Petition for Writ of Certiorari — Gulf States Steel, Inc. v. LTV Corp., 113 S. Ct. 661 (1992) (No. 92-732)
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IN THE Steere
Supreme Court of the United States
OCTOBER TERM, 1992
an. oe
GULF STATES STEEL, INC. OF ALABAMA,
Petitioner,
¥e
THE LTV CORPORATION, et ai.,
Respondents.
Petition For A Wnit Of Certiorari
To The United States Court Of Appeals
For The District Of Columbia Circuit ’
PETITION FOR A WRIT OF CERTIORARI
SUSAN G. BRADEN
Counsel of Record
1001 Pennsylvania Avenue, N.W.
Suite 1200 South
Washington, D.C. 20004
(202) 626-3968
BETTY SOUTHARD MURPHY
Baker & Hostetler
1050 Connecticut Avenue, N.W.
Suite 1100
Washington, D.C. 20036
(202) 861-1500
RICHARD T. CUNNINGHAM
Amer Cunningham Brennan
159 South Main
Society Building, 6th Floor
Akron, Ohio 44308
(216) 762-2411
Counsel for Petitioner
Balmar Legal Publishing Services, Washington, D.C. (202) 682-9800
i
QUESTIONS PRESENTED FOR REVIEW
1. Whether a federal court of appeals has the power to
modify de facto a final antitrust consent decree by issuing a
mandate that reverses orders, entered by the supervising district
court to enforce environmental obligations assumed under the
decree, without a showing on the public record which “estab-
lishes that a significant change in facts or law warrants revision
of the decree and that the proposed modification is suitably
tailored to the changed circumstance,” as this Court recently
held Federal Rule of Civil Procedure 60(b) requires.
2. Whether a federal court of appeals has the power to
conclude that the Rules Enabling Act, 28 U.S.C. § 2072(b)
(1988), prohibits a district court from accepting a voluntary
deposit of over $31 million of disputed funds, proffered under
Federal Rule of Civil Procedure 67, as payment in full, if it
terminates the accrual of additional default interest upon full
payment of these funds into escrow so that a litigant’s right to
the funds may be adjudicated.
ii
LIST OF PARTIES
TO THE PROCEEDING
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
LTV CORPORATION, LTV STEEL
COMPANY, INC., AND GULF STATES
STEEL CORPORATION
Appellants
GULF STATES STEEL, INC. OF ALABAMA
Appellee
OFFICIAL COMMITTEES
OF UNSECURED CREDITORS
OF THE LTV CORPORATION AND
LTV STEEL CORPORATION, INC.
AND CERTAIN AFFILIATES
Amicus Curiae for Appellants
JAMES H. EVANS
ATTORNEY GENERAL
STATE OF ALABAMA
Amicus Curiae for Appellee
ili
TABLE OF CONTENTS
QUESTIONS PRESENTED FOR REVIEW. ....
Boyes oe: | Be ee ae ee ee re
TABLE CE AU Pee E nk oe ee eee ee
Pare EE © kis es See RAS
PEE be Se WE es
STATUTES AND RULES INVOLVED .......
STATEMENT OF THE CASE... . «0.022 wees
1. The District Court’s Entry Of The Antitrust
Consent Decree As A Final Judgment Was
in Tee Fe MO a we
2. The District Court’s Divestiture And
Implementing Orders Were Entered Pursuant
To And In Furtherance Of The Final
SG = 50 foe 0 a ee ee Key 6's
3. The District Court’s Escrow Deposit Order
Was Entered To Supervise Enforcement Of
The Final Judgment, As Well As To Protect
LTV’s Creditors During The Pendency Of
Tene EI gg Sik ie oe eee a a
4. The District Court’s Order Denying Summary
Judgment And Its Recoupment Order Enforced
LTV’s Duties Under The Final Judgment,
Divestiture, And Implementing Orders .. . .
5. The Court Of Appeals’ Decision Modified
Te Fuel POGUE Re ws
1]
iV
REASONS FOR GRANTING THE WRIT ..... 14
I. THE COURT OF APPEALS EXCEEDED
ITS AUTHORITY WHEN IT MODIFIED
DE FACTO THE FINAL JUDGMENT
WITHOUT THE PARTICIPATION OF THE
UNITED STATES AND THE STATE OF
ALABAMA, AND WITHOUT
COMPLIANCE WITH FEDERAL RULE
OF CIVIL PROCEDURE 60(B). ...... 15
I]. THE COURT OF APPEALS IGNORED THE
EQUITABLE AUTHORITY CONVEYED BY
THE DISTRICT COURT’S JURISDICTION
AND MISAPPLIED THE RULES ENABLING
ACT, 28 U.S.C. § 2072(B) (1988), TO IMPOSE
AN UNCONSTITUTIONAL, UNDULY
HARSH AND UNJUST BURDEN ON GSSI,
WHICH WILL IMPAIR THE FUTURE
UTILITY OF FEDERAL RULE OF CIVIL
km | a eg eee re 20
A. The District Court’s Power to Accept The
Escrow Deposit Was Not Derived From
BMME GE 55d 4-0, 00 Oe 22
B. The District Court’s Escrow Deposit Order
Did Not Impair LTV’S Contractual
a ere eo Se ot 23
C. This Court Should Not Allow A Future
Litigant That Makes A Deposit Under
Rule 67 To Be Placed At Risk
IO et ee Re Oke 24
CRUMGAAPEGNT Sacha ac ta eee ee 27
APPENDICES
Appendix A -
Appendix B -
Appendix C -
Appendix D -
Appendix E -
Appendix F -
Appendix G -
LTV Corp. v. Gulf States Steel,
Inc., 969 F.2d 1050 (D.C. Cir.
Beta aa Og ae ane la
LTV Corp. v. Gulf States Steel,
Inc., No. 91-1072 (D.D.C.
Dec. 5, 1991) (findings of facts and
conclusions of law) .....-- 28a
LTV Corp. v. Gulf States Steel,
Inc., No. 91-1072 (D.D.C.
Dec. 5, 1991) (order granting
recoupment) ....-----: Ala
LTV Corp. v. Gulf States Steel,
Inc., No. 91-1072 (D.D.C.
June 21, 1991) (order regarding
depositof monies) ....-- 43a
LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C. July 1, 1991)
(order denying summary judgment
and defining scope of evidentiary
hearing) ....-.---+-++:> 57a
LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C. Aug. 4, 1992)
(final judgment complying with
wey Sc cw ce 8 60a
LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C. Aug. 6, 1992)
(escrow deposit release order) 62a
Appendix H -
Appendix I -
Appendix J -
Appendix K -
Appendix L-
Appendix M -
vi
LTV Corp. v. Gulf States Steel, Inc.,
91 Civ. 1826 (S.D.N.Y.
May 3, 1991) (order withdrawing
reference and transferring
WR ree 65a
United States v. LTV Corp.,
1984-2 Trade Cas. (CCH)
§ 66, 133 (D.D.C. Aug. 2, 1984)
(memorandum decision and final
are 67a
United States v. LTV Corp..,
No. 84-0884 (D.D.C.
Dec. 10, 1984) (order appointing
Ge ok a a 110a
United States v. LTV Corp.,
No. 84-0884 (Dec. 17, 1985)
(diverstiture order denying LTV
i See 113a
United States v. LTV Corp.,
No. 84-0884 (D.D.C.
Jan 30, 1986) (order
implementing divestiture) .. 1l6a
LTV Corp. v. Gulf States Steel,
Inc., No. 92-7007 (D.C. Cir.
July 28, 1992) (order denying
petition for rehearing and
suggestion for rehearing
Na baad wae ss 120a
Appendix N -
Appendix O -
Appendix P -
Appendix Q -
Appendix R -
Vii
15 U.S.C. § 16(b)-(h) . . . . - 12la
Tee ee a ko se 125a
ry. GORE ae oy | | 126a
Rule 60(b), Federal Rules of
eR. 126a
Rule 67, Federal Rules of Civil
EEE eee oe 126a
49 Fed. Reg. 29,288, at 29,323
fo, & a ara 128a
November 6, 1985 letter from
J. Robert Kramer, II, U.S. Depart-
ment of Justice, Antitrust Division,
to Susan G. Braden, Esquire
re: LTV Objections to
| NA re 132a
November 27, 1985 letter from
J. Robert Kramer, I, U.S.
Department of Justice, Antitrust
Division, to the Honorable John
H. Pratt re: Approval of
a a ee 137a
September 18, 1985 letter from
K.W. Means, Manager,
Engineering/Environmental,
Gulf States Steel Corporation to
Michael Sappington, Lake
Engineering and Development,
eee ne aa ae 145a
Viii
Appendix S- November 25, 1985 Affidavit of
James J. Paulos, Executive Vice
President, LTV Corporation . 152a
Appendix T- Exhibit V to the January 31, 1986
Asset Purchase Agreement .. 170a
Appendix U - Letter from Winston A. Smith,
Director, Air Pesticides and
Toxics Management Division, U.S.
Environmental Protection Agency,
Region IV to Kenneth Means,
Chief Engineer, Gadsden Steel
Corporation (Gulf States Steel
ee eee ee 184a
Appendix V- Letter from Winston A. Smith,
Director, Air Pesticides and
Toxics Management Division,
U.S. Environmental Protection
Agency, Region IV to Richard E.
Grunsnick, Chief, Air Division,
Alabama Department of Environ-
mental Management ..... 189a
Appendix W- July 31, 1991 Affidavit of John
Poole, Chief Industrial Branch of
Water Division, Alabama Depart-
ment of Environmental
eee 198a
Appendix X- July 31, 1991 Affidavit of Richard
E. Grunsnick, Chief, Air Division,
Alabama Department of
Environmental Manage-
ee eae eee 199a
Appendix Y -
Appendix Z -
Appendix AA -
Appendix BB -
Appendix CC -
ix
August 19, 1991 letter from J.
Robert Kramer, II, U.S. Depart-
ment of Justice, Antitrust Division,
to Jerome G. Snyder, Davis, Polk
& Werdwell ... 1.2555: 202a
LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C.), DX 5012-1
(Gulf States Steel, Inc. Authorized
Costs As of July 31,1991) .. 204a
April 8, 1991 Response of the
State of Alabama to LTV’s
April 4, 1991 Memorandum in
Opposition [to the State of
Alabama’s Motion to Intervene],
LTV Corp. v. Gulf States Steel,
Inc., 91 Civ. 1826 (LLS)
tat) & eee 205a
Excerpts from June 14, 1991
Transcript of Hearing on
CO eee ee 213a
Excerpts from Brief of
Defendants-Appellees and
Cross-Appellants the
LTV Corporation, LTV Steel
Company, Inc. and All Affiliated
0 ee er ee 221a
xX
TABLE OF AUTHORITIES
Cases
Anderson v. City of Bessemer City, 470 U.S. 564
SEE ce o0 aoe 6k dt aie ol a or
fo Pree eee era es wrayer ee
Hutto v. Finney, 437 U.S. 678 (1978) .......
In re Chateaugay Corp., 944 F.2d 977
wie Bn Cee a 7
In re Chateaugay Corp., Nos. 86B11270 -
86B 11334, 86B 11402, 86B11464
(Bankr. S.D.N.Y. July 30,1992) .......
Lemon v. Kurtzman, 411 U.S. 192 (1973) .....
Logan v. Zimmerman Brush Co., 455 U.S. 422
COD sa 0s ao ee ae ee a
Northern Pac. Ry. v. United States, 356 U.S. 1
(Te. kk ee Se a eee
Richardson-Merrell, Inc. v. Koller, 472 U.S. 424
tee ore ee ee
Rufo v. Inmates of Suffolk County Jail, 112 S. Ct
Peete 8 ke RES TO 15, 16,
Southern Constr. Co. v. Pickard, 37] U.S. 57
CR ca rm, cna cea eects
Thomas v. Capital Sec. Servs. Inc., 836 F.2d 866
Ce RUD oo cn ik om aon
Statutes
Se CE a 64k ak 4a 8 oe oe eee
Sk ak ck ae ek ee
Se Gn SUD kn os ae Ole wee
EEE ee a» ae
EE ee 2
EE 25
Ge oe Se a 20, 21, 23
Rules
Se 15, 19, 26
EE ee ee 24, 25, 26
Acts
Bankruptcy Reform Act of 1978, Pub. L. No. 95-598,
§§ 201-401, 92 Stat. 2549, 2657-82
Raa ss os sss ys ee 14
Federal Register
49 Fed. Reg. 13,603 (Apr. 5, 1984) ....-..-.. aa
49 Fed. Reg. 29,288 (July 19,1984) ........ 4.5
Miscellaneous Materials
7 James W. Moore et al., Federal Practice { 67.01[6]
PUM ks oe ec ce ee e 25
IN THE
Supreme Court of the United States
OCTOBER TERM, 1992
No. 92-
GULF STATES STEEL, INC. OF ALABAMA,
Petitioner,
V.
THE LTV CORPORATION, et ai.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Petitioner Gulf States Steel, Inc. of Alabama (“GSST’),*
the defendant below, hereby petitions for issuance of a writ of
certiorari to review the June 12, 1992 decision and August 4,
1992 mandate, of the United States Court of Appeals for the
District of Columbia Circuit in LTV Corp. v. Gulf States Steel,
Inc., 969 F.2d 1050 (D.C. Cir. 1992).
OPINIONS BELOW
The opinion of the United States Court of Appeals for the
District of Columbia Circuit (“Court of Appeals’) is reported at
969 F.2d 1050 (D.C. Cir. 1992) (Wald, J.), and is reprinted in
the appendix hereto as Appendix A. The opinion of the United
States District Court for the District of Columbia (“District
” Petitioner Gulf States Steel. Inc. of Alabama, has no parent companies,
or subsidiaries to report under Rule 29.1 of this Court.
2
Court’) is reported at 133 B.R. 665 (D.D.C. 1991) (Pratt, J.),
and is reprinted in the appendix hereto as Appendix B.
The opinion of the District Court in the related case, United
States v. LTV Corp., No. 84-0884 (D.D.C.), is reported at 1984-2
Trade Cas. (CCH) § 66,133 (D.D.C.) (Pratt, J.), and is reprinted
in the appendix hereto as Appendix I.
Other relevant orders of the District Court are unreported,
but are reprinted in the appendix hereto as Appendices C-H,
J-M.
JURISDICTION
The opinion and judgment of the Court of Appeals was
decided and entered on June 12, 1992. GSSI’s timely petition
for rehearing and suggestion for rehearing en banc was denied
by the Court of Appeals on July 28, 1992. See Pet. App. M, at
120a.
The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
STATUTES AND RULES INVOLVED
The following statutes and rules are reprinted in the appen-
dix hereto as Appendix N:
15 U.S.C. § 16(b)-(h)
15 U.S.C. § 18
28 U.S.C. § 2072(b)
Rule 60(b), Federal Rules of Civil Procedure
Rule 67, Federal Rules of Civil Procedure
"* References to the Appendix are designated as “Pet. App. ___. at
”
a.
icici
STATEMENT OF THE CASE
1. The District Court’s Entry Of The Antitrust
Consent Decree As A Final Judgment Was In The
Public Interest.
On March 21, 1984, the United States challenged under
Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, LTV
Corporation’s (“LTV”) proposed acquisition of Republic Steel
Corporation, because it significantly increased concentration in
the manufacture and sale of carbon and alloy hot and cold rolled
steel. A consent decree was negotiated to allow LTV to con-
summate the acquisition if it promptly divested two steel mills,
one of which was located in Gadsden, Alabama.’ See Pet. App. I,
at 67a; JA43-JA61.*** LTV agreed that if the Gadsden divesti-
ture did not take place within six months after entry of the
consent decree as a final judgment, a trustee could be appointed
by the District Court with
the power to require [LTV] to divest assets only,
retaining and assuming all liabilities of Gadsden . . .
upon their divestiture.
sss
“JA ___”™ citations refer to the Joint Appendix in the Court of
Appeals, a copy of which will be lodged with this Court.
' On April 5, 1984, the proposed consent decree was placed on the public
record, pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
§ 16(b)-(h) (1988) (“Tunney Act”). See 49 Fed. Reg. 13,603 (Apr. 5, 1984).
The Tunney Act requires the United States to publish in the Federal Register
the text of a proposed antitrust consent decree to which it is a party, together
with a competitive impact statement. This procedure provides interested
non-parties with an opportunity to comment upon or criticize the terms of a
proposed antitrust setllement and for the United States to respond on the
public record before a district court is asked to enter it as a final judgment.
The Tunney Act also requires, before a proposed antitrust consent decree is
so entered, that the district court determine “the entry of such judgment is in
the public interest.” 15 U.S.C. § 16(e) (1988).
4
See Pet. App. I, at 98a; JA49 (emphasis added).
The District Court was urged to reject the proposed consent
decree, among other reasons, because it was predicted that no
buyer would purchase the Gadsden plant with its long-standing
history of environmental problems. See 49 Fed. Reg. 29,288, at
29,288-309, 29,320-33 (July 19, 1984). As Wheeling-
Pittsburgh Steel Corporation stated during the Tunney Act
proceedings:
When the tenuous character of this [Gadsden] dives-
titure is recognized its value as a curative measure
shrinks to deminimus. [sic]
[T]he Department has chosen to depart from its stand-
ard ““fix-it-first” practice and let the merger go forward
with no assurance that this divestiture will take place
or that, if it does, that the plant will be operated by an
effective competitor. [Emphasis in orginal.]
This very substantial doubt is heightened by the fol-
lowing facts about the Gadsden plant:
(3) In December 1982, Republic entered into a con-
sent order with the state of Alabama pertaining to the
operation of the No. 2 Coke battery at the Gadsden
plant. That order required Republic to implement an
air pollution control program and requires Republic
to pay a penalty of over $250,000 if the control
program is not implemented. Further, a daily penalty
for future violations of pollution standards is imposed
and “is applicable until the battery is permanently shut
down.” (Source: Republic 1982 10-K p. 10), ...
[Emphasis in original.]
5
(4) The Gadsden plant coke oven was named in 1982,
as a “cancer hot-spot” producing potentially
dangerous pollution, according to the National Clean
Air Coalition (Source: UPI March 10, 1982); ...
[Emphasis added. ]
Id. at 29,323. See Pet. App. O, at 128a-30a.
The District Court, in evaluating the consent decree under
the Tunney Act, recognized these problems:
there is substantial doubt that Gadsden can be sold and
operated as an effective competitor in the market for
hot and cold rolled carbon and alloy sheet and strip. .
