Opinion
16-P-767
05-08-2017
CABOT CSC CORPORATION & another v. AEARO TECHNOLOGIES LLC & another.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In this contract interpretation dispute, the plaintiffs, Cabot CSC Corporation and an affiliate (collectively, Cabot) appeal from a Superior Court judgment determining that Cabot rather than the defendants, Aearo Technologies LLC and an affiliate (collectively, Aearo) are contractually responsible for defending and paying certain claims involving workers' exposure to silica in coal mine dust while using respirators manufactured by Cabot or its predecessors. We affirm.
Background. In 1995, Cabot entered into an "Asset Transfer Agreement" (ATA), expressly governed by New York law, providing for the sale of a respirator manufacturing business, which Cabot had previously acquired from the American Optical Corporation (American Optical), to a "Buyer" of which Aearo is the successor in interest. The parties dispute the meaning of § 1.6(j) of the ATA, entitled "Excluded Liabilities," under which Cabot as seller retained certain liabilities associated with the business. Generally, under § 1.5 of the ATA, the buyer "assume[d] and agree[d] to pay, perform and discharge when due, all liabilities and obligations of the Sellers (other than the Excluded Liabilities) relating to or arising out of the Business as conducted through the Closing Date." Among other Excluded Liabilities, § 1.6(j) provided for a "Respirator Liability Retention" under which Cabot retained responsibility for:
"any liability or obligation relating to or otherwise arising under any litigation, proceeding or other claim against any Buyer or any Seller or any of their respective Affiliates or other parties with whom any Seller directly or indirectly has contractual liability sharing arrangements, which liability, proceeding or other claim sounds in product liability or related causes of action, arising out of actual or alleged Respirator Medical Conditions caused or allegedly caused by the use of respirators or similar devices sold by the Sellers or their predecessors (including, without limitation, American Optical Corporation and its predecessors) prior to the Closing Date" (emphasis added).
Under § 4.12(b), the Respirator Liability Retention did not apply to any liability attributable to the use of respirators sold on or after the closing date. Also, Cabot's responsibility for the Respirator Liability Retention was subject under § 4.12(a) to the buyer's obligation to pay $100,000 to Cabot every three months, which Aearo has done.
Section 1.6(j) further defined "Respirator Medical Conditions" as:
"medical conditions involving exposure to asbestos, silica or silica products. Respirator Medical Conditions are typically suspected to involve and/or diagnosed as asbestosis, mesothelioma, silicosis or related long latency diseases." (Emphasis added.)
At the time of the sale in 1995, numerous product liability cases were known to be pending against Cabot or American Optical, in which plaintiffs (sandblasters, painters, and foundry workers) alleged that, while using American Optical respirators during sandblasting, they had suffered harmful exposure to commercial silica sand or other commercial products containing silica. There is no dispute that, under § 1.6(j), Cabot retained liability for these claims.
Under separate contracts, Cabot's liability was shared in some manner with American Optical and other parties.
Starting in 2001, however, former coal mine employees began to file suits alleging that, while using American Optical respirators prior to 1995, they had developed medical conditions, including silicosis and coal workers' pneumoconiosis, due to exposure to coal mine dust, which contains silica in its crystalline form, quartz. Cabot asserted that silica in that form does not constitute "silica or silica products" within the meaning of § 1.6(j), making the Respirator Liability Retention inapplicable and meaning that liability in the so-called "coal cases" was assumed by Aearo under § 1.5. Aearo disagreed. After paying over $7 million in coal case defense and indemnification costs, Cabot sued Aearo.
The parties agree that silica in its crystalline form, quartz, is the most abundant mineral in coal deposits (the predominant constituent of coal itself being carbon), and that coal mining necessarily creates dust containing such silica. As discussed infra, Cabot disputes whether silica in that form is "silica" within the meaning of § 1.6(j).
