In the

United States Court of Appeals

For the Seventh Circuit

Nos. 11-1501 & 11-1523

NORMAN W. BERNSTEIN, et al.,

Plaintiffs-Appellants/

Cross-Appellees,

v.

PATRICIA A. BANKERT, et al.,

Defendant-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
2 Nos. 11-1501 & 11-1523

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

District Court for the Northern District of Indiana, sitting

by designation.

Before KANNE and WILLIAMS, Circuit Judges, and

DEGUILIO, District Judge.

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. Addressing both ap-
Nos. 11-1501 & 11-1523 3

peals, we reverse in part and affirm in part. The case is

remanded for further proceedings on the reinstated claims.

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,
4 Nos. 11-1501 & 11-1523

surface water samples collected by the EPA in 1988 from

nearby Finley Creek showed elevated levels of VOCs

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
Nos. 11-1501 & 11-1523 5

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

We use “the Bankerts” to refer collectively to Patricia A. 1

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.

Action Memorandum. For the most part, the 2002 AOC

tracked the form of the 1999 AOC. It included separate

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-à-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 appellees were listed as Non- 1

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
Nos. 11-1501 & 11-1523 7

For reasons unknown to us, the Complaint did not include 2

a “Count VI.”

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

cost recovery action pursuant to 42 U.S.C. § 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- 2

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’

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’

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
8 Nos. 11-1501 & 11-1523

that reply or, in the alternative, for permission to file

supplemental briefing. The district court heard 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
Nos. 11-1501 & 11-1523 9

appeal on March 3, 2011, and Auto Owners cross-appealed.

We take up each appeal in turn.

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

We begin with the Trustees’ CERCLA claims. In Count I

of their Complaint, the Trustees sought to recover funds

which the Bankerts allegedly owed to the Third Site Trust

pursuant to obligations created by the 1999 and 2002

AOCs. The Trustees characterized Count I as a claim

for cost recovery under 42 U.S.C. § 9607(a), but the

district court held that a § 9607(a) claim was unavailable

to the Trustees; that their claim must therefore be one
10 Nos. 11-1501 & 11-1523

for contribution under § 9613(f); and 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 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
Nos. 11-1501 & 11-1523 11

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

Burlington N. and Santa Fe Ry. Co. v. United States, 556

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

524 U.S. 51, 55 (1998)). To put it mildly, 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 N., 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’ CERLCA claim falls before determining whether it is time-barred.

Section 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
12 Nos. 11-1501 & 11-1523

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

3

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.

(continued...)

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

liable for “all costs of removal or remedial action3
Nos. 11-1501 & 11-1523 13

(...continued) 3

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)). 

“The national contingency plan specifies procedures for 4

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.

incurred by the United States Government or a State or

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

4

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 N., 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.
14 Nos. 11-1501 & 11-1523

(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)).

Section 9613(f), on the other hand, is the “contribution” provision of CERCLA. Added to the statute by the

Superfund Amendments and Reauthorization Act

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).
Nos. 11-1501 & 11-1523 15

One could reasonably conclude, based solely on the physical 5

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

distinct, second cause of action for contribution, instead 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, 6

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).

The second contribution right of action is codified at

42 U.S.C. § 9613(f)(3)(B):5

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).6

(emphasis added). As the Supreme Court did with respect

to § 9613(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 . . .
16 Nos. 11-1501 & 11-1523

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 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.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.”).

Furthermore, the phrase “resolved its liability . . . in an

administrative . . . settlement,” used as a trigger in

§ 9613(f)(3)(B), has a specific meaning within the

CERCLA framework. Any time the United States settles

with a PRP under CERCLA, it does so through the authority conferred by 42 U.S.C. § 9622. The effect of any

such settlement on the settling parties’ liability is

governed by § 9622(c)(1):

Whenever the President has entered into an agreement under this section, the liability to the United

States under this chapter of each party to the agreement, including any future liability to the United

States, arising from the release or threatened release

that is the subject of the agreement shall be limited

as provided in the agreement pursuant to a covenant
Nos. 11-1501 & 11-1523 17

not to sue in accordance with subsection (f) of

this section.

