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Red Spot could face $26 million in cleanup costs

August 6, 2009

A southern Indiana company could be on the hook for $26 million in contaminated site cleanup costs, a consequence of a federal judge's default ruling in June that found the business and its former attorneys had purposely withheld evidence and misled the court.

In a remediation plan filed in U.S. District Court, Southern District of Indiana, Tuesday in 1100 West v. Red Spot Paint & Varnish Co., No. 1:05-CV-1670, the plaintiff detailed costs ranging from $24.7 million to $25.8 million for the investigation and cleanup of the Evansville area site. Judge Larry McKinney will determine the amount, which comes as part of a partial settlement agreement recorded on the court docket last month.

The case involves a business's 7-acre site that it claims was heavily contaminated with toxic chemicals from the nearby Red Spot property. After filing a state court suit in 2003 about the alleged contamination, 1100 West took the case to federal court in 2005 and sought injunctive relief under the Resource Conservation and Recovery Act. 1100 West asked the judge to order the removal of all the chemicals near its property and for Red Spot to stop discharging any of that hazardous and solid waste from its nearby property.

A central issue in the case was whether particular chemicals were used at the site, and both sides debated during discovery whether those chemicals were ever stored at the site. Red Spot officials testified throughout the litigation that the company hadn't used or stored specific chemicals, but opposing counsel showed otherwise and Judge McKinney found that discovery had been withheld. As a result, the judge sanctioned Indianapolis firm Bose McKinney & Evans for the conduct of some of the attorneys who he determined had abused the discovery process and allowed their client to evade the truth. Two of those attorneys are no longer with the firm, and the company has since hired new counsel.

In the June ruling, Judge McKinney issued a default judgment against Red Spot that held it responsible for the cleanup costs. Now, Red Spot has 60 days to object to the proposed remediation plan; a hearing is set for Nov. 4.

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