The opinion of the court was delivered by: URBINA, District Judge.
DENYING WITHOUT PREJUDICE THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT;
DENYING WITHOUT PREJUDICE THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
The plaintiff, Potomac Electric Power Company ("Pepco"), brings this
claim for breach of contract against the defendant, Mirant Corporation
("Mirant"). On June 7, 2002, the two parties entered into the Asset
Purchase and Sales Agreement ("Agreement") whereby Mirant purchased
several of Pepco's power generating facilities and related assets. This
dispute centers on whether the Agreement requires Mirant to assume
liability and indemnify Pepco for expenses related to an asbestos-related
lawsuit that was filed before December 19, 2000 (the Agreement's closing
date) but did not name Pepco as a defendant until after December 19,
2000. This matter comes before the court on the parties' respective
motions for summary judgment. For the reasons that follow, the court
denies both motions without prejudice.
Pepco is a District of Columbia corporation with its principal place of
business in the District of Columbia. Compl. ¶ 1. Mirant is a
Delaware corporation with its principal place of business in Atlanta,
Georgia. Id. ¶ 2. On June 7, 2000, Pepco and Mirant entered into an
Asset Purchase and Sale Agreement ("Agreement"). Pl.'s Statement
of Undisputed Material Facts ("Pl.'s Statement") ¶¶ 1-2. Mirant agreed
to purchase certain power generating facilities and related assets owned
by Pepco in Maryland, Virginia and the District of Columbia, some of
which the parties identified collectively as the "Auctioned Assets."
Pl.'s Mot. for Summ J. at 3. The Chalk Point generating facility ("Chalk
Point"), located in Aquasco, Maryland, is one of the Auctioned Assets.
Pl.'s Statement ¶ 2.
Under Section 2.3(a)*fn1 of the Agreement, the Assumed Obligations
section, Mirant assumed all liabilities and obligations relating to the
Auctioned Assets "from and after the closing" of the Agreement. Id.
¶¶ 2-4. The closing date of the Agreement is December 19, 2000. Id.
¶ 3. These liabilities and obligations include any environmental or
personal injury liabilities arising out of the use or presence of
hazardous substances, such as asbestos. Id. Furthermore, under Section
10.1(b)*fn2 of the Agreement, Mirant agreed to indemnify Pepco for any
losses arising out of these liabilities and obligations. Id. ¶ 13.
Section 2.3(b) of the Agreement, the Retained Liabilities section,
specifies that Pepco retained several categories of liabilities. Id.
¶ 7. Pepco's claim focuses on Section 2.3(b)(iii)(C) of the
Agreement, which exempts Mirant from liability and indemnity obligations
as they pertain to certain personal injury claims. Pl.'s Mot. for Summ.
J. Ex. 1 at 9. Section 2.3(b)(iii)(C) reads:
Retained Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the
following liabilities or obligations[:] . . . (C) any
liability in respect of any personal injury claims
relating to the exposure of a third party to asbestos
at the Auctioned Assets or the Potomac River Station
Site which have been filed with any state or federal
court having jurisdiction prior to the Closing Date
[December 19, 2000] . . . .
Id. In other words, under Section 2.3(b)(iii)(C), Pepco retained
liability for personal injury claims related to asbestos exposure at the
Auctioned Assets (including Chalk Point) and filed before December 19,
In 2000, a number of asbestos-related personal injury claims, known as
the CT-4 Cases, were pending in the Circuit Court for Baltimore City.
Def.'s Statement of Undisputed Material Facts ("Def.'s Statement") ¶
2. Pursuant to a February 17, 1987 order, the Circuit Court for Baltimore
City consolidated into one trial cluster all personal injury asbestos
cases in which the plaintiff was not a tradesman or steelworker and filed
on or after January 1, 1987. Id. The master complaint in the CT-4 Cases,
filed on March 20, 1987, served as the foundation for the allegations of
fact and legal claims for this trial cluster. Id. For all subsequent
cases, the Circuit Court for Baltimore City required prospective
plaintiffs to file a short-form complaint that adopted and incorporated
the relevant paragraphs of the master complaint. Id.
In November 1999, Alexander Wilson joined the CT-4 Cases by filing a
short-form complaint for personal injuries resulting from asbestos
exposure ("Wilson Case"). Id. ¶ 3; Def.'s Mot. for Summ. J. Ex. F.
Mr. Wilson's complaint requested relief in excess of $100 million and
incorporated by reference "all Introductory Language and the Counts" set
forth in the master complaint. Id. Mr. Wilson's complaint failed to
allege specific facts or counts. Def.'s Statement ¶ 3.
In January 2001, after Mr. Wilson passed away, Mr. Wilson's estate
filed an amendment to add Pepco as a defendant in the Wilson Case. Id.
¶ 5. Containing no additional allegations of fact, the amendment
simply stated that Pepco was a defendant. Id. In March 2001, Mr. Wilson's
estate filed an amended complaint elaborating on its theories of
negligence, and then filed a second amended complaint in August 2001.
Id. ¶ 5 n. 1; Def.'s Mot. for Summ. J. Exs. H, I. As Mirant
concedes, not until the August 2001 second amended complaint did the
Wilson Case make specific allegations about Pepco, reference Chalk
Point, and connect Mr. Wilson to Chalk Point. Id. ¶ 5 n. 1. On
December 14, 2001, the Circuit Court for Baltimore City granted Pepco's
motion for summary judgment in the Wilson Case and dismissed all claims
related to Pepco. Id.; In re Baltimore City Asbestos Litig., 2001 WL
1757153 (Md. Cir. Ct. Dec. 14, 2001).
In January 2001, Pepco called upon Mirant to indemnify Pepco for its
expenses related to the Wilson Case. Pl.'s Statement ¶ 14. Since that
time, Mirant has refused to indemnify Pepco. Id. ¶ 15. Pepco claims
that it incurred more than $620,000 in "reasonable costs and expenses in
preparation and defense of the Wilson Case." Id. ¶ 16. Consequently,
Pepco filed a complaint seeking damages against Mirant in excess of
$620,000, pre- and post-judgment interest, costs, and attorney's fees.
Compl. ¶ 25. Pepco also asks for a declaratory judgment that Mirant
is obligated to indemnify Pepco for all indemnifiable losses. Id. ¶
In its motion for summary judgment, Pepco argues that under Section
2.3(a) of the Agreement, the Wilson Case constitutes an obligation that
Mirant assumed because Mr. Wilson's estate did not file the amended
complaint naming Pepco as a defendant until after the December 19, 2000
closing date of the Agreement. Pl.'s Mot. for Summ. J. at 2; Compl.
¶¶ 12, 16. Therefore, Pepco argues, Mirant must pay the costs of
litigating the Wilson Case. In contrast, Mirant contends it need not pay
these costs. In its motion for summary judgment, Mirant contends that
Pepco retained liability for the Wilson Case pursuant to Section
2.3(b)(iii)(C) because the Wilson Case meets the requirements of this
section and the original complaint in the Wilson Case was filed in 1999,
before the December 19, 2000 closing date. Def.'s Cross-Mot. for Summ.
J. at 10. Thus, Mirant asserts, it does not have to indemnify Pepco. Id.
A. Legal Standard for Motion for Summary Judgment
Summary judgment is appropriate when "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law." FED. R. CIV. P. 56(c); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540
(D.C. Cir. 1995). To determine which facts are "material," a court must
look to the substantive law on ...