United States District Court, E.D. Louisiana
ORDER AND REASONS
D. ENGELHARDT UNITED STATES DISTRICT JUDGE
before the Court is a motion for summary judgment filed by
plaintiff and defendant-in-counterclaim, KFC Corporation
("KFC"). (Rec. Doc. 13). Defendants, Iron Horse of
Metairie Road, LLC and Iron Rooster, LLC
("Defendants"), oppose the motion. (Rec. Doc. 23).
KFC filed a reply memorandum in response to Defendants'
opposition. (Rec. Doc. 27). Having carefully reviewed the
parties' submissions, the record, and applicable law, the
Court, on the present showing made, is not in a position to
find Plaintiff to have demonstrated, as required by Rule 56,
that "there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law." See Fed. R. Civ. P. 56. Thus, IT
IS ORDERED that the motion is
present case involves alleged breach of contract claims in
connection with Defendants' purchase of immovable
property from KFC. In 1991, Kentucky Fried Chicken of
California ("KFC California") purchased
immovable property located at 700 Metairie Road in Metairie,
Louisiana (the "Property"). (Rec. Doc. 13-1 at p.
2). After purchasing the Property, KFC California claims that
it discovered that the Property and adjoining property,
located at 800 Metairie Road (the "adjoining
property"), were contaminated with perchloroethylene and
its metabolites, dichloroethylene, and trichloroethylene (the
"PERC Contamination"), allegedly caused by the
operation of a former dry-cleaning facility. (Id.).
A lawsuit ensued regarding the PERC Contamination, in which
KFC California was a named defendant. Ultimately, KFC alleges
that the parties reached a settlement, and that a Stipulated
Consent Decree was entered on September 9, 2002, wherein KFC
California "voluntarily agreed with the Louisiana
Department of Environmental Quality (the "DEQ") to
remediate the PERC Contamination on the Property and on the
Adjoining Property." (Id. at pp. 2-3).
2013, allegedly while "remediation was still in
progress, " KFC U.S. Properties, Inc. ("KFC
U.S."), entered into a purchase agreement with defendant
herein, Iron Horse of Metairie Road, LLC (Id. at p.
3). KFC contends that the Purchase Agreement included
"specific references to and disclosures of" the
PERC Contamination, the PERC Plume, the remediation, the
voluntary remedial action plan, the environmental litigation,
the settlement documents, the contract between KFC California
and its environmental consultant, Professional Service
Industries, Inc. ("PSI"), and the DEQ proceedings,
"all of which Iron Horse had an opportunity to inquire
about, study, and review prior to signing the Purchase
Agreement." (Id.). Iron Horse subsequently
assigned the Purchase Agreement to Iron Rooster, LLC,
defendant herein, allegedly resulting in Iron Horse and Iron
Rooster becoming "jointly, severally, and solidarily
liable under the Purchase Agreement." (Id.).
February 14, 2014, KFC Corporation, successor to KFC U.S.,
sold the Property to Iron Rooster. (Id. at. p. 4).
On that same date, KFC Corporation, Iron Horse, and Iron
Rooster signed an Assignment, Assumption, and Indemnification
Agreement (the "Indemnification Agreement"). KFC
alleges that pursuant to the Indemnification Agreement:
 KFC Corporation assigned its rights under the Settlement
Documents, the PSI Contract,  and the VRAP to Iron Rooster.
 Both defendants assumed all of the obligations of KFC
California, Tricon, Yum, KFC U.S., KFC Corporation, and all
of their respective related or affiliated companies, as well
as their respective predecessors, successors, and assigns
(collectively, the "KFC Companies"), relating to
the PERC Contamination, the Environmental Litigation, the
Settlement Documents, the PSI Contract, the Remediation, and
the VRAP, and  both defendants agreed to use their best
efforts to complete the Remediation in a diligent and
expeditious manner at their sole cost and expense, and to
also fulfill all of the KFC Companies' remaining
obligations relating to the PERC Contamination, the
Environmental Litigation, the Settlement Documents, the PSI
Contract, and the VRAP.
(Rec. Doc. 13-1 at p. 4). Next, KFC alleges that on June 6,
2016, it was notified by the DEQ that "Since acquisition
of the property by Iron Rooster, on-site remediation and
monitoring of site conditions have ceased."