.. The shutting down in 1982 of certain portions of
the Gadsden facility, current problems with air pollu-
tion, rejection of a proposal for investment in new
equipment . . . are cited as examples of the problems
facing Gadsden.
See Pet. App. I, at 78a-79a (emphasis added).
Despite these conditions, the United States contended that
the consent decree’s “stringent provisions” insured that a buyer
would be found, by a trustee if necessary, and that the purchase
terms would enable a buyer to be a viable competitor. See 49
Fed. Reg. 13,603, at 13,609 (Apr. 5, 1984). The United States
emphasized that the consent decree contained “provisions not
usually found” in such decrees, which were “designed to achieve
prompt divestiture” to induce a buyer to take such a risk. See
49 Fed. Reg. 29,288, at 29,316 (July 19, 1984).
Therefore, the District Court held that the decree was in
“the public interest” and entered it as a Final Judgment. See Pet.
App. I, at 106a; JAS8. According to the District Court:
[t]he public interest is to be determined in the context
of the anti-trust laws whose fundamental premise is
the protection and safeguarding of free competition.
The effect on competition of the proposed settlement
ee
6
is of paramount importance in the determination
which we are required to make.
See id. at 88a.
2. The District Court’s Divestiture And Implement-
ing Orders Were Entered Pursuant To And In
Furtherance Of The Final Judgment.
Because it was not divested within six months, as required
by the Final Judgment, the District Court appointed a trustee to
divest the Gadsden plant. See Pet. App. J, at 110a. Although
LTV objected, on October 8, 1985, the trustee recommended
divestiture to the Brenlin Group (“Brenlin”), see JA1017, and
the United States concurred, see Pet. App. Q, at 137a; JA1126-
JA1131.
LTV specifically objected to being required to retain and
assume environmental liabilities, stating:
The Brenlin proposal would cause LTV very severe
financial hardship. . . .
LTV is not required by the Final Judgment to assume
any liability to fund, after the Closing, the cost of any
corrective action required to be taken with respect to
the divested assets under any applicable environmen-
tal law or regulation, as provided in the Brenlin
proposal.
See JA1028, JA1031. In a November 26, 1985 Affidavit, filed
in support of its objections, LTV’s then Executive Vice Presi-
dent and Chief Financial Officer, further stated:
[T]he Brenlin proposal could be read as requiring
LTV to pay the cost of corrective actions required to
be taken with respect to the divested assets under
applicable environmental and occupational health
and safety Jaws or regulations. . . . The sale of the
—
7
Gadsden plant to Brenlin would result in grievous
injury to LTV. ... Additional cash penalties would
be incurred that cannot be calculated. Those penal-
ties, would result from: . . . Costs of post-closing
funding for OSHA/Environmental compliance.
See JA1105-JA1106 (emphasis added). LTV’s “best forecast”
of the costs for “capital projects for environmental controls” at
the Gadsden plant in September 1985 ranged between $18-$21
million including: (1) Water Treatment for Coke Plant ($7-10
million); (2) B.O.F. Precipitator Repairs ($3 million); (3) Hot
Strip/Cold Strip Water Treatment ($3 million); (4) No. 3 Battery
Rehabilitation ($3 million) and (5) Additional Solid Waste
Disposal Area ($2 million). See Pet. App. R, at 145a; JA1007.
Following extensive briefing concerning LT V’s objections
and an evidentiary hearing, the District Court entered a divesti-
ture order on terms recommended by the trustee that required
LTV to retain and assume the environmental liabilities of
Gadsden upon the divestiture. See Pet. App. K, at 113a; JA62-
JA65. As the Final Judgment specified,
prompt and certain divestiture is the essence of this
agreement and [LTV has] represented . . . that the
divestiture required below can and will be made and
that [LTV] will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify
any of the divestiture provisions . .
See Pet. App. I, at 93a; JA43 (emphasis added). LTV filed a
notice of appeal, which was later withdrawn and dismissed.
United States v. LTV Corp., No. 85-6222 (D.C. Cir. Feb. 20,
1986) (order dismissing appeal).
Thereafter, Brenlin formed GSSI to own and operate the
Gadsden plant. On January 31, 1986, GSSI made a promissory
note for $38.5 million to LTV to purchase assets of the Gadsden
plant. See JA20-JA31. In retum, LTV agreed to be bound by
8
an Asset Purchase Agreement, executed on the same day, that
specifically incorporated by reference LTV’s obligation under
the Final Judgment to retain and assume all liabilities at the
Gadsden plant as of the date of closing. See JA88. As required,
LTV also provided GSSI with an exhibit to the Asset Purchase
Agreement to disclose the Gadsden plant’s compliance record
with environmental laws and regulations since January 1, 1980,
which included LTV’s “schedule of corrective action,” required
to be implemented by LTV for “material compliance with
current environmental laws,” if LTV had retained the plant. See
JA98. This document, Exhibit V, disclosed that LTV had notice
that expenditures of $5.2-$20 million could be needed to correct
water pollution control facilities alone. See Pet. App. T, at
182a-183a; JA1173.
3. The District Court’s Escrow Deposit Order Was
Entered To Supervise Enforcement Of the Final
Judgment, As Well As To Protect LT V’s Creditors
During The Pendency Of This Litigation.
On July 17, 1986, LTV filed for reorganization, under 11
U.S.C. § 101 et seq., in the Bankruptcy Court for the Southern
District of New York (“Bankruptcy Court”). The bar date was
set as November 25, 1987. Jn re Chateaugay Corp., Nos.
86B11270 through 86B11334, 86B11402, and 86B11464
(Bankr. $.D.N.Y. July 30, 1987) (order setting bar date). On
that date, GSSI filed proofs of claims specifically referencing
LTV’s obligations under the Final Judgment and the District
Court’s prior orders concerning the divestiture. See JA1188-
JA1205.
From January 31, 1986, to February 1, 1991, GSSI paid
LTV $37,532,187 on the promissory note (i.e., $9,625,000
principal and $27,907,187 interest). On February 1, 1991,
however, GSSI defe- “ted on a $4,812,500 payment because
LTV had failed to reta. and assume environmental liabilities
required under the Fina. Judgment. See JA32-JA33. On
9
February 4, 1991, LTV and its related companies initiated an
adversary proceeding in the Bankruptcy Court to recover the
$31,293,281 balance then due on the note, plus default interest.
See JA13-JA19.
On March 15, 1991, GSSI moved in the District Court for
the Southern District of New York to withdraw the reference
and transfer venue to the District Court. See JA128-JA159.
GSSI also moved, pursuant to Federal Rule of Civil Procedure
67, voluntarily to deposit $31,293,281, i.e., the unpaid principal
and default and accrued interest on the note as of the date of
default, into the registry of the district court determined to have
jurisdiction over the dispute. See id. On March 18, 1991, GSSI
also filed its answer asserting recoupment, among other defen-
ses, because of LTV’s failure to retain and assume environmen-
tal liabilities at the Gadsden plant, as required by the Final
Judgment. See JA165.
On April 1, 1991, the State of Alabama, through its Attor-
ney General, James H. Evans, filed a motion to intervene, or in
the alternative to appear as an amicus curiae, in the proceeding
to withdraw the reference, LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1826 (S.D.N.Y. 1991). The State of Alabama argued,
under its parens patriae authority and this Court’s unanimous
decision in California v. American Stores, Co., 495 U.S. 271,
281-82 (1990), that a state’s standing to seek a post-acquisition
divestiture under the federal antitrust laws inherently conveys
the requisite standing to enforce the benefits conveyed by that
divestiture. /d. at 296. The State of Alabama further asserted
that it
like the United States has an interest in a competitive
steel industry and the creation of a viable competitor
in that market, but Alabama has a more compelling
and direct interest in maintaining GSSI as a viable
ongoing competitor that is in compliance with
Alabama's environmental laws and regulations.
10
Alabama also is without question a primary and direct
beneficiary of the Final Judgment, which sets forth
the circumstances under which LTV may be required
to assume all liabilities of the Gadsden plant, includ-
ing environmental. . . . Alabama has a direct interest
in the divestiture of the Gadsden plant that preexists
and is separate and apart from GSSI's interests,
although it also has a related interest in having LTV
indemnify GSSI for certain environmental liabilities
to the extent such indemnification conveys competi-
tive and environmental benefits to the citizens of
Alabama.
See Pet. App. AA, at 208a. The State of Alabama also filed a
Motion to Intervene before the District Court to enforce its rights
under the Final Judgment.
On May 3, 1991, the District Court for the Southern District
of New York withdrew the reference from the Bankruptcy Court
and transferred venue to the District Court below, stating:
In the interest of justice and in deference to its reten-
tion of jurisdiction . . . this proceeding is respectfully
transferred. . . to the United States District Court for
the District of Columbia for such further proceedings
as that court sees fit... .
See Pet. App. H at 65a; JA172-JA173 (emphasis added). That
district court also dismissed GSSI’s Rule 67 motion, without
prejudice to its being refiled before the District Court below. /d.
On May 13, 1991, GSSI refiled its motion.
After briefing concluded, the District Court scheduled a
June 14, 1991, oral argument. The transcript reflects that the
District Court carefully weighed its duties to supervise enforce-
ment of the Final Judgment and to protect LTV’s creditors
11
during the pendency of this litigation? against LTV’s contractual
right to receive a higher interest rate if there was a default on the
note. See JA225-JA243. The District Court decided to accept
GSSI’s voluntary and full payment of the disputed monies into
escrow and terminated the operation of the default rate of
interest, on the condition that the full deposit was made up to
and including the date of deposit. See Pet. App. D, at 43a;
JA260-JA261.
4. The District Court’s Order Denying Summary
Judgment And Its Recoupment Order Enforced
LT V’s Duties Under The Final Judgment,
Divestiture, And Implementing Orders.
On May 24, 1991, GSSI filed a motion to enforce the
District Court’s prior orders and in opposition to LTV’s May 3,
1991 motion for summary judgment.® See JA180. As the
transcript of the June 14, 1991 oral argument reflects, the
District Court reminded LTV that it had notice of GSSI’s claims
for and amounts required for environmental compliance, which
was the basis for one of its objections to the divestiture to
Brenlin. See Pet. App. BB at 213a; JA244-JA247. Since this
objection was made, considered, ruled on, and appealed in the
divestiture proceedings in 1985-1986, the District Court denied
LTV’s motion for summary judgment and set a hearing solely
to determine whether the amount GSSI sought by recoupment
2 See LTV Corp. v. Gulf States Steel, Inc., No. 91-1072 (D.D.C. June 17,
1991) (order denying motion of Steel Committee for leave to intervene but
accepting leave to file as amicus curiae). See also JA226.
> On May 23, 1991, the State of Alabama also refiled its motion to
intervene or, in the alternative, file as an amicus curiae. See JA175-JA177.
The District Court denied the State of Alabama's motion to intervene. LTV
Corp. v. Gulf States Steel, Inc., No. 91-1072 (D.D.C. June 5, 1991) (order
denying motion of State of Alabama for leave to intervene). Subsequently,
on August 26, 1991, however, the District Court allowed the State of Alabama
to file as an amicus curiae. See JA275-JA276.
had, in fact, been spent to discharge LTV’s environmental
liabilities, under the Final Judgment and divesture order. See
Pet. App. E, at 57a; JA270-JA271.
After an evidentiary hearing on August 26-27, 1991, see
JA422-JA832, and several months of additional briefing by the
parties, the District Court issued Findings of Fact and Con-
clusions of Law reaffirming that LTV was required to retain and
assume environmental liabilities at the Gadsden plant. See Pet.
App. B, at 28a; JA385-JA399. Because GSSI already had paid
or incurred expense for correcting environmental violations
which arose directly or indirectly out of the conduct of business
at the Gadsden plant prior to January 31, 1986, the District Court
held GSSI was entitled to recoup the following amounts from
the escrow deposit: (1) $18,085,438 for correcting environmen-
tal violations that arose directly or indirectly out of the conduct
of business at the Gadsden plant prior to January 31, 1986 (and
$2,371,353 of interest on that amount from July 31, 1991), and
(2) $10,620,741 for authorized and anticipated, but not yet fully
incurred expenses. See Pet. App. B, at 33a, 39a; JA391-JA398.
Compare Pet. App. Z, at 204a. As a predicate to that determina-
tion, the District Court held, in accord with its July 1, 1991
Order, that “LTV had timely notice, written and otherwise, of
GSSI’s indemnification claims.” See Pet. App. B, at 39a;
JA398.
5. The Court Of Appeals’ Decision Modified The Final
Judgment.
The Court of Appeals concluded on de novo review that
under Section 9.3 of the Asset Purchase Agreement
GSSI failed to provide prompt notice to LTV, as
explicitly required. . . of the claims for which GSSI
planned to seek indemnification under the Asset
Agreement and thereby give LTV an opportunity to
challenge or defend against any such claims, GSSI is
nap Scten oh RET
13
barred from asserting its rights to indemnification
under the Asset Agreement.
See Pet. App. A, at 2a (emphasis added). The Court of Appeals
ordered immediate payment to LTV of the entire escrow deposit
fund that had been subject to the continuing jurisdiction of the
District Court,
plus the difference between the earnings of the escrow
fund and the amount of interest that would have been
earned at an annual rate of 18-3/4% on $31,293,000
between June 21, 1991 and the date of judgment on
remand.
See Pet. App. A, at 27a (emphasis added).
On July 28, 1992, GSSI’s petition for rehearing and sug-
gestion for rehearing en banc was denied. See Pet. App. M, at
120a. On August 4, 1992, the Court of Appeals issued its
mandate implementing the June 12, 1992 decision. On August
6, 1992, the District Court entered a Final Judgment complying
with the mandate, but reserved jurisdiction until all remaining
matters under the Final Judgment were concluded. See Pet.
App. F, at 60a. By its terms, the Final Judgment does not expire,
however, until August 2, 1994. See Pet. App. I, at 106a; JAS8.
On September 8, 1992, LTV filed a partial satisfaction of
judgment with the District Court to verify that the entire escrow
deposit had been paid by GSSI, together with an additional
money judgment of $4,959,877.64. A money judgment of an
additional $100,000.00 is still owed and remains due LTV under
the August 4, 1992 mandate so that a viable case and controversy
survives for this Court’s review and redress.
14
REASONS FOR GRANTING THE WRIT
The United States Court of Appeals for the Second Circuit
recently stated in a different case involving LTV, “[t]his appeal
presents important issues at the intersection of bankruptcy and
environmental law.” Jn re Chateaugay Corp., 944 F.2d 997,
999 (2d Cir. 1991). In the case before this Court, these laws now
meet another crossroad — with the antitrust laws. This Court
held many years ago that the antitrust laws were “designed to
be a comprehensive charter of economic liberty aimed at
preserving free and unfettered competition as the rule of trade.”
Northern Pac. Ry. v. United States, 356 U.S. 1,4 (1958). When
Congress enacted the Bankruptcy Code, it made specific amend-
ments to numerous statutes to enable a debtor to have “a fresh
start.” See Bankruptcy Reform Act of 1978, P.L. 95-598, §§
201-401, 92 Stat. 2549, 2657-82 (1978). Neither Section 7 of
the Clayton Act nor the Tunney Act, however, were among the
laws amended. Thus, Congress did not subjugate the antitrust
laws to the bankruptcy code. Each of these laws fulfills distinct
and different public policy objectives. The bankruptcy laws
provide a safety net for the failures of the market. The antitrust
laws exist to promote an economic system where the market
rewards superior business acumen and risk takers by allowing
consumers to pick the winners and losers.
In 1984, LTV promised the public that it would promptly
divest the Gadsden plant to ameliorate the anti-competitive
effects of the Republic acquisition. Because LTV did not keep
that promise, the District Court was required to intervene and
appoint a trustee to insure that it was kept— under the terms that
LTV had agreed to and represented during the Tunney Act
proceedings were “in the public interest.” Brenlin (GSSI) was
selected by the District Court’s trustee to fulfill the need to
interject new vigorous competition into a mature and laggard
market. GSSI promised that it would make the Gadsden plant a
“viable compettor;” in return, GSSI became the direct and
s
x
2
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2
Stee
phe a Ea a Ae alts AAC iin OE APE ADDS Lie Na eh Le Aig Mt
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15
intended beneficiary of a bargain LTV made with the public.
GSSI became a “viable competitor,” but that viability will be
significantly impaired if LTV is not required to live up to its
promise to retain and assume environmental liabilities at the
Gadsden plant. In this action, District Court was required to act
again to enforce LTV’s promise. By granting GSSI recoupment
for environmental claims, the District Court promoted the
objectives of the environmental and antitrust laws, without harm
to the bankruptcy code. Accord In re Chateaugay Corporation,
944 F.2d at 1002. (“{O]f course, the comprehensive nature of
the bankruptcy statute does not relieve us of the obligation to
construe its terms, nor may we resolve all issues of . . . construc-
tion in favor of the ‘fresh start’ objective, regardless of the terms
Congress has chosen to express its will.”)
This Court should issue a writ of certiorari to review the
Court of Appeals’ de facto modification of the Final Judgment
without following the procedures and substantive requirements
all other courts of this land are expected to follow.
I. THE COURT OF APPEALS EXCEEDED ITS
AUTHORITY WHEN IT MODIFIED DE FACTO
THE FINAL JUDGMENT WITHOUT THE PAR-
TICIPATION OF THE UNITED STATES AND
THE STATE OF ALABAMA AND WITHOUT
COMPLIANCE WITH FEDERAL RULE OF
CIVIL PROCEDURE 60(B)
The Court of Appeals’ issuance of the mandate to enforce
its June 12, 1992 decision, ordering immediate payment of the
entire escrow deposit to LTV without even facial compliance
with Federal Rule of Civil Procedure 60(b) exceeded the proper
exercise of its jurisdiction, as that action modified de facto the
Final Judgment as well as the District Court’s divestiture and
implementing orders, entered to enforce the Final Judgment.
Last term, in Rufo v. Inmates of Suffolk County Jail, 112 S.
Ct. 748 (1992), this Court ruled, even under its “flexible”
16
standard, that the modification of a consent decree under Rule
60(b) is appropriate only where
a party seeking modification of [the] decree . . .
establish [es] that a significant change in facts or law
warrants revision of the decree and that the proposed
modification is suitably tailored to the changed cir-
cumstance.
Id. at 765 (emphasis added).
