ELR Citation: ELR 20554
No(s). 84-1159 (3d Cir. May 28, 1985)

The Court holds that under Pennsylvania law a purchaser of land, who cleaned up hazardous wastes placed on the land by the corporate predecessor of the seller of the land, does not have a viable cause of action against the seller for cleanup costs in private or public nuisance or common-law indemnity. In this appeal of a judgment for the current landowner, the court first rules that the seller, Hercules, Inc., assumed the waste disposer Pennsylvania Industrial Chemical Corporaion's (PICCO's) unknown and contingent liabilities. While the Pennsylvania rule is that one purchasing a corporation's assets generally does not assume its liabilities, two exceptions apply in this case. The first is the exception of express assumption of liability: the sale agreement expressly gave Hercules all of PICCO's liabilities except those listed; contingent and unknown liabilities were not listed. The second applicable exception is for de facto mergers: the district court correctly ruled that since Hercules obtained essentially all PICCO's assets in exchange for stock, took steps to maintain PICCO's business, and required that PICCO be dissolved as soon as possible after the transaction, PICCO's liabilities passed to Hercules as well. The court rejects Hercules' argument that the de facto merger exception does not apply in nuisance actions.

The court next rules that under the doctrine of caveat emptor, Hercules could not be liable to plaintiff in private nuisance for conditions existing on the land transferred. A seller of land in an arm's length transaction to a buyer with equal means of knowledge about the land is liable only for those things expressly provided in the contract of sale. Judicial exceptions to this rule, such as that for sales of new homes by builders, do not apply in this case. Nor, the court rules, does the fact that the action is for private nuisance make Hercules liable. Even if plaintiff proved that Hercules was legally responsible for a private nuisance on the land, Hercules would not be liable to plaintiff, but only to people on nearby land.The policy interests served by private nuisance, controlling and resolving problems caused by discordant use of land, are not served by making Hercules liable to a purchaser of the land, who, unlike the property's neighbors, had an opportunity to inspect the land and see its defects.

The court next holds that Hercules is not liable in public nuisance. Public nuisance liability is not limited to those occupying land near the site of the nuisance, but plaintiff lacks standing to sue on this theory, the court rules. The harm suffered by plaintiff, the need to clean up chemical wastes dumped by PICCO under threat of action by the state environmental agency, was not incurred in the exercise of a right common to the general public. The public right interfered with was that to clean water, pollution of the Delaware River by chemicals from the site; the subject of plaintiff's injury was the cause of any public nuisance, not the result.

Finally, the court rejects plaintiff's argument that the lower court's assessment of damages should be allowed to stand on common law indemnification principles. Plaintiff failed to establish that it could have been compelled to clean up the site by the state, an element of an indemnity action under Pennsylvania law. Whether plaintiff was indeed liable under the Clean Streams law, the authority cited by the state in its informal requests for action, was not tried below or decided by the jury. Moreover, the court rules, even if plaintiff had cleared this hurdle, it still would not be entitled to indemnity; Pennsylvania law does not allow indemnity actions between those who, like Hercules or plaintiff, are equally liable (as successor landowners to PICCO).

Counsel for Plaintiffs
Kean K. McDonald
LaBrum & Doak
700 IVB Building, 1700 Market St. Philadelphia PA 19107
(215) 732-2700

Counsel for Defendants
Joseph M. Donley, Robert Emmet Hernan
Kittredge, Kauffman & Donley
800 North American Bldg., 121 S. Broad St. Philadelphia PA 19103
(215) 561-4400

Before McCune,^* JJ.