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Title Al Tech Specialty Steel Corp. v. Alleghany International Credit Corporation

Date 1997

By Alito

Subject Misc

Contents

Page 1

LEXSEE 104 F.3D 601

AL TECH SPECIALTY STEEL CORPORATION, Appellant v. ALLEGHENY INTERNATIONAL CREDIT CORPORATION; SUNBEAM CORPORATION; SUNBEAM HOLDINGS, INC., ALMET/LAWNLITE, INC; CHEMETRON CORPORATION; INTERGRATED SPECIALTIES, INC.; ALLEGHENY INTERNATIONAL (USA), INC.; AL INDUSTRIAL PRODUCTS, INC.; ALLEGHENY INTERNATIONAL EXERCISE, CO.; WOODSHAFT, INC.; CHEMETRON INVESTMENTS, INC., INFOWSITCH, INC.; ELISKIM, INC.

No. 95-3415

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

104 F.3d 601; 1997 U.S. App. LEXIS 706; 43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248; 27

ELR 20691

May 6, 1996, Argued

January 17, 1997, Filed

PRIOR HISTORY: **1 ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil No. 93-01445).

LexisNexis(R) Headnotes

COUNSEL: David P. Flynn, Esq. Kevin M. Hogan, Esq.

(Argued), Phillips, Lytle, Hitchcock, Blaine & Huber,

3400 Marine Midland Center, Buffalo, New York 14203, Attorneys for Appellant.

William L. Gardner, Esq. Anthony C. Roth, Esq.

(Argued), Morgan, Lewis & Bockius LLP, 1800 M Street, N.W. Washington, D.C. 20036, Attorneys for Appellee.

JUDGES: Before: GREENBERG, ALITO, and

MCKEE, Circuit Judges.

OPINIONBY: ALITO

OPINION: *603 OPINION OF THE COURT

ALITO, Circuit Judge:

This is an appeal from a district court order af- firming the bankruptcy court's disallowance of AL Tech Specialty Steel Corporation's ("AL Tech") claim against Allegheny International, Inc. ("Allegheny International") in Allegheny International's Chapter 11 proceeding. AL Tech's claim was based on certain environmental liabil- ities, under the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")

and the New York Oil Spill Act, at two steel plants that it purchased from Allegheny International's corpo- rate predecessor in 1976. The bankruptcy court held that AL Tech's claim was not barred **2 by ei- ther § 502(c) or § 502(e)(1)(B) of the Bankruptcy Code, 11 U.S.C. §§ 502(c),(e)(1)(B), and it estimated the total remediation cost at the two plants for which Allegheny International might share responsibility at

$12,792,000. The bankruptcy court also ruled that Allegheny International's equitable share of AL Tech's federal liabilities was zero, primarily because of a dollar- for-dollar discount taken off the purchase price by the current owner of AL Tech's stock in 1989. It further held that the New York statute created a private right of ac- tion but that any action that AL Tech could bring against Allegheny International under the New York statute was time-barred. The district court affirmed the bankruptcy court's order in all respects.

We conclude that there was insufficient evidence be- fore the bankruptcy court to support the finding of a dollar-for--dollar discount in the 1989 purchase of AL Tech by its current corporate parent and that any discount that may have been given accrued to the benefit of AL Tech's parent and not to AL Tech. We therefore reverse the order of the district court as it relates to Allegheny International's equitable share of AL Tech's federal en- vironmental **3 liabilities. We also conclude that the bankruptcy court applied the wrong limitations period in assessing the portion of AL Tech's claim that relied on the New York statute. However, in light of a 1995 decision by the New York Court of Appeals on the availability of a private right of action under the New York statute, we remand that issue for application of the holding of that

104 F.3d 601, *603; 1997 U.S. App. LEXIS 706, **3;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 2

decision to the present case. We affirm the order of the district court as it relates to §§ 502(c) and 502(e)(1)(B) and the *604 bankruptcy court's estimation of remedia- tion costs to be allocated between AL Tech and Allegheny International.

The factual and procedural history of this case may be summarized as follows. AL Tech bought two steel plants in Dunkirk and Watervliet, New York, from Allegheny International's predecessor, Allegheny Ludlum Industries

("Allegheny Ludlum"), in 1976. (Allegheny Ludlum had owned and operated the plants since 1937.) Since then, AL Tech's stock has been sold three times: in 1981, to GATX Corporation; in 1986, to Rio Algom, Inc. and Rio Algom Limited (collectively "Rio Algom"); and most recently (in 1989) to Sammi Steel Company, Limited

("Sammi"). Environmental assessments of **4 the two plants performed in the mid-and late 1980s revealed nu- merous areas of contamination with oil, polychlorinated biphenyls ("PCBs"), and other hazardous substances that would require costly remediation in order to come into compliance with applicable environmental statutes and regulations.

