Apex Oil liability in Stack's hands

Steve Korris Feb. 14, 2007, 5:58am

Madison County Circuit Judge Daniel Stack must decide whether the former bankruptcy of Apex Oil relieves it of liability for pollution at a refinery in Hartford.

According to Apex Oil, companies seeking to shift liability should have done it before 1990, when a bankruptcy judge approved Apex Oil's reorganization.

Apex Oil attorney James O'Brien of St. Louis argues that BP Products predecessor Amoco and Atlantic Richfield knew the risk of liability long before 1990.

"They also knew that it was possible to argue that Old Apex shared in at least part of that liability," O'Brien wrote to Stack in a Jan. 17 brief.

He wrote that Amoco and Atlantic Richfield filed claims against the bankruptcy estate.

"…[N]either party asked the Court to require that the reorganization plan allow for a fund to cover Old Apex's contributions, if any, to future judgments in lawsuits that might be brought by residents of Hartford," he wrote.

O'Brien wants Stack to dismiss counterclaims that Atlantic Richfield and BP Products filed against Apex Oil in one of two competing lawsuits over refinery pollution.

BP Products and Atlantic Richfield filed their counterclaims in a suit that attorneys from Missouri filed for Katherine Sparks against many companies in 2003.

Stack in 2005 certified Sparks to represent Hartford residents in a class action over damages that an underground lake of petroleum has caused.

Last year Stack granted a motion to reconsider class certification. He did not decertify the class but he left it in limbo.

Mark Goldenberg of Edwardsville, who had filed a separate suit for Hartford residents without proposing a class action, then turned the tables.

He announced a class action settlement with defendants Equilon and Premcor. He filed a new suit, on behalf of Harry Goforth, to carry out the settlement.

Stack granted preliminary approval for the settlement.

The Sparks case continued, with BP Products and Atlantic Richfield seeking to shift damages to Apex Oil through counterclaims.

Apex Oil moved to dismiss the counterclaims.

BP Products and Atlantic Richfield responded by asking Stack to stay Apex Oil's motion until the court has determined damages.

BP Products and Atlantic Richfield argued that an order dismissing the counterclaims would arguably bind Equilon.

For Apex Oil, O'Brien told Stack that, "In essence, BP Products and Atlantic Richfield would become the masters of Apex's fate in this case."

He wrote that Apex Oil would remain in the case even if it settled with plaintiffs or disposed of all other claims and counterclaims.

"Interestingly, BP Products and Atlantic Richfield also attempt to vindicate the rights of Equilon," he wrote.

"BP Products and Atlantic Richfield fail to explain how an adjudication of their individual knowledge of the existence of Old Apex's bankruptcy proceeding would affect Equilon in any way."

On the date O'Brien filed his brief, Michael Kokal of Edwardsville filed one for BP Products and Atlantic Richfield, arguing that the claims arose after 1990.

"Contrary to Apex's assertion, the BP Entities' counterclaim did not arise until plaintiffs filed their claims against the BP entities in 2004 in the underlying lawsuit," Kokal wrote.

"No right to contribution could have existed until the underlying plaintiffs filed their lawsuit," he wrote.

A decision in Apex Oil's favor would nullify the Illinois Contribution Act, he wrote.

"Apex's motion gives the impression, without directly saying so, that the BP Entities should have been aware of Apex's contribution to the alleged Hartford contamination in the late 1980s…," Kokal wrote.

He wrote that even if his clients had been aware that someone would sue in 15 years, they could not have made that claim in bankruptcy court.

"This is because the Bankruptcy Code bars as premature any contingent claim for contribution or reimbursement," he wrote.

He wrote that Apex Oil's liability might rest on acts and omissions since 1990, in which case no bankruptcy discharge could apply.

He wrote that Apex Oil documents raise a question of whether Apex disclosed possible contamination in its bankruptcy proceeding – "and if not, why not."

"It would be curious, indeed, for Apex to claim that the BP Entities knew enough about the situation that they should have filed a claim in the bankruptcy proceeding while simultaneously suggesting that Apex itself did not have enough information to warrant disclosing the contamination...," he wrote.

O'Brien responded Jan. 25 that, "The last possible date on which Apex Oil could have committed such a tort in Hartford would have been November 22, 1988, when Premcor took over the refinery from Apex."

At a Jan. 26 hearing, Stack granted the motion of BP Products and Atlantic Richfield to stay Apex Oil's motion to dismiss.

He kept the stay short, however, ruling that it would expire April 10.

That schedule will allow Stack to consider the counterclaims after wrapping up the Goldenberg settlement at a March 13 fairness hearing.

Apex Oil meanwhile pursues a separate effort to manage its liability. Apex Oil seeks a court order requiring its insurers to indemnify and defend it in the pollution suits.

Apex Oil filed the insurance suit on the miscellaneous remedies docket, which associate judges handle.

Associate Judge Ellar Duff recently denied a motion of the insurers to dismiss the suit so Apex Oil could file it in St. Louis.

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