EPA’s covenants

not to sue—and the accompanying release from CERCLA

liability—would take effect when they had seen the

EE/AC project through to its completion and provided

the Trust with sufficient funds to meet its monetary

commitments pursuant to the AOC, and no sooner. It

is undisputed that the Non-Premium Respondents

did meet those obligations, as the EPA approved their

performance of the 1999 AOC on October 24, 2000.

a. The Trustees have a § 9613(f)(3)(B) contribution

claim for costs incurred under the 1999 AOC.

By the terms of the AOC, when the Non-Premium

Respondents completed performance of their obligations

under the 1999 AOC and obtained a notice of approval

from the EPA, the conditional covenants not to sue contained therein went into effect. At that point, the NonPremium Respondents, and by extension the Trust, had

“resolved [their] liability to the United States . . . for some

or all of a response action or for some or all of the costs

of such action” through an administrative settlement,
22 Nos. 11-1501 and 11-1523

thus satisfying the prerequisites for a contribution

action pursuant to 42 U.S.C. § 9613(f)(3)(B). Specifically,

the Trust had resolved its liability to the United States

with respect to the execution of the EE/CA and with

respect to the reimbursement of government response

and oversight costs incurred prior to and in conjunction

with the EE/CA project. As a result, they were entitled

to recover the costs they incurred in accomplishing

those tasks through a contribution action.

Of course, the Trustees also incurred necessary costs

of response consistent with the national contingency

plan. They did not simply reimburse the EPA for a

removal action it had already performed; they funded

and executed the removal action themselves. In that

sense, the trigger for a § 9607(a) cost recovery action

was also met. This brings us to one of the questions

raised in the briefs: are there any circumstances under

which a plaintiff may bring both a cost recovery and a

contribution claim under CERCLA? The Supreme Court

left that possibility open in Atlantic Research:

We do not suggest that §§ 107(a)(4)(B) and 113(f)

have no overlap at all. Key Tronic Corp. v. United States,

511 U.S. 809, 816, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994)

(stating the statutes provide “similar and somewhat

overlapping remed[ies]”). For instance, we recognize

that a PRP may sustain expenses pursuant to a

consent decree following a suit under § 106 or § 107(a).

See, e.g., United Technologies Corp. v. Browning-Ferris

Industries, Inc., 33 F.3d 96, 97 (1st Cir. 1994). In such

a case, the PRP does not incur costs voluntarily but
Nos. 11-1501 and 11-1523 23

does not reimburse the costs of another party. We

do not decide whether these compelled costs of response are recoverable under § 113(f), § 107(a), or both.

551 U.S. at 139 n. 6.

Most circuits, after Atlantic Research, have not allowed

a plaintiff to pursue a cost recovery claim when a contribution claim is available. See Solutia, Inc. v. McWane,

Inc., 672 F.3d 1230, 1236-37 (11th Cir. 2012); Morrison

Enters., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011);

Lyondell Chem. Co. v. Occidental Chem. Corp., 608 F.3d

284, 291 n. 19 (5th Cir. 2010) (acknowledging, and not

disturbing, district court’s implicit decision that plaintiff

could not pursue both remedies); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010);

Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596

F.3d 112, 128 (2d Cir. 2010); ITT Indus., Inc. v.

BorgWarner, Inc., 506 F.3d 452, 458 (6th Cir. 2007). Two

justifications are usually given for reaching that conclusion. First, courts have noted that, despite its passing

acknowledgment of a possible overlap in Atlantic

Research, the Supreme Court has repeatedly emphasized

the procedural “distinctness” of the CERCLA rights of

action. See, e.g., 551 U.S. at 138; Niagara Mohawk, 596 F.3d at

128; ITT Indus., 506 F.3d at 458. Second, some courts have

concluded that permitting a party who has already resolved his own liability through a settlement to pursue

a § 9607(a)(4)(B) action would allow him to exploit

CERCLA’s “contribution bar” provision to shift full

liability onto the target of his suit, a result antithetical

to the purpose of the statute. See, e.g., Solutia, 672 F.3d

at 1237; Agere Sys., Inc., 602 F.3d at 228-229.
24 Nos. 11-1501 and 11-1523

The “contribution bar” argument, although common

in the case law, is based on a faulty premise. The argument is that a § 9607(a) cost recovery suit imposes joint

and several liability on its target, whereas a contribution defendant only faces equitable apportionment. At

the same time, pursuant to § 9613(f)(2), a party who

has “resolved its liability to the United States or a State

in an administrative or judicially approved settlement

shall not be liable for claims for contribution regarding

matters addressed in the settlement.” Several courts

have concluded that allowing a party who has resolved

its liability through settlement—and who thus meets the

prerequisites for a § 9613(f)(3)(B) contribution action,

as well as for protection under § 9613(f)(2)—to pursue

a cost recovery action instead would allow that party

to impose joint and several liability on a defendant

without any fear of a counterclaim, due to the operation

of § 9613(f)(2). Solutia, 672 F.3d at 1237; Agere Sys., Inc.,

602 F.3d at 228-229. Theoretically, one PRP could shift

full liability onto another PRP and escape all liability

himself. Given that CERCLA is intended to distribute

the costs of environmental correction among all

of those who bear responsibility for an instance of contamination, see Burlington Northern, 556 U.S. at 602, such

gamesmanship seems inappropriate.

The problem, of course, is that § 9607(a) does not

always impose joint and several liability. Apportionment

is proper on a cost recovery claim where there is a reasonable basis for determining the contribution of each

cause to a single harm. Burlington Northern, 556 U.S. at

614. Apportionment is likewise the remedy for a con-
Nos. 11-1501 and 11-1523 25

tribution claim. As a result, counterclaim or no counterclaim, there is not more risk that a defendant could

be gamed into shouldering full liability, or more than

his fair share, by a plaintiff with a § 9607(a) cost

recovery action than by a plaintiff with a § 9613(f)(3)(B)

contribution action. After Burlington Northern, the “contribution bar” argument is not persuasive.

The other justification usually offered for limiting a

plaintiff to one form of CERCLA action—the procedural

distinctness of the remedies—is more compelling. As

the Second Circuit has observed, “[t]o allow [a qualifying

contribution plaintiff] to proceed under § 9607(a) would

in effect nullify the SARA amendment and abrogate

the requirements Congress placed on contribution

claims under § 9613.” Niagara Mohawk, 594 F.3d at 128.

“ ‘When Congress acts to amend a statute, [courts]

presume it intends its amendment to have real and substantial effect.’ ” Id. (citing Stone v. INS, 514 U.S. 386, 397

(1995)). We agree with the sentiments expressed by the

Second Circuit. Through SARA, Congress intentionally

amended CERCLA to include express rights to contribution, subject to certain prerequisites. If § 9607(a) already

provided the rights of action contemplated by the

SARA amendments, then the amendments were just

so many superfluous words. The canons of statutory

construction counsel against any interpretation that

leads to that result. See Hibbs, 542 U.S. at 101.

In short, with respect to the 1999 AOC, the Trustees

have a contribution action under § 9613(f)(3)(B). Although,

giving the words their plain meaning, they have
26 Nos. 11-1501 and 11-1523

also incurred “necessary costs of response,” see

§ 9607(a)(4)(B), as is required to sustain a cost recovery

action, we agree with our sister circuits that a plaintiff

is limited to a contribution remedy when one

is available. The next step is to determine whether the

Trustees’ recovery, on a contribution theory, for costs

incurred pursuant the 1999 AOC is time-barred.

b. The Trustees are time-barred from recovering

costs expended pursuant to the 1999 AOC.

The statute of limitations for CERCLA contribution

actions can be found at 42 U.S.C. § 9613(g)(3):

No action for contribution for any response costs or

damages may be commenced more than 3 years after—

(A) the date of judgment in any action under

this chapter for recovery of such costs or

damages, or

(B) the date of an administrative order under

section 9622(g) of this title (relating to de minimis

settlements) or 9622(h) of this title (relating to

cost recovery settlements) or entry of a judicially

approved settlement with respect to such costs

or damages.

The Bankerts argue that because the de minimis parties,

also known as the Premium Respondents, settled out

pursuant to § 9622(g), the three year limitations period
Nos. 11-1501 and 11-1523 27

Although the Bankerts failed to raise the issue, an argument

11

can also be made that the 1999 AOC was “an administrative

order . . . under § 9622(h)[,]” to the extent that the NonPremium Respondents agreed to reimburse response costs

incurred by the federal government pursuant to that section.

That would provide an additional basis for starting the

three year clock on the day the AOC was executed. In its

amicus brief, the EPA suggests that by making note of this

potential wrinkle we “addressed” the issue and reached a

conclusion that was “incorrect.” [EPA amicus brief, pp. 12-13).

In fact, we neither address it nor reach any conclusion at all;

we have relied on it in no way in reaching our decision. 

began to run on the date the AOC was executed.11

The Trustees argue in response that it certainly did with

respect to any claims that the de minimis parties might

advance, but that none of the § 9613(g)(3) triggers

have occurred with respect to their own claims. The

Trustees argue that their claims fall within a “gap” in

the statutory coverage, and that the gap should be

filled with the limitations period applicable to actions

under U.S.C. § 9607(a). An “initial action for the

recovery of costs” under § 9607(a) must be filed:

(A) for a removal action, within 3 years after completion of the removal action, except that such cost

recovery action must be brought within 6 years after

a determination to grant a waiver under section

9604(c)(1)(C) of this title for continued response

action; and

(B) for a remedial action, within 6 years after

initiation of physical on-site construction of the reme-
28 Nos. 11-1501 and 11-1523

dial action, except that, if the remedial action is initiated within 3 years after the completion of the removal action, costs incurred in the removal action

may be recovered in the cost recovery action

brought under this subparagraph.

42 U.S.C. §§ 9613(g)(2)(A)-(B).

We need not resolve the “coverage gap” dispute with

respect to the work performed under the 1999 AOC,

because the outcome is the same either way. Assuming

for the moment that we agree with the Trustees that

the limitations period for a cost recovery action should

apply, we note that an EE/CA is a “removal action.”

