U.S. District Judge Cynthia Rufe of the Eastern District of Pennsylvania recently decided motions in a case among successive owners of a property with an environmental problem. Her opinion in CSX Transportation v. 2712 Investors, Civil Action No. 14-7148 (E.D. Pa. Apr. 29, 2015), provides some useful reminders of very basic propositions about environmental due diligence in real estate transactions and the litigation that follows when things go wrong.
CSX Transportation involves a release of what was alleged to be 40,000 gallons of oil from a 75,000-gallon, above-ground storage tank on a property in the East Falls neighborhood of Philadelphia. The spill occurred when vandals stole piping from the tank, according to the opinion. The oil migrated onto CSX’s right-of-way, causing CSX to incur costs. CSX sued the owners of the neighboring properties. They asserted claims against each other, against their seller, and against an environmental consulting firm that conducted a Phase I investigation. The third-party defendants, other than the consulting firm, moved to dismiss.
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