World Fuel Services 2005 Annual Report Download - page 80

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Support Corporation (“Signature”) in December 2000. Pursuant to the PAFCO acquisition agreement, Signature
agreed to indemnify us for all PAFCO liabilities arising prior to the closing date (“Closing”). Because the Airport
contamination occurred prior to Closing, we believe that the County Suit is covered by Signature’s
indemnification obligation. We have notified Signature of the County Suit, as stipulated in the acquisition
agreement. We expect Signature to defend this claim on behalf of PAFCO and at Signature’s expense.
Also in April 2001, the County sent a letter to approximately 250 potentially responsible parties (“PRP’s”),
including World Fuel Services Corporation and one of our subsidiaries, advising of our potential liability for the
clean-up costs of the contamination that is subject of the County Suit. The County has threatened to add the
PRP’s as defendants in the County Suit, unless they agree to share in the cost of the environmental clean-up at
the Airport. We have advised the County that: (1) neither we nor any of our subsidiaries were responsible for any
environmental contamination at the Airport, and (2) to the extent that we or any of our subsidiaries were so
responsible, our liability was subject to indemnification by the County pursuant to the indemnity provisions
contained in our lease agreement with the County.
The claims asserted by the County relating to environmental contamination at the Airport remain pending;
however, neither we, nor any of our subsidiaries, have been added as defendants in the County Suit. No
significant developments occurred with respect to the County’s claims against us during the year ended
December 31, 2005. We intend to vigorously defend these claims, and we believe our liability in these matters (if
any) should be adequately covered by the indemnification obligations of Signature as to PAFCO, and the County
as to World Fuel Services Corporation and our other subsidiaries.
Action Manufacturing Litigation
In November 2004, World Fuel was served with process in a lawsuit titled Action Manufacturing Co., Inc.
et al. v. Simon Wrecking Company, et al. This action, pending in U.S. Federal District Court for the Eastern
District of Pennsylvania, relates to the environmental clean up of the Malvern TCE Superfund site in Chester
County, Pennsylvania. The plaintiffs are a group of private corporations that entered into a consent decree with
the Environmental Protection Agency in 1999, under the terms of which the plaintiffs agreed to pay for
remediation of the site. In the action, the plaintiffs are seeking contribution from the various defendants toward
the costs of remediating the site. Plaintiffs alleged that World Fuel was a “successor” to Resource Technology
Services, Inc., a Pennsylvania corporation that arranged for disposal of wastes at the site. In 1988, Resource
Recovery Atlantic, Inc., a Delaware corporation that was then an indirect subsidiary of World Fuel, purchased
selected assets from Resource Technology Services, Inc. The plaintiffs claimed that this transaction gave rise to
our successor liability pursuant to the Pennsylvania Hazardous Sites Cleanup Act. World Fuel filed a motion to
dismiss this action for lack of jurisdiction. In June 2005, World Fuel’s motion to dismiss was granted and all
claims against World Fuel relating to this action were dismissed.
Panama Litigation
In July 2005, Atlantic Service Supply, S.A. (“Atlantic”), a Panamanian fuel barge operator, filed suit against
Tramp Oil & Marine Ltd. (“TOM”), one of our subsidiaries, alleging that TOM is jointly and severally liable for
barging fees of approximately $1.0 million owed to Atlantic by Isthmian Petroleum Supply & Services, S.A.
(“Isthmian”). TOM and Isthmian were parties to an agreement pursuant to which Isthmian provided storage,
delivery and other fuel related services to TOM in Panama. In its suit, Atlantic alleges (1) that Isthmian breached
a barge charter agreement entered into between the two parties, (2) that Isthmian entered into the agreement as an
agent on behalf of TOM, and (3) that TOM is liable, as a principal, for Isthmian’s breach of the agreement.
Although TOM utilized the services of Isthmian for storage and delivery of fuel, at no time did TOM request or
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