The Court of Appeals, however, simply ignored these
requirements. There was no change, either in fact or law, that
could have been cited on the public record as a credible justifica-
tion to support the Court of Appeals’ mandate, other than the
consequences of LTV’s voluntary decision in 1986 to seek
reorganization. In 1984, however, LTV waived the ability to
seek a subsequent modification based on “hardship or difficul-
ty.” See Pet. App. I, at 93a; JA 43. In return, LTV received the
immediate financial and competitive benefits conveyed by the
merger with Republic. See Pet. App. S, at 152a; JA1089.
At a minimum, the views of the United States, a party to
the Final Judgment, and the State of Alabama, a beneficiary
thereof, should have been solicited. It is not surprising that the
United States did not intervene in the adversary action. See Pet.
App. Y, at 2034. It was established in the 1984 Tunney Act
proceedings and the 1985-1986 divestiture proceedings that
LTV had and was required to retain environmental liabilities at
the Gadsden plant. The United States Environmental Protection
Agency (“EPA”), in documents introduced below, took the
position in 1987 that violations at the Coke Plant and Basic
Oxygen Furnace (“BOF”) facilities for which GSSI was re-
quired to make environmental corrections, were not new or
unforeseen by LTV, as these violations had caused the Gadsden
plant to be “carried [by EPA] as a significant violator since
October 1984.” See Pet. App. U, at 184a; JA1206-JA1209. See
also Pet. App. V, at 191a; JA1180-JA1187.
ee Sikes
17
The District Court permitted the State of Alabama to file
as an amicus‘ and allowed the admission of abbreviated af-
fidavits from the state environmental enforcement agency offi-
cials, prepared to supplement one of the State of Alabama’s
amicus filings. see Pet. App. W, at 198a; Pet. App. X at 199a.
Before the Court of Appeals issued its mandate, these key
witnesses should have been afforded the opportunity to provide
their views regarding the basis of the District Court’s finding
that LTV had the requisite actual notice of the claims at issue
and whether there were changed circumstances to support a
modification.
The Court of Appeals’ de novo review found “nothing in
the record to suggest that GSSI ever informed LTV, prior to
defaulting on the Note, that it intended to hold LTV liable for
these environmental expenses.” See Pet. App. A, at 23a (em-
phasis added). That is not what is required under Section 9.3,
however, which provides that:
in the event of any claims under Section 9.1 or 9.2 for
indemnification, the Claimant shall advise the Indem-
nitor in writing of the amount and circumstance sur-
rounding said claim.
See JA108-JA109 (emphasis added).
Before deciding to substitute its judgment for that of the
supervising District Court, the Court of Appeals should have
been sure its de novo review was correct. Under Section 9.3 the
proper analysis is: what are GSSI’s “claims”; what are the
“amounts and the circumstances surrounding those claims;” and
then, was there written notice of these?
+ The State of Alabama attempted to intervene below, see JA175-JA179,
but was informed by the United States that it would oppose the State of
Alabama's status as an intervenor, but would not oppose its participation, if
it was limited to an amicus curiae. The State of Alabama agreed at that
juncture to accommodate the United States to avoid a battle over standing.
eT
18
To ascertain the meaning of “claims” this Court need look
no further than LTV’s own definition:
a claim under an environmental statute comes into
existence when the debtor acts so as to give rise to a
predicate for liability under the statute . . . it is the
debtor's act alone that creates a “claim.”
Brief of Defendants-Appellees and Cross-Appellants the LTV
Corporation, LTV Steel Company, Inc. and all affiliated Deb-
tors at 15 (emphasis added). /n re Chateaugay Corporation, No.
90-5024 (2d Cir.).
All of GSSI’s “claims” came into existence when LTV
“act[ed] so as to give rise to a predicate for liability under the
[environmental] statute(s),” i.e., the “claims” came into exist-
ence when LTV owned the Gadsden plant and failed to take
action to bring the Coke Plant, BOF Melt Shop and Wastewater
Treatment Plant into “compliance with the applicable regulatory
standard on a continuous and day-to-day basis.” See Pet. App.
B, at 32a. Therefore, LTV had actual knowledge of GSSI’s
“claims,” see Pet. App. P, at 132a; Pet. App. S, at 152a, the
amount of claims, see Pet. App. R, at 14a; Pet. App. T, at 170a,
and the circumstances surrounding their existence, id. In addi-
tion, LTV was given written notice of GSSI’s “[intention] to
hold LTV liable” for these claims prior to the default on the note
during the divestiture proceedings and by the filing of GSSI’s
proofs of claims, which referenced the Final Judgment and
orders, entered by the District Court in the Tunney Act and
divestiture proceedings. See JA1188-JA1205. Therefore, the
District Court’s finding and conclusion with regard to notice
were not Clearly erroneous nor an abuse of its discretion.
Justice O’Connor’s concurring opinion in Rufo singles out
one of the most compelling reasons why this Court should grant
certiorari in the case at bar—the discretion to be accorded a
district court that has spent a number of years “supervising the
19
implementation of this decree.” Rufo, 112 S. Ct. at 765. As
Justice O’Connor stated:
A court may modify a final judgment, such as the
judgment embodied in the consent decree at issue,
where the court finds that “it is no longer equitable
that the judgment should have prospective applica-
tion.” Fed. Rule Civ. Proc. 60(b)(5). Determining
what is “equitable” is necessarily a task that entails
substantial discretion, particularly in a case like this
one, where the District Court must make complex
decisions requiring the sensitive balancing of a host
of factors. As a result, an appellate court should
examine primarily the method in which the District
Court exercises its discretion, not the substantive
outcome the District Court reaches. If the District
Court takes into account the relevant considerations
(all of which are not likely to suggest the same result),
and accommodates them in a reasonable way, then
the District Court's judgment will not be an abuse of
its discretion, regardless of whether an appellate
court would have reached the same outcome in the
firstinstance. Cf. Lemon v. Kurtzman, 411 U.S. 192,
200, 93 S. Ct. 1463, 1469, 36 L.Ed.2d 1510 (1973)
(“In shaping equity decrees, the trial court is vested
with broad discretionary power; appellate review is
correspondingly narrow’’).
Id. (emphasis added). See also Hutto v. Finney, 437 U.S. 678,
688 (1978) (substantial deference is owed to “the trial judge’s
years of experience with the problem at hand”’).
A review of the seven-year history of the District Court’s
supervision and oversight of the Final Judgment reveals
repeated efforts by LTV at every juncture to avoid its obliga-
tions. The record clearly reflects that the District Court exer-
cised “substantial discretion” in “[taking] into account the
20
relevant considerations [concerning LTV’s consent decree
obligations to retain and assume environmental liabilities and
GSSI’s claims] and accommodate[d] them in a reasonable way,”
in effect, by declining to modify the Final Judgment, and grant-
ing GSSI recoupment. Accord Anderson v. City of Bessemer
City, 470 U.S. 564, 573-575 (1985) (“If the district court’s
account of the evidence is plausible in light of the record viewed
inits entirety, the Court of Appeals may not reverse”) (emphasis
added).
Contrary to this Court’s clear precedent, the Court of
Appeals disregarded the District Court’s superior knowledge,
gained as the trier of fact, of: the parties; the consent decree’s
requirements; the amount and circumstances surrounding the
claims at issue; and, the sufficiency of notice under Section 9.3.
This Court should exercise its supervisory powers and
grant GSSI’s petition for a writ of certiorari to reverse the Court
of Appeals and reinstate the District Court’s December 5, 1991,
order enforcing terms of the Final Judgment, divestiture and
implementing orders properly issued thereunder.
i. THE COURT OF APPEALS IGNORED THE EQUI-
TABLE AUTHORITY CONVEYED BY THE DIS-
TRICT COURT’S JURISDICTION AND
MISAPPLIED THE RULES ENABLING ACT, 28
U.S.C. § 2072(B) (1988), TO IMPOSE AN UNCON-
STITUTIONAL, UNDULY HARSH AND UNJUST
BURDEN ON GSSI, WHICH WILL IMPAIR THE
FUTURE UTILITY OF FEDERAL RULE OF
CIVIL PROCEDURE 67.
The District Court’s June 21, 1991 escrow deposit order
held that GSSI’s obligation to LTV on the note was
satisfied and paid in full, upon GSSI’s deposit in
escrow ... the amount of $31,293,000.00 together
21
with interest at the rate of 18-7/4 percent from
February 1, 1991 through the date of the entry of this
Order.
See Pet. App. D, at 44a (emphasis added). The District Court
also ordered that the accrual of any additional default interest at
the contract rate of 18-34% terminated upon the deposit of these
disputed monies in escrow and market interest took its place.
Id.
The Court of Appeals conceded that “[t]he decision
whether to allow a Rule 67 deposit generally lies within the
discretion of the district court.” See Pet. App. A, at 25a (cita-
tions omitted). Nevertheless, it held “that Rule 67, like all of
the Federal Rules of Civil Procedure, ‘shall not abridge, enlarge
or modify any substantive right.” 28 U.S.C. § 2072(b) (1988).”
Id.5 On that basis, the Court of Appeals opined that
the district court [did not have] authority, under Rule
67, to alter the substantive contractual right of LTV
to receive, upon [GSSI’s] default, an 18-3/4% annual
[default] interest rate on the principal amount still
owing under the Note. The district court abused its
discretion when it effectively altered the terms of the
contract by substituting the market rate of interest
available in the escrow account for the rate to which
the parties had agreed in the Note.
Id. at 26a.
> This Court also should issue a writ of certiorari to endorse the Fifth
Circuit’s practice of declining to review the effect of the Rules Enabling Act
in cases where it was not raised before or decided by the District Court, as
was the case here. See Thomas v. Capital Sec. Servs. Inc., 836 F.2d 866, 884
n.25 (Sth Cir. 1988) (en banc). This issue was raised by LTV for the first
tume on April 6, 1992 in its reply brief at 13, at a time when GSSI had no
further right to respond in writing to the interjection of this new issue into
the proceedings.
22
Declaring that “[s]ome risks simply do not pay off,” the
Court of Appeals remanded the case and directed that LTV be
paid the full amount held in the escrow deposit “plus the
difference between the earnings of the escrow fund and the
amount of interest that would have been earned at an annual rate
of 18-34% on $31,293,000 between June 21, 1991 and the date
of judgement on remand.” Jd. at 27a. The Court of Appeals’
analysis was erroneous both as to the source of the District
Court’s power to enter that order and the effect of the Rules
Enabling Act on a deposit proffered under Rule 67.
A. The District Court’s Power to Accept the Escrow
Deposit Was Not Derived From Rule 67.
The Court of Appeals misconstrued the District Court’s
power to accept the escrow deposit, which was derived from
equity powers attendant to its continuing statutory jurisdiction
under 15 U.S.C. § 18, over the Final Judgment, and residual
power under 11 U.S.C. § 105(a), te protect and preserve the
potential assets of the debtor.® As the transcript of the June 14,
© The Court of Appeals implies in dicta in the last paragraph of its
decision that GSSI should have sought “relief as a creditor in bankruptcy
court.” See Pet. App. A, at 27a. LTV did not challenge the May 3, 1991
Order of the Southern District of New York to withdraw the reference. See
JA419-JA420. Therefore, it was settled as a matter of law that GSSI followed
the proper procedure for seeking an adjudication before the District Court
that entered the Final Judgment and was determined to have continuing
jurisdiction over the parties and all disputes arising thereunder. Therefore,
the Court of Appeals exceeded its power by improperly considering an issue
never raised on appeal and its consequential misperception of the proper
scope of the District Court’s jurisdiction.
If LTV did not in fact have the requisite notice, as the Court of Appeals
held, however, it would not have been able to seek relief in the Bankruptcy
Court either. In this dicta, the Court of Appeals revealed the motive behind
its defective “de novo” analysis. The Court of Appeals decided sua sponte
to modify the Final Judgment to allow LTV to renege on its promise to GSSI
because of LTV’s bankruptcy. Since the terms of the Final Judgment would
not permit that, the Court of Appeals took the matter into its own hands.
23
1991 oral argument reflects, the District Court weighed its
equitable authority to further jurisdictional objectives ap-
propriate to each statute before deciding to enter the order. See
JA225-JA259.
By accepting GSSI’s voluntary payment of over $31 mil-
lion of disputed funds into escrow, the District Court enabled
the parties to adjudicate their rights under the Final Judgment
while the disputed monies were invested and continued to accrue
interest at the prevailing market rate for the benefit of the
ultimate recipient. The deposit also secured monies from which
LTV’s pre-existing duty to retain and assume environmental
liabilities at the Gadsden plant could be met. See JA237. In
addition, even though LTV waived its ability to seek modifica-
tion of the Final Judgment on the basis of subsequent financial
“hardship or difficulty,” the District Court was not precluded
from exercising its equitable power under 11 U.S.C. § 105(a) to
protect the interests of LTV’s creditors in the disputed funds.
In the event LTV could have demonstrated at trial that it was not
required to retain and assume the specific environmental
liabilities at the Gadsden plant that GSSI claimed, or could have
shown that it had already fulfilled those obligations prior to
divestiture, the deposited monies protected the interests of those
creditors. LTV, however, failed to meet its burden of proof and
persuasion as to each at mal.
B. The District Court’s Escrow Deposit Order Did
Not Impair LT V’s Contractual Rights.
The Court of Appeals misconstrued the effect of the Rules
Enabling Act on the District Court’s June 21, 1991 escrow
deposit order. That Act clarifies that the Federal Rules of Civil
Procedure “shall not abridge, enlarge or modify any substantive
right.” 28 U.S.C. § 2072(b) (1988). The District Court, how-
ever, exercised its power in complete accord with the Rules
Enabling Act because LTV’s contractual right to receive default
interest was not impaired. LTV received the default rate from
ae
24
the date of default until and through the date deposit was made
in escrow for the full amount owed on that date under the
contractual provisions on the note. Thus, GSSI’s debt on the
note was paid and satisfied in full. This determinative fact was
entirely ignored, resulting in the Court of Appeals’ erroneous
application of the Rules Enabling Act.
C. This Court Should Not Allow a Future Litigant
That Makes a Deposit Under Rule 67 To Be
Placed At Risk Retroactively.
Rule 67 was enacted and amended to allow parties to
adjudicate rights over disputed funds without accruing unneces-
sary liability. Rule 67 plainly states:
[I]n an action in which any part of the relief sought is
a judgment for a sum of money or the disposition of
a sum of money . .. a party upon notice to every other
party, and by leave of court, may deposit with the
court all or part of such sum or thing, whether or not
that party claims all or any part of the sum.... The
fund shall be deposited in an interest-bearing account
or invested in an interest-bearing instrument approved
by the court.
Fed. R. Civ. P. 67.
In fact, Rule 67 was amended specifically to accommodate
situations in which a litigant may wish to be relieved
of responsibility for a sum or thing, but continue to
claim an interest in all or part of it. In these cases the
deposit-in-court procedure should be available; in
addition to the advantages to the party making the
deposit, the procedure gives other litigants assurance
that any judgment will be collectable. The amend-
ment is intended to accomplish that.
25
Fed. R. Civ. P. 67 advisory committee’s note, 1983 amendment
quoted in 7 James W. Moore et al., Federal Practice § 67.01[6]
(2d ed. 1992).
The phrase “whether or not that party claims all or any part
of such sum or thing” was added to Rule 67 in 1983. Jd. Prior
to 1983, some courts construed Rule 67 “to permit deposit only
when the party making it claims no interest in the fund or thing
deposited.” /d.
This Court of Appeals is the only federal court that has held
the termination of the accrual of default interest upon deposit to
be an abuse of discretion, even though it allowed that “very few
cases construing Rule 67” exist. See Pet. App. A, at 25a. For
this reason alone, GSSI’s petitioner for writ of certiorari should
be granted. As a practical matter, what litigant would wish to
“risk” making a deposit under Rule 67 in the future, in light of
the price paid in this case, i.e., over $5 million or $400,000 for
each month this matter was pending?
The retroactive application of the Court of Appeals’
decision exceeds the constitutional bounds of reasonableness.
See Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 n.5, 437
(1982) (unreasonable requirements may infringe on a litigant’s
due process right to a hearing). Cf. Thomas v. Capital Sec.
Servs., Inc., 836 F.2d 866, 882-83 n.23 (Sth Cir. 1988) (en banc)
(“any type of sanction, monetary or otherwise, should not result
in preclusion of access to the courts”). Moreover, it is particular-
ly offensive to GSSI’s due process rights were impaired since
the June 21, 1991 escrow deposit order, by its terms, was not a
final order under 28 U.S.C. § 1291. See Richardson-Merrell,
Inc. v. Koller, 472 U.S. 424, 436 (1985). See also Thomas, 836
F.2d at 882-83 n.23.’
” Under these circumstances, at a minimum, GSSI should be able to rely
on the District Court’s ruling to terminate the operation of default interest as
of that date.
26
This mandate was unduly harsh and unnecessarily puni-
tive. GSSI not only lost the use of the deposited monies during
the escrow deposit, but continued to accrue liability, while
LTV’s interests were protected. What litigant would ever risk
using Rule 67 again? Cf. Southern Constr. Co. v. Pickard, 371
U.S. 57 (1962) (certiorari was granted “to consider the ap-
plicability of [a Federal] Rule [of Civil Procedure] in these
unusual circumstances”).
Finally, there is no compelling reason in the record, nor
was one offered by the Court of Appeals, as to why the District
Court should not have retained jurisdiction over the escrow
deposit pending this Court’s review of GSSI’s writ of certiorari.
Thus, the Court of Appeals’ mandate appears to have been
issued to impair GSSI’s ability to seek this Court’s review and
redress for its clear circumvention of Rule 60(b) and this Court’s
precedent in Rufo, Lemon, Hutto, and Anderson.
Rule 67 was enacted to facilitate the orderly resolution of
disputes over money by providing a “safe harbor” for such funds
during the storm of litigation so that both parties’ interests in the
funds were protected. The Court of Appeals’ decision, how-
ever, has thrown litigants back into a sea of unknown and
unnecessary risk. This Court should grant certiorari to reopen
this “safe harbor” and redress this injustice.
27
CONCLUSION
For the reasons set forth above, a writ of certiorari should
issue to review and reverse this decision and mandate of the
United States Court of Appeals for the District of Columbia
Circuit.
