Former Paper Mill Owners Lose Bid to Exit Superfund Case

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By Steven M. Sellers

The former owners of an Ohio paper mill aren’t entitled to dismissal of superfund claims on the theory that they are “dead and buried” companies over which the court has no jurisdiction, a federal district court ruled Nov. 15.

More fact-finding is needed to determine whether Howard Paper Group and related companies, former owners of the mill, are dissolved companies with no remaining assets, the U.S. District Court for the Southern District of Ohio said ( Garrett Day LLC v. Int’l Paper Co. , 2017 BL 409578, S.D. Ohio, No. 15-cv-00036, 11/15/17 ).

The case presents the unusual question whether the defunct, assetless companies are potentially liable “persons” within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act.

The litigation stems from hazardous waste at a paper mill in Dayton, Ohio, sold by St. Regis Paper Co. to Howard Paper Mills Inc. in the 1970s.

Howard Paper, HPP Inc., and Harrison Holdings LP allege that their ownership ceased in a 1991 merger with Fox River Paper Co. that dissolved all HPP companies and transferred their assets.

As “dead and buried” entities, the HPP companies can’t be potentially liable persons under superfund, the defendants argued.

But plaintiffs Garrett Day LLC and the Ohio Development Services Agency—who seek to recover $1.7 million in cleanup costs at the site— argued that the HPP companies retained environmental liability in the transfer to Fox River Paper and that discovery should proceed to determine their corporate status.

Though other federal district courts in Ohio have ruled that dead and buried companies can’t be sued under superfund, discovery should be allowed here to explore the status of the companies, the U.S. District Court for the Southern District of Ohio said.

It also declined to dismiss Garrett Day’s related claims under Ohio environmental and nuisance laws.

U.S. Magistrate Judge Sharon L. Ovington wrote the opinion.

Ice Miller represented Garret Day and The Ohio Development Services Agency.

Coolidge Wall Co. represented the HPP companies.

For More Information

The opinion is available at http://src.bna.com/uht.

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