News and Events Involving Environmental Law, Published by Chicago Environmental Attorney Dave Scriven-Young
of Peckar & Abramson, P.C. -- (312) 239-9722

Federal Appeals Court Affirms Summary Judgment in Favor of Purchaser of Property Based on Inaccurate Environmental Representations and Warranties

In Nature Conservancy v. Wilder Corp., No. 09-2988, the U.S. Court of Appeals for the Seventh Circuit in Chicago recently affirmed the trial court’s grant of summary judgment in favor of the purchaser of land contaminated by the prior landowner.  This case concerned farmland purchased by The Nature Conservancy from Wilder for $16,350,000.

The sales contract required Wilder to remove from the property all rubbish, hazardous or toxic substances, petroleum contamination, and cattle sewage, among other things.  The contract also contained representations and warranties regarding the property by Wilder, including that there “have not been and there are not now any underground or aboveground storage tanks” on or under the property.  Prior to closing, the inspection revealed significant amounts of rubbish, trash, and toxic chemicals and substances.  The Conservancy agreed to close on the sale prior to cleanup by Wilder under a supplemental agreement, under which the Conservancy held back $75,000 of the purchase price to apply toward the cost of any cleanup that Wilder failed to perform.

The Conservancy sued in 2006 alleging that Wilder breached the warranty regarding storage tanks, failed to fulfill a number of cleanup provisions, and failed to pay real estate taxes.  In 2007, the trial court granted summary judgment to the Conservancy.  Then, the trial court reopened discovery and allowed the Conservancy to amend its complaint to seek relief for additional areas of contamination discovered during the litigation. The trial court granted summary judgment in favor of the Conservancy on the additional claim, and Wilder appealed.

On appeal, Wilder claimed that the breach of contract claim relating to the additional areas of contamination should be barred by the doctrine of laches because the Conservancy raised the claim nearly seven years after performing an environmental inspection of the land and nearly five years after Wilder vacated the property.  Under Illinois law, laches is “a neglect or omission to assert a right, taken in conjunction with a lapse of time of more or less duration, and other circumstances causing prejudice to an adverse party, as will operate to bar relief in equity.”  Essentially, Wilder alleged that it was prejudiced because the Conservancy waited too long to bring its claim.

The Seventh Circuit rejected Wilder’s argument and affirmed the trial court’s grant of summary judgment to the Conservancy.  Specifically, the Seventh Circuit found that Wilder had not proven that the Conservancy’s delay caused material prejudice to Wilder:

“Wilder’s claim of prejudice is wholly conclusory and entirely devoid of support in the record.  Wilder complains that by waiting until five years after the company vacated the property to bring the claim, ‘the Conservancy deprived Wilder of any hope of defending itself against the claim.’  Because it was not the last tenant on the property, Wilder asserts there is no way of knowing who contaminated the property. . . . But Wilder cites no evidence that it even attempted to discover what happened after it vacated the property.  The court allowed discovery on the new claim and the Conservancy identified the subsequent tenants to Wilder.  But Wilder failed to investigate any of the subsequent tenants.  It produced no testimony that witnesses could no longer recall what happened on the property.  It produced no affidavits stating that business records had been lost or destroyed during the intervening years.  It simply failed to ask either the Conservancy or any third-party witnesses any relevant questions about the years after Wilder vacated the property.”

This case is relevant to businesses that are buying or selling property and shows the importance of environmental provisions in real estate contracts.  If your business is selling property and the contract contains environmental representations and warranties, make sure that those reps and warranties are accurate.  If not, your company could be sued many years into the future based on those inaccurate environmental provisions in the contract.

Stay tuned to the Illinois Environmental Law Blog for more news and developments. To set up a free initial consultation to discuss your legal matter, please contact Chicago environmental attorney Dave Scriven-Young at (312) 239-9722 or dscriven-young@pecklaw.com.





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