United States District Court, E.D. Pennsylvania
a dispute between two companies over which company is liable
for the other's polluted groundwater.
parties have been litigating this case for several years,
which began in the Court of Common Pleas of Lehigh County in
2014. On June 15, 2016, the parties entered into a
“Tolling Agreement.” Under this contract, among
other thing, the parties agreed to discontinue the state
court action. They also agreed that any statute of
limitations-type defenses would be tolled until November 30,
2016. On November 30, 2016, the plaintiff recommenced the
action-this time here in federal court.
defendant filed counterclaims for breach of contract,
fraudulent inducement, and rescission of the Tolling
Agreement. The plaintiff filed a motion to dismiss the
counterclaims. I will grant the motion to dismiss.
1990, the defendant, Apollo M s, Ltd., (“Apollo”)
purchased a piece of land in Bethlehem, Pennsylvania. Seven
years later, the plaintiff, Atlantic Holdings Limited
(“Atlantic”), purchased a nearby piece of land in
Bethlehem to use for commercial storage space. Atlantic's
land sits immediately adjacent to and downhill from
Apollo's land. Since Apollo bought its land in 1990, it
has used that land to operate an industrial steel plant.
alleges that Apollo's operations have resulted in the
release of hexavalent chromium and TCE in its
groundwater. Atlantic brings claims against Apollo
under state and federal law for this pollution and
contamination. Years before this litigation began, Apollo
entered into a Covenant with the Pennsylvania Department of
Environmental Protection (“DEP”). This Covenant
acknowledged the presence of hexavalent chromium and TCE in
the groundwater under Apollo's property. Atlantic claims
these chemicals have since made their way onto its property
and contaminated the groundwater there.
October of 2014, Atlantic, through its prior counsel (who no
longer represents Atlantic),  initiated a lawsuit against
Apollo in the Court of Common Pleas of Lehigh County. On
February 9, 2016, Atlantic's prior counsel was
disqualified from the action. After that happened, Apollo
hired a new lawyer and entered into a “Tolling
Agreement” with Atlantic on June 15, 2016.
agreement tolled any statute of limitations-type defense that
had not otherwise expired by September 30, 2014. (Doc. No.
13-1, Tolling Agreement ¶ 2). It also provided that
Atlantic would withdraw its state court action on or before
June 22, 2016. Atlantic did this. The Tolling Agreement also
states: “The parties share a common interest in the
resolution of the Civil Action.” (Tolling Agreement
¶ C). This sentence forms the basis for the
counterclaims that Apollo has lodged against Atlantic.
filed suit in this Court on the same day the Tolling
Agreement expired: November 30, 2016. In response to this
complaint, Apollo filed an Answer and three counterclaims
for: (1) rescission of the Tolling Agreement, (2) fraudulent
inducement, and (3) breach of contract. In sum, Apollo claims
that Atlantic fraudulently induced it to enter into the
Tolling Agreement and breached that agreement by never
engaging in any good-faith efforts to settle the case.
Atlantic's counsel was disqualified, Atlantic retained
David A. Garrison, Esq. It was under Mr. Garrison's
representation that Apollo and Atlantic entered into the
Tolling Agreement. This Tolling Agreement was jointly entered
into and signed by authorized representatives of both
Atlantic and Apollo. Apollo alleges Atlantic never had any
intention of engaging in settlement discussions when they
entered into the Tolling Agreement.
months after entering into the Tolling Agreement, Mr.
Garrison and counsel for Apollo emailed back and forth about
setting up a time to discuss settlement. Around September
2016, Apollo learned that Mr. Garrison no longer represented
Atlantic. Atlantic had terminated Mr. Garrison as counsel.
then hired new lawyers: counsel in this case. Counsel for
Apollo contacted Atlantic's new counsel on September 23,
2016. During this conversation, Atlantic's counsel stated
he was just becoming familiar with the case as he had
recently been retained by Atlantic. In early November 2016,
Atlantic's counsel communicated to Apollo that Atlantic
was “not opposed to entertaining a settlement offer by
Apollo.” He also suggested scheduling a settlement
conference. Apollo claims this suggestion for a settlement
conference was a “sham.” Apollo never followed
through with it or made any settlement offer. Now ...