The “subsection (f)” to which the quotation refers provides:

(1) Discretionary covenants 

The President may, in his discretion, provide any

person with a covenant not to sue concerning any

liability to the United States under this chapter, including future liability, resulting from a release

or threatened release of a hazardous substance addressed by a remedial action, whether that action

is onsite or offsite, if each of the following conditions

is met: 

(A) The covenant not to sue is in the public interest. 

(B) The covenant not to sue would expedite response action consistent with the National Contingency Plan under section 9605 of this title. 

(C) The person is in full compliance with a

consent decree under section 9606 of this title

(including a consent decree entered into in accordance with this section) for response to the

release or threatened release concerned. 

(D) The response action has been approved by

the President.

* * *

(3) Requirement that remedial action be completed 

A covenant not to sue concerning future liability to the

United States shall not take effect until the President
18 Nos. 11-1501 & 11-1523

certifies that remedial action has been completed

in accordance with the requirements of this chapter

at the facility that is the subject of such covenant.

42 U.S.C. § 9622(f).

Thus, reading the statutory scheme as a whole, as we

are bound to do, see King v. St. Vincent’s Hosp., 502 U.S. 215,

221 (1991), we see that an administrative settlement

between the United States and PRP does not, and cannot,

automatically resolve that PRP’s liability. It does so only

through the operation of a subsection (f) covenant not

to sue. And, under the plain terms of the statute, a subsection (f) covenant not to sue cannot possibly take

effect, thereby actually releasing the settling PRP from

liability, until the PRP has satisfactorily discharged its

obligation under the agreement and the President has

certified its completion. See § 9622(f)(1), (3). The end

result is that a § 9613(f)(3)(B) contribution action, predicated as it is on the resolution of liability, is not available

simply because a settlement has occurred. The trigger

is the resolution of liability through that settlement,

which, pursuant to the statute, does not occur until satisfactory performance has been certified.

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
Nos. 11-1501 & 11-1523 19

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 “necessary

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
20 Nos. 11-1501 & 11-1523

An EE/CA is classified as a “removal action” by the EPA. 7

See 40 C.F.R. § 300.415(b)(4)(i).

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

Site, to develop and submit an EE/CA report to the EPA,7

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
Nos. 11-1501 & 11-1523 21

Both the case law and the administrative materials 8

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)”

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. 

Sections 106(a) or 107(a) of CERCLA, 42 U.S.C.

§§ 9606(a), 9607(a).8

The covenants not to sue referred to in the disclaimer

above were expressly conditioned on 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.
22 Nos. 11-1501 & 11-1523

These conditional covenants are consistent with the

statutory requirements for a release of CERCLA liability

through settlement, in that such a release cannot occur

until any obligations imposed by the settlement are

certified complete. See 42 U.S.C. § 9622(f).

For the Non-Premium Respondents, then, the EPA’s

covenants not to sue—and 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 statute and of the AOC itself, 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 Non-Premium 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, 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 reimburse-
Nos. 11-1501 & 11-1523 23

ment 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 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.
24 Nos. 11-1501 & 11-1523

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., Inc., 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 228-29.

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
Nos. 11-1501 & 11-1523 25

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). See, e.g., Solutia, 672 F.3d at 1237; Agere

Sys., Inc., 602 F.3d at 228-29. 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 N., 556 U.S. at

602, such gamesmanship seems inappropriate.

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

to impose joint and several liability. Instead, apportionment is proper where there is a reasonable basis for

determining the contribution of each cause to a single

harm. Burlington N., 556 U.S. at 614. Showing a

reasonable basis for apportionment is arguably easier for

a defendant than meeting the preponderance of the

evidence standard that would apply to a contribution

counterclaim. As a result, counterclaim or no counterclaim, there is little to no danger that a defendant could
26 Nos. 11-1501 & 11-1523

be gamed into shouldering full liability, or more than

his fair share, by a plaintiff with a § 9607(a) 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, 596 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). And

although, giving the words their plain meaning, they

have 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 plain-
Nos. 11-1501 & 11-1523 27

Although the Bankerts failed to raise the issue, an argument

9

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

order . . . under § 9622(h)[,]” to the extent that the Non-Premium

(continued...)

tiff 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

began to run on the date the AOC was executed. The 9
28 Nos. 11-1501 & 11-1523

(...continued) 9

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.

