## Facts

- The Environmental Protection Agency (EPA) and Arkansas’s environmental agency conducted cleanup work at hazardous-waste sites in Arkansas, including the South 8th Street Landfill and the Gurley Pit.
- After incurring response costs, the EPA pursued cost recovery under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) against potentially responsible parties (PRPs), including Signature Combs, Inc. (Combs).
- Combs was required to reimburse the EPA for cleanup costs under CERCLA.
- Combs (and other plaintiffs) then sued additional alleged PRPs, including Mason and Dixon Lines, Inc. (MDL), seeking to shift part of the cleanup costs through CERCLA cost-recovery and/or contribution theories.
- MDL had previously completed a Chapter 11 reorganization in the mid-1980s and asserted that any CERCLA liability to Combs was a prepetition “claim” that was discharged when MDL’s plan was confirmed.
- MDL moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that the complaint and available pleadings showed the CERCLA claims were barred by bankruptcy discharge.

## Issues

1. Whether Combs’s CERCLA cost-recovery and/or contribution claims against MDL were discharged in MDL’s prior Chapter 11 case because they constituted prepetition bankruptcy “claims.”
2. Whether MDL was entitled to judgment on the pleadings under Rule 12(c) based on the discharge defense.

## Decision

- The court denied MDL’s motion for judgment on the pleadings.
- Accepting the plaintiffs’ allegations as true and drawing reasonable inferences in their favor, the court held MDL had not shown, on the pleadings alone, that plaintiffs’ CERCLA causes of action were discharged.
- The court treated the plaintiffs’ CERCLA theories as independent statutory rights that, as alleged, arose after MDL’s bankruptcy rather than merely as pass-through or derivative claims tied to the government’s earlier cost-recovery efforts.
- Because MDL did not establish that the asserted CERCLA rights to payment existed in a form dischargeable in the mid-1980s bankruptcy, the case could proceed on the merits.

## Legal Principles

- A Rule 12(c) motion is assessed under the same general standard as Rule 12(b)(6): the court accepts the nonmovant’s well-pleaded factual allegations as true and grants judgment only if the movant is entitled to judgment as a matter of law on the face of the pleadings.
- Bankruptcy discharge generally bars enforcement of prepetition “claims,” and the Bankruptcy Code defines “claim” broadly to include contingent, unmatured, and unliquidated rights to payment; however, there must still be a right to payment that can be treated as existing during the bankruptcy case.
- CERCLA provides statutory causes of action for cost recovery and contribution that may arise for private parties when they incur response costs, enter into qualifying settlements, or otherwise become legally obligated for cleanup expenses.
- A private PRP’s CERCLA cost-shifting action is not automatically discharged merely because the United States had (or could have had) CERCLA cost-recovery rights; the private party’s statutory rights may arise later and may not be the same “claim” as the government’s.
- Bankruptcy discharge is an affirmative defense, and at the pleadings stage the defendant must show the defense is established by the complaint and pleadings; if the timing and nature of the asserted CERCLA right to payment are not established as prepetition, judgment on the pleadings is improper.

## Conclusion

The court denied MDL’s Rule 12(c) motion because, based on the pleadings, Combs’s CERCLA cost-recovery/contribution rights were alleged to be independent statutory claims arising after MDL’s mid-1980s Chapter 11 reorganization, so MDL did not show that bankruptcy discharge barred the suit as a matter of law.


Signature Combs, Inc. v. United States, 253 F. Supp. 2d 1028 (2003)