Respectfully submitted,
SUSAN G. BRADEN
Counsel of Record
1001 Pennsylvania Avenue, N.W.
Suite 1200 South
Washington, D.C. 20004
(202) 626-3968
BETTY SOUTHARD MURPHY
BAKER & HOSTETLER
1050 Connecticut Avenue, N.W.
Suite 1100
Washington, D.C. 20036
(202) 861-1500
ZICHARD T. CUNNINGHAM
AMER CUNNINGHAM BRENNAN
159 South Main
Society Building, 6th Floor
Akron, Ohio 44308
(216) 762-2411
Counsel for Petitioner
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 4, 1992 Decided June 12, 1992
No. 92-7001
The LTV CORPORATION, et al., APPELLANTS
V.
GULF STATES STEEL, INC. OF ALABAMA, APPELLEE
Appeal from the United States District Court
for the District of Columbia
(Civil Action No. 91-01072)
Guy Miller Struve, with whom Karen E. Wagner and
Jerome G. Snider were on the brief, for appellants.
Richard T. Cunningham, with whom Susan G. Braden and
Betty Southard Murphy were on the brief, for appellee.
James G. Greilsheimer was on the brief for amicus curiae
Official Committees of Unsecured Creditors of LTV Corpora-
tion, et al., urging that the judgment of the District Court be
reversed.
Marc Givhan was on the brief for amicus curiae State of
Alabama.
Before WALD, WILLIAMS and RANDOLPH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge WALD.
WALD, Circuit Judge: Appellants LTV Corporation,
LTV Steel Company, Inc. and Gulf States Steel Corp. (collec-
tively “LTV”) appeal from an order of the district court award-
2a
ing over $31 million to appellee Gulf States Steel, Inc. of
Alabama (“GSSI’) as recoupment for expenses incurred in
remedying certain environmental violations at a steel mill in
Gadsden, Alabama.!_ GSSI purchased the Gadsden plant on
January 31, 1986 (the “Closing Date”) pursuant to an Agreement
of Purchase and Sale of Assets (“Asset Agreement”). The
district court interpreted the Asset Agreement to mean that LTV -
was obligated to pay for all corrective actions to bring the
Gadsden plant into compliance with environmental laws to the
extent that the conditions to be remedied arose directly or
indirectly out of the conduct of the business on or before the
Closing Date. After a two-day evidentiary hearing, the court
concluded that GSSI was entitled to recoup $31,077,532 in
expenses.
Because we conclude that GSSI failed to provide prompt
notice to LTV, as explicitly required by the Asset Agreement,
of the claims for which GSSI planned to seek indemnification
under the Asset Agreement and thereby give LTV an oppor-
tunity to challenge or defend against any such claims, GSSI is
barred from asserting its rights to indemnification under the
Asset Agreement. We therefore reverse.
I. BACKGROUND
A. The Consent Decree
When LTV agreed to purchase Republic Steel Corp.
(“Republic’’) in September 1983, the Justice Department filed a
complaint seeking to enjoin the merger, charging that it would
substantially lessen competition in critical parts of the steel
industry and tend to create a monopoly in violation of the
antitrust laws. A consent decree was signed and approved in
August 1984, see United States v. LTV Corp., 1984-2 Trade
' The Gadsden plant is an “integrated steel mill” — that is, it contains
facilities for cokemaking, ironmaking, steelmaking, rolling and finishing
processes.
3a
Cas. (CCH) 166,133, at 66,334 (1984) (“Final Judgment’),
appeal dismissed, 746 F.2d 51 (D.C. Cir. 1984), according to
which LTV agreed to divest itself of Republic’s steel plant at
Gadsden, Alabama. Specifically, the parties agreed that the
[d]ivestiture of Gadsden shall be accomplished in such a
way as to ensure that, as of the time of divestiture, it can
reasonably be anticipated that Gadsden can and will be
operated by the purchaser or purchasers as a viable, ongo-
ing business engaged in the manufacture and sale of carbon
and alloy hot and cold rolled sheet steel made from slabs
produced at Gadsden or elsewhere.
Id. at 66,334.
LTV and the Justice Department also agreed that, should
it prove necessary to appoint a trustee to effect the divestiture,
the trustee
shall have the power to require the defendants to divest
assets only, retain and assuming all liabilities of Gadsden
... upon [its] divestiture. Defendants shall not object to a
sale by the trustee on any grounds other than malfeasance,
provided, however, that if the buyer chooses to purchase
any inventory or semi-finished or finished steel mill
products, coke or raw materials, defendants shall have a
right to object. . . .
Id. at 66,345.
B. The Sale
As expected, the district court appointed a trustee in
December 1984 to effect the divestiture of the Gadsden plant.
See United States v. LTV Corp., No. 84-0884 (D.D.C. Dec. 10,
1984). In April 1985, the trustee identified the Brenlin Group
(“Brenlin”), a Ohio-based, private holding company, as a pos-
sible purchaser. Brenlin submitted a proposed Asset Purchase
Agreement as well as a Business Plan to the trustee, and in
October 1985, the trustee recommended that the Gadsden plant
4a
be divested to Brenlin, on the terms set forth in a revised Asset
Purchase Agreement dated September 23, 1985.
The Justice Department submitted a letter to the court in
which it stated that it had no object to and, indeed, supported the
sale of the Gadsden plant to Brenlin pursuant to the proposed
asset agreement. See Letter from J. Robert Kramer, Att’y,
Antitrust Division, to Judge Pratt (Nov. 27, 1985). LTV ob-
jected to the sale, but after full briefing and oral argument, the
district court ordered that the Gadsden plant be sold to the
Brenlin Group on the basis of the proposed agreement with
“such other modifications as may be agreed to by LTV and
Brenlin and approved by the Trustee, and, if material to the
viability of Gadsden, by the Department of Justice.” United
States v. LTV Corp., No. 84-0884 (D.D.C. Dec. 17, 1985)
(“December 17 Order’) para. 3(f).
After denial of its motion for expedited appeal of the
December 17 Order on January 7, 1986, LTV sought to enjoin
the sale by seeking a temporary restraining order. Subsequently,
the court convened another hearing, the trustee intervened, and
LTV finally withdrew its motion on January 30, 1986. See
United States v. LTV Corp., No. 84-0884 (D.D.C. Jan. 30, 1986).
On the next day, LTV agreed to sell the plant to GSSI, a company
formed by Brenlin to own and operate the Gadsden plant.
The final version of the Asset Agreement signed on January
31, 1986 included the following provisions:
9.1 Indemnification by LTV.
(a) From and after the Closing Date, but subject to the
conditions and limitations set forth in this Agreement, LTV
shall defend, indemnify and save [GSSI] harmless from
and against any and all loss, cost, damage or expense
(including attorneys’ fees) whatsoever resulting from or
arising out of (i) any breach of any covenant, obligation or
watranty or misrepresentation of LTV contained herein,
Rte I PE RE, NOP” BEL ARAPTI EN NB aE OP ak 8
Sa
(il) any liability or obligation arising directly or indirectly
out of the conduct of Business on or before the Closing
Date which is not an Assumed Liability. . . .
9.2 Indemnification by [GSSI]. From and after the
Closing Date, but subject to the conditions and limitations
set forth in this Agreement, [GSSJ] shall defend, indemnify
and save LTV harmless from and against any and all loss,
cost, damage or expense (including attorneys’ fees) what-
soever resulting from or arising out of (i) any breach of any
covenant or obligation of [GSSI] contained herein, (ii) the
Assets or [GSSI]’s use thereof after the Closing Date, . . .
and (iv) the conduct of the Business after the Closing Date.
9.3 Claims.
(a) In the event [GSSIj or LTV (the “Claimant’) desires
to make a claim against the other (the “Indemnitor’’) under
Section 9.1 or 9.2, the Claimant shall give prompt notice
to the Indemnitor of the institution of any actions, suits or
proceedings and demands at any time instituted against or
made upon Claimant in connection with which the
Claimant would claim indemnification under Section 9.1
or 9.2 and Claimant shall, at the time of giving such notice,
if the Indemnitor shall agree that it would have respon-
sibility to indemnify under this Section 9.3, give the
Indemnitor full authority to defend, adjust, compromise or
settle the action, suit, proceeding or demand of which such
notice shall have been given, in the name of the Claimant
or otherwise as the Indemnitor shall elect. In the event of
any claims under Section 9.1 or 9.2 for indemnification,
the Claimant shall advise the Indemnitor in writing of the
amount and circumstances surrounding said claim. With
respect to liquidated claims, if within thirty days the Indem-
nitor has not contested said claim in writing, the Indemnitor
6a
will pay the full amount thereof in cash within ten days
after the expiration of such period. . . .
Id. §§ 9.1, 9.2,9.3. The parties agreed that the Asset Agreement
would be governed by Ohio law. Jd. § 13.9.
LTV agreed to accept a $38.5 million unsecured promis-
sory note payable over ten years at an interest rate of 16-3/4%
per year. The note provided further than an additional 2% would
be added to the interest in the event of default. See Promissory
Note (Jan. 31, 1986) (“Note”) preamble. From August 1, 1986
until February 1, 1991, GSSI made regular payments on the
Note, with principal and interest payments totalling over $37
million. As of February 1, 1991, GSSI still owed $31,293,000
under the Note.
C. The Proceedings Below
GSSI refused to make any more payments on February 1,
1991, claiming that LTV had failed to comply with the Asset
Agreement by refusing to indemnity GSSI for remedial actions
taken to correct environmental conditions at the Gadsden plant.
LTV considered GSSI to be in default under the Note and
brought an adversary proceeding to recover the full amount
($31,293,000, with interest accruing from February 1, 1991 at
a rate of 18-3/4%) in the bankruptcy court in the Southern
District of New York, where it had been in voluntary reorganiza-
tion since July 1986. Judge Stanton of the district court for the
Southern District of New York granted GSSI’s motion to
withdraw the reference to the bankruptcy court and transferred
the case to the district court below. LTV Corp. v. Gulf States
Steel, Inc., 91 Civ. 1826, slip op. at 1-2 (S.D.N.Y. May 3, 1991).
Il. Deposit Order
GSSI filed a motion to deposit the outstanding balance on
the Note in an escrow account pending resolution of the disputed
issues. GSSI’s motion was based on Rule 67, according to
which a party, in any action for a sum of money, “may deposit
Ta
with the court all or any part of such sum or thing. . . in an
interest-bearing account or invested in an interest-bearing in-
strument approved by the court.” Fed. R. Civ. P. 67. LTV
objected to this request, arguing that the market rate of interest
available from an escrow account was insufficient; according to
LTV, it was entitled to the default rate ( 18-3/4%) under the
Note.
After extensive briefing and oral argument on June 14,
1991, the district court granted the motion and ordered that GSSI
deposit the outstanding amount owing on the Note into an
escrow account. See Transcript (D.D.C. June 14, 1991) at 19.
In a subsequent order, the district court stated that the deposit of
the $31,293,000 (plus 18-3/4% between February 1 and June
21, 1991) in the escrow account would satisfy any remaining
obligation of GSSI to LTV under the Note. LTV Corp. v. Gulf
States Steel, Inc., No. 91-1072 (D.D.C. June 21, 1991)
(“Deposit Order’).
2. LTV’s Motion for Summary Judgment
In addition to the motion to deposit monies, the district
court considered LTV’s motion for summary judgment. Ac-
cording to LTV, GSSI had failed to allege that any of the costs
it sought to recoup arose from operational events occurring prior
to the Closing Date. On July 1, 1991, the district court denied
LTV’s motion for summary judgment. The court ruled that
“[iJssues of material fact exist as to which, if any, of the
corrective actions necessary to bring the Gadsden plant into
compliance with environmental law arose ‘directly or indirectly
out of the conduct of Business on or before the Closing Date
which is not an Assumed Liability... .”” LTV Corp. v. Gulf
States Steel, Inc., No. 91-1072 (D.D.C. July 1, 1991) at 2
(quoting from section 9.1(a)(ii) of the Asset Agreement). The
court scheduled an evidentiary hearing for August 26 and 27,
199].
8a
GSSI filed a motion in limine to exclude the introduction
in the hearing of extrinsic evidence relating to the meaning of
the indemnity clause. The district court granted GSSI’s motion.
See LTV Corp. v. Gulf States Steel, Inc., No.91-1072 (D.D.C.
Aug. 22, 1991).
3. Findings of Fact and Conclusions of Law
After the evidentiary hearing on August 26 and 27, 1991,
the parties submitted proposed findings of fact and conclusions
of law. The district court adopted, in the main, the proposed
findings and conclusions of GSSI. First, the court concluded
that “LTV had timely notice, written and otherwise, of GSSI’s
indemnification claims.” LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C. Dec. 5, 1991) (“Findings and Con-
clusions’) at 14. Second, it found that “[f]rom January 31, 1986
to July 31, 1991, in the normal course of business, GSSI had
made authorized expenditures of approximately $130 million
for capital improvements, including $18,085,438 in correcting
environmental violations that arose directly or indirectly out of
the conduct of Business at the Gadsden plant prior to January
31, 1986.” Id. at 6-7. Interest on this amount, owing since July
31, 1991, was calculated to be $2,371,353. Jd. at 7.
Third, the district court concluded that “expenditures in the
amount of $10,620,741 have been authorized [by GSSI’s board
of directors] and are anticipated, but not yet fully incurred, for
correcting environmental violations which arose directly or
indirectly out of the conduct of Business at the Gadsden plant
prior to January 31, 1986.” Jd. The court granted GSSI’s claim
for recoupment for the total amount of $31,077,532.2
2 The only amount requested by GSSI that the court did not award was
an additional $11.5 million that GSSI anticipated it would spend “with
reasonable certainty” in the future but which had not yet been authorized or
committed. The court rejected this request, concluding that “[t}his figure is
no more than an estimate of possible future expenditures. Its speculative
character is underscored by the fact that in a period of almost six years, these
costs have yet to be authorized.” Findings and Conclusions at 15 (as
9a
Il. DISCUSSION
A. Standard of Review
Interpretation of the plain language of a contract is a
question of law subject to de novo review by this court. See Hoh
Co. v. Travelers Indem. Co., 903 F.2d 8, 12 n.6 (D.C. Cir. 1990)
(“When we have no need to depart from the plain wording of
the contracts and no extrinsic evidence is introduced, we are not
bound by the clearly erroneous standard of review.”);
Washington Metro. Area Transit Auth. v. Mergentime Corp.,
626 F.2d 959, 961 (D.C. Cir. 1980). The district court’s post-
hearing findings of fact should be reversed only if clearly
erroneous. United States v. Western Elec. Co., 900 F.2d 283,
293 (D.C. Cir.) (per curiam), cert. denied, 111 S. Ct. 283 (1990);
City of Las Vegas v. Lujan, 891 F.2d 927, 931 (D.C. Cir. 1989).
B. Environmental Expenditures at Gadsden
During the evidentiary hearing, the parties stipulated to the
fact that GSSI had incurred actual expenditures totaling
$18,085,358 through July 1991.3 In addition, GSSI Claimed,
and the district court awarded, $10,620,741 corresponding to
authorized expenditures for work in progress during 1991 and
1992. Findings and Conclusions at 7.
As of July 31, 1991, GSSI had spent (or had committed
itself to spend) the following amounts:
corrected by LTV Corp. v. Gulf States Steel, Inc., No. 91- 1072 (D.D.C. Dec.
16, 1991)).
3
There is an $80 discrepancy between the actual amount awarded and
the total figure for expenditures included on GSSI’s corrected exhibit.
Compare Findings and Conclusions at 7 ($18,085,438) with Defendant’s
Exhibit (“DX”) 5012-1, line 9, col. 5 ($18, 085,358).
10a
Coke Plant
(1) Rebuilding brickwork in end flues
and through wall of Coke Battery #2 $6,000,000
(2) Installation of 260 coke oven doors
and cleaners $2,589,514
BOF/Melt Shop
(3) Installation of fume suppressor
and other emission control devices
in Basic Oxygen Furnace
(“BOF”)/Melt Shop $4,196,566
(4) Repairs to the BOF precipitator $1,493,569
Benzene
(5) Installation of benzene emission
controls at coke byproduct plant $9,000,002
Wastewater Treatment
(6) Construction of coke byproducts
wastewater treatment plant $3,298,063
(7) Construction of galvanizing line
wastewater treatment plant + $2,128,385
TOTAL = $28,706,099
l. Coke Plant
In November 1988, the Alabama Department of Environ-
mental Management (“ADEM”) filed acomplaint against GSSI,
alleging that emissions from the coke plant violated certain
sections of the Alabama Air Pollution Control Rules. Alabama
Dep’ tof Envtl. Mgmt. v. GSSI, Complaint, No. CV-88-856 (Ala.
Cir. Ct. Nov. 8, 1988). One month later, on December 20, 1988,
the state court entered a consent order requiring GSSI to make
end flue and through wall repairs on the No. 2 coke ovens. See
Findings and Conclusions at 11-12; Alabama Dep't of Envtl.
lla
Mgmt. v. GSSI, Consent Order, No. CV 88-856 (Ala. Cir. Ct.
Dec. 20, 1988).
2. BOF/Melt Shop
The same December 1988 consent order required GSSI to
install a fume suppression system on the hot metal transfer
station of the BOF. See id. at 5. In order to comply with certain
sections of the Air Pollution Control Rules, GSSI agreed to Carry
out extensive repairs on the BOF precipitator. Jd. at 6.
3. Benzene
In September 1989, the EPA issued its Final Rule regarding
the National Emission Standard for Hazardous Air Pollutants
(“NESHAP”), including the standard for benzene emissions
from coke by-products recovery plants. See 54 Fed. Reg.
38,044, 38,073-77 (1989). In January 1990, the EPA informed
GSSI that it would have to comply with the benzene NESHAP
by September 1991. See Letter from Winston Smith, EPA, to
Ken Means, Chief Engineer, GSSI (Jan. 26, 1990) (DX 386-A);
Testimony of John D. Lefler, GSSI Vice President of Manufac-
turing (D.D.C. Aug. 26, 1991) at 85. In order to comply with
the requirements in the January 1990 letter, GSSI installed a
cooling tower, gas blanketing facilities, and mechanical and
liquid seals to keep benzene from emanating from containment
vessels. See id. at 80-81, 177.
4. Wastewater Treatment
In June 1986, ADEM issued an administrative order alleg-
ing that GSSI was discharging pollutants into a creek near the
Gadsden plant in violation of Alabama law. In December 1987,
ADEM issued a permit authorizing certain discharge levels in
accordance with the National Pollution Discharge Elimination
System (“NPDES”). /d. at 100-02.
