Free Motion for Miscellaneous Relief - District Court of Colorado - Colorado

Case 1:01-cv-01807-MSK-MJW

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No.: 01-cv-01807-MSK-MJW BANK ONE, N.A., (Successor to Bank One, Colorado, N.A.) and BANK ONE TRUST COMPANY, N.A., As Trustee of the Frank G. Jamison Marital Trust and the Frank G. Jamison Family Trust, Plaintiffs, v. C.V.Y. CORPORATION, d/b/a Your Valet Cleaners; and, JOHNNY ON THE SPOT, INC. Defendants.

BOULDER CLEANERS, INC. and, JOHN'S CLEANERS, INC., Cross-Plaintiffs, v. C.V.Y. CORPORATION, d/b/a Your Valet Cleaners, Cross-Defendant. ______________________________________________________________________________ JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT WITH CONTRIBUTION PROTECTION ______________________________________________________________________________ Plaintiffs Bank One, N.A., as successor to Bank One, Colorado, N.A. ("Bank One") and Bank One Trust Company, N.A., As Trustee of the Frank G. Jamison Marital Trust and the Frank G. Jamison Family Trust ("Bank One Trust") (Bank One and Bank One Trust are collectively the "Plaintiffs"), and Defendants, C.V.Y. Corporation, d/b/a Your Valet Cleaners ("CVY"), and Johnny on the Spot, Inc. ("JOS") have reached an agreement to settle the claims among them (the "Settlement Agreement"). (The Settlement Agreement is Ex. 1 and was submitted under seal with

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the Joint Motion for Filing Exhibit 1 to the Joint Motion for Approval of Settlement Agreement with Contribution Protection under Seal Pursuant to D.C.Colo.L.CivR 7.2.) The Settlement Agreement completely resolves all claims and defenses between and among these parties, and also resolves any liability relating to CVY, JOS or their officers, directors, shareholders, successors, affiliates, owners, employees, agents, heirs, and assigns (the "Settling Defendants"). The only claims and defenses remaining in this case are the cross-claims of Boulder Cleaners, Inc. and John's Cleaners, Inc. against CVY, and CVY's defenses to same. Those cross-claims were stayed by the Court pending the outcome of the trial of Plaintiffs' claims against CVY and JOS. The parties to this motion jointly request that the Court (1) approve the terms of the Settlement Agreement; and (2) bar any contribution claims against the Settling Defendants relating to any matter addressed in the Settlement Agreement.. A proposed Order is attached as Ex. 2. COMPLIANCE WITH D.C.Colo.L.CivR 7.1(A) Counsel for the Settling Defendants certifies that they conferred with counsel for Plaintiffs and that both parties consent to this Motion, as evidenced by their joint signatures. Scott Jurdem, Esq., counsel for Cross-Plaintiffs, Boulder Cleaners, Inc. and John's Cleaner's, Inc., does not consent to the Motion and proposed Order as drafted. CLAIMS AFFECTED BY THE SETTLEMENT AGREEMENT The Settlement Agreement completely resolves all claims and defenses between Plaintiffs and the Settling Defendants, including (1) Plaintiffs' federal RCRA (First) and CERCLA (Second) Claims for Relief; (2) Plaintiffs state-law Breach of Contract (Fourth), Trespass (Fifth), and Negligence (Sixth) Claims for Relief. Plaintiffs' Third Claim for Relief (CERCLA contribution) 2

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was previously dismissed. Pursuant to the terms of the Settlement Agreement, Plaintiffs and the Settling Defendants have released all of the above claims and associated defenses in addition to any other claims that they could have asserted against each other, arising from the presence of PCE and/or other hazardous substances (and any of their degradation products) at the Property that is the subject of this litigation, in consideration of the Settling Defendants' confidential payment to Plaintiffs. The confidential settlement payment represents a share of Plaintiffs' current response costs incurred and anticipated future response costs at the Property. To date, Plaintiffs have incurred over $800,000.00, excluding legal fees, in cleaning up the Property. While Plaintiffs' future response costs are unknown and must be estimated, the costs of future investigation and cleanup could exceed $700,000.00. Given the Settlement Agreement and the fact that it resolves all remaining claims of Plaintiffs against all remaining Defendants and that the settlement is reasonable and accomplishes the goals of CERCLA, Settling Defendants are entitled to contribution protection pursuant to 42 U.S.C. § 9613(f)(2) and the Uniform Comparative Fault Act. ARGUMENT In CERCLA cases, when one defendant settles its liability, the statute expressly provides that contribution claims by others against the settling defendant are extinguished. 42 U.S.C. § 9613(f)(2). Courts (including this Court) have concluded that this rule applies to CERCLA settlements among purely private parties. See City and County of Denver v. Adolph Coors Co., 829 F. Supp. 340, 344 (D. Colo. 1993) (private parties should be eligible for contribution protection in 3

