Philadelphia Electric Company v. Hercules, Inc.

762 F.2d 303 (3rd Cir. 1985)

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Nature of the Case

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Facts

The Pennsylvania Industrial Chemical Corporation ('PICCO') owned a tract of land abutting the Delaware River. It operated a hydrocarbon resin manufacturing plant. PICCO filled in the shoreline at an inlet and thereby created a pond. PICCO then deposited or buried various resins and their by-products in the PICCO pond and possibly other locations. PICCO ceased operations and sold the facility to Gould, Inc. Gould did not conduct any operations other than leasing certain tanks to ABM Disposal Services Company which used them to store large quantities of various waste materials, though apparently not resins or resinous by-products. The Philadelphia Electric Company (P) who operated a plant on an adjoining piece of land obtained an option to purchase the Chester site from Gould. P inspected the site on more than one occasion, including walking tours along the banks of the Delaware River and the banks of the PICCO pond. P learned that Gould's tenant, ABM, had caused a number of spills on the site, including oil spills in the pond area, and was informed that ABM was a 'sloppy tenant.' ABM was unable to clean up the Chester site in time to meet Gould's original deadline for vacating the premises, a condition of the P purchase agreement. P exercised its option and acquired the property in March of 1974. The Pennsylvania Department of Environmental Resources ('DER') discovered that resinous materials similar to those once produced by PICCO were seeping from the banks of the Delaware River. P developed a plan whereby the remaining pond resin would be removed to a landfill, and the PICCO pond area would be backfilled and regraded. DER approved this plan. P produced evidence indicating that it incurred expenses of $338,328.69 for clean-up, $7,578 in collecting and carting away resinous material and $67,500 in lost rentals from American Refining due to the continuing leaching. DER expressed satisfaction with the clean-up of the pond area, but reported that resins still on the Delaware River bank and continued leaching of resins into the River. P instituted suit against Gould and Hercules (D), which had acquired the remaining assets of PICCO in 1973, in exchange for Hercules stock. D cross-claimed against Gould. On cross-motions for summary judgment, the district court ruled that D was liable as PICCO's corporate successor under the express terms of the Agreement and Plan of Reorganization ('the Agreement') it entered into with PICCO and because the transaction was a de facto merger. The jury's verdict was rendered in the form of answers to special interrogatories. The district court molded a verdict and entered judgment for P against D in the amount of $394,910.14. D appealed contending that the district court erred in ruling that it was liable as PICCO's successor and that P had no cause of action against it for public or private nuisance.