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People v. Beazer East, Inc.

United States District Court, N.D. Illinois, Eastern Division

September 8, 2014

THE PEOPLES GAS LIGHT AND COKE COMPANY, Plaintiff,
v.
BEAZER EAST, INC., Defendant.

MEMORANDUM OPINION AND ORDER

GEORGE M. MAROVICH, District Judge.

Plaintiff Peoples Gas Light and Coke Company ("Peoples Gas") filed a two-count complaint against defendant Beazer East, Inc. ("Beazer"). In Count I, Peoples Gas seeks to recover response costs under the Comprehensive Environmental Response, Compensation and Liability Act ("CERLCA") § 107(a), 42 U.S.C. § 9607(a). Alternatively, in Count II, Peoples Gas seeks contribution under CERCLA § 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B). Defendant moves to dismiss. For the reasons set forth below, the Court grants in part and denies in part defendant's motion to dismiss.

I. Background

The Court takes as true the allegations in plaintiff's complaint. The Court also considers the documents attached to plaintiff's complaint. Fed.R.Civ.P. 10(c).

Plaintiff Peoples Gas was Chicago's first utility and has been selling gas in Chicago since 1850. It brings CERCLA claims against defendant Beazer, who, in 1988, purchased all of the stock of Koppers. Koppers was a company originally established by Dr. Heinrich Koppers, an engineer who developed a method for transforming coal into "coke oven gas" that could be used for heating and cooking.

In 1920, Peoples Gas and Koppers entered an agreement (the "1920 Agreement"). Under the 1920 Agreement, Koppers agreed to "organize... a corporation empowered by its charter to build and to operate a by-product coke plant and a plant for the manufacture of carbureted water gas." (Complt. Exh. A at ¶ 7). The corporation was to be called Chicago By-Product Coke Company ("Chicago Coke" or "Coke"). Coke, in turn, was to "enter into a contract with Koppers, ' under the terms of which Koppers' will agree to erect and to operate for a period of years... a Koppers Patented Cross Regeneration Combination Coke and Gas Plant." (Complt. Exh. A at ¶ 9) (emphasis added). To pay for construction, Coke issued $13, 000, 000 of first mortgage bonds to Koppers and $600, 000 of second mortgage bonds. (Complt. Exh. A at ¶¶ 16-17). Peoples Gas agreed to buy all of the gas produced by the plant. (Complt. Exh. A at ¶ 28).

At Coke's inception, all of its stock was to "be delivered to a Trustee nominated by Koppers' to be held subject to the provisions of paragraphs 54 to 56 hereof and to such other conditions as shall be necessary for the purpose of assuring to Koppers' the payments hereinafter provided to be made to it in paragraphs 54 to 56." (Complt. Exh. A at ¶ 19). Peoples Gas had the option to buy Koppers's rights in the Coke stock when the Coke Plant began operations or at the end of the first year of operation. (Complt. Exh. A at ¶¶ 54, 55). That was not, however, the only way, under the 1920 Agreement, that Peoples Gas could purchase all of Coke. Alternatively, "[i]n the event that Peoples Gas' shall not have elected theretofore to pay Koppers' in full for the transfer or release of its rights in such stock, "Koppers' rights in such stock shall become vested in Peoples Gas at the end of the year of operation of the proposed plans in which the aggregate of the earnings applied to the reduction of the price shall become equal to the amount of the price fixed to be paid at the beginning of operation of the By-Product Coke Plant." (Complt. Exh. A at ¶ 56). If that had not happened within 25 years after the Coke Plant began operation, then the Trustee was to give the stock to Koppers, who would own it outright. (Complt. Exh. A at ¶ 59).

With respect to "Koppers [o]bligation to [o]perate" the Coke Plant, the 1920 Agreement states:

48. The obligation to be assumed by Koppers' with respect to the operation of the proposed By-Product Coke Plant shall be limited to operating or supervising the operation thereof for and in behalf of and in the name of Coke, ' without liability of any character on the part of Koppers, ' except as expressly assumed under the terms of this contract, and shall cover the period contemplated by paragraphs 54 to 60 inclusive hereof. Koppers' shall assume full responsibility for the efficient operation and for the maintenance of the plant in good working order during the period of operation by Koppers, ' but the expense of such operation and maintenance or loss incident thereto shall be borne by Coke' as hereinafter provided.

(Complt. Exh. A at ¶ 48).

The Coke Plant was built at Crawford Station, which is located at 3500 South Pulaski Road in Chicago. Koppers operated the Coke Plant until 1938, when Peoples Gas purchased the stock of Coke.

Today, the Crawford Station site (the "Crawford Site") is 247 acres, divided into 22 parcels. Some of the land is still owned by Peoples Gas. In recent years, Peoples Gas has worked with the U.S. Environmental Protection Agency and the Illinois Environmental Protection Agency to investigate the Crawford Site. The investigation turned up evidence of contamination, including hazardous substances under CERCLA. The Crawford Site is a facility for purposes of CERCLA.

With respect to the Crawford Site, Peoples Gas entered into three agreements with the EPA. In 2007, Peoples Gas and EPA entered an "Administrative Settlement Agreement and Order on Consent" (the "2007 ASAOC"). (Complt. Exh. D). Among other things, the 2007 ASAOC required Peoples Gas "to conduct an Engineering Evaluation and Cost Analysis ("EE/CA") of alternative response actions... to address the environmental concerns in connection with... Crawford Station." (Complt. Exh. D at ¶ 2). In 2008, Peoples Gas and EPA entered a second "Administrative Settlement Agreement and Order on Consent" (the "2008 ASAOC"). (Complt. Exh. E). Among other things, the 2008 ASAOC "concern[ed] the preparation and performance of a remedial investigation and feasibility study" at the Crawford Site. (Complt. Exh. E at ¶ 1). In 2011, Peoples Gas and EPA entered a third "Administrative Settlement Agreement and Order on Consent" (the "2011 ASAOC"). (Complt. Exh. F). Among other things, the 2011 ASAOC "provide[d] for the performance of a removal action by [Peoples Gas] and the reimbursement of certain response costs by the United States" in connection with the Crawford Site. (Complt. Exh. F at ¶ 1).

Peoples Gas has already spent more than $70, 000, 000 in costs associated with the investigation and removal activities at the Crawford Site. It brought suit against Beazer to recoup some or all of those costs. In Count I, Peoples Gas seeks to recover response costs under CERLCA § 107(a), 42 U.S.C. § 9607(a). Alternatively, in Count II, Peoples Gas seeks ...


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