After Allegheny International filed a bankruptcy peti- tion in 1988, AL Tech filed a timely proof of claim, alleg- ing that Allegheny International was liable for a share of the incurred, contingent, and unliquidated response costs required to remediate the contamination at the two plants. The bankruptcy court initially denied the claim, but its de- cision was reversed by the district court, In re Allegheny Int'l, Inc., 126 Bankr. 919 (W.D. Pa. 1991), and a panel of this court affirmed by judgment order, Allegheny Int'l, Inc. v. AL Tech Specialty Steel Corp., 950 F.2d 721 (3d Cir.

1991) (table). The case was remanded to the bankruptcy court for a trial to allow for estimation and allocation of AL Tech's claim.

On the basis of evidence presented at that 1992 trial, the bankruptcy court (1) estimated the allowable liabili- ties at $12,792,000, (2) found that Sammi had received a $22 million **5 discount (3) held, primarily for that reason, that Allegheny International's equitable share of the cleanup costs was zero, and (4) held that AL Tech's Oil Spill Act claim was time-barred by the applicable limitations period. In re Allegheny Int'l, Inc., 158 Bankr.

361 (Bankr. W.D. Pa. 1993). The district court affirmed the bankruptcy court's order in its entirety. AL Tech Specialty Steel Corp. v. Allegheny Int'l, Inc., No. 93-1445 (W.D. Pa. June 27, 1995). This appeal followed.

On appeal, AL Tech argues that there was no discount; that if there was one, it was received by Sammi, not AL Tech; that the bankruptcy court abused its discretion in fo-

cusing on only one equitable factor when it concluded that Allegheny International's equitable share was zero; that the bankruptcy court erred in finding that AL Tech failed to prove that Allegheny International was responsible for any of the PCB contamination at one of the contaminated sites, Willowbrook Pond; that the bankruptcy court un- derestimated response costs at Willowbrook Pond (at $1.3 million, versus AL Tech's estimate of approximately $14 million); and that the bankruptcy court applied the wrong limitations period and used **6 the wrong triggering event in holding AL Tech's Oil Spill Act claim to be time- barred.

Allegheny International disagrees on every point and raises two independent grounds for affirming the district court: first, that AL Tech's claim is barred by Bankruptcy Code § 502(e)(1)(B) because it is a contingent co-liability to the government, rather than a direct claim against Allegheny International; and second, that it should be dis- allowed pursuant to Bankruptcy Code § 502(c) because AL Tech has not taken sufficient steps to remove the con- tingencies (i.e., has not done enough to assess and clean up the contamination since 1976). We address Allegheny International's arguments first and then turn to AL Tech's arguments.

II.

Section 502(e)(1)(B) of the Bankruptcy Code pro- vides:

(e)(1) . . . The court shall disallow any claim for reimbursement or contribution of an en- tity that is liable with the debtor on or has secured, the claim of a creditor, to the extent that --

. . .

*605 (B) such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement or contribution.

11 U.S.C. §§ 502(e)(1), **7 (e)(1)(B).

Allegheny International argues that § 502(e)(1)(B) bars AL Tech's claim. The bankruptcy court originally agreed with Allegheny International, but in its 1991 de- cision, the district court held that this section barred only contingent claims on which the claimant and the debtor are co-liable to a third party and that to the extent that AL Tech's claim against Allegheny International was based on CERCLA, 42 U.S.C. §§ 9601 et seq., n1 it was not excluded because it was a direct claim against Allegheny International. 126 Bankr. at 923-24. This court affirmed

104 F.3d 601, *605; 1997 U.S. App. LEXIS 706, **7;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 3

the district court's order by judgment order. 950 F.2d 721

(3d Cir. 1991)(table). On remand, the bankruptcy court considered itself bound by the district court's 1991 de- cision under the "law of the case" doctrine, and it thus declined Allegheny International's invitation to revisit the issue in light of two 1992 bankruptcy court decisions, In re Cottonwood Canyon Land Co., 146 Bankr. 992 (Bankr. D. Colo. 1992), and In re Eagle-Picher Indus., Inc., 144

Bankr. 765 (Bankr. S.D. Ohio 1992), aff'd, 164 Bankr.

265 (S.D. Ohio 1994). 158 Bankr. at 367.

n1 The parties did not brief the applicability of

§ 502(e)(1)(B) to AL Tech's Oil Spill Act claim in the earlier appeal to the district court. In the present appeal, Allegheny International has again focused its arguments on the applicability of §

502(e)(1)(B) to CERCLA claims, leaving the Oil Spill Act claim virtually unaddressed. We thus read Allegheny International's argument as limited to AL Tech's CERCLA claim.

