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Southland Corp. v. Ashland Oil, Inc.

Citation: 19 ELR 20738
No. No. 88-0700, 28 ERC 1813/(D.N.J., 11/23/1988) Rev'd in part on reconsideration

The court holds that a claim by the purchaser of a chemical manufacturing plant that the seller is liable for hazardous waste cleanup costs under the indemnity provision of the agreement of sale is not time-barred, and the agreement of sale does not bar the purchaser from seeking indemnification. In a prior decision, 19 ELR 20733, the court held that the seller's obligations under the indemnity provision terminated two years after the closing date under the terms of the agreement. The court refused to consider the buyer's claim that it filed a notice of claim within this two-year period, concluding that any cause of action based on breach of the indemnity provision accrued in 1980 when the seller failed to respond to the buyer's claim and is thus barred by New Jersey's six-year statute of limitations. The court grants the buyer's motion for reconsideration based on new evidence that the parties agreed to toll the running of the statute of limitations. The court holds that the agreement's "as is" clause does not supersede the indemnification clause. To the extent the clauses are inconsistent, the more specific indemnification clause controls over the general disclaimer of warranty in the indemnification clause. The court holds that a provision of the agreement of sale requiring the seller to remove any waste material for which the cost of removal exceeds $ 5,000 upon notice from the buyer applies only to above-ground waste drums, not to excavation of underground waste material or correction of groundwater contamination. The court holds that the letter that the buyer sent to the seller within the two-year contractual period constitutes a timely notice of a legitimate claim. The buyer's notification to the seller of the New Jersey Department of Environmental Protection's (NJDEP's) demand for groundwater monitoring at the plant was valid notice of a claim against the buyer. Even if the contract limits indemnification to third-party claims, the NJDEP qualifies as a third party. The language of the indemnification clause does not limit the seller's obligation to claims arising out of formal lawsuits or governmental proceedings.

[A previous decision in this litigation is published at 19 ELR 20733.]

Counsel are listed at 19 ELR 20733.