Contaminated Property Case Study
Disputes often arise following the discovery of contamination such as; who caused the contamination, when the contamination started, where the contamination migrated and who should be responsible to investigate, cleanup or pay for contamination.
A common scenario goes something like this:
- Prior to a real estate transaction, the purchaser retains a contractor to inspect the property. The inspection is conducted and no environmental conditions are found. Before the purchaser initiates operations or begins to redevelop the property, contamination is discovered on site and is found to be migrating off site. The contamination occurred through no fault of the purchaser. An environmental consultant is retained who estimates that the cost to investigate and remediate the property in compliance with applicable laws is approximately $750,000. Forensic analysis of the contamination reveals that it has existed for 20-25 years, during which time the property was transferred five times to five different owners.
In this scenario, the property owner may have a potential claim against the inspection contractor, the person or entity that caused the contamination (which may or may not be one or more of the prior property owners), and all of the prior property owners.
The property owner may also have a claim against his or her insurer, as well as the insurance companies for the prior property owners.
Owners of adjacent properties that are contaminated by the source on the client’s property may have a claim against the client and others.
Each of these claims may be subject to certain statutes of limitation, (i.e. a time period after which all claims are barred). Therefore, it is critical that owners of contaminated property are aware of these time periods so as not to miss the opportunity to litigate against potentially responsible parties.
Initially, we might recommend contacting each of the potential liable parties and requesting cooperation in an effort to avoid costly litigation. Sometimes, due to the significant costs of the environmental work necessary to remediate the property, these liable parties are uncooperative, despite our best efforts to negotiate. If the circumstances warrant, we may recommend that a lawsuit be filed.
The recommendation to litigate is never made lightly, as we are cognizant of the taxing nature and significant expense of litigation. Whenever we represent a client in a lawsuit, whether as a plaintiff or defendant, we make every effort to be as efficient as possible in order to minimize costs. In doing so, we work closely with the right environmental consultants, scientists, and other experts before, during and after litigation to monitor, document and provide appropriate direction for the necessary investigations and remediations. We also draw on our extensive experience with environmental disputes to seek creative and effective resolutions.