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White Consol. Indus., Inc. v. Westinghouse Elec. Corp.

Citation: 29 ELR 21202
No. No. 98-3524, 179 F.3d 403/48 ERC 1747/(6th Cir., 05/27/1999)

The court holds that the buyer of a facility contaminated with trichloroethylene (TCE) assumed responsibility for environmental liabilities in its purchase agreement with the seller. The court first holds that the seller's failure to disclose that there was a TCE spill at the facility does not constitute a material breach of the purchase agreement. The seller could not have known at the time of sale that a prior spill of TCE could give rise to environmental remediation because the laws that created such potential liability, namely the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the New Jersey Spill Compensation and Control Act, did not exist at that time. In addition, the buyer failed to present evidence that the seller had any knowledge ofthe soil and groundwater contamination at the facility, or proof that the TCE spill violated antipollution requirements that were in effect at the time of the spill.

The court next holds that the purchase agreement allocated to the buyer the risk of CERCLA losses after the expiration of the one-year indemnification period. The assumption of liabilities provision of the purchase agreement is unambiguous and sufficiently broad to transfer to the buyer all environmental liabilities of the facility. The court also holds that the district court's grant of summary judgment to the seller as to the buyer's fraudulent concealment claim was not erroneous. For nondisclosure to be deliberate, the seller clearly must have knowledge of the defects. The seller, however, had no knowledge at the time of contracting that the facility was contaminated or that the TCE spill would subject the facility to liability.

Last, the court declines to review the buyer's claim that the district court prematurely granted summary judgment to the seller on the buyer's claims of misrepresentation, public nuisance, and strict liability for abnormally dangerous activity. While the buyer raises a colorable claim, it is raised for the first time on appeal and is not preserved for appellate review. The buyer's failure to file a Fed. R. Civ. P. Rule 56(f) affidavit or a motion for discovery in the district court, and its failure to specify how additional time for discovery would have precluded the grant of summary judgment in favor of the seller, is fatal to its claim for relief.

Counsel for Plaintiff
Richard Gurbst
Squire, Sanders & Dempsey
4900 Key Tower
127 Public Sq., Cleveland OH 44114
(216) 479-8500

Counsel for Defendant
John D. Luken
Dinsmore & Shohl
1900 Chemed Center
255 E. 5th St., Cincinnati OH 45202
(513) 977-8200

Before Boggs and Godbold,* JJ.