A federal court in Indiana has dismissed a CERCL A claim for reimbursement for cleanup costs against the city of South Bend based on language in a purchase and sale agreement. United States v. ARG Corp., No. 10-311 (N.D. Ind. 8/04/11). In 2006, ARG Corp. sold a 440,000 square-foot industrial facility to the city. The purchase and sale agreement stated that ARG was solely responsible for cleaning up hazardous substances existing before closing and arising from the company’s ownership, use or operation. Conversely, the contract provided that the city was solely responsible for remediating hazardous substances on the property arising from its ownership, use or operation after the closing date.

Soon after closing, the city notified EPA that hazardous conditions on the property might pose a danger to public health. EPA investigated and determined that the site presented an imminent danger to the public. EPA spent more than $840,000 cleaning up the site after ARG refused to do so. EPA then sued ARG under CERCL A for reimbursement, and ARG filed a third-party complaint against the city arguing that under the sales agreement, the city was financially responsible for the agency’s cleanup costs. The city moved to dismiss.

The court applied Indiana law, which treats a contract that is unambiguous as conclusive. According to the court, this is true even when one party argues that the contract is ambiguous, as ARG did here. The court held that the contract unambiguously made ARG responsible for the cleanup and that arguments by ARG to the contrary were without merit.