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United States v. Pioneer Natural Resources Company

United States District Court, D. Colorado

April 18, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
PIONEER NATURAL RESOURCES COMPANY, and PIONEER NATURAL RESOURCES USA, INC., Defendants.

          ORDER GRANTING PLAINTIFF'S EARLY MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING CORPORATE SUCCESSOR LIABILITY

          WILLIAM J. MARTINEZ, UNITED STATES DISTRICT JUDGE.

         In this action brought under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et seq., the United States, as Plaintiff, seeks to recover from Defendants, Pioneer Natural Resources Company (“Pioneer Natural Resources”), and Pioneer Natural Resources, USA, Inc. (“Pioneer-USA”), certain costs incurred in response to the release (or threatened release) of hazardous waste at the Nelson Tunnel/Commodore Waste Rock Pile Superfund Site, located in Mineral County, Colorado.

         Now before the Court is the United States' Early Motion for Partial Summary Judgment on Defendants' Corporate Successor Liability (ECF No. 46), in which the United States seeks a ruling as a matter of law that Defendants “are liable for the CERCLA liabilities, to be determined at a later date” of certain predecessor entities, namely, that (1) Defendant Pioneer Natural Resources is a successor to the CERCLA liabilities of Pioneer Nuclear, Incorporated (here, “PNI”) and (2) that Defendant Pioneer-USA is a successor to the CERCLA liabilities of Mesa Operating Limited Partnership (here, “MOLP”) (id. at 53). For the reasons explained below, the Motion is granted.

         I. SUMMARY JUDGMENT STANDARD

         Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or conversely, is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, 477 U.S. 242, 248-49 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132 (10th Cir. 2000). A fact is “material” if it pertains to an element of a claim or defense; a factual dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248.

         In ruling on summary judgment, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. Houston v. Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987). “[T]he moving party carries the burden of showing beyond a reasonable doubt that it is entitled to summary judgment.” Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008). W here, as here, the moving party would have the burden of proof at trial, the movant “must establish, as a matter of law, all essential elements of the issue before the nonmoving party can be obligated to bring forward any specific facts alleged to rebut the movant's case.” Id. However, “[a]lthough the burden of showing the absence of a genuine issue of material fact is upon the movant, the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts.” Champagne Metals v. Ken-Mac Metals, Inc., 458 F.3d 1073, 1084 (10th Cir. 2006) (internal quotation marks omitted; alterations incorporated).[1]

         II. FACTUAL BACKGROUND

         A. The Site & Alleged Liability of PNI and MOLP

         The Nelson Tunnel/Commodore Waste Rock Pile Superfund Site (the “Site”) is located in the San Juan Mountains, just north of the town of Creede, Colorado, in an area with a long history of silver mining. (See ECF No. 1 ¶ 7; id. at 18.) As alleged by the United States, mining activity commenced there by the 1890s and continued at least through the 1980s. (Id. ¶¶ 9-10.) The Environmental Protection Agency (“EPA”) has designated two operating units within the Site; relevant here is “OU1, ” which is the Commodore Waste Rock Pile (the “Rockpile”). (Id. ¶ 6.)

         In general terms, the United States alleges that over the course of many years, waste rock from mining excavations “was cast down the mountainside into the West Willow Creek drainage, ” creating the Rockpile; and that “[l]ayers of cribbing to contain waste rock” and “makeshift hydraulic structures to convey West Willow Creek over and under the [Rockpile] . . . were installed over many years by several mining companies, ” including certain wooden flume structures and “a steel pipe . . . pieced together from parts of railroad tank cars.” (Id. ¶¶ 11-12.)[2]

         In this CERCLA case, the United States alleges that PNI and MOLP, as well as another related entity, Mesa Limited Partnership (“MLP”), [3] conducted mining operations at the Site between 1983 and 1989 (see Id. ¶¶ 16, 22-26), using the Rockpile “as the hub of their mining operations, ” and taking certain actions to alter or maintain the “deteriorating cribbing and water conveyance system” (id. ¶ 13).[4] Further, the United States alleges that in 1988 Mesa retained an engineering firm which recommended that certain actions be taken to address the “failing cribbing and water conveyance” and the unstable Rockpile, but that Mesa did not complete those actions, thus failing to prevent a subsequent collapse of the water conveyance system and resulting “washout” that “released mine waste contaminated with heavy metals . . . into West Willow Creek” and in turn into the Rio Grande River. (Id. ¶¶ 13, 36.)[5]

         The Site was placed on the National Priorities List (“NPL”) by the EPA on September 3, 2008, as provided under Section 105 of CERCLA, 42 U.S.C. § 9605. (Id. ¶ 5; 73 Fed. Reg. 51368 (Sept. 3, 2008).) According to the United States, the EPA completed certain removal and stabilization work in 2008 and 2009. (ECF No. 1 ¶ 39.)