(Id. at p. 5). In response to the letter, KFC claims
it hired PSI to prepare a work plan with respect to the
remaining remediation, which was approved by the DEQ on
October 19, 2016. (Id. at p. 6). KFC subsequently
filed this lawsuit seeking specific performance and indemnity
for Defendants' alleged failure to satisfy obligations
that they allegedly assumed with the purchase of the Property
from KFC. (Rec. Doc. 1). In response, Iron Rooster filed an
answer denying KFC's entitlement to the relief sought and
asserting a counterclaim for damages due to KFC's failure
to disclose the extent of the contamination at issue. (Rec.
filed the instant motion for summary judgment, arguing that
there are no genuine issues of material fact, and that it is
entitled to summary judgment on both its main demand and
Defendants' counterclaim, claiming: "it is
undisputed that defendants have failed to complete and
fulfill, in a diligent and expeditious manner, or at all, the
Remediation of the PERC Contamination and KFC Companies'
remaining obligations relating to the PERC Contamination, the
Environmental Litigation, the Settlement Documents, the PSI
Contract, and the VRAP, including payment of the Post-Closing
DEQ Costs, all of which defendants became liable and
obligated pursuant to the Purchase Agreement and/or the
Indemnification Agreement." (Rec. Doc. 13-1 at p. 6). In
support of its contention, Plaintiff claims that Defendants
admitted to signing the Purchase and Indemnification
Agreements, admitted that they had access to the Property and
to relevant documents during the due diligence period, and
admitted that they had not completed the remediation.
(Id. at p. 7). KFC alleges that Defendants
contractually assumed KFC's PERC Contamination-related
obligations and agreed to defend, hold harmless, and
indemnify KFC, citing to language in the signed agreements
that KFC claims is "clear, explicit, [and]
enforceable." (Id. at pp. 9-14). Thus, KFC
contends that Defendants breached the Purchase Agreement and
the Indemnification Agreement by failing to satisfy those
contractually assumed obligations, "which defendants
have admitted or not denied." (Id. at p. 14).
KFC contends that "there is no genuine issue of material
fact with respect to defendants' Counterclaim, and
plaintiff is entitled to judgment in its favor...as a matter
of law, dismissing defendants' Counterclaim, with
prejudice, at defendants' sole cost and expense."
(Rec. Doc. 13-1 at p. 18). KFC rejects Defendants'
asserted defenses and counterclaims as lacking merit.
(Id. at p. 15). Specifically, KFC attacks
Defendants' claim that had Defendants known of the
off-site remediation obligations, they would not have
purchased the Property or would have paid a lower price,
claiming that "their admissions clearly show that
defendants knew or should have known, and certainly could
have learned from an examination of the record" that the
assumed obligations "also included remediation of the
PERC Contamination that extended onto the Adjoining
Property." (Id. at p. 16). Finally, KFC argues
that "contrary to defendants'  allegation in their
Counterclaim that plaintiff's refusal to agree to an
amended VRAP constituted an abuse of rights, plaintiff
prudently rejected the [proposed] amended VRAP because...[it]
would have left KFC exposed to penalties and fines by the DEQ
for failing to remediate contamination on the Adjoining
Property." (Id. at p. 17-18).
opposition, Defendants contend that summary judgment is
inappropriate due to remaining issues of material fact. (Rec.
Doc. 23). Defendants claim, inter alia, that KFC
should be estopped from enforcing the Agreements because KFC
and PSI "flagrantly" misrepresented the status of
the remediation, and failed to disclose that KFC had
abandoned remediation, which Iron Rooster relied upon to its
detriment. (Id. at pp. 2-3, 14). Citing the
affidavits of Fernando Iturralde, a Geology
Supervisor/Hrydrogeologist for the LDEQ; Jacqueline
McPherson, attorney representing Defendants in sale; and
Joseph Caldarero, the sole member of the Defendant LLCs,
Prior to the 2014 Sale and throughout the due diligence
period, KFC repeatedly assured Iron Rooster that no further
remediation remained offsite and that only minimal
remediation remained onsite. Neither representation was true.
Among other things, the multiphase extraction system
("MPE") - the principal form of remediation adopted
for the KFC Property - had been abandoned more than two years
before the sale. Iron Rooster could not have discovered from
the public record the fact that KFC had abandoned the MPE and
KFC did not disclose its abandonment of the MPE system. In
fact, KFC and its consultant repeatedly and expressly
represented just the opposite.
(Id. at pp. 2-3). Further, Defendants claim that KFC
misrepresented and failed to disclose the fact that KFC had
abandoned remediation of the Property in the ...