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 remedial

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).
Nos. 11-1501 & 11-1523 29

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

2000. The Complaint in this case was filed on April 1,

2008, significantly more than three years later. Recovery

is time-barred. 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.

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. In

November 2002, the parties entered into the second AOC

to implement those solutions. The 2002 AOC included
30 Nos. 11-1501 & 11-1523

identical conditional covenants not to sue, and 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. Additionally, they could not possibly 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. See § 9622(f)(1), (3). 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 therefore 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). The

Bankerts offer no persuasive reason why such an

action cannot be maintained. Their argument focuses

primarily on a distinction between voluntary and compelled costs: they claim that the Supreme Court drew a

new line in the sand in Atlantic Research and that, going

forward, 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 con-
Nos. 11-1501 & 11-1523 31

tribution action. Since the Trustees were “compelled” to

clean up the site by the administrative settlement

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. See 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
32 Nos. 11-1501 & 11-1523

has not incurred its own costs of response and therefore

cannot recover under § 107(a). As a result, though eligible

to seek 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 cause-shopping 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.
Nos. 11-1501 & 11-1523 33

The Bankerts conclude, based on the quoted footnote,

that only parties who voluntarily incur response costs can

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) con-
34 Nos. 11-1501 & 11-1523

tribution claim was available to plaintiffs by virtue of a

previous EPA lawsuit, and noting that “[d]espite the

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 straightforward 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). Finally, 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 Int’l, 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.
Nos. 11-1501 & 11-1523 35

The third, and most obvious, problem with the

Bankerts’ argument is that they are asking us to impose 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

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.

Beyond their characterization of Atlantic Research and

subsequent case law, the Bankerts seem to suggest that

the mere fact that the Trustees entered into a settlement

is enough to give rise to a claim for contribution under

§ 9613(f)(3)(B), thereby precluding the Trustees from

advancing a cost recovery claim instead. But the

statutory trigger for a § 9613(f)(3)(B) contribution claim

is not the fact of settlement. It is the resolution of

liability through settlement. Given the express terms of

the statute and of the AOCs in this case, there can be

no meaningful argument that the liability to the United

States of the Non-Premium Respondents, and by

extension the Trust, was resolved on the day they

signed the settlement agreement. To the extent that the
36 Nos. 11-1501 & 11-1523

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 three-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 Trustees’ cost recovery action for expenses

incurred under the 2002 AOC is timely.

3. Conclusion of CERCLA Issues

In summary, the Trustees cannot recover for expenses

incurred in carrying out the work performed under the

1999 AOC. At this point, that relief can only be sought

through a contribution action, and a contribution action

is time-barred, no matter which side is correct as to the

triggering event. But the Trustees can recover for

expenses incurred in carrying out the 2002 AOC. In that

respect, Count I is a claim for cost recovery and is timely.

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. 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
Nos. 11-1501 & 11-1523 37

action. Each is governed by a different statute of limitations, and the fact that recovery with respect to the

former is time-barred 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

that the plaintiff 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. Functionally speaking,

this ruling simply limits the damages the plaintiff can

recover. The district court’s judgment 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 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.
38 Nos. 11-1501 & 11-1523

C. 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, 618-19

(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

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.
Nos. 11-1501 & 11-1523 39

That changed in 2011, when the Indiana General Assembly 10

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

(continued...)

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 limitations, 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, 10
40 Nos. 11-1501 & 11-1523

(...continued) 10

(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 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[.]”)). 

both 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
Nos. 11-1501 & 11-1523 41

Found at IND. CODE § 34-11-2-7: 11

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. 

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 11

statute applies, the Bankerts also dispute—and we must

determine—when the limitations period began to run.

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 756 (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 six-year

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
42 Nos. 11-1501 & 11-1523

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.