Finally, in an August 1988 administrative order, ADEM
required GSSI to submit a pollution abatement plan designed to
bring the Gadsden plant into compliance with the December
12a
1987 NPDES permit. See In re Gulf States Steel, Inc., Order
No. 88-081-WP (ADEM Aug. 19, 1988). GSSI constructed two
wastewater treatment plants — one to remove compounds such
as benzene and cyanide from the wastewater of the coke by-
products plant and one to remove zinc from the galvanizing line
— in order to comply with the August 1988 administrative
order.
C. Notice
The district court concluded below that “LTV had timely
notice, written and otherwise, of GSSI’s indemnification
claims.” Findings and Conclusions at 14. LTV argues on
_ appeal that this conclusion is clearly erroneous, because there is
nothing in the record to support the conclusion that it ever
received proper notice of (1) the 1988 complaint alleging emis-
sions violations at the coke plant and at the BOF/melt shop; (2)
the 1989 benzene NESHAP and the 1990 EPA letter; or (3) the
1988 administrative order requiring compliance with the 1987
NPDES permit concerning wastewater pollutants. Under sec-
tion 9.3 of the Asset Agreement, GSSI explicitly agreed to
give prompt notice to [LTV] of the institution of any
actions, suits or proceedings and demands at any time
instituted against or made upon [GSSJ] in connection with
which [GSSI] would claim indemnification under Section
9.1 or 9.2 and [GSSI] shall, at the time of giving such
notice, if [LTV] shall agree that it would have respon-
sibility to indemnify under this section 9.3, give [LTV] full
authority to defend, adjust, compromise or settle the action,
Suit, proceeding or demand of which such notice shall have
been given, in the name of [GSST] or otherwise as [LTV]
shall elect. In the event of any claims under Section 9.1 or
9.2 for indemnification, [GSSI] shall advise [LTV] in
writing of the amount and circumstances surrounding said
claim.
Whe wt allen, eas
5 hth OA AD Sterns hoor
13a
Asset Agreement § 9.3. Clearly, the purpose of this notice
provision is to provide LTV with the opportunity to participate
in the settling of any claims and the negotiating of any agree-
ments resulting in the expenditure of funds for which it would
ultimately be responsible. Of course, LTV could deny respon-
sibility for the costs, but the issue of liability would then be the
subject of litigation. The critical point is that GSSI would Satisfy
its obligations under section 9.3 only by providing notice prior
to the final settlement of any outstanding claim.
1. Ohio Law
“The purpose of a requirement of notice and proofs of loss
is to allow the insurer to form an intelligent estimate of its rights
and liabilities, to afford it an Opportunity for investigation, and
to prevent fraud and imposition upon it.” West Am. Ins. Co. y.
Hardin, 571 N.E.2d 449, 452 (Ohio App. 1989). Under Ohio
law, a notice provision in an indemnity agreement is considered
to be “of the essence of the contract” and is regularly enforced.
Thomas v. Studley, 571 N.E.2d 454, 620 (Ohio App. 1989);
Patrick v. Auto-Owners Ins. Co., 449 N.E.2d 790, 791 (Ohio
App. 1982); Zurich Ins. Co. v. Valley Steel Erectors, Inc., 233
N.E.2d 597, 598 (Ohio App. 1968). Ohio has rejected, however,
the traditional view that treats strict compliance with the terms
of a notice provision as acondition precedent to the indemnifica-
tion contract; instead, the failure to comply with the notice
provision must cause prejudice to the indemnitor before it is
relieved of its obligation to defend or indemnify. Hardin, 571
N.E.2d at 452.
A provision requiring “prompt” notice to the indemnitor
means “notice within a reasonable time in light of all the
surrounding facts and circumstances.” Ruby v. Midwestern
Indem. Co., 532 N.E.2d 730, 732 (Ohio 1988). Whether there
has been an unreasonable delay in the giving of notice is
generally considered to be a question of fact. Patrick, 449
N.E.2d at 791; Zurich, 233 N.E.2d at 599. However, courts have
l4a
on occasion ruled that the time delay was such that notice was
not within a reasonable time, as a matter of law. See, e.g.,
Patrick, 449 N.E.2d at 791 (court ruled that claimant’s one-year
delay in reporting “theft” of car by ex-wife was unreasonable as
a matter of law). Under Ohio law, prejudice to the indemnitor
is presumed when the delay in giving notice is “unreasonable.”
This presumption may be rebutted by the presentation of
evidence that the indemnitor was not, in fact, prejudiced by the
delay. Ruby, 532 N.E.2d at 732; Patrick, 449 N.E.2d at 791;
see also Imperial Casualty & Indem. v. Buckeye Union Ins. Co.,
No. CA-7989, 1990 Ohio App. LEXIS 1420 (Ohio Ct. App. Apr.
9, 1990) at *8 (when notice is unreasonably delayed, burden
shifts to claimant to rebut presumption that indemnitor was
prejudiced by delay).*
4 The Court of Appeals of Ohio recently revisited the issue of burden-
shifting when a claimant waited over eight years from the date of the accident
to file a claim against her insurance company.
The implication of the Ruby decision is that a delay in giving notice,
in and of itself, is not a sufficient reason to deny coverage. Prejudice
to the insurer must be demonstrated.
Therefore, the trial court, in the instant cause, erred in stating that the
lapse of time between the accident date and the date of notice, in and
of itself, was sufficient to defeat the right of appellant to coverage.
Priester v. Travelers Ins. Co., No. 90-T-4426, 1991 Ohio App. LEXIS 1394
at *5 (Ohio App. Mar. 29, 1991) (citations omitted). The claimant in Priester
had presented ample evidence that the insurance company had not been
prejudiced by the delay. As the concurring opinion makes clear, once it is
demonstrated that notice had been unreasonably delayed, prejudice to the
insurer is presumed absent evidence to the contrary. “The burden of going
forward to rebut this presumption rests with the insured. Once the trial court
is presented with such evidence, the sufficiency and weight of that evidence
becomes the duty and function of the trier of fact.” Jd. at **9-10 (Ford, J.,
concurring) (citations omitted). The lower court’s error in Priester occurred
not because the burden of presenting the evidence of prejudice was shifted
to the claimant; it occurred because the trial judge refused to weigh the
evidence once the claimant had presented it.
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2. GSSI’s Notice to LTV
GSSI makes several alternative arguments on the question
of notice. First, it argues that it effectively provided notice when
it filed its proofs of claims in the bankruptcy court. Second, it
argues that, because of the automatic stay provision in the
Bankruptcy Code, it was precluded from complying with the
notice provision. Third, it argues that LTV was not prejudiced
by the failure to comply with the notice provision because it had
actual notice of the environmental problems at the Gadsden
plant and of the nature of GSSI’s indemnification claims.
a. Proofs of Claim
LTV filed for bankruptcy in July 1987, and GSSI filed three
separate proofs of claim on November 25, 1987. See In re
Chateaugay Corp., Nos. 86 B 11272, 11273, 11291 (Bankr.
S.D.N.Y. Nov. 25, 1987). In each claim, GSSI indicated that
the amount due was “contingent - unknown” and that the total
sum Claimed was “undetermined as of this date.” The only
reference to the “ground of liability” was an attachment —
Exhibit C — to each proof of claim, where GSSI indicated that
its “contingent claims against Debtor” are based on “contracts,
orders, and other instruments applicable to the Debtor.” Among
those listed was the Asset Agreement, as well as orders entered
by the district court in connection with the sale of the Gadsden plant.
Proofs of claim are not intended to be elaborately detailed
documents. As one bankruptcy court has explained, “[a] proof
of claim for an unsecured creditor requires little more than a
listing of name, address, amount of claim (or a listing as “unli-
quidated” or “contingent”), and a signature. It should take less
than five minutes to fill out.” Jn re Great W. Cities, Inc., 88 B.R.
109, 114 (Bankr. N.D. Tex. 1988). The proofs of claim sub-
mitted to the bankruptcy court made no mention of “the institu-
tion of any actions, suits or proceedings and demands at any time
instituted against or made upon [GSSI] in connection with
which [GSST] would claim indemnification.” Asset Agreement
16a
§ 9.3. Furthermore, referring only to “contingent claims” and
“unknown” amounts, the proofs of claim clearly failed to “ad-
vise [LTV] in writing of the amount and circumstances sur-
rounding” the claim as required by section 9.3. Id.
In order to comply with the bar date, GSSI had to submit
its proofs of claim on or before November 25, 1987, which was
prior to any of the regulatory actions of the EPA or ADEM that
led to the repairs and improvements at the Gadsden plant.
Obviously, the proofs of claims could not, by themselves,
satisfy the notice requirement of section 9.3, because the claims
for which GSSI seeks indemnification had not yet been made
by the time the proofs of claim were presented.
b. Automatic Stay
Anticipating the many problems with its argument that the
proofs of claim were sufficient notice under the Asset Agree-
ment, GSSI argues alternatively that it was precluded, by virtue
of the automatic stay provision of the Bankruptcy Code, 11
U.S.C. § 362(a) (1988), from providing the notice specifically
required.> The filing of bankruptcy stays “[a]ny act to obtain
> Under the Bankruptcy Code, a petition
operates as a stay, applicable to all entities, of—
(1) the commencement or continuation, including the issuance or
employment of process, of a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced
before the commencement of the case under this title, or to recover a
claim against the debtor that arose before the commencement of the
case under this title;
(3) any act to obtain possession of property of the estate or of
property from the estate or to exercise control over property of the
estate;
(6) any act to collect, assess, or recover a claim against the debtor
that arose before the commencement of the case under this title. . . .
11 U.S.C. § 362(a) (1988).
17a
possession of property from the estate,” id. § 362(a)(3), and
courts have interpreted this broadly to encompass such actions
as changing the locks in order to effect an eviction, Jn re Atlantic
Business & Community Corp., 901 F.2d 325, 328 (3d Cir. 1990),
sending notices of default or of acceleration, Jn re Manville
Forest Prods. Corp., 43 B.R. 293, 298 (Bankr. S.D.N.Y. 1984),
aff d on relevant grounds, 60 B.R. 403 (S.D.N.Y. 1986), or
threatening the termination of a lease, see In re 48th St. Steak-
house, Inc., 835 F.2d 427, 431 (2d Cir. 1987), cert. denied, 485
U.S. 1035 (1988).
It is clear, however, that “mere requests for payment are
not barred absent coercion or harassment by the creditor.”
Morgan Guar. Trust Co. v. American Say. & Loan, 804 F.2d
1487, 1491 (9th Cir. 1986) (presentment of notes for payment
was not prohibited by automatic stay), cert. denied, 482 U.S.
929 (1987); In re Sixteen to One Mining Corp., 9 B.R. 636, 638
(Bankr. D. Nev. 1981) (“{S]o long as there is no attempt to
obtain possession of the terms of a lease. A landlord is entitled
to put a lessee on notice of where and when the lessee is failing
in performance.”). The automatic Stay is designed to protect the
debtor from acts “that immediately or potentially threaten the
debtor’s possession of its property. . . . The activities that are
specifically prohibited all involve attempts to confiscate the
debtor’s property or require the debtor to act affirmatively to
protect its interests.” Morgan Guaranty, 804 F.2d at 1491.
Finally, the purpose of the notice provision in the Asset
Agreement was to protect the interests of the indemnitor — to
allow it “to defend, adjust, compromise or settle the action, suit,
proceeding or demand.” Asset Agreement § 9.3. Notice would
have given the trustee of LTV’s estate the Opportunity to par-
ticipate in the fashioning of the 1988 consent order and in
negotiating the terms of compliance with the administrative
orders and environmental regulations. This would have been
entirely consistent with the Purposes of the automatic stay
18a
provision, for it would have served to protect the interests of the
debtor’s estate. Neither the language or purpose of the automat-
ic stay provision prevented GSSI from giving notice to LTV
under section 9.3.
3. Notice by Other Means
GSSI argues that, besides the proofs of claim discussed
above, support for the conclusion that LTV had notice may be
found in the following: (1) depositions of John Steinhauer,
Secretary, GSSI, and James S. Van Tiem, Treasurer, GSSI; and
(2) two letters, one from Steinhauer to Glenn Moran, LTV
Corporate General Counsel on June 6, 1990 and the other from
J.F. Powers, LTV Counsel, to Steinhauer on June 7, 1990.
a. Depesitions
At his deposition in August 1991, GSSI’s Secretary
recalled having had certain meetings with representatives from ~
LTV:
A: There was a conversation that I had, which, probably,
related to talk about environmental things in probably 1987
when we had Mike Hiemstra [from LTV] and the invest-
ment bankers for probably the creditors committee and
LTV about discounting the note.
I’m sure environmental matters would have been dis-
cussed. The second [meeting] was when we discussed with
the union’s investment bankers, Lazard Freres, we had a
meeting with them in New York, which would probably
have been like December of ’88 or December of ’87,
maybe. I think, probably December of ’87 we had a
conversation with them where financial data was discussed
and the state of the company and so forth.
Q: What was said about environmental issues?
Reiner, aa abies
A:
19a
I’m not sure anything was. I can’t believe the state of the
company could have been talked about without an invest-
ment banker asking us about environmental matters.
Was anything said about LTV’s possible indemnification
responsibilities [at the meeting with the investment
bankers]?
That was not discussed. What we did discuss was because
the company had made such a statement about the financial
viability of the Gadsden plant, if we were going to get a
discount through the bankruptcy, we tried to play up on that
financial viability and got into the finances. So that was
the hot button.
In any of the subsequent meetings in that series with Mr.
Hiemstra, was there any discussion about potential indem-
nification responsibilities as opposed to take our settlement
because of this viability issue?
We tried to keep it very simple and what we thought would
be the best, simplest, cleanest discussion.
Prior to 1990 or "91, were there any discussions with LTV
about any potential breach of warranties or indemnifica-
tion?
Other than a proof of claim, no.
Transcript of Deposition of John Stuart Steinhauer (Aug. 8,
1991) at 88-91, 106-07, 108.
GSSI’s Treasurer testified at his deposition that there were
several meetings between representatives from GSSI, LTV, and
investment banks in the summer of 1987 to discuss redeeming
the promissory Note.
Q 2
Q
Q:
A:
20a
Was there any discussion in connection with any of those
meetings or at any of those meetings about the indemnifica-
tion provision in the asset sales agreement?
I don’t recall specific discussions about that.
Was there any discussion of environmental liabilities that
LTV might have in connection with Gadsden?
I don’t recall any specific discussions.
Do you recall any general discussions at that time?
I don’t remember.
In those discussions with Shearson and/or First Boston,
was there any mention of any indemnification obligation
LTV had to Gulf States, or the Brenlin Group?
I believe so, but I’m not 100 percent sure.
What do you believe was said by whom?
I think there was discussion of environmental issues and
general indemnifications made by LTV.
And who said that? First of all, what was said and who
said it?
I don’t recall specifically what was said.
Transcript of Deposition of James D. Van Tiem (Aug. 7, 1991)
at 65-67.
The testimony of these two GSSI employees is clearly
inadequate to establish that LTV was given notice of the en-
vironmental claims against the Gadsden plant. Not only did the
purported conversations, like the proofs of claim, predate most
of the relevant regulatory activity, but neither deponent recalled
for sure whether environmental issues had even been discussed.
Indeed, Steinhauer specifically recalled that the issue of LTV’s
indemnification was not discussed. Van Tiem simply could not
recall whether there had been any discussion of indemnification.
2la
Contrary to GSSI’s assertion, these depositions offer no support
whatsoever for the conclusion that LTV had notice of the
specific regulatory measures taken against the Gadsden plant
and of the specific remedies implemented in response.
b. Letters
GSSI proposed to satisfy its obligation under the promis-
sory Note by paying LTV $26 million, subject to certain condi-
tions, including:
An agreement by LTV and its affiliates as debtors and
debtors in possession to defend, indemnify, and hold harm-
less Gulf States from and against any liability or obligation
directly or indirectly resulting from or arising out of the
conduct of the “Business”, as defined in the [Asset Agree-
ment] .,., including, without limitation, employee, tax,
environmental, products liability or bulk sales claims, and
claims of LTV’s creditors as to the validity of title.
Letter from Steinhauer to Moran (June 6, 1990) at 1.
This letter clearly fails to satisfy the requirement of giving
“prompt notice to [LTV] of the institution of any actions, suits
or proceedings and demands at any time instituted against or
made upon [GSSI] in connection with which [GSST] would
claim indemnification,” Asset Agreement § 9.3. It refers
generally to all “employee, tax, environmental, products
liability or bulk sales claims” for which LTV would be respon-
sible under the Asset Agreement, but it does not discuss the
nature or amount of any such claims.
In any case, the letter quite obviously comes much too late
to satisfy the requirement that LTV be given notice in advance
of any settlement or other resolution of outstanding claims.
Even if the June 6, 1990 letter had provided the detail required
by section 9.3, it would not have given LTV sufficient notice to
have allowed it to participate in the negotiation of the December
1988 consent order or in the compliance with either the 1989
22a
EPA benzene regulation or the 1988 administrative order
regarding the contamination of the wastewater.
The June 7, 1990 letter consists of only one sentence in
which a representative from LTV indicates to GSSI that “LTV
has no interest in pursuing the Gulf States settlement proposal.”
Letter from Powers to Steinhauer (June 7, 1990). At most, this
letter proves that LTV received the June 6 letter. But since the
notice provided by the June 6 letter was insufficient and untime-
ly, LTV’s acknowledgment of it is irrelevant.
4. Actual Notice
None of the purported “notices” that GSSI provided
LTV—the proofs of claim, the vaguely recalled conversations
that took place in 1987,-or the letters proposing and acknow-
ledging a settlement offer—satisfied the contractual notice re-
quirement. GSSI’s last recourse, then, is to argue that LTV had
actual notice of the environmental problems at the Gadsden
plant when it submitted its Exhibit “V” to the Asset Agreement®
and that it was therefore not prejudiced by GSSI’s failure to
provide notice under section 9.3. Of course, knowledge of the
environmental problems at the plant is not the same as knowing
about the specific steps taken by the ADEM and the EPA to
require remedial action. There is nothing in the record to
indicate that LTV had actual notice of (1) the November 1988
complaint alleging violation of emission standards at the coke
plant and at the BOF/melt shop; (2) the September 1989 benzene
NESHAP or the January 1990 EPA letter setting the date for
final compliance; or (3) the December 1987 NPDES permit and
the August 1988 administrative order requiring the construction
of the two wastewater treatment facilities. Furthermore, there
© Exhibit “V” is attached to the Asset Agreement and contains a lengthy
list of environmental problems of which LTV was aware at the time of the
closing. It explicitly states that “LTV makes no representation or warranty
that it is in compliance with all environmental laws and regulations ap-
plicable to the Business in all material respects.” Exhibit V to Asset Agree-
ment.
