In Re Sugarhouse Realty, Inc.
MEMORANDUM
Let’s Hope This Works Corporation (“LHTW”), purchaser of Sugarhouse Realty, Inc.’s (“Sugarhouse Realty”) property under a confirmed bankruptcy plan of reorganization, appeals the bankruptcy court’s order granting First Lehigh Bank’s (“First Le-high”) Motion to Compel LHTW Corporation to Close Under Agreements of Sale Necessary for Consummation of Confirmed Plans of Reorganization Pursuant to 11 U.S.C. § 1142 (“Motion to Compel”). 1 This court has jurisdiction pursuant to 28 U.S.C. § 158(a) (1988). For the reasons set forth below, this court affirms the order of the bankruptcy court.
I. FACTS AND PROCEDURAL HISTORY
The facts of this case were fully set forth in the bankruptcy court opinion,
In re Sugarhouse Realty, Inc.,
Nos. 92-23024 SR, 92-24533 SR, 93-22920 SR,
This case involves three tracts of real property contiguously situated along the west side of the Delaware River in Philadelphia, commonly known collectively as the former Jack Frost Sugar Refinery Site (the “Site”). The Site consists of approximately 30 acres of land including the remains of the hundred-year-old multi-building sugar refinery. The Site has a lengthy history of environmental litigation.
2
The three tracts of
The Site was purchased by the Debtors with the intent to clean up and develop the property. Their plans were to build condominiums, a marina, retail shops, a heliport, and an entertainment center on the Site. Unfortunately, the real estate recession intervened and the plans for the resurgence of the Delaware River area failed. Sugarhouse Realty fell behind in mortgage payments. Claiming a balance due of approximately $3,300,000, Royal Bank sought to foreclose on the Sugarhouse Realty tract in late 1993. Subsequently, all three Debtors filed for bankruptcy 4 under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101-1330 & app. (1994). 5
Sugarhouse Realty and Royal Bank entered into a stipulation that called for a public auction of all three tracts of land. The auction was to require a minimum bid of $7,000,000. The stipulation also provided for a period after an unsuccessful auction during which the Debtors could attempt to secure a private sale buyer. If both attempts at sale were unsuccessful, Royal Bank would be at liberty to complete the foreclosure sale on February 7, 1994. No bids were received at a December 16, 1993 auction, and no buyers were subsequently located.
In 1993, the public learned that legislation approving riverboat gaming was being considered in Philadelphia. If this legislation passed, licenses would likely be issued in the Delaware Avenue area. Because of the Site’s location, passage of the legislation would make the Site economically desirable notwithstanding the debt and environmental contamination. Trump and LHTW 6 became interested in the property. Both were trying to initiate gaming operations in the Philadelphia area. A competitive bidding war ensued. Thayer aligned himself with Trump, thus placing LHTW at a disadvantage. 7 Nonetheless, LHTW retained environmental experts and attempted to enlist a party-in-interest to serve as plan proponent.
Prior to the February 7, 1994 foreclosure sale, Thayer presented evidence to the bankruptcy court of a pending sale to Trump or a Trump-related corporation. The court issued a sixty-day injunction, postponing the foreclosure sale until April 4, 1994, with the condition that the Debtors propose and have confirmed a plan of reorganization prior to
With time running out, competition between Trump and LHTW increased. Thayer proposed a number of reorganization plans, all focused on a sale to Trump. LHTW frantically sought a party-in-interest to serve as proponent of its plan, and adopted the slogan, “Anything Trump can do we can do better.” While Thayer’s plan favored the Debtors, the LHTW-authored plan favored creditors. 9 The City of Philadelphia (“the City”), a creditor of all three debtors, became the proponent of the LHTW-authored Plan (the “City Plan”).
During the City’s disclosure statement hearing, Trump deposited the full amount of the existing tax claim with the City. Accordingly, the City withdrew its plan of reorganization. The EPA, a creditor of Sugarhouse Realty, then stepped forward to assume the City’s position as plan proponent for the portion of the City’s Plan that concerned the one Sugarhouse Realty tract (the “EPA Plan”).
Shortly thereafter, First Lehigh assumed the role of plan proponent for the rest of the City Plan, which concerned the tracts owned by its debtors, Sugarhouse II and Riverfront Concepts (the “First Lehigh Plan”). The sheriffs sale scheduled for April 4, 1994 was postponed after Trump delivered a $1,000,-000 payment to Royal Bank.
The bankruptcy court approved the companion EPA and First Lehigh disclosure statements. The only remaining events were a vote by the classes, confirmation of one of the competing plans — either the Debtors’ Plan or the combined EPA and First Lehigh Plans — by the court, and signing of the Agreement of Sale. The plan confirmation hearing was scheduled for April 28, 1994. Prior to confirmation, on April 15, Trump withdrew from his negotiations with the Debtors, and the Debtors were forced to withdraw their plan of reorganization. The Debtors’ request for a continuance was denied by the bankruptcy court.
On April 28, 1994, a confirmation hearing took place on the EPA and First Lehigh plans of reorganization. Thayer was opposed to the EPA and First Lehigh plans and had earlier made it clear that he would not be cooperative. The court confirmed the plans after concluding that objections raised by Thayer lacked merit.
In order to proceed without Thayer’s cooperation, several unusual provisions were included in the documentation. First, the Agreement of Sale was not executed prior to confirmation of the plan by the court. Sec
Shortly after plan confirmation, LHTW sought access to the property. Thayer was uncooperative. LHTW asked First Lehigh’s counsel to draft a motion requesting that the court order Thayer to both allow access to the property and execute the agreements of sale. A duplicate motion relating to the Sug-arhouse Realty plan was sent to the EPA to file as well. Access to the property was granted and LHTW instructed the attorneys not to file the motions.
Execution of the Agreement of Sale, as directed by the Confirmation Order, was suspended by the Debtors’ appeals. However, on July 5, 1994, all appeals were withdrawn. First Lehigh immediately made written demand upon LHTW to proceed to closing. On July 11, 1994, LHTW transmitted a letter to the United States Attorney for the Eastern District of Pennsylvania (counsel for the EPA) purporting to withdraw pursuant to section 3.3 of the Agreement of Sale, citing as a reason the EPA’s failure to sign the Agreement of Sale on behalf of Sugarhouse Realty. On July 13, 1994, LHTW sent a follow-up letter enumerating failures of conditions precedent under section 13.2 of the Agreement of Sale that LHTW believed excused its performance and permitted termination of the agreement. Negotiations between the parties were unsuccessful, and on August 12, 1994, First Lehigh filed the Motion to Compel which is the subject of this appeal. LHTW responded with a motion to dismiss. On March 15, 1995, after lengthy evidentiary hearings before the bankruptcy court, Judge Raslavich issued an opinion and order granting First Lehigh’s Motion to Compel.