Cabot's complaint asserted that the meaning of "silica or silica products" was limited to "commercial silica sand and sand products used for sandblasting," and that "silica" did not include the "crystalline silica fragments and dust" generated during coal mining. Cabot sought a declaration that it did not retain any liability for the coal cases or that, if it did, its retention did not include liability for exposure to coal as distinct from silica; Cabot asserted that such coal-related liability should be "equitably allocated" to Aearo. Cabot also sought damages for Aearo's refusal, in asserted breach of the ATA, to accept any responsibility for the costs of the coal cases.
Cabot's complaint explained these terms as follows:
"Commercial silica sand and sand products are manufactured products sold by the silica sand industry. Silica sand, often called simply ‘silica,’ consists of cleaned and purified granular particles of silicon dioxide from surface sand pits. These particles are purified, bagged, branded and sold by the sand products industry. For decades silica in this form was used with high pressure sandblasting equipment as the abrasive substance that sandblasters fired at a surface to be cleaned or abraded."
We quote this allegation only to show Cabot's claimed understanding of these terms. Aearo's answer stated that it lacked sufficient information to admit or deny these allegations and therefore denied them.
Aearo answered, and moved for summary judgment, arguing that "silica or silica products" unambiguously and broadly encompasses any exposure to silica (the chemical name of which is silicon dioxide), whether contained in the form of quartz encountered in coal mines, or as part of commercial silica products used for sandblasting or in other industries. A judge granted partial summary judgment for Aearo, concluding that § 1.6(j)'s term "silica" unambiguously means silicon dioxide and that the term "Respirator Medical Conditions" in § 1.6(j) includes conditions involving exposure to silica contained in coal mine dust.
A second judge later ordered the entry of summary judgment for Aearo on the remaining claims. She declined to allocate any liability to Aearo, concluding that the broad language of § 1.6(j) unambiguously conferred all liability on Cabot for all aspects of the respirator-related claims described in that section, including the coal cases. Cabot now appeals from the final judgment entered for Aearo.
Discussion. 1. New York contract law. "Interpretation of the contract is a legal matter for the court." 805 Third Ave.Co. v. M.W. Realty Assocs., 58 N.Y.2d 447, 451 (1983).
"The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent.... The best evidence of what parties to a written agreement intend is what they say in their writing.... Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms."
Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). "Courts may not ‘by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.’ " Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398, 404 (2009), quoting from Reiss v. Financial Performance Corp., 97 N.Y.2d 195, 199 (2001). "[A] court should not read a contract so as to render any term, phrase, or provision meaningless or superfluous." Givati v. Air Techniques, Inc., 104 A.D.3d 644, 645 (N.Y. 2013).
2. The meaning of "silica." a. Dictionary definitions. In determining whether § 1.6(j)'s term "silica" includes the silica contained in coal mine dust, we turn first to dictionary definitions, as "it is common practice for the courts of [New York] State to refer to the dictionary to determine the plain and ordinary meaning of words to a contract." Mazzola v. County of Suffolk, 143 A.D.2d 734, 735 (N.Y. 1988). The dictionaries cited by the parties all define "silica" using chemical terms such as "the dioxide of silicon," "silicon dioxide," or "SiO2," with a typical definition reading: "the dioxide of silicon SiO2 occurring in crystalline, amorphous, and impure forms (as in quartz, opal, and sand respectively)." Numerous other definitions likewise refer to silica as it exists in various forms, of which sand (or "silica sand," in one definition ) is an example, but no definition in any way limits the meaning of "silica" to "sand" or any other single form. Put differently, the term "silica" includes"silica sand," but the dictionaries do not support Cabot's claim that "the term ‘silica’ reasonably means commercial silica or silica sand, not SiO2" (emphasis added). Instead, the dictionaries also include silica in its quartz form, the form found in coal mine dust.
This definition reads: "A white or colorless crystalline compound, SiO2, which in the form of quartz and certain other minerals is a chief component of the earth's crust. Silica sand is used in making a wide variety of materials, such as glass and concrete."
Cabot's argument on appeal is particularly strained given the allegation in its own complaint that "[c]ommercial silica sand" is a "manufactured product[ ] sold by the silica sand industry." See note 6, supra. In the context of § 1.6(j)'s phrase "silica or silica products," "commercial silica" is more reasonably understood as a "silica product."
