Justia Contracts Opinion Summaries

James Pyne, who died during these proceedings, was the founder and sole stockholder of Remet Corporation. Pyne sold Remet’s stock and facilities, along with real property he had been leasing to Remet, to Burmah Castro Holding, Inc. The sales agreement contained an indemnification provision obligating Pyne to indemnify, defendant, and holder the buyer harmless for certain environmental losses. Remet later received a letter from the Department of Environmental Conservation (DEC) notifying Remet that it was a potentially responsible party for environmental contamination at the Erie Canal Site adjacent to Remet’s real property. Remet filed notices of claim against Pyne’s estate seeking indemnification for environmental liabilities under the sales agreement. Remet then brought this action against the Estate asserting claims for contractual and common-law indemnification. Supreme Court granted Remet summary judgment on liability. The Appellate Division reversed, concluding that DEC’s letter did not require Remet to take action. The Court of Appeals reversed, holding (1) the letter was sufficiently coercive and adversarial as to require action in connection with any environmental law pursuant to the sales agreement; and (2) Remet was entitled to contractual indemnification for past and future environmental losses arising out of DEC’s investigation and remediation of the Erie Canal Site. View "Remet Corp. v. Estate of Pyne" on Justia Law

In 2001, Furnival and its insurer agreed to a Pollution and Remediation Legal Liability Policy, detailing $10 million in liability protection; a 10-year coverage period; and insurance coverage for 12 Furnival locations, including the Elizabethtown Landfill Site, which Furnival was obligated to clean up under a consent decree with the federal government. Insurer knew about the consent decree when the Policy issued. The Policy Endorsements list five reasons for which insurer may “refuse to offer a renewal extension of coverage,” and states that insurer “shall not cancel nor non-renew this Policy except for the reasons stated above.” None of the listed reasons for non-renewal occurred. In 2006, the parties increased the Policy’s limit to $14 million. After the term expired, insurer sent Furnival’s insurance broker its version of a renewal offer, providing $5 million of coverage over a one-year term, omitting coverage for Elizabethtown, the only previously insured site for which Furnival had made a claim, refusing to renew the same terms. The Third Circuit vacated a ruling in favor of insurer, holding that, for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract. View "Indian Harbor Ins. Co v. F&M Equip., Ltd" on Justia Law

Trona is a sodium carbonate compound that is processed into soda ash or baking soda. Because oil and gas development posed a risk to the extraction of trona and trona worker safety, the Bureau of Land Management (BLM), which manages the leasing of federal public land for mineral development, indefinitely suspended all oil and gas leases in the mechanically mineable trona area (MMTA) of Wyoming. The area includes 26 pre-existing oil and gas leases owned by Barlow. Barlow filed suit, alleging that the BLM’s suspension of oil and gas leases constituted a taking of Barlow’s interests without just compensation and constituted a breach of both the express provisions of the leases and their implied covenants of good faith and fair dealing. The Federal Circuit affirmed the Claims Court’s dismissal of the contract claims on the merits and of the takings claim as unripe. BLM has not repudiated the contracts and Barlow did not establish that seeking a permit to drill would be futile. View "Barlow & Haun, Inc. v. United States" on Justia Law

Shortly after plaintiff John Ross signed a contract to sell his home, he learned of contamination on his property as a result of a leak that previously existed in an underground oil storage tank located on a neighboring property. The prospective purchaser then cancelled the contract, and plaintiffs commenced suit against the current and former owners of the neighboring property, and their respective insurers. After the insurers remediated the contamination on the property, the lawsuit proceeded on the claims for damages against all defendants on theories of negligence, strict liability, private nuisance and trespass, as well as violations of the Spill Compensation and Control Act. In this appeal, the issue presented for the Supreme Court's review centered on whether plaintiffs' claims were properly dismissed, and whether plaintiffs could maintain claims as third-party beneficiaries against the insurers which provided coverage to the former owner of the neighboring property where the underground storage tank was located. The Court found no basis for the claims of private nuisance or trespass against the homeowner defendants because there was no proof of negligence, recklessness, intentional conduct, or the conduct of an abnormally dangerous activity, by these parties. Additionally, the Court declined to expand these causes of action to impose strict liability upon defendants. Plaintiffs could not proceed with a direct claim against the defendant insurers for breach of the implied covenant of good faith and fair dealing contained in the insurance contracts because they did not hold an assignment of rights from the named insured, and there was no evidence that the named insured or her insurers agreed to recognize plaintiffs as third-party beneficiaries of the insurance contracts. View "Ross v. Lowitz" on Justia Law