On appeal of that order to this court, LHTW argues first, that the bankruptcy court erred in holding that the Agreement of Sale does not permit withdrawal after confirmation of the plan by the bankruptcy court (“post-confirmation withdrawal”) and, second, that the bankruptcy court erred in holding that LHTW had no right to refuse to close for failures of conditions precedent under section 13.2 of the Agreement of Sale. 10
The parties have extensively briefed the issues and, on October 6, 1995, presented thorough oral argument. 11
II. STANDARD OF REVIEW
In reviewing the bankruptcy court’s decision, “[f]indings of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.”
12
Fed.R.Bankr.P. 8013.
III. ANALYSIS
A. Withdrawal Under Section 3.3 of the Agreement of Sale
The first argument raised by LHTW is that the bankruptcy court erred in holding that it has no post-confirmation right of withdrawal pursuant to the Agreement of Sale. (Brief of Appellant at 24.) Specifically, LHTW points to section 3.3 of the Agreement of Sale and finds fault with the court’s interpretation of the term “the latter of.” Section 3.3 of the Agreement of Sale reads as follows:
Buyer may, without any liability or obligation whatsoever, withdraw this Agreement of Sale by written notice given to the Plan Proponent of Creditor’s Competing Plan at any time prior to the latter of (a) the execution and delivery of the Agreement of Sale by Seller to Buyer, which such delivery must be actually received by Buyer, or (b) the entry of an order by the Court confirming and approving this Agreement and the sale to Buyer of the Property pursuant hereto, providing, however, that the foregoing to the contrary notwithstanding, in no event may Buyer withdraw this Agreement prior to April 4, 1994. Upon withdrawal as provided herein, all Deposits and other monies delivered by Buyer, together with interest earned thereon, shall be returned to Buyer.
(Agreement of Sale § 3.3, LHTW Ex. 24.) The bankruptcy court held that the term was unambiguous and accorded what it found to be the “primary and generally accepted meaning” of the term, “the second of two things mentioned.”
In re Sugarhouse Realty,
(1) Contract Interpretation
Confirmed bankruptcy plans of reorganization are binding contracts that must be interpreted in accordance with applicable contract law.
14
See Official Creditors Comm. of Stratford of Tex., Inc. v. Stratford of Tex., Inc. (In re Stratford of Tex., Inc.),
The paramount consideration of the court is to “ascertain and give effect to the contracting parties’ objectively manifested intent.”
Windsor Sec., Inc. v. Hartford Life Ins. Co., 986
F.2d 655, 667 (3d Cir.1993) (quoting
Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d
1001, 1009 (3d Cir.1980)). To ascertain intent, the court looks to the circumstances, the situation of the parties, the object they have in mind, and the nature of the subject matter of the contract.
Mellon Bank,
The court first looks to the words chosen by the parties to the contract to determine whether the words are ambiguous.
Stendardo v. Federal Nat'l Mortgage Ass’n (In re
Stendardo),
Although all parties characterize the phrase “the latter of’ as unambiguous, two different interpretations are offered.
16
This court must, therefore, determine whether the term is “susceptible to two reasonable
According to Pennsylvania law, “[i]n determining whether a contract term is ambiguous, we must consider the actual words of the agreement themselves, as well as any alternative meanings offered by counsel, and extrinsic evidence offered in support of those alternative meanings.”
St. Paul Fire & Marine Ins. Co. v. Lewis,
LHTW argues that the term “the latter of’ unambiguously means “later in time.” (Brief of Appellant at 26.) It further claims that interpreting the term as such comports with the intent of the parties to permit the buyer to withdraw from the Agreement of Sale any time prior to the occurrence of the later in time of the listed events, regardless of sequence. Thus, only after both (a) (execution) and (b) (confirmation) occurred would the buyer, LHTW, be bound. Because the execution and delivery of the Agreement of Sale had not occurred, LHTW argues it was not bound. LHTW maintains that because the signature was an important event to the contract, the parties intended that both execution and confirmation were necessary in order to bind the parties. (Brief of Appellant at 14.) It offered as evidence testimony that the clause was added for the purpose of “having somebody step up to the plate” and sign on the representations and warranties to bind the Debtors.
In re Sugarhouse Realty,
LHTW further contends that the bankruptcy court’s interpretation renders clause (a) of section 3.3 meaningless, in violation of contract principles mandating that a contract provision may not be read to annul another section. (Brief of Appellant at 27) (citing
Cerceo v. DeMarco,
Appellees EPA and First Lehigh argue that the term is unambiguous and means “second of two things mentioned.” (Brief of Appellee EPA at 5 n. 6; Brief of Appellee First Lehigh at 33, 38 & n. 35.) They maintain that, consistent with bankruptcy law and procedure, the intent of the parties was to allow only preeonfirmation withdrawal and limited post-confirmation termination. Ap-pellee First Lehigh characterizes clause (a) of section 3.3 as a counterpoint to clause (b),
The bankruptcy court agreed with the Ap-pellees’ definition and found that the parties drafted the Agreement of Sale conditioned on confirmation of the plan.
In re Sugarhouse Realty,
(2) The Contract as a Whole
The Letter Agreement, dated March 18, 1994, is attached to the Disclosure Statement (EPA) as Exhibit 6. (Second Amended Disclosure Statement (EPA), LHTW Ex. 58.) The wording in the Letter Agreement, which is only slightly different from the wording in the Agreement of Sale, supports the Appel-lees’ interpretation of section 3.3 of the Agreement of Sale. The Letter Agreement reads:
LHTW may elect to withdraw this offer to enter into the LHTW Agreement and pursue its support of the Competing Plan at any time prior to the date of confirmation of the EPA’s Competing Plan, without and [sic] liability or penalty to LHTW, whereupon this agreement shall be of no further effect. Moreover, the LHTW Agreement will provide that if the Conditions Precedent are not satisfied, or waived by Buyer, within a certain period of time specified therein, Buyer shall have certain limited rights, more fully set forth in the LHTW Agreement, to terminate the LHTW Agreement....
(Second Amended Disclosure Statement (EPA), LHTW Ex. 58.) The Letter Agreement recognizes confirmation as the key event and allows withdrawal only prior to confirmation. The intent expressed in this section of the Letter Agreement would be in conflict with the similarly worded clause in the Agreement of Sale, if the court were to accept LHTW’s interpretation. Established rules of construction require the court to read provisions of a contract so as not to conflict with each other.
