Ferris Avenue Realty, LLC v. Huhtamaki, Inc.
110 A.3d 267
R.I.2015Background
- Ferris bought ~22 acres from Huhtamaki in 2003 subject to an Indemnity Agreement under which Huhtamaki agreed to reimburse certain environmental cleanup costs.
- VHB’s 2005 testing of Parcel A (4.5 acres) found soil and groundwater contaminated with PCE and TCA above DEM standards; Ferris excavated contaminated soil Jan–Feb 2006.
- DEM sent a December 21, 2005 Letter of Responsibility to both parties notifying them of hazardous substances; Huhtamaki received and reviewed that letter.
- Ferris sent Huhtamaki a February 14, 2006 Claim Notice; Huhtamaki refused indemnification on March 10, 2006 asserting untimely notice and prejudice from inability to test in situ soil.
- Ferris obtained partial summary judgment ruling that Section 6(c) of the Indemnity Agreement permitted Ferris to bring its own indemnity claim and that Ferris’s February 14 letter satisfied the notice requirement; remaining factual issues were tried to a jury.
- After a 13-day trial the jury awarded Ferris approximately $251,121 for cleanup costs; Huhtamaki appealed challenging contract interpretation, expert testimony, spoliation rulings, jury instructions, and alleged pyramiding of inferences.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 6(c) permitted Ferris to bring an independent indemnity claim and whether Ferris’s Feb. 14, 2006 letter satisfied the Agreement’s notice requirement | Ferris: Section 6(c) allows Ferris to assert its own claims and the Feb. 14 notice complied with Section 6(c) | Huhtamaki: Claim Notice as defined in 6(a) (requiring "reasonable promptness") applies everywhere; Ferris’s notice was untimely and prejudiced Huhtamaki | Court affirmed summary judgment: Section 6(c) governs Ferris’s claim; in any event Huhtamaki had actual notice from DEM’s Dec. 21 letter so it was not materially prejudiced by timing of Ferris’s notice |
| Admissibility of Ferris’s expert (O’Connor) to opine contamination found in 2005 existed in 2003 | Ferris: O’Connor’s background and review of historical reports permitted a reasonable inference that contaminants predated the 2003 closing | Huhtamaki: O’Connor lacked forensic-chemistry qualifications; only a forensic chemist can date contamination | Court affirmed admission: testimony not so novel/technical to require DiPetrillo/Daubert-level gatekeeping; opinion was a reasonable inference and cross-examination sufficed |
| Whether Ferris’s excavation (removal of soil) required exclusion of soil-evidence or other sanctions for spoliation | Ferris: removal did not warrant exclusion; jurors can be instructed about spoliation and draw adverse inferences if warranted | Huhtamaki: excavation destroyed evidence and prevented in situ testing; exclusion or harsher sanctions appropriate | Court upheld admission of evidence and spoliation instruction; adverse-inference instruction appropriate and exclusion unnecessary because Huhtamaki had actual notice and was not meaningfully prejudiced |
| Jury instructions — whether trial court erred (notice and spoliation instructions) | Ferris: notice was decided by summary judgment; spoliation instruction was proper and mirrored precedent | Huhtamaki: court should have left notice to jury and the spoliation instruction improperly imposed a duty to preserve and was ambiguous about negligence vs. deliberate spoliation | Court rejected arguments: notice was resolved at summary judgment; spoliation instruction proper when read as a whole and objection about duty to preserve lacked merit; other objections waived on appeal |
| Whether Ferris’s case rested on an improper "pyramid of inferences" | Ferris: inference that contaminants found in 2005 were present in 2003 was reasonable and supported by historical reports and stratigraphy | Huhtamaki: Ferris relies on layered inferences over weak facts, requiring reversal | Court rejected the challenge: inference was reasonable, supported by evidence, not an impermissible pyramid |
Key Cases Cited
- DiPetrillo v. Dow Chemical Co., 729 A.2d 677 (R.I. 1999) (factors for assessing reliability of novel expert testimony)
- Morabit v. Hoag, 80 A.3d 1 (R.I. 2013) (less stringent gatekeeping where proffered expertise is not novel or highly technical)
- Tancrelle v. Friendly Ice Cream Corp., 756 A.2d 744 (R.I. 2000) (spoliation instruction and adverse-inference principles)
- Farrell v. Conetti Trailer Sales, Inc., 727 A.2d 183 (R.I. 1999) (rejecting exclusion of evidence as spoliation sanction; adverse-inference instruction preferred)
- In re Ryan, 851 F.2d 502 (1st Cir. 1988) (definition and effect of actual notice)
- United States v. Aarons, 310 F.2d 341 (2d Cir. 1962) (actual notice binds a party; notice may cure procedural defects)