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Waterville Indus., Inc. v. Finance Auth. of Me.

Citation: 30 ELR 20796
No. No. Ken-99-426, 758 A.2d 986/(Me., 07/14/2000)

The court holds that a trial court improperly excluded evidence central to a wool processing mill owner's case against the Finance Authority of Maine (FAME) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and contract law and, therefore, vacates and remands the decision. FAME's predecessor had a deed to the mill, taken in lieu of foreclosure, and entered into a sale agreement with a realty company that then leased the land to the mill owner. Although the predecessor had received multiple letters from the state environmental agency about wastewater lagoons on the property and agreed to clean the lagoons or make cleanup of them a condition of sale, FAME's predecessor failed to notify the realty company of the lagoons. The mill owner sued FAME in federal court under CERCLA, but the case was dismissed. The mill owner then sued FAME in state court claiming breach of contract for FAME's failure to notify the realty company about the lagoons. The court first holds that the mill owner's state-law claim is not barred by the federal CERCLA case. The mill owner's only forum for its CERCLA claim was the federal district court, but that court had no jurisdiction over the mill owner's state-law breach of contract claim because of the Eleventh Amendment. Given the jurisdictional dilemma faced by the mill owner, the trial court did not err in entertaining the mill owner's claims in state court because those claims could not have been litigated in the federal action. The court next holds that the claims are not barred by sovereign immunity. At the time the parties entered into the contract, the state legislature had given its consent to suits against FAME's predecessor for breach of contract and later amendments to the statute have not limited the scope of FAME's liability.

The court further holds that the case was ripe for adjudication and that the trial court properly granted declaratory relief. The court goes on to hold, however, that the trial court improperly excluded testimony from the president of the realty company as to whether the company would have purchased the property had it known about the lagoons. The court finally holds that the trial court applied the wrong measure of damages. On remand, the mill owner must prove breach of contract and that the damages it seeks to recover were reasonably within the contemplation of the contracting parties when the agreement was made.

Counsel for Plaintiff
Jotham D. Pierce Jr.
Pierce Atwood
One Monument Sq., Portland ME 04101
(207) 773-6411

Counsel for Defendant
Martha C. Gaythwaite
Friedman, Babcock & Gaythwaite
Six City Center
Ste. 400, P.O. Box 4726, Portland ME 04112
(207) 761-0900