COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71471, 71486 & 71487 RMI TITANIUM COMPANY, ET AL. : : JOURNAL ENTRY PLAINTIFF-APPELLANTS : : AND v. : : OPINION OCCIDENTAL CHEMICAL CORP., : ET AL. : : DEFENDANT-APPELLEES : : DATE OF ANNOUNCEMENT OF DECISION: SEPTEMBER 11, 1997 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas, Case Nos. CV-295831 & CV-298791. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Appellee Occidental Chemical Corporation: Joseph D. Lonardo, Esq., Elizabeth E. Tulman, Esq., Vorys, Sater, Seymour and Pease, P.O. Box 1008, Columbus, Ohio, 43216-1008. For Appellee The Cleveland Electric Illuminating Company: Gregory A. Cada, Esq., Douglas J. Weber, Esq., 6200 Oak Tree Boulevard, Room 455, Independence, Ohio, 44131. For Appellee Viacom International Inc.: Michael A. Cyphert, Esq., Virginia S. Brown, Esq., Heather Aley Austin, Esq., Thompson, Hine & Flory, LLP, 3900 Key Center, 127 Public Square, Cleveland, Ohio, 44114-1216. -i- For Appellants RMI Titanium Company and Quantum Chemical: William W. Falsgraf, Esq., Mary M. Bittence, Esq., Baker & Hostetler, LLP, 3200 National City Center, 1900 East 9th Street, Cleveland, Ohio, 44114-3485. For Appellant Detrex Corporation: Robert A. Emmett, Esq., Reed, Smith, Shaw & McClay, 1301 K Street, N.W., Suite 1100 - East Tower, Washington, D.C. 2005. 2 SWEENEY, JAMES D., C.J.: Plaintiffs-appellants C oration ( Quantum ) and Detrex Corporation ( Detrex ) appeal the granting of summary judgment in favor of defendants- appellees Occidental Chemical Corporation ( Occidental ), Viacom International Incorporated ( Viacom ) and the Cleveland Electric Illuminating Company ( CEI )1. For the reasons adduced below, we affirm. appeal indicates that the genesis ofRMI Titanium Co the dispute herein involved a U.S. Environmental Protection Agency ( EPA ) investigation of contamination of Fields Brook, a stream in Ashtabula, Ohio, which was designated as a Superfund hazardous waste site. See CERCLA at 42 U.S.C. 9607. At one time, each of the parties2owned or operated property adjoining, or near, Fields Brook. The EPA notified the fourteen (14) potentially responsible companies ( PRP ) that they were liable, jointly and severally 1 The trial court ruled on cross motions for summary judgment, granting defendants' motions and denying plaintiffs' motions. 2 The parties, as detailed in the historical perspective contained in the appellants' brief, page 4, fn. 3, include the following: ... RMI/Quantum, Viacom International (f/k/a/ Gulf + Western and Paramount), Detrex, The Cleveland Electric Illuminating Company ( CEI ), Occidental Chemical Corporation as a successor to Hooker Electrochemical and Diamond Shamrock Corporation. Maxus Energy Corporation owned the Diamond Shamrock facility which was allegedly liable for the contamination of Fields Brook. This facility was later purchased by Occidental. 3 under CERCLA, for the cost of both the investigation and cleanup of the site. Thereafter, in 1989, five of the fourteen PRP companies, namely, RMI3, Detrex, Occidental, Gulf + Western and CEI, entered into an agreement (referred to as the 1989 Allocation Agreement ) whereby some or all of the CERCLA costs of the environmental investigation and cleanup would be divided among signatories to the Agreement. The purpose of this 1989 Allocation Agreement was the following: (A) to provide for allocation of the costs incurred and to be incurred for the pre-design and design work for the Sediment Operable Unit as well as for the Source Control RI/FS for the Fields Brook Site; (B) to provide, if nine (9) Percentage Companies join this Agreement, for allocation of the costs incurred and to be incurred for the Sediment Operable Unit or other response activities for the Fields Brook Site, and for any other damages or amounts owing with respect to the Fields Brook Site in connection with CERCLA and Related Laws; and (C) to present a unified position to the governments of the United States and Ohio. See Stipulated Facts, paragraphs 17-18, RMI R. 234. To paraphrase the basic purpose of the 1989 Allocation Agreement: 1. Clause (A) would divide the predesign and design costs, also known as Phase I costs5, between only the five PRP signatories to the Agreement, if at least nine of the PRP's do 3For purposes of this case, appellants treat RMI and Quantum as a single entity. See appellants' brief, at 3, fn. 1. 