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VanderWal v. Albar, Inc.

Supreme Court of Idaho

June 20, 2013

ECHO VANDERWAL and JLZ ENTERPRISES, INC., an Ohio Corporation, Plaintiffs-Respondents,
v.
ALBAR, INC., an Idaho Corporation, Defendant-Appellant, and ELMER B. SUDAU; T. OWEN MULLEN; and MARITA T. STEWART, dba Lake Country Real Estate, Defendants. ALBAR, INC., an Idaho corporation, Plaintiff-Appellant,
v.
JLZ ENTERPRISES, INC, an Ohio corporation, and JAMES O. STEAMBARGE, a single man, Defendants-Respondents.

2013 Opinion No. 72

Appeal from the District Court of the First Judicial District of the State of Idaho, in and for Bonner County. The Hon. Steven C. Verby, District Judge.

The judgment of the district court is affirmed.

John A. Finney, Finney Finney & Finney, Sandpoint, argued for appellant.

Charles R. Dean, Jr., Dean & Kolts, Coeur d'Alene, argued for respondents.

EISMANN, Justice.

This is an appeal out of Bonner County from the district court's finding, after a court trial, that the seller of real property had breached its contract with the buyer by failing to remediate a gasoline spill on the property within a reasonable time and the court's award of damages to the buyer. The appeal also challenges the district court's denial of the seller's post-judgment motion to reduce the buyer's damages by the amount it received from the Idaho Department of Environmental Quality after the judgment was entered because of the buyer's completion of the remediation. We affirm the judgment of the district court.

I.

Factual Background.

Albar, Inc., was the owner of a business known as Dock-N-Shop, which was a convenience store, gas station, and marina located on the Pend Oreille River. On Memorial Day weekend in May 2003, one of the business's three underground storage tanks leaked gasoline into the surrounding soil. The three tanks were insured through the State of Idaho Petroleum Storage Tank Fund (Fund). Albar eventually entered into a consent order dated August 22, 2003, with the Idaho Department of Environmental Quality (DEQ), which required Albar to remediate the Property and any impacted adjacent property until it met cleanup levels established by DEQ. A contractor retained by the Fund began remediation efforts.

In early 2005, Albar listed the property for sale. Albar completed a property disclosure form, which stated: "Memorial Day weekend 2003 a leak in gas tanks discovered, DEQ & State insurance fund notified immediately and tank pulled next day, suspect soil removed and replaced. DEQ continue monitoring." That statement was false.

JLZ Enterprises, Inc., an Ohio corporation, became interested in purchasing the property. A representative of Albar told Echo VanderWal, the president of JLZ Enterprises, that the soils had been remediated and were clear and that the only task left in the remediation was two monitoring sessions, which would be completed by January 2006. The Albar representative knew or should have known that the statement was false. On June 14, 2005, JLZ Enterprises made an offer to purchase the property for $450, 000. The offer included several contingencies, including the "EPA giving closure to gasoline spill on site." Albar countered by increasing the purchase price to $539, 000 and agreeing to have "all responsibility and liability for recent gasoline spill on property and adjoining property" instead of the provision regarding the EPA. Albar understood the provision to mean that it was required to continue with the remediation until the property was cleared by DEQ. JLZ Enterprises accepted the counteroffer on June 16, 2005, and the transaction closed on September 14, 2005. As payment of part of the purchase price, JLZ Enterprises executed a promissory note to Albar in the sum of $250, 000, which was secured by a deed of trust on the property.

The contractor performing the remediation on behalf of Albar installed a series of vapor extraction wells which were designed to remediate the soil, as well as air sparging wells and an air stripping system to attack ground water contamination. However, it did not do any testing to determine the lateral extent of the contamination even though such testing was required by DEQ before it would clear the property.

In August 2006, there was a meeting with DEQ, JLZ Enterprises, and Albar to discuss a more expeditious and accepted way to achieve remediation of the property. During the meeting, DEQ stated that the soil beneath the Dock-N-Shop building had to be tested to see if there was contamination there. In late August 2006, JLZ Enterprises demolished the Dock-N-Shop building. The contractor performing the remediation on behalf of Albar told a representative of JLZ Enterprises that with the building removed, ground water levels would permit testing below where the building had been in mid-October and that any contaminated soil could be excavated and hauled off. However, the contractor did not test the soil then, and it abandoned any thought of excavating and hauling off any contaminated soil because the cost might exceed the limits of Albar's insurance policy and Albar was not willing to expend any money on the remediation.

Tests conducted in December 2006 revealed contamination at various locations in the soil under the site where the building had been. During the next twelve months, the contractor performing the remediation on behalf of Albar did not take action to remediate the soil below the building site.

JLZ Enterprises wanted to remove the other two underground tanks, one of which was located between the tank that leaked and the building site where contamination had been discovered. Albar took the position that removal of the two remaining tanks was not its responsibility. DEQ would not clear the property until the soils under the two remaining tanks had been ...


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