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United States v. Sunoco, Inc.

ELR Citation: 39 ELR 20139
Nos. No. 05-6336, (E.D. Pa., 06/10/2009)

A district court held that under Pennsylvania law, a property owner that agreed to hold the seller harmless for environmental claims does not become a successor to the seller's environmental liabilities. In a settlement agreement between the current and prior owners, the current owner promised to conduct any recovery or remediation of contamination and to defend and hold the prior owner harmless from any claims or orders relating to such recovery or remediation. The United States, which owns neighboring property, filed suit under state law against both parties, arguing that the agreement's "hold harmless" language provides for successor liability. An agreement to defend and hold harmless, however, has a legal meaning that is distinct from assumption of liability. The current owner specifically agreed to defend and indemnify the prior owner for any claims made against the prior owner, but nowhere in the settlement agreement did it agree to assume any of the prior owner's liabilities. The agreement to defend and indemnify implies that the owner's duty to the prior owner only arises if a third party brings suit against the prior owner. This is distinct from a situation in which the owner agreed to assume the prior owner's liabilities as if it were the prior owner.