Dennis J. Krumholz and Michael S. Kettler of the Firm’s Environmental Group prevailed in the Appellate Division for client Renaissance at Schanck Road LLC, a shopping center operator, in a lawsuit brought by its landlord, Port-Man-GB Associates, over responsibility for environmental cleanup costs.
The lengthy dispute centered on contamination caused by one or more dry cleaners that had operated as sub-tenants on the property from 1979 to 2009. The original shopping center tenant, Pathmark Stores, assigned its lease to Renaissance in 2007. When Renaissance became aware of the contamination, it voluntarily spent more than $300,000 on remediation costs and sought reimbursement from the most recent dry cleaner. The default judgment was entered against the dry cleaner. Port-Man later sued Renaissance to compel it to complete the remediation. Renaissance argued that it was not responsible to remediate contamination that had occurred before the lease assignment in 2007 because it had not assumed those obligations.
At trial, the court adopted Renaissance’s lease interpretation, namely, that Renaissance was not required to remediate under the lease unless the contamination occurred after the 2007 lease assignment. Nonetheless, the trial court applied the doctrine of judicial estoppel to hold that Renaissance, based on testimony it had offered at a proof hearing leading to the default judgment it had obtained against the dry cleaner, was required to reimburse Port-Man nearly $200,000 in cleanup expenses, as well as bear responsibility for completing the remediation.
Renaissance appealed, and the Appellate Panel reversed. The court upheld the trial court’s determination as to the lease interpretation, but it held that it was error to apply judicial estoppel against Renaissance, and it instructed the trial court to dismiss Port-Man’s Complaint since Port-Man had not presented any evidence below to establish when the contamination took place.
The decision was reported by Law360.