Kingston Dodge, Inc. v. Chrysler Corp.
Use of the term “withdraw” by the drafter, LHTW, in both documents is also significant. Appellees argue persuasively that presentation of a plan is akin to an offer.
18
In accordance with basic contract law, once an offer has been accepted and becomes a binding agreement the offer cannot be withdrawn, the agreement can only be terminated.
United States v. Lipman,
The EPA points out that the word “latter” is used as a noun in the Agreement of Sale. Both dictionaries relied upon by LHTW which list the definition “later in time” as the preferred definition do so as an adjective. The bankruptcy court also noted that within the Plan, LHTW, the drafter of the documents, uses the term “later” when it intends to convey the meaning “later in time.”
In re Sugarhouse Realty,
Another section of the Agreement of Sale that conflicts with LHTW’s argued interpretation is section 13.2.4(c), which reads as follows:
If this Agreement has not been terminated as set forth in this section 13.2.4, then Buyer’s obligation to consummate Closing shall remain unaffected and in full force and effect.
(Agreement of Sale, LHTW Ex. 24.) According to the Agreement of Sale, the only means of ending the contract, with the exception of section 10 relating to quality of title, is termination pursuant to section 13.2.4, entitled “Conditions Precedent.” There is no discussion of withdrawal in section 13.2.4, only termination. Appellees argue that the reason for this is that both the Letter Agreement and the Agreement of Sale permit limited post-confirmation termination, but neither permit withdrawal post-confirmation.
See In re Sugarhouse Realty,
The Disclosure Statement drafted by LHTW was filed contemporaneously with the Plan. The disclosure statement is distributed to all creditors and must include information in sufficient detail to enable creditors to make an informed judgment before voting on a plan. 11 U.S.C. § 1125;
see also Oneida Motor Freight, Inc. v. United Jersey Bank (In re Oneida Motor
Freight),
The Disclosure Statement also undermines LHTW’s argument that it considered the signature important because it “wanted someone to step up to the plate and sign on the representations.”
In re Sugarhouse Realty,
NO ASSURANCE CAN BE GIVEN AS TO THE ACCURACY OF THE INFORMATION PROVIDED BY THE DEBTOR AND NO REPRESENTATION IS MADE BY THE PLAN PROPONENT AS TO ANY INFORMATION PROVIDED HEREIN, EXCEPT AS EXPRESSLY IDENTIFIED AS HAVING BEEN DETERMINED BY THE PLAN PROPONENT.
(Second Amended Disclosure Statement (EPA), LHTW Ex. 58.) Further, pages 11 and 12 read:
The Plan Proponent has not independently verified the Debtors’ environmental analy-ses and makes no representations respecting the state of environmental compliance at the Site.
(Second Amended Disclosure Statement (EPA), LHTW Ex. 58.) These provisions reveal that it was abundantly clear not only that the Debtors might not sign, but also that the EPA never intended to warrant and represent the Site’s condition in any manner.
Because the parties were fairly confident that Thayer would not sign the Agreement of Sale, the documents were carefully drafted by LHTW to bind the Debtors and allow the parties to proceed notwithstanding Thayer’s lack of cooperation and lack of signature.
In re Sugarhouse Realty,
(3) Bankruptcy Law and Procedure
The Plan and detailed order confirming the Plan (the “Confirmation Order”) provided for the lack of cooperation and eliminated the need for the signature. The Plan does not merely set forth the details of the reorganization but specifically references and incorporates the Agreement of Sale and states, in Article V:
5.3 The Debtor shall timely execute the Asset Purchase Agreement and such other documents as may be necessary or appropriate to effectuate the terms of the Asset Purchase Agreement and the Plan. The Plan Proponent is hereby appointed attorney-in-fact for the Debtor for the purpose of, and is authorized to, execute the Asset Purchase Agreement and any and all documents, including deeds and/or bills of sale necessary to consummate the Asset Purchase Agreement and the Plan.
(Second Amended Plan of Reorganization (EPA), Article V, section 5.3, LHTW Ex. 58 (emphasis added).) Upon confirmation of the Plan, the bankruptcy court signed the Confirmation Order which supersedes the Plan. Pursuant to 11 U.S.C. § 1141, the confirmation order binds all parties to perform the substantive provisions of the plan.
21
Reisher v. Internal Revenue Serv. (In re Reisher),
The Confirmation Order contains the following very specific language directing the parties to consummate the transaction:
3. The Plan, the Asset Purchase Agreement and all transactions, documents, instruments and agreements referenced to therein, contemplated thereunder or executed and delivered in connection therewith, are approved and the Debtor, the Disbursing Agent and other parties thereto are authorized and directed to enter into and perform according to their terms.
4. Pursuant to Section 1142(a) of the Bankruptcy Code, notwithstanding any otherwise applicable non-bankruptcy law ... relating to financial condition, the Debtor, the Plan Proponent and the disbursing Agent shall carry out the Plan and the related transactions.
7. [Pjrovisions of the Plan are valid and enforceable and bind the Debtor ...
9. The Debtor is authorized and directed to sell its real property and other assets as set forth in the Plan and the Asset Purchase Agreement ... on the terms and conditions set forth therein....
There is no question that, if as LHTW contends, a signature was important, the bankruptcy court had the power under the Bankruptcy Code to compel Thayer to sign the agreement if necessary. Section 1142 of the Bankruptcy Code grants the court broad jurisdiction to secure implementation of the plan and to enter orders to effectuate the plan.
22
See United States v. Unger,
Permitting withdrawal after confirmation would be in conflict not only with this specific plan of reorganization, but with the Bankruptcy Code generally. While LHTW characterizes this case as a contract dispute, (Reply Brief of Appellant at 4), this court finds more importantly that it is a contract dispute within the context of a Chapter 11 bankruptcy reorganization. Without the bankruptcy proceeding there would be no Agreement of Sale. The Agreement of Sale alone is invalid; it is valid only as part of a confirmed plan of reorganization.
The purpose of bankruptcy law is twofold: to achieve a just and equitable distribution of assets to creditors and to relieve the debtor of the weight of indebtedness.