See 40 C.F.R. § 300.415(b)(4)(i). That means that §

9613(g)(2)(A) would apply to any attempt to recover

the costs incurred in executing the EE/CA. Under that

standard, the limitations period began running when

the EE/CA project was completed in October of 2000.

The Complaint in this case was filed on April 1, 2008,

significantly more than three years later. Recovery is timebarred. Assuming, on the other hand, that we agree

with the Bankerts and apply the statute of limitations

for contribution actions, we would mark a start date for

the limitations period on the date the AOC was executed. Pursuant to § 9613(g)(3)(B), the Trustees had three

years from that date—in 1999—in which to file an action.

They missed the deadline by approximately six years;

recovery is time-barred. Under either party’s theory, it is

too late for the Trustees to recover the costs they incurred

in carrying out the 1999 AOC.
Nos. 11-1501 and 11-1523 29

2. The 2002 AOC

After approving the work done under the 1999 AOC,

the EPA issued an Enforcement Action Memorandum

selecting a removal action and cleanup objectives

from among the options detailed in the EE/CA. In November 2002, the parties entered into the second AOC to

implement those solutions. The 2002 AOC included

identical conditional covenants not to sue and an

identical disclaimer of liability on the part of the Respondents; its structure was largely parallel to that of the

1999 AOC. To the extent that the Trustees’ suit seeks to

recover expenses arising out of their performance of

the 2002 AOC, it is not a contribution action. The

Trustees have been subjected to no civil action under

§§ 9606 or 9607, so a contribution action under § 9613(f)(1)

is unavailable. On the other hand, under the plain terms

of the AOC, they could not have “resolved [their]

liability to the United States . . . for some or all of [the

work performed under the 2002 AOC] or for some or all

of the costs of [the work performed under the 2002 AOC]

in an administrative . . . settlement” at any time before

satisfactory discharge of their obligations under the

2002 AOC. Since the work to be performed under the

2002 AOC was ongoing when this action was filed, and

no notice of approval had issued which would trigger

the conditional covenants not to sue, a contribution

action under § 9613(f)(3)(B) is likewise unavailable. What

the Trustees have done, with respect to the work called

for by the 2002 AOC, is incur costs of response consistent with the national contingency plan, as is required

to file a cost recovery action under § 9607(a).
30 Nos. 11-1501 and 11-1523

So, a plain reading of the statute and a sober look at

the facts make it clear that a cost recovery action is available. Nonetheless, between the Bankerts and the EPA

writing as amicus in support of rehearing, three different

reasons have been advanced why this court should

find that the Trustees are limited to a contribution

action for costs incurred pursuant to the 2002 AOC. The

first, championed primarily by the Bankerts, is that

“compelled” costs incurred pursuant to an AOC must,

as a matter of law, be recovered in a contribution action. The second, argued by both parties, is that the

mere act of signing a settlement agreement amounts to

a resolution of liability for purposes of the statute.

The third argument is based on policy considerations

and on the theory that withholding a contribution

action until liability is actually resolved will discourage

future polluters from settling early with the PRP. None

of these arguments are factually or legally convincing,

and they do not warrant a different result.

a. The voluntary/compelled costs dichotomy

The Bankerts’ first argument focuses on a distinction

between voluntary and compelled costs: they claim that

the Supreme Court drew a line in the sand in Atlantic

Research and that in the current legal environment a

cost recovery action is available only to plaintiffs who

incurred costs “voluntarily”. “Compelled” costs, on the

other hand, may only be recovered through a contribution action. Since the Trustees were “compelled” to

clean up the site by the administrative settlement
Nos. 11-1501 and 11-1523 31

process, the Bankerts argue that they are limited to a

contribution action. There are three significant problems with this argument.

The first problem with the Bankerts’ argument is that

it has no basis in the text of the source case. In Atlantic

Research, the Court was asked to decide whether the

phrase “any other person” in § 9607(a)(4)(B) provides

PRPs, in addition to “innocent” parties, with a right to

recover response costs from other PRPs. 551 U.S. at 131.

Arguing against that result, the United States suggested

to the Court that allowing one PRP to maintain a § 9607(a)

cost recovery action against another PRP would give

it license to “cause shop” between an action for cost

recovery and an action for contribution, choosing whichever section offered a perceived advantage under

the circumstances of the case.

In response to the government’s concern, the Court

emphasized the procedural distinctness of the remedies.

The Court contrasted a plaintiff who seeks to recover

expenditures he himself incurred in cleaning up a site

with a plaintiff who seeks to recover the cost of reimbursing another person’s expenditures pursuant to a

settlement agreement or judgment. 551 U.S. at 139. The

former is a typical cost recovery claim, whereas the

latter is a typical contribution claim under § 9613(f)(1). Id.

Under the circumstances as hypothetically defined, the

Court saw no room for choosing between the two: “[B]y

reimbursing costs paid to other parties, the PRP has not

incurred its own costs of response and therefore cannot

recover under § 107(a). As a result, though eligible to seek
32 Nos. 11-1501 and 11-1523

contribution under § 113(f)(1), the PRP cannot simultaneously seek to recover the same expenses under § 107(a).”

Id. The Court concluded that the government’s causeshopping worries were thus unfounded. But before

moving on, the Court recognized the limitations of its

own conceptual illustration in a footnote, which we

have quoted once already:

We do not suggest that §§ 107(a)(4)(B) and 113(f) have

no overlap at all. Key Tronic Corp. v. United States,

511 U.S. 809, 816, 114 S.Ct. 1960, 128 L.Ed.2d 797

(1994) (stating the statutes provide “similar and

somewhat overlapping remed[ies]”). For instance,

we recognize that a PRP may sustain expenses pursuant to a consent decree following a suit under § 106

or § 107(a). See, e.g., United Technologies Corp. v.

Browning-Ferris Industries, Inc., 33 F.3d 96, 97 (1st Cir.

1994). In such a case, the PRP does not incur costs

voluntarily but does not reimburse the costs of

another party. We do not decide whether these compelled costs of response are recoverable under § 113(f),

§ 107(a), or both. For our purposes, it suffices to demonstrate that costs incurred voluntarily are recoverable only by way of § 107(a)(4)(B), and costs of

reimbursement to another person pursuant to a

legal judgment or settlement are recoverable only

under § 113(f). Thus, at a minimum, neither remedy

swallows the other, contrary to the Government’s

argument. 

551 U.S. at 139 n. 6.

The Bankerts conclude, based on the quoted footnote,

that only parties who voluntarily incur response costs can
Nos. 11-1501 and 11-1523 33

bring an action for cost recovery under § 9607(a), and that

parties who are “compelled” to incur response costs

because of an enforcement action or a government settlement must proceed under § 9613(f) instead. But the

Court said “costs incurred voluntarily are recoverable only

by way of [§ 9607(a)(4)(B).]” Id. (emphasis added). That

is not the same as saying that only voluntarily incurred

costs are recoverable by way of § 9607(a)(4)(B). The

latter implies the exclusion of costs of any other type; the

former does not. The Supreme Court said, and meant,

the former. In fact, the Court explicitly left open the

possibility that parties who were “compelled” to incur

costs—including parties who incurred costs subsequent

to government settlements—might proceed under § 9607(a)

nonetheless. Id.

The second problem with the Bankerts’ position is

that they have produced no legal authority in support of

it. The cases they cite which did hold that PRPs who

incurred cleanup costs under government settlements

were bound to pursue a contribution claim did so

because the statutory triggers for contribution claims

were met, not because the costs were compelled as opposed to voluntary. See Niagara Mohawk, 596 F.3d 112

(holding that the plaintiff had a contribution claim

under § 9613(f)(3)(B), because the plaintiff had resolved

its CERCLA liability through an administrative settlement); Appleton Papers Inc. v. George A. Whiting Paper Co.,

572 F.Supp.2d 1034, 1043 (E.D. Wis. 2008) (dismissing a

§ 9607(a) cost recovery claim where a § 9613(f)(1) contribution claim was available to plaintiffs by virtue of

a previous EPA lawsuit, and noting that “[d]espite the
34 Nos. 11-1501 and 11-1523

courts’ use of the terms ‘voluntary’ and ‘involuntary’

to distinguish between payments recoverable under

§ 107(a) and those recoverable under § 113(f), the

operative principle appears to be that § 107(a) is available

to recover payments only in cases where § 113(f) is not.”).

The cases cited by the Bankerts with different outcomes

simply reinforce the straight-forward application of the

statutory scheme. See ITT Indus., Inc., 506 F.3d 452 (plaintiff’s § 9613(f)(3)(B) claim was dismissed where the

AOC did not resolve plaintiff’s liability, as would be

statutorily necessary to support a § 9613(f)(3)(B) action);

Chitayat v. Vanderbilt Assocs., 702 F.Supp.2d 69 (E.D.N.Y.

2010) (dismissing a § 9607(a) claim because, in the

court’s eyes, the plaintiff never “incurred” costs, as is

necessary for a cost recovery action). At least one case

directly refutes the Bankerts’ argument that costs

incurred pursuant to a settlement cannot be recovered

under § 9607(a). In W.R. Grace & Co.-Conn. v. Zotos Intern., Inc., 559 F.3d 85 (2d Cir. 2009), a landfill owner

brought an action to recover costs it incurred in the

investigation and remediation of a contaminated

landfill site pursuant to a government settlement agreement. Despite the existence of the settlement agreement,

the court held that the plaintiff could recover its

cleanup costs under § 9607(a) because neither contribution trigger had occurred. The settlement had not

resolved CERCLA liability (§ 9613(f)(3)(B)) and no civil

action had been filed (§ 9613(f)(1)). In short, not a

single one of these cases treated the voluntary/

compelled costs dichotomy as dispositive.