**8

In this appeal, Allegheny International urges us to re- examine the question whether AL Tech's claim is barred by § 502(e)(1)(B), but under the law of the case doc- trine, we believe that it would be inappropriate for us to do so. Under the law of the case doctrine, an appellate court should generally decline to reconsider a question that was decided in a prior appeal. See 18 Charles A. Wright, et al., Federal Practice and Procedure § 4478, at

788 (1981 & 1996 Supp.). "The doctrine is not a jurisdic- tional limitation; rather, it 'merely expresses the practice of courts generally to refuse to reopen what has been de- cided.'" Alliance for Cannabis Therapeutics v. DEA, 304

U.S. App. D.C. 400, 15 F.3d 1131, 1134 (D.C. Cir. 1994)

(quoting Messenger v. Anderson, 225 U.S. 436, 444, 56

L. Ed. 1152, 32 S. Ct. 739 (1912)). Accordingly, it is ap- propriate for an appellate court to reconsider a decision made in an earlier appeal in exceptional circumstances, such as where there has been an intervening change in the law, where new evidence has become available, or where reconsideration is necessary to prevent clear error or a manifest injustice. 18 Charles A. Wright, et al., supra, §

4478, at 790.

In this case, the panel that heard the **9 prior appeal necessarily decided that AL Tech's claim was not barred by § 502(e)(1)(B). The law of the case doctrine applies to this decision even though it was rendered by judgment or- der because that doctrine "applies both to issues expressly decided by a court in prior rulings and to issues decided by necessary implication." Bolden v. SEPTA, 21 F.3d 29,

31 (3d Cir. 1994); see also United States v. Local 560

(I.B.T.), 974 F.2d 315, 329-30 (3d Cir. 1992) (applying

doctrine to judgment order).

Moreover, we do not believe that there are exceptional circumstances here that make it appropriate to reconsider the prior panel's decision. While Allegheny International points to two intervening bankruptcy court decisions that disagree with the district court's decision in this case, those decisions do not represent the type of authority nec- essary to invoke the exception that applies when there has been an intervening change in the law. Nor do those de- cisions convince us that a refusal to reconsider the issue would amount to clear error or a manifest injustice.

We likewise reject Allegheny International's argument that this court's opinion in In re Penn Cent. Transp. Co.,

944 **10 F.2d 164 (3d Cir. 1991), cert. denied, 503

U.S. 906, 117 L. Ed. 2d 491, 112 S. Ct. 1262 (1992), rep- resents an intervening change in the law sufficient to relax the usual strictures of the law of the case doctrine. There are two problems *606 with Allegheny International's argument. First, while the decision in Penn Central came after the district court's 1991 decision, it was handed down more than two months before the filing of judgment or- der by which this court affirmed the district court's order. Second, the Penn Central decision did not directly ad- dress the issue at hand but rather concerned the govern- ment's ability to assert CERCLA claims against a reorga- nized debtor where the consummation order, which pro- tected the reorganized debtor against lawsuits based on the debtor's activities, predated the enactment of CERCLA. Accordingly, we believe that it is inappropriate in this case to reconsider the merits of Allegheny International's

§ 502(e)(1)(B) argument.

Allegheny International also argues that § 502(c) of the Bankruptcy Code precludes estimation of AL Tech's claim because AL Tech has not taken sufficient steps to remove the contingencies in its claim, i.e., has not done enough to assess and remediate **11 the various con- tamination problems at its plants. We agree with the dis- trict court that this argument must fail. The cases that Allegheny International cites do not support its position. All three cases, Kessler v. Jefferson Storage Corp., 125

F.2d 108 (6th Cir. 1941), In re Hot Springs Broadcasting, Inc., 210 F. Supp. 533 (W.D. Ark. 1962), and In re KDI Corp., 119 Bankr. 594 (Bankr. S.D. Ohio 1990), concern

§ 57(d) of the Bankruptcy Act of 1898, which provided that unliquidated claims were not to be allowed where liquidation would unduly delay the administration of the estate. Thus, a claimant had the burden of liquidating its claim as a condition precedent to its allowance. By con- trast, § 502(c) of the Bankruptcy Code specifically pro- vides for estimation, for purposes of allowance, of such unliquidated claims. The three cases are also factually distinguishable from the present case; for instance, the

104 F.3d 601, *606; 1997 U.S. App. LEXIS 706, **11;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 4

claimant in KDI Corp. was denied permission to amend a claim filed 12 years earlier, after it had waited eight years before even seeking permission to amend. As the bankruptcy court noted, the law does not require that all contingencies be removed, and AL Tech has taken **12 some steps to remove the contingencies in its claim.

III.

AL Tech's principal arguments on appeal con- cern the bankruptcy court's determination of Allegheny International's equitable share of AL Tech's allowable CERCLA liabilities. After estimating AL Tech's response costs to total $12,792,000, the bankruptcy court pro- ceeded to determine Allegheny International's equitable share of those costs pursuant to § 113(f) of CERCLA, which authorizes a court to allocate response costs among responsible parties "using such equitable factors as it determines are appropriate." 42 U.S.C. § 9613(f). The court considered a number of factors, but its ultimate conclusion-that Allegheny International's equitable share was zero -- was based on its findings that Sammi was fully aware of AL Tech's future environmental liabilities and that, as a result, Sammi "discounted the purchase price dollar for dollar until the total purchase price was

$1.00" and thus "held no real expectation that Allegheny International would pay for any portion of the remedia- tion costs." 158 Bankr. at 383. AL Tech argues that there is no record evidence, let alone sufficient evidence, to support such findings and that, **13 even if there were such a discount, the beneficiary of that discount was not AL Tech, the claimant in this case, but Sammi.

With respect to this issue, the following facts are undisputed or at least beyond dispute under a clearly er- roneous standard. Sammi was aware of $22 million in environmental liabilities on the part of AL Tech when it purchased AL Tech's stock in 1989. An agreement among Rio Algom, Sammi, and AL Tech provided for an adjust- ment to the purchase price in the event of changes in AL Tech's net worth. At the time of the sale, AL Tech and Sammi "accrued" $22 million in expenses to cover fu- ture environmental liabilities; these were charged against sales during the first seven months of 1989. This substan- tially reduced the net *607 worth of AL Tech, n2 and after litigation and arbitration over the propriety of this accounting procedure, Rio Algom was required to pay Sammi in excess of $5 million to assume ownership of AL Tech. n3 Of this amount, $2.4 million was awarded to Sammi to account for the increased environmental lia- bilities.

n2 AL Tech points out that the net worth of its stock on the date of purchase was approximately negative $16 million. A. 1515. Thus, it argues, even

considering the subsequent adjustment in the pur- chase price, Sammi overpaid for AL Tech's stock by some $11 million.

**14

n3 The parties cite a figure of $5.3 million, while the bankruptcy court quoted the figure of

$6.5 million.

AL Tech argues that there was insufficient evidence to show that Sammi reduced the sale price dollar for dol- lar to account for the $22 million in liabilities of which it was aware at the time of the transaction. Allegheny International relies on the testimony of two officers of AL Tech: Ronald Hansen, the chief financial officer, and James Mintun, the chief executive officer. Both Hansen and Mintun testified that the environmental liabilities re- duced AL Tech's value and reduced the purchase price, A. 301, 303, 325-27, and Hansen testified that these lia- bilities brought the purchase price down "approximately dollar for dollar." A. 327. However, Hansen also testified that he had "absolutely no idea whatsoever how the pur- chase price was arrived at," A. 335, and had not come to know the reason for the one dollar purchase price, A.

322, and Mintun likewise testified that he had no knowl- edge of how the price was arrived at. A. 398. Mintun also testified that neither he nor Hansen participated **15 in any of the discussions concerning the price to be paid for AL Tech, A. 398-99, and Hansen testified that he had no involvement in determining what the purchase price would be. A. 323; see also A. 335 (Hansen testifying that he " did not know specifically what Sammi paid in fact for AL Tech or what was going through their mind and how they arrived at that").

Also of some relevance is the fact that the agreement for the sale of AL Tech to Sammi makes reference to the proof of claim that AL tech had filed against Allegheny International. A. 1415. n4 Allegheny International points out that this claim was not identified as an asset on AL Tech's balance sheets. In addition, the schedule of the sale agreement in which it appears seems designed to disclose pending or threatened litigation that might result in judg- ments against AL Tech. See A. 1331. Still, on the basis of the sale agreement, it is clear that Sammi was aware of the existence of AL Tech's claim against Allegheny International.

n4 In a reference to possible recoupment from GATX, the notes accompanying AL Tech's finan- cial statements also refer to its management's belief that:

104 F.3d 601, *607; 1997 U.S. App. LEXIS 706, **15;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 5

part of the $22 million environmen- tal liability may be recovered through negotiations or litigation with certain of the Company's previous owners. Because of the uncertainty, no recog- nition has been given to a recovery of these liabilities in the accompanying financial statements.