In re Campbell,
Upon consideration of the entire contract and its context, it is clear that the term “the latter of’ reasonably permits only one meaning which will effectuate the parties’ intent— “the second of two things mentioned.” Therefore, this court confirms the bankruptcy court’s holding in this regard and finds LHTW had no post-confirmation right of withdrawal pursuant to section 3.3 of the Agreement of Sale. 25
B. Failure to Close/Right of Termination
The second argument raised by Appellant LHTW on appeal is that the Bankruptcy Court erred in holding that LHTW had no right to refuse to close under the Agreement of Sale. Specifically, LHTW finds error in the court’s interpretation of sections 7.1, 7.1.7, 9.1, 13.2, and 13.2.1 of the Agreement of Sale. The bankruptcy court found the phrases unambiguous and interpreted them as warranties of knowledge, not quantity or condition. The sections in question read as follows:
7. Representations.
7.1 Seller hereby makes the following representations and warranties to Buyer which are true and correct as of the date hereof and will be true and correct on the Closing Date as if then made:
7.1.7 Seller has not received notice of any violation of any environmental law or regulations, and Seller is aware of no violation of any environmental laws or regulations, except as set forth on Exhibit D attached hereto and made part hereof... . 26
9. Environmental.
9.1 Seller represents and warrants to Buyer as being true and correct as of the date hereof and on the Closing Date as if then made, that it is unaware of the existence of any hazardous materials or storage tanks in, on, under, about or affecting the Property except as set forth in environmental reports and studies obtained by Sellers and listed on Exhibit E attached hereto and made part hereof... . 27
13. Conditions Precedent.
13.2 Buyer’s obligation to close the transaction contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions precedent, any or all of which Buyer may, at its sole discretion, elect to waive by providing written notice thereof to Seller:
13.2.1 All of the representations contained in this agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date.
(Agreement of Sale, LHTW Ex. 24 (emphasis added).)
The conditions LHTW alleges violate the above are:
(1) quantities of asbestos three times as great as represented by the debtors, with a remediation cost of at least ten times as much as that disclosed by the debtors;
(2) United States Army Corps of Engineers written notices of violations of wetlands areas due to unlawful fill that must be excavated and then restored;
(3) substantial illegal groundwater and soil contamination relating to releases of petro-earbons from underground gas and oil tanks including total petroleum hydrocarbon contamination 9 to 97 times higher than applicable standards, and carcinogenic benzene contamination 30 times higher than applicable standards ... ;
(4) illegal concentrations of PCBs in and around the transformer room concrete mat 30 times higher than applicable standards; and
(5) illegal contamination of river sediment with PCBs and certain metals, in some cases several hundred times higher than applicable standards.
(Brief of Appellant at 36.)
(1) Interpretation
The crux of this argument is again contract interpretation. The paramount consideration of the court is to “ascertain and give effect to the contracting parties’ manifested intent.”
Windsor Sec., Inc. v. Hartford Life Ins. Co.,
The contract unambiguously requires the representations to be true when made and at closing.
(See
Agreement of Sale, §§ 7.1, 9.1, & 13.2.1., LHTW Ex. 24.);
see also In re Sugarhouse Realty,
LHTW argues that the clauses are unambiguous warranties of specific condition or quantity.
(See
Brief of Appellant at 40.) If this were so, the language in section 7.1.7, which reads, “except as set forth in Exhibit D,” and in section 9.1, which reads, “except as set forth in ... the Environmental Reports,” would demonstrate that the parties intended to warrant that the actual amounts of hazardous waste present at the Site were listed in the reports attached to the Agree
The bankruptcy court found that the clauses are warranties of knowledge intended to prevent withholding of material information possessed by the unwilling Sellers (Debtors).
See In re Sugarhouse Realty,
Caveat emptor is the rule in Pennsylvania regarding sales of industrial property between corporations of roughly equal resources, as is the case here.
Philadelphia Elec. Co. v. Hercules, Inc.,
Section 2.6 of the Agreement of Sale reads, “Realty and improvements thereon are being purchased in ‘AS IS’ condition.” An “as is” clause disclaims implied warranties.
PBS Coals, Inc. v. Burnham Coal Co.,
The Second Amended Disclosure Statement (EPA) further supports this narrow reading. Page three contains the following express disclaimer:
EXCEPT WHERE SPECIFICALLY NOTED, THE INFORMATION CONCERNING THE DEBTOR AND ITS ASSETS AND LIABILITIES IS BASED UPON INFORMATION OBTAINED FROM THE AMENDED DISCLOSURE STATEMENTS FILED BY THE DEBTOR, THE DISCLOSURE STATEMENT RELATING TO PLAN REORGANIZATION PROPOSED BY THE CITY OF PHILADELPHIA (“PHILADELPHIA DISCLOSURE STATEMENT”), WHICH HAS BEEN WITHDRAWN, THE SCHEDULES AND STATEMENT OF AFFAIRS FILED BY THE DEBTOR, AND OTHER PUBLIC DOCUMENTS. NO ASSURANCE CAN BE GIVEN AS TO THE ACCURACY OF THE INFORMATION PROVIDED BY THE DEBTOR AND NO REPRESENTATION ISMADE BY THE PLAN PROPONENT AS TO ANY INFORMATION PROVIDED HEREIN, EXCEPT AS EXPRESSLY IDENTIFIED AS HAVING BEEN DETERMINED BY THE PLAN PROPONENT.
Similarly, pages 11 and 12 read:
The Debtor is under Court Order to provide remediation for the asbestos and tank removal. The Debtor has estimated that this remediation will cost approximately four hundred thousand dollars ($400,000.00). The Plan Proponent has not independently verified the Debtor’s environmental analyses and makes no representations respecting the state of environmental compliance at the Site.
(Second Amended Disclosure Statement (EPA) at 3, 11-12, LHTW Exhibit 58.) The information contained in the Disclosure Statement was gathered from outside documents, as were the warranties LHTW included when it drafted the Agreement of Sale. This court cannot find that parties who included the above disclaimers intended to warrant quantity or cost. Nor does it believe the EPA would be willing to sponsor a plan contingent on the veracity of the Debtors’ representations which were not made to the EPA or LHTW by the Debtors, nor checked for accuracy by either, but rather were gathered from outside documents by LHTW and incorporated into the Plan.
This court again finds the context of the agreement to be of critical importance. This was not a sale of real estate between a willing seller and buyer. It was not a case of a seller fraudulently misrepresenting the condition of the property to induce purchasers. Rather, it was a forced sale of real property owned by a recalcitrant Chapter 11 debtor. The buyer in this case was not an unwitting third party, but a sophisticated entity, advised by knowledgeable counsel, that vigorously pursued purchase. LHTW was well aware that Thayer’s documents were incomplete and contained errors. It was wary of information obtained from Thayer. LHTW now argues that because the results of testing it performed post-confirmation show quantities of hazardous waste in excess of those approximated in reports attached to the Agreement of Sale, it can withdraw from the confirmed plan on the grounds of misrepresentation or breach of warranty. Merely to state this proposition mandates its rejection.