The third, and most obvious, problem with the

Bankerts’ argument is that they are asking us to impose
Nos. 11-1501 and 11-1523 35

a requirement that appears nowhere in the statutory

text. Imposing a requirement not evident on the face of

the statute arguably violates fundamental rules of

statutory construction. See E.I. DuPont de Nemours and Co.

v. United States, 508 F.3d 126, 133 n. 5 (3d Cir. 2007). As

outlined in detail above, CERCLA does not ask whether

a person incurs costs voluntarily or involuntarily. It

asks whether a person incurred costs of response

consistent with the national contingency plan, whether a

person has previously been subjected to a civil action

under § 9606 or § 9607(a), and so on. The Bankerts

have advanced no persuasive reason, and we can think of

none, why we would flatly disregard the terms of the

statute and replace them with a new scheme of the

Bankerts’ choosing, especially one with so little to recommend it in the case law.

b. Equating signing a settlement agreement

with the resolution of liability

The Bankerts’ second argument is that the phrase

“resolved its liability . . . in an administrative or judicially

approved settlement[,]” as a statutory prerequisite to a

contribution suit under § 9613(f)(3)(B), really just means

“entered into an administrative or judicially approved

settlement,” even where the settlement may or may not

lead to a resolution of liability depending on future

events. In its amicus brief in support of rehearing, the EPA

argued the same. The EPA summarized its argument

as follows:
36 Nos. 11-1501 and 11-1523

Unlike “discharge,” “release,” or “satisfy,” the word

“resolve” is not a term of art in contract law and is not

defined in Black’s Law Dictionary. Congress therefore

did not intend to require a PRP to completely extinguish its liability before obtaining contribution

rights. Rather, Congress provided contribution rights

to a PRP who “has resolved its liability . . . in an

administrative or judicially approved settlement.” 42

U.S.C. § 9613(f)(3)(B). Given that context, Congress

meant that the settlement agreement needs to

resolve a PRP’s liability, not that the release,

covenant, or other liability-resolving term in the

agreement must be effective for contribution rights

to arise. In the AOCs, the settling PRPs promised to

perform certain removal actions and EPA promised

not to sue concerning those actions. The AOCs therefore are “settlement[s]” that resolved the PRPs’

liability for response actions within the meaning of

[§ 9613(f)(3)(B)] and thus triggered contribution

rights upon their effective dates.

The argument, as stated in the passage above and explained in more detail throughout the EPA brief, is not

legally persuasive. The EPA ignores traditional rules of

statutory interpretation and jumps immediately from its

observation that “resolve” is not a “term of art” to

a discussion of House Reports and other evidence of

legislative intent extrinsic to the statutory text. That

path of analysis is not correct.

When a statute itself does not define a term, “we construe the term ‘in accordance with its ordinary or natural
Nos. 11-1501 and 11-1523 37

meaning,’ a meaning which may be supplied by a dictionary.” Carmichael v. The Payment Center, Inc., 336 F.3d

636, 640 (7th Cir. 2003) (quoting FDIC v. Meyer, 510 U.S.

471, 476, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994)). This is

because “the plain language of a statute is the best evidence of legislative intent.” Senne v. Village of Palatine, Ill.,

695 F.3d at 597, 612 (7th Cir. 2012) (Flaum, J., dissenting)

(citing United States v. Clintwood Elkhorn Mining Co., 553

U.S. 1, 11 (2008) (“The strong presumption that the

plain language of the statute expresses congressional

intent is rebutted only in rare and exceptional circumstances.”) (internal markup omitted)). Of course, while

“[w]e frequently look to dictionaries to determine the

plain meaning of words,” Sanders v. Jackson, 209 F.3d

998, 1000 (7th Cir. 2000), we always do so with caution,

sensitive to the need to consider the meaning of those

words in context and to the reality that many words in

our language are susceptible of multiple “ordinary or

natural” meanings. United States v. Costello, 666 F.3d

1040, 1043-44 (7th Cir. 2012); see also Trs. of Chicago Truck

Drivers, Helpers, and Warehouse Workers Union (Indep.)

Pension Fund v. Leaseway Transp. Co., 76 F.3d 824, 828

(7th Cir. 1996). If the ordinary meaning of a word is

totally ambiguous, then resort to legislative materials of

the type referenced by the EPA is sometimes warranted.

But even then, “where . . . the interpretation urged by

[a party] is not supported by common usage, dictionary

definition, or court decision, such interpretation cannot

be upheld.” Torti v. United States, 249 F.2d 623, 625 (7th

Cir. 1957) (quoting Gellman v. United States, 235 F.2d 87,

93 (8th Cir. 1956)). In short, it is what Congress says,
38 Nos. 11-1501 and 11-1523

The Oxford English Dictionary entry on “resolve” is rather 12

extensive, but the section titled “to untie; to answer, solve; to

decide, determine” seems most applicable to this statutory

context. That section includes, inter alia, “[t]o answer (a question); to solve (a problem of any kind); to determine, settle, or

decide upon (a point or matter regarding which there is doubt

or dispute)”; as well as “to settle (a dispute or argument); to

reconcile opposing elements or tendencies within (a conflict,

contradiction, etc.)[.]” Oxford English Dictionary, available at

http://www.oed.com/. The New Oxford American Dictionary

defines “resolve,” when used as a transitive verb in a nonspecialized context, as “settle or find a solution to (a problem,

dispute, or contentious matter)[.]” NEW OXFORD AMERICAN

DICTIONARY (Angus Stevenson et al., eds., 3d ed. 2010). MerriamWebster contains several potentially applicable definitions:

(1) to deal with successfully: clear up <resolve doubts> <resolve

a dispute>; (2) to find an answer to; (3) to make clear or understandable; and (4) to reach a firm decision about <resolve to get

more sleep> <resolve disputed points in a text>. MerriamWebster, available at http://www.merriam-webster.com

(continued...)

not what Congress means to say, that becomes the law

of the land. Statutory interpretation is therefore an

exercise best grounded in the text of the statute itself.

The statute at issue in this case provides some

context clues as to the meaning of the phrase “resolved

its liability[.]” § 9613(f)(3)(B). First, “resolved” clearly acts

as a verb and takes an object—“liability.” That eliminates

the various dictionary definitions covering “resolve”

used as an intransitive verb or as another part of speech

entirely. A variety of potential meanings still remain,12
Nos. 11-1501 and 11-1523 39

(...continued) 12

(entries renumbered to eliminate inapplicable, specialized or

obsolete definitions). “Dictionary.com” provides one

potentially applicable definition: “to come to a definite or

earnest decision about; determine[.]” It also provides “confirm”

as a synonym.

but certain commonalities can be discerned. All of them

seem to involve the concept of a conclusive determination

of some kind. An issue which is “resolved” is an issue

which is decided, determined, or settled—finished, with

no need to revisit. This sense of the word is consistent

with a common sense understanding of its role in the

statutory text, and is also consistent with the way the

term is regularly used by courts of law in unrelated

contexts. See, e.g., Guzman v. City of Chicago, 689 F.3d

740, 745 (7th Cir. 2012) (question of liability was “resolved”

by the district court’s determination, at the summary

judgment stage, that the defendant was liable); Shepherd

v. C.I.R., 147 F.3d 633, 635 (7th Cir. 1998) (suggesting

that to “resolve” a taxpayer’s liability, in the refund suit

context, means to make a final determination of the

issue); Baylor Heating & Air Conditioning, Inc. v. Federated

Mut. Ins. Co., 987 F.2d 415 (7th Cir. 1993) (noting that

plaintiff’s “contested liability was resolved” when the

Seventh Circuit conclusively found against him in an

earlier declaratory judgment action); Deimer v. Cincinnati

Sub-Zero Prods., Inc., 990 F.2d 342, 344 (7th Cir. 1993)

(characterizing a legal claim as “resolved” on summary

judgment where it was conclusively decided). The cited

cases suggest that, as a matter of common parlance,
40 Nos. 11-1501 and 11-1523

courts consider liability to be “resolved” when the issue

of liability is decided, in whole or in part, in a manner

that carries with it at least some degree of certainty

and finality.

Accordingly, having surveyed the statutory context,

the dictionary definitions, and the common use of

similar terms by the federal courts more generally, we

believe the “ordinary or natural” meaning of the phrase

“resolved its liability . . . in an administrative or judicially

approved settlement” is clear and unambiguous. To

meet the statutory trigger for a contribution action

under § 9613(f)(3)(B), the nature, extent, or amount of a

PRP’s liability must be decided, determined, or settled, at

least in part, by way of agreement with the EPA. As a

matter of simple, observable fact, that did not happen

here. Yes, the Non-Premium Respondents “settled”

with the EPA. They agreed to perform certain actions

in order to remedy an instance of environmental contamination. But they did not settle the issue of liability

for that contamination—which is what the statute

requires—at all. The parties do not need to take this panel’s

word for it. They can refer to the language which they

themselves chose to include in the 2002 AOC:

Respondents’ agreement to comply with and be

bound by the terms of this Order and not to contest

the basis or validity of this Order or its terms shall

not constitute any admission of liability by any (or

all) of the Respondents nor any admission by Respondents of the basis or validity of U.S. EPA’s findings, conclusions or determinations contained in

this Order. 
Nos. 11-1501 and 11-1523 41

It is very difficult to say, in light of the quoted passage,

that the agreement between the parties constituted a

resolution of liability.

The attempts by the EPA and the Bankerts to argue

otherwise depend on the assertion that “[i]n the AOCs,

the settling PRPs promised to perform certain removal

actions and EPA promised not to sue concerning those

actions.” But while the Non-Premium Respondents did

indeed promise to perform certain removal actions, the

EPA only conditionally promised to release the Non-Premium Respondents from liability. The condition which

had to be met was complete performance, as well

as certification thereof. If the EPA’s covenant not to

sue is the contemplated “resolution of liability” in

this case—and the argument advanced by the EPA and

the Bankerts seems to agree that it is—then, by the terms

of the AOC itself, the resolution of liability would not

occur until performance was complete, which is the

first time at which the covenant would have any effect.

In fact, the EPA expressly reserved its right to “seek[]

legal or equitable relief to enforce the terms of

[the] Order” at any time before those covenants went

into effect.

Of course, if the EPA had included an immediately

effective promise not to sue as consideration for

entering into the agreement, the situation would be

different. That is exactly what occurred in RSR

Corporation v. Commercial Metals Co., 496 F.3d 552 (6th

Cir. 2007). In that case, as a term of the AOC, “the

United States agreed ‘not to sue or take administrative
42 Nos. 11-1501 and 11-1523

action’ that would impose additional liability on RSR

and its co-defendants[.]” Id. at 554. As a result, all

parties agreed that RSR had resolved its liability

through settlement and was therefore entitled to a

§ 9613(f)(3)(B) contribution action. Id. at 556. The Sixth

Circuit also agreed, reasoning that “RSR’s promise of

future performance was the very consideration it gave

in exchange for the United States’ covenant not to

seek further damages. RSR and its co-defendants in

other words resolved their liability to the United States

by agreeing to assume all liability (vis-a-vis the United

States) for future remedial actions.” Id. at 558 (emphasis original).

