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Cleanup Compromise Ruled Fair
by Ron Davis

A disputed compromise will give a Texas shopping center the funds to clean up pollution created by a tenant of a neighboring shopping center.

The two shopping centers–Memorial and Town and Country–are located in the Houston area, and the tenant whose pollution has been at issue operates a dry-cleaning business at Memorial. Groundwater that flowed from that business contained harmful substances that reached Town and Country and threatened a nearby residential area. The owners of Town and Country therefore sued Memorial’s owner for violations of federal and state environmental laws, for gross negligence and for nuisance arising from the contaminated groundwater.

The owner of Memorial is an estate, created when the estate’s ward began suffering from Alzheimer’s disease a few years ago. The guardian of that estate subsequently worked out a settlement with the owners of Town and Country. And a Texas court agreed that the settlement seemed fair to both parties.

The son of the Alzheimer’s victim rejected that compromise, however. He argued that payment for decontamination of the groundwater would “increasingly reduce the estate [of his mother], which is already inadequate for her support and which provides no protection from ultimate loss of [her] shopping center property.”

He also pointed out that while the estate’s payment obligation is “absolute and fixed in time, the obligation of the Town and Country owners to provide a remedy for the pollution problem is not.” He therefore appealed the court ruling.

A Texas appellate court, in upholding the lower court ruling, explained, “Memorial shopping center was appraised at $580,000 without environmental contamination.... There was testimony that the contractor’s best estimate of the actual remediation cost is $300,000 to $400,000. There was also evidence that ‘not one penny’ of the estate’s money would pay for cleanup that did not originate in the Memorial shopping center. Also, there was testimony that the first year’s interest under the settlement agreement would be $1,700 monthly and that the estate has other sources of income to pay that interest. Moreover, the settlement prevented exposing [the mother] to ‘significant’ and ‘huge’ potential liability. The lower court could reasonably conclude that the settlement was in her best interest.” (Epstein v. Hutchison, 2004 WL 2612258 [Tex.App.-Hous. 1st Dist.])

Decision: November 2004
Published: January 2005



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