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DRR, L.L.C. v. Sears, Roebuck & Co.

ELR Citation: 27 ELR 20794
Nos. 94-401 MMS, 949 F. Supp. 1132/44 ERC 1039/(D. Del., 12/17/1996)

The court holds that a former owner of petroleum-contaminated property is not liable to the current owner on state-law claims of fraud and strict liability for the alleged expense of removing leaking underground storage tanks from the site. The court first holds that to succeed on its fraud claim, the current owner must show that the former owner or its agents acted with knowledge of, or reckless indifference to, the falsity of the former owner's representations. The court holds that the current owner cannot show that anyone working for the former owner knowingly or recklessly made false representations that there were no tanks at the site other than the one that the former owner removed. There is also no evidence to support a theory that the former owner withheld plans of the site in an attempt to dupe the individual who bought the property and transferred it to the current owner. And the former owner did not imply to that individual, with the intent of concealing other tanks, that there was only one tank there.

The court next holds that an indemnification provision in the contract under which the former owner sold the site bars the current owner's strict liability claim. The claim is based on the former owner's alleged violation of the Delaware Hazardous Substance Cleanup Act (DHSCA). The Delaware Supreme Court has likened the DHSCA to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which provides that private parties can contractually allocate potential CERCLA liability among themselves. Although the DHSCA does not specifically authorize indemnification agreements, the court sees no reason that private parties should not be able to contractually allocate their liability under the DHSCA. The court holds that the current owner's claim falls within the indemnification provision because the current owner is alleging a violation of a state environmental statute, which the provision covers. Finally, the court holds that the former owner is not entitled to an award of attorney fees based on the attorney fee clause of the indemnification provision, because the clause strongly indicates that the indemnification provision did not contemplate actions between the former owner and the current owner.

Counsel for Plaintiff
Christopher J. Battaglia
Biggs & Battaglia
1800 Mellon Bank Ctr., Wilmington DE 19899
(302) 655-9677

Counsel for Defendant
Donald M. Ransom, Stacey L. Cummings
Casarino, Christman & Shalk
222 Delaware Ave., Ste. 1220, Wilmington DE 19899
(302) 594-4500