A. 1582.

**16

A reduction in the purchase price of a facility is certainly a valid factor to be considered in allocating CERCLA response costs among responsible parties, see, e.g., Smith Land & Improvement Corp. v. Celotex Corp.,

851 F.2d 86, 90 (3d Cir. 1988), cert. denied, 488 U.S.

1029, 102 L. Ed. 2d 969, 109 S. Ct. 837 (1989), and the amount of the discount is, of course, important, id. On the record before the bankruptcy court, however, we do not think that there was sufficient evidence to support a finding that the discount received by Sammi equalled $22 million. The testimony of Hansen and Mintun reflects, at best, informed speculation as to the existence and magni- tude of any discount in the price paid by Sammi for AL Tech's stock.

An even more fundamental issue raised by AL Tech is whether any discount received by Sammi in its pur- chase of AL Tech from Rio Algom should be reflected in a dispute that involves neither Sammi nor Rio Algom, but rather AL Tech and Allegheny International. AL Tech point out that Smith Land and all of the other cases cited by Allegheny International and the bankruptcy court -- Amoco Oil Co. v. Borden, Inc., 889 F.2d 664 (5th Cir.

1989); BTR Dunlop, Inc. v. Rockwell Int'l **17 Corp.,

1992 U.S. Dist. LEXIS 9474, 1992 WL 159203 *608

(N.D. Ill. 1992); South Fla. Water Management Dist. v. Montalvo, 1989 U.S. Dist. LEXIS 17555, 1989 WL

260215 (S.D. Fla. 1989); and Southland Corp. v. Ashland Oil, Inc., 696 F. Supp. 994 (D.N.J.), modified on recon- sideration, 1988 WL 125855 (D.N.J. Nov. 23, 1988)- involved allocation between the seller and the purchaser of the subject property (or their successors, see Smith Land, 851 F.2d at 88). Here, the seller (Rio Algom) is not in the picture; Allegheny International's predecessor received full value for the plants when it sold them to AL Tech in 1976 for $23.5 million in cash and stock. A.

647-702 (purchase agreement). In addition, AL Tech, not Sammi, is the claimant here, and under traditional cor- porate law principles the two companies are considered separate entities. Thus, even if it is assumed that there was a discount in the 1986 sale, this discount would work

against Sammi and in favor of Rio Algom, but it does not necessarily work against AL Tech and in favor of Allegheny International.

Allegheny International's counterargument is that the bankruptcy court properly disregarded corporate forms in light of AL Tech's status as a wholly-owned **18 sub- sidiary of Sammi. Allegheny International cites several cases describing bankruptcy courts as courts of equity that will disregard legal fictions when justice requires. The problem here is that the bankruptcy court did not find that justice required that it regard Sammi and AL Tech as a single entity. In the absence of such a finding, it was error to assume, as the bankruptcy court appears to have done, that any windfall reaped by Sammi should be imputed to AL Tech.

Nor do we believe, on the record before us, that such a finding would be warranted. Allegheny International has pointed to no facts that would allow the piercing of the corporate veil. Without sufficient facts of record to war- rant veil-piercing, i.e., facts of sufficient dominance of the affairs of the subsidiary by the parent corporation, AL Tech and Sammi must be considered separate entities. See In re Cohn, 54 F.3d 1108, 1116-17 (3d Cir. 1995); see also Mellon Bank, N.A. v. Metro Communications, Inc.,

945 F.2d 635, 643 (3d Cir. 1991) ("There is a presump- tion that a corporation, even when it is a wholly owned subsidiary of another, is a separate entity."), cert. denied,

503 U.S. 937, 117 L. Ed. 2d 620, 112 S. Ct. 1476 (1992). AL **19 Tech also argues that the bankruptcy court abused its discretion in relying exclusively on a single equitable factor -- the discount received by Sammi -- in deciding that Allegheny International's equitable share of the cleanup cost was zero. It is within the court's discre- tion to rely on a single factor, see Environmental Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 509 (7th Cir.

1992), but here the court also considered several other factors, e.g., actual years of ownership and operation of the two plants, 158 Bankr. at 383, Allegheny Ludlum's compliance with federal environmental laws that were in effect before it sold the plants to AL Tech, 158 Bankr. at 384, and AL Tech's less-than--enthusiastic cleanup ef- forts since the sale, id. However, it is clear to us that the bankruptcy court's ultimate conclusion can be justi- fied only on the basis of the discount, as the bankruptcy court itself seemed to recognize. See 158 Bankr. at 383

("This court considers the discounted purchase price for the AL Tech steel plants to be the most compelling and dispositive allocation factor in this case."). Other factors may weigh in Allegheny International's favor, but they are insufficient to **20 drive Allegheny International's equitable share down to zero. In other words, it was in- consistent with the sound exercise of its discretion for the

104 F.3d 601, *608; 1997 U.S. App. LEXIS 706, **20;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 6

bankruptcy court to rely, not simply on a single factor, but on a single factor where the factual finding underlying the factor was clearly erroneous.