4The term RI/FS, as used in Clause (A), means remedial investigation/feasibility study. 5See RMI R. 23, at paragraphs 12, 15-17. 4 not join in the Agreement. 2. Clause (B) would divide all costs and damages at the Site between the PRP's joining in the Agreement, if at least nine of the PRP's join in the Agreement. After executing the 1989 Allocation Agreement, the five signatories began to expend monies to fund Phase I expenses through an interim allocation of costs. In September of 1989, the EPA filed suit in federal court against certain non-performing parties (who are not the parties in this case, but who were identified by the EPA as PRP's relative to the Fields Brook site). See United States v. GenCorp, et al., Case No. 5:89-CV-1866 (N.D.Ohio). These non-performing parties filed third-party complaints for contribution of the CERCLA costs against the appellants and appellees herein, who then filed CERCLA cross- claims for contribution against the non-performing parties. Thereafter, settlement negotiations ensued amongst certain parties to the federal case. In 1992, thirteen companies involved in the federal action, including all of the parties to the case sub judice, executed an agreement (hereafter referred to as the 1992 Agreement ), effective June 16, 1992, to settle the CERCLA allocation claims in the federal case. The 1992 Agreement stated purposes included the following: . to carry out the remaining work under Phase I of the Record of Decision (hereinafter ROD ), issued by the U.S. Environmental Protection Agency (hereinafter U.S. EPA ) on September 30, 1986. Phase I of the ROD means the remedial design and pre-design activities of the Sediment Operable Unit and the Source Control remedial 5 investiga tion/feasibility study activities for the Site; 2. to allocate among themselves the costs of implementing Phase I of the ROD and certain other costs relating to the Site; . to stay pending litigation among the Members in United States v. GenCorp, et al. , Case No. 5:89-CV-1866 (N.D.Ohio)(hereinafter United States v. GenCorp.); 4. to encourage other Fields Brook potentially responsible parties (hereinafter PRPs ) to become parties to this Agreement; and . to work with U.S. EPA to assure the most cost effective design and implementation of the remedy. (Italization added.) 1992 Agreement, Section II. The 1992 Agreement also contained the following integration clause, at Section IX.O: This Agreement constitutes the entire understanding of the Members with respect to its subject matter. By virtue of the terms of the 1992 Agreement, the signatories, who are known as Members under the Agreement, received shares of the expenses related to fund Phase I with the monies already paid by the parties sub judice towards Phase I under the 1989 Allocation Agreement (approximately $4.5 Million Dollars) being accounted for under the 1992 Agreement. See 1992 Agreement, Section IV. Thereafter, the signatories expended monies, based on the assigned interim shares, toward the costs of Phase I. The 1992 Agreement also obligated the signatories to arbitration, while the Phase I work was being performed, so as to 6 make a recommendation of final allocation of shares of liability for the cleanup for all PRPs. See 1992 Agreement, Section V. In October of 1994, the arbitrator submitted its recommended final allocation report to the signatories of the 1992 Agreement. See RMI R. 23, Exhibit L. Within this report by the arbitrator, the industrial plants contributing to the discharge of hazardous waste into Fields Brook were identified as distinct parcels, with a percentage for responsibility of Phase I costs attributed as to each parcel. Thereafter, the percentage on each individual parcel was further subdivided between the separate companies on that particular parcel. As a result, the parties sub judice were assigned percentages at a number of parcels: 1. RMI: percentages at 4 parcels; 2. Detrex: percentages at 2 parcels6; 3. Gulf + Western: percentages at 2 parcels; 4. CEI: percentages at 2 parcels; 5. Occidental: full percentage at 1 parcel. The signatories