As a child, I remember summer vacations at my uncle's cottage in the Catskill Mountains (or bungalow in the parlance of the region) where one of the fun trips was going to the local town dump where garbage was burned.
Towns across the country had local dumps but were forced to close these "open dumps" following the passage of the 1965 Solid Waste Disposal Act which became Subtitle D of RCRA in 1976. The precise locations of the dumps were usually not recorded and with the passage of time, the lines became very blurred. Indeed, as metropolitan areas expanded, many of these once-rural towns became bedroom communities and home builders bought up what now looked like undeveloped fields for new suburban developments.
The discovery of vapor intrusion by the plaintiffs bar coupled with the economic downturn seems have resulted in an increasing number of lawsuits projects that were built on or near former landfills. A recent example involves the lawsuit in the Rochester area of New York where residents have sued former home builders and the local government over vapor intrusion eminating from an old solid waste landfill.
In Schroder v Ontario Properties, et al, the complaint alleges that a variety of hazardous materials were disposed at the Old Rochester City Landfill from the mid-1950s until it was closed in 1964 although the plaintiffs claim additional illegal dumping occurred for another decade. In 1980, the state of New York placed the landfill on the state superfund list but delisted it in 1994. In 2009, a developer sought to enroll the site into the state brownfield program but the application was initially denied. To buttress its case, the developer collected vapor intrusion samples which identified a variety of VOCs and concentrations of methane above explosive lower limit were present in the soil gas near and below homes that had been built in the 1980s. Some of the plaintiffs homes also allege that a portion of the old landfill extends beneath their residences based on the presence of waste material that was observed during advancement of the soil vapor probes.
The plaintiffs are alleging the defendants failed to take reasonable precautions with respect to the contaminants and failred to detect or disclose the presence of the contaminants to the plaintiff home owners. The plaintiffs are seeking property damages and medical monitoring and restitution of expenses to remediate the contamination. They also assert an inverse condemnation claim against the local government.
Consultants who fail to identify the presence of a former landfill or raise concerns about potential impact of a former landfill located near a property could find themselves subject to a malpractice action. One of the leading examples was the case I discussed in the November 2007 issue of the Schnapf Environmental Law Journal (available from my website at http://www.schnapflaw.com/).
In Watco v. Pickering Environmental Consultants, Inc., 2007 Tenn. App. LEXIS 364 (Ct. App. 6/5/07), a state appeals court affirmed a ruling by a trial court granting a judgment in favor of a consultant-defendant. In this case, the plaintiff agreed in December 1994 to purchase a 169-acre tract of undeveloped wooden land from National Bank of Commerce (NBC), acting as trustee for the Norfleet Charitable Remainder Uni-Trust (Norfleet Trust), for $880, 588. The purchase was contingent on a satisfactory phase 1 that conformed to the ASTM E1527-94. At the time of the phase 1, the land adjacent to the west was county park. The defendant completed the Phase 1 in July 1995 and provided an opinion letter to plaintiff acknowledging that the report was in connection with the sale of the property and expressly provided that the plaintiff could rely on the report. The letter went on to state that the defendant had not identified any “hazardous materials or environmental conditions” associated with current of former uses, and that no “significant environmental concerns” were identified in the surrounding areas that would represent a “significant environmental concern” to the property. As a result, the letter indicated that further environmental review was not recommended.
As it turned out, the county park had formerly an unlicensed municipal landfill that had operated from approximately 1955 to the mid-1970s. The land containing the unlicensed landfill had actually been owned by the Norfleet Trust and NBC had conveyed the land to the Shelby County Conservation Board pursuant to two deeds in 1980 and 1986.
During grading operations for a residential subdivision in March 2004, the plaintiff discovered garbage buried at a depth of 3 to 5 feet under approximately 30 acres of the western portion of the property. The plaintiff incurred substantial costs removing the garbage, and had to delay development while the solid waste was excavated and replaced with clean fill. The plaintiff then sought damages for professional negligence and negligent misrepresentation. The defendant filed a claim against NBC seeking indemnity under the Phase 1 contract but the court granted NBC’s motion to dismiss on the grounds that the contract provided that disputes between the parties were to be resolved through arbitration.
In its claim for negligent misrepresentation, the plaintiff claimed that the defendant made a false statement when it stated it had complied with ASTM E1527-94. The parties also agreed that the ASTM E1527-94 established the standard of care for the professional negligence claim. The plaintiff’s expert witness testified that the Phase 1 did not identify the former landfill, that he was able to learn about the existence of the former landfill by contacting local officials and that defendant’s failure to interview additional persons constituted a breach of its professional standard of care. The defendant’s expert testified that the defendant had reviewed the standard database records provided by Vista Environmental Information and that the landfill was not identified in any of these records. Thus, the expert concluded that the records were not reasonably ascertainable or practically reviewable. The trial court found that both experts were equally qualified, informed and credible. In its decision, the court noted the plaintiff had the burden to prove that the defendant did not conform to the applicable professional standard. Because the proof was equally balanced as to whether the defendant had a duty to conduct further interviews than those required in the ASTM E1527-94, the court found in favor of the defendant.
