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In re Mountain Laurel Resources Co.

ELR Citation: 31 ELR 20435
Nos. Nos. CIV.A.5:00-0610 et al., 258 B.R. 652/(S.D. W. Va., 02/16/2001)

The court affirms a bankruptcy court's denial of a successive owner's motion challenging a settlement agreement entered by the prior owner of a contaminated site, the state of West Virginia, and the town where the site was located, that partially released the successive owner from liability for water contamination. The successive owner appealed the approval of the settlement agreement, and the Fourth Circuit affirmed. Based on language contained in the appellate court's discussion of the settlement agreement, the successive owner sought to proceed with its fraud claims against the prior owner, but the bankruptcy court denied their motion and ordered the adversary proceedings closed.

The court first holds that the Fourth Circuit's mention in a footnote of the successive owner's fraud claims against the prior owner was dicta, irrelevant to the court's holding, and peripheral to the discussion. It did not dictate that the bankruptcy court interpret the settlement agreement as allowing the successive owner to proceed with the fraud claim. The court next holds that the bankruptcy court properly denied the successive owner's motion to proceed to trial against the prior owner. The same judge from the bankruptcy court had the case from its inception, and before accepting the settlement agreement, that judge conducted extensive evidentiary hearings relating to the difficulty of the settlement negotiations, pollution exclusion clauses, and the cost of reclamation and remediation. Further, the bankruptcy court found that the settlement had value to the successive owner because it relieved them of a state court judgment, state cleanup liability, and water treatment expenses.

The full text of this opinion is available from ELR (8 pp., ELR Order No. L-333).

Counsel for Appellants
Charles E. Hurt
Law Offices of Charles E. Hurt
Security Bldg.
100 Capitol St., Ste. 703, Charleston WV 25301
(304) 344-3501

Counsel for Appellees
Stephen L. Thompson
Barth, Thompson & George
P.O. Box 129, Charleston WV 25321
(304) 342-7111