to the 1992 Agreement, having reviewed the arbitrator's preliminary allocation recommendation report and received the necessary 75% of signatories' votes to accept the report, accepted and approved in October of 1994, the Final Allocation Recommendations arrived at by the arbitrator. Subsequent to the acceptance of the arbitrator's Final Allocation Recommendation report in October of 1994, problems over the allocation of costs developed. Appellees brief, at 11-12, 6 Hooker-Detrex was assigned a percentage at the Detrex parcel by virtue of six years of operations at a plant by Hooker-Detrex, a company that Occidental and Detrex co-owned in the 1950's. 7 succinctly describes the concerns of appellants: During the arbitration process, the Members funded the Phase I Work required by USEPA's order, but the amounts contributed by each Member pursuant to the interim shares did not match the shares ultimately allocated by the arbitrator. In addition, certain members had funded other work related to Fields Brook, but separate from the Phase I Work, which the arbitrator found should be included in the allocation [footnote omitted]. As of January 16, 1996, the total amount to be allocated under the 1992 Agreement was $23,085,935.07. (Stipulated Facts, q41, RMI R. 23.) The Members directed the Finance Committee to reconcile the Members' accounts to reflect the final allocation percentages. In January of 1995, a Reconciliation of Members' Accounts was issued to the Members, and showed that RMI and Detrex owed money under the 1992 Agreement in accordance with their percentages assigned by the arbitrator and adopted by the Members. (Stipulated Facts, Exhibit N, RMI R. 23, Ex. N.) [Emphasis added.] As a result of these concerns, the defendants refused to pay their allotted percentage of costs under the 1989 Allocation Agreement. On September 25, 1995, plaintiffs RMI and Quantum filed suit against the defendants herein, alleging breach of contract. See Cuyahoga County Common Pleas Case No. CV-295831. On November 21, 1995, Detrex filed suit against the defendants herein, alleging breach of contract. See Cuyahoga County Common Pleas Case No. CV- 298791. The two cases were consolidated by the trial court on February 2, 1996. Thereafter, the parties agreed to dispose of the cases through the use of cross-motions for summary judgment. RMI/Quantum and Detrex filed separate motions for summary judgment. Defendants filed a joint motion for summary judgment. Defendants-appellees 8 argued that the 1992 Agreement constituted a novation of the obligations contained in the 1989 Allocation Agreement. Subsequent to an oral hearing on these competing motions, the trial court ruled in favor of the defendants and found that a novation of the 1989 Allocation Agreement had been demonstrated. See Journal Vol. 2000, page 550, journalized September 24, 1996. Subsequent to this final order, the parties filed the following notices of appeal from that ruling: 1. Appellate case No. 71471/trial court case No. 295831: notice of appeal filed on October 23, 1996, by plaintiffs RMI and Quantum; 2. Appellate case No. 71486/trial court case No. 298791: notice of appeal filed on October 24, 1996, by plaintiff Detrex; 3. Appellate case No. 71487/trial court case No. 295831: notice of appeal filed on October 24, 1996, by plaintiff Detrex. These appeals have been consolidated for purpose of review and opinion. The two assignments of error presented will be discussed jointly. I WHETHER THE TRIAL COURT INCORRECTLY DENIED APPELLANTS' MOTIONS FOR SUMMARY JUDGMENT. II WHETHER THE TRIAL COURT INCORRECTLY GRANTED APPELLEES' MOTION FOR SUMMARY JUDGMENT. The standard of review for a motion for summary judgment was stated in State ex rel. Zimmerman v. Tompkins (1996), 75 Ohio St.3d 447, 448-449, as follows: Civ.R. 56(C) provides that before summary judgment may be granted, it must be determined 9 that (1) no genuine issue as to any material fact remains to be litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the nonmoving party, that conclusion is adverse to the party against whom the motion for summary judgment is made. State ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379, citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d 