The Bankerts and the EPA believe this panel’s reading

of the statute conflicts with the Sixth Circuit’s decision

in RSR Corporation. However, we—like the Sixth Circuit—

simply read the statute as requiring that liability

be “resolved.” Our result differs from the result reached

by the Sixth Circuit in RSR Corporation not because

we apply a contradictory rule of law, but because of

the obvious and dispositive differences in the facts. In

that case, the consent order contained an immediately

effective release from liability. In this case, it did not. In

fact, far from immediately resolving all liability, see 496

F.3d at 558, our AOC immediately resolved none. So, the

consideration in RSR Corporation was an immediate

release from liability; the consideration in this case was

a conditional promise to release from liability if and

when performance was completed. Given the nature of

the statutory trigger, that distinction clearly warrants

a different result—a reality which the Sixth Circuit itself
Nos. 11-1501 and 11-1523 43

In Dravo, the EPA entered into a settlement agreement

13

with three PRPs containing an immediately effective

covenant “not to sue or to take any other civil or administrative

action against” the settlors. 13 F.3d at 1224. The agreement

also provided “EPA agrees that by entering into and carrying

out the terms of this Consent Order, Respondents will have

resolved their liability to the United States[.]” Id. (emphasis

added). The Eighth Circuit placed special emphasis on the

agreement’s indication that the resolution of liability was

based on “entering into” the agreement. Id. at 1227. The terms

of the AOC at issue in the case before this court are different.

has openly recognized. See, e.g., ITT Indus., Inc., 506 F.3d

at 459-60 (finding that plaintiff had not “resolved its

liability” for purposes of § 9613(f)(3)(B) contribution

action when plaintiff “has not conceded the question

of liability as part of its settlement with the EPA”). The

same distinction differentiates this case from Dravo Corp.

v. Zuber, 13 F.3d 1222 (8th Cir. 1994). There is no 13

circuit split here.

In summary, the efforts of the Bankerts and the EPA

to equate the resolution of liability, as a legal proposition,

with the simple act of signing a settlement agreement

are not persuasive. The ordinary and natural reading

of the statute is that a contribution action becomes available when a PRP’s liability is resolved—as in decided or

determined—through settlement. Whether or not

liability is resolved through a settlement simply is not

the sort of question which can or should be decided

by universal rule. Instead, it requires a look at the terms

of the settlement on a case-by-case basis. The parties to
44 Nos. 11-1501 and 11-1523

a settlement may choose to structure their contract so

that liability is resolved immediately upon execution of

the contract. See RSR Corporation, 496 F.3d 552; Dravo,

13 F.3d 1222. Or, the parties may choose to leave

the question of liability open through the inclusion of

reservations of rights, conditional covenants, and express

disclaimers of liability. See, e.g., ITT Indus., Inc., 506 F.3d

at 459-60 (finding that plaintiff had not “resolved its

liability” for purposes of § 9613(f)(3)(B) contribution

action when plaintiff “has not conceded the question

of liability as part of its settlement with the EPA”). In

this case, the parties clearly chose to do the latter—

a choice which the EPA typically has great weight to

influence. 

c. Policy considerations

The final argument advanced by the EPA and the

Bankerts in support of their request for rehearing

suggests that this panel’s decision creates negative incentives which will discourage PRPs from settling with

the EPA in a timely and efficient manner. They

argue that it is the possibility of obtaining contribution

from non-settling parties as soon as a settlement is executed which incentivizes PRPs to settle in the first place,

and that refusing to recognize that right of contribution

means a settling PRP will be stuck shouldering the full

cost of the cleanup until completion. We are sensitive

to such policy considerations, but we are not persuaded

that settlement incentives will be negatively effected by

our opinion in the way the EPA envisions. True, we
Nos. 11-1501 and 11-1523 45

See http://cfpub.epa.gov/compliance/resources/policies/ 14

cleanup/superfund/index.cfm?action=3&sub_id=1229

hold that a settling PRP is not entitled to sue a nonsettling PRP for contribution under § 9613(f)(3)(B) until

the settling PRP’s liability is resolved. But we emphatically do not hold that the settling PRP has no legal

recourse until that time. As soon as the settling PRP

incurs response costs consistent with the national contingency plan, and until liability is resolved, that

settling PRP has access to a cost recovery action. What’s

more, the cost recovery action is subject to a longer

statute of limitations, making it arguably the preferable

recovery vehicle for a PRP embarking on what might

well be a decade-long cleanup effort, and thus actually

creating a further positive incentive to settle. That is

exactly why the settling PRPs in this case—the very type

of people the Bankerts and the EPA claim are disadvantaged by our decision—are arguing in favor of classifying

their claim as one for cost recovery.

Accordingly, it is difficult to see how our holding,

properly understood, has any negative effect on settlement incentives at all. But if any negative incentives are

in fact created by deferring the availability of a contribution action, then the EPA can structure its settlements

with future PRPs in such a way as to resolve liability

effective immediately upon execution. See RSR Corporation, 496 F.3d 552; Dravo, 13 F.3d 1222. In fact, the

EPA’s current model AOC has already incorporated

provisions to that effect. This opinion has no effect on 14

the validity of such agreements; as already stated, the
46 Nos. 11-1501 and 11-1523

In the context of arguing that the Trustees are limited to a 15

contribution claim—which they did not plead—the EPA

argues that we should dismiss the claim pursuant to Rule

12(b)(6), rather than on statute of limitations grounds. Since

we find that a cost recovery claim does exist, however, it

is necessary to decide whether that claim is timely.

parties to an AOC can structure the resolution of liability

in whatever way they see fit, within the bounds of the

authority granted by statute. Finally, it must be noted

that the Bankerts have spent the entirety of this litigation

arguing that giving a settling PRP access to a cost

recovery action instead of a contribution action equips

the settling PRP with some sort of unfair advantage.

They now argue that classifying a settling PRP’s

claim as one for cost recovery is so remarkably disadvantageous to the settling PRP that it jeopardizes

future settlement efforts.

3. Conclusion of CERCLA Issues

In summary, to the extent that the Trustees seek to

recover for costs incurred in executing the 2002 AOC,

their action is a cost recovery action. Because the

removal action called for by the 2002 AOC was ongoing

when this suit was filed, the 3-year limitations period

under 42 U.S.C. § 9613(g)(2)(A), quoted in full supra,

had not yet begun to run, let alone expired. The Trust15

ees’ cost recovery action for expenses incurred under the

2002 AOC is timely and must be reinstated for further

proceedings at the district court level.
Nos. 11-1501 and 11-1523 47

We recognize that neither party appears to have considered splitting the Trustees’ claim in the way that we

do now. But the removal actions called for by the

AOCs were temporally discrete projects. If that were not

the case, the EPA would not have been able to certify

the first action’s completion before the second action

had even been selected. They need not be treated as

an indivisible whole. See United States v. Manzo, 182

F.Supp.2d 385 (D.N.J. 2000). The removal action contemplated by the 1999 AOC was completed years ago, and

supports a contribution action. The removal action contemplated by the 2002 AOC was ongoing at the time

this suit was filed, and supports a cost recovery action.

Each is governed by a different statute of limitations, and

the fact that recovery with respect to the former is timebarred does not legally preclude the Trustees from pursuing recovery with respect to the latter, which is not.

Furthermore, resolving the dispute in this manner

does not require constructing a new claim which the

Trustees did not plead. Count I, as written, is an action

for cost recovery, and we hold that it can stand as an

action for cost recovery. This ruling simply limits the

damages the plaintiff can recover. The district court is

reversed with respect to Count I to the extent that

the Trustees may seek to recover for costs incurred pursuant to the 2002 AOC.

Finally, we address the district court’s dismissal of

Count II, seeking a declaratory judgment of the

Bankerts’ joint and several liability. Count II is based on

42 U.S.C. § 9613(g)(2), which provides that in any action
48 Nos. 11-1501 and 11-1523

for recovery of costs “the court shall enter a declaratory

judgment on liability for response costs or damages

that will be binding on any subsequent action or actions

to recover further response costs or damages.” The

district court’s determination that the Trustees could

not bring a cost recovery action obviously rendered

§ 9613(g)(2) inapplicable. But since we have revived

part of Count I, we must revive Count II as well. We do

note, however, that the mere fact that the Trustees seek

to impose joint and several liability does not mean

they will be successful. As we have repeatedly stated,

the Bankerts will be given an opportunity to show

a reasonable basis for apportionment.

D. The District Court’s Denial of the Trustees’ Motion

to Strike

According to the Trustees, the Bankerts raised an argument in their summary judgment reply brief which

they did not raise in their original motion. More specifically, the Bankerts raised the“contribution bar” argument which we have previously discussed. The Trustees

wanted the argument struck, but the district court let

it stand. The Trustees now appeal that decision. We

review the district court’s grant or denial of a motion

to strike for abuse of discretion. Stinnet v. Iron Works

Gym/Executive Health Spa, Inc., 301 F.3d 610, 613 (7th Cir.

2002); Winfrey v. City of Chi., 259 F.3d 610, 618-619 (7th

Cir. 2001). “Normally, the decision of a trial court is

reversed under the abuse of discretion standard only

when the appellate court is convinced firmly that the
Nos. 11-1501 and 11-1523 49

reviewed decision lies beyond the pale of reasonable

justification under the circumstances.” Harman v. Apfel,

211 F.3d 1172, 1175 (9th Cir. 2000) (citing Valley Eng’rs

v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998), cert.

denied, 526 U.S. 1064 (1999)). This is not such a case. In

its decision denying the motion to strike, the district

court pointed out that the argument was derived from

Atlantic Research and other cases which the parties did

discuss at length in their earlier filings, and that it was

raised previously at oral argument. It was therefore

not “new” to the case at all. We have no reason to question the district court’s representations, let alone to

find that they are “beyond the pale of reasonable justification.” We find no abuse of discretion on this record.

