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The United States of America v. Marmon Holdings

December 5, 2012


The opinion of the court was delivered by: U. S. District Judge Honorable Edward J. Lodge



Pending before the Court are cross motions for summary judgment (Dkt. 38, 39 and 42).Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument. For the reasons explained below, the Court will deny the motions for summary judgment and the matter will proceed to a bench trial.


This case concerns Defendants' liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for mining related pollution within the Bunker Hill Mining and Metallurgical Complex Superfund Site ("Bunker Hill Superfund Site") in northern Idaho.

In 1927, Golconda Lead Mines, Inc. founded the Golconda Mine and Mill near Lake Coeur d'Alene. The Government maintains that the operation of the mine resulted in the release of hazardous substances into the Coeur d'Alene Basin watershed. This Court is very familiar with the Superfund designation and mining history of the Coeur d'Alene Basin based numerous actions filed in Federal Court including the CERCLA action in United States v. Asarco, et al, Civ. Case 96-122-N-EJL. In this case, the first legal hurdle the Government must establish is that the Defendants are liable parties under CERCLA.

It appears undisputed that through a series of mergers and name changes, the Government argues Golconda Lead Mines, Inc. became RegO Group, Inc. ("RegO") which in 1992 changed its name to Group R. Co., Inc. ("Group R"). Defendants do not argue the existence of RegO and Group R, but argue that there were other corporate transfers of Golconda mining assets that did not involve the Defendants.

The Court finds the following corporate history relevant to the motions for summary judgment:

1. Golconda Lead Mines, Inc. ("Golconda") was incorporated in Idaho in 1927 and operated the Golconda Mine and Mill (the "Golconda Site") until the 1950s. The Golconda Site is located east of Wallace, Idaho. Mining operations at the Golconda site ceased in the 1950s. Golconda continued in business and acquired investments in other mining companies.

2. In 1970, Golconda incorporated a subsidiary in Idaho called Golconda Mining Corporation ("GMC"). GMC succeeding to Golconda's mining assets including the Golconda Site.

3. Also in 1970, the parent corporation Golconda merged with Astro Controls, Inc. with "Golconda Corporation" being the surviving entity. As a result of the merger, Golconda Corporation acquired several manufacturing companies having no connection to mining activities.

4. In 1976, Harry Magnuson, who was a director, shareholder and officer of Golconda Corporation, purchased the assets of the subsidiary GMC including GMC securities, the mill and associated real estate more particularly described in Exhibit A of the corporate minutes for $175,000. Rodburg Decl. Ex. J, Dkt. 38- 5. Defendants maintain that this purchase included all of the Golconda Site and that since 1976, Golconda Corporation had no ownership or control over the Golconda Site or any of its mining activities in the Coeur d'Alene Basin. While the Government does not dispute that GMC purchased certain mining assets, the Government maintains that Group R was a successor in interest to the Golconda Corporation which was also an owner or operator of the Golconda Site and therefore Group R is also liable under CERCLA.

5. In January 2012, the Court approved a Consent Decree between GMC and the United States settling GMC's CERCLA liability. See United States e al. v. Alice Consolidated Mines, Inc., et al., Civil Case No. 11-446-C-EJL, Dkt. 6. In that Consent Decree on page 3, the United States agreed:

Golconda Mining Corporation, incorporated in Idaho in 1970, owned or operated and continues to own or operate mining or milling related properties within the Site, including the Golconda Mine and Mill site.

The Consent Decree was an "ability to pay" settlement with certain defendants and specifically stated the settlement was not equal to the response costs incurred or will be incurred. Therefore, the Government maintains it should also be able to see response costs from other owners of Golconda prior to GMC.

6. In 1977, Golconda Corporation, an Idaho corporation, merged into RegO Company, a Delaware corporation.

7. In 1978, RegO Company changed its name to The RegO Group, Inc. ("RegO"). Defendants maintain that RegO was the holding company for the manufacturing entities and subsidiaries acquired in the Astro Controls Inc. merger in 1970.

8. It appears RegO was a wholly owned subsidiary of Group R Co. Inc. ("Group R") (but the Court is unclear on when this ownership interest by Group R began or the exact date RegO changed its name to Group R).

9. It appears undisputed that in 1985, Defendant Marmon Wire & Cable, Inc. ("Marmon Wire") became the sole shareholder of Group R.*fn1

9. Between 1986 and 1988, it is undisputed that RegO made dividend payments to Group R Co, Inc. and in turn Group R made dividend payments to Marmon Wire in the about of $42 million. The Government argues these dividend payments made Group R insolvent.

10. Group R also made a dividend of its stock interest in Anderson Copper & Brass to Marmon Wire in 1987.

11. It is undisputed that Marmon Wire is wholly owned by Defendant Marmon Holdings, Inc. ("Marmon Holdings").

12. Group R, a Delaware corporation, filed a certificate of dissolution with that state in 2003.

13. Marmon Holdings, as the sole shareholder of Group R, signed a Plan of Liquidation with Group R. The Plan of Liquidation included a "Plan of Distribution to Creditors."

14. It is undisputed that Group R transferred its only asset, the RegO Residual Trust to Marmon Holdings. The value of the asset is disputed by the parties. Marmon

Holdings argues the value is the book value of zero and the United States argues the value is what the interest was sold for in 2008 which was $44 million.

As to the history of the Environmental Protection Agency's ("EPA") actions and notifications for the Coeur d'Alene Basin and the Golconda Site, the Court makes the following undisputed factual findings:

In 1980, CERCLA was enacted. in 1983 the EPA designated the Bunker Hill Superfund Site on its CERCLA National Priorities List and noticed the listing in the Federal Register. The ...

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