VFC Partners 26, LLC v. Cadlerocks Centennial Drive
Citation: 43 ELR 20253
No. 13-1128, (1st Cir., 11/12/2013)
The First Circuit reversed in part a lower court's judgment in favor of a lender in a dispute concerning environmental testing expenses associated with a foreclosure on a parcel of land following a loan default. The lender and borrower entered an environmental indemnity agreement under which the land owner agreed to indemnify the lender for any liabilities stemming from the release or threatened release of hazardous material on the property. The lower court, therefore, held that the lender was entitled to recover the majority of its costs under that agreement. But the lower court interpreted the agreement too broadly. The agreement limited coverage to those liabilities "sought from or asserted against" the lender by a third party. In addition, the expenses were not costs "required to take necessary precautions to protect against the release of any hazardous materials." As such, they fall outside of the scope of the agreement.