Action Mfg. Co., Inc. v. Simon Wrecking Co.

Page 439

387 F.Supp.2d 439

ACTION MANUFACTURING CO., INC., et al., Plaintiffs, v. SIMON WRECKING CO., et al., Defendants.

No. Civ.A. 02-CV-8964.

United States District Court, E.D. Pennsylvania.

August 31, 2005.

David E. Romine, Larry D. Silver, Langsam, Langsam, Stevens & Silver, LLP, Jeannette M. Brian, Leigh W. Marquardt, Conrad, O'Brien, Gellman & Rohn, PC, Philadelphia, PA, Sandra G. Gibbs, Manko, Gold, Katcher & Fox, Bala Cynwyd, PA, for Plaintiffs.

Philip L. Hinerman, Fox, Rothschild, LLP, J. Robert Stoltzfus, Robert L. Collings, Schnader, Harrison, Segal & Lewis LLP, Philadelphia, PA; George J. Ozorowski, Hughes, Kalkrenner & Adshead LLP, Plymouth Meeting, PA; C. Shawn Dryer, Kevin K. Douglass, Matthew C. Landreth, Robert W. Thomson, Babst, Calland, Clements & Zomnir, PC, Pittsburgh, PA; David J. Staudt, Rees A. Griffiths, Barley, Snyder, Senft & Cohen, LLC, York, PA; Matthew H. Haverstick, Megan Reardon Ford, Barley, Snyder, Lancaster, PA; Madelaine R. Berg, Stroock, Stroock & Lavan LLP, New York, NY; Joseph D. Picciotti, Pittsford, NY, for Defendants.

Lightman Drum Co., Inc., c/o Jerome Lightman, Berlin, NJ, Defendants pro se.

MEMORANDUM AND ORDER

ANITA B. BRODY, District Judge.

I. INTRODUCTION

Plaintiffs¹ (collectively referred to as "Action Manufacturing") bring this action against defendants² pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), and Pennsylvania's Hazardous Site Cleanup Act, 35 Pa. Stat. Ann. § 6020.101 et seq. ("HSCA"), for contribution and cost recovery of past and future response costs incurred in the environmental cleanup of a site located in Malvern, Pennsylvania (the "Malvern Superfund Site"). Plaintiffs also seek declaratory judgment. Jurisdiction is appropriate under 28 U.S.C. §§ 1331 & 1367. Plaintiff Action Manufacturing alleges liability against defendant Marcegaglia USA, Inc. ("Marcegaglia") as a successor-in-interest to the Bishop Tube Company ("Bishop Tube"). Currently before me is Marcegaglia's motion for summary judgment on the basis that it is not liable as a successor to Bishop Tube. For the reasons set forth below, Marcegaglia's motion is granted.

II. BACKGROUND

A. Bishop Tube and the Malvern Superfund Site

Bishop Tube, located in Frazer, Pennsylvania, was founded in 1842 for the manufacture of gold and platinum alloys for technical and industrial uses. (Pl.'s Resp. Ex. 5 at 13789.) For all time periods relevant to this case, Bishop Tube manufactured metal alloy tubing in sizes ranging from 0.125" to 2" in diameter. (Id. at 13783.) These tubes were used in a variety of industries. (Id.)

In 1974 Bishop Tube was purchased by Christiana Metals Corporation ("Christiana"), an Italian corporation. (Id. at 13789.) Bishop Tube continued to operate in Frazer as a division of Christiana. (Id.)

The parties agreed at oral argument that between 1969 and 1979, both before and after Bishop Tube became a division of Christiana, Bishop Tube arranged for the transportation of hazardous materials from its Frazer facility to the Malvern Superfund Site. (Tr. at 3-4.)³

In 1980, Congress enacted CERCLA. Groundwater contamination associated with the Malvern Site was first identified in the spring of 1980 in residential wells. (Pl.'s Resp. Ex. 2 at 56412.) In September 1983, the Malvern Superfund Site was listed on the National Priorities List. (Id.)

B. Electralloy's purchase of Bishop Tube

In 1988 or 1989, the CEO and President of Electralloy Corporation ("Electralloy") traveled to Italy to negotiate buying Bishop Tube from Christiana. (Pl.'s Resp. Ex. 7.) Christiana's lawyer during the negotiations in Italy was Giovanni Lega. (Id.) An appraisal of the Bishop Tube assets in 1988 indicated an "orderly liquidation value" of $2,476,000. (Pl.'s Resp. Ex. 8 at 4.) In 1989, Electralloy bought the Bishop Tube Company from Christiana and Bishop Tube became a division of Electralloy. (Pl.'s Resp. Ex. 7; Tr. at 4.) Although Electralloy bought the Bishop Tube Company and continued to operate the Bishop Tube facilities, Christiana retained ownership of the real estate, i.e. the land and the buildings, and Electralloy leased the real estate from Christiana. (Pl.'s Resp. Ex. 10 at 1.)

C. Electralloy's bankruptcy and Marcegaglia's purchase of the Bishop Tube assets

In January 1991, Electralloy filed a petition under Chapter 7 of the Bankruptcy Code. (Pl.'s Resp. Ex. 8 at 1.) At the same time that Electralloy filed for bankruptcy, it ceased operations at the Bishop Tube facility. (Woolard Dep. at 12-13.) The United States Bankruptcy Court appointed Richard W. Roeder as the trustee of Electralloy's bankruptcy estate. (Pl.'s Resp. Ex. 8 at 2.)

