The opinion of the court was delivered by: LYNCH
EUGENE F. LYNCH, UNITED STATES DISTRICT JUDGE
Plaintiff, Jones-Hamilton Company, has brought this action pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. Plaintiff alleges that defendants, Kop-Coat, Inc., Beazer Materials and Services, Inc., and Koppers Company, Inc., should contribute to the cost of responding to the illegal disposal of certain hazardous substances from plaintiff's chemical formulation facility. Plaintiff and defendants have filed cross-motions for summary judgment. For the reasons set forth below, the Court grants defendants' motion for summary judgment and denies plaintiff's motion for summary judgment.
The following facts are not in dispute. On August 31, 1970, plaintiff and defendants entered into a written agreement ("the agreement") under which plaintiff was to formulate raw materials to be provided by defendants into wood preservation compounds.
Under the agreement, defendants retained title to the raw materials and title to the finished products at all times. The agreement contained a provision ("the indemnity clause") which provided as follows:
[Plaintiff] agrees to comply with all applicable Federal, State and local laws, ordinances, codes, rules and regulations and to indemnify [defendants] against all losses, damages and costs resulting from any failure of [plaintiff] or any of its employes [sic], agents or contractors to do so.
Plaintiff formulated defendants' raw materials into wood preservation compounds under the agreement from 1970 until some time in 1984. An agent of defendants was present at plaintiff's facility during the formulation process. Although the agent's full role in the formulation process is disputed, it is clear that his duties included, at a minimum, insuring that plaintiff maintained quality control standards that were acceptable to defendants.
The Court, at a status conference held on April 20, 1990, requested that the parties submit cross-motions for summary judgment on two issues. First, the Court requested that the parties brief the issue of whether the indemnity clause bars plaintiff's action. If defendants are entitled to indemnification from plaintiff for any liability under CERCLA, plaintiff's suit against defendants for contribution is meaningless. Second, the Court requested that the parties brief the issue of whether defendants fall within the ambit of the statute -- that is, whether defendants "arranged for the disposal of hazardous substances." 42 U.S.C. § 9607(a)(3). Because the Court holds that the indemnity clause bars plaintiff's action, the Court need not address the issue of whether defendants "arranged for the disposal of hazardous substances."
Plaintiff contends that the indemnity clause does not bar plaintiff's action for three reasons. First, plaintiff argues that defendants may not be indemnified for liability under CERCLA because indemnification for strict liability is contrary to the public policy of California. Second, plaintiff argues that the indemnity clause does not apply to CERCLA liability because the clause's language does not expressly anticipate "CERCLA-type liability" and because the parties drafted the clause ten years before CERCLA's enactment. Third, plaintiff argues that defendants' "active negligence" bars indemnification. After briefly discussing the source of applicable law, the Court addresses each of these issues in turn.
California contract law governs the Court's interpretation of the indemnity clause. The Ninth Circuit has held that state law should provide the general content of federal law with respect to interpreting a contract that releases a party from CERCLA liability. Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1458-59 (9th Cir. 1986). A court should apply uniform federal law to the interpretation of such a contract only when the outcome under state law would be hostile to federal interests. Id. at 1460. The indemnity clause at issue is part of an agreement that was executed in California. The parties were to perform their obligations under the agreement in California. As set forth below, interpretation of the indemnity clause ...