We also reject Cabot's argument that the United States Geological Survey (USGS) "interprets ‘silica’ as a ‘commodity,’ " i.e., sand. The supporting material cited by Cabot states that the USGS publishes an annual Minerals Yearbook for a large number of mineral commodities, including "silica," which is further broken down into various categories including "industrial sand and gravel" and "quartz crystal." The USGS material does not purport to define or "interpret" the word "silica," but merely lists how various forms of silica may be used as commodities. That the USGS states in this commodities context that "[i]ndustrial sand and gravel" is "often called ‘silica’ " neither "defines" silica as, or limits it to, industrial sand and gravel. Indeed, the USGS listing itself indicates otherwise, by including quartz crystal and other forms of silica.
b. Specialized industry meaning. Cabot next argues that, even if the ordinary meaning of "silica" unambiguously includes the quartz found in coal dust, the term "silica" has a specialized, technical meaning in the industrial hygiene industry, in which the term assertedly refers only to "silica as a product." In support of this claim, Cabot offered the opinion of a toxic tort litigation expert, an attorney with a special focus on silica exposure litigation. The expert stated that at the time the ATA was executed in 1995, "a reference to a claim arising out of a medical condition involving exposure to ‘silica’ or ‘silica products' was customarily understood by persons within the industries that supply sandblasting products, including respirator manufacturers, to mean a claim involving exposure to commercially produced silica sand," and would not have been understood by such persons to mean "a claim involving exposure to coal dust." Cabot argues that the term "silica" as used in § 1.6(j) of the ATA had this limited meaning.
Assuming arguendo that, under New York law, evidence of a term's specialized, technical meaning in a particular industry is admissible to show an ambiguity in what is otherwise an unambiguous agreement—an issue the parties dispute and we do not decide—we conclude that Cabot's expert evidence does not support its argument as to § 1.6(j). The expert did not say that "silica" had any special industry definition in 1995 that was more limited than its dictionary definition. Rather, he emphasized that, as of 1995, the vast majority of pending claims alleging exposure to "silica" or "silica products" were brought by workers in the sandblasting or foundry industries who had been exposed to commercially produced silica sand. Accordingly, he continued, a respirator manufacturer seeing a reference to a "silica" or "silica products" claim in 1995 would have thought of a claim involving commercially produced silica sand and not a claim involving coal mine dust. Significantly, however, he did not say that a respirator manufacturer, if asked in 1995 whether a reference to a claim involving the crystalline silica in coal mine dust would constitute a "silica" claim, would have answered in the negative.
Indeed, he said that because in the silica toxic tort litigation industry as of 1995, "there was no ... tort litigation coming from sources other than the use of silica products," he viewed the terms "silica" and "silica products" as "interchangeable," and the use of both terms in § 1.6(j) of the ATA as "somewhat of a redundancy, as if someone were saying, ‘silica, or stated otherwise, silica products.’ " The expert essentially viewed the contractual term "silica" as superfluous.
This was not because such coal-related exposures were unknown at the time. The expert acknowledged that "studies prior to 1995 indicated that coal workers, along with individuals in other trades, were at risk for exposure to dusts that contain crystalline silica."
In short, the expert's view amounts to an opinion that, to a respirator manufacturer in 1995, the principal example or illustration of a "silica" claim involved commercially produced silica sand—not an opinion that, in the industry, "silica" was defined as or limited to such sand, or that reference to a "silica" claim necessarily excluded a claim involving the crystalline silica in coal mine dust. Had respirator manufacturers wanted to enter a contract concerning silica claims that was confined to claims concerning commercially produced silica sand, they could easily have used that phrase. Here, however, these manufacturers, Cabot and Aearo, took the risk of using the broader phrase "silica or silica products"—the plain, dictionary meaning of which encompassed a broader range of claims than the ones that might have been uppermost in their minds at the time. And they did so despite knowing, as shown by § 1.6(j)'s use of the term "long latency diseases," that the future contained uncertainties.