AL Tech raises two arguments with respect to Willowbrook Pond, a cooling pond at the Dunkirk plant that is contaminated with PCBs. n5 First, AL Tech argues that the bankruptcy court erred in concluding that it failed to prove, by a preponderance of the ev- idence, that Allegheny International (as successor to Allegheny Ludlum) is responsible *609 for any of the PCB contamination. Second, AL Tech argues that the bankruptcy court committed reversible error in choosing Allegheny International's estimate of the response costs at Willowbrook Pond ($ 1.3 million) instead of AL Tech's estimate (approximately $14 million).

n5 The sediments in the pond also contain high levels of nickel, but the dispute here concerns re- sponsibility for, and remediation of, the PCB prob- lem.

**21

We find no fault in the bankruptcy court's determi- nation on the liability question here. AL Tech presented no reports, analyses, or other documentation of the use of PCB-containing materials at the plants during the pe- riod when the plants were owned by Allegheny Ludlum. AL Tech's evidence consisted of the testimony of Edwin Diehl and Morton Parker, neither of whom could establish that the materials used by Allegheny International before the purchase of the plants by AL Tech contained PCBs. Mr. Diehl, AL Tech's Director of Engineering (and pre- viously its Director of Environmental Affairs), pointed to a hydraulic fluid, first used in new rolling mill machinery in 1970, as the source of the PCBs in Willowbrook Pond. A. 437-40, 454, 457. He had no personal knowledge, however, as to whether the fluid contained PCBs.

Mr. Parker visited the Dunkirk plant in the mid-1970s to determine whether oils and greases that Allegheny Ludlum had collected from Willowbrook Pond were suitable for reclamation by his employer, Wallover Oil Company. A. 465-69. He testified that Allegheny Ludlum had recently switched to a new hydraulic fluid that did not contain PCBs, that the fluid previously used sank **22 because it was heavier than water, and that fluids that contained PCBs also were heavier than water and sank. A. 467-69. Mr. Parker also testified that his company rejected Allegheny Ludlum's oils and greases for recla- mation and that, while PCB contamination was the reason for most such rejections, he did not recall the reason for rejecting Allegheny Ludlum's materials. A. 470-72. Mr. Parker also could not recall the results of any chemical

analyses done on the materials from Willowbrook Pond. A. 470. Nor could he recall the year in which he visited the plant or the name of anyone whom he met there. A.

466. Like Mr. Diehl, then, Mr. Parker could provide no specific information as to whether any materials used by Allegheny Ludlum before the 1976 sale of the plants to AL Tech contained PCBs.

It may well be that Allegheny Ludlum used PCB- containing materials during the relevant period, and it may be that the only reasonable explanation for the presence of PCBs in the pond sediments, based on the evidence adduced, is that Allegheny Ludlum dumped them there. But that is different from proving, by a preponderance of the evidence, that Allegheny International is responsible for at least **23 some of the contamination. This AL Tech failed to do. In light of this conclusion, it is not necessary to reach AL Tech's second argument regarding Willowbrook Pond.

IV.

We deal last with two related questions concerning AL Tech's claim under the New York Oil Spill Act, N.Y. Nav. Law §§ 171-197 (McKinney 1989 & Supp. 1996). First, may AL Tech bring an action against Allegheny International under the Oil Spill Act? Second, is any such action time-barred? Because our decision concern- ing these questions of New York law is unlikely to have much precedential significance, we will deal with them in an abbreviated fashion.

A. Under White v. Long, 85 N.Y.2d 564, 650 N.E.2d

836, 626 N.Y.S.2d 989 (N.Y. 1995), a case not considered by either the bankruptcy court or the district court, it is clear that a property owner may under certain conditions sue a prior owner to recover cleanup costs. The claim in White was asserted under § 181(5), which provides as follows:

Any claim by any injured person for the costs of cleanup and removal and direct and indi- rect damages based on the strict liability im- posed by this section may be brought directly against the person who has discharged the petroleum, provided, however, **24 that damages recoverable by any injured person in such a direct claim based on the strict lia- bility imposed by this section shall be limited to the damages authorized by this section.

N.Y. Nav. Law § 181(5) (McKinney Supp. 1996).

