Tuesday, June 12, 2007
Ind. Decision - 7th Circuit decides environmental clean-up costs case
The 7th Circuit has just released a decision in typescript (a printed copy, they say, will follow later) in the case of Kemper/Prime Industrial Partners v. Montgomery Watson and The Prime Group (ND Ill.), 12 pages. Judge Wood writes what might be taken by those not involved in the dispute as a cautionary tale:
This case concerns who is responsible for certain environmental clean-up costs. Kemper/Prime Industrial Partners (“Kemper/Prime”), the plaintiff, claims that an environmental assessment of a parcel of land performed by Warzyn, Inc., the predecessor of defendant Montgomery Watson Americas, Inc. (“Montgomery”), was deficient insofar as it failed to reveal to Kemper/Prime the full extent of contamination and clean-up costs. The property in question was called the Chicago Enterprise Center (“the Property”), which Kemper/Prime purchased after receiving Warzyn’s report in 1990. Later, when it decided to refinance the Property in 1996, Kemper/Prime conducted another environmental assessment of the land. The new assessor discovered contamination that was present in 1990 but that Warzyn had not detected. Kemper/Prime sued Montgomery, Warzyn’s successor, claiming negligent misrepresentation on Warzyn’s part, but the district court ruled that its evidence of damages was insufficient and dismissed the case with prejudice. We affirm. * * *
Kemper/Prime could have used its expert to analyze the Warzyn reports, take note of every measurable amount of contamination identified, and calculate remediation costs based on some industry standard cost, but it did not do so. Without such additional materials, the district court was left with no means of identifying or inferring the cost of remediation from the Warzyn reports.
Finally, we are left with two insurmountable calculation problems. Kemper/Prime has sold significant sections of the Property since 1990; indeed, in post-argument submissions the parties discussed the effect of Kemper/Prime’s sale of its remaining holdings in October 2004. Any remediation costs identified in the Warzyn reports would need to be reduced by the costs associated with the sections of the Property no longer owned by Kemper/Prime. This has not been done. Second, there is no evidence that even the $300,000 figure, nor any other figure, is what is called a Tier One remediation cost, or that it was calibrated to any particular standard of remediation. There are many such standards for cleaning up contaminated land, depending on what the planned use of the land is. As the district court noted, in order to come up with a valid comparison of the cost of remediating the problems that were identified with the cost of remediating all problems that existed, both must be calibrated to the same standard. Kemper/Prime offers only Tier One evidence of the full cost of remediating the contamination that existed in 1990. A court given these two cost estimates would be left to compare them not knowing if it was making an apples-to-apples comparison or an apples-to-oranges comparison. That level of uncertainty is insufficient to “establish a basis for the assessment of damages” with any “degree of probability.”
Therefore, we are led to the same conclusion as the district court: Kemper/Prime has not shown a genuine issue of material fact for the remediation costs for the contamination listed in the 1990 Warzyn reports.
Kemper/Prime’s evidence of the total cost of remediating all of the contamination that existed on the Property at the time of the 1990 reports is equally flawed. * * *
The district court gave Kemper/Prime every opportunity to put forth evidence of its recoverable damages, but it failed at every turn. We therefore AFFIRM the decision of the district court.
Posted by Marcia Oddi on June 12, 2007 02:01 PM
Posted to Ind. (7th Cir.) Decisions