Cabot also offered the opinion of an industrial hygienist that "when [he] think[s] of silica exposures, [he] often think[s] of either abrasive blasting or exposures to industrial sand in foundries." However, this expert admitted that he had been asked to opine on the meaning of the terms "silica" or "silica exposure" "to an industrial hygienist only" and "not ... to a respirator manufacturer."
Cabot fares no better in citing the testimony of Aearo's industrial hygiene expert that the industrial sand industry uses the term "silica" to refer to "industrial silica sand." The same expert opined that "within the industrial hygiene context," which is the relevant context here, "the term silica is commonly used to mean this crystalline silica in the form of quartz" to which persons are exposed "anytime [they] disturb[ ] either the surface or the subsurface of the earth."
c. Meanings drawn from context in the ATA. Cabot next observes that the word "silica" appears in the context of § 1.6(j)'s phrase, "asbestos, silica or silica products," and then makes two arguments. First, Cabot says, "The natural reading of ‘silica products' is products made from silica, which means ‘silica’ must be something from which commercial products can be made—silica sand, not a part of a nuisance dust produced during mining activities." But even if all "silica products" were made from silica occurring in the form of sand, it simply would not follow that, contrary to the dictionary definitions discussed above, "silica" refers only to silica in its sand form and not its crystalline quartz form.
Second, Cabot says, the term "asbestos" as used in § 1.6(j) "must mean asbestos products," or else it would not cover the numerous asbestos products-related cases pending against Cabot or American Optical at the time of the ATA. Cabot thus interprets § 1.6(j) as if it says "asbestos products, silica or silica products," and then argues, citing the statutory interpretation maxim of "noscitur a sociis" (it is known by its associates), that the word "silica" must also refer to "silica as a product—i.e., commercial silica or silica sand," lest the phrase awkwardly consist of "two products and a chemical." We reject this argument, because the term "asbestos," although it may well include"asbestos products" in this context, is by its plain definition not so limited; it does not mean asbestos products, as Cabot claims.
In interpreting statutes, under the maxim noscitur a sociis, "the meaning of a word in a provision may be ascertained by a consideration of the company in which it is found and the meaning of the words which are associated with it." Popkin v. Security Mut. Ins. Co., 48 A.D.2d 46, 48 (N.Y. 1975). Because we do not view the meaning of "silica" as used in § 1.6(j) as doubtful, the maxim does not apply in any event.
"Asbestos" is "a mineral (as chrysotile, tremolite, or actinolite) that readily separates into long flexible fibers suitable for uses where incombustible, nonconducting, or chemically resistant material is required." Webster's Third New Intl. Dictionary 126 (2002).
Neither party has offered a reasonable explanation for why § 1.6(j) uses the single word "asbestos" on the one hand and the phrase "silica or silica products" on the other. But that is not enough to cause us to accept Cabot's claim that the word "silica" means "silica as a product"; such a product would appear to be a "silica product," thereby rendering the stand-alone word "silica" superfluous, in violation of accepted interpretive principles. See Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 63 N.Y.2d 396, 403 (1984) ; Givati, 104 A.D.3d at 645.
Cabot next argues that the meaning of "silica" is "informed" by the list of pending cases against Cabot or American Optical, attached to the ATA pursuant to § 3.1(h) and entitled Schedule 3.1(h), many of which concerned silica sand or other commercial products containing silica, and none of which involved exposure to coal mine dust. But § 3.1(h), a part of the "Representations and Warranties" section of the ATA, is entitled "Legal Proceedings" and merely states in essence that, to the best knowledge of Cabot and its related-entity sellers, with the exception of the matters listed on Schedule 3.1(h), there is no litigation pending or threatened that would be expected to have a material adverse effect on the business being sold. Schedule 3.1(h) includes not only product liability cases related to respirators but also cases involving employment discrimination, breach of business contracts, and an automobile accident.