23a
is nothing in the record to suggest that GSSI ever informed LTV,
prior to defaulting on the Note, that it intended to hold LTV
liable for these environmental expenses.
5. Summary
LTV was prejudiced by GSSI’s failure to give notice. In
the leading case on notice, the Ohio Supreme Court explained
why the failure to provide timely notice in an insurance contract
was prejudicial:
First, [the delay] deprived [the insurer] of any meaningful
Opportunity to investigate the accident and determine the
relative fault of the parties involved; and second, because
the deadline for filin g Claims against the [deceased’s] estate
had passed, [the insurer] lost any ability to assert a claim
against the estate. Thus we find that appellants’ failure to
provide timely notice was prejudicial to appellee and its
right to subrogation.
Ruby v. Midwestern Indem. Co., 532 N.E.2d 730, 732 (Ohio
1988). LTV has been prejudiced in much the same way. In
Ruby, the claimants delayed notifying their insurance company
for only eleven months. In this case, the record reveals that
GSSI informed LTV of the extent of its environmental correc-
tions when it filed its statement of costs in anticipation of the
evidentiary hearing on J uly 15, 1991; this was several years after
the obligation to make the repairs arose.7
Any deficiency in actual evidence to support the con-
clusion that LTV was, in fact, prejudiced by the failure to
provide proper notice is overcome by the presumption in Ohio
” The fact that the law on notice was developed in the insurance context
is significant, for courts may be reluctant to require strict compliance with
notice provisions in insurance policies because claimants are often lay people
with little understanding of the technical requirements. But where the
claimant is a sophisticated Corporation that has been well-represented by
counsel, this concern about strict application of the notice requirement is less
compelling.
24a
law arising from GSSI’s unreasonable delay in providing notice
under section 9.3. GSSI has the burden of rebutting this
presumption by coming forward with evidence that LTV was
not prejudiced. Jd.; Patrick v. Auto~-Owners Ins. Co., 449
N.E.2d 790, 791 (Ohio App. 1982). There is nothing in the
record to indicate that TV was not prejudiced by the delay, and
GSSI has failed to bear its evidentiary burden.
The district court’s conclusion that LTV had timely notice
of GSSI’s indemnification claims was clearly erroneous. The
district court adopted the proposed finding of GSSI which
purported to rely on the proofs of claim, the conversations in
1987 and the June 1990 letters for evidence that notice was
given. But as we have seen, none of these satisfies the plain
terms of the notice requirement contained in the Asset Agree-
ment, and LTV was deprived of the opportunity to participate
in the defense and settlement of the underlying claims for which
it was allegedly responsible. GSSI’s failure to give notice
precludes its claim for indemnification.®
D. Interest
Rule 67 provides that
[ijn an action in which any part of the relief sought is a
judgment for a sum of money ... a party, upon notice to
every other party, and by leave of court, may deposit with
the court all or any part of such sum or thing, whether or
not that party claims all or any part of the sum or thing.
The party making the deposit shall serve the order permit-
ting deposit on the clerk of the court. . . . The fund shall be
deposited in an interest-bearing account or invested in an
interest-bearing instrument approved by the court.
FED. R. CIV. P. 67.
. Of course, we do not now reach the question of whether LTV would
have been liable under the plain terms of the Asset Agreement, had GSSI
given proper notice, for the more than $28 million incurred to bring the
Gadsden plant into compliance.
25a
We have found very few cases construing Rule 67. See 12
CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRAC-
TICE AND PROCEDURE § 2991 (1973) (agreeing with prediction
that there would not be “ “very many occasions for the applica-
tion of this rule’ ”’). The decision whether to allow a Rule 67
deposit generally lies within the discretion of the district court.
See Gulf States Utilities Co. v. Alabama Power Co., 824 F.2d
1465, 1475 (Sth Cir.), modified on other grounds, 831 F.2d 557
(Sth Cir. 1987); Jn re Department of Energy Stripper Well
Exemption Litigation, 124 F.R.D. 217, 220 (D. Kan. 1989).
LTV argues that the district court abused its discretion, however,
by permitting GSSI to use Rule 67 to deposit the amount owing
under the Note and thereby stop the accrual of interest at the
default rate of 18-3/4%.
It is well-settled that Rule 67, like all of the Federal Rules
of Civil Procedure, “shall not abridge, enlarge or modify any
substantive right.” 28 U.S.C. § 2072(b) (1988). “The Rule 67
procedure provides a place of safekeeping for disputed funds
pending the resolution of a legal dispute, but it cannot be used
as a means of altering the contractual relationships and legal
duties of the parties.” /n re Department of Energy Stripper Well
Exemption Litigation, 124 F.R.D. at 218-19; Prudential Ins Co.
v. BMC Indus., 630 F. Supp. 1298, 1300 (S.D.N.Y. 1986).
Under the terms of the Note given to LTV by GSSI, “[u]pon
the occurrence of any Event of Default [which includes the
failure to pay the full amount of any payment of principal]. . . ,
the entire unpaid principal amount hereof and interest accrued
thereon shall become immediately due and payable, at the option
of the holder.” Note § 5(b). Furthermore, “[a]fter maturity,
whether by acceleration upon default or otherwise, all sums then
due hereunder shall bear interest at the rate set forth above
[16-3/4%] plus Two Percent (2%).” Id. preamble. As of June
21, 1991, when the district court signed its Deposit Order, GSSI
was in default under the Note and was subject to the default rate
26a
of interest of 18-3/4%. On June 21, 1991, the district court
ordered that, upon payment of the principal plus interest at the
default rate between February 1, 1991 and June 21, 1991, “[aJny
remaining obligation of GSSI to LTV Corporation. . . on the
January 21, 1986 Promissory Note. . . is hereby satisfied and
paid in full.” Deposit Order at 1.
We do not believe, however, that the district court had the
authority, under Rule 67, to alter the substantive contractual
right of LTV to receive, upon GSSI’s default, an 18-3/4% annual
interest rate on the principal amount still owing under the Note.
The district court abused its discretion when it effectively altered
the terms of the contract by substituting the market rate of
interest available in the escrow account for the rate to which the
parties had agreed in the Note.
Furthermore, the amount currently held in escrow is subject
to the default rate of 18-3/4% rather than to the contract rate of
16-3/4%. Under Ohio law,
when money becomes due and payable upon any bond, bill,
note, or other instrument of writing. . . , the creditor is
entitled to interest at the rate of ten per cent per annum, and
no more, unless a written contract provides a different rate
of interest in relation to the money that becomes due and
payable, in which case the creditor is entitled to interest at
the rate provided in that contract.
OHIO REV. CODE ANN. § 1343.03(A) (Anderson Supp. 1991)
(emphasis added). A special default rate of interest is permitted
under Ohio law.
[M]oney paid by the borrower to the lender for the use of
money after it is past due is regarded as liquidated damages
for the detention of the money, and the parties to the
lending contract may provide in it for a rate after maturity
higher than the rate before, except it must not exceed the
limit fixed by the usury statute.
eee
27a
Hacket v. Kripke, 23 N.E.2d 438, 438 (Ohio Ct. App. 1939); see
also Cardinal Fed. Sav. & Loan Ass'n v. Michaels Bldg. Co.,
C.A. No. 12881, slip op. at 4-5 (Ohio Ct. App. Sept. 30, 1987)
(LEXIS, States library, Ohio file) (default rate represented
parties’ bargained for damages, not unenforceable penalty,
where borrower “entered into the agreement, a commercial loan,
which clearly included the default rate of interest; indeed, it
could be said that the increased default rate provision repre-
sented part of the original consideration for which the loan was
given”).
As of June 21, 1991, when the district court entered its
Deposit Order, GSSI had been in default for over four months.
The obligation under the Note had been accelerated, and the
applicable rate of interest under the Note was 18-3/4%. GSSI
chose to litigate the issue of LTV’s liability rather than to pay
LTV the amount due under the Note and then seek relief as a
creditor in bankruptcy court. The risk that GSSI bore in failing
to pay LTV the full amount, free and clear of any claims, was
that it might lose on appeal and be forced to pay the full amount
plus the default rate of interest expressly provided for in the
Note. Some risks simply do not pay off.
il, CONCLUSION
For the reasons stated above, the judgment of the district
court is reversed and the case remanded for entry of judgment
in favor of LTV for the full amount currently held in escrow plus
the difference between the earnings of the escrow fund and the
amount of interest that would have been earned at an annual rate
of 18-3/4% on $31,293,000 between June 21, 1991 and the date
of judgment on remand.
It is so ordered.
28a
APPENDIX B
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE LTV CORPORATION, LTV STEEL COMPANY
INC., and GULF STATES STEEL CORPORATION,
Plaintiffs,
V.
GULF STATES STEEL, INC., OF ALABAMA,
Defendant.
Civil Action
No. 91-1072
FILED Dec. 5, 1991
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Background Summary and Procedural Status _
This lengthy litigation commenced with the Order of this
Court of August 2, 1984 divesting plaintiff LTV! of its owner-
ship of the Gadsden steel mill and the subsequent purchase of
Gadsden by defendant Gulf States Steel, Inc., of Alabama
(“GSSI’) on January 31, 1986. United States v. LTV Corp.,
Civil Action No. 84-0884 (D.D.C.). The purchase price was
covered by a note for $38,500,000. On or about July 17, 1986,
LTV filed a voluntary petition for reorganization in the
Bankruptcy Court for the Southern District of New York. On
November 29, 1987, GSSI filed its proof of claims for LTV’s
alleged liabilities for environmental violations. From January
! “LTV” refers collectively to the LTV Corporation, LTV Steel Com-
pany Inc., and Gulf States Steel Corporation.
,
29a
31, 1986 to February 1, 1991, GSSI had made all payments due
LTV on the note: $9,625,000 principal and $27,907,187 inter-
est, for a total payment of $37,532,187. On February 1, 1991,
GSSI declined to make the $4,812,500 payment then due LTV
on the note. This adversary proceeding by LTV, as debtor in
possession, was immediately initiated to recover the balance due
on the note of $31,293,281, plus accrued interest and attorney’s
fees. Pursuant to defendant GSSI’s Motion to Withdraw the
Reference to the Bankruptcy Court, Judge Stanton of the
Southern District, to whom the matter had been assigned, issued
an order Withdrawing the Reference and Transferring the Venue
to this Court. LTV Corp. v. Gulf States Steel, Inc., No. 91-1826
(S.D.N.Y. May 3, 1991). In our Order of July 1, 1991, we
denied plaintiff LTV’s Motion for Summary Judgment. At the
same time we held that defendant GSSI was not precluded from
recovery on its claim for recoupment. Pending before us are
LTV’s claim for the balance due on the note and GSSI’s claim
(not exceeding the amount held in escrow pursuant to this
Court’s Order of June 21, 1991) for the costs it has incurred in
correcting environmental violations that arose “directly or in-
directly” out of the conduct of Business on or before the closing
date which is not an Assumed Liability. See January 31, 1986
Agreement of Purchase and Sale of Assets (“Asset Agree-
ment’), Section 9.1(a)(ii).
We held an evidentiary hearing on these issues on August
26 and 27, 1991. Both sides presented live testimony and
literally hundreds of exhibits, as well as numerous stipulations.”
The issues have been extensively briefed.
To summarize the contentions of the parties, it is defendant
GSSI’s position that plaintiff LTV agreed to be liable for costs
> We are grateful to both sides, particularly the plaintiffs, for reducing
the witnesses’ direct testimony to writing, introducing said into evidence,
and presenting the witnesses for cross-examination. This aided greatly in
expediting the hearing.
30a
incurred in correcting environmental violations arising directly
or indirectly out of the conduct of Business on or before January
31, 1986. Plaintiff LTV strenuously disputes defendant’s con-
tention and asserts that defendant’s expenditures were for the
most part not necessary to comply with the environmental
requirements in effect on January 31, 1986. Admittedly, defen-
dant from January-31, 1986 to July 31, 1991, has spent over
$100,000,000 in capital improvements to an aged and aging
steel mill, but, according to plaintiff, such expenditures, how-
ever necessary to maintain the plant as a productive and viable
entity, were not needed for environmental reasons.
FINDINGS OF FACT
1. Defendant, GSSI, is a corporation organized and exist-
ing under the laws of the State of Alabama with its principal
place of business in Gadsden, Alabama. GSSI was organized
to own and operate the Gadsden plant, acquired pursuant to this
Court’s Orders in United States v. LTV Corp., Civil Action No.
84-0884 (D.D.C.).
2. Plaintiff, the LTV Corporation, is a corporation or-
ganized and existing under the laws of the State of Delaware,
with its principal place of business in Dallas, Texas. Plaintiff,
LTV Steel Company, Inc., is a corporation organized and exist-
ing under the laws of the State of New Jersey, with its principal
place of business in Cleveland, Ohio. Plainuff, Gulf States Steel
Corporation, is a corporation organized and existing under the
laws of the State of Delaware, with its principal place of business
in Dallas, Texas. On July 17, 1986, LTV filed a petition for
reorganization under 11 U.S.C. § 1011, et seq.
3. On August 26, 1991, this Court granted the August 23,
1991 Motion of the Attorney General of the State of Alabama
to appear as amicus curiae pursuant to its parens patriae
authority and Ala. Code §§ 22-22A-1 to 16 (1990). Since 1982,
the Alabama Department of Environmental Management
a
x» \ sms
3la
(“ADEM”) has had authority to enforce state environmental
laws and administer federally approved or delegated environ-
mental programs.
4. As recognized by Judge Stanton in LTV Corp. v. Gulf
States Steel Inc., No. 91-1826 (S.D.N.Y. May 3, 1991), this
Court has continuing subject matter jurisdiction, pursuant to the
August 2, 1984 Final Judgment and other Orders entered in
United States v. LTV Corp., supra. This was an action initiated
under Section 7 of the Clayton Act, 15 U.S.C. § 18. On May
13, 1991, LTV Corp. v. Gulf States Steel Inc., supra, was
assigned to this Court as LTV Corp. v. Gulf States Steel, Inc.,
No. 91-1072 (D.D.C.), and designated as a related case to
United States v. LTV Corp., supra.
5. GSSI’s Gadsden plant is an integrated steel mill, i.e., one
that has cokemaking, ironmaking, steelmaking, rolling and
finishing processes.
6. Coke is made by heating bituminous coal to remove
volatiles leaving a mass of nearly pure carbon that is used as a
fuel in the iron and steelmaking processes.
7. AtGadsden, coke is manufactured in two coke batteries,
i.e., No. 2 and No. 3, attached to a by-products recovery plant.
No. 2 was placed in operation in 1942; No. 3 in 1965. Each
battery has 65 ovens; each oven has two doors. The doors are
refractory-faced assemblies placed into jambs. A jamb is an iron
casting, held by steel clips that are bolted to vertical steel beams
or buck stays, providing the structural framework for the coke
oven.
8. After a coke oven is charged by filling it with coal, the
temperature is raised by burning gas in the sidewall flues. At
GSSI, coal is coked for approximately 24 hours. When coking
is complete, the doors are removed and a ram is inserted that
pushes the coke from the oven into a quench car that carries it
to a tower where it is cooled by water.
32a
9. During coking, approximately 30 percent of the coal’s
weight is volatized into gases, water vapor and solids that are
further processed at GSSI’s coke by-products recovery plant.
By a series of cooling and chemical processes, various products
are then separated, including tars, ammonia sulfate, naph-
thalene, and benzol. An organic volatile chemical released
during these processes is benzene.
10. At each process stage in GSSI’s coke by-products
recovery plant, wastewater streams are generated. Wastewater
streams also are generated at other GSSI processes, including
the galvanizing line, where the acid rinse overflow is a major
source of zinc found in GSSI’s wastewater.
11. AtGSSI, iron ore and scrap are refined into steel at the
Basic Oxygen Furnace (“BOF”) melt shop, where two BOF
vessels are located. Scrap and molten iron from the blast furnace
are poured into the BOF vessels from transfer ladles causing
emission of iron oxide particulates. The molten iron is then
desulphurized and slag is skimmed, releasing additional gases
and particulates. If these emissions are not captured by the
baghouse system, they escape through the monovent (roof
monitor). Afterwards, oxygen is blown into the molten iron,
creating an exothermic reaction releasing additional gases and
particulates that are removed through a water-cooled hood
system into an evaporation chamber and then to an electrostatic
precipitator. At GSSI, approximately 4 tons of particulates are
generated for every heat of steel produced. GSSI’s BOF
precipitator, built in 1965, has a shorter residence time for
particulate collection and a smaller area of electrodes than is
required for standard operation.
12. Compliance with environmental laws and regulations
requires compliance with the applicable regulatory standard on
a continuous day-to-day basis.
13. Expenditures at the Gadsden plant prior to January 31,
1986, under both Republic an LTV ownership, were inadequate
33a
to accomplish environmental compliance. In January 1986,
LTV admitted that at least $18-21 million would be required for
environmental corrections.
14. From January 31, 1986 to July 31, 1991, in the normal
course of business, GSSI had made authorized expenditures of
approximately $130 million for capital improvements, includ-
ing $18,085,438 in correcting environmental violations that
arose directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986.
15. The foregoing expenditures of $18,085,438 cover
repairs in the following categories: coke plant (coke oven doors
and jambs, end flue and thru wall and benzene control),
BOF/melt shop (fumes suppressor, precipitator and emission
control), and water (wastewater treatment plant and galvanizing
line).
16. Interest on $18,085,438 as of July 31, 1991, less
capitalized interest of $617,924, amounts to $2,371,353.
17. In addition, expenditures in the amount of $10,620,741
have been authorized and are anticipated, but not yet fully
incurred, for correcting environmental violations which arose
directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986. These authorized, but
yet not incurred, additional expenditures cover necessary repairs
in the end/flue and thru wall, benzene control, and emission
control. Defendant’s Exhibit (“DX”’) 5012-1.
18. Anticipated, but not authorized costs are estimated by
defendant, as of July 31, 1991, to be $11,500,000. DX 5004-1.
19. GSSI’s operation did not increase the net emissions
from the plant. GSSI has significantly increased maintenance
expenditures above those made by LTV, particularly at the coke
plant and BOF/melt shop.
20. Section 4.9.4(a) of the Alabama Air Pollution Control
Rules and Regulations (“Section 4.9.4(a)”) provides:
34a
There shall be no visible emissions during the pushing
cycle, other than water mist or vapor, within an
opacity which is greater than forty percent (40%) for
more than one (1) push per hour per battery.
21. Section 4.9.8 of the Alabama Air Pollution Control
Rules and Regulations (“Section 4.9.8”) provides:
There shall be no visible emissions, other than water
mist or vapor, with an opacity greater than twenty
percent (20%) from any stack except for a period or
periods aggregating not more than three (3) minutes
in any consecutive sixty (60) minutes.
22. Section 4.9.6(a) of the Alabama Air Pollution Control
Rules and Regulations (“Section 4.9.6(a)’’) provides:
There shall be no visible emissions, except non-smok-
ing flame, from any opening on the coke oven doors
from more than fifteen percent (15%) of the coke oven
doors on any battery at any time.
23. The Gadsden plant has a documented history of non-
compliance with environmental requirements. As long ago as
June 21, 1974, the Environmental Protection Agency (“EPA”’)
reported that the coke plant was not in environmental com-
pliance. Failure to achieve compliance continued to be a con-
cern to EPA in 1975. In order to secure a permit to continue
operating No. 2 Coke Battery, Republic promised to shut down
and replace this battery by the second half of 1981. Republic
reconsidered when it realized $4-5 million was required to
maintain operations until 1981. On March 30, 1976, an abate-
ment order was issued requiring submission of a schedule and
costs to achieve compliance by December 31, 1976. Although
a September 13, 1976 press release claimed No. 2 Coke Battery
had achieved compliance, internal Republic memorandum
revealed that, as of December 9, 1976, reported emissions from
No. 2 Coke Battery stack were “in violation of Commission
35a
regulations.” On September 1, 1977, Republic revealed that
construction of a replacement for No. 2 Coke Battery would be
“indefinitely postponed.” On July 17, 1978, a delayed com-
pliance order was issued requiring Republic to “use the best
practicable systems of emissions reduction” to minimize viola-
tions of Section 4.9.8 (coke oven combustion stacks) on No. 2
Coke Battery by August 1, 1978. Failing to meet this objective,
on October 15, 1979, a complaint was filed in Etowah County
Circuit Court alleging violations of Section 4.9.4 caused by No.
2 Coke Battery. Republic internal memoranda and correspon-
dence indicated that the defense of the suit would be difficult
and No. 2 Coke Battery might have to be closed to settle the
litigation. On June 10, 1980, EPA reaffirmed its March 3, 1978
designation, of that portion of Etowah County in which the
Republic plant was located, as a non-attainment area, pursuant
to Section 107(d) of the Clean Air Act, because it failed to meet
the National Ambient Air Quality Standards (“NAAQS”). 45
Fed. Reg. 32,254 (June 10, 1980).
24. Under Republic’s ownership, there were numerous
violations of the Alabama Pollution Control Rules and Regula-
tions (i.e., Sections 4.9.4(a), 4.9.6, 4.9.8.)
25. On June 29, 1984, Republic became a wholly-owned
subsidiary of LTV, and thereafter it was required that all en-
vironmental licenses be re-issued under the new corporate name,
Gulf States Steel Corporation. New air permits were issued on
September 13, 1985 covering all process sources of con-
taminants.
_26. Under LTV’s ownership, from June 29, 1984 to
January 31, 1986, violations of Section 4.9.8 (combustion
stacks) were found on at least ten occasions: August 15, 1984;
August 28-29, 1984; October 2, 1984; December 5, 1984;
January 16, 1985; February 7, 1985; February 22, 1985; March
14, 1985; and December 17, 27, 30, 1985. In addition, Section
4.9.6(a) violations (door emissions) were cited on October y &
36a
1984 and February 7, 1985. While the previous consent order
did not require Republic either to shut down No. 2 Coke Battery
by a specific date or if the NAAQS were not met, nevertheless
itremained an enforcement option that could have been required
at any time. At a September 21, 1984 ADEM meeting shortly
after the final judgment was entered, LTV admitted that the No.
2 Coke Battery:
. . . has more severe problems and its production
potential is not predicated to last beyond the end of
1986. Serious problems exist with regard to wall and
flue damage that cannot be addressed without major
Capital expenditures that would be foolhardy on a
battery with such a short remaining life.
LTV’s Director of Environmental Control also stated that the
“No. 2 battery was so far past its useful life that no repairs could
be made which would bring the flue stack into compliance.” An
October 5, 1984 LTV internal memorandum indicated that the
No. 3 combustion stack and doors also were not in compliance.
On October 31, 1984, LTV wrote ADEM:
Following ADEM’s inspections of August 15 and
October 2, 1984 it was determined that major capital
must be spent on battery No. 2 in order to bring it into
compliance with regard to combustion stack and
doors .... With respect to battery No. 3, a similar
program of major repair and maintenance is proposed.
A November 1984 internal LTV report confirms that No. 2 was
not in compliance.
27. An October 18, 1985 ADEM memorandum sum-
marized LTV’s environmental compliance at the Gadsden plant:
LTV appears to be reluctant to commit to any definite
program to achieve long-term compliance of this
facility because of the always-imminent sale of the
plant, low profitability, and what appears to be a
37a
general pattern of poor management aimed at short-
term results. Short of legal action, which may
threaten continued operation (or sale) of the plant, the
Department’s options range from tolerating the viola-
tions to EPA’s involvement, which becomes more
likely with time.
The EPA considered the Gadsden plant a “significant violator”
since at least October 1984 because of environmental violations
regarding the coke batteries.
28. The environmental violations did not immediately
cease after GSSI took over Gadsden. On November 8, 1988,
ADEM filed a complaint against GSSI in Alabama Circuit Court
of Etowah County alleging violations of Section 4.9.4(a) at the
coke batteries during August 25, 1987 — August 10, 1988.
ADEM also cited violations of Section 4.9.4(a) on July 10, 1989;
August 23, 1989; September 26, 1989; October 19, 23, 25,
1989; and December 5, 1989. Other violations were also cited
in the complaint covering dates as early as October 31, 1986.
29. These violations of Sections 4.9.4(a), 4.9.6(a) and 4.9.8
arose directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986.
30. On December 20, 1988, the Alabama Circuit Court
entered a consent decree which required extensive end flue and
thru wall repairs on the No. 2 Coke Battery, compliance with
the regulations relating to pushing on the No. 2 and No. 3
Batteries, and control of emissions from the combustion stacks
on said Batteries. A strict time frame for compliance was
imposed.
31. GSSI has incurred authorized costs of $5,459,096, as
of July 31, 1991, in correcting violations of Sections 4.9.4(a)
and 4.9.8 by rebuilding end flues and thru walls to achieve and
maintain compliance with Sections 4.9.4(a) and 4.9.8, as re-
quired by the consent decree. GSSI completed repairs on 130
38a
end flues on or about December 31, 1990 and is completing
remaining end flue and thru walls. DX 5012-1.
32. GSSI will incur additional authorized costs of
$540,904 to complete work-in-progress rebuilding end flues and
thru walls to achieve and maintain compliance with Sections
4.9.4(a) and 4.9.8, as required by the consent decree. DX
5012-1.
33. By August 1, 1994, GSSI states that it will incur
additional costs of approximately $4,500,000 to complete
rebuilding end flue and thru walls to achieve and maintain
compliance with Sections 4.9.4(a) and 4.9.8, as required by the
consent decree. DX 5004-1.
CONCLUSIONS OF LAW
1. As previously stated, this Court has continuing subject
matter jurisdiction pursuant to the Final Judgment and other
Orders entered on August 2, 1984 in United States v. LTV Corp.,
etal., supra. This jurisdiction was recognized by Judge Stanton
in his Transfer Order of May 3, 1991. (See Findings of Fact No.
4.)
2. The Gadsden plant was not in environmental compliance
in 1984 at the time LTV and Republic Steel Corporation peti-
tioned this Court to enter the Final Judgment in United States v.
LTV, supra, and contrary to representations made at that time,
therefore was not capable of “competing effectively in the
manufacture and sale of carbon and alloy hot and cold rolled
sheet steel.” Nor was the Gadsden plant capable of achieving
and maintaining environmental compliance on a day-to-day
basis, on January 31, 1986, without the expenditure of substan-
tial capital.
3. Under the Asset Purchase Agreement of January 31,
1986, defendant LTV had the duty, not only to retain and assume
all liabilities or obligations arising directly or indirectly out of
the conduct of Business on or before January 31, 1986, but also
39a
to indemnify GSSI for such liabilities and obligations. Asset
Agreement, Sections 3.1, 3.2 and 9.1. Relevant warranty and
representations are set forth in Sections 4.1.5 and 4.1.13.
4. This Court’s Orders in United States v. LTV Corp.,
supra, did not relate to, require and were not dependent upon
GSSI installing electric furnaces to replace the cokemaking and
Basic Oxygen facilities at the Gadsden plant. Electric furnaces
cost more to operate and their installation would have an adverse
effect upon customers for sheet steel. These two factors would
prevent GSSI from being a viable competitor in the domestic
steel market.
5. LTV had timely notice, written and otherwise, of
GSSI’s indemnification claims.
6. Pursuant to this Court’s July 1, 1991 Order, GSSI is
entitled to receive from LTV authorized costs incurred in cor-
recting violations of environmental laws and regulations that
arose directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986 in the amount of
$18,085,438, by recoupment from the monies deposited in
escrow and subject to this Court’s June 21, 1991 Order.
7. In addition, GSSI is entitled to receive interest from
LTV, on its expenditure of $18,085,438, as of July 31, 1991,
less $617,824 capitalized interest, in the amount of $2,371,353,
based on an end of the quarter payment convention at a statutory
rate of 10 percent per annum, continuing at the rate of $4,786
per day until GSSI has received payment in full, by recoupment
from the monies deposited in escrow and subject to this Court’s
June 21, 1991 Order.
8. Pursuant to this Court’s July 1, 1991 Order, GSS1 is also
entitled to receive from LTV authorized and anticipated costs of
$10,620,741 for correcting environmental violations which
arose directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986.
40a
9. GSSI has not demonstrated, with reasonable certainty,
that it will incur authorized costs of approximately $22,120,741
by August 2, 1994 in correcting environmental violations that
arose directly or indirectly out of the conduct of Business at the
Gadsden plant prior to January 31, 1986. This figure is no more
than an estimate of possible future expenditures. Its speculative
character is underscored by the fact that in a period of almost
six years, these costs have yet to be authorized. At the same
time, Gadsden continues to authorize and make substantial
Capital expenditures to maintain the plant as a viable and effec-
tive competitor in the domestic steel market.
An Order consistent with the foregoing has been entered
thisday.
/s/
JOHN H. PRATT
United States District Judge
Date: December 5, 1991
4la
APPENDIX C
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE LTV CORPORATION, LTV STEEL COMPANY
INC., and GULF STATES STEEL CORPORATION,
Plaintiffs,
Vv.
GULF STATES STEEL, INC., OF ALABAMA,
Defendant.
Civil Action
No. 91-1072
FILED Dec. 5, 1991
ORDER
Pursuant to the Findings of Fact and Conclusions of Law
entered this day in the above entitled cause, it is this 5th day of
December, 1991
ORDERED that
1. Defendant GSSI’s claim for recoupment be granted for
the following authorized expenditures made in correcting
specific environmental violations which arose directly or in-
directly out of the conduct of Business at the Gadsden plant on
or before January 31, 1986:
(a) Authorized expenditures of $18,085,438 plus in-
terest on said amount, as of July 31, 1991, of
$2,371,353 (Findings of Fact Nos. 14, 15 and 16,
Conclusions of Law Nos. 6 and 7), and
42a
(b) Authorized and anticipated, but not fully incurred
expenditures of $10,620,741 (Findings of Fact No.
17, Conclusions of Law No. 8).
2. Said recoupment shall not exceed the amount held in
escrow subject to this Court’s Order of June 21, 1991, with
respect to the deposit of moneys pursuant to an Escrow Agree-
ment attached to said Order.
3. Plaintiff LTV’s claim for any unpaid balance allegedly
due on the original purchase money note is denied without
prejudice, subject to a determination of the amount, if any,
presently due LTV on said note.
4. This Court shall retain jurisdiction until any remaining
issues are concluded.
/s/
JOHN H. PRATT
United States District Judge
43a
APPENDIX D
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE LTV CORPORATION, LTV STEEL COMPANY,
INC., AND GULF STATES STEEL CORPORATION,
Plaintiff,
V.
GULF STATES STEEL, INC. OF ALABAMA,
Defendant.
Civil Action No. 91-1072
(Judge Pratt)
Filed
June 21, 1991
Clerk, U.S. District Court
District of Columbia
ORDER REGARDING DEPOSIT OF MONIES
Pursuant to Rule 67, Fed. R. Civ. P., the Motion of Gulf
States Steel, Inc. (“GSSI”) to Deposit Certain Monies,
Memorandum of Points and Authorities in Support thereof, and
upon consideration of argument presented to this Court on June
14, 1991,
IT IS HEREBY ORDERED:
1. Any remaining obligation of GSSI to LTV Corporation,
LTV Steel Company, Inc. and Gulf States Steel Corporation
(collectively “LTV”) on the January 31, 1986 Promissory Note
made by GSSI as consideration to purchase the Gadsden,
Alabama steel mill, pursuant to this Court’s Orders in United
444
States v. LTV Corp., Civil Action No. 84-0884 (D.D.C.), is
hereby satisfied and paid in full, upon GSSI’s deposit in escrow
with the First National Bank of Chicago, pursuant to the Escrow
Agreement attached hereto, the amount of $31,293,000.00
together with interest at the rate of 18-3/4 percent from February
1, 1991 through the date of the entry of this Order.
2. The terms of the Escrow Agreement, attached hereto, are
incorporated into and made a part of this Order;
3. Upon such deposit, the accrual of any additional interest
on the January 31, 1986 Promissory Note is terminated, as set
forth above; and
4. Any and all disbursement of such escrowed monies
including any interest earned thereon subsequent to the date of
deposit, is subject to further Order of this Court.
/s/
Judge John H. Pratt
United States District Court
Entered: June 21, 1991
45a
ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated as of June 19, 1991
(this “Agreement’”’) is among GULF STATES STEEL, INC. OF
ALABAMA (“GSST’), THE LTV CORPORATION, LTV
STEEL COMPANY, INC. and GULF STATES STEEL COR-
PORATION (collectively “LTV”), and THE FIRST NATION-
AL BANK OF CHICAGO, as Escrow Agent (the “Escrow
Agent”).
RECITALS
WHEREAS, LTV, LTV Steel Company, Inc. and Gulf.
States Steel Corporation have filed an adversary compiaint in
the United States Bankruptcy Court for the Southern District of
New York against GSSI demanding payment upon a Note in the
amount of $28,875,000.00 in principal and $2,418,281.00 in
interest accrued as of February 1, 1991, for a total of
$31,293,281.00, with interest accruing at the rate specified on
the Note from February 1, 1991 (the “Proceeding”); and
WHEREAS, GSSI has filed an answer to the adversary
complaint denying allegations and asserting defenses; and
WHEREAS, The United States District Court for the
Southern District of New York on May 3, 1991 ordered a
withdrawal of the reference of the adversary proceeding to the
United States District Court for the Southern District of New
York from the Bankruptcy Court, and then transferred the
proceeding to the United States District Court for the District of
Columbia; and
WHEREAS, at a preliminary conference, GSSI proposed
that the amount demanded be deposited with a court as payment
in full, and the bankruptcy court instead proposed that a sum be
deposited in an escrow account and invested in accordance with
its Order Approving Investment Guidelines dated September
22, 1986; and
46a
WHEREAS, GSSI renewed its proposal to deposit the
amount demanded in court as payment in full in the matter of
LTV Corporation, et al. v. Gulf States Steel, Inc. of Alabama,
CA No. 91-1072, and at a hearing held on June 14, 1991, the
Hon. John H. Pratt approved the deposit, subject to his further
orders, pursuant to an Order attached hereto and made a part
hereof as Exhibit “1”.
In consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
SECTION 1. DEPOSIT OF ESCROWED FUNDS
GSSI has agreed to deposit with the Escrow Agent in
escrow the sum of Thirty-Three Million, Five Hundred Twen-
ty-six Thousand, One Hundred Eighty-six Dollars
($33,526,186.00), plus the sum of Sixteen Thousand Seventy-
Five and 32/100 Dollars ($16,075.32) per day after June 17,
1991 until the date Exhibit “1”(the Order) is entered (the "Initial
Deposit’, together with the proceeds of any investments thereof
and all interest and income thereon, the “Escrowed Funds’’).
The Escrow Agent hereby acknowledges receipt of the Initial
Deposit and agrees to establish and maintain a separate account ~
therefor (the “Escrow Account’).
SECTION 2. REPRESENTATIONS BY GSSI
GSSI represents and warrants that it has good and
marketable title to the Initial Deposit, free and clear of all liens,
charges and encumbrances whatever (other than as shall exist
under this Escrow Agreement), and has good right, full power
and authority to convey, transfer to the Escrow Agent for the
uses and purposes in this Escrow Agreement set forth; and GSSI
will warrant and defend the title thereto against all claims and
demands whatsoever.
47a
SECTION 3. INVESTMENT OF ESCROWED FUNDS
Pending application of the Escrowed Funds as con-
templated in this Escrow Agreement, the Escrow Agent shall
invest and reinvest the Escrowed Funds, from time to time
during the term of the escrow in direct, interest-bearing obliga-
tions of the United States of America with maturities of 30
and/or 60 days (the “Obligations”). Interest and other earnings
on the Obligations shall be added to the Escrow Account. Any
loss incurred from an investment will be borne by the Escrowed
Funds. Investment and reinvestment of the Escrowed Funds
shall be made only in Obligations. The Escrow Agent shall not
be liable for any losses or failure to receive any particular return
in respect of any investment. The Escrow Agent is hereby
authorized and directed to sell any or all of the escrowed funds
investments and reduce them to cash, if necessary, to make
disbursements hereunder without liability for any resulting los-
ses thereon.
SECTION 4. DISBURSEMENT OF ESCROWED FUNDS
The Escrow Agent shall disburse the funds on deposit in
the Escrow Account promptly upon receipt from LTV or GSSI
of a copy of a final judgment or order of the United States
District Court for the District of Columbia (the “Relevant
Court’), certified by the clerk of such court or other appropriate
official. A judgment or order under this Escrow Agreement
shall not be deemed to be final until the time within which an
- appeal may be taken therefrom has expired and no appeal has
been taken, or until the entry of a judgment or order from which
no appeal may be taken.
