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Black Horse Lane Assocs. v. Dow Chem. Corp.

ELR Citation: 31 ELR 20148
Nos. No. 00-5031, 228 F.3d 275/51 ERC 1289/(3d Cir., 09/20/2000)

The court affirms a district court order that dismissed a current property owner's contracts, implied covenant of good faith, and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) claims against the previous owner. Before selling the property to the current owner in 1985, the previous owner agreed to detoxify the property as approved by the state environmental agency. In 1997, the prior owner had yet to complete detoxification, and the current owner filed suit alleging breach of the agreement to complete detoxification in a reasonable time, breach of the implied covenant of good faith and fair dealing, and violation of CERCLA. The court first holds that a reasonable time provision for cleanup of the property was implicit in the sales agreement, but that a reasonable time period has not expired. The record does not support the conclusion that the previous owner breached its contractual duties to complete the remediation and detoxification efforts within a reasonable time. Similarly, the current owners failed to produce evidence indicating that delays in groundwater remediation were avoidable, and in any event, unreasonable. Further, a statement from the previous owner's environmental consultant stops short of stating definitively that, given the circumstances, the previous owner had taken too long to complete its remediation and detoxification efforts. While it may be unfortunate that it has taken the previous owner an extended period of time to complete the cleanup of the property, the delay does not support a conclusion that the amount of time it already has spent is unreasonable given the nature of its contractual obligation.

The court next holds that the previous owner did not breach the implied duty of good faith and fair dealing. A letter from the previous owner questioning the reasonableness of certain aspects of the cleanup plan does not demonstrate a lack of good faith on the previous owner's part in performing its obligations pursuant to the sales agreement. The court further holds that the current owner cannot recover under CERCLA for consulting costs that are litigation-related expenses. The court finally holds that the district court properly imposed sanctions against the current owner's general partner because as the party designated under rule 30(b)(6) of the Federal Rules of Civil Procedure to speak for the current owner, the partner's lack of preparation and inability to provide relevant information at deposition is tantamount to a failure to appear that is sanctionable under rule 37(d) of the Federal Rules of Civil Procedure.

Counsel for Appellants
Paul H. Schafhauser
Berger & Bornstein
237 South St., Ste. 2, Morristown NJ 07960
(973) 993-8600

Counsel for Appellees
Kenneth H. Mack
Fox, Rothschild, O'Brien & Frankel
997 Lenox Dr., Ste. 301, Trenton NJ 08648
(609) 896-3600

Before Barry and Weis, JJ.