Schedule 3.1(h) is neither referenced in § 1.6(j) nor purports to be a complete list of cases, or even categories of cases, to which § 1.6(j) might apply. The schedule does no more than incidentally illustrate some of the cases to which § 1.6(j) would apply. That no cases involving coal mine dust appear on the schedule does not require us to interpret "silica" in § 1.6(j) as excluding the silica present in such dust.
Nor are we persuaded by Cabot's argument that the cases on Schedule 3.1(h) serve to "defin[e] what ‘Respirator Medical Conditions' were understood to be at the time," thus limiting what conditions would qualify as Respirator Medical Conditions, for which Cabot retained liability under § 1.6(j). Cabot points to that portion of the definition of Respirator Medical Conditions referring (with emphasis added) to conditions that are "typically suspected to involve and/or diagnosed as asbestosis, mesothelioma, silicosis or related long latency diseases." Cabot argues that the cases on Schedule 3.1(h) define what conditions were "typically suspected" in 1995 to qualify as Respirator Medical Conditions. Again, we think the cases on the schedule merely illustrate, rather than define, what might qualify as Respirator Medical Conditions. The very phrase "typically suspected" itself suggests that qualifying conditions are not always suspected of involving or being diagnosed as the referenced diseases.
d. Silica as a component of coal mine dust. Cabot's fallback argument is that even if "silica" as used in § 1.6(j) includes "pure silica" or "pure silica dust," it does not include the silica that "becomes mixed into coal mine dust due to the proximity of quartz to coal," creating the "mix of toxic dusts" to which the plaintiffs in the coal cases were allegedly exposed. Cabot insists that " ‘silica’ cannot mean silica within a mix of substances, or the term ‘silica products' is pure surplusage."
Cabot's argument depends on the unstated and unpersuasive premise that any mixture must be considered a "product." When silica is intentionally mixed with another substance for the purpose of making a product containing both, the result could reasonably be termed a "silica product." But when silica becomes mixed with coal dust as an incident of extracting coal from the surrounding quartz-containing rock, the result—although it might be termed a "silica byproduct" as suggested by Cabot's own expert, or a coal byproduct, or coal mine dust—could not reasonably be termed a "silica product." Yet the result indisputably contains silica.
Cabot would not prevail even if we agreed that any mixture must be considered a "product." If that were so, then § 1.6(j) would effectively create a dichotomy between "pure silica" and "silica products," and silica mixed with coal dust would have to be considered a "silica product" under § 1.6(j). And this would not deprive "pure silica" of separate meaning and significance in § 1.6(j), because, to quote Cabot's complaint, "Silica sand, often called simply ‘silica,’ consists of cleaned and purified granular particles of silicon dioxide," which "[f]or decades ... was used with high pressure sandblasting equipment" (emphasis added), giving rise to lawsuits by sandblasters alleging exposure while wearing American Optical respirators. It was these lawsuits that Cabot describes as a central concern underlying § 1.6(j).
Asked to explain his use of the term "silica byproduct," Cabot's expert stated, "[I]f 95 percent of the earth's crust contains silica, if you break into a rock, you may expose silica.... So a byproduct, a silica byproduct, for instance, would be disturbing silica in a mining operation."
Further, under § 1.6(j), Respirator Medical Conditions are defined as "medical conditions involving exposure to asbestos, silica or silica products" (emphasis added). That the medical conditions at issue in the coal cases involved exposure both to silica and to other coal mining byproducts does not take them out of the category of Respirator Medical Conditions.
For all of the above reasons, the first motion judge was correct in ruling that § 1.6(j)'s term "silica" unambiguously means silicon dioxide and that the Respirator Medical Conditions for which Cabot retained liability include conditions involving exposure to silica contained in coal mine dust.