Headwaters Resources, Inc. carried commercial liability insurance issued by two insurance companies: Illinois Union Insurance Company and ACE American Insurance Company. Headwaters sought reimbursement for its litigation costs arising from a case brought by landowners in Virginia, alleging that Headwaters had caused personal injury and property damage during the construction of a nearby golf course. The complaint alleged that fly ash used in the construction process caused air and water pollution that devalued their homes and created health risks to the homeowners. The insurance companies told Headwaters that defense costs related to Headwaters’ pollution were outside the scope of the coverage and denied the claim. Headwaters sued, and the district court eventually granted summary judgment in favor of the insurance companies, finding that the pollution exclusions in the insurance policies precluded coverage. Jurisdictions that have addressed the scope of a "total pollution exclusion" were either: (1) courts that applied the pollution exclusions as written because they find them clear and unmistakable; or (2) courts that narrowed the exclusions to "traditional environmental pollution," because they found the terms of the exclusion to be ambiguous due to their broad applicability. The Utah Supreme Court had not yet weighed in on this debate, and the federal district court did not pick a side on its behalf. Instead, the district court found that certain of the at-issue pollution exclusions unambiguously applied to bar coverage and that the remaining pollution exclusions, although possibly ambiguous, still applied because the complaints unquestionably alleged traditional environmental pollution. As a result, the complaints triggered the pollution exclusions in all of the policies, and the district court granted summary judgment in favor of the insurance companies. Upon review, the Tenth Circuit found that each of the pollution exclusions was unambiguous, and affirmed the district court’s grant of summary judgment.View "Headwaters Resources v. Illinois Union Insurance Co." on Justia Law

Appellants owned the mineral rights and the State owned the surface rights to a certain tract of land. When the property was transferred to the State, the seller reserved all mineral rights and “reasonable surface right privileges.” Appellants filed a complaint for declaratory judgment seeking a determination that they were entitled to surface-mine a reasonable portion of the property. The court of common pleas granted summary judgment for the State, and the court of appeals affirmed. The Supreme Court reversed, holding that the contract entitled Appellants to surface-mine the property, subject to the reasonableness standard of the contract. Remanded.View "Snyder v. Ohio Dep’t of Natural Res." on Justia Law

At issue in this case was a performance bond issued by Stanley Black and Decker, Inc. to secure the obligation of an environmental consulting company to perform environmental remediation of contaminated property, a portion of which was owned by Stanley. A.J. Properties, LLC commenced the underlying action against Stanley alleging that it had been assigned the right to recover all funds paid to Stanley under the performance bond. Specifically, A.J. Properties argued that Stanley had assigned the rights to payment when it assigned a mortgage on the property to the Wyman-Gordon Company, which assigned the mortgage to A.J. Properties. A federal district court judge determined that A.J. Properties was entitled to the amounts paid to Stanley under the rule of Quaranto v. Silverman. Stanley appealed, and the court of appeals recommended certification of a question of law to the First Circuit. The First Circuit answered the question as follows: “Where a mortgage and a surety agreement secured an obligation, and both the mortgagor and the surety committed a breach of that obligation prior to a written assignment of the mortgage, the assignee does not necessarily acquire the right against the surety’s receiver for the surety’s breach of its obligation.” View "A.J. Props., LLC v. Stanley Black & Decker, Inc." on Justia Law

Asarco filed suit against UP alleging breach of contract and seeking contribution regarding a dispute about environmental liability for a lead refinery and smelter which polluted Omaha, Nebraska. The district court granted UP's motion to dismiss, ruling that UP did not breach the agreement and consent decree that protected UP from Asarco's claims. Despite receiving notice of UP's settlement, Asarco did not object before the district court issued the consent decree. Asarco waited until after entry of the consent decree and brought this collateral case. The court concluded that the district court correctly recognized that all of Asarco's claims were prohibited contribution claims even though some were disguised as breach of contract claims. In light of the consent decree, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. 9601-9675, protected UP against any contribution claim related to the site. Further, the district court correctly concluded that UP neither waived CERCLA's contribution protection nor breached the tolling agreement by invoking that protection. Accordingly, the court affirmed the judgment of the district court. View "ASARCO v. Union Pacific Railroad Co." on Justia Law

Dozens of suits were filed against Irving Oil Limited (IOL) alleging environmental contamination by methyl tertiary butyl ether (MTBE) occurring from 1979 to the present. At the time of this opinion, all of the MTBE suits against IOL had been settled. In 2009, IOL filed a complaint asking the superior court to declare that ACE INA Insurance (ACE) had a duty to defend and indemnify in the MTBE suits. The superior court granted IOL’s motion for summary judgment in part and denied it in part, concluding that it could not declare that IOL was entitled a judgment on the duty-to-defend count as a matter of law. IOL appealed. The Supreme Court dismissed IOL’s appeal and ACE’s cross-appeal, holding that although a decision that an insurer does not have a duty to defend its insured is ordinarily immediately appealable under the death knell exception to the final judgment rule, the exception did not apply in this case because there were no MTBE cases pending against IOL. View "Irving Oil Ltd. et al. v. ACE INA Ins." on Justia Law

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law