A.J. Properties, LLC v. Stanley Black & Decker, Inc.

989 F. Supp. 2d 156, 2013 WL 6182406, 2013 U.S. Dist. LEXIS 166350
District Court, D. Massachusetts·Decided November 22, 2013·No. Civil Action No. 11-10835-FDS·Published·Cited by 3 cases

Opinion

MEMORANDUM AND ORDER ON DEFENDANTS SECOND MOTION FOR SUMMARY JUDGMENT

SAYLOR, District Judge.

This dispute concerns the proceeds from a performance bond issued for the environ[158]*158mental remediation of a contaminated parcel of land in Worcester, Massachusetts. Plaintiff A.J. Properties, LLC alleges that defendant Stanley Black & Decker, Inc. wrongfully collected payment under the bond after it had assigned its rights to those proceeds to a third party, the Wyman-Gordon Company, which in turn allegedly assigned them to A.J. Properties. Jurisdiction is based on diversity of citizenship.

The Court granted partial summary judgment for A.J. Properties, holding that it had been assigned Stanley’s interest in the proceeds of the performance bond. The key issue on summary judgment was whether the right to collect from the surety to the performance bond was included in the series of assignments. After holding that it was so included, and granting summary judgment for plaintiff on that basis, the Court stayed the case and certified the underlying question of state law to the SJC pursuant to the method detailed in Supreme Judicial Court Rule 1:03.

In the meantime, Stanley discovered a release filed in the Registry of Deeds, signed by A.J. Properties, that it contends moots the present dispute. The Court lifted the stay in order to address the potential effect of the stay. Stanley then amended its answer and filed a second motion for summary judgment on the ground that the release prevents A.J. Properties from bringing any future claims relating to the property against it. A.J. Properties opposed the motion, contending that the release does not bar claims brought as assignee of Wyman-Gordon and that it is in unenforceable for lack of consideration or as against public policy. For the reasons set forth below, defendant’s motion will be denied.

I. Background

The following facts are presented in the light most favorable to the non-moving party, the plaintiff.

A. Factual Background

During the early and mid-1990s, Stanley-Bostitch, Inc., a predecessor to defendant Stanley Black & Decker, Inc., a Connecticut corporation (collectively, “Stanley”), operated a small-tools manufacturing facility on a site located at 149 Washington Street in Worcester (“the 149 property”). (Joint Appendix to Mots. Summ. J. (“J.A.”) at 146, 215).1

In March 1995, Stanley became aware of substantial levels of soil and groundwater contamination on portions of the 149 property. (J.A. at 215). The area surrounding the 149 property had a long history of industrial use, and it is not clear from the record what portion of the contamination was attributable to Stanley. (J.A. at 145, 515, 843). Nonetheless, it appears that at least some of the degradation resulted from Stanley’s manufacturing operations. (Id.). In any event, the company submitted a release notice to the Massachusetts Department of Environmental Protection, as required by the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Mass. Gen. Laws ch. 21E. (J.A. at 878). Environmental assessments undertaken around that time indicated that the contamination on the 149 property extended to an adjacent parcel at 105 Madison Street, where the WymanGordon Company operated an industrial facility. (J.A. at 145-47).

Stanley ceased operations at the 149 property in July 1996. (J.A. at 147). In October 1997, Vargo & Associates Environmental Consulting Corporation (“Vargo [159]*159Corp.”) completed a “Phase III Remedial Action Plan” for the site that included a risk analysis and evaluation of remedial alternatives. (J.A. at 141-44). Vargo Corp. and its president, Patrick Vargo, were in the business of evaluating, purchasing, and remediating contaminated properties. (J.A. at 7).

On December 31,1997, Stanley and Var-go Corp. entered into an agreement by which Vargo Corp. would purchase the 149 property for one dollar. (J.A. at 1). Stanley also agreed to pay $400,000 in exchange for Vargo Corp.’s promise to remediate both the 149 property and the Wyman-Gordon property. (J.A. at 2-4).2 The agreement provided that as conditions for the closing of the sale, Vargo Corp. would (1) deliver an indemnity agreement executed by it and its principal, Patrick Vargo; (2) obtain a performance bond in the amount of $800,000; and (3) grant Stanley a mortgage on the 149 property that would “secure all obligations of [Var-go Corp.] and Vargo to [Stanley] under the Indemnity Agreement, this Agreement and all other agreements between [Stanley] and [Vargo Corp.]” (J.A. at 8).

Also on December 31, 1997, the parties executed an Environmental Compliance and Indemnity Agreement to satisfy the first condition of closing under the Purchase and Sale Agreement. (J.A. at 82-106). In that document, Patrick Vargo and Vargo Corp. agreed to “take all action necessary to obtain all permits, approvals, licenses and the like ... to fully remediate the Site.” (J.A. at 84). In addition, they promised “to protect, indemnify, reimburse, defend and hold harmless Stanley ... from and against any and all liabilities” arising from any breach by Vargo Corp. of the agreements between the parties, from any contamination on the site, or from any activities of Vargo Corp. on the site. (J.A. at 87).

The same day, Vargo Corp. and Stanley also executed a Mortgage and Security Agreement. (J.A. at 107). Pursuant to that agreement, Vargo Corp. granted Stanley a mortgage on the 149 property as security for Vargo Corp.’s remediation obligations under the Purchase and Sale Agreement and the Environmental Compliance and Indemnity Agreement. (Id.).

On January 22, 1998, Vargo Corp. obtained a performance bond in the amount of $800,000 to fulfill the final condition for closing on the sale. (J.A. at 69-70). The surety on the bond was the United Capitol Insurance Company. (Id.).

Around August 2000, Vargo Corp. suspended operation of the remedial system at the site and, in early 2001, abandoned the site. (J.A. at 311, 879). Soon thereafter, Wyman-Gordon became aware that the system had not effectively addressed the contamination at the site. (J.A. at 214-16, 248). On March 16, 2001, it issued a letter to both Stanley and Vargo Corp. in which it asserted that the companies were liable under Mass. Gen. Laws ch. 21 E for the remaining contamination. (J.A. at 214-19). Shortly thereafter, Stanley sent a series of letters to Vargo Corp. and its representative, attorney David Li of Posternak, Blankstein & Lund, LLP. (J.A. at 220-46). It asserted that Vargo Corp. had breached its duties under the Purchase and Sale Agreement and the Environmental Compliance and Indemnity Agreement and demanded that. Vargo Corp. complete the remediation of the 149 property and Wyman-Gordon Property. (Id.). It also demanded indemnification under those [160]*160agreements for any liabilities that arose from the remaining contamination. (Id.). On January 11, 2002, David Li responded to Stanley and explained that his firm had been unable to establish contact with Mr. Vargo for some time. (J.A. at 247). He indicated that Mr. Vargo had filed for personal bankruptcy and provided the name and address of Mr. Vargo’s bankruptcy counsel. (Id.)

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A.J. Properties, LLC v. Stanley Black & Decker, Inc., 989 F. Supp. 2d 156, 2013 WL 6182406, 2013 U.S. Dist. LEXIS 166350 (D. Mass. 2013).

989 F. Supp. 2d 156 (A.J. Properties, LLC v. Stanley Black & Decker, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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