On appeal, the court reviewed three components of the ASTM E1527-94 that environmental consultants were required to satisfy: Records Review, site reconnaissance and interviews.The plaintiff’s expert testified that he his own record search uncovered minutes of a 1978 meeting held by the Shelby County Conservation Board where the residential landfill had been discussed. He asserted that the defendant could have easily obtained this record and therefore discovered the prior existence of the landfill. However, on cross-examination he admitted that the minutes did not precisely describe the name or location of the landfill and that the landfill had not been identified in any of the standard public records. He admitted that the defendant had reviewed all of the standard records and that the Vista system used by the defendant was an acceptable method for reviewing the standard sources of records required to be reviewed under ASTM E1527-94.
The site inspection had been performed by an intern who had been supervised by a senior member of the defendant. The inspector had noted undulating terrain that was consistent with a previously known use as a quarry and observed some construction debris on an adjacent property. The parties agreed that the construction debris observed by the intern would not have resulted in the discovery of buried garbage located on a different adjacent parcel The plaintiff’s expert admitted that the site inspection would not by itself had resulted in any evidence of an recognized environmental condition at the property or that the park had formerly been used as a dump. However, he testified that because the adjacent site was a county park, the defendant should have contacted the conservation board since that would have “probably lead to further information”.
Prior to phase 1, NBC had advised the defendant that the real estate broker should be contacted for information about the prior uses of the property and other information. The plaintiff’s expert testified that the broker did not good knowledge of the uses and physical characteristics of the property and therefore could not qualify as a “key site manager” that the defendant was required to interview. Instead, the plaintiff’s expert asserted that the defendant was obligated to conduct interviews of additional persons such as the former owner or adjoining property owners. However, on cross-examination ne conceded that the ASTM E1527-94 did not require interviews of former owners of the property or adjoining landowners.
The court concluded that while the ASTM E1527-94 standard directed the consultant to make an initial inquiry of contacting a key site manager, the standard allocated to the user the task of identifying the key site contact. Since NBC designated the broker as the key site contact, it was reasonable for the defendant to infer that the broker had good knowledge of the uses and physical characteristics of the property for purposes of complying with the interview component of the standard.
Regarding section 10.5.1 of ASTM E1527-94 providing that the consultant make a reasonable attempt to interview at least one staff member of one a local fire department, health agency or local/regional office of a state agency having jurisdiction over hazardous waste disposal or other environmental matters, the defendant produced evidence that it had called and sent a follow-up letter to the state environmental agency and that the local office responded that the property was not on any known state list of sites with known or suspected releases of hazardous substances, and that none were identified within a four-mile radius. One of the defendant’s employees also testified that it had contacted the local office of the USDA Soil Conservation Service which was unaware of any environmental problems with the property. The court noted that both experts agreed that these agencies were appropriate sources of knowledgeable government officials and that these interviews technically satisfied the ASTM standard. Accordingly, the court found that the plaintiff failed to establish by a preponderance of the evidence that the defendant had provided false information when it stated it had complied with the ASTM standard and affirmed the judgment entered by the trial court dismissing the claim of negligent misrepresentation.
On the professional negligence claim, the appeals court began its analysis by stating that a standard of care is “that level of care and diligence ordinarily employed by the average firm practicing in the same area and at the same time. A ‘standard’ such as ASTM E1527 only become the ‘standard of care’ if it us embraced as the ordinary way things are done” The court also note that the ASTM standard is by definition a flexible standard so that the way it will be applied will vary between consultants in different areas and at different times. The court discussed a 2000 study by the local Association of Soil and Foundation Engineers (ASFE) indicating that 73% of phase 1 proposals evaluated stated they would conform to ASTM and that not a single report was in strict conformance to the standard.
Based on this study and the totality of both experts’ testimony, the court concluded that the standard of care and ASTM standard were not equivalent at the time of the 1995 Phase 1. As a result, the court said it would not limit its focus to the defendant’s conformance to ASTM in determining if defendant was negligent. The plaintiff’s expert testified that he had not conducted a formal study of the standard of care for Shelby County and similar communities in 1995 and that his testimony was based on his years of experience with consulting firms.
When asked if the defendant had complied with the standard of care for conducting phase 1 ESAs in Shelby County, the plaintiff’s expert simply indicated that it was his opinion that the defendant had breached the standard because they should have made some effort to find a knowledgable person to interview about the past uses of the land around the site since they knew it had been a quarry, there were “little tell-tale” signs that it had occurred right to the boundry, that there was level ground which means it had been filled and defendant needed to find a person who could discuss what was used to fill the land.
In contrast, the defendant’s expert specifically testified that he had reviewed six other environmental reportds that had been conducted in Shelby County in 1995 and that based on this review, the defendant’s report has conformed to the standard of care. He said the defendant was provided the name of a person to contact by the landowner, the contact indicated that the adjacent land had been used as a quarry, no evidence of dumping was observed during the site reconnaissance and the standard of care in effect in 1995 in Shelby County did not require the defendant to interview prior owners or adjacent owners. As a result, the court affirmed the trial court’s ruling that the plaintiff had failed to establish by a preponderance of the evidence that the defendant had breached the applicable standard of care.
This case is full of nuggets for environmental consultants, attorneys and their clients. First, although this case came to trial 20 years after the CERCLA innocent purchaser defense was enacted at a time, the case illustrates that real estate developers, lenders and attorneys should not assume that the ASTM E1527 will necessarily serve as the standard of care for the environmental consulting industry. In some cases, the local due diligence practices may vary and not rise to the level that may be required to successfully assert liability defenses. In other instances such as New Jersey, the ASTM E1527 will not satisfy the requirements of the state innocent purchaser defense. Nevertheless, the case does show how the ASTM E1527 protocol has evolved and improved over the years.
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