Opinion ID: 2816330
Heading Depth: 2
Heading Rank: 3

Heading: The Wickland Agreement Covered All Response

Text: Costs at the Selby Site and the 2008 Bankruptcy Settlement Merely Fixed Costs.
The 1989 Consent Judgment and Wickland Agreement ended the litigation related to the Selby Site, after the appeal in Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887 (9th Cir. 1986). As discussed earlier, Wickland was permitted to pursue its CERCLA cost recovery claims against ASARCO after we reversed the district court’s dismissal. In order to determine what the Wickland Agreement covered, we interpret de novo the settlement agreement. City of Emeryville, 621 F.3d at 1261. Under California law, “the mutual intention of the parties at the time the contract is formed governs interpretation.” AIU Ins. Co. v. Super. Ct., 799 P.2d 1253, 1264 (Cal. 1990) (citing Cal. Civ. Code § 1636). The intent of the parties is 3 ASARCO also argues that the Wickland Agreement did not meet the standard for a judicially approved settlement. ASARCO cannot now argue that the court was wrong to approve the Wickland Agreement as part of the consent judgment 25 years after ASARCO participated in the agreement and accepted the consent judgment. The district court did not abuse its discretion decades ago in approving the agreement. 16 ASARCO V. CELANESE CHEMICAL CO. determined “solely from the written provisions of the contract.” Id. (citing Cal. Civ. Code § 1639). The ordinary meaning of a contract’s terms controls judicial interpretation. Id.; see also Cal. Civ. Code § 1644. No matter how broad a contract may appear, “it extends only to those things concerning which it appears that the parties intended to contract.” Cal. Civ. Code § 1648. In this case, the provisions of the contract are clear.4 The Wickland Agreement settled the dispute between ASARCO and Wickland over the Selby Site. In the Wickland Agreement, the parties undertook to “establish a procedure for allocating past and future costs attributable to the events and conditions underlying the [district court case].” The events and conditions underlying the district court case were the industrial operations and resulting pollution that had occurred at the Selby Site prior to Wickland’s ownership. See Wickland Oil Terminals, 792 F.2d at 889. The parties to the Wickland Agreement, Wickland, ASARCO, and State Lands, agreed to undertake site remediation to investigate, monitor, and abate actual or threatened contamination at the Selby Site, caused by or related to the conditions at the site addressed by the Remedial Action Plan. 4 “The construction and enforcement of settlement agreements are governed by principles of local law which apply to interpretation of contracts generally.” Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1990). The Wickland Agreement expressly states that California law governs its terms, but the district court analyzed the Wickland Agreement by applying principles of federal common law. While the district court committed error by failing to explicitly apply California law, instead using a federal standard to interpret the Wickland Agreement, such error was harmless because both approaches yield the same result. See Cachil Dehe Band of Wintun Indians v. California, 618 F.3d 1066, 1073 (9th Cir. 2010). ASARCO V. CELANESE CHEMICAL CO. 17 The Remedial Action Plan was based on a report prepared by an environmental consultant and incorporated into the Wickland Agreement. The goals of the Remedial Action Plan were to dredge contaminated sediments in the tidelands to dispose of them, to remediate acid-affected soils in the Virginia Chemicals area, to cap the site to prevent runoff contamination, and to relocate a sewage oxidation pond. ASARCO, Wickland, and State Lands agreed to share the costs of implementing the initial part of this plan equally. To the extent that a government agency responsible for oversight of the cleanup effort ordered additional work, or the parties mutually agreed that additional work was required to accomplish the Remedial Action Plan, those costs would also be shared equally as a “Subsequent Modification.” The parties decided that if a future cost was an “Other Remediation Cost” and not a “Subsequent Modification,” that ASARCO would bear 42%, State Lands 38%, and Wickland 20% of the future cost. Costs envisioned were necessary and proper if the parties agreed to them, an arbitrator imposed them, or the government required them as part of a compliance order. The Wickland Agreement’s Remedial Action Plan was developed with input and approval from California DHS and the RWQCB. The California DHS letter attached as part of the Wickland Agreement establishes an understanding between the agency and the parties that the parties would take over responsibility for the efforts that California DHS had already begun to remediate conditions at the Selby Site. The Wickland Agreement’s tasks matched those already planned or started by California DHS. The Remedial Action Plan included work in the Virginia Chemicals-leased area. Therefore, the clean-up work that underlies ASARCO’s contribution claim against CNA was included in the Wickland Agreement. The Remedial Action 18 ASARCO V. CELANESE CHEMICAL CO. Plan does not distinguish between site conditions caused by Virginia Chemicals and those caused by ASARCO as a result of sulfur dioxide operations at the Plant. When read in total, it is evident from the terms of the Wickland Agreement that the agreement was meant to be a final determination of each agreeing party’s liability for costs associated with cleaning up the Selby Site, in accordance with the oversight and requirements of California DHS. ASARCO argues that the future work to be performed and associated costs were too uncertain under California law to be enforceable by contract. ASARCO cites Robinson & Wilson, Inc. v. Stone, 110 Cal. Rptr. 675, 682–84 (Cal. Ct. App. 1973), in support of that proposition, though that case is factually distinguishable. In Robinson, the contract calling for future work failed to provide sufficient clarity regarding the nature of the work or who would pay for it. See id. at 683. The terms of the Wickland Agreement clearly define who will pay for the work and the nature of the work to remediate the Selby Site, while contemplating that additional tasks may be added to accomplish the remediation’s goals. Though the complete costs were unknown at the time that the Wickland Agreement was entered, ASARCO’s contention that the uncertainty of costs then means that the Wickland Agreement could not have covered costs now mirrors ASARCO’s contention against Wickland in the 1980s litigation. We previously decided that “[t]he essential fact establishing Wickland’s right to declaratory relief—the alleged disposal of hazardous substances at the Selby [Site] at the time [ASARCO] owned and operated the smelting facility—has already occurred.” Wickland Oil Terminals, 792 F.2d at 893. The Wickland Agreement functions much ASARCO V. CELANESE CHEMICAL CO. 19 like a proportionate liability declaratory judgment would.5 The fact that the full costs were unknown at the time does not mean that the Wickland Agreement was less than comprehensive.
