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Valbruna Slater Steel Corp. v. Joslyn Manufacturing Co.

United States District Court, N.D. Indiana, Fort Wayne Division

May 22, 2018

VALBRUNA SLATER STEEL CORPORATION and FORT WAYNE STEEL CORPORATION, Plaintiffs,
v.
JOSLYN MANUFACTURING COMPANY, JOSLYN CORPORATION and JOSLYN MANUFACTURING COMPANY, LLC, Defendants.

          OPINION AND ORDER

          JON E. DEGUILIO JUDGE

         This is an action pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq. wherein plaintiffs Valbruna Slater Steel Corporation and Fort Wayne Steel Corporation (collectively, “plaintiffs”) filed a cost recovery claim against defendants Joslyn Manufacturing Company, Joslyn Corporation, and Joslyn Manufacturing Company, LLC (collectively, “defendants” or “Joslyn entities”), who then filed a contribution counterclaim.

         More than eight years have passed since this lawsuit began. As a result, the procedural history of this litigation is extensive and much of it has been set forth in prior orders. To quickly summarize, the Court first resolved two motions for summary judgment filed by defendants. After discovery closed, the parties engaged in another round of summary judgment motions- two filed by defendants and one filed by plaintiffs. In ruling on these motions for summary judgment, the Court determined that the defendants were jointly and severally liable for the cost of remediating the contaminated site[1] (thereby entitling plaintiffs to declaratory judgment and payment of future costs). The Court deferred calculating damages until it could be determined what remediation costs were compensable and how those costs were to be equitably allocated [DE 124]. The Court then held trial in two phases-one for determining cost compensability and the other for determining cost contribution. These bench trials resulted in the issuance of extensive findings of fact and conclusions of law [DE 175; DE 182]. In Phase I of trial, the Court held that defendants were strictly liable to plaintiffs for $2, 029, 871.09 in cleanup costs [DE 175]; and in Phase II of trial, the Court determined that $1, 529, 871.09 of the recoverable costs were to be allocated 75% to defendants and 25% to plaintiffs (with the same allocation percentages applying to future costs deemed necessary and consistent with the National Contingency Plan) [DE 182].

         At this point, the only outstanding issues concern the following: the assessment of remediation costs post-dating December 14, 2016 (“additional costs”); the amount of attorney fees and expenses to be taxed; the proper prejudgment interest to be assessed; and finally, whether or not certain Joslyn entities can escape the entry of final judgment against them in light of defense counsel's eleventh-hour argument that Joslyn Manufacturing Company, LLC, is the only “proper defendant” in this action. Those issues have been briefed by the parties [DEs 185 - 191] and are ripe for the Court's resolution.

         I. DISCUSSION

         A) Proper Defendants

         During the entire course of this protracted litigation, the defendants have never once (until now) asked the Court to distinguish between the Joslyn entities-that is, Joslyn Manufacturing Company, Joslyn Corporation, and Joslyn Manufacturing Company, LLC.[2]

         By way of history, the litigation began in 2010 with plaintiffs' identification of all three Joslyn entities as defendants in the complaint [DE 1]. Ever since the filing of the complaint, the defendants have repeatedly been referred to by the parties and the Court as Joslyn.[3] Defendants then filed an amended answer and counterclaim [DE 59].[4] When plaintiffs moved for summary judgment on the complaint, plaintiffs explicitly sought summary judgment against all of the defendants [DE 102], and plaintiffs' “statement of material facts not in dispute” identified the relationship between each of the Joslyn entities (as derived from the defense's response to interrogatories).[5] In opposing the entry of judgment in plaintiffs' favor [DE 113], the defense argued solely that the motion for summary judgment should be denied because “Joslyn is not liable under § 107, ” and, to the extent there exists compensable costs, “Valbruna's equitable share is 100%” based on the counterclaim for contribution. The defense did not assert that plaintiffs failed to sue the proper party, nor did the defense draw a distinction between the Joslyn entities for purposes of liability. In issuing its summary judgment ruling in December 2015, the Court decided the motion on exactly the terms presented by the parties: it found that there was no genuine dispute that the defendants were jointly and severally liable for the costs (including future costs) of remediating the contaminated site, while it deferred the calculation of damages. Because the defendants did not contend that a particular entity could not be held responsible or that liability among the defendants differed, the Court granted the motion for summary judgment in favor of plaintiffs against all of the Joslyn entities named in the complaint.

         Three years later, defense counsel now seeks to limit the effect of that order. The defense contends that Joslyn Manufacturing Company, LLC, is the only legal successor to the entity that actually owned and operated the site from 1928 until 1981; and therefore, only Joslyn Manufacturing Company, LLC, should be subject to the judgment in this action. Essentially, defense counsel wants to present its affirmative defense to liability on the part of Joslyn Corporation, [6] notwithstanding the fact that summary judgment as to liability has already been granted on plaintiffs' complaint. In support of this position, defense counsel contends that (1) defendants never waived this argument because throughout the litigation only Joslyn Manufacturing Company, LLC, has responded to discovery and filed documents; and (2) plaintiffs failed to carry their burden in providing evidence to show that Joslyn Corporation is actually liable, given that this entity didn't own or operate the contaminated site and was not in existence when this lawsuit was filed.

