United States: Environmental Claims: Twenty Years Later

Last Updated: August 6 2014
Article by Vicki Harding

In re Solitron Devices, Inc., 510 B.R. 890 (Bankr. S.D. Fla. 2014)

A Chapter 11 debtor moved to reopen its bankruptcy case more than 15 years after it was closed in order to enforce the plan confirmation order to prevent claims by a state environmental agency and other potentially responsible parties for clean-up costs at a landfill.

The threshold issue was whether the state environmental agency (NYSDEC) had a "claim" that could have been discharged. Section 101 of the Bankruptcy Code defines "claim" as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured ..." The court noted that the 11th Circuit held in the context of a products liability case that "claims" should be read broadly to include all legal obligations "no matter how remote or contingent."

The 2d Circuit addressed contingent claims for future clean-up costs in the frequently cited case of In re Chateaugay Corp, 944 F.2d 997 (2nd Cir. 1991). In that case the debtor gave notice to the EPA in all 50 states and the District of Columbia of contingent environmental claims. The EPA filed claims totaling $32 million for response costs under CERCLA at 14 sites. The EPA determined that this was a non-exhaustive list of sites, but did not file contingent claims with respect to potential sites for future clean-up costs.

The debtor's plan sought to discharge all claims for pre-petition conduct, whether the EPA knew about the existence of the claims or not. In concluding that response expenses incurred post-petition from pre-petition conduct could be discharged, the 2d Circuit found that there was sufficient contemplation of those claims. The gleaned from Chateaugay is that the "agencies need to be capable of fairly contemplating any unmatured contingent claims at the time of the bankruptcy." Generally courts have taken a very expansive view of what can be "fairly" contemplated.

The events leading up to this case were as follows:

  • 1961 – 1987: The debtor operated a manufacturing plant facility in Tappan within five miles of a Clarkstown landfill.
  • November 1979: NYSDEC sent the debtor a letter stating that it had been "cited on October 30, 1979 for delivering a 'dumpster with refuse' from its Tappan facility to the Clarkstown landfill on October 27, 1979."
  • June 1989: The landfill was listed in the state registry of inactive hazardous waste disposal sites.
  • August 1989: NYSDEC and the town of Clarkstown entered into a consent order to clean-up the landfill that required the town to assist in identifying all parties responsible for contamination. There is no evidence that the town identified the debtor before confirmation of its plan.
  • October 1989: NYSDEC and the town entered into a contract that provided for state reimbursement of 75% of the costs of clean-up.
  • Summer/Fall 1990: Remedial investigation began.
  • December 1990: The landfill closed.
  • January 1992: The debtor filed for bankruptcy.
  • October 1992: The debtor obtained an order establishing a bar date for filing claims that specifically included entities with claims arising out of any environmental contamination.
  • The notice specifically identified the Tappan facility and stated that the bar date applied to environmental claims against the debtor notwithstanding that they "may be contingent or may not have occurred, matured or become fixed or liquidated prior to [the bar date]." The debtors specifically sent notice to NYSDEC, and it did not file a proof of claim.
  • August 1993: The debtor's plan of reorganization was confirmed, and a confirmation order was entered that included an injunction preventing discharged claimholders from proceeding against the reorganized debtor.
  • April 1995: NYSDEC completed its final report. It stated that remedial investigation took place during 1990 with additional work between summer of 1991 to fall of 1993.
  • July 1996: The bankruptcy case was closed.
  • 2002: NYSDEC sent notices of potential liabilities to various potentially responsible parties (PRPs) regarding landfill contamination, including the debtor. Some of the PRPs formed a joint defense group (JDG).
  • March 2011: NYSDEC filed suit against the town of Clarkstown and the JDG members.
  • 2011: A consent decree settled all claims against the JDG defendants for $4 million (later reduced to $3.75 million).
  • August 2013: The JDG filed a complaint against the debtor and other PRPs who had not participated in the settlement seeking contribution.
  • January 2014: The debtor filed an emergency motion to reopen the Chapter 11 case and to enforce the order confirming the plan of reorganization that enjoined prosecution of discharged claims.

In this case the court found that (1) the conduct occurred pre-petition, (2) there was an identifiable relationship between NYSDEC and the debtor, (3) prior to bankruptcy the landfill had been identified as a polluted site, and (4) NYSDEC (a) knew that the debtor had been cited for improper dumping at the landfill, (b) knew that the debtor had a facility five miles from the landfill, and (c) had specific notice that the debtor was seeking to include any potential environmental claims in its bankruptcy case.

A key fact appeared to be the October 1979 letter that alleged that at least eleven 55-gallon drums of oily substances were transported from the debtor's facility to the landfill. Although NYSDEC argued that this was not sufficient since the notice was sent many years before the relevant events, the court disagreed. "Notice that something happened does not become stale or irrelevant just because years have passed or the entity receiving notice simply forgets about it."

Given the broad definition of claim and the fact that if NYSDEC reviewed its records it would have seen the citation that "conclusively linked" the debtor to the landfill, the court found that all of the state environmental claims were discharged in the bankruptcy.

The court acknowledged that the JDG did not even exist at the time the plan was confirmed. However, the court noted that a PRP's contribution right is contingent on common liability of the defendants. Since the state claim against the debtor had been discharged, it concluded that the debtor and the JDG did not have common liability.

The fact that the JDG did not exist until after the bankruptcy also meant that the bankruptcy court did not have jurisdiction to enjoin the JDG since the JDG did not have a discharged claim, and thus did not violate the confirmation order. Consequently, although the bankruptcy court determined that the JDG did not have a claim against the debtor, the court noted that it was up to the district court to dismiss the JDG claims.

It seems surprising that a single letter sent more than ten years before NYSDEC began investigating and remediating a landfill was sufficient to cause the NYSDEC claims to be discharged. However, given this type of decision, it is not hard to understand why the EPA and state agencies are very aggressive in carving out environmental claims from plan confirmation discharge provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Vicki Harding
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions