PHILADELPHIA ELECTRIC COMPANY V. HERCULES, INC.
762 F.2d 303 (3rd Cir. 1985)
NATURE OF THE CASE: Hecules (D) challenged decision of the United States District Court
that found in favor of Philadelphia (P)for a stipulated amount and further ordered D to take
appropriate action to eliminate pollution on a property owned by P in an action based on
private and public nuisance.
FACTS: The Pennsylvania Industrial Chemical Corporation ('PICCO') owned a tract of land
abutting the Delaware River. It operated a hydrocarbon resin manufacturing plant. PICCO
filled in the shoreline at an inlet and thereby created a pond. PICCO then deposited or
buried various resins and their by-products in the PICCO pond and possibly other locations.
PICCO ceased operations and sold the facility to Gould, Inc. Gould did not conduct any
operations other than leasing certain tanks to ABM Disposal Services Company which used them
to store large quantities of various waste materials, though apparently not resins or
resinous by-products. The Philadelphia Electric Company (P) who operated a plant on an
adjoining piece of land obtained an option to purchase the Chester site from Gould. P
inspected the site on more than one occasion, including walking tours along the banks of the
Delaware River and the banks of the PICCO pond. P learned that Gould's tenant, ABM, had
caused a number of spills on the site, including oil spills in the pond area, and was
informed that ABM was a 'sloppy tenant'. ABM was unable to clean up the Chester site in time
to meet Gould's original deadline for vacating the premises, a condition of the P purchase
agreement. P exercised its option and acquired the property in March of 1974. The
Pennsylvania Department of Environmental Resources ('DER') discovered that resinous
materials similar to those once produced by PICCO were seeping from the banks of the
Delaware River. P developed a plan whereby the remaining pond resin would be removed to a
landfill, and the PICCO pond area would be backfilled and regraded. DER approved this plan.
P produced evidence indicating that it incurred expenses of $338,328.69 for clean-up, $7,578
in collecting and carting away resinous material and $67,500 in lost rentals from American
Refining due to the continuing leaching. DER expressed satisfaction with the clean-up of the
pond area, but reported that resins still on the Delaware River bank and continued leaching
of resins into the River. P instituted suit against Gould and Hercules (D), which had
acquired the remaining assets of PICCO in 1973, in exchange for Hercules stock. D
cross-claimed against Gould. On cross-motions for summary judgment the district court ruled
that D was liable as PICCO's corporate successor under the express terms of the Agreement
and Plan of Reorganization ('the Agreement') it entered into with PICCO, and because the
transaction was a de facto merger. The jury's verdict was rendered in the form of answers to
special interrogatories. The district court molded a verdict and entered judgment for P
against D in the amount of $394,910.14. D appealed contending that the district court erred
in ruling that it was liable as PICCO's successor, and that P had no cause of action against
it for public or private nuisance.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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