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,
Nos. 11-1501 & 11-1523 43

The Bankerts seem to argue that the applicability of the ten12

year limitations period in Pflanz was assumed, rather than

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

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.

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”).12

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
44 Nos. 11-1501 & 11-1523

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 [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
Nos. 11-1501 & 11-1523 45

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 six-year 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.

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,
46 Nos. 11-1501 & 11-1523

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 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
Nos. 11-1501 & 11-1523 47

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.

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 1279 (“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
48 Nos. 11-1501 & 11-1523

The Bankerts rightly note that the limitations period for an 13

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.

after its issuance. The Trustees, of course, disagree. 13

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 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
Nos. 11-1501 & 11-1523 49

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, 673 N.E.2d at 842. But

that just means an obligation to pay may be considered

an “injury” for statute of limitations purposes even

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 re-
50 Nos. 11-1501 & 11-1523

quested. 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.

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-

30 (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
Nos. 11-1501 & 11-1523 51

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

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
52 Nos. 11-1501 & 11-1523

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

their respective policy limits, for any liabilities owed by

their policyholders 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’ conditional cross-appeal.

AUTO OWNERS’ 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
Nos. 11-1501 & 11-1523 53

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 propriety 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’ 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 EnviroChem operation. From 1977 until its closure in May

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 compa-
54 Nos. 11-1501 & 11-1523

Gary Watson served as court-appointed receiver for Enviro14

Chem beginning on July 1, 1981. 

nies—Pratt & Lambert, Inc., and Union Carbide Corporation—transported industrial and commercial wastes to

the Enviro-Chem Site, where they were held in tanks

owned by Wastex Research, Inc. On May 5, 1982, EnviroChem 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 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 Patricia Bankert, Roy Strong, David Finton, Gary

Watson, Wastex, Pratt & Lambert, and Union Carbide. 14

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, Jona-
Nos. 11-1501 & 11-1523 55

than and Patricia Bankert, Roy Strong, David Finton,

Gary Watson, and Wastex. The cross-claim 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

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’ suit was resolved piecemeal. On

December 21, 1990, the court entered a default judgment

in Auto Owners’ favor against Enviro-Chem, Roy

Strong, David Finton, Gary Watson, Technosolve, and
56 Nos. 11-1501 & 11-1523

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.

Discussion

The first dispute concerns the propriety of the crossappeal. The Trustees argue that Auto Owners’ cross-appeal

should be dismissed because Auto Owners prevailed in

the final judgment issued by the district court. Auto

Owners argues in response that a conditional cross-appeal

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
Nos. 11-1501 & 11-1523 57

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 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
58 Nos. 11-1501 & 11-1523

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 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 crossappeal, 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
Nos. 11-1501 & 11-1523 59

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 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 re-litigating 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.
60 Nos. 11-1501 & 11-1523

I. Issue Preclusion

We begin by addressing Auto Owners’ 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,

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
Nos. 11-1501 & 11-1523 61

contaminated as a result of Enviro-Chem operations. But

that does not mean that Enviro-Chem’s operations at the

Enviro-Chem 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 EnviroChem Site was caused by the release of pollutants at the

Enviro-Chem 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 “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’ claim preclusion argument. The doctrine of claim preclusion, also known as res
62 Nos. 11-1501 & 11-1523

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., 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
Nos. 11-1501 & 11-1523 63

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 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.R. Co. v. Strong, 907 F.2d 707, 711 (7th

Cir. 1990).

Auto Owners’ 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
64 Nos. 11-1501 & 11-1523

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 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’ 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’ policies, while the previous dispute concerned

whether the pollution activities at the Enviro-Chem Site

were covered by Auto Owners’ 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
Nos. 11-1501 & 11-1523 65

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’ contracts bars coverage for

the pollution activities at Third Site, but not on claim

preclusion grounds. We affirm with respect to both

preclusion issues.

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’ motion for summary judgment on preclusion grounds. The trustees’ suit is reinstated and
66 Nos. 11-1501 & 11-1523

remanded for further proceedings consistent with

this opinion.

12-19-12