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environmental cleanup cases.); see also United States v. Mallinckrodt, Inc., 2006 WL 3331220, at *2-3 (E.D. Mo. Nov. 15, 2006); United States v. SCA Servs. Of Ind., Inc., 827 F.Supp. 526, 532 (N.D. Ind. 1993); Commercia Bank-Detroit v. Allen Industries, Inc., 769 F.Supp. 1408, 1414 (E.D. Mich. 1991); Allied Corp. v. ACME Solvent Reclaiming, Inc., 771 F.Supp. 219, 222 (N.D. Ill. 1990); and Lyncott Corp. v. Chem. Waste Mgmt., Inc., 690 F.Supp. 1409, 1418-19 (E.D. Pa. 1988). In approving contribution protection among private parties, one court noted: Courts have recognized a strong federal interest in promoting settlement. Metropolitan Housing Dev. Corp. v. Arlington Heights, 616 F.2d 1006, 1013 (7th Cir. 1980). This interest is especially pronounced in complex matters such as CERCLA claims, where the amount of evidence to be gathered for assessing liability is voluminous. It is hard to imagine that any defendant in a CERCLA action would be willing to settle if, after the settlement, it would remain open to contribution claims from other defendants. The measure of finality which a cross-claim bar provides will make settlements more desirable. A settling defendant therefore "buys its peace" from the plaintiff, as being relieved of liability to co-defendants frees the settling defendant from the litigation. Allied Corp., 771 F.Supp. at 222. The Uniform Comparative Fault Act also requires contribution protection. "A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable upon the same claim unless it so provides." Unif. Comparative Fault Act, § 6. Here, this Court should approve the settlement and grant the Settling Defendants contribution protection because: (1) the Settlement Agreement is fair, reasonable, and faithful to the objectives of CERCLA; and (2) barring contribution claims is required by both CERCLA and the Uniform Comparative Fault Act, as well as judicial policy encouraging settlement of disputes.

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I.

The Settlement Agreement is Fair, Reasonable, and Faithful to CERCLA's Objectives. In reviewing a proposed CERCLA settlement, a court must "satisfy itself that the settlement

is reasonable, fair, and consistent with the purposes that CERCLA is intended to serve." United States v. Cannons Engineering, 899 F.2d 79, 85 (1st Cir. 1990), (quoting H.R. Rep. No. 253, Pt. 3, 99th Cong., 1st Sess. 19 (1985)), also reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 3038, 3042 (legislative history of Superfund Amendment and Reauthorization Act of 1986). Here, the Settlement Agreement meets each of these three factors. A. The Settlement Agreement is Procedurally and Substantively Fair.

In considering the fairness of the Settlement Agreement, this Court should consider both procedural and substantive fairness. First, to measure procedural fairness, "a court should ordinarily look to the negotiation process and attempt to gauge its candor, openness, and bargaining balance." Cannons, 899 F.2d at 86. In this case, the Settlement Agreement (attached hereto as Ex. 1) was reached through arm's-length negotiations by parties represented by experienced counsel. Plaintiffs and the Settling Defendants entered negotiations after litigating vigorously for several years. A simple glance at the volume of pleadings in this matter confirms this beyond question. Plaintiffs and the Settling Defendants have both engaged in significant discovery, have asserted countless motions, and engaged in mediation on several occasions. Second, substantive fairness "introduces into the equation concepts of corrective justice and accountability." Cannons, 899 F.2d at 87. Here, the Settling Defendants are being held accountable for the presence of PCE and other hazardous substances in the soil and groundwater at the Property.

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B.

The Settlement Agreement is Reasonable.

Three factors bear on reasonableness: (1) whether the settlement will be effective as a means of cleaning up the site; (2) whether the agreement adequately compensates the Plaintiffs for the cost of the cleanup; and (3) whether the agreement reflects the strength of the parties' litigating positions. Cannons, 899 F.2d at 89-90. By providing funds for cleanup purposes and resolving this litigation between Plaintiffs and CVY and JOS, the Settlement Agreement meets these factors. C. The Settlement Agreement is Faithful to the Objectives of CERCLA.