(2) Due Diligence
The bankruptcy court found that the parties intended that all due diligence investigations were to have been completed prior to confirmation.
In re Sugarhouse Realty,
The documents make it clear that the parties did not intend to provide for post-confirmation due diligence. Closing was to follow shortly after confirmation.
32
There was no window of time for due diligence. The bankruptcy court found that closing was conditioned on confirmation.
33
There are no references to post-confirmation due diligence investigations in any of the Plan documents. The court found as a factual issue that LHTW planned to perform due diligence investigations before confirmation, as is the norm.
In re Sugarhouse Realty,
This court finds no provisions in the documentation to the contrary. A sophisticated buyer knowledgeable in real estate matters who intended to include a non-standard procedure could have and should have made the terms clear in the defining plan documents. LHTW not only claims the parties planned post-confirmation due diligence investigations, but also claims it was prevented from performing any meaningful pre-confirmation due diligence. (Brief of Appellant at 40.) The evidence shows that LHTW had performed its investigations. If LHTW had not completed its investigations, it could have and should have asked the EPA to request an extension, so it could perform due diligence investigations and decide, prior to confirmation, whether it wanted to purchase the property. There is no evidence that LHTW ever mentioned this “lack of investigation” to either of the plan proponents or the bankruptcy court. To the contrary, the facts also show that investigation was to be done prior to confirmation and was completed to LHTWs satisfaction.
At the January 11, 1994 meeting attended by Debtors’ representatives, LHTW representative Everett, and attorneys for both sides, LHTW requested the opportunity to perform due diligence investigations. (NT 9/26/94 at 84-86, 143-44.) LHTW subsequently hired surveyors, a title company, and TSD Environmental Services (“TSD”), an environmental consulting firm.
Id.
at 89-90. Everett and TSD visited the Site in January 1994, months before confirmation.
Id.
at 93. TSD performed an approximately seven-hour walk-through Phase I analysis of the Site for LHTW and noted possible PCB contamination, obvious asbestos contamination, and the presence of underground storage tanks. At that time, TSD recommended a reassessment of the Site. (Letter from TSD to Jan Quim-by Fox of 1/18/94, LHTW Ex. 2.) The actions taken by LHTW pre-confirmation were consistent with due diligence investigations. LHTW claims it was prevented from performing due diligence investigations because of the weather and the lack of cooperation by Thayer. To the contrary, the evidence establishes that even after the City filed its plan and LHTW became a party, it did not attempt further due diligence. (NT 9/27/94 at 32.) Nor did LHTW seek access after Trump withdrew before confirmation. Nor did it attempt further due diligence when the EPA and First Lehigh became plan proponents. LHTW did not ask First Lehigh or the EPA to seek postponement of the eonfir-
At the confirmation hearing, Everett testified, “[w]e found that those materials [supplied by Thayer] were completely inadequate and had to go and get our own title reports, hire our own environmental people, our own surveyor, because ... the debtor just didn’t have ... what would normally be produced in a due diligence.” (NT Confirmation Hearing 4/28/94 at 101.) Everett never stated that the due diligence investigation was continuing or incomplete. This court must conclude therefore that due diligence was to be performed prior to confirmation as is customary.
(3) Breach of Warranty
LHTW claims that because certain express warranties have been breached, failures of conditions precedent have occurred. This court first looks to the warranties in sections 7.1, 7.1.7, and 9.1 to determine whether a breach has occurred.
The law with respect to breach of express warranties is set forth in
Fallowfield Dev. Corp. v. Strunk,
Nos. 89-8644, 90-4431,
The record also shows that LHTWs environmental consultant, TSD, informed it prior to confirmation that the Brandywine Reports might not be accurate or complete.
See In re Sugarhouse Realty,
There is also no question that Thayer was uncooperative and did not want the property sold to LHTW. LHTW claims its reliance was nonetheless justified because the statements were made to a sophisticated businessman (Donald Trump). (NT 9/27/94 at 20-21.) However, as LHTW well knew, Trump would not be unduly harmed by any misrepresentations because his contract expressly limited his financial responsibility for environmental liability.
(See
Agreement of Sale Between Trump and Sugarhouse Realty, § 9.2, LHTW Ex. 21.) LHTW knew of numerous inaccuracies in the plan and Disclosure Statement prepared in conjunction with the Debtors’
Given the facts and context, this court, like the bankruptcy court, cannot find that LHTW justifiably relied upon any representations of the Debtor. In light of the reports reaffirming the contamination present at the Site presented to LHTW by TSD prior to confirmation, this court must also reject LHTW’s contentions that it was surprised by the amount of contamination at the Site and that the representations were material.
This court will now address separately each of the conditions LHTW alleges breach the warranties contained in the Agreement of Sale.
(a) Asbestos
LHTW claims that a warranty is breached by the discovery of quantities of asbestos “three times as great as represented” and ten times as costly to remediate. (Brief of Appellant at 36.) LHTW states “quantitative differences between what is warranted and what is true can give rise to a material breach of contract” and cites cases in support thereof. (Brief of Appellant at 38.) This court accepts Appellant’s statement of law, but finds it inapplicable because no implied or express warranties of quantity of any hazardous waste are present in the contract documents. A quantity of asbestos greater than Appellant believed existed does not amount to a breach of warranty.
LHTW was informed of and had evidence of the existence of large quantities of asbestos at the Site. The auction package relating to the Site, which was obtained by the LHTW prior to any negotiations, identifies large quantities of asbestos present at the Site. (See Brandywine Reports, Phase II, Auction Package, LHTW Ex. 18A, Tab 6.) The Brandywine Reports, contained in the Auction Package and attached to the Agreement of Sale, identify pervasive asbestos contamination throughout the Site and note loose asbestos on the floor in debris. (Bran-dywine Reports, Phase I, LHTW 18A, Tab 6.)
There could be no basis for relying on or warranting any figures presented in the reports; the reports themselves clearly disclaim the figures. The Brandywine Reports state that more analysis is needed and all quantities are approximate. (See Brandy-wine Reports, Phase II Conclusions and Recommendations, LHTW Ex. 18A, Tab 6.) The Reports, written in 1992, caution that future changes to the property may affect the validity of the analysis. (Brandywine Reports, LHTW Ex. 18A, Tab 6.) The reports also contemplate the discovery of further contamination. (See Brandywine Reports, Phase III, Preliminary Schedule, LHTW Ex. 18A, Tab 6) (stating that “[a]ny additional materials discovered after the onset of the project will ... become an amendment to the Phase III report.”)
