The Samuel J. Heyman 1981 Continuing Trust for Lazarus S. Heyman v. Ashland LLC ( 2022 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
THE SAMUEL J. HEYMAN 1981 §
CONTINUING TRUST FOR LAZARUS S. § No. 279, 2021
HEYMAN; THE SAMUEL J. HEYMAN 1981 §
CONTINUING TRUST FOR ELEANOR S. § Court Below: Superior Court
HEYMAN; THE SAMUEL J. HEYMAN 1981 § of the State of Delaware
CON-TINUING TRUST FOR JENNIFER L. §
HEYMAN; THE SAMUEL J. HEYMAN 1981 § C.A. No. N15C-10-176
CONTINUING TRUST FOR ELIZABETH D. §
HEYMAN; THE LAZARUS S. HEYMAN AGE §
50 TRUST FOR ASSETS APPOINTED §
UNDER WILL OF LAZARUS S. HEYMAN; §
THE ELEANOR S. HEYMAN AGE 50 TRUST §
FOR ASSETS APPOINTED UNDER WILL OF §
LAZARUS S. HEYMAN; THE JENNIFER L. §
HEYMAN AGE 50 TRUST FOR ASSETS §
APPOINTED UNDER WILL OF LAZARUS S. §
HEYMAN; THE ELIZABETH D. HEYMAN §
AGE 50 TRUST FOR ASSETS APPOINTED §
UNDER WILL OF LAZARUS S. HEYMAN; §
THE HORIZON HOLDINGS RESIDUAL §
TRUST; RFH INVESTMENT HOLDINGS §
LLC; THE 2013 SAMUEL J. HEYMAN 1981 §
CONTINUING TRUST FOR LAZARUS S. §
HEYMAN; THE 2013 SAMUEL J. HEYMAN §
1981 CONTINUING TRUST FOR ELEANOR §
HEYMAN PROPP; THE 2013 SAMUEL J. §
HEYMAN 1981 CONTINUING TRUST FOR §
JENNIFER HEYMAN MILLSTONE; THE §
2013 SAMUEL J. HEYMAN 1981 §
CONTINUING TRUST FOR ELIZABETH §
HEYMAN WINTER; THE 2013 LAZARUS S. §
HEYMAN AGE 50 TRUST FOR ASSETS §
APPOINTED UNDER WILL OF LAZARUS S. §
HEYMAN; THE 2013 ELEANOR HEYMAN §
PROPP AGE 50 TRUST FOR ASSETS §
APPOINTED WILL OF LAZARUS S. §
HEYMAN; THE 2013 JENNIFER HEYMAN §
MILLSTONE AGE 50 TRUST FOR ASSETS §
APPOINTED UNDER WILL OF LAZARUS S. §
HEYMAN; THE 2013 ELIZABETH HEYMAN §
WINTER AGE 50 TRUST FOR ASSETS §
APPOINTED UNDER WILL OF LAZARUS S. §
HEYMAN; THE 2015 HORIZON HOLDINGS §
RESIDUAL TRUST FOR LAZARUS S. §
HEYMAN; THE 2015 HORIZON HOLDINGS §
RESIDUAL TRUST FOR ELEANOR §
HEYMAN PROPP; THE 2015 HORIZON §
HOLDINGS RESIDUAL TRUST FOR §
JENNIFER HEYMAN MILLSTONE; THE §
2015 HORIZON HOLDINGS RESIDUAL §
TRUST FOR ELIZABETH HEYMAN §
WINTER; and LINDEN PROPERTY §
HOLDINGS LLC, §
§
Defendants Below, §
Appellants/Cross-Appellees, §
§
v. §
§
ASHLAND LLC, INTERNATIONAL §
SPECIALTY PRODUCTS INC., ISP §
ENVIRONMENTAL SERVICES INC., and §
ISP CHEMCO LLC, §
§
Plaintiffs Below, §
Appellees/Cross-Appellants. §
Submitted: June 22, 2022
Decided: September 12, 2022
Before SEITZ, Chief Justice; VAUGHN and TRAYNOR, Justices.
Upon appeal from the Superior Court. REVERSED AND REMANDED.
