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United States v. Clark

August 19, 2010

UNITED STATES OF AMERICA, PLAINTIFF,
v.
JAMES W. CLARK, LEROY E. DRURY, CALUMET HEAT TREATING CORPORATION, NITREX, INC., AND THOMAS G. COOPER, DEFENDANTS.
CALUMET HEAT TREATING CORPORATION, NITREX, INC., AND THOMAS G. COOPER, THIRD-PARTY PLAINTIFFS,
v.
LIBERTY MUTUAL INSURANCE COMPANY, ROBERT SIERKS AND GENERAL CASUALTY COMPANY OF ILLINOIS, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Joan B. Gottschall United States District Judge

Judge Joan B. Gottschall

MEMORANDUM OPINION & ORDER

On July 22, 2008, the United States filed suit against James Clark and Leroy Drury under sections 107(a) and 104(e) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 ("CERCLA"). (Doc. 1.) The government sought reimbursement for response costs incurred in connection with a facility known as the South Green Plating Superfund Site (the "Superfund Site") located in Chicago, Illinois. Clark was alleged to be an operator at the Superfund Site, doing business as Temper Tough, Inc. and JC Enterprises. Drury was the former president and registered agent for Temper Tough. (See id.) In January, 2009, the government amended its complaint to add additional defendants Calumet Heat Treating Corporation ("Calumet"), Nitrex, Inc. ("Nitrex"), and Thomas G. Cooper (collectively, "CHTC"). (Doc. 19 ("Compl.").)

According to the complaint, Calumet owned the Superfund Site from 1946 to 1993 "and conducted heat treating operations, a thermal process for strengthening metals." (Compl. ¶ 13.) Cooper is the president of Calument, and Nitrex is alleged to be the legal successor of Calumet. (Id. ¶¶ 9-10.)

CHTC filed a third-party complaint against Liberty Mutual Insurance Company ("Liberty"), General Casualty Company of Illinois ("General Casualty") (collectively, the "Insurers"), and Robert Sierks, seeking a declaratory judgment that the Insurers have a duty to defend and indemnify CHTC in this action and seeking contribution from Sierks. (Doc. 57.) The Insurers filed third-party counterclaims seeking declaratory judgments that no duty to defend or indemnify exists. (Docs. 49, 69.) CHTC and the Insurers have filed cross-motions for partial summary judgment, seeking to establish whether the Insurers have a duty to defend CHTC in this action. (Docs. 88, 98, 100.)*fn1

I. BACKGROUND

The Superfund Site is composed of two separate properties, located at 12130 South Green Street (the "Green Street property") and 12139 Peoria Street (the "Peoria Street property"), on approximately one acre of land located in a primarily residential area. (Compl. ¶¶ 11-12.) According to the complaint, Calumet conducted its heat treating business at the Peoria Street property beginning in 1946 and at the Green Street property beginning in 1954. (Id. ¶ 60.) Calumet owned both properties and continued to operate its business on them until 1993. In February 1993, Cooper moved Calumet's business to another location and allowed Clark to conduct his own heat treating business at the Superfund Site. Clark had abandoned the Superfund Site by the end of 2003. (Id. ¶¶ 13-16.)

The City of Chicago (the "City") acquired ownership of the Green Street property in April 2002 in a tax delinquency sale. (Id. ¶ 17.) The City eventually requested assistance from the United States Environmental Protection Agency ("EPA") in removing hazardous materials from the property. (Id. ¶ 22.) EPA assisted with removal from the Green Street property, and, after the City acquired the Peoria Street property in a separate tax sale in February 2005, EPA expanded its removal efforts to the entire Superfund Site. (Id. ¶¶ 23, 30.) Removal activities were completed by July, 2005. (Id. ¶ 33.)

EPA arrived at the Green Street Property in October 2004 to begin removal. The government's complaint describes the condition of the property as follows:

23. On October 6, 2004, the Superfund Technical Assessment and Response Team ("START") conducted site reconnaissance. START observed evidence of leaking drums and containers, and two large underground pits containing materials of unknown contents.

24. Analytical results for samples collected at the Site by START during the initial site reconnaissance indicated the presence of heavy metals including, barium, cadmium, chromium, and lead, as well as cyanides and corrosive and caustic liquids, which are hazardous substances within the meaning of CERCLA Section 101(14), 42 U.S.C. § 9601(14).

25. Based on the findings described above, EPA determined, pursuant to Section 104(a) of CERCLA, 42 U.S.C. § 9604(a), that releases or threats of release into the environment of hazardous substances at or from the Site presented an imminent and substantial endangerment to the public health or welfare.

26. Accordingly, EPA issued an action memorandum for a time-critical removal action at the ...


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