*610 Another provision of the Act defines a "claim"

as "any claim by an injured person, who is not responsible

104 F.3d 601, *610; 1997 U.S. App. LEXIS 706, **24;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 7

for the discharge." N.Y. Nav. Law § 172(3) (McKinney Supp. 1996) (emphasis added). Noting this definition, the New York Court of Appeals wrote in White:

Although even faultless owners of contami- nated lands have been deemed "dischargers" for purposes of their own section 181(1) li- ability, n6 where they have not caused or contributed to (and thus are not "responsi- ble for") the discharge, they should not be precluded from suing those who have actu- ally caused or contributed to such damage. To preclude reimbursement in that situation would significantly diminish the reach of sec- tion 181(5).

650 N.E.2d at 838 (footnote added).

n6 This provision states in pertinent part that

"any person who has discharged petroleum shall be strictly liable, without regard to fault, for all cleanup and removal costs and all direct and indirect dam- ages, no matter by whom sustained, as defined in this section." N.Y. Nav. Law § 181(1)(McKinney Supp. 1996).

**25

Since neither the bankruptcy court nor the district court has applied White to the facts of this case, we re- mand AL Tech's Oil Spill Act claim so that this can be done. n7

n7 AL Tech originally argued that its claim arose under N.Y. Nav. Law § 176(8), which pro- vides:

Notwithstanding any other provision to the contrary . . . every person pro- viding cleanup, removal of discharge of petroleum or relocation of persons pursuant to this section shall be en- titled to contribution from any other responsible party.

AL Tech now argues that its claim arises "un- der both Section 176(8) and Section 181(5)," see Appellant's Br. at 46 n.22, and that White v. Long, supra, which was based on § 181(5), "settled defini- tively" its right to bring a private action. Appellant's Br. at 44 n.20. AL Tech does not argue that there is any difference between the right of action cre-

ated by § 181(5) and the right of action that it has asserted under § 176(8). We therefore do not de- cide whether there is an independent private right of action under § 176(8) or whether any such ac- tion differs in scope from the right of action under

§ 181(5). On remand, the bankruptcy and district courts need only apply White to the facts of this case.

**26

B. On the issue of the statute of limitations, under the New York Court of Appeals' decision in State v. Stewart's Ice Cream, Inc., 64 N.Y.2d 83, 473 N.E.2d 1184, 484

N.Y.S.2d 810 (N.Y. 1984), it appears that AL Tech's claim is governed by the six-year limitations period for actions on express or implied contracts, N.Y. Civ. Prac. L. & R. § 213(2) (McKinney 1990). In Stewart's Ice Cream, the state paid for the cleanup and removal of discharged petroleum and then sought to recover its expenses from the party that caused the discharge. The New York Court of Appeals concluded that the state's claim was one for indemnity and that liability on an indemnity claim "theo- retically springs from an implied contract." 473 N.E.2d at

1186. The court further held that the state's claim was not covered by the three-year limitations period for actions to recover on a liability created or imposed by a statute, N.Y. Civ. Prac. L. & R. § 214(2) (McKinney 1990), because that provision applies only to liability not recognized in the common or decisional law and because it could not be said that the state's claim "would not exist but for the statute." Stewart's Ice Cream, 473 N.E.2d at 1187.

In this case, AL Tech's claim **27 appears to be in the nature of a claim for indemnity. Stewart's Ice Cream is arguably distinguishable on the ground that there the court held that the Oil Spill Act did not "expressly pro- vide for an indemnity action such as the one brought by the state ," 64 N.Y.2d 83, 473 N.E.2d 1184 at 1186, 484

N.Y.S.2d 810, whereas here § 181(5) does expressly pro- vide for AL Tech's claim. However, Stewart's Ice Cream made this point to refute the argument that N.Y. Civ. Prac. L. & R. § 214(2) furnished the applicable statute of limita- tions. Since Allegheny International does not contend this provision applies here, this arguable distinction need not concern us. n8 Thus, we hold *611 that Stewart's Ice Cream governs here. See 145 Kisco Ave. Corp. v. Dufner Enters., Inc., 198 A.D.2d 482, 604 N.Y.S.2d 963 (App. Div. 1993).

n8 Moreover, while § 181(5) expressly au- thorizes Al Tech's claim, the right of indemnity also has roots in common law, although it is also

104 F.3d 601, *611; 1997 U.S. App. LEXIS 706, **27;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 8

sometimes imposed by statute. See 23 N.Y. Jur.

2d Contribution, Indemnity, and Subrogation § 2

(1982).

The conclusions reached above also follow if AL Tech's claim is characterized as one for contri- bution rather than indemnity. It appears well set- tled under New York law that contribution, like indemnity, is based on an implied contract. Hard v. Mingle, 206 N.Y. 179, 99 N.E. 542, 544 (N.Y.

1912); Blum v. Good Humor Corp., 57 A.D.2d

911, 394 N.Y.S.2d 894, 896 (App. Div. 1977). Furthermore, contribution existed at common law. Mingle, 206 N.Y. 179, 99 N.E. 542. Consequently, the six-year limitations period for actions on con- tracts would apply. Blum, 394 N.Y.S.2d at 896; Liberty Mut. Ins. Co. v. Societe Coiffure, Inc., 50

N.Y.S.2d 40, 41 (Sup. Ct. N.Y. Cty. 1944).

**28

We reject Allegheny International's argument that AL Tech's claim is subject to the three-year statute of limi- tations for actions to recover for damages or injuries to property. See N.Y. Civ. Prac. L. & R. § 214(4) (McKinney

1990). The cases upon which Allegheny International principally relies n9 -- State v. King Serv., Inc., 167

A.D.2d 777, 563 N.Y.S.2d 331 (App. Div. 1990), and

Town of Guilderland v. Texaco Ref. & Mktg., Inc., 159

A.D.2d 829, 552 N.Y.S.2d 704 (App. Div. 1990) -- in- volved claims that differ from those asserted by AL Tech. The claim in Town of Guilderland was explicitly for prop- erty damage, viz., damage to the town's sewer system that resulted from an explosion of fumes from gasoline that had leaked into the sewers, rather than one for reimburse- ment of cleanup costs. The claim at issue in King Service was also one for direct damages under § 190 of the Act, which covers actions against insurers. See N.Y. Nav. Law

§ 190 (McKinney 1989). On balance, we believe that Stewart's Ice Cream is a closer fit in this case than the de- cisions on which Allegheny International relies. We thus hold that the statute of limitation for AL Tech's Oil Spill Act claim is six years. **29

n9 Allegheny also cites two additional cases that are of limited relevance to the present appeal: Victorson v. Bock Laundry Mach. Co., 37 N.Y.2d

395, 335 N.E.2d 275, 373 N.Y.S.2d 39 (N.Y. 1975), which applied the three-year limitations periods for actions for property damage and personal in- jury to cases based on strict product liability; and P.B.N. Assocs. v. Xerox Corp., 141 A.D.2d 807,

529 N.Y.S.2d 877 (App. Div. 1988), order modi-

fied on reargument, 575 N.Y.S.2d 451 (App. Div.

1991), which applied the three-year limitations pe- riod for actions for property damage to an action for waste stemming from an oil spill. Neither case involved the Oil Spill Act or an action for indemnity or contribution.

Furthermore, it is settled law in New York that an action for indemnity or contribution does not generally accrue until the payment is made by the party seeking re- covery. Bay Ridge Air Rights, Inc. v. State, 44 N.Y.2d 49,

375 N.E.2d 29, 404 N.Y.S.2d 73 (N.Y. 1978). AL Tech may thus seek to recover cleanup costs under the Oil Spill Act that it incurred within six years prior to its **30 fil- ing of its proof of claim against Allegheny International. To the extent that AL Tech is seeking to recover for future remediation costs, n10 the limitations period has not yet begun. n11

n10 The bankruptcy court appears to have al- lowed only those costs related to future remediation efforts.

n11 The bankruptcy court disallowed as time- barred only AL Tech's claim related to the Oil Contamination Area. 158 Bankr. at 377-

78. However, AL Tech's claims related to three other areas -- the Pump House and Aboveground Fuel Tank, the Underground Fuel Tanks, and the Kromma Kill -- are also based on petroleum con- tamination. 158 Bankr. at 368. Given CERCLA's petroleum exclusion, see 42 U.S.C. § 9601(14), the Oil Spill Act may be the only basis for liability at those locations. We thus point out that our con- clusion concerning the applicable limitations pe- riod applies to any of AL Tech's claims involving petroleum contamination.

For the reasons stated above, we reverse the order of the district court as it relates **31 to the bankruptcy court's finding of a discount in the price paid by Sammi in

1989 and as it relates to the bankruptcy court's determi- nation of Allegheny International's equitable share of AL Tech's allowable response costs, and we remand for re- consideration of equitable allocation without the discount. We reverse the order of the district court as it relates to the limitations period applicable to AL Tech's claim under the New York Oil Spill Act, and we remand for applica- tion of the standard set out in the New York Court of Appeals' decision in White v. Long to the facts of this case. We affirm the order of the district court as it relates to the bankruptcy court's determination that Bankruptcy

104 F.3d 601, *611; 1997 U.S. App. LEXIS 706, **31;

43 ERC (BNA) 2030; 30 Bankr. Ct. Dec. 248

Page 9

Code §§ 502(c) and 502(e)(1)(B) do not bar AL *612 Tech's claim and as it relates to the bankruptcy court's de- termination that AL Tech failed to prove that Allegheny

International was responsible for any of the cleanup costs at Willowbrook Pond.


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