2
William M. Lafferty, Esquire, Miranda N. Gilbert, Esquire, John P. DiTomo,
Esquire, Lauren N. Bennett, Esquire, Thomas P. Will, Esquire, Morris Nichols Arsht
& Tunnell LLP, Wilmington, Delaware; Robert N. Hochman, Esquire, Heather
Benzmiller Sultanian, Esquire, Sidley Austin LLP, Chicago, Illinois; Eamon P.
Joyce, Esquire, Sidley Austin LLP, New York, New York; Andrew J. Rossman,
Esquire (Argued), Jonathon B. Oblak, Esquire, Nicholas Hoy, Esquire, Quinn
Emanuel Urquhart & Sullivan, LLP, New York, New York, for Defendants-Below,
Appellants.
Christopher Viceconte, Esquire, Gibbons, P.C., Wilmington; Jennifer A. Hradil,
Esquire (Argued), William S. Hatfield, Esquire, Camille V. Otero, Esquire, Joshua
R. Elias, Esquire, Gibbons, P.C., Newark, New Jersey, for Plaintiffs-Below;
Appellees.
VAUGHN, Justice:
3
This is a breach-of-contract dispute involving a stock purchase agreement for
the sale of all the shares of stock of International Specialty Products Inc.
(“International Specialty”). The selling shareholders were nine trusts and RFH
Investment Holdings LLC, all of whom are Appellants in this appeal (the “Heyman
Parties”).1 The purchaser was Appellee Ashland Inc. (“Ashland”), a leading global
specialty chemical company. International Specialty had two wholly owned
subsidiaries that went with the sale, Appellee ISP Environmental Services Inc. (“ISP
Environmental”) and Appellee Chemco LLC (“Chemco”).2 ISP Environmental
owned a property known as the Linden property, which for years had been home to
chemical manufacturing operations and had an extensive environmental history. As
part of the transaction, the parties agreed that the Heyman Parties would keep the
Linden property. Accordingly, at the time of closing on the Stock Purchase
Agreement, ISP Environmental caused the Linden property to be transferred to
Appellant Linden Property Holdings LLC (“Linden Property Holdings”), the
Heyman Parties’ designated entity for that purpose.
A dispute has now arisen between the parties as to who is responsible for the
1
At the time of the filing of the complaint, the nine seller trusts had distributed all of their assets
and liabilities to twelve successor trusts, all of which are Appellants. The phrase “Heyman Parties”
will be used to refer to the Appellants without distinguishing among them, unless the context
requires specificity.
2
“Ashland” will be used to refer to Ashland, Inc. and to Ashland, Inc., International Specialty, ISP
Environmental, and Chemco collectively without distinguishing among them, unless the context
requires specificity.
4
Linden property’s pre-closing, environmental liabilities. The parties agree that the
Heyman Parties assumed responsibility in the agreement for the Linden property’s
on-site environmental liabilities, that is, liability for environmental contamination
on the property itself. They disagree as to who is responsible for the Linden
property’s off-site environmental liabilities, that is, liability for environmental
contamination to areas that are not part of the Linden property but are contaminated
because of the activities on the Linden property. Ashland claims that under the
agreement, the Heyman Parties are responsible for the off-site environmental
liabilities as well as the on-site liabilities. The Heyman Parties claim that they never
assumed any liability in the agreement for the off-site liabilities. The Superior Court
agreed with Ashland and found that the Heyman Parties assumed responsibility in
the agreement for the Linden property’s off-site environmental liabilities. We have
concluded, however, that under the unambiguous language of the agreement, the
Heyman Parties assumed liability only for the Linden property’s on-site
environmental liabilities, and the Heyman Parties did not assume any liability in the
agreement for the property’s off-site liabilities.
FACTS AND PROCEDURAL HISTORY
I. History of the Linden Property and Its Environmental Liabilities
From 1919 to 1991, International Specialty’s predecessors, nonparties GAF
Corporation and GAF Chemicals Corporation (collectively “GAF”), owned and
5
operated the Linden property as a home to chemical manufacturing operations.
During the 1970s-1980s, GAF discovered contamination at the Linden property.
The Heyman Parties acquired GAF in the 1980s. In June 1989, the New Jersey
Department of Environmental Protection (“NJDEP”) and GAF entered into an
Administrative Consent Order. The Administrative Consent Order required GAF to
remediate “any and all pollution at the site, emanating from the site, or which has
emanated from the site.”3 The Administrative Consent Order identified both on-site
and off-site contamination that GAF was responsible for remediating.
