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Environmental – Groundwater Contamination – Clean-Up – Indemnification

Deborah Elkins//November 2, 2010

Environmental – Groundwater Contamination – Clean-Up – Indemnification

Deborah Elkins//November 2, 2010//

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A Richmond U.S. District Court follows up on an earlier decision construing a 1996 Agreement between the parties’ predecessors and a 2006 Amendment between the parties that involved the sale of a Richmond manufacturing facility that requires a groundwater treatment system under an EPA remediation order, with a denial of Viasystems’ motion to dismiss Agere’s third-party complaint.

In an earlier decision, this court interpreted contract language in a 1996 agreement and its 2006 amendment that allocate liability for remediation of contamination of groundwater contamination at a Richmond manufacturing facility formerly owned by Lucent Technologies Inc. The issue before the court is whether and to what extent defendant Agere Systems Inc. must indemnify Forest City under the relevant agreements. Lucent Technologies Inc., predecessor to Agere, formerly owned and operated a manufacturing facility in Richmond. Viasystems argues that Agere’s third-party complaint fails to state a claim against Viasystems because Agere is seeking indemnification for a claim that is not being made against it. Forest City’s amended complaint against Agere makes clear it is only seeking to recovery damages for contamination that occurred before 1995, and it specifically states it is not seeking damages for any costs incurred as a result of or related to the actual relocation of the Remediation System. Therefore, Viasystems argues, given the limitations of the allegations in Forest City’s amended complaint against Agere, because Forest City has explicitly stated it only seeks to recover for pre-1996 contamination, all of which Forest City alleges was discovered outside the scope of the actual relocation of the Remediation System, there is no set of facts that Agere can plead that would entitle it to recovery against Viasystems.

Agere correctly states that the court has previously ruled that Viasystems has certain indemnity obligations in this matter, but Agere misstates Viasystems’ indemnity obligations, omitting significant wording.

As noted by the 4th Circuit and as recently discussed by Judge Payne, a third-party claim under Rule 14(a) can be maintained only if the asserted liability is in some way derivative of the main claim.

Forest City’s amended complaint against Agere contains two counts: breach of contract, under the 1996 Agreement and the 2006 Amendment, and unjust enrichment. Forest City essentially alleges it uncovered environmental contamination and incurred substantial costs in connection with, relating to and arising out of Agere’s business operations during or prior to 1996 that is subject to indemnification by Agere. It also alleges that by failing to remediate or address contamination and by failing to indemnify or reimburse Forest City, Agere has been unjustly enriched at Forest City’s expenses.

Agere’s third-party complaint seeks indemnification from Viasystems. Given the nature of the allegations in the amended complaint and in the third-party complaint, the asserted liability of Viasystems is in some way derivative of the main claim as required by Rule 14. The motion to dismiss the third-party complaint is denied.

The court holds that Forest City’s unjust enrichment claim is properly pled and will not be dismissed. It cannot be said at this stage of the proceedings that Forest City’s environmental clean-up not expressly contemplated by the parties’ contracts in any way contravenes the agreements with Agere.

Forest City Commercial Development Inc. v. Agere Systems Inc. (Williams, J.) No. 3:08cv328, June 1, 2010; USDC at Richmond, Va. VLW 010-3-290, 13 pp.

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