ELR Citation: ELR 20021
No(s). 93-7021 (2d Cir. Sep 15, 1993)

Applying New York law, the court holds that release and indemnity agreements between the seller and purchaser of contaminated property, although signed before the enactment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and silent as to environmental liabilities, are sufficiently broad to require the purchaser to indemnify the seller for CERCLA liability. The agreements provide that the purchaser will indemnify the seller for all existing or future liabilities relating to the business the purchaser acquired from the seller. The court finds that the contractual language evidences the parties' clear and unmistakable intent that the purchaser indemnify the seller for all liabilities, including future liabilities, related to the site. The inclusion of the broadly worded contractual provisions affected the selling price, and the contracts were made by two large, sophisticated companies who expected to be able to rely on the contracts' terms. The court notes that there are equities in favor of each side.

The court next holds that the district court improperly dismissed with prejudice the purchaser's counterclaim for a declaratory judgment that the seller is liable for environmental claims at unspecified sites. In dismissing the counterclaim with prejudice, the district court's ruling arguably forecloses the purchaser from bringing an action in the future to determine the respective liabilities of the parties if a cleanup of one of the third-party sites is ordered. Whether the seller will someday be held subject to environmental liability at some unknown third-party site is speculative. Because there was no actual controversy before the district court as to these sites, the court vacates the district court's holding and orders the district court to amend its judgment to provide that the claims in the purchaser's counterclaim dealing with third-party sites, other than a specified site in Pennsylvania, are dismissed without prejudice. With regard to the Pennsylvania site, the court directs the district court on remand to make findings and explicitly rule on the purchaser's CERCLA counterclaim as it pertains to the site.

[The district court's opinion is published at 23 ELR 20513.]

Counsel for Appellee
James J. Harrington
Newman & Harrington
425 Lexington Ave., New York NY 10017
(212) 916-3800

Counsel for Appellant
John M. Hessel
Lewis, Rice & Fingersh
611 Olive St., Ste. 1400, St. Louis MO 63101
(314) 444-7600

Before Pierce and Walker, JJ.