On November 12, 2013, the First Circuit Court of Appeals reversed a decision of a lower court in favor of the Guarantor client of David H. Rich, a partner with Todd & Weld LLP, and Benjamin J. Wish, an associate with the firm. The First Circuit Court of Appeals reversed an order of the United States District Court for the District of Massachusetts which found the Guarantor liable under an Environmental Indemnity Agreement.
After a trial in January 2013, the District Court found that the Guarantor was not liable for alleged waste and related damage to certain commercial property, but the District Court did find that the Guarantor was liable under an Environmental Indemnity Agreement for significant costs associated with environmental testing undertaken at the property relative to the alleged suspicion of hazardous materials on site.
In reversing the decision of the District Court, the First Circuit Court of Appeals unanimously held that the District Court's interpretation of the Environment Indemnity Agreement was "too broad," that the cost of the testing "fell outside of the scope of the Indemnity Agreement," and that the significant costs incurred by the lender were not "required to take necessary precautions to protect against the release of any Hazardous Materials." Accordingly, the First Circuit Court of Appeals reversed the District Court's order awarding the lender the costs associated with environmental testing.
VFC Partners 26, LLC v. Cadlerocks Centennial Drive, LLC, et al (Stahl, J.) (1st Circuit)