ELR Citation: ELR 20461
No(s). 90-0030-D (W.D. Va. Sep 21, 1990)

The court holds that the claims of a buyer of a manufacturing plant against the seller, including a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) cost recovery claim and contract and tort claims, are subject to arbitration, as provided in the sales agreement. The seller had dumped hazardous substances on its property before the sale, and the buyer incurred costs of investigation related to the contamination and could not obtain further financing because lenders were concerned about environmental damage at the site. The court first holds that the seller did not waive its right to arbitration, expressly provided for in the sales agreement, by merely requesting that its motion to dismiss be treated in the alternative as a motion to compel arbitration. Although the seller's motion to dismiss was not styled as a motion to compel arbitration, the seller made the buyer sufficiently aware that the seller believed the controversy should be resolved through arbitration. Moreover, the U.S. Supreme Court has directed federal courts to decide all questions on the applicability of an arbitration clause, including questions of waiver, in favor of arbitration. The court next holds that because the buyer has failed to carry its burden of showing why arbitration should be avoided, the CERCLA, tort, and contract claims should all be considered by the arbitrator. No evidence exists that Congress disfavors arbitration of a CERCLA claim, whereas some evidence demonstrates that both Congress and the Environmental Protection Agency approve of arbitration. Finally, the court holds that although it retains jurisdiction to consider whether a preliminary injunction is proper as to the buyer's motion for relief from final payment on the note owed to the seller, the buyer has not established that an injunction would prevent the irreparable harm the buyer claims—that it cannot obtain new financing to satisfy its existing obligation because of the environmental problems at the site and because of its outstanding note to seller. An injunction would not improve or cure the environmental problems, or ensure that the buyer would be able to obtain alternative financing.

Counsel for Plaintiff
James F. Stutts, J. Jon Jewett, Margery Bugen
McGuire, Woods, Battle & Boothe
One James Ctr., Richmond VA 23219
(804) 755-1000

Counsel for Defendant
Timothy G. Hayes, William J. Dinkin, Clayton L. Walton
Hazel, Thomas, Fiske, Weiner, Beckhorn & Hanes
411 E. Franklin St., Ste. 600, Richmond VA 23202
(804) 344-3400

Robert R. Salman, Beth D. Jacob, Robert C. Malaby
Carter, Ledyard & Milburn
2 Wall St., New York NY 10005
(212) 732-3200