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Atlantic Holdings, Ltd. v. Apollo Metals, Ltd.

United States District Court, E.D. Pennsylvania

July 11, 2017

APOLLO METALS, LTD., et al., Defendants.


          STENGEL, J.


         This is a dispute between two companies over which company is liable for the other's polluted groundwater.

         The 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.

         The 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.


         In 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.

         Atlantic alleges that Apollo's operations have resulted in the release of hexavalent chromium and TCE in its groundwater.[1] 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.

         In October of 2014, Atlantic, through its prior counsel (who no longer represents Atlantic), [2] initiated a lawsuit against Apollo in the Court of Common Pleas of Lehigh County.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.

         This 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.

         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.

         After 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.

         Two 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.

         Atlantic 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 ...

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