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Dartron Corp. v. Uniroyal Chem. Co.

ELR Citation: 26 ELR 21056
Nos. 1:94-CV-119, 917 F. Supp. 1173/42 ERC 1717/(N.D. Ohio, 02/22/1996) contract and warranty claims granted

The court holds that the past owner of a contaminated site, who still owns land adjacent to the site, is liable to the current owner for breach of an as-is sales agreement under Ohio law, but may seek contribution of necessary response costs from the current owner under §113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first holds that under Ohio law, the current owner can bring a cause of action based on the sales agreement for breach of contract and breach of warranty. The terms in the sales agreement that excepted any hazardous or toxic materials left on the site from the as-is conveyance are not ambiguous as a matter of law. The clause in the sales agreement that required the current owner to reasonably inspect the site for observable defects did not shield the past owner from the promise that it had not left any hazardous or toxic materials, or require the current owner to uncover concealed defects. Furthermore, the past owner's promise regarding hazardous and toxic materials did not merge into the deed by law, because this was essentially a promise that the site did not suffer from the latent defect of environmental contamination. The court holds, however, that the current owner is not entitled to a rescission of the contract. The current owner may obtain adequate and complete relief through both damages and recovery of response costs under CERCLA. The current owner never stated a cause of action for misrepresentation on which the relief of rescission could be granted. Moreover, Ohio law does not allow the equitable relief of cancellation and rescission of a deed conveying real estate for a mere breach of contract. The court next holds that the past owner is not liable to the current owner under negligence, nuisance, or trespass theories for contamination that migrated from a disposal area to the site. The past owner does not now own the land containing the disposal site, and the undisputed facts show that no contaminants from the adjacent property migrated onto the site via area groundwater.

Turning to the past owner's CERCLA counterclaim, the court holds that the past owner is limited to pursuing a contribution action against the current owner under §113(f). Because the court held in a prior decision that the past owner owned the site at the time of disposal of a hazardous substance, the past owner is not an innocent party that could bring a cost recovery action under §107(a). The court next holds that the current owner is liable in contribution for at least some of the necessary response costs. The used motor oil that the current owner spilled contains substances not found in virgin motor oil, which is excluded as an unadulterated waste oil from CERCLA's definition of a hazardous waste. Finally, the court holds that because both owners are responsible for contamination of the site, they are confined to bringing contribution actions under §113(f).

[A prior decision in this litigation is published at 26 ELR 20115.]

Counsel for Plaintiff
Michael L. Hardy
Thompson, Hine & Flory
3900 Society Ctr.
127 Public Sq., Cleveland OH 44114
(216) 566-5500

Counsel for Defendant
Charles R. McElwee
Squire, Sanders & Dempsey
4900 Society Ctr.
127 Public Sq., Cleveland OH 44114
(216) 479-8500