         The defense's non-waiver argument is disingenuous at best. Creatively docketing filings using the names of all (or some) of the defendants, but then naming only Joslyn Manufacturing Company, LLC, in the actual body of the documents hardly constitutes raising an issue requiring the Court's ruling. See, e.g., Fed.R.Civ.P. 7(b). Moreover, to the extent that not all of the Joslyn entities participated in answering the complaint, then this would support their being defaulted, see Fed. R. Civ. P. 55, not support some inference that they claimed to be improperly named in the complaint. In addition, at least two courts of appeals have held that this type of “proper party” defense is indeed an affirmative defense that is waived unless the court grants leave to amend the pleadings. Jordan v. City of Baton Rouge, 192 F.3d 125, 1999 WL 683794 at *3 (5th Cir. 1999); Bokunewicz v. Purolator Prods., Inc., 907 F.2d 1396, 1402 (3d Cir. 1990); see also Grabianski v. Bally Total Fitness Holding Corp., 169 F.Supp.3d 785, 791-92 (N.D. Ill. 2015). Certainly, justice doesn't require allowing defendants to amend their pleadings in this case, see Fed. R. Civ. P. 15(a)(2), where for eight years defense counsel has purposefully referred to his clients collectively as “Joslyn, ” without explicitly differentiating between the entities, and where the liability of all of the defendants was determined over three years ago.

         With respect to the alleged lack of evidence proving each of the Joslyn entities' liability, the contention has no merit. Plaintiffs specifically moved for summary judgment on the complaint against all of the defendants, and the Court granted that motion without the defendants ever drawing a distinction between themselves for purposes of liability. Thus, back in December 2010, the Court determined that each of the Joslyn entities was jointly and severally liable under § 107 of CERCLA. And this Court agrees with the various other district courts in the circuit who have uniformly held that failing to assert an affirmative defense to liability in response to a motion for summary judgment constitutes abandonment of the defense. E.g., Sunshine Imp & Exp Corp. v. Luxury Car Concierge, Inc., No. 13 C 8925, 2015 WL 2193808 (N.D. Ill. May 7, 2015); Frerck v. Pearson Educ., Inc., 63 F.Supp.3d 882 (N.D. Ill. 2014); United Cent. Bank v. Wells St. Apartments, LLC, 957 F.Supp.2d 978 (E.D. Wis. 2013). Given that summary judgment is the “put up or shut up” moment in a lawsuit, Olendzki v. Rossi, 765 F.3d 742, 749 (7th Cir. 2014), it would have been incumbent on defense counsel to raise this “proper party” defense in response to the motion for summary judgment if it could have actually precluded summary judgment against any one of the Joslyn entities. See Grabianski, 169 F.Supp.3d at 791-92. Questioning the Court's liability determination several years later, without any legitimate basis for doing so, does not warrant a revision of the decision. See Fed. R. Civ. P. 54(b). Accordingly, the Court denies the defense's untimely and unjustified request to limit its previous liability determination by excluding Joslyn Corporation from the final judgment.

         B) Additional Costs Post-December 14, 2016

         The Court previously set forth the legal standard for recoverable costs and expenses under CERCLA [DE 175 at 4], and incorporates that standard herein. In short, to be recoverable, expenses must be both necessary and consistent with the National Contingency Plan. See id.

         Plaintiffs claim that they have incurred additional costs in the amount of $240, 745.69 from December 14, 2016 through March 15, 2018 in responding to the environmental contamination at the site. These additional costs are itemized and supported by their respective invoices [DE 186-1, Third Affidavit of Jonathan P. Hacker, ¶ 7]. Defendants only contend that $2, 174.20 of that amount is not recoverable under CERCLA (“disputed costs”)[7]-thus, defendants do not dispute the other $238, 571.49 in claimed costs [DE 188 at 1-2]. Defendants argue that the disputed costs were incurred to ensure worker safety in indoor spaces and are, therefore, not compensable. Defendants equate the disputed costs to those expended to install a vapor barrier-which the Court previously concluded were not compensable because the costs did not address a threat to human health or the environment; rather, the evidence demonstrated that the vapor barrier only benefited worker safety [DE 175 at 10-11].

         Contrary to defendants' position, Mr. Hacker's affidavit explains that once the site was entered into the Indiana Department of Environmental Management's (“IDEM”) Voluntary Remediation Program (“VRP”), plaintiffs have continued to engage in VRP work under IDEM's close supervision in order to address threats posed at the site. Moreover, Mr. Hacker indicates that the disputed costs were actually incurred while conducting VRP work required and overseen by IDEM [DE 186-1, ¶¶ 4, 7]. In fact, plaintiffs confirm that the VRP ...


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