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NRC Corp. v. Amoco Oil Co.

Citation: 30 ELR 20394
No. Nos. 98-2162, -2314, 205 F.3d 1007/50 ERC 1129/(7th Cir., 03/03/2000)

The court affirms a district court ruling that an oil company that operated a service station on leased property was liable to the lessor for all damages caused by a leaking underground storage tank, including the lessor's inability to sell or lease the property immediately surrounding the leased property. The court first upholds the district court's decision holding the company liable for damages beyond the leased premises. Although the fair rental value of property is the proper measure of damages for loss of use of property under Indiana law, the parties entered into a lease agreement with a broad indemnification clause that held the company liable for any damages to the lessor arising from the operation of the service station. Under the indemnification clause, the court found that the company was liable for all damages caused by its use of the leased land as a service station, including the lessor's inability to market surrounding land. Thus, the fact that the lessor could not prove contamination beyond the boundaries of the leased parcel was irrelevant to the district court's finding that the contamination eliminated the lessor's ability to sell or lease the surrounding property. Because the company did not challenge the court's reliance on the indemnification clause on appeal, the company waived any challenge to that theory of damages. The court next holds that the district court did not stretch far in inferring that the market would demand indemnity during remediation in order to make the property marketable. Substantial evidence supports the view that the property was unmarketable until remediation was complete.

In addition, the court upholds the district court's measure of damages for the property, which the district court enhanced based on a 20% probability that the land would be rezoned. The lessor argued that the district court undervalued the parcel, but the lessor failed to prove that the district court erred in finding that there was a less than 100% probability that the land would be rezoned. The court then affirms the district court's denial of punitive damages. The company's conduct did not rise to the level of conduct that is necessary for punitive damages. Likewise, the court affirms the district court's refusal of attorneys fees to the lessor. The lessor is not entitled to fees under the lease.

Counsel for Plaintiff
George Plews
Plews, Shadley, Racher & Braun
1346 N. Delaware St., Indianapolis IN 46202
(317) 637-0700

Counsel for Defendant
William P. Wooden
Wooden & McLaughlin
201 N. Illinois St., Indianapolis IN 46204
(317) 639-6151

Before Kanne and Wood, JJ.