Once manufacturing operations ceased at the Linden property in 1991, ISP
Environmental became the owner of the Linden property and assumed all its
liabilities, including those related to the Administrative Consent Order. In 2003, the
NJDEP approved an on-site Remedial Action Workplan for the Linden property.
When the remediation under the Workplan was complete, NJDEP issued “No
Further Action” letters certifying that on-site remediation was complete, and no
future action would be taken against ISP Environmental or any successor owners of
the Linden property for the on-site remediation ISP Environmental had completed.
In June 2007, NJDEP filed a complaint against ISP Environmental for failure
to fulfill its off-site remedial obligations at the Arthur Kill and Piles Creek
waterways. These areas are off-site Linden property liabilities. In June 2011, ISP
3
App. to Opening Br. at A794.
6
Environmental and NJDEP entered into a Consent Judgment that dismissed the
claims relating to Piles Creek with prejudice but preserved the claims relating to the
Arthur Kill waterway. Therefore, off-site remediation under the Administrative
Consent Order remained open and the NJDEP could still require clean-up of the
Arthur Kill area.
II. Ashland’s Purchase of ISP and the SPA
In 2010, Ashland began considering an acquisition of International Specialty,
and by February 2011, Ashland and the Heyman Parties had a tentative deal for
Ashland to acquire 100% of the shares of stock of International Specialty for $3.3
billion. After engaging in due diligence, Ashland reduced its offer to $2.75 billion.
The Heyman Parties rejected the revised offer and held to the $3.3 billion figure.
In May 2011, Ashland and the Heyman Parties came to an agreement:
Ashland would purchase 100% of International Specialty’s stock for $3.2 billion. In
exchange for the $100 million price reduction from $3.3 billion, the parties agreed
that immediately after closing, ISP Environmental would transfer the Linden
property and another site in Wayne, New Jersey back to entities designated by the
Heyman Parties.4 Linden Property Holdings was the designee for the Linden
property.
The Stock Purchase Agreement was executed on May 30, 2011, and closed
4
The Wayne property is not involved in this litigation.
7
on August 23, 2011. Transfer of the Linden property from ISP Environmental to the
Heyman Parties’ entity is addressed in Schedule 5.19 Section 2 of the agreement.
Section 2(e) describes the Linden property liabilities being assumed by the Heyman
Parties. It states, in pertinent part:
In connection with the Linden Transfer, [the Heyman
Parties] shall assume all Liabilities to the extent related to
or arising from or existing at the Linden Property,
including Liabilities arising under or relating to (i)
Environmental Laws, provided that such Liabilities shall
not include any off-site migration or disposal of
Hazardous Materials from the Linden Property prior to the
Closing, any claims or damages associated with any off-
site migration or disposal of Hazardous Material from the
Linden Property prior to the Closing, and for the
avoidance of doubt, any off-site contamination of soils,
groundwater or sediments, any third party superfund sites
including the Newark Bay Complex, any natural resources
damages or exposure claims relating to operations or
discharges prior to Closing . . . (the “Linden Excluded
Liabilities”).5
Section 2(f) of Schedule 5.19 then provides:
In connection with the Linden Transfer, the Seller Parties
shall be responsible, at their sole cost and expense, for
compliance, if applicable, with any requirements of the
Industrial Site Recovery Act (“ISRA”) and, if ISRA
applies to the Linden Transfer, [the Heyman Parties] shall
(i) within five (5) Business Days after execution of this
Agreement, make any required filings or notifications
(such as a General Information Notice, as defined under
ISRA) to the New Jersey Department of Environmental
Protection (“NJDEP”), and (ii) use reasonable best efforts
to, prior to closing, make all other filings, undertake all
5
App. to Opening Br. at A908.
8
other measures, including where required undertaking any
site investigation or Remedial Action required by ISRA.
In addition, [the Heyman Parties] shall use reasonable best
efforts to amend any consent decree or other binding
agreement with any Governmental Entity relating to the
Linden Excluded Liabilities, and to replace or substitute
any related financial assurance (including any bond or
letter of credit), to include the name of the [Heyman
Parties’ designee] following the Linden Transfer and, if
permitted by NJDEP, to remove the name of [International
Specialty or any of its affiliates] therefrom.6
The dispute between the parties involves the proper construction of the second
sentence of Section 2(f).
