Greyhound Lines Inc. v. Viad Corp.
260 F. Supp. 3d 1181
D. Ariz.2017Background
- GLI purchased 1250 Denny Way (Seattle Property) from Viad in a 1986 Acquisition Agreement; a March 18, 1987 Third Amendment allocated responsibility for remediation tied to underground storage tank (UST) leaks with a step-down (100% first year → 0% after five years).
- Later agreements (1991 Claims Treatment Agreement and subsequent Settlement Agreement) limited Viad’s environmental indemnity to Environmental Obligations of which Viad was "Notified" in writing prior to March 1, 1992.
- GLI notified Viad in June 1989 of hydrocarbon contamination and ran site assessments; a March 1990 tank test showed vapor leaks in two USTs and GLI began remediation before March 18, 1990, leading Viad to accept a 60% allocation for that leak.
- More substantial diesel contamination (including free product) and other contaminant types (waste oil, lube oil, gasoline, chlorinated solvents) were discovered or remediated after March 1, 1992 (many not tied to confirmed UST leaks or to pre-1992 written notice to Viad).
- GLI sued Viad seeking contractual and statutory recovery (including 60% of a $5.95M sale price reduction and statutory recovery under CERCLA/MTCA); Viad counterclaimed for $547,177 it says GLI improperly billed. After a 6-day bench trial, the court ruled for Viad on GLI’s claims and for GLI on Viad’s counterclaim.
Issues
| Issue | GLI's Argument | Viad's Argument | Held |
|---|---|---|---|
| 1) Scope of Third Amendment liability | Third Amendment notice (June 12, 1989) triggered Viad’s 60% liability for all subsurface contamination at the property | Liability limited to remediation tied to confirmed leaks from USTs at specific tank locations | Court: Viad liable only for contamination tied to confirmed UST leaks; §3.3 read in context and by course of dealing supports Viad’s narrower interpretation |
| 2) Conditions to trigger Viad liability | Written notice alone (or notice + leak) was sufficient to fix allocation | Three steps required: (1) reasonable written notice to Viad, (2) confirmation of a UST leak, and (3) commencement of remediation (or governmental enforcement) | Court: all three steps required; GLI met them only for the minor 1990 vapor leak, not for most later contamination |
| 3) Statutory claims under CERCLA and MTCA | Statutory recovery available notwithstanding contracts; purchase-price reduction ($5.95M) and CERCLA costs recoverable from Viad | Contracts allocate Environmental Obligations (including CERCLA/MTCA) and limit Viad’s liability to obligations it was notified of before March 1, 1992 | Court: contractual allocation controls; GLI’s statutory claims barred by contract and, alternatively, GLI failed to prove Viad caused the relevant releases or that cleanup met statutory standards |
| 4) Viad counterclaim for overpayments (statute of limitations) | Viad waited until litigation to discover improper billing; GLI concealed details so limitations tolled | Viad knew by mid-1992 that GLI was remediating significant diesel free product and soils and agreed to pay share; reasonably should have investigated within 6 years | Court: discovery rule triggered in 1992; limitations not tolled; Viad’s counterclaim time-barred and insufficiently apportioned between diesel and other contaminants |
Key Cases Cited
- United Dairymen of Arizona v. Schugg, 212 Ariz. 133, 128 P.3d 756 (Ariz. Ct. App. 2006) (elements for breach of implied covenant of good faith and fair dealing)
- Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 854 P.2d 1134 (Ariz. 1993) (parol evidence admissibility and enforcing parties’ intent)
- Associated Students of the Univ. of Ariz. v. Arizona Bd. of Regents, 120 Ariz. 100, 584 P.2d 564 (Ariz. Ct. App. 1978) (course of dealing informs contract meaning)
- Jones-Hamilton Co. v. Beazer Materials & Servs., Inc., 973 F.2d 688 (9th Cir. 1992) (private contractual allocation of CERCLA liability enforceable)
- Car Wash Enterprises, Inc. v. Kampanos, 74 Wash. App. 537, 874 P.2d 868 (Wash. Ct. App. 1994) (private allocation of MTCA liability permitted)
- Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964 (Ariz. 1995) (discovery rule for accrual of breach claims)
- Walk v. Ring, 202 Ariz. 310, 44 P.3d 990 (Ariz. 2002) (reasonable person standard for triggering investigation under discovery rule)
- Anson v. Am. Motors Corp., 155 Ariz. 420, 747 P.2d 581 (Ariz. Ct. App. 1987) (tolling limitation for wrongful concealment requires affirmative concealment that prevented discovery)