II. Count III: Indiana ELA Claim

We move next to the Trustees’ claim under the

Indiana Environmental Legal Actions statute (“ELA”). In

1997, the Indiana General Assembly enacted a statute

providing for an “environmental legal action” to “recover

reasonable costs of a removal or remedial action”

involving hazardous substances or petroleum. See

Cooper Indus., LLC v. City of South Bend, 899 N.E.2d

1274, 1280 (Ind. 2009) (citing IND. CODE § 13-30-9-2). The

statute became effective on February 28, 1998. In

Count III of the Complaint, the Trustees sued under the

ELA to recover the costs of the removal actions undertaken pursuant to the 1999 and 2002 AOCs. At the summary judgment stage, the Bankerts argued that an

ELA claim was barred by the applicable statute of limita-
50 Nos. 11-1501 and 11-1523

That changed in 2011, when the Indiana General Assembly 16

enacted IND. CODE § 34-11-2-11.5. That section states, inter alia:

(b) Subject to subsections (c), (d), and (e), a person may seek

to recover the following in an action brought on or after

the effective date of this section under IC 13-30-9-2 or

IC 13-23-13-8(b) to recover costs incurred for a removal

action, a remedial action, or a corrective action:

(1) The costs incurred not more than ten (10) years before

the date the action is brought, even if the person or

any other person also incurred costs more than ten

(10) years before the date the action is brought. 

(2) The costs incurred on or after the date the action is

brought. 

If § 34-11-2-11.5 governed this litigation, the resolution of the

ELA issue would be a simple affair. But this lawsuit was filed

on April 1, 2008, more than three years prior to the

section’s effective date, and we must apply the limitations

period that existed at the time the action commenced. See

(continued...)

tions, and the district court agreed. Once again, we

review the district court’s dismissal of the claim and

its resolution of accompanying legal questions de novo.

Storie, 589 F.3d at 876; Stepney, 392 F.3d at 239.

We apply the statute of limitations of the state

whose substantive law governs the claim, which in this

case is Indiana. See Guaranty Trust Co. of N.Y. v. York, 326

U.S. 99, 110 (1945) (holding that statutes of limitations

are considered substantive law for purposes of the Erie

doctrine). When this action was filed, the ELA did not

include its own limitations provision. Accordingly, both 16
Nos. 11-1501 and 11-1523 51

(...continued) 16

Connell v. Welty, 725 N.E.2d 502, 506 (Ind. App. 2000) (quoting

State v. Hensley, 661 N.E.2d 1246, 1249 (Ind. Ct. App. 1996) (“the

period of limitation in effect at the time the suit is brought

governs in an action[.]”)). 

Found at IND. CODE § 34-11-2-7: 17

The following actions must be commenced within six (6) years

after the cause of action accrues:

(1) Actions on accounts and contracts not in writing.

(2) Actions for use, rents, and profits of real property.

(3) Actions for injuries to property other than personal

property, damages for detention of personal property and

for recovering possession of personal property.

(4) Actions for relief against frauds.

parties looked elsewhere in the Indiana Code to find

an applicable statute of limitations. The Trustees argue

that Indiana’s ten-year “catch-all” statute of limitations

should apply. See IND. CODE § 34-11-1-2 (a cause of action

which arises on or after September 1, 1982, and which

is not limited by any other statute must be brought

within ten years). The Bankerts’ position has continued

to develop throughout the pendency of this appeal,

and they now argue two related points. First, the

Bankerts argue that the Trustees’ ELA claim is a claim

for property damage, and should therefore be governed

by the six-year statute of limitations for actions to

recover damages to real property. Second, whichever 17

statute applies, the Bankerts also dispute—and we must

determine—when the limitations period began to run.
52 Nos. 11-1501 and 11-1523

See Doe v. United Methodist Church, 673 N.E.2d 839, 842

(Ind. Ct. App. 1996) (“The determination of when a cause

of action accrues is a question for the court.”). The

answer to that question depends on which limitations

provision applies, as Indiana courts have held that the

time at which a plaintiff’s cause of action accrues

under each is different.

Pflanz v. Foster, 888 N.E.2d 759 (Ind. 2008), explains

the application of the ten-year catch-all statute of limitations, and Peniel Group, Inc. v. Bannon, 973 N.E.2d 575

(Ind. Ct. App. 2012), explains the application of the sixyear property damage statute of limitations. In combination, they provide the framework for the resolution of

this case. Pflanz v. Foster concerned a dispute between

the seller, Merrill Foster, and the buyers, Richard and

Dolores Pflanz, of a parcel of land that was previously

occupied by a gas station. When Foster sold the land to

the Pflanzes in 1984, he advised them that underground petroleum tanks were present on the property,

but were not in use and had been closed. 888 N.E.2d at

758. In fact, the tanks were still open and partially filled.

Id. The Pflanzes first learned as much in 2001, when the

Indiana Department of Environmental Management

(“IDEM”) inspected the property and discovered that

the tanks were leaking. Id. IDEM ordered the Pflanzes to

clean up the property, see id. at 759, and the Pflanzes

subsequently incurred over $100,000 in cleanup costs.

Id. at 758. In 2004 and 2006, the Pflanzes filed complaints

seeking contribution from Foster. Those complaints

were dismissed on statute of limitations grounds, and

the issue made its way up to the Indiana Supreme Court.
Nos. 11-1501 and 11-1523 53

The Bankerts seem to argue that the applicability of the ten18

year limitations period in Pflanz was assumed, rather than

decided, due to the agreement of the parties. That cannot be

(continued...)

The Pflanzes’ claim was brought pursuant to the Underground Storage Tanks Act (USTA), IND. CODE 13-23-13-1

et seq. The USTA is similar to the ELA in that it creates

a cause of action for a person who “undertakes corrective action resulting from a release from an

underground storage tank, regardless of whether the

corrective action is undertaken voluntarily or under an

[administrative] order[,]” to recover his expenditures

by suing a party responsible for the release. IND. CODE § 13-

23-13-8(b)(2). In fact, the two remedies are so substantively similar that the Indiana Code gives plaintiffs aggrieved by a release from an underground tank the

option of choosing between the two. See IND. CODE § 13-30-

9-6; see also Peniel, 973 N.E.2d at 581 n.5 (acknowledging

the statutory option). Most importantly for our purposes, however, the two are identical to the extent

that neither includes its own express statute of limitations. In Pflanz, both parties and the Indiana Supreme

Court agreed that the ten-year catch-all statute of limitations therefore applied to the Pflanzes’ USTA claim. See

888 N.E.2d at 758 (citing Comm’r, Ind. Dep’t of Envtl. Mgmt.

v. Bourbon Mini-Mart, Inc., 741 N.E.2d 361 (Ind. Ct. App.

2000), for the proposition that the ten-year catch-all,

as opposed to the six-year limitations period for

property damages, applies to an action for “recovery of

environmental cleanup costs”).18
54 Nos. 11-1501 and 11-1523

(...continued) 18

correct. Which statute of limitations applies to a claim is a

question of law, and it is long-settled in Indiana that a “conclusion of law” is “beyond the power of agreement by the

attorneys or parties.” App v. Cass, 75 N.E.2d 543, 395 (Ind. 1947)

(citing Miller v. State ex rel. Tuthill, 171 N.E. 381, 384 (Ind. 1930)).

Put even more bluntly, “[t]here is no question that the parties

cannot agree upon the law and force a conclusion according

to their understanding or agreement.” Id. The Indiana

Supreme Court simply would not have applied the ten-year

catch-all if it was legally incorrect to do so, whether the parties

agreed to it or not. Their decision to honor the parties’ agreement therefore amounted to a decision that the limitations

period agreed to was legally correct.

Next, the Indiana Supreme Court proceeded to determine when the ten-year limitations period began to run.

Under the Indiana discovery rule, “a cause of action

accrues, and the statute of limitations begins to run, when

a claimant knows or in exercise of ordinary diligence

should have known of the injury[,]” not of the mere

possibility of an injury in the future. Id. In cases in which

a party seeks to recover cleanup costs, “the damage [or

injury] at issue is the cleanup obligation assessed by [the

controlling government agency,]” not the mere fact of

contamination. Id. The latter would be the injury in a

suit to recover property damages, but suits to recover

cleanup costs are different. Id. Following this path to

its logical conclusion, the Indiana Supreme Court

held that in an environmental cleanup case governed

by the ten-year catch-all statute of limitations, the limitations period does not begin to run “until after the
Nos. 11-1501 and 11-1523 55

[plaintiff is] ordered to clean up the property.” 888

N.E.2d at 759. Since the Pflanzes brought their action

within ten years of the cleanup order, their action

was timely.

In Peniel Group, Inc. v. Bannon, the Indiana Court

of Appeals confronted a different kind of claim. The

plaintiffs were the current owner and manager of a

parcel of real property. After discovering that levels of

contamination on the property exceeded limits set by the

state, thus requiring a cleanup, the plaintiffs sued the

previous owners and tenants of the parcel under the

ELA. Since the ELA did not include a limitations provision at the time the suit was filed, the Indiana Court

of Appeals was tasked with deciding which other

statute of limitations to apply. 973 N.E.2d at 581. Finding

that the plaintiffs were the owners of the real property

in question and were not themselves responsible in

any way for the contamination at the site, the court concluded that the Peniel plaintiffs’ action was one for property damage. Id. at 581-82. That being the case, the sixyear limitations period governing actions for damages

to real property was applied, and that limitations period

begins to run “when a claimant knows, or in the exercise

of ordinary diligence should have known of the injury.”

Id. at 582 (quoting Martin Oil Mktg, Ltd. v. Katzioris, 908

N.E.2d 1183, 1187 (Ind. Ct. App. 2009). Under Indiana

law, “parties are usually held accountable for the time

which has run against their predecessors in interest.” Id.

(citing Cooper, 899 N.E.2d at 1279). Since the plaintiffs’

predecessors in interest knew of the damage to the

site more than six years before the action was filed, the

Court of Appeals found that the action was barred.
56 Nos. 11-1501 and 11-1523

In light of Peniel, the Bankerts now argue that the Trustees’ claim must likewise be governed by the six-year

limitations period for real property damages, since it,

too, is brought pursuant to the ELA. But under these

circumstances, the statute under which the claim is

brought does not determine the limitations period.

