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Cooper Industries, LLC v. CBS Corporation

Superior Court of Delaware

January 10, 2019

COOPER INDUSTRIES, LLC, Plaintiff,
v.
CBS CORPORATION, Defendant.

          Submitted: August 15, 2018

         Defendant's Motion to Dismiss - DENIED

          Timothy Jay Houseal, Esquire; Jennifer M. Kinkus, Esquire, Young Conaway Stargatt & Taylor LLP, Attorneys for Plaintiff.

          Michael A. Piatt, Esquire (Argued); Kristin S.M. Morrison, Esquire, Jones Day, Attorneys for Plaintiff.

          Kathleen M. Miller, Esquire, Smith, Katzenstein & Jenkins LLP, Attorney for Defendant.

          Steven W. Zoffer, Esquire (Argued); Michael P. Flynn, Esquire, Dickie, McCamey & Chilcote, P.C., Attorneys for Defendant.

          MEMORANDUM OPINION

          WILLIAM C. CARPENTER, JR. JUDGE.

         Before the Court is Defendant CBS Corporation's ("CBS" or "Defendant") Rule 12(b)(6) Motion to Dismiss. For the reasons set forth in this Opinion, Defendant's Motion to Dismiss is denied.

         I. FACTUAL & PROCEDURAL BACKGROUND

         This litigation arises out of a 1982 agreement for the sale of the lighting products business of Westinghouse Electric Corporation's ("Westinghouse" or "Seller") Lighting Business Unit (the "1982 Agreement" or the "Agreement").[1]Specifically, the 1982 Agreement gave Cooper Industries, Inc. ("CII" or "Purchaser") ownership of'" [a]ll real estate owned or used in the business, including plants and buildings [such as the Vicksburg Facility, now known as Cooper Lighting - Vicksburg ("Vicksburg Facility")]."[2] The Agreement contains a forum selection clause, which indicates it is governed by Ohio law.[3]

         The 1982 Agreement was originally between CII and Westinghouse.[4] Plaintiff Cooper Industries, LLC ("Cooper" or "Plaintiff) and Defendant CBS Corporation both inherited the Agreement as respective successors-by-merger to CII and Westinghouse.[5] Presently, the parties dispute Defendant's indemnity obligations under the 1982 Agreement for the disposal of hazardous substances at the Vicksburg Facility.[6]

         A. THE TERMS OF THE 1982 AGREEMENT

         The 1982 Agreement, among other things, specified liabilities that CII would assume as part of the sale, as well as the liabilities Westinghouse would retain.[7] The Agreement also included "standard indemnification provisions in connection with liabilities that were assumed or retained, subject to certain time and dollar limitations prescribed by Section 14.4."[8]

         During negotiations for the 1982 Agreement, CII was allegedly concerned about Westinghouse's disposal of chemical and toxic substances.[9] Through due diligence, CII had discovered that the waste disposal site at the Vicksburg Facility contained hazardous solvents, like TCE (trichloroethylene).[10] CII was also worried about the presence of toxic substances, such as PCBs (polychlorinated biphenyls), at the Vicksburg Facility.[11]

         To alleviate its concerns, CII proposed an additional indemnification provision, now contained in Section 14.5 of the 1982 Agreement, which is explicitly not subject to Section 14.4's time or dollar limitations.[12] Westinghouse agreed to this additional provision, and Section 14.5 reads:

Seller hereby extends to Purchaser a separate indemnification, not subject to any of the limitations described in 14.4 above, with respect to the disposal by Seller of any chemical or toxic substance on or off the premises of the Vicksburg facility, including but not limited to the substance Trichloroethylene, which Seller acknowledges to have been buried in an underground waste disposal site on the premises at Vicksburg, and with respect to the disposal by Seller of PCB's (polychlorinated biphenyls) on or off said premises. Seller shall indemnify, defend and hold Purchaser harmless from all liability, costs, damages and attorney's fees which Purchaser may sustain or become subject to as a result of said disposal. Purchaser agrees to cooperate with Seller to a reasonable extent by permitting access by Seller to the waste disposal site in Vicksburg for clean-up. Seller shall control the defense of any lawsuit with respect to said underground waste disposal site. Purchaser agrees not to use said underground waste disposal site.[13]

         In the fall of 1995, Westinghouse merged with CBS.[14] CBS subsequently assumed Westinghouse's obligations and liabilities under the 1982 Agreement.[15]Ten years later, CII merged with Cooper, which similarly assumed all rights and responsibilities of CII under the 1982 Agreement.[16]