Schedule 5.19 Section 4 of the Stock Purchase Agreement also provides
Ashland and its affiliates with indemnification for losses related to the Linden
Excluded Liabilities. Specifically, it requires the Heyman Parties to indemnify
Ashland and its affiliates “from and against any and all Losses actually suffered or
incurred . . . to the extent arising out of . . . the Linden Excluded Liabilities.”7 There
is no corresponding provision in which Ashland agreed to indemnify the Heyman
Parties or their designated Linden property transferee for any losses related to Linden
property off-site liabilities.
The actual transfer of the Linden property was executed through a
Contribution Agreement on August 23, 2011, the same day the Stock Purchase
6
Id.
7
Id. at A909.
9
Agreement closed. This is the only agreement signed by Linden Property Holdings.
The Contribution Agreement defines liabilities being assumed by Linden Property
Holdings with substantially the same language as appears in Section 2(e). It provides
that liabilities assumed by Linden Property Holdings
shall not include any off-site migration . . . of Hazardous
Materials from the Linden Property prior to the Closing,
any claims or damages associated with any off-site
migration . . . of Hazardous Material from the Linden
Property prior to the Closing, and for the avoidance of
doubt, any off-site contamination of soils, groundwater or
sediments.8
The Contribution Agreement does not include an analog to Section 2(f).
III. Actions After the Acquisition
Pursuant to its obligations under Section 2(f), in 2011, the Heyman Parties
replaced certain financial assurances required by the Administrative Consent Order
as guarantees for ongoing cleanups with a $7,744,000 letter of credit issued on behalf
of Linden Property Holdings for operation and maintenance costs for the Linden
property. They also obtained the release of the original financial assurances, which
had been posted by Chemco.9 There is a dispute between the parties as to whether
8
Id. at A1206.
9
The $7,744,000 letter of credit remained in place until 2015. Linden Properties Holding informed
NJDEP of is intent to terminate the letter of credit and ultimately posted a smaller amount. That
smaller letter of credit has been terminated. The Superior Court found that because Linden
Property Holdings has no longer posted financial assurances, the Heyman Parties have violated
Section 2(f). Whether the Heyman Parties have violated the agreement on this point as found by
the Superior Court, and what, if any, damages Ashland might have sustained as a result thereof,
are beyond the scope of this appeal. The Superior Court also found that the Heyman Parties
10
the letter of credit covered all remediation requirements of the Administrative
Consent Order or merely Linden Property Holdings’ on-site obligations.
In 2012, at the request of a potential Linden property purchaser, the Heyman
Parties attempted to terminate the Administrative Consent Order. The NJDEP
rejected the request, explaining that the Administrative Consent Order carried
obligations related to Arthur Kill waterway that had not been resolved by the 2011
Consent Judgement.
IV. Procedural History
On October 20, 2015, Ashland, International Specialty, ISP Environmental,
and Chemco sued the Heyman Parties in the Superior Court. Count I of the
complaint alleged that under the terms of the Stock Purchase Agreement, the
Heyman Parties assumed liability for environmental investigation and remediation
of the Linden property under the Administrative Consent Order and New Jersey law,
including both on-site and off-site contamination. It alleged that the Heyman Parties
had breached their obligation by failing to perform remediation of the Arthur Kill
waterway.
Both parties filed motions for judgment on the pleadings. In rejecting both
violated Section 2(f) when it did not make best efforts to amend the Administrative Consent Order
to add Linden Property Holding or remove International Specialty. Whether the Heyman Parties
violated this provision of Section 2(f) and what, if any, damages Ashland might have sustained as
a result thereof are also beyond the scope of this appeal.