The trustee, with the approval of the bankruptcy court, scheduled an auction of the Bishop Tube assets, consisting of machinery, equipment and inventory located at the Bishop Tube facility, for September 24, 1991. (Id. at 4; Pl.'s Resp. Ex. 9.) The trustee represented to the bankruptcy court: "No appraisal of the Property has been made since 1988, which indicated an orderly liquidation value of Two Million Four Hundred Seventy Six Thousand Dollars ($2,476,000.00). However, the Trustee estimates that the value of the Property is closer to One Million Dollars ($1,000,000.00)." (Pl.'s Resp. Ex. 8 at 4.) The sale of the Bishop Tube assets was to be "free and clear of all liens" and the bankruptcy trustee told that court that he believed "the highest net recovery to the estate will be obtained by selling the [Bishop Tube assets] at public auction." (Id. at 5.)

On September 23, 1991, the bankruptcy trustee canceled the auction. (Pl.'s Resp. Exs. 10 & 11.) The Bishop Tube assets that were to be auctioned were instead conveyed back to Christiana in full satisfaction of Christiana's claims against Electralloy. (Id.) Christiana had a claim of nearly $5 million against Electralloy's bankruptcy estate. (Pl.'s Resp. Ex. 10 ¶ 5.) Between $3.5 million and $4 million of the claim was unsecured. (Id. ¶ 10.) The trustee also paid Christiana $296,000 as an "administrative expense." (Id. ¶ 9.) As part of the deal, Christiana received the "right, title and interest to the trade name and goodwill of Bishop." (Id. at Ex. A.)

Also on September 23, 1991, Christiana sold the assets of Bishop Tube to Marcegaglia S.p.A., the Italian parent company of defendant Marcegaglia, for $1.6 million in cash. (Pl.'s Resp. Ex. 14.) At the time of sale, Marcegaglia S.p.A. intended to "reoperate the plant as an ongoing concern for the production of tubes and pipings or to use the premises as a temporary warehouse for the machinery." (Pl.'s Resp. Ex. 18 at 1.) If Marcegaglia S.p.A. decided to operate the plant as an ongoing concern, it would be obliged to lease the premises from Christiana for at least three years.⁴ (Id. at 1-2; Pl.'s Resp. Ex. 22.) The sale agreement between Christiana and Marcegaglia S.p.A. specified that Marcegaglia S.p.A. was not assuming and would not be liable for any liabilities of Bishop Tube. (Pl.'s Resp. Ex. 14 at 2.)

Christiana and Marcegaglia S.p.A. did not have any overlapping shareholders, directors or officers.

D. Marcegaglia's operations

On January 1, 1992, the New Bishop Tube Company⁵ was incorporated as a subsidiary of Marcegaglia S.p.A. (Pl.'s Resp. Ex. 15.) The New Bishop Tube Company, using some employees from Italy, upgraded and modernized the Frazer facility. (Woolard Dep. at 36-37.) The New Bishop Tube Company re-opened the Frazer facility in the second half on 1992, approximately eighteen months after Electralloy ceased operations. (Woolard Dep. at 12-13, 36.)

When the New Bishop Tube Company was first incorporated, Steno Marcegaglia was president of the corporation. (Pl.'s Resp. Ex. 15.) At some point between the New Bishop Tube Company's incorporation and March 2, 1995, Giovannia Lega, who was Christiana's lawyer during its negotiations with Electralloy in Italy in 1988, became president of the company.⁶ (Pl.'s Resp. Ex. 3 at 3, Ex. B.)

The New Bishop Tube Company hired three out of the eighty people who were employed at the Bishop Tube facility under Electralloy: Howard Long, the plant manager; Russ Levering, the plant engineer; and James Woolard, the sales manager. (Woolard Dep. at 14-18.) These were the only three employees of Electralloy that were retained by the court during the bankruptcy proceedings. (Id. at 17.) Howard Long left the New Bishop Tube Company before the Frazer facility reopened.

The New Bishop Tube Company manufactured stainless steel pipe and tubing in sizes ranging from 0.75" to 4.5" in diameter. (Pl.'s Resp. Ex. 3 at 3.) When the New Bishop Tube Company first started operations, it only had a handful of customers. (Woolard Dep. at 41-43.) These customers were tubing distributors and had also been customers of Electralloy. (Id.)

In February 1993 the New Bishop Tube Company acquired the assets of Damascus Tubular Products and changed its name to the Damascus-Bishop Tube Company. (Marcegaglia Dep. at 13-14, 61-62.)

In November 1996, the United States Environmental Protection Agency ("EPA") notified the Damascus-Bishop Tube Company that it was a potentially responsible party in the cleanup of the Malvern Superfund Site. (Pl.'s Resp. Ex. 21.)

In 1999, Damascus-Bishop Tube Company changed its name to its current name, Marcegaglia USA, Inc. (Marcegaglia Dep. at 13-14.)

III. STANDARD OF REVIEW

Summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). There is a "genuine" issue if the evidence would permit a reasonable jury to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party must make an initial showing that...