LHTW also states that the difference between the cost of remediation cited in the auction package and the estimates it has solicited is substantial. (Brief of Appellant at 45.) The auction package contains asbestos remediation cost estimates between $250,000 and $325,000. (Auction Package, LHTW Ex. 18A, Tab 1.) The Debtors’ various disclosure statements estimate the cost of remediation as $300,000.
(See e.g.,
LHTW Ex. 23, at 15.) Estimates received by LHTW range from $1,000,000 to $15,000,000.
(See
LHTW Exs. 2, 6, 7, 8, 12, 13.) TSD estimated the asbestos cleanup would cost approximately $500,000.
In re Sugarhouse Realty,
As a bargaining tool, LHTW expressly agreed not to cap its environmental liability.
(b) Groundwater and Soil Contamination
LHTW also claims that groundwater and soil contamination caused by the leaking USTs is a breach of warranty, thus causing a failure of a condition precedent. Again, these issues are addressed in the Brandy-wine Reports. 34 Phase I of the Brandywine Reports identifies the stained soil around the USTs as an area of immediate concern due to the potential for adverse environmental impact to the soil, water, and air. (See Brandywine Reports, Phase I, §§ 2.0, 2.1, LHTW Ex. 18A, Tab 6.) The Phase II Report also discusses the stained soil and states that testing of the soil would not be performed until remediation. (Brandywine Reports, Phase II Conclusions and Recommendations, LHTW Ex. 18A, Tab 6.) Neither report identifies the type of waste present or the quantity. Again, based on the disclosure set forth in the Reports, there is no warranty in regard to quantity or type of contamination.
(c) PCBs
LHTW claims that the presence of PCBs in the main engine room and the presence of PCBs in the sediment of the Delaware River breach the warranties. (Brief of Appellant at 18.) The presence of PCBs at the Site is noted in the report prepared by PMT Associates of Maryland (“PMT”), which is incorporated as an attachment to the Brandywine Reports. (Brandywine Reports, Phase II, LHTW Ex. 18A, Tab 5.) The Brandywine Reports affirm the PMT finding. (See Brandywine Reports, Phase II Executive Summary, LHTW Ex. 18A, Tab 5.)
The PMT report not only addresses the presence of PCBs generally, but also specifically identifies the main engine room as contaminated. (See PMT Report, LHTW Ex. 18A, Tab 5.) LHTW argues that because the EPA approved the court-ordered clean-up of the Site, it is entitled to believe that the Site is free of PCBs and that the existence of the PCBs therefore is a breach of warranty. (Brief of Appellant at 43.) However, the EPA never certified that the Site was free of PCBs. Furthermore, LHTWs own environmental consultant, TSD, recommends in its January 1994 memorandum additional sampling to determine the status of PCB contamination at the Site. (Brief of Appellant at 18.) Accordingly, this court finds that the presence of PCBs was sufficiently disclosed to LHTW, and there was no warranty of a PCB-free Site. 35
(d)The Army Corps of Engineers Letter
LHTW alleges that a breach of the warranty contained in section 7.1.7 of the Agreement of Sale occurred regarding the violation cited by the Army Corps of Engineers. This issue relates to a portion of the property known as Pier 42, which is leased to the Ultimate Sports Bar, Inc. The lessee operates an outdoor bar on the property now known as Bahama Bay.
See In re Sugarhouse Realty,
According to the Agreement of Sale, Thayer was obligated to disclose the information. Failure to do so was a breach of warranty. However, in order to excuse performance, the breach would have to have been material. The bankruptcy court found that a $30,000 cost to remedy the fill was not, in this case, material and would be neither a material breach of contract nor a failure of a condition precedent in the contract.
In re Sugarhouse Realty,
(4) Qualitative/Quantitative Distinction
LHTW claims the bankruptcy court’s use of a qualitative/quantitative distinction in its analysis was in error.
See In re Sugarhouse Realty,
(5) Source of Knowledge
LHTW also claims that “[u]nder the bankruptcy court’s decision, if the debtors learned of the property’s environmental condition ... from any source other than LHTW, there would be no question that LHTW could withdraw.” (Brief of Appellant at 41.) It argues that the source of knowledge is irrelevant and, once the Debtors learn of the condition, LHTW may then terminate the agreement. This court does not agree with LHTW’s reading of the bankruptcy court’s opinion. The opinion states:
[I]t is possible that the newly revealed information, if material, may independently breach some separate Seller’s warranty ... and that such breach may excuse the Buyer’s performance under the Agreement of Sale. The Court, however, rejects theinterpretation of the paragraphs in question which suggests that where the Buyer discovers supplemental information which, qualitatively, is of a type already disclosed by the Seller, which information the Buyer then imparts to the Seller, the Buyer, merely by causing this type of subjective change to the Seller’s “state of mind,” can invoke the above paragraphs to avoid the Agreement of Sale.
In re Sugarhouse Realty,
(6) Conditions Precedent
Sections 13.2 and 13.2.1 of the Agreement of Sale make Buyer’s obligation to close contingent on the veracity of Sellers’ representations and warranties contained in the Agreement of Sale:
13.2 Buyer’s obligation to close the transaction contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions precedent, any or all of which Buyer may, at its sole discretion, elect to waive by providing written notice thereof to Seller:
13.2.1 All of the representations contained in this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date.
(Agreement of Sale, LHTW Ex. 24 (emphasis added).) LHTW is correct in its assertion that the remedy for failure of a condition precedent is different from the remedy for a breach of warranty. (Reply Brief of Appellant at 24.) A breach of warranty must be material to excuse performance, the remedy sought.
Oak Ridge Constr. Co. v. Tolley,
The question is whether the warranties could be true in all material respects at Closing, not whether they have been deviated from at all. The only breach found was a breach of the warranty in section 7.1.7. The Debtor warranted in section 7.1.7:
Seller has not received notice of any violation of any environmental law or regulations and seller is aware of no violation of any environmental laws or regulations, except as set forth on Exhibit D attached hereto and made part hereof.
(Agreement of Sale, LHTW Ex. 24 (emphasis added).) As discussed, Thayer did not disclose the first letter relating to the fill issue, which he received after confirmation. However, he did disclose the follow-up letter relating to the excavation and restoration. The purpose of the section 7.1.7 was to assure disclose of all pertinent information, and if any changes occurred that were material, to permit termination. As discussed previously, Thayer’s non-disclosure of the original letter was a technical breach, not a material breach that would warrant termination.
