ELR Citation: ELR 20369
No(s). 92-2440 (7th Cir. Jan 18, 1994)

The court reverses a district court decision that the purchaser of contaminated land and an affiliated corporation to which it transferred the land are not liable as "owners" under §107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and holds that an indemnification provision of the 1972 contract for the sale of the land requires the purchaser to indemnify the seller's successor-in-interest for past and future response costs the successor incurred at the site. The court first holds that the purchaser's affiliate is an "owner," because it is the current landowner. It is not entitled to rely on CERCLA §107(b)'s innocent landowner defense, because it failed to show that it took precautions to prevent the threat of release or other foreseeable consequences arising from pollution at the site. The court holds that the purchaser is also liable, because it was aware of wood preservatives at the site and made no attempt to remove the polluting chemicals. With respect to the successor's contribution claim under CERCLA §113, the court holds that if the district court on remand determines that reallocation of contribution is necessary, the lower court should consider the indemnification provision in its equitable balancing. The court holds that the successor is entitled to indemnification, because the purchaser agreed in the contract to acquire the land "as is" and indemnify the seller against any action, claim, or order concerning pollution or nuisance. The court holds that the agreement covers CERCLA damages even though CERCLA was enacted after execution of the contract, because nothing in the indemnification provision limits the agreement to indemnification for liabilities under then existing law. Further, the purchaser knew of the pollution at the site when it purchased the property.

Counsel for Plaintiff
Jeffrey C. Fort
Sonnenschein, Nath & Rosenthal
Sears Tower
233 S. Wacker Dr., Ste. 8000, Chicago IL 60606
(312) 876-2380

Counsel for Defendants
Mark G. Arnold
Husch & Eppenberger
100 N. Broadway, Ste. 1300, St. Louis MO 63102
(314) 421-4800

Before, POSNER, Chief Judge, FAIRCHILD and CUMMINGS, Circuit Judges.