United States District Court, D. Delaware
Michael F. Bonkowski and Nicholas J. Brannick, COLE SCHOTZ
P.C., Wilmington, DE Thomas L. Shriner, Jr. and Philip C.
Babler, FOLEY & LARDNER LLP, Milwaukee, WI Attorneys for
Plaintiff ESG Holdings, LLC
W. Whetzel and Todd A. Coomes, RICHARDS, LAYTON & FINGER,
P.A. James P. Smith III and Matthew L. DiRisio, WINSTON &
STRAWN LLP, New York, NY Attorneys for Defendant Lear
U.S. District Judge
2015, Defendant Lear Corporation ("Lear") purchased
Everett Smith Group, Ltd. ("Everett") from
Plaintiff ESG Holdings, LLC ("ESG"). (See
generally D.I. 10-1 Ex. A ("Purchase
Agreement")) As part of the deal, ESG agreed to
indemnify Lear for, among other things, future losses related
to Everett's potential liability for cleanup of a
Superfund Site. (See D.I. 10-1 at 86 of 124) As
security, the parties agreed that ESG would put $59.5 million
of the sale proceeds in escrow. (See D.I. 10-1 Ex. B
Escrow Agreement gave Lear 18 months to seek disbursements
from the escrow account by serving ESG and U.S. Bank, the
escrow agent, with notice of an indemnification claim.
(See, e.g., Escrow Agreement § 3(c)(i)) In the
absence of such a timely claim, the funds would be disbursed
to ESG. (See Id. § 3(d))
1, 2016 - four days before the close of the 18-month window -
Lear sent a letter to ESG and U.S. Bank (see D.I.
10-1 Ex. C ("Notice")) informing them that Everett
had received a March 31, 2016 notice of potential liability
from the U.S. Environmental Protection Agency
("EPA"). In the Notice, Lear advised ESG that the
EPA had informed Everett that it had selected a remedy for
the Superfund Site, which was estimated to cost $1.38
billion, and expressed Lear's view that Everett "may
be jointly and severally liable for the cost of implementing
the remedy." (Notice at 1) Lear demanded that U.S. Bank
refrain from releasing any portion of the $59.5 million in
29, 2016, ESG sent a letter objecting to Lear's Notice,
which ESG contended was invalid. (See D.I. 10-1 Ex.
D) As a result, the escrow funds remain frozen in U.S.
Bank's possession. (See generally Escrow
Agreement § 3(c)(ii))
sued Lear on August 23, 2016. (See generally D.I. 1)
It seeks a declaratory judgment "to break the
escrow." (D.I. 13 at 4; see D.I. 1 at 6-8) On
October 4, 2016, Lear moved to dismiss. (D.I. 8) The parties
completed briefing (see D.I. 9, 13, 14), and the
Court heard oral argument on February 22, 2017 (see
D.I. 17 ("Tr.")).
a motion to dismiss under Rule 12(b)(6) requires the Court to
accept as true all material allegations of the complaint.
See Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir.
2004). "The issue is not whether a plaintiff will
ultimately prevail but whether the claimant is entitled to
offer evidence to support the claims." In re
Burlington Coat Factory Sec. Litig., 114F.3dl410, 1420
(3d Cir. 1997) (internal quotation marks omitted). Thus, the
Court may grant such a motion to dismiss only if, after
"accepting all well pleaded allegations in the complaint
as true, and viewing them in the light most favorable to
plaintiff, [the] plaintiff is not entitled to relief."
"[t]o survive a motion to dismiss, a civil plaintiff
must allege facts that 'raise a right to relief above the
speculative level on the assumption that the allegations in
the complaint are true (even if doubtful in fact).'"
Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir.
2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). A claim is facially plausible "when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). At bottom, "[t]he complaint
must state enough facts to raise a reasonable expectation
that discovery will reveal evidence of [each] necessary
element" of a plaintiff s claim. Wilkerson v. New
Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d
Cir. 2008) (internal quotation marks omitted). The Court is
not obligated to accept as true "bald assertions, "
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906
(3d Cir. 1997) (internal quotation marks omitted),
"unsupported conclusions and unwarranted inferences,
" Schuylkill Energy Res., Inc. v. Pa. Power &
Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or
allegations that are "self-evidently false, "
Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).
a district court ruling on a motion to dismiss generally
"may not consider matters extraneous to the pleadings,
" there is an exception for documents "integral to
or explicitly relied upon in the complaint, " which may
be considered "without converting the motion [to
dismiss] into one for summary judgment." In re
Burlington Coat, 114 F.3d at 1426 (internal quotation
marks and emphasis omitted) (alteration in original).