The remaining warranty, section 9.1, reads:
Seller represents and warrants to Buyer as being true and correct as of the date hereof and on the Closing Date as if then made, that it is unaware of the existence of any hazardous materials or storage tanks in, on, under, about or affecting the Property except as set forth in environmentalreports and studies obtained by the Sellers and listed on Exhibit E attached hereto and made part hereof (the “Environmental Reports”). Copies of all environmental reports and estimates for removal of hazardous materials and storage tanks have been furnished to Buyer and are listed on Exhibit E.
(Agreement of Sale, LHTW Ex. 24 (emphasis added).) The above was true in all material respects when made and will be true at Closing. Although Debtor now is aware of different quantities of substances, it is not aware of the existence of hazardous materials other than the types identified in the Bran-dywine Reports. Further, LHTW has not been deprived of the benefit of its bargain.
The context is critical to an understanding of the parties’ intent. It would defeat the purpose of a bankruptcy proceeding to allow a party that drafted the contract and vigorously pursued confirmation to withdraw from the agreement post-confirmation. Confirmation proceedings are intended to be final.
Oneida Motor Freight, Inc. v. United Jersey Bank,
LHTW urges that affirming the bankruptcy court opinion will set an unwise precedent and paints itself as an unwitting buyer who was induced to purchase land by misrepresentations of the Seller. This court is not persuaded. As the bankruptcy court found, the property was a well-known “Pandora’s Box” of environmental problems that LHTW early on stated it was ready, willing, and able to handle. Put simply, LHTW bargained for a parcel of land with a large unspecified quantity of environmental contamination, and that is what it received.
This court finds that the parties’ intent was that any due diligence investigations were to be completed prior to confirmation to determine whether LHTW wanted to contract for the purchase of the Site. If LHTW’s investigation at that point revealed unfavorable information, the remedy was to withdraw the offer. After the Plan was confirmed, the warranties guaranteed that the Debtors had supplied all the information they had and would continue to do so until Closing. Because no material breaches warranting termination have occurred and the Debtors’ representations are still true in all material respects, LHTW is still bound to close.
III. CONCLUSION
For the above reasons, this court affirms the decision of the bankruptcy court. An appropriate order follows.
ORDER
AND NOW, this 17th day of January, 1996, it is hereby ordered that the decision of the bankruptcy court in
In re Sugarhouse Realty, Inc.,
Nos. 92-23024 SR, 92-24533 SR, 93-22920 SR,
Notes
. References to testimony at the hearing on the Motion to Compel before Judge Raslavich will be designated as: NT [date] at [page].
. The Environmental Protection Agency (the "EPA”) commenced litigation in 1985 to compel the Debtors to remediate Polychlorinated Biphe-nyl containing matter ("PCBs”). In 1991, the City of Philadelphia commenced litigation to compel the Debtors to remediate hazardous asbestos, secure the Site from the public, and remove underground storage tanks (USTs) in accordance with environmental regulations. The Army Corps of Engineers has also cited the Debt
. First Lehigh and the EPA will be referred to collectively as "Appellees.”
. On April 10, 1995, the three bankruptcy cases, numbers 92-23024 (Sugarhouse Realty), 92-24533 (Sugarhouse II), and 93-22920 (Riverfront Concepts) were consolidated under the docket number 92-23024 (Sugarhouse Realty) for the purpose of appeal.
. All three parcels have creditors in addition to the mortgagees. The EPA is a judgment creditor of Sugarhouse Realty and Thayer, in the amount of $1,119,750 for the failure to remediate PCBs in a timely fashion.
See United States v. Sugarhouse Realty, Inc.,
. A representative of Greenwood Racing, Inc. received an auction packet for the Site at a gaming conference in 1993 and directed Terrence Everett ("Everett”) to investigate purchasing the Site. Everett hired Andrew Gowa ("Gowa”) in 1994 to serve as transactional counsel in the matter. LHTW was then formed by Greenwood specifically for the purpose of purchasing the Site.
. The agreement with Trump prohibited Thayer from negotiating with other prospective purchasers.
In re Sugarhouse Realty,
. A brief, simplified explanation of the Chapter 11 bankruptcy process may prove helpful. Under Chapter 11, the debtor must submit to any interested party a summary of the plan and a written disclosure statement containing information reasonably necessary to inform creditors before they vote on the plan. 11 U.S.C. § 1125. The court must approve the disclosure statements before they are sent to creditors. Id. Each class of creditors impaired by the plan then votes to accept or reject the plan. Id. § 1126. Once confirmed, the plan binds all parties. Id. § 1141.
. Under the LHTW-authored plan, two agreements of sale were drafted' — one pertaining only to the tract owned by Sugarhouse Realty and a second for the properties owned by Sugarhouse II and Riverfront Concepts. The second agreement was contingent on the success of the first agreement. Both the LHTW-authored Agreement of Sale and the agreement of sale between Debtors and Trump contained a fixed “front-end” purchase price to be paid at closing as well as a contingent "back-end” payment to be paid only if riverboat gaming were legalized.
To entice both the Debtors and the creditors, LHTW offered a number of things that Trump did not. LHTW offered more money on the front-end payment than Trump and a back-end payment of cash as opposed to Trump’s back-end payment of stock. While Trump capped his environmental clean-up liability, LHTW did not. (.See NT 9/27/94 at 15-16.) If Trump purchased the Site, unsecured creditors would be paid to some extent only if casino gaming were approved, whereas purchase by LHTW would ensure that unsecured creditors were paid.
Sale of all three tracts between Debtors and LHTW called for a fixed purchase price of $10,-000,000 and a contingent back-end payment of $7,000,000. The Agreement of Sale relating solely to the tract owned by Sugarhouse Realty provided for a fixed purchase price of $6,575,000 and a contingent back-end payment of $4,000,-000. (Second Amended Disclosure Statement (EPA), LHTW Ex. 58 at 16.)
.LHTW, in a footnote, still contests the standing of First Lehigh, who is not a creditor of Sugarhouse Realty, but is a creditor of the owners of the two related parcels, the sales of which are expressly contingent upon the sale of the Sugarhouse Realty tract. It is clear under section 1109(b) of the Bankruptcy Code and case law that First Lehigh has standing as a party-in-interest.
See In re Sugarhouse Realty,
. The court can affirm the correct decision of a lower court on grounds different than those relied upon by that court.
University of Maryland v. Peat Marwick Main & Co.,
. A finding is clearly erroneous "when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”
Anderson v. City of Bessemer,
. Although this court does not analyze the extrinsic evidence, it notes that there is substantial support in favor of the bankruptcy court’s decision.
