Carroll Co. v. Sherwin-Williams Co.

848 F. Supp. 2d 557, 2012 WL 253430, 2012 U.S. Dist. LEXIS 39519
CourtDistrict Court, D. Maryland
DecidedJanuary 26, 2012
DocketCivil Action No. WMN-11-1700
StatusPublished
Cited by10 cases

This text of 848 F. Supp. 2d 557 (Carroll Co. v. Sherwin-Williams Co.) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carroll Co. v. Sherwin-Williams Co., 848 F. Supp. 2d 557, 2012 WL 253430, 2012 U.S. Dist. LEXIS 39519 (D. Md. 2012).

Opinion

MEMORANDUM

WILLIAM M. NICKERSON, Senior District Judge.

Before the Court is Defendant The Sherwin-Williams Company’s Motion to [560]*560Dismiss, ECF No. 10. The motion has been fully briefed. Upon a review of the papers and applicable case law, the Court determines that no hearing is necessary, Local Rule 105.6, and that the motion to dismiss will be granted in part and denied in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action involves a dispute over the clean-up obligations of the seller of a nine-acre tract of land. On December 23, 2005, Plaintiff Carroll Company (Carroll) and Defendant The Sherwin-Williams Company (Sherwin-Williams) entered into a Purchase and Sale Agreement (PSA) by which Carroll agreed to purchase the real property and facilities located at 1354 Old Post Road in Havre de Grace, Maryland (Property). Both parties knew that the Property was historically used as an industrial site, and Carroll, a manufacturer of industrial cleaning and maintenance products, continues to operate a chemical blending facility on the Property. Plaintiff Ogden, LLC (Ogden) is an entity created for the purpose of owning the Property at issue; contemporaneous with the closing of the PSA, Carroll assigned certain rights under the PSA to Ogden and leased back the Property and related assets such that Carroll maintained operational control of the business operations at the facility.

In 1989 and 1991, years before either party owned the Property, the Maryland Department of the Environment (MDE) conducted a phased groundwater investigation and discovered the presence of volatile organic compounds in the groundwater. ECF No. 1-7. A final work plan was submitted to MDE in November 1991, but there is no record that the owner at the time, Cello Corporation, completed the proposed remediation. Id. Subsequently, in 1996, Sherwin-Williams purchased the Property for use as a chemical blending facility and operated it as such through the time at which it entered into the PSA with Carroll.

'■ On November 21, 2005, a month before the parties entered into the PSA, MDE sent a letter to Sherwin-Williams requesting information about any environmental investigation or remedial activities that had taken place on the Property subsequent to the work plan submission in 1991. The purpose of the letter was to solicit information so that MDE could determine whether it could close its case file. The letter also noted that “[u]nder Section 7-221 of the Environment Article [of the Maryland Code], responsible persons, including the owner and current or past operators of the site, are liable for all costs incurred by the State in responding to any release or threatened release, including oversight, enforcement and investigation” and suggested that Sherwin-Williams may want to address the site under Maryland’s Voluntary Cleanup Program. ECF No. 1-7 at 3. Participation in the VCP, however, was not explicitly required by the notice. On December 13, 2005, Sherwin-Williams sent the MDE letter to Plaintiffs for their review.

On December 20, 2005, Plaintiffs sent an email to Sherwin-Williams requesting immediate assistance with several environmental concerns, including the MDE letter. With regard to the MDE Letter, Plaintiffs stated that they “would consider a response to this letter and closure of the matter to be [Sherwin-Williams’] responsibility.” ECF No. 1-8. Plaintiffs also stated that “if the Voluntary Cleanup Program would give [Plaintiff Ogden] immunity from liability, we would like for you to apply for that program and conduct the response under that program.” Id.

On December 23, 2005, the parties entered into the PSA, the purchase price [561]*561exceeding two million dollars.1 Concurrently, Sherwin-Williams presented Plaintiffs with a letter confirming SherwinWilliams’ intent to pursue the VCP as proposed by MDE in its letter (Confirmation Letter). ECF No. 1-9. This is the only documentation in the record that addresses Plaintiffs’ December 20 email.

The parties initially planned to close on the Property on March 31, 2006, but agreed to postpone the closing until July 7, 2006, so that there was sufficient time for the parties to resolve pending environmental issues. Sherwin-Williams hired Environmental Resources Management (“ERM”) to prepare VCP applications to be submitted to MDE on behalf of Sherwin-Williams, Carroll and Ogden.

According to Plaintiffs, in late June 2006, ERM hand-delivered to MDE applications for expedited “inculpable person” status for Carroll and Ogden. An “inculpable person” is a party that “has no prior or current ownership interest in an eligible property at the time of application” and “has not caused or contributed to contamination at the eligible property at the time of application.” Md.Code Ann., Envir. § 7 — 501(j). In letters dated July 3, 2006, and July 6, 2006, respectively, MDE indicated that it granted Ogden and Carroll expedited inculpable person approval pursuant to the requests received from ERM on June 28, 2006. ECF No. 1-11 at 50, 28.

Subsequently, on July 6, 2006, the day prior to closing on the PSA, SherwinWilliams provided Plaintiffs with draft VCP applications to be submitted to MDE on behalf of Sherwin-Williams, Carroll and Ogden. According to the complaint, the draft applications proposed enrollment in the VCP for remediation to a “Tier 3 (Industrial)” standard, which Plaintiffs immediately rejected. Plaintiffs demanded that the applications be revised to reflect remediation to the highest “Tier 1 (Residential)” standard, and threatened that they would not proceed to closing unless these revisions were made. SherwinWilliams revised the applications accordingly and sent them for Plaintiffs’ approval on the day of closing.

The revised applications note that Sherwin-Williams is the current owner of the property and a “Responsible Person,”2 that Carroll is the operator of the facility and an “inculpable person,” and that Ogden is a party “considering purchasing the property” and an “inculpable person.” ECF No. 1-11. The applications also note that the property is zoned for “General Industrial,” with no pending requests for zoning variances, special exceptions or reclassification, and the intended future property use is Tier 1 (Residential), A (Unrestricted). Id. Plaintiffs signed both the Carroll and Ogden applications on July 6, 2006. ERM subsequently submitted the applications to MDE (Tier 1 VCP Applications) and Sherwin-Williams paid all application fees.

On the day of closing, the parties also executed a Site Access Agreement (SAA), which is referred to in the PSA. The SAA states in part:

... [Sherwin-Williams] desires to obtain access to such Property from Grantors to fulfill [Sherwin-Williams’] obligations under Paragraph 10 of the Purchase Agreement, which may include installing [562]*562and monitoring of groundwater wells and such other tasks in order to obtain a Certificate of Completion under the Voluntary Cleanup Program administered by the [MDE] as more fully set forth in the VCP Remedial Action Plan as may be amended, and which will be attached hereto as Exhibit A and as the scope of work (the “Activities”).

ECF No. 1-12 at B.

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848 F. Supp. 2d 557, 2012 WL 253430, 2012 U.S. Dist. LEXIS 39519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carroll-co-v-sherwin-williams-co-mdd-2012.