Indeed, it cannot do so, because the statute under

which the claim was brought did not have a limitations

period. That is the root of the problem. What Peniel

shows is that the underlying nature of the claim is

what matters, a principle which is well-established in

Indiana law. See Bourbon Mini-Mart, 741 N.E.2d 361 (“The

applicable statute of limitations is determined by the

‘nature or substance of the cause of action.’ ”) (citing

Klineman, Rose & Wolf, P.C. v. North American Lab. Co., 656

N.E.2d 1206, 1207 (Ind. Ct. App. 1995), trans. denied

(1996); Monsanto Co. v. Miller, 455 N.E.2d 392, 394 (Ind. Ct.

App. 1983)). Specifically, the Peniel court found that a

property damage claim brought under the ELA—at least,

back when the ELA had no independent limitations

provision—was governed by the statute of limitations

for property damages. That makes sense, given the

nature of the claim. But not every ELA claim is one

for property damages. In this case, for example, the

Trustees have no proprietary interest in Third Site. The

Bankerts do. There is no plausible legal theory under

which we might find that the Trustees are suing the

Bankerts—who are the only parties with a proprietary

interest in Third Site—for damages to the real property

at Third Site. Neither the “nature or substance” of this

ELA claim shows that it is an action for property
Nos. 11-1501 and 11-1523 57

damages, and the property damages limitations period

therefore does not apply.

Accordingly, the Trustees’ ELA claim is not limited

by the statute under which it is brought, since no

internal limitations provision existed, and it is not

limited by the statute applicable to property damage

suits, since it is not a suit for property damages. If the

action “is not limited by any other statute[,]” see IND.

CODE § 34-11-1-2(a), then the ten-year catch-all limitations period applies. It makes no difference whether

we call the Trustees’ ELA claim a contribution action, or

a cost-recovery action, or whether we call it by some

other name. By the terms of the Indiana Code, where

no other statutory limit exists, the ten-year limitations

period applies. That is consistent with the Indiana

Supreme Court’s decision to apply the ten-year period

to a generic action for the recovery of environmental

cleanup costs in Pflanz. See 888 N.E.2d at 758. And,

once again, it makes no difference that the claim in

Pflanz was nominally brought under the USTA while

this one was nominally brought under the ELA. The

“nature and substance” controls, and the two claims are

alike in nature and substance. The Trustees are suing “not

to recover for damages to their own property, but,

instead, to allocate liability for the funds spent [ ] to clean

up the environmental contamination of the [Bankerts’]

property.” Bourbon Mini-Mart, 741 N.E.2d 361. Therefore,

“[t]he nature or substance of their claim sounds

[nearer] contribution or indemnity, and the general

ten-year statute of limitations found at IC 34-11-1-2 applies.” Id.
58 Nos. 11-1501 and 11-1523

The Bankerts rightly note that the limitations period for 19

an ELA claim could not begin to run on the date of the 1996

AOC because the ELA was not yet enacted. Accordingly, they

argue that it began to run on February 28, 1998, the date the

ELA went into effect, instead. This action was not filed until

after February 28, 2008, leading the Bankerts to argue that it

is therefore untimely.

The ten-year limitations period for an action to

recover cleanup costs incurred as the result of an EPA

order did not begin to run “until after the [Trustees

were] ordered to clean up the property.” Pflanz, 888

N.E.2d at 759. But the parties’ second dispute concerns

the application of that rule. There are multiple cleanup

orders in this case, each of which inflicted an injury on

the Trustees in the form of a cleanup obligation. The

Bankerts latch onto the earliest AOC—issued in 1996 to

the Trustees’ predecessors-in-interest, see Cooper, 899

N.E.2d at 734 (“third parties are usually held accountable

for the time running against their predecessors in interest[.]”) (quoting Mack v. Am. Fletcher Nat’l Bank & Trust

Co., 510 N.E.2d 725, 734 (Ind. Ct. App. 1987))—and argue

that the limitations period for any ELA claim with

respect to Third Site began to run as soon as possible

after its issuance. The Trustees, of course, disagree. 19

They concede that the limitations period, with respect to

an action to recover costs expended pursuant to the

1996 AOC, began to run on February 28, 1998. The

Trustees cannot recover for those expenditures, and

they are not trying to do so. But they do not believe

that has any effect on the limitations period for
Nos. 11-1501 and 11-1523 59

recovering the costs of the removal actions mandated

by the 1999 or 2002 AOCs. We agree with the Trustees.

This action was filed on April 1, 2008, and we find that

any injury—meaning, in this context, any costs incurred

under a cleanup obligation imposed by the EPA—which

occurred subsequent to April 1, 1998, is actionable

under the ELA and is not time-barred. This plainly includes the damages suffered through compliance with

both the 1999 and 2002 AOCs, which is all the damages

the Trustees hope to recover.

The Bankerts’ argument fails to persuade us for

several reasons. First, the cleanup obligations that the

Trustees incurred by executing the 1999 and 2002 AOCs

simply were not incurred, either explicitly or implicitly,

when the respondents to the 1996 AOC agreed to

realign Finley Creek. Neither the Trustees, who did not

yet exist in that capacity, nor the 1996 respondents, incurred any obligation at that time to engage in removal

or remedial efforts at Third Site itself. Generally, parties

bringing actions to recover cleanup costs “must wait

until after the obligation to pay is incurred, for otherwise the claim would lack the essential damage element.”

Pflanz, 888 N.E.2d at 759 (internal citations omitted). It

is true, as the Bankerts and the district court observe,

that “it is not necessary that the full extent of the

damage be known or even ascertainable but only that

some ascertainable damage has occurred” for the statute

of limitations to be triggered. Doe v. United Methodist

Church, 673 N.E.2d 839, 842 (Ind. Ct. App. 1996). But

that just means an obligation to pay may be considered

an “injury” for statute of limitations purposes even
60 Nos. 11-1501 and 11-1523

before it gives rise to an actual monetary loss. It does

not, however, support conflating one obligation with

another as though they create the same injury, which

is what the Bankerts hope to do.

Furthermore, the Bankerts’ argument that the statute

of limitations began to run with respect to the Trustees’ obligations under the 1999 and 2002 AOCs

before they incurred those obligations would, if applied

to other cases, lead to impractical results. What if the

EPA’s process had been more drawn out (as is often the

case), and the AOCs governing the Third Site cleanup

were not issued until 2010, or 2012? According to the

argument advanced by the Bankerts, in that case, the

statute of limitations would have run entirely on the

Trustees’ requests for relief before they had even

suffered the damages from which relief might be requested. They would have been legally required to

bring their action based on nothing but speculation

about what sort of cleanup might be ordered in the

future at Third Site, what it might cost, what the present

discounted value of those potential future costs

might be, etc., or else they would lose their right to

bring an action at all. The law does not require such clairvoyance. Furthermore, any action that was filed under

such circumstances would raise serious justiciability

concerns, thereby putting plaintiffs who have expended

their own resources in redressing environmental harms

in between a rock and a hard place. That is not a

desirable outcome, but under the Bankerts’ understanding

of the law it could be a common one.
Nos. 11-1501 and 11-1523 61

Finally, before moving on, we note that the Trustees

suggested we might certify this issue to the Indiana

Supreme Court. In deciding whether certification is

appropriate, “the most important consideration

guiding the exercise of our discretion is whether we

find ourselves genuinely uncertain about a question of

state law that is vital to a correct disposition of the case.”

Craig v. FedEx Ground Package Sys., Inc., 686 F.3d 423, 429-

430 (7th Cir. 2012) (citing Cedar Farm, Harrison Cnty., Inc. v.

Louisville Gas & Elec. Co., 658 F.3d 807, 812-13 (7th

Cir.2011)). “Certification is appropriate when the case

concerns a matter of vital public concern, where the

issue will likely recur in other cases, where resolution

of the question to be certified is outcome determinative

of the case, and where the state supreme court has yet

to have an opportunity to illuminate a clear path on

the issue.” Id. When considering certification, we are

mindful of the state courts’ already busy dockets. Id.

We also consider several factors when deciding whether

to certify a question, including whether the issue “is of

interest to the state supreme court in its development

of state law.” Id. (citing State Farm Mut. Auto. Ins. Co. v.

Pate, 275 F.3d 666, 671 (7th Cir.2001)).

We see no reason to certify this question. First, we

are not genuinely uncertain about it. While it is not at all a

frivolous issue, we are confident in proceeding under the

guidance provided by existing Indiana law. Between the

settled rule that the nature or substance of an action

governs which statute of limitations applies; the fact that

this particular action plainly is not one for property

damages; and the Indiana Supreme Court’s previous
62 Nos. 11-1501 and 11-1523

application of the ten-year catch-all under substantially

similar circumstances, the appropriate resolution is

clear. Second, we cannot say this issue concerns a matter

of vital public concern. The remediation of environmental

hazards is certainly an issue of public concern, but

the limitations issues discussed herein have by this

time been resolved conclusively by legislative action in

Indiana. The limitations period in effect at the time an

action is brought governs that action, Connell, 725

N.E.2d at 506, and any future ELA actions will be

governed by the independent limitations period legislatively added to the ELA. Accordingly, we can say with

certainty that this issue will not reappear in any cases

not already pending. Third, the Indiana law question is

at most only partially outcome-determinative in this

case. To the extent that the ELA claim will allow the

Trustees to seek recovery of costs incurred under the

2002 AOC, it is merely duplicative of the CERCLA cost

recovery claim we have already reinstated. To the extent

that it will allow recovery of costs incurred under the

1999 AOC, it extends farther than the CERCLA claim, but

that twist is not enough to offset the lack of genuine

concern we have about its resolution, or to independently

warrant certification. We move on to Count VIII. 