. The language in question is contained in the Agreement of Sale, which is one part of the Second Amended Plan of Reorganization (the "Plan”). The Agreement of Sale is not a freestanding contract, it is only valid as it relates to the Plan. The contract in question is, therefore, the Plan.
. Even if the Disclosure Statement were not part of the contract, "[i]t is a general rule of contract law that where two writings are executed at the same time and are intertwined by the same subject matter, they should be construed together and interpreted as a whole, each one contributing to the ascertainment of the true intent of the parties."
Kroblin Refrigerated Xpress, Inc.
v.
Pitterich,
. Before the bankruptcy court, each party offered dictionary definitions to support its version of the term's ordinaiy meaning. The EPA referred the court to the American Heritage Dictionary (2d College ed. 1982) which defines latter as:
(adj.) 1. Designating the second of two persons or things mentioned. 2. Further advanced in time or sequence; later. 3. Closer to the end; the latter part of the book. — n. The second of two persons or things mentioned.
LHTW relied on Webster's Third New International Dictionary (1986) and the Oxford English Dictionary (2d ed. 1993) to support its case, both of which it claims favor the "later in time" definition.
The bankruptcy court, in its decision, relied on The Random House Dictionary of the English Language, (College ed. 1968), which defines latter as:
1. being the second mentioned of two (distinguished from former). 2. more advanced in time; later. 3. near or comparatively near to the end: the latter part of the century. 4. Obs. last; final.
In re Sugarhouse Realty,
. Most courts, in general, and Pennsylvania courts, in particular, permit "examination of external signs and objective indicia” to aid in a "rational interpretation of the parties’ intent.”
Northbrook Ins. Co. v. Kuljian Corp.,
. The EPA cites
Unarco Indus., Inc. v. Bloomington Factory Workers (In re UNR),
. The court recognizes that LHTW is not the plan proponent. However, it also recognizes that LHTW collected all information and drafted the documents.
. What constitutes adequate information required to be included in the disclosure statement under the Bankruptcy Code is to be determined by the facts and circumstances of each case. H.R.Rep. No. 595, 95th Cong., 2d Sess. 409 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 6365.
. 11 U.S.C. § 1141 reads, in pertinent part, as follows:
(a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor....
.11 U.S.C. § 1142(a) reads:
Notwithstanding any otherwise applicable non-bankruptcy law, rule, or regulation relating to financial condition, the debtor and any entity organized or to be organized for the purpose of carrying out the plan shall carry out the plan and shall comply with any orders of the court.
11 U.S.C. § 1142(b) reads:
The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act, including the satisfaction of any lien, that is necessary for the consummation of the plan.
. In the instant case, the EPA and the City of Philadelphia had concerns about both environmental remediation and monetary recovery.
. Courts have consistently emphasized the importance of finality in bankruptcy proceedings.
See, e.g., Oneida Motor Freight, Inc. v. United Jersey Bank (In re Oneida Motor Freight, Inc.),
.This court finds no ambiguity. However, it does recognize the rule that, in order to prevent draftsmen from gaining an advantage by using deliberately obscure language, any ambiguities would be construed against the drafter. Restatement (Second) of Contracts § 206 (1981);
see also In re F.H. McGrow & Co.,
. Exhibit D contains the Court of Common Pleas of Philadelphia County's order requiring remediation of asbestos.
. Exhibit E contains the reports prepared by the Brandywine Environmental Group, Inc. (the "Brandywine Reports”) entitled Phase I, Phase II, and Phase III. Phase I was performed to “address potential areas of environmental concern.” (Brandywine Reports, Phase I, LHTW Ex. 18A, Tab 6.) Phase II was performed to identify “location and description of potential sources of contamination, the need for remediation, the type of remediation, and/or the extent of previous contamination." (Brandywine Reports, Phase II, LHTW Ex. 18A, Tab 6.) Phase III was performed to set "a temporary schedule ... to begin the implementation of remediation....” (Brandywine Reports, Phase III, LHTW Ex. 18A, Tab 6.)
. Gowa, counsel for LHTW, acknowledged at the hearing before the bankruptcy court that the warranties contained in section 9 of the Agreement of Sale are warranties of the state of mind of the seller. (NT 11/10/94 at 108, 114-15, 123.)
. For an example of a dear warranty of condition, see
Versatile Metals, Inc. v. Union Corp.,
. Section 5.1 of the Agreement of Sale reads:
Buyer and its agents, consultants and representatives shall have the right to enter upon the Realty from time to time for the purpose of inspection of the property and to conduct such tests as Buyer may desire including, without limitation, air, water and soil samples, test borings, surveys, etc.
(Agreement of Sale § 5.1, LHTW Ex. 24.)
. Section 9.2 of the Agreement of Sale reads as follows:
Seller has advised Buyer of the entry of a judgment entered in the Court of Common Pleas of Philadelphia County (“the Judgment”) ordering the removal of asbestos from the Property.... Buyer agrees to remove the asbestos pursuant to the Judgment or as soon thereafter as is reasonable.
(Agreement of Sale § 9.2, LHTW Ex. 24.)
. Section 4 of the Agreement of Sale reads as follows:
Closing of title ... shall occur on a date ("Closing Date”) set by the Buyer which shall be within ten (10) business days after satisfaction (or waiver thereof by Buyer in writing) of the Conditions Precedent (hereinafter defined).
Section 13.2.4 lists the only acts that must be completed. It reads:
All necessary approvals incorporating the transactions contemplated by this Agreement as part of the plan of Bankruptcy Reorganization have been approved and confirmed by the Court and all applicable appeal periods have expired without the filing of an appeal or if a timely appeal was filed, the appeal or appeals have been denied and the Court's order confirming the Plan has been affirmed, and all further appeal periods have been expired....
(Agreement of Sale §§ 4, 13.2.4, LHTW Ex. 24.)
. The Agreement of Sale provides that if the bankruptcy court's decision was not appealed, the parties contemplated closing the agreement of sale as early as within ten days of the entry of the order. Further, it was not certain that there would be an appeal.
. The City of Philadelphia issued a violation with respect to the USTs and demanded removal and closure. Appellants were aware of this violation. (Sugarhouse II/Riverfront Concepts Agreement of Sale Ex. K, LHTW Ex. 35; Second Amended Disclosure Statement (EPA), LHTW Ex. 58, at 11.)
. There is also no evidence of withholding information about PCB contamination.
. TSD estimates the cost to remediate and remove the fill material as approximately $30,000. (TSD Reports, LHTW Ex. 4, at 58.)