466, 472, 364 N.E.2d 267, 274. * * * Summary judgment is appropriate where the nonmoving party does not produce evidence on any issue for which that party bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108, 570 N.E.2d 1095, paragraph three of the syllabus; State ex rel. Morley v. Lordi (1995), 72 Ohio St.3d 510, 513, 651 N.E.2d 937, 940. When a motion for summary judgment is made and supported as provided in Civ.R. 56, the nonmoving party may not rest on the mere allegations of his pleading, but his response, by affidavit or as otherwise provided in Civ.R. 56, must set forth specific facts showing that there is a genuine triable issue. Civ.R. 56(E); Jackson v. Alert Fire & Safety Equip., Inc. (1991), 58 Ohio St.3d 48, 52, 567 N.E.2d 1027, 1031. Also see, Celotex Corp. v. Catrett (1986), 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265. As previously stated, the central issue is whether the 1992 Agreement constituted a novation of the 1989 Allocation Agreement. The requirements for a novation were recently stated in Snell v. Salem Ave. Assoc. (1996), 111 Ohio App.3d 23, 32, as follows: A contract of novation is created where a previous valid obligation is extinguished by a new valid contract, accomplished by the substitution of parties or of the undertaking, with the consent of all the parties, and based on valid consideration. *** The discharge of 10 the existing obligation by a party to a contract is sufficient consideration for a contract of novation. McGlothin v. Huffman (1994), 94 Ohio App.3d 240, 244, 640 N.E.2d 598, 601. Also see, Ridenour v. Haynes (App.1931), 11 Ohio Law Abs. 131, 132, and Suburban Trust & Sav. Bank v. Campbell (1969), 19 Ohio Misc. 74, 80, 250 N.E.2d 118, 122 (a novation may occur in situations where the parties to a contract, absent the substitution of a third-party for an original party to the contract, make a subsequent contract among themselves.); Hunter v. BPS Guard Services, Inc. (1995), 100 Ohio App.3d 532, 542, 654 N.E.2d 405 (a novation occurs where the principal parties to a contract enter into a new contract covering the same subject matter of the original contract). Whether a purported novation has been accepted depends on the demonstration of the elements of intent, knowledge and consent. Natl. City Bank v. Reat Corp. (Cuyahoga,1989), 64 Ohio App.3d 212, 215, citing Bolling v. Clevepak Corp. (1984), 20 Ohio App.3d 113, 125. These elements need not be express, but may be implied from circumstances or conduct. Id. at 216. The effect of a novation is to discharge the obligations of the parties under the original contract. Union Cent. Life Ins. Co. v. Hoyer (1902), 66 Ohio St. 344, 64 N.E. 435. In the case sub judice, the court has reviewed the evidence submitted and finds that the purposes of the 1989 Allocation Agreement and the 1992 Agreement to be virtually the same, except that the later Agreement applies to a far greater number of PRPs 11 and the substantive work to be covered by the terms of the later Agreement is far more broad than that which was covered under the 1989 Allocation Agreement. Also, nowhere in the 1992 Agreement is it mentioned that the 1989 Allocation Agreement was somehow preserved. Significantly, the 1992 Agreement, at Section IV.B.1, credited the signatories to the 1989 Allocation Agreement with their Phase I contributions to date. Additionally, the contract provision at the heart of these appeals, Section IX.O of the 1992 Agreement, is clear and unambiguous, stating: This Agreement constitutes the entire understanding of the Members with respect to its subject matter. (Emphasis added.) The terms of the contract being clear and unambiguous, parol evidence may not be submitted or relied upon to contradict the meaning of the terms. See Inland Refuse Transfer Co. v. Browning- Ferris (1984), 15 Ohio St.3d 321, 474 N.E.2d 271. Accordingly, the averments by Mr. Richard Mason7 on behalf of RMI, which sought to detail private reflections concerning events and intentions prior to the signing of the 1992 Agreement and would contradict the terms of this Agreement by insisting that the 1992 Agreement was never intended to negate the obligations under the 1989 Allocation Agreement, are inadmissible under the parol 7 