III. Count VII: Seeking a Declaratory Judgment Against

the Bankerts’ Insurers

In Count VII of the Complaint, the Trustees seek a

declaratory judgment that each of the insurer defendants

are obligated to provide insurance coverage, subject to
Nos. 11-1501 and 11-1523 63

their respective policy limits, for any liabilities owed by

their policy holders to the Trustees. After dismissing

Counts I through V on statute of limitations grounds, the

district court asked the Trustees and the insurers to

report on the status of Count VII. All parties agreed it

was moot. Obviously, in light of our reinstatement of

the CERCLA and ELA claims, that conclusion is no

longer warranted. Count VII is not moot, and we

proceed to a consideration of Auto Owners’s conditional cross-appeal.

AUTO OWNERS’S CROSS-APPEAL

Auto Owners Mutual Insurance Company is one of the

Bankerts’ former insurers, targeted by the Trustees in

Count VII of the Complaint. Early in this litigation,

Auto Owners filed a motion to dismiss Count VII on res

judicata and/or issue preclusion grounds. Auto Owners

previously litigated several of the insurance policies

in question during the Enviro-Chem Site cleanup in the

1980s and obtained relief in the form of a consent

decree and a default judgment. As a result, Auto Owners

believes the present claim against it is precluded. The

district court treated the motion as one for summary

judgment and denied it. To the extent that Auto Owners

prevailed regardless when Count VII was dismissed as

moot, the final judgment in the case was a favorable

one. But they filed a conditional cross-appeal to hedge

against a possible reversal, challenging the district

court’s adverse finding on the preclusion issue. The

Trustees responded by challenging the procedural propri-
64 Nos. 11-1501 and 11-1523

ety of the cross-appeal and, in the alternative, by

arguing that the district court reached the correct result.

Because we have reinstated the CERCLA, ELA, and

declaratory judgment claims originally dismissed in

the district court’s final judgment, we now reach Auto

Owners’s conditional cross-appeal.

Background

Auto Owners is a party to the case because of its role as

a Bankert insurer during the last years of Enviro-Chem

operation. From 1977 until its closure in May of 1982,

Enviro-Chem was located primarily at 865 South State

Road 431, Zionsville, Indiana—referred to earlier in this

opinion as the “Enviro-Chem Site.” The Bankert family

owned the site, and Jonathan Bankert, Sr., served as

president of Enviro-Chem. His officers and directors

were Roy Strong and David Finton. Two companies—Pratt

& Lambert, Inc., and Union Carbide Corporation—transported industrial and commercial wastes to the EnviroChem Site, where they were held in tanks owned by

Wastex Research, Inc. On May 5, 1982, Enviro-Chem

ceased operations, leaving approximately 25,000 drums

and 56 bulk storage tanks at the Enviro-Chem Site. The

drums and tanks were located outside and, unfortunately,

were permitted to deteriorate and release the waste

they contained. In July of 1983, the EPA responded by

authorizing a $3 million cleanup project.

On September 21, 1983, the United States filed a complaint in the Southern District of Indiana against more than

250 defendants, including Enviro-Chem, Jonathan and
Nos. 11-1501 and 11-1523 65

Gary Watson served as court-appointed receiver for Enviro20

Chem beginning on July 1, 1981. 

Patricia Bankert, Roy Strong, David Finton, Gary Watson,20

Wastex, Pratt & Lambert, and Union Carbide. The complaint sought to recover EPA response costs and to

obtain a declaratory judgment holding the defendants

jointly and severally liable for future costs incurred by

the United States as it continued to address contamination at the Enviro-Chem Site. On the same day the complaint was filed, Union Carbide and 133 other

defendants entered into a consent decree with the government, agreeing to clean up the surface of the

Enviro-Chem Site in order to resolve a portion of the

government’s claim against them. Then, on November 8,

1983, the settling defendants filed a cross-claim against

the non-settling defendants, a group which included

Enviro-Chem, Jonathan and Patricia Bankert, Roy Strong,

David Finton, Gary Watson, and Wastex. The crossclaim sought to recover the approximately $3 million

the settling defendants would expend on the surface

cleanup, as well as a declaratory judgment that they

were not liable for any additional future costs related

to cleanup efforts at the Enviro-Chem Site.

While the 1983 lawsuit progressed, another was in the

works. Auto Owners had issued several insurance

policies to Enviro-Chem, the Bankerts, and two

other companies known as Technosolve and Hazardous

Materials Management, Inc., during Enviro-Chem’s last

years of operation. On April 5, 1984, Auto Owners filed
66 Nos. 11-1501 and 11-1523

its own complaint in the Southern District of Indiana,

naming the parties on both sides of the cross-claim in

the simultaneously pending action as defendants.

Auto-Owners sought a declaratory ruling that it owed

no coverage for the potential liability of its insureds,

pursuant to an exclusion contained in the policies at issue:

No coverage is provided by this policy for claims, suits,

actions or proceedings against the insured arising

out of the discharge, disposal, release or escape of

smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants,

contaminants or pollutants into and upon land,

the atmosphere or any water course or body of water.

Auto Owners’s suit was resolved piecemeal. On December 21, 1990, the court entered a default judgment in

Auto Owners’s favor against Enviro-Chem, Roy Strong,

David Finton, Gary Watson, Technosolve, and Hazardous

Materials Management. On August 29, 1991, the court

entered an agreed judgment between Auto Owners, the

Bankerts, Union Carbide, Pratt & Lambert, and Wastex.

The default judgment simply incorporated the complaint

by reference and granted the relief requested therein,

and the agreed judgment stipulated a dismissal without

prejudice. In any case, it is undisputed that Auto Owners

was successful in avoiding any duty of indemnification

attendant to the Enviro-Chem Site litigation. Now, Auto

Owners hopes to use the 1990 default judgment and

the 1991 agreed judgment to preclude the Trustees

from obtaining a declaration of coverage for Third Site.
Nos. 11-1501 and 11-1523 67

Discussion

The first dispute concerns the propriety of the crossappeal. The Trustees argue that Auto Owners’s crossappeal should be dismissed because Auto Owners prevailed in the final judgment issued by the district court.

Auto Owners argues in response that a conditional crossappeal is a permissible way to hedge against an

adverse finding on the main appeal. Neither party references the actual standard in our Circuit for resolving

this sort of dispute. The dispositive question is whether

the relief sought in the cross-appeal is different from

the relief already obtained by the cross-appealing party

in the district court’s final judgment. If it is not

different, then the cross-appeal must be dismissed. See

Weitzenkamp v. Unum Life Ins. Co. of Am., 661 F.3d

323, 332 (7th Cir. 2011) (reiterating the rule that

“cross-appeals are not appropriate in routine cases like

ours that raise only alternate grounds for affirmance of

the judgment and not an independent issue[.]”). On the

other hand, “[a]n appellee who wants, not that the judgment of the district court be affirmed on an alternative

ground, but that the judgment be changed,” for

example, from a dismissal without to a dismissal with

prejudice, not only should but must file a cross-appeal.

Am. Bottom Conservancy v. United States Army Corps

of Eng’rs, 650 F.3d 652, 661 (7th Cir. 2011).

In this case, the district court did not specify, either in

its separate order dismissing count six as moot or in its

final judgment, whether the dismissal of count six was

a dismissal with or without prejudice. Pursuant to
68 Nos. 11-1501 and 11-1523

Federal Rule of Civil Procedure 41(b), “[u]nless the dismissal order states otherwise, a dismissal under this

subdivision (b) and any dismissal not under this rule—

except one for lack of jurisdiction, improper venue, or

failure to join a party under Rule 19—operates as

an adjudication on the merits.” A dismissal on

mootness grounds is a dismissal for lack of jurisdiction.

St. John’s United Church of Christ v. City of Chi., 502 F.3d

616, 626 (7th Cir. 2007) (“ ‘when the issues presented are

no longer live or the parties lack a legally cognizable

interest in the outcome,’ the case is (or the claims are)

moot and must be dismissed for lack of jurisdiction.”

(quoting Powell v. McCormack, 395 U.S. 486, 496 (1969))).

The case law holds, consistent with Rule 41(b), that a

dismissal for lack of subject matter jurisdiction cannot

be a dismissal with prejudice. Murray v. Conseco, Inc.,

467 F.3d 602, 605 (7th Cir. 2006) (citing Fredericksen v.

City of Lockport, 384 F.3d 437, 438 (7th Cir. 2004)). The

relief Auto Owners obtained in the district court was

therefore a dismissal without prejudice.

The relief Auto Owners requests in its cross-appeal, on

the other hand—a dismissal on res judicata grounds—is a

dismissal with prejudice. Auto Owners seeks a determination that the claims before the court in this case

have previously been adjudicated on the merits; res

judicata only bars an action if there was a final judgment

on the merits in an earlier case and both the parties

and claims in the two lawsuits are the same. See Matrix IV,

Inc. v. Am. Nat’l Bank & Trust Co., 649 F.3d 539, 547 (7th

Cir.2011); Johnson v. Cypress Hill, 641 F.3d 867, 874

(7th Cir.2011). Obviously, in contrast to a dismissal
Nos. 11-1501 and 11-1523 69

without prejudice, any such determination disposes of

the claims before the court permanently. If the Trustees’

declaratory judgment claim against Auto Owners

cannot be brought in this instance due to an earlier,

binding determination of the claim or of the dispositive

issues, then it cannot be brought in any future instance

without running into the same problem. See Walliser v.

Hannig, 358 Fed. Appx. 715, 717 (7th Cir. 2009) (referring

to a dismissal on res judicata grounds as a “final judgment on the merits”). The relief Auto Owners seeks in

its cross-appeal, a dismissal with prejudice, is therefore

different from the relief it won in the district court’s

disposition of the case, which was a dismissal without

prejudice. A cross-appeal is proper under the circumstances, see Am. Bottom Conservancy, 650 F.3d at 661, and

we proceed to the merits.