48a
SECTION 5. CONCERNING THE ESCROW AGENT
5.1. Certain Duties and Responsibilities of the
Escrow Agent:
(a) The Escrow Agent undertakes to perform such duties
and only such duties as are specifically set forth in this
Escrow Agreement and no implied covenants or
obligations shall be read into this Escrow Agreement
against the Escrow Agent.
(b) In the absence of bad faith on the part of the Escrow
Agent, the Escrow Agent may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or
opinions furnished to the Escrow Agent and conform-
ing to the requirements of this Escrow Agreement; but
in the case of any such certificates or opinions which
by any provisions hereof are specifically required to
be furnished to the Escrow Agent, the Escrow Agent
shall be under a duty to examine the same to determine
whether or not the execution and delivery thereof
conform to the requirements hereof.
(c) No provision of this Escrow Agreement shall be con-
strued to relieve the Escrow Agent from liability for
its own gross negligence or willful misconduct, ex-
cept that:
(1) This subsection shall not be construed to
limit the effect of subsection (a) of this
Section; and
(2) The Escrow Agent shall not be liable for
any error of judgment made in good faith
unless it shall be proved that the Escrow
Agent was negligent in ascertaining the per-
tinent facts.
3 -
iy -
49a
(d) No provision of this Escrow Agreement shall require
the Escrow Agent to expend or risk its own funds or
otherwise incur any financial liability in performance
of any duty hereunder, or in the exercise of any rights
or powers granted hereunder or by law if the Escrow
Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured
to it.
(e) GSSI and LTV, jointly and severally, agree to indem-
) nify and save harmless the Escrow Agent from and
against all loss, liability and expense incurred in good
faith and without gross negligence or willful miscon-
duct on its part in the exercise or performance of any
rights, remedies or duties under this Escrow Agree-
ment.
(f) Whether or not herein expressly so provided, every
provision of this Escrow Agreement relating to the
conduct or affecting the liability of or affording
protection to the Escrow Agent shall be subject to the
provisions of this Section.
5.2. Escrow Agent's Compensation, Expenses, etc. GSSI,
from time to time upon request, will pay the Escrow Agent
reasonable compensation for its services hereunder as set forth
in the attached Exhibit “2” and will pay or reimburse the Escrow
Agent for all reasonable expenses and disbursements of the
Escrow Agent hereunder, including, without limitation, the
reasonable compensation and expenses and disbursements of
the Escrow Agent’s counsel and of agents not regularly in the
Escrow Agent’s employ.
5.3. Certain Rights of the Escrow Agent.
(a) The Escrow Agent shall not be responsible for paying
or discharging any tax, assessment, governmental —
50a
charge or lien affecting the Escrowed Funds, or for
the recording, filing or refiling of this Escrow Agree-
ment nor shall the Escrow Agent be bound to ascertain
or inquire as to the performance or observance of any
of the covenants, conditions or agreements contained
herein, and, except in the case of a default of which
an officer in the Corporate Trust Department of the
Escrow Agent has actual knowledge, the Escrow
Agent shall be deemed to have knowledge of a default
in the performance or observance of any of such
covenants, conditions or agreements only upon
receipt of written notice thereof from GSSI or LTV.
The Escrow Agent shall promptly notify GSSI and
LTV of any default of which the Escrow Agent has
actual knowledge. .
(b) The Escrow Agent makes no representation or war-
ranty as to the validity, sufficiency or enforceability
of this Escrow Agreement.
(c) The Escrow Agent may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, note
or other paper or document believed by the Escrow
Agent to be genuine and to have been signed or
presented by the proper party or parties.
(d) Any request, direction or authorization by GSSI or
LTV shall be sufficiently evidenced by a request,
direction or authorization in writing, delivered to the
Escrow Agent, and signed in the name of the company
making the request, director or authorization by the
President or any Vice President of that company.
(e) Whenever in the administration of this Escrow Agree-
ment provided for herein, the Escrow Agent shall
deem it necessary or desirable that a matter be proved
err). “4 |e A. Pe eerr a y
oo tee me » =<
(f)
(g)
(h)
Sla
or established prior to taking, suffering or permitting
any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved
and established by a certificate purporting to be signed
by the appropriate officer of GSSI or LTV and
delivered to a corporate trust officer of the Escrow
Agent, and such certificate shall be full warrant to the
Escrow Agent or any other person for any action
taken, suffered or omitted on the faith thereof, but in
its discretion the Escrow Agent may accept in lieu
thereof other evidence of such fact or matter or may
require such further or additional evidence as it may
deem reasonable.
The Escrow Agent may consult with counsel, ap-
praisers, engineers, accountants and other skilled per-
sons to be selected by the Escrow Agent, and the
written advice of any thereof shall be full and com-
plete authorization and protection in respect of any
action taken, suffered or omitted by the Escrow Agent
hereunder in good faith and in reliance thereon.
The Escrow Agent shall not be liable for any action
taken or omitted by the Escrow Agent in good faith
and believed by the Escrow Agent to be authorized or
within the discretion or rights or powers conferred
upon the Escrow Agent by this Escrow Agreement.
The provisions of paragraph (c) to (h) inclusive of this
§ 5.3 shall be subject to the provisions of § 5.1 hereof.
5.4. Showings Deemed Necessary by the Escrow Agent.
Notwithstanding anything elsewhere in this Escrow Agreement
contained, the Escrow Agent shall have the right, but shall not
be required, to demand in respect of withdrawal of any
Escrowed Funds or any other action whatsoever within the
purview hereof, any showings, certificates, opinions, appraisals,
52a
or other information by the Escrow Agent deemed necessary or
appropriate in addition to the matters by the terms hereof re-
quired as a condition precedent to such action.
5.5. Status of Moneys Received. All monies received by
the Escrow Agent shall, until used or applied as herein provided,
be held for the purposes for which they were received.
5.6. Resignation of the Escrow Agent. The Escrow Agent
may resign and be discharged from the trusts created hereby by
delivering written notice thereof to LTV and GSSI. Such resig-
nation shall take effect on the date a successor Escrow Agent
shall have been appointed and shall have accepted such appoint-
ment as provided in § 5.10.
5.7. Removal of Escrow Agent. The Escrow Agent may
be removed at any time, for or without cause, by an instrument
or instruments in writing executed by LTV and GSSI.
5.8. Appointment of Successor Escrow Agent. In case at
any time the Escrow Agent shall resign or be removed or
otherwise become incapable of acting, a successor Escrow
Agent may be appointed by an instrument in writing executed
by such successor Escrow Agent, LTV and GSSI. Each Escrow
Agent appointed in succession of the Escrow Agent named in
this Escrow Agreement shall be a trust company or banking
corporation organized and in good standing under the laws of
the United States of America or any state thereof, and having
capital, surplus and undivided profits aggregating no less than
$1,000,000,000.
5.9. Successor Escrow Agent by Merger, Consolidation,
etc. Any corporation into which a corporation acting as Escrow
Agent hereunder may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Escrow Agent is a party, or any state
or national bank or trust company in any manner succeeding to
all or substantially all of the corporate trust business of a
53a
corporation acting as Escrow Agent hereunder, shall automat-
ically succeed to all of the rights and obligations of the Escrow
Agent hereunder without further action on the part of any of the
parties hereto.
5.10. Acceptance of Appointment by Successor Escrow
Agent. Any new Escrow Agent appointed pursuant to any of the
provisions hereof shall execute, acknowledge and deliver to
LTV and GSSI an instrument accepting such appointment; and
thereupon such new Escrow Agent, without any further act, deed
or conveyance, shall become vested with all the estates, proper-
ties, rights, powers and trusts of its predecessor in the rights
hereunder with like effect as if originally named as Escrow
Agent herein; but nevertheless, upon the written request of LTV
and GSSI, or the successor Escrow Agent, the Escrow Agent
ceasing to act shall execute and deliver an instrument transfer-
ring to such successor Escrow Agent, upon the trusts herein
expressed, all the estates, properties, rights, powers and trust of
the Escrow Agent so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such
Escrow Agent to the successor Escrow Agent so appointed in
its or his place.
SECTION 6. MISCELLANEOUS
6.1. Amendments. Any term, covenant, agreement or con-
dition of this Agreement may be amended, upon the written
consent of the parties hereto.
6.2. Effect of Amendment or Waiver. No such amendment
or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
6.3. Notices. All communications provided for hereunder
Shall be in writing and delivered or mailed by registered or
certified mail or overnight air courier, or by facsimile com-
munication confirmed by registered or certified mail or over-
night air courier: (1) If to GSSI, to Gulf States Steel, Inc.. 174
54a
South 26th Street, Gadsden, AL 35904-1935, Attention: Presi-
dent, with a copy to The Brenlin Group, Inc. 670 West Market
Street, Akron, OH 44303, Attention: James D. Van Tiem; (2)
if to LTV, to Glenn J. Moran, Esq., Vice President and Group
Counsel, The LTV Steel Company, Inc., 25 West Prospect
Street, Cleveland, OH 44115; or (3) if to the Escrow Agent, to
The First National Bank of Chicago, One North State Street, 9th
Floor, Chicago, Illinois 60602, Attention: Corporate Trust
Administration - Escrow, if by registered or certified mail, and
at The First National Bank of Chicago, One First National Plaza,
Suite 0126, Chicago, Dlinois 60670, Attention: Corporate
Trust Administration - Escrow, if by overnight courier, or at
(312) 407-1708, if by facsimile communication, or to such other
address as GSSI, LTV or the Escrow Agent may in writing
designate.
6.4. Successors and Assigns. This Agreement shall be
binding upon GSSI, LTV and the Escrow Agent and their
respective successors and assigns and shall inure to the benefit
of each thereof.
6.5. Severability. Should any part of this Agreement for
any reason be declared invalid or unenforceable, such decision
shall not affect the validity or enforceability of any remaining
portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion
or unenforceable thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be
hereafter declared invalid or unenforceable.
6.6. Governing Law. This Agreement shall be governed
by and construed in accordance with Illinc is law.
6.7. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only
55a
and shall not affect the meaning or construction of any of the
provisions hereof.
6.8. Termination. This Escrow Agreement shall terminate
upon disbursement of the Escrowed Funds pursuant to Section
[4] hereof. Any investments in the Escrow Account on the
aforesaid termination date shall be liquidated and the proceeds
thereof plus any cash balance in the Escrow Account shall be
distributed pursuant to Section [4] hereof.
6.9. Set-Off. The Escrow Agent hereby agrees that it shall
not assert, claim or endeavor to exercise any right of set-off or
banker’s lien against any Escrowed Funds or any items or
proceeds thereof that come into its possession in connection with
this Escrow Agreement.
6.10. Recordkeeping; Accounting; Tax Returns. The
Escrow Agent shali keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions
hereunder. Within thirty days following the end of each calen-
dar month, and either (i) the Escrow Agent’s removal or resig-
nation or (ii) the termination of the Escrow Agreement as
provided herein, the Escrow Agent shall render to LTV and
GSSI an accounting of its administration of the Escrow Agree-
ment, including a description of all gains, income, losses and
expenses during the month and on a calendar year basis, assets
on hand at the end of the month, a description of all securities
and investments purchased and sold during the month and other
pertinent information.
S$6a
IN WITNESS WHEREOF, Gulf States Steel, Inc. of
Alabama has caused this Escrow Agreement to be executed on
its behalf by its and attested by its Secretary, on
this day of , 1991, and the LTV Corporation has
caused this Escrow Agreement to be executed on its behalf by
its and attested by its Secretary on this day
of , E998.
GULF STATES STEEL, INC.
OF ALABAMA
By
Its
ATTEST
By
Its
THE LTV CORPORATION
By
Its
ATTEST
By
Escrow Agreement accepted
this day of , 1991:
THE FIRST NATIONAL
BANK OF CHICAGO
as Escrow Agent
By
Its
57a
APPENDIX E
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE LTV CORPORATION, et al.,
Plaintiffs,
v.
GULF STATES STEEL, INC. OF ALABAMA,
Defendant.
Civil Action No. 91-1072
ORDER
On June 14, 1991 this Court entertained oral argument from
plaintiffs (collectively, “LTV”) and defendant Gulf States Steel,
Inc. of Alabama (“GSSI’’) on LTV’s motion for summary
judgment. After considering oral argument, all the briefs filed
before and after the hearing, and the entire record of the case,
we reach the following conclusions:
1. As the Court stated at the hearing on June 14, the words
“any liability or obligation” in paragraph 9. 1(a)(ii) of the Agree-
ment of Purchase and Sale of Assets (“Asset Agreement”)
signed by the parties on January 31, 1986, includes environmen-
tal liabilities. Therefore, GSSI is not precluded as a matter of
law from receiving a recoupment, no greater than the amount
held in escrow pursuant to this Court’s Order of June 21, 1991,
for the costs it has incurred in correcting environmental viola-
tions that arose “directly or indirectly out of the conduct of
Business on or before the Closing Date which is not an Assumed
Liability ....” See Asset Agreement, paragraph 9. 1(a)(ii).
58a
2. LTV is liable to GSSI for the cost of each corrective
action that arose “directly or indirectly out of the conduct of
Business on or before the Closing Date which is not an Assumed
Liability,” whether or not LTV listed the need for that corrective
action in Exhibit V. Itis true that the version of paragraph 4.1.13
of the Asset Agreement which the parties signed on January 31,
199] contains “a schedule of all corrective action which, but for
this transaction, would have been required to be implemented
by LTV respecting the Business for material compliance with
current environmental laws and regulations . . . .” (emphasis
added). Nevertheless, this language does not necessarily relieve
LTV of the duty to indemnify GSSI for the cost of the corrective
activities listed in Exhibit V. Paragraph 4.1.13 can be inter-
preted simply as requiring LTV to disclose to GSSI all of the
corrective actions it would have had to take if it were stil
running the Gadsden plant. None of the Orders of this Court
ever allowed LTV to relieve itself of liability for the environ-
mental violations simply by listing them in Exhibit V. There-
fore, we find that paragraph 4.1.13 does not exempt LTV from
liability under the terms of the Asset Agreement.
3. Issues of material fact exist as to which, if any, of the
corrective actions necessary to bring the Gadsden plant into
compliance with environmental law arose “directly or indirectly
out of the conduct of Business on or before the Closing Date
which is not an Assumed Liability ... .”
Therefore, it is by the Court this Ist day of July, 1991,
ORDERED that plaintiff LTV’s motion for summary judg-
ment is denied, and it is
ORDERED that the Court will hold an evidentiary hearing
on August 26, 1991 to resolve the issues of material fact in this
case, and it is
ORDERED that no later than fourteen (14) days after the
entry of this Order, GSSI shall provide LTV with a statement as
tachi an iach iliac
59a
to the costs or expense for which it will seek indemnification at
the evidentiary hearing, and it is
ORDERED that no later than August 5, 1991 each party
Shall file with the Court, and serve counsel for the opposing
party, a list of all potential witnesses, including expert witnesses,
if any, showing the name, address thereof and subject matter
areas of proposed testimony, and it is
ORDERED that no later than August 12, 1991, each party
Shall file with the Court, and serve counsel for the opposing
party, a list of the exhibits it will offer in evidence, and it is
ORDERED that no later than August 19, 1991, each party
shall file a schedule with the Court, and serve counsel for the
opposing party, identifying the specific grounds for any objec-
tion to a proposed exhibit, and it is
ORDERED that the parties will not be allowed to use any
exhibits or proffer testimony of witnesses at the hearing, not
identified as required herein, and it is
ORDERED that no later than August 19, 1991 each party
shall file with the Court, and serve counsel for the opposing
party, amemorandum addressing any contested legal issues, and
it is further
ORDERED that no later than September 8, 1991 each party
shall file proposed findings of fact and conclusions of law and
a proposed hearing order.
/s/
JOHN H. PRATT
United States District Judge
60a
APPENDIX F
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Civil Division
THE LTV CORPORATION, LTV STEEL COMPANY,
INC. and GULF STATES STEEL CORPORATION,
Plaintiffs,
V.
GULF STATES STEEL, INC. OF ALABAMA,
Defendant.
Civil Action No. 91-1072
(Judge Pratt)
Filed August 6, 1992
Clerk, U.S. District Court
District of Columbia
FINAL JUDGMENT
Pursuant to the August 4, 1992 mandate of the Court of
Appeals, it is hereby
ORDERED, ADJUDGED, AND DECREED that any and
all amounts held in escrow pursuant to this Court’s Order of June
21, 1991 shall be paid forthwith to LTV; and it is further
ORDERED, ADJUDGED, AND DECREED that an addi-
tional judgment is entered in favor of LTV and against GSSI for
$4,959,877.64, representing the difference between the actual
earnings of the escrow fund and interest at the rate of 18-3/4%
on the sum of $31,293,281.00 between June 21, 1991 and
August 6, 1992; and it is further
6la
ORDERED, ADJUDGED, AND DECREED that an addi-
tional judgment is entered in favor of LTV and against GSSI for
$2,180.46, representing LTV’s bill of costs on appeal; and it is
further
ORDERED, that the Court reserves jurisdiction of this case
until all remaining matters are concluded.
Dated: August 6, 1992
JOHN H. PRATT
United States District Judge
cc.: Guy Miller Struve
Karen E. Wagner
Philip Ransom Schatz
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Jerome G. Snider
Davis Polk & Wardwell
1300 I Street, N.W.
Washington, D.C. 20005
Susan G. Braden
Anderson Kill Olick & Oshinsky
2000 Pennsylvania Avenue, N.W., Suite 7500
Washington, D.C. 20006
Richard T. Cunningham
Amer Cunningham Brennan
159 South Main
6th Floor Society Building
Akron, Ohio 44308
Betty Southard Murphy
Baker & Hostetler
1050 Connecticut Avenue, N.W., Suite 1100
Washington, D.C. 20036
62a
APPENDIX G
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Civil Division
THE LTV CORPORATION, LTV STEEL COMPANY,
INC. and GULF STATES STEEL CORPORATION,
Plaintiffs,
Vv.
GULF STATES STEEL, INC. OF ALABAMA,
Defendant.
Civil Action No. 91-1072
(Judge Pratt)
Filed August 6, 1992
Clerk, U.S. District Court
District of Columbia
ESCROW DEPOSIT
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