         B. Corporate Entity History

         The present Motion retells a lengthy corporate history somewhat in the fashion of an Old Testament genealogy, with one company begetting another, and another, through a series incorporations, name changes, sales, and mergers, dating from 1906 through 1997, when the transactions creating the present Defendants, Pioneer Natural Resources and Pionner-USA were completed. (See generally ECF No. 46 at 5-35, ¶¶ 9-146.) However, the facts relevant to the presently disputed issues focus only on a few months in 1986, when PNI's parent, Pioneer Corporation, through a series of corporate actions, first merged a number of its subsidiaries into itself, and then transferred its assets and liabilities to Mesa. (See generally ECF No. 46 at 6-10, ¶¶ 13-34; ECF Nos. 46-7, 46-9, 46-11, 46-12.) The Court details each of the corporate actions and documents relevant to the present dispute in turn. The following facts are undisputed unless attributed otherwise.

         1. March 5, 1986 Conveyance Agreement

         As memorialized in an “Agreement of Sale and Purchase, ” dated March 5, 1986 (the “March 5, 1986 Agreement” (ECF No. 46-7)), Pioneer Corporation, MLP, and MOLP entered into an agreement for Pioneer Corporation to sell its assets to MLP, which would, “[i]mmediately upon the acquisition of the assets, ” “convey, transfer, and contribute the same to the MOLP, ” together with “Assumed Liabilities, ” as defined by the March 5, 1986 Agreement. Several provisions of this document are relevant to the disputed issues here.

         An initial recital states that the agreement was entered because Pioneer Corporation “desire[d] to contribute to the Buyers . . . all of the assets, properties, goodwill and business” of Pioneer Corporation, “as a going concern.” (Id. at 2.) The subsequent “Conveyance, Contribution and Transfer of Assets” clause states that “at the Closing, ” Pioneer “will convey, transfer and contribute to the MLP the Seller's [i.e., Pioneer Corporation's] Assets . . . as provided in Section 3.9” of the Agreement. (Id. at 2-3, § 1.1.)

         Section 3.9 of the March 5, 1986 Agreement in turn provides that on or before closing, Pioneer Corporation

and each of its subsidiaries shall have taken all necessary action, including all necessary corporate action, to convey and transfer to the Seller [i.e., Pioneer Corporation] all of the assets, properties and business and to cause the Seller to assume all liabilities and obligations, whether accrued, absolute, contingent or otherwise, of each direct or indirect subsidiary of the Seller as shall be selected by the Buyers and specified to the Seller . . . . Such conveyances shall have been effective to vest in Seller all of the right, title and interest in such assets held by the Seller's subsidiaries immediately prior to such conveyances and to obligate the Seller to pay, perform or discharge all such liabilities . . . .

(Id. at 39-40, § 3.9.)[6]

         Further, Section 1.2 of the March 5, 1986 Agreement defines the “consideration” to be exchanged for the asset purchase, defining Mesa's obligations and agreement that Pioneer Corporation's assets would be delivered to MLP “in exchange for” a specified stock transfer, and “MLP's assumption of and agreement to pay, perform or discharge the Assumed Liabilities, ” which were broadly defined to include “all debts, liabilities, obligations, taxes and contracts of the Seller [i.e., Pioneer Corporation] of any kind, character or description, whether accrued, absolute, contingent or otherwise, no matter whether arising before or after the Closing Date.” (Id. at 2-3, § 1.2.)

         2. June 26-27, 1986 Articles of Merger and Certificate of Merger

         On June 26, 1986, Pioneer Corporation executed an “Articles and Plan of Merger, ” reciting that Pioneer Corporation “desire[d] to . . . succeed to the debts, liabilities and duties of” certain of its wholly-owned subsidiaries, which Pioneer had agreed to convey to MLP. (ECF No. 46-9 at 3 (the “Articles”).) The Articles also recited that “Pioneer . . . adopts the following Articles . . . for the purpose of merging . . . . Pioneer Nuclear Inc. [i.e., PNI, together with other subsidiaries] with and into Pioneer [Corporation], with Pioneer [Corporation] being the surviving corporation.” (ECF No. 46-9 at 3.)

         Significantly, the Articles listed PNI among the listed subsidiaries which, on the effective date of the merger, would “be merged with and into Pioneer Corporation, ” with the effect that “the separate existence of each Subsidiary shall cease, ” and Pioneer Corporation would thereafter “have all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of each Subsidiary” (ECF No. 46-9 at 4-5, Arts. I, IV.A., IV.D.)[7]

         On June 27, 1986, these Articles were filed with the Texas Secretary of State, which the same day issued a “Certificate of Merger of Domestic Corporations into Pioneer Corporation” (the “Certificate of Merger”), identifying PNI among the subsidiaries merged into Pioneer Corporation, and certifying that the Articles of Merger had been received by the Secretary of State and “found to conform to law.” (Id. at 2.)

         3. June 30, 1986 Conveyance and Closing

         A “Closing Memorandum” recording the closing of the asset sale documents states that “[t]he Closing was held . . . on June 30, 1986, ” outlines the steps of the transaction leading up to the closing, and also the steps taken as part of closing. (ECF No. 46-11 at 9.)

         On the closing date of June 30, 1986, MLP, MOLP, and Pioneer Corporation executed a “Conveyance From Pioneer Corporation to Mesa Limited Partnership and from Mesa Limited Partnership to Mesa Operating Limited ...


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