In considering CERCLA settlements, courts have considered two policy objectives in the statute: First, Congress intended that the federal government be immediately given the tools necessary for prompt and effective response to the problems of national magnitude resulting from hazardous waste disposal. Second, Congress intended that those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created. Cannon Engineering, 899 F.2d at 90-91. The Settlement Agreement accomplishes these goals by providing funds for the cleanup and by spreading the costs of cleanup among all parties and prior parties to this litigation. II. The Settling Defendants Should be Entitled to Contribution Protection. CERCLA § 113(f)(2) bars contribution claims against settling parties. A person who has resolved its liability to a plaintiff "in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement." 42 U.S.C. § 9613(f)(2) (emphasis added). Additionally, the Uniform Comparative Fault Act encourages settlements by protecting settling defendants against contribution claims. 6

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A.

CERCLA Bars Contribution Claims Against Settling Defendants.

Given the settlement agreement reached between the Settling Defendants and Plaintiffs, any contribution claims against the Settling Defendants are barred by CERCLA § 113(f)(2). 42 U.S.C. § 9613(f)(2); Coors, 829 F. Supp. at 344 (private settlement agreements trigger CERCLA contribution bar); Allied Corp. v. Acme Solvent Reclaiming, Inc., 771 F. Supp. 219, 222-23 (N.D. Ill. 1990) (applying section § 113(f)(2) to private settlements as a matter of public policy); United States v. Mallinckrodt, Inc., 2006 WL 3331220, at *3 (E.D. Mo. Nov. 15, 2006); United States v. SCA Servs. Of Ind., Inc., 827 F.Supp. 526, 532 (N.D. Ind. 1993); Commercia Bank-Detroit v. Allen Industries, Inc., 769 F.Supp. 1408, 1414 (E.D. Mich. 1991); and Lyncott Corp. v. Chem. Waste Mgmt., Inc., 690 F.Supp. 1409, 1418-19 (E.D. Pa. 1988). B. The Uniform Comparative Fault Act Bars Contribution Claims Against Settling Defendants.

The Uniform Comparative Fault Act also requires contribution protection. This is because the settlement agreement entered into between Plaintiffs and the Settling Defendants acts to discharge the Settling Defendants "from all liability for contribution." Uniform Comparative Fault Act, § 6. WHEREFORE, for the foregoing reasons, Plaintiffs and the Settling Defendants request that this Court (1) approve the Settlement Agreement; and (2) order that all contribution claims against the Settling Defendants are barred.

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Respectfully submitted this 14th day of September, 2007. DAVIS GRAHAM & STUBBS LLP MONTGOMERY, KOLODNY, AMATUZIO & DUSBABEK, L.L.P.

s/ Laura J. Riese __________________ Laura J. Riese Jonathan W. Rauchway 1550 Seventeenth Street, Suite 500 Denver, CO 80202 Phone: 303-892-9400 Fax: 303-893-1379 ATTORNEYS FOR PLAINTIFFS

s/ C. Michael Montgomery ________________ C. Michael Montgomery Max K. Jones, Jr. Ryan C. Gill 1775 Sherman Street, 21st Floor Denver, CO 80203 Phone: 303-592-6600 Fax: 303-592-6666 ATTORNEYS FOR THE DEFENDANTS C.V.Y. CORPORATION, d/b/a YOUR VALET CLEANERS, and JOHNNY ON THE SPOT, INC.

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CERTIFICATE OF MAILING I hereby certify that on September 14, 2007 a true and correct copy of the JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT WITH CONTRIBUTION PROTECTION was filed with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Scott Jurdem, Esq. Buchanan Jurdem & Cederburg, P.C. 1621 18th Street, Suite 260 Denver, Colorado 80202 [email protected] Laura J. Riese, Esq. Jonathan W. Rauchway, Esq. Davis Graham & Stubbs LLP 1550 Seventeenth Street, Suite 500 Denver, CO 80202 [email protected] [email protected]

s/ Karen Wood Karen Wood Montgomery, Kolodny, Amatuzio & Dusbabek 1775 Sherman Street, 21st Floor Denver, CO 80203 Telephone: 303-592-6600 Fax: 303-592-6666 [email protected]

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