11
motions, the Superior Court held that “at this stage of the proceedings, the Court is
not comfortable that there are not ambiguities in the [Stock Purchase Agreement].”10
The Court noted that Section 2(e)’s “all-encompassing” language “allocated pre-
closing off-site liabilities to Ashland.”11 However, the court went on to explain that
reading 2(e) and 2(f) together, one could construe the Stock Purchase Agreement as
allocating to the Heyman Parties off-site liabilities “relating to the [Administrative
Consent Order],” including liabilities because of contamination to the Arthur Kill
waterway.12
After discovery, both parties moved for summary judgment. The Superior
Court held, “Now that the record has been developed, the Court is comfortable that
Schedule 5.19, including Sections 2(e) and 2(f), is unambiguous and that the
Heyman Defendants retained all liabilities relating to the Linden Property under the
[Administrative Consent Order].”13 The court explained that as the more specific
provision, the language of 2(f) prevails. The specific responsibilities that the
Heyman Parties undertook in Section 2(f), the court found, “qualifie[d] [Stock
Purchase Agreement] Section 2(e)’s definition of Linden Excluded Liabilities to
include certain off-site obligations under the [Administrative Consent Order].”14
10
Opening Br. Ex. A at 10.
11
Id. at 11.
12
Id. at 12.
13
Opening Br. Ex. D at 23.
14
Id. at 31.
12
Section 2(f) obligates the Heyman Parties to “use reasonable best efforts to
amend any consent decree . . . relating to the Linden Excluded Liabilities, and to
replace or substitute any financial assurance . . . to include the name of the [Heyman
Parties’ designee] following the Linden Transfer and, if permitted by NJDEP, to
remove the name of [International Specialty or any of its affiliates] therefrom.”15
Finding that the Administrative Consent Order was a consent decree, the Superior
Court held that the language of Section 2(f) shifted all liabilities of the
Administrative Consent Order to the Heyman Parties. The court then found that the
Heyman Parties breached their obligation under 2(f) by failing to use best efforts to
switch out the named party on the Administrative Consent Order.
The court also found that Schedule 5.19 Section 4(a) of the Stock Purchase
Agreement, which requires the Heyman Parties to indemnify Ashland and its
affiliates for any losses they sustained on account of the Linden Excluded Liabilities
but does not require Ashland to indemnify the Heyman Parties or their Linden
property designee for any losses sustained by them on account of off-site liabilities,
supported its interpretation of Section 2(f). “This is contractually inconsistent with
the idea that Ashland was responsible, even in part, under the [Administrative
Consent Order] for actions taken by NJDEP under the [Administrative Consent
15
App. to Opening Br. at A908.
13
Order] for on-site or off-site remediation.”16 The court also looked to certain
“background facts”17 to make its ruling, including the fact that after closing, the
Heyman Parties posted financial assurances for operation and maintenance of the
Linden property−inferring that they took responsibility of all Administrative
Consent Order liabilities.
In its ruling, the Superior Court declared that the Heyman Parties must
indemnify Ashland, pursuant to Schedule 5.19 Section 4 and Section 7.2 of the Stock
Purchase Agreement, for amounts Ashland or its affiliates have had to pay for off-
site contamination stemming from the Linden property. However, the court also
found that Ashland was not entitled to recover attorneys’ fees because the Stock
Purchase Agreement did not clearly and unequivocally shift these fees to the
Heyman Parties.
The Heyman Parties now appeal the Superior Court ruling and ask us to find
that the Stock Purchase Agreement unambiguously carves out all off-site liabilities
from its obligations and that Ashland is therefore not entitled to any indemnification.
Ashland cross-appeals the Superior Court’s determination that it is not entitled to
attorneys’ fees.
16
Opening Br. Ex. D at 26.
17
Id. at 22.
14
STANDARD OF REVIEW
This Court reviews a grant of summary judgment and questions of contract
interpretation de novo.”18
DISCUSSION
Delaware law “adheres to the objective theory of contracts, i.e., a contract’s
construction should be that which would be understood by an objective, reasonable
third party.”19 “When interpreting a contract, this Court ‘will give priority to the
parties’ intentions as reflected in the four corners of the agreement,’ construing the
agreement as a whole and giving effect to all its provisions.”20 Furthermore, “a court
must determine the intent of the parties from the language of the contract.” 21 This
approach places great weight on the plain terms of a disputed contractual provision,
and we “interpret clear and unambiguous terms according to their ordinary
meaning.”22 Courts should also assure that “all contract provisions [are] harmonized
and given effect where possible.”23 We do not consider extrinsic evidence unless
we find that the text is ambiguous.24 Ambiguity is present “only when the provisions
in controversy are reasonably or fairly susceptible of different interpretations or may
18
Salamone v. Gorman, 106 A.3d 354, 367 (Del. 2014); Ploof v. State, 75 A.3d 811, 820 (Del.
2013) (en banc).
19
Salamone, 106 A.3d at 367-68.
20
Id. at 368.
21
Id.
22
GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 780 (Del. 2012).
23
Martin Marietta Materials, Inc. v. Vulcan Materials Co., 68 A.3d 12-8. 1225 (Del. 2012).
24
Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 1262, 1267 (Del. 2017).
15
have two or more different meanings.”25 Critically, a contractual provision is “not
rendered ambiguous simply because the parties in litigation differ” as to the proper
interpretation.26
Both the Heyman Parties and Ashland claim to offer the plain, unambiguous
reading of Schedule 5.19 Sections 2(e) and 2(f) of the Stock Purchase Agreement.
The Heyman Parties argue that Section 2(e) explicitly states that they assumed only
the Linden Excluded Liabilities−a defined term that “could not more clearly have
excluded off-site liabilities from the transfer to [Linden Properties Holding].”27
Section 2(f), they argue, can easily be harmonized with 2(e) “by simply restricting
[the provisions] to their respective scopes: Section 2(e) substantively divides
liabilities, and Section 2(f) identifies procedural consequences that follow from, but
do not alter, that division.”28
Ashland contends that under Section 2(f), the Heyman Parties are responsible
for all Linden property liabilities relating to the Administrative Consent Order, both
on-site and off-site. It contends that Section 2(f)’s requirement that the Heyman
Parties “use reasonable best efforts to amend any consent decree . . . relating to the
Linden Excluded Liabilities, and to replace or substitute any related financial
25
Rhone–Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
26
City Investing Co. Liquidating Tr. v. Cont'l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993).
27
Opening Br. at 24.
28
Id. at 28.
16
assurance . . . to include the name of the [Heyman Parties’ designee] . . . and, if
permitted by the NJDEP, to remove the name of [International Specialty or any of
its affiliates] therefrom”29 shifts all the obligations imposed by the Administrative
Consent Order to the Heyman Parties and their designee, including the obligations
for off-site remediation of the Arthur Kill waterway. In other words, Ashland asserts
that “[i]t cannot be disputed that the consequence of fulfilling the intention of Section
2(f) would effectively leave [the Heyman Parties] and their designee as the only
parties responsible for the obligations under the [Administrative Consent Order].”30
We cannot reconcile the interpretation that Ashland and the Superior Court
give to these provisions with the plain language of their text. Sections 2(e) sets out
the liabilities the Heyman Parties are assuming in connection with the Linden
property. It begins by stating that the Heyman Parties assume all liabilities arising
from the Linden property, but then unambiguously excludes all off-site liabilities.
After so stating, it emphasizes the point by stating that “for the avoidance of
doubt,”31 the liabilities assumed by the Heyman parties do not include liabilities for
off-site contamination. Section 2(e) then defines these on-site liabilities that the
Heyman Parties are assuming as the “Linden Excluded Liabilities.” It refers to the
on-site liabilities as “excluded liabilities” because they are “excluded” from all the
29
App. to Opening Br. at A908.
30
Opening Br. at 27.
31
App. to Opening Br. at A908.
17
liabilities of International Specialty and its subsidiaries—including off-site liabilities
related to the Administrative Consent Order—that Ashland is indirectly taking in the
transaction through its purchase of International Specialty’s stock. The clear intent
of the language is that the Heyman Parties are agreeing to assume only on-site
liabilities.
Ashland does not take any serious issue with this reading of Section 2(e).
Section 2(f) begins with a lengthy sentence involving New Jersey’s Industrial Site
Recovery Act (“ISRA”). It makes the Heyman Parties responsible for “compliance,
if applicable, with any requirements of the [New Jersey ISRA].”32 It provides that
“if ISRA applies to the Linden Transfer”33 the Heyman Parties shall, within five (5)
Business Days after execution of this Agreement, make any required filings or
notifications” to NJDEP, and “use reasonable best efforts to, prior to closing, make
all other filings, undertake all other measures, including where required undertaking
any site investigation or Remedial Action required by ISRA.”34 Ashland argues that
Section 2(f)’s allocation of “all responsibility for compliance with the ISRA” to the
Heyman Parties provides some support for its claim that the second sentence of
Section 2(f) allocates all responsibility for compliance with the Administrative
Consent Order to the Heyman Parties. However, the scope of compliance with the
32
Id.