3. Allocation of liability for coal cases. The second motion judge correctly rejected Cabot's claim that any liability it retained with respect to the coal cases did not include liability for exposure to coal (as distinct from silica), and that such coal-related liability should be "equitabl[y] allocat[ed]" to Aearo. The judge concluded that § 1.6(j) unambiguously conferred all liability on Cabot for all aspects of the respirator-related claims described in that section, including in the coal cases. She emphasized that § 1.6(j) used broad language, under which Cabot retained responsibility for "any liability or obligation relating to or otherwise arising under any litigation, proceeding or other claim ... arising out of actual or alleged Respirator Medical Conditions," meaning "medical condition[s] ‘involving exposure to asbestos, silica or silica products.’ "
Cabot's various claims of error in this ruling are unpersuasive. Cabot argues that because the first judge had earlier concluded that § 1.6(j) did not expressly rule out allocation, the provision is at a minimum ambiguous, requiring that extrinsic evidence be considered. The first judge, however, did not focus on § 1.6(j)'s definition of Respirator Medical Conditions as "medical conditions involving exposure to asbestos, silica or silica products" (emphasis added). The second judge properly focused on that language and concluded that its breadth, together with other expansive language in § 1.6(j), meant that the provision was not limited to exposures to silica, but extended as well to exposures "to other agents in combination with silica."
We also reject, in light of the other expansive language in § 1.6(j), Cabot's argument that the term "involving" should be construed narrowly as limiting Respirator Medical Conditions to those "to which silica exposure is a necessary and sufficient feature." Cabot would have us read "involving" to mean "caused solely by." Such a restrictive interpretation does not harmonize with the remainder of § 1.6(j) and therefore, if intended, would have likely been made explicit.
Cabot next argues that the phrase "any liability" in § 1.6(j) should be construed narrowly, to mean "some liability," especially when contrasted with the phrase in § 1.5 assigning to Aearo "all liabilities" except for the Excluded Liabilities. We disagree, given the other broad phrases used in § 1.6(j) and the principle that "the word ‘any’ means ‘all’ or ‘every’ and imports no limitation." Zion v. Kurtz, 50 N.Y.2d 92, 104 (1980). Nor are we persuaded by Cabot's argument that § 4.12 of the ATA, which establishes mechanisms for implementing and terminating the Respirator Liability Retention of § 1.6(j), supports a narrower construction of the term "any liability" than that suggested by § 1.6(j) itself.
Cabot mischaracterizes the second judge as having rejected its allocation claim on the impermissible ground that implementing allocation would simply be "too difficult." The judge said only that given the complexity of allocation, the parties, had they intended to require it, would have made some express provision for it.
Cabot finally argues that, in rejecting allocation, the judge failed to "endeavor to give the [contract] construction most equitable to both parties instead of the construction which will give one of them an unfair and unreasonable advantage over the other." Metropolitan Life Ins. Co. v. Noble Lowndes Intl., Inc., 84 N.Y.2d 430, 438 (1994), quoting from Fleischman v. Furgueson, 223 N.Y. 235, 241 (1918). But the cases cited by Cabot applied that principle where the court was faced with an ambiguous term, see Metropolitan Life Ins. Co., supra at 437-438, or where the "more reasonable" interpretation was also more equitable. See Misek v. Downstairs Cabaret Theatre, Inc., 28 Misc. 3d 830, 839 (N.Y. City Ct. 2010). Neither situation is presented here.
We do not read Federated Retail Holdings, Inc. v. Weatherly 39th St., LLC, 77 A.D.3d 573 (N.Y. 2010), as expanding a court's power to interpret a contract to achieve equitable results. There the court quoted the above language from Metropolitan Life Ins. Co. only after concluding that a lower court had misread an "unambiguous" provision in a manner that allowed one party to render it "meaningless" and its benefits "illusory" to the other party. Federated Retail Holdings, Inc., supra at 574.
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In sum, regardless of whether the parties specifically contemplated the risk of claims involving exposure to silica dust mixed with other harmful dust, and despite knowing that they were dealing with "long latency diseases," the clear and broad language they agreed upon allocated that risk to Cabot. They could have chosen narrower or more specific language allocating that risk differently, but they did not do so.
Conclusion. The motion judges correctly ordered summary judgment in Aearo's favor on all counts of the complaint.
Judgment affirmed.