         B. THE VICKSBURG FACILITY

         The Vicksburg Facility, located in Vicksburg, Mississippi, is situated on 53.5 acres of land, and is presently used "to manufacture lighting fixtures and poles for distribution to the industrial and construction markets."[17] When Westinghouse was owner, it was used to manufacture "fluorescent and incandescent light fixtures, including light ballasts with PCB compounds."[18] Westinghouse also used and disposed of a variety of other chemicals and toxic substances at the Vicksburg Facility.[19] Since CII took ownership in 1982, PCBs have not been used at the Vicksburg Facility.[20]

         C. CONTAMINATION OF VICKSBURG FACILITY

         In August 1999, CII discovered PCB contamination affecting the engineering offices, cafeteria aisle-way, hallway, and former photometries laboratory at the Vicksburg Facility."[21] CII determined that the affected walls and floors had to be remediated, and sought indemnification from CBS pursuant to Section 14.5 of the 1982 Agreement.[22]

         After a series of discussions, CII completed the required remediation and "[i]n early 2000, CBS reimbursed CII... for an agreed-upon amount of $167, 000."[23] CBS never disputed its obligation to indemnify CII for this remediation under Section 14.5 of the 1982 Agreement.[24] Defendant also never took the position that "the indemnification covered by Section 14.5 was limited only to the disposal of chemicals or toxic substances associated with the 'underground waste disposal site' mentioned in Section 14.5."[25] Plaintiff further contends that "CII's PCB remediation in late 1999 and early 2000 had nothing to do with [the] underground waste disposal site[, ]"[26] but Defendant still indemnified Cooper.

         In 2012, Plaintiff conducted an investigation of the environmental conditions at the Vicksburg Facility.[27] Cooper discovered "that [the] soil and groundwater in certain areas beneath and to the west of the manufacturing facility building [were] contaminated with a variety of chemicals and toxic substances, including PCBs and TCE."[28]

         Cooper subsequently entered into a November 2015 agreement with the Mississippi Department of Environmental Quality ("MDEQ") "to review and agree upon a site investigation work plan for remediation of the identified contamination at the Vicksburg Facility."[29] In 2016 and 2017, Cooper and its environmental engineering firm, Golder Associates Inc. ("Golder"), collaborated with MDEQ to create this plan.[30]

         Based on its work with MDEQ and Golder, Plaintiff believes "the potential environmental liability costs for the identified contamination are estimated to be approximately $4 million ... [and] the future potential cost of PCB remediation alone is estimated to be approximately $2 million."[31] At the time Plaintiffs Complaint was filed, Cooper had already spent about $660, 000 to help remediate the contamination, [32] which it alleges is only attributable to the actions of Westinghouse.[33]

         D. THE INSTANT LITIGATION

         In response to these remediation costs, Cooper asked CBS, in a letter dated February 9, 2017, "to indemnify, defend, and hold [it] harmless against any loss, damage, liability ... or expense (including attorney's fees and court costs) arising from the identified contamination at the Vicksburg Facility pursuant to Section 14.5 of the 1982 Agreement."[34]

         CBS subsequently refused to indemnify Cooper in a February 28, 2017 email.[35] In the email, Defendant claimed that Section 14.5 only required CBS to provide indemnification "for costs, liabilities or damages ... associated with the subject underground disposal site."[36] Plaintiff believes that Defendant's interpretation of Section 14.5 of the 1982 Agreement is flawed and cannot be reconciled with its prior conduct or with the plain language of the Agreement.[37]

         Because Cooper has been unable to resolve this issue with CBS, Plaintiff filed the instant litigation on March 20, 2018.[38] Plaintiff has asserted breach of contract and declaratory judgment claims against CBS, seeking recovery for the "... hundreds of thousands of dollars in indemnifiable costs ... at the Vicksburg Facility."[39]Defendant responded by filing the instant Motion to Dismiss on May 23, 2018, pursuant to Superior Court Civil Rule 12(b)(6).[40]

         II. STANDARD OF REVIEW

         In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the Court must assume the truthfulness of the complaint's well-pleaded allegations, [41] and afford a plaintiff "the benefit of all reasonable inferences that can be drawn from [their] pleading."[42] Certain documents that are "integral to a plaintiffs claims ... may be incorporated by reference without converting the motion to a summary judgment."[43] At this preliminary stage, dismissal will be granted only when the Court is able to determine with "reasonable certainty" that the plaintiff would not be entitled to relief "under any set of facts that could be proven to support the claims asserted" in the complaint.[44]

         III. DISCUSSION

         CBS moves to dismiss Cooper's Complaint on the grounds that its breach of contract and declaratory judgment claims are time-barred under the applicable Delaware statute of limitations.[45] The Court would like to note that, as Defendant CBS argued and Plaintiff Cooper conceded in their respective briefs, [46] Delaware procedural law will be applied. Any substantive issues regarding "the ...


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