Because the prior decisions—the 1990 default judgment

and the 1991 agreed judgment—were entered by the

United States District Court for the Southern District of

Indiana, we apply federal law to determine their preclusive effect. E.E.O.C. v. Harris Chernin, Inc., 10 F.3d 1286,

1290 n. 4 (7th Cir. 1993) (“Where the earlier action is

brought in federal court, the federal rules of res judicata

apply.”) (internal citations omitted); see also Havoco of

America, Ltd. v. Freeman, Atkins & Coleman, Ltd., 58 F.3d

303, 307 n.6 (7th Cir. 1995). Auto Owners argues both

issue and claim preclusion, which are doctrinally related

but are subject to different tests. Claim preclusion, which

operates to conserve judicial resources and promote

finality, applies when a case involves the same parties

and the same set of operative facts as an earlier one
70 Nos. 11-1501 and 11-1523

that was decided on the merits. See Matrix IV, Inc., 649

F.3d at 547. Issue preclusion, a narrower doctrine

than claim preclusion, prevents litigants from relitigating an issue that has already been decided in a

previous judgment. Hayes v. City of Chi., 670 F.3d 810, 814

(7th Cir. 2012) (citing Matrix IV, Inc., 649 F.3d at 547). The

district court found that neither doctrine precluded

this lawsuit. We review the district court’s disposition

of these questions de novo, see Johnson v. Cypress Hill,

641 F.3d 867, 874 (7th Cir. 2011) (“We review the

district court’s dismissal of a lawsuit on res judicata

grounds de novo.”); Townsend v. Vallas, 256 F.3d 661, 668

(7th Cir. 2001) (“We review a district court’s decision to

grant or deny summary judgment de novo.”), and

we agree.

I. Issue Preclusion

We begin by addressing Auto Owners’s issue preclusion argument. The doctrine of issue preclusion “bars

‘successive litigation of an issue of fact or law actually

litigated and resolved in a valid court determination

essential to the prior judgment,’ even if the issue recurs in

the context of a different claim.” Taylor v. Sturgell, 553

U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532

U.S. 742, 748 (2001)). Issue preclusion requires an

identity of issues: “the doctrine ‘applies only when

(among other things) the same issue is involved in the

two proceedings[.]’ ” Coleman v. Donahoe, 667 F.3d 835, 853-

54 (7th Cir. 2012) (quoting King v. Burlington N. & Santa

Fe Ry. Co., 538 F.3d 814, 818 (7th Cir. 2008)). Additionally,
Nos. 11-1501 and 11-1523 71

it is well-settled that issue preclusion, like claim preclusion, only applies if the issue was previously determined

by a “valid and final judgment.” Bobby v. Bies, 556 U.S.

825, 834 (2009).

We need not decide whether the relief obtained by

Auto Owners in the 1984 action—a default judgment and

a consented dismissal without prejudice—constitutes a

“valid and final judgment,” and we need not decide

whether the coverage issue was “actually litigated” therein.

The issue in this case and the issue in that case are

not identical. They are not identical because the effects

of the pollution exclusion and personal injury provisions

of the Auto Owners policies on coverage for contamination at the Enviro-Chem Site and for contamination at

Third Site necessarily depend on different sets of facts.

True, nobody disputes that Third Site was contaminated

as a result of Enviro-Chem operations. But that does

not mean that Enviro-Chem’s operations at the EnviroChem Site and Enviro-Chem’s operations at Third Site

were identical in all material aspects. As the district

court rightly observed, there is substantial—even undisputed—evidence in the record that contamination at

Third Site was caused by the release of pollutants at

Third Site, and that contamination at the Enviro-Chem

Site was caused by the release of pollutants at the EnviroChem Site. It may yet turn out that the absolute pollution exclusion—to the extent that most of the policies

at issue incorporate it—will prevent the Trustees from

recovering against Auto Owners for costs they incurred

in cleaning up Third Site. But if so, that will be because

the contamination process at Third Site qualified as a
72 Nos. 11-1501 and 11-1523

“discharge, disposal, release or escape of smoke, vapors,

soot, fumes, acids, alkalis, toxic chemicals, liquids or

gases, waste material or other irritants, contaminants or

pollutants into and upon land, the atmosphere or any

water course or body of water.” It will not be because

the contamination process at the Enviro-Chem Site qualified as the same, and that is what Auto Owners asks

us to conclude by finding that the coverage issues

involved in the present suit and the prior suit are identical. They are different factual questions, requiring different

discovery, etc., and Auto Owners is not entitled to issue

preclusion.

II. Claim Preclusion

Next, we turn to Auto Owners’s claim preclusion argument. The doctrine of claim preclusion, also known as

res judicata, “applies to bar a second suit in federal

court when there exists: (1) an identity of the causes

of actions; (2) an identity of the parties or their privies;

and (3) a final judgment on the merits.” Kratville v. Runyon,

90 F.3d 195, 197 (7th Cir. 1996). With respect to the

first element, “[a] claim is deemed to have ‘identity’ with

a previously litigated matter if it is based on the same,

or nearly the same, factual allegations arising from

the same transaction or occurrence.” Id. at 198. With

respect to the second, “[w]hether there is privity

between a party against whom claim preclusion is

asserted and a party to prior litigation is a functional

inquiry in which the formalities of legal relationships

provide clues but not solutions.” Tice v. Am. Airlines, Inc.,
Nos. 11-1501 and 11-1523 73

162 F.3d 966, 971 (7th Cir. 1998) (quoting Chase

Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 346 (2d

Cir. 1995)). It is a fact-specific analysis, and short-hand

terms like “virtual representation” are of little to no use

in our circuit. Id. With respect to the final element, for

the purpose of claim preclusion, the traditional rule is

that “a judgment on the merits is one which ‘is based

on legal rights as distinguished from mere matters of

practice, procedure, jurisdiction, or form.’ ” Harper

Plastics, Inc. v. Amoco Chems. Corp., 657 F.2d 939, 944

(7th Cir. 1981) (quoting Fairmont Aluminum Co. v. Comm’r,

222 F.2d 622, 625 (4th Cir. 1955)).

Regardless of whether the parties are identical or

whether the piecemeal resolution of the 1984 litigation

qualified as a “final judgment on the merits,” claim

preclusion is inappropriate because there is no “identity

of the causes of action.” Federal law defines a “cause of

action” as “a core of operative facts which give rise to a

remedy[.]” Shaver v. F.W. Woolworth Co., 840 F.2d 1361,

1365 (7th Cir. 1988) (internal citations omitted). Accordingly, the test for an “identity of the causes of action” is

“whether the claims arise out of the same set of operative

facts or the same transaction.” Matrix IV, Inc., 649 F.3d

at 547 (citing In re Energy Coop., Inc., 814 F.2d 1226, 1230

(7th Cir. 1987)). “Even if the two claims are based on

different legal theories, the ‘two claims are one for purposes of res judicata if they are based on the same, or

nearly the same, factual allegations.’ ” Id. (quoting

Hermann v. Cencom Cable Assocs., 999 F.3d 223, 226 (7th

Cir. 1993)). The test is an outgrowth of the rule that a

party must allege in one proceeding all claims and/or
74 Nos. 11-1501 and 11-1523

counterclaims for relief arising out of a single occurrence, or be precluded from pursuing those claims in

the future. Id., 840 F.2d at 1365; Fed. R. Civ. P. 13(a). But

despite the frequency with which preclusion defenses

are raised, “there is no formalistic test for determining

whether suits arise out of the same transaction or occurrence.” Ross ex rel. Ross v. Bd. of Educ. of Tp. High School

Dist. 211, 486 F.3d 279, 284 (7th Cir. 2007). “Instead, we

have held that courts ‘should consider the totality of

the claims, including the nature of the claims, the legal

basis for recovery, the law involved, and the respective

factual backgrounds.’ ” Id. (quoting Burlington N. R. Co.

v. Strong, 907 F.2d 707, 711 (7th Cir. 1990).

Auto Owners’s 1984 complaint sought a declaratory

judgment that it owed no coverage to the Bankerts or

any of their insured corporate entities under the

policies listed therein for environmental damages at

the Enviro-Chem Site. Supra, n. 14. The operative facts

underlying the lawsuit were that the Enviro-Chem Site

was polluted; that the EPA was engaged in a collaborative process to remedy that pollution; that litigation

was underway to distribute liability for the cleanup costs

between cooperative and uncooperative PRPs; and

that Auto Owners insured the Bankerts and their

corporate entities, who had not paid for any of the

cleanup despite their PRP status, during several of the

years in which the pollution occurred.

Those facts do overlap, to some extent, with the operative facts underlying Count VII in this case. The Trustees

seek a declaration of coverage for the same insureds
Nos. 11-1501 and 11-1523 75

under the same insurance policies, although they focus

on a different coverage provision within the policies.

But there are also fundamental differences between

the factual background of this suit and the factual background underlying Auto Owners’s 1984 complaint. For

example, the same factual considerations which barred

a finding of issue preclusion come into play here. This

coverage dispute concerns whether the pollution

activities at Third Site were covered by Auto Owners’s

policies, while the previous dispute concerned whether

the pollution activities at the Enviro-Chem Site were

covered by Auto Owners’s policies. We need not

reiterate why that distinction is important. It is enough

to note that it means the claims are not identical;

the success of each depends on fitting the facts that led

to that contamination to the text of the exclusion provision in the insurance policies. After engaging in such

an analysis, the district court could come to the

conclusion that Auto Owners does owe coverage to the

Bankerts for the pollution at Third Site, for example,

without in any way contradicting the earlier finding that

it does not owe coverage at the Enviro-Chem Site. See

Harper Plastics, Inc., 657 F.2d at 944 (court looks to

“whether the judgment in a second suit would impair

rights established under the first judgment” when determining whether causes of action are identical). Again,

the district court may well find that the pollution exclusion in Auto Owners’s contracts bars coverage for the

pollution activities at Third Site, but not on claim preclusion grounds. We affirm with respect to both preclusion

issues.
76 Nos. 11-1501 and 11-1523

CONCLUSION

For the reasons stated, we reverse the district court’s

dismissal of Counts I, II, III, and VII. In Count I, the

Trustees have made a timely CERCLA claim, under

42 U.S.C. § 9607(a)(4)(B), to recover costs incurred

pursuant to the 2002 AOC. The Trustees’ Count II “companion claim” for a declaratory judgment of CERCLA

liability is therefore also reinstated. We find that the

Indiana ELA claim contained in Count III is timely,

and that the declaratory judgment claim contained in

Count VII is not moot. The district court committed no

abuse of discretion in its handling of the summary judgment briefing process. Finally, we affirm the district

court’s denial of Auto Owners’s motion for summary

judgment on preclusion grounds. The Trustees’ suit is

reinstated and remanded for further proceedings consistent with this opinion.

7-31-13