Mr. Mason's affidavit is attached to plaintiffs'-RMI/Quantum's joint motion for summary judgment at Exhibit 1. Mr. Mason was RMI's Director of Environmental Affairs. This is the only affidavit attached to that motion with any relevancy to the issue at hand. 12 evidence rule. Mr. Robert Currie's8 affidavit, which supported Detrex's motion for summary judgment and similarly attempts to contradict the express terms of the 1992 Agreement by averring his reflections in 1994, also fails the parol evidence test. Appellants next argue that there was no consideration to support the novation. It is true that appellants' percentage share of the costs did increase by virtue of the 1992 Allocation Agreement and its attendant arbitration, however, appellants overlook the collateral savings resulting from reduced litigation expenses and the shared expenses by more PRP signatories. Thus, there was consideration supporting novation. Finally, appellants argue that the claims of novation should be barred by the application of the doctrines of laches and equitable estoppel9. The defense of laches requires the following: 1. An unreasonable delay or lapse in asserting a claim; 2. The lack of an excuse for the delay; 3. Knowledge of the claim; and, 4. Resulting prejudice to the other party as a result of the delay. State ex rel. Cater v. North Olmsted (1994), 69 Ohio St.3d 315, 325, 631 N.E.2d 1048, 1056. Appellants assert that there was a delay in asserting the 8 Mr. Currie is the General Counsel and Secretary of Detrex who, after being briefed on the arbitrator's 1994 preliminary allocation recommendations, authorized Detrex's counsel to sign the October, 1994 Final Allocation Recommendation prepared by the arbitrator. 9 These arguments were not presented by Detrex before the trial court and therefore cannot be presented for the first time on appeal by Detrex. Accordingly, these arguments only apply to RMI/Quantum. 13 claim of novation. However, the facts do not support this claim. The 1992 Agreement, which was voluntarily signed by the plaintiffs, clearly provided that it constituted the entire agreement with respect to the Fields Brook cleanup. A clearer indication that agreements made prior to 1992 concerning the subject matter were superceded is difficult to imagine. The element of delay was not demonstrated and the laches argument is without merit. The defense of equitable estoppel requires the following: 1. A representation made by a party; 2. The representation was communicated to another party and was misleading; 3. The representation induced reliance by another party; and, 4. The injured party would suffer prejudice unless the offending party is estopped from asserting a claim which is contradictory to the earlier representation. See State ex rel. Cities Service Oil Co. v. Orteca, Bldg. Commr. (1980), 63 Ohio St.3d 295, 409 N.E.2d 1018. Appellants rely on representations relative to the interim allocation funding of Phase I made to Mr. Mason by Occidental some nine months prior to the execution of the 1992 Agreement. This representation provided for the reimbursement by Occidental of other parties' share of Phase I costs attributable to Diamond Shamrock. Yet, these representations were not included in the executed version of the 1992 Agreement. This fact leads one to conclude that the earlier representation was not relied upon by the plaintiffs-appellants, otherwise, the 1992 Agreement would have reflected this bargained for provision. Accordingly, the trial court did not err in determining that the equitable estoppel argument was without merit. 14 There is simply no admissible evidence to conclude that the 1992 Agreement was anything other than what it was: a more comprehensive attempt by a significant number of the PRPs to spread the total costs (not only Phase I costs prior to 1992) associated with complying with the EPA's orders to clean up the Fields Brook watershed. Assignments overruled. Judgment affirmed. 15 It is ordered that appellee recover of appellant their costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. Exceptions. PATRICIA A. BLACKMON, J., and LEO M. SPELLACY, J., CONCUR. ______________________ JAMES D. SWEENEY CHIEF JUSTICE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .