## Facts

- The Ninth Avenue Dump Superfund site in Gary, Indiana operated as a chemical and industrial waste disposal facility during the 1970s and became contaminated by releases or threatened releases of hazardous substances.
- Ninth Avenue Remedial Group (the Group), an unincorporated voluntary association of corporations (along with its member companies), undertook EPA-approved cleanup activities at the site and alleged cleanup costs exceeding $20 million.
- The Group and its members sued multiple defendants (captioned as *Allis-Chalmers Corporation, et al.*) under CERCLA, 42 U.S.C. §§ 9607 and 9613, seeking contribution toward response costs.
- In 1987, Apex Oil Company (Apex) and its subsidiary Clark Oil & Refining Corporation (Old Clark) filed Chapter 11 bankruptcy cases.
- During the Chapter 11 process, Clark Refining & Marketing, Inc. (Clark) agreed to purchase certain assets of Apex and Old Clark under an asset-purchase agreement that stated Clark would not assume liabilities arising from Old Clark’s prior operations.
- In 1988, the bankruptcy court approved the transaction “free and clear” of liens, claims, encumbrances, and obligations, and extinguished prior liens and interests in the transferred assets.
- The Group sued Clark on the theory that Clark was Old Clark’s corporate successor and that Old Clark/Apex had arranged for disposal of hazardous substances at the Ninth Avenue site.
- Clark moved to dismiss, or alternatively for summary judgment, arguing that the bankruptcy sale order and non-assumption language barred the Group’s CERCLA contribution claims; Clark also filed similar motions targeting cross-claims asserted by Barber-Greene Company and Commander Packaging Corporation.

## Issues

1. Whether an asset purchaser in a Chapter 11 sale approved “free and clear” can still face CERCLA contribution liability as a successor to the debtor based on successor-liability doctrine.
2. Whether the bankruptcy sale order and Chapter 11 process barred or discharged the Group’s CERCLA contribution claim against the purchaser as a matter of law.
3. Whether dismissal or summary judgment was proper given disputes about successor status and whether the environmental liabilities were sufficiently knowable and tied to the debtors during the bankruptcy proceedings.

## Decision

- The court denied Clark’s motions to dismiss and for summary judgment on the Group’s claims.
- The court denied Clark’s motions to dismiss and for summary judgment against the cross-claims of Barber-Greene Company and Commander Packaging Corporation.
- The court held that the “free and clear” sale order and the asset-purchase agreement’s non-assumption terms did not, by themselves, establish that Clark was insulated from CERCLA successor liability as a matter of law.
- The court concluded that Clark had not shown, as a matter of law, that the Group’s CERCLA contribution claim was discharged or otherwise eliminated by the bankruptcy proceedings and sale order, particularly where timing, notice, and related facts remained disputed.

## Legal Principles

- CERCLA successor liability is generally analyzed under federal common law; depending on the facts, a purchaser of assets may be treated as a successor for CERCLA purposes even when the purchase agreement disclaims assumption of liabilities.
- A bankruptcy court’s “free and clear” sale order can bar or cut off certain pre-existing interests and dischargeable claims, but it does not automatically eliminate environmental liabilities that did not arise, or were not reasonably assertable, during the bankruptcy case.
- Whether an asserted environmental right to payment qualifies as a dischargeable bankruptcy “claim” can turn on fact questions about the relationship to the debtor’s pre-bankruptcy conduct and whether the claimant could meaningfully identify and assert the claim in time to participate in the bankruptcy process.
- On a motion to dismiss, the court accepts well-pleaded allegations as true; on summary judgment, the movant must show no genuine dispute of material fact and entitlement to judgment as a matter of law—standards that are not met where successor-status and discharge-related facts are contested.

## Conclusion

The district court allowed the CERCLA contribution claim (and related cross-claims) to proceed against Clark, holding that Clark was not entitled to dismissal or summary judgment because the 1988 Chapter 11 “free and clear” sale order and non-assumption provisions did not, standing alone, bar successor liability or establish discharge of the asserted CERCLA liabilities as a matter of law.


Ninth Avenue Remedial Group v. Allis-Chalmers Corp., 195 B.R. 716 (1996)