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COA rules in favor of previous site owner in environmental contamination suit

April 14, 2015

A company seeking to recover environmental cleanup costs of a commercial real estate site from a previous owner who operated a film processing company failed to prove that the previous owner caused or contributed to the site’s contamination, the Indiana Court of Appeals affirmed Tuesday. 

5200 Keystone Limited Realty LLC acquired property in Indianapolis from Apex Mortgage Corp., which had acquired the property through foreclosure proceedings against Erick Spicklemire. After KLR purchased the property, it was substituted as the plaintiff in a lawsuit Apex brought against the former owners and companies on that property for environmental cleanup costs. In addition to Filmcraft, which Spicklemire operated, a dry cleaners and auto detailer also operated on the site. 
 
At issue in 5200 Keystone Limited Realty, LLC v. Filmcraft Laboratories, Inc., Eric J. Spicklemire, Portrait America, Inc., A.C. Demaree, Inc., Clean Car, Inc., and The Wax Museum & Auto Sales, Inc. , 49A02-1403-CT-188, is the trial court ruling in favor of Spicklemire granting his motion to dismiss with respect to KLR’s statutory causes of action and a grant of summary judgment with respect to certain common-law claims presented by KLR at trial. 
 
In granting Spicklemire’s T.R. 41(B) motion, the trial court ruled that KLR failed to establish a viable environmental legal action claim. KLR was required to offer evidence that Spicklemire caused or contributed to the release of chlorinated solvents and petroleum hydrocarbons in the soil and groundwater at the site. KLR contended that Spicklemire helped spread the contaminants that were brought to and released onto the site by others, even though there is no evidence that Spicklemire’s company, Filmcraft, used any of the chemicals in question.
 
The COA noted that the parties stipulated that the dry cleaning business was responsible for the chlorinated solvent and petroleum hydrocarbon contamination at the site. The lower court found that subsequent purchaser Spicklemire had no involvement in the day-to-day operations of Filmcraft’s subtenants, which were the auto detail shops, nor did he have knowledge regarding whether those subtenants used chemicals in their operations. There was also no evidence that the detailers used any of the chemicals in question.
 
“Therefore, the evidence supported the determination that Spicklemire was not liable by virtue of his status as landlord vis-à-vis the Detailers and their operations on the Site. As for liability by virtue of Filmcraft’s own activities, the direct evidence indicated that, with but one very minor exception, its operations did not involve the use of chlorinated solvents or petroleum hydrocarbons,” Judge Ezra Friedlander wrote. 
 
The judges also affirmed that Spicklemire did not impliedly consent to litigating the common-law claims of lost rent and loss of use at trial within the meaning of Trial Rule 15(B).

 

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