33
Id.
34
Id.
18
ISRA imposed on the Heyman Parties by Section 2(f), including whether it imposes
any post-closing obligations at all, are undeveloped in the record. The first sentence
of Section 2(f) is of no help in ascertaining the meaning of the second sentence.
The second sentence of Section 2(f) requires the Heyman Parties to use
“reasonable best efforts” to accomplish several results. It does not directly address
a division of liabilities. It does not directly add to, subtract from, or otherwise
qualify the definition of “Linden Excluded Liabilities”—a definition which seems
to have been set forth with considerable care in the preceding section. Ashland
claims that the Administrative Consent Order liabilities are swept in by Section
2(f)’s mandate that Heyman use “reasonable best efforts to amend any consent
decree . . . relating to the Linden Excluded Liabilities.”35 This approach to the
second sentence would contradict Section 2(e)’s clear language. We conclude that
Section 2(f) cannot be given the interpretation advocated by Ashland. Rather, the
second sentence of Section 2(f) is one that is properly read as implementing the
Heyman Parties’ agreement to be responsible for the Linden Excluded Liabilities. It
does so by requiring the Heyman Parties to use “reasonable best efforts” to take the
steps described therein for the purpose of putting the Heyman Parties’ designee in
the place of International Specialty with regard to the Linden Excluded Liabilities—
i.e., the on-site liabilities. Section 2(f) does not contradict Section 2(e) and does not
35
Answering Br. at 26–27.
19
disturb the allocation of liabilities contained in Section 2(e). The Superior Court’s
finding that Section 2(f) allocated responsibility for the remediation of the Arthur
Kill waterway required by the Administrative Consent Order from ISP
Environmental to the Heyman Parties is error.
This result is supported by other provisions of the Stock Purchase Agreement
and the Contribution Agreement. The Contribution Agreement defines the liabilities
that are being assumed by Linden Properties Holding with language identical to the
language in Section 2(e). It does not have a Section 2(f) equivalent. Ashland argues
that the liabilities assumed by the Heyman Parties were transferred to them in the
Stock Purchase Agreement, and because the Contribution Agreement became
effective after closing, there was no need for the Contribution Agreement to include
an equivalent to Section 2(f). However, the Stock Purchase Agreement states that
liabilities associated with the Linden property will be transferred immediately after
closing,36 while the Contribution Agreement states that it is transferring these
liabilities.37 Reading the Stock Purchase Agreement and the Contribution
Agreement together supports the conclusion that the parties’ intent was to confine
the Heyman Parties’ obligations with respect to the Linden property to on-site
liabilities.
36
App. to Opening Br. at A906 (“In connection with the Linden Transfer, the Seller Parties shall
assume all Liabilities.”).
37
Id. at A1206 (“The Company hereby assumes . . . all Liabilities.”).
20
The indemnification provision at Schedule 5.19 Section 4 also supports the
conclusion we reach. It obligates the Heyman Parties to indemnify Ashland for any
losses “to the extent arising out of” the Linden Excluded Liabilities. 38 Section 4
cites the clearly defined term Linden Excluded Liabilities and does so without any
qualifications. The fact that Section 4 does not contain a clause giving the Heyman
Parties or Linden Property Holdings indemnification rights against Ashland for off-
site liabilities does not change the unambiguous and plain meaning of this
language.39
For the reasons discussed above, we find that the Stock Purchase Agreement
unambiguously allocates all off-site liabilities, including the Arthur Kill cleanup, to
Ashland. Ashland is not entitled to any indemnification for costs related to off-site
remediation. We need not address Ashland’s cross-appeal regarding attorney’s fees.
CONCLUSION
For the foregoing reasons, the judgment of the Superior Court is reversed
and the case is remanded to the Superior Court for further proceedings consistent
with this opinion.
38
Id. at A909.
39
See Alcoa World Alumina LLC v. Glencore Ltd., 2016 WL 521193, at *7 (Del. Super. Ct. Feb.
8, 2016) (“[T]he interpretation of indemnification provisions cannot contradict the plain text of the
agreement or logic of the transaction.”), aff’d sub nom. Glencore Ltd. v. St. Croix Alumina, LLC,
150 A.3d 1209 (Del. 2016).
21