ASARCO’s Costs Associated with the Wickland Agreement. The 2008 Bankruptcy Settlement settled any claims that State Lands and CSLI had against ASARCO as a result of the Wickland Agreement. It also settled ASARCO’s responsibility vis-a-vis DTSC (California DHS’s successor) to clean up the Selby Site. The 2008 Bankruptcy Settlement refers to the Wickland Agreement, and states that DTSC required ASARCO, CSLI, and State Lands to conduct additional remediation at the site in order to achieve a “final remedy.” CSLI’s and State Lands’ proofs of claim in the 2008 Bankruptcy Settlement all cite to the entry of the Wickland Agreement Consent Judgment on March 13, 1989, as the basis for their claims against ASARCO. DTSC’s proof of claim cites January 1, 1983 as the date when ASARCO’s obligations to DTSC began. In other words, the bankruptcy claims against ASARCO stem from ASARCO’s liability to fund or perform cleanup efforts at the Selby Site, which, according to the terms of the Wickland Agreement, were divided among ASARCO, Wickland, and State Lands for past and future costs at the Selby Site. In an affidavit in support 5 If ASARCO had filed a contribution claim against CNA after entering the Wickland Agreement, it could have sought a declaratory judgment for contribution costs. See, e.g., Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1191 (9th Cir. 2000) (proportional declaratory judgment contribution claims allowed following private party CERCLA actions). 20 ASARCO V. CELANESE CHEMICAL CO. of the 2008 Bankruptcy Settlement, ASARCO contended that its fair share of any future work at the Selby Site would be 33%, in accordance with the terms of the Wickland Agreement (although the other Wickland Agreement parties maintained that ASARCO would be liable for 42%, citing a different provision of the Wickland Agreement), and the amount paid to DTSC reflected that liability. Therefore, the 2008 Settlement Agreement reflects an understanding of the parties to settle ASARCO’s 1989 obligations under the Wickland Agreement. Also instructive is ASARCO’s parent’s objection to the terms of the 2008 Bankruptcy Settlement, withdrawn after clarification and a stipulation among the parties that the 2008 Bankruptcy Settlement did not go beyond ASARCO’s responsibilities under the Wickland Agreement. While ASARCO’s contention that there are items in DTSC’s remedial action objectives that differ from the intermediate remedial measures in the Wickland Agreement is valid, those changes are the mandate of an overseeing government agency. The Wickland Agreement defines such mandated costs as “necessary and appropriate,” and apportions that liability according to the intent of the parties. Therefore, the $33 million that ASARCO agreed to pay to DTSC in the 2008 Bankruptcy Settlement to satisfy ASARCO’s obligations to clean up the Selby Site is not a new cost, and it cannot underlie a new claim for contribution. ASARCO contends that the phrase “such costs or damages” in the statute of limitations means that ASARCO’s claim for contribution only came about when “such costs or damages” became fixed. ASARCO cites to American Cyanamid Co. v. Capuano, 381 F.3d 6 (1st Cir. 2004), but that case held that a new claim for contribution based on new settlement liability (groundwater) cannot be barred by an ASARCO V. CELANESE CHEMICAL CO. 21 earlier settlement for a different contribution claim (soil). 381 F.3d at 25–26. ASARCO also cites to a Sixth Circuit case in an attempt to bolster the point that only costs fixed in a settlement are eligible in contribution. See RSR Corp. v. Commercial Metals Co., 496 F.3d 552, 559 (6th Cir. 2007). But the Sixth Circuit found that the future costs sought in that action were imposed as part of a judicially approved settlement, and found that the statute of limitations had expired. Id. at 558. “Rather than focus on who settled the cost-recovery action, in short, the statute asks us to focus on what was settled.” Id. at 557. In this appeal, ASARCO’s new contribution claim via the 2008 Bankruptcy Settlement is for exactly the same liability ASARCO assumed in the 1989 Wickland Agreement, and is therefore time barred.