Opinion
No. CV 07 5011505 S
December 17, 2009
MEMORANDUM OF DECISION
This is breach of contract action brought by the plaintiff, J. Yancey Brame, against the defendants, Larry G. Grela and J. and L. Grela Ventures, LLC, seeking money damages and declaratory relief. The dispute arises out of a real estate purchase and sale agreement entered into by the plaintiff and the individual defendant for certain real property located in Terryville, CT. The property is contaminated by industrial chemicals historically used on the site as part of a machine shop operation. The principal issue to be decided by the court is which party has contractual responsibility for on-going compliance with Connecticut's Transfer Act and the costs associated with the investigation, monitoring and remediation of the pollution. For the reasons set forth below, the court finds the issues in favor of the plaintiff.
I. FACTUAL AND PROCEDURAL HISTORY
The court finds the following facts. The property at issue in this case consists of 2.7 acres of land and is located at 143 Main Street, Terryville, CT. On the property is an industrial building that, since the early 1900s, was used by Chapman Machine Company to manufacture parts for use in the medical, military and aerospace industries. The company used various chlorinated solvents, including trichloroethane and other chemicals in its manufacturing processes and was registered with Connecticut Department of Environmental Protection ("DEP") as small quantity generator of hazardous waste.
The plaintiff purchased the property and the assets of Chapman Machine from its former owners in 1981. The plaintiff, in 1984, sold the assets of Chapman Machine to new owners but retained ownership of the real property. The new owners of Chapman Machine continued to conduct manufacturing operations at the property under a fifteen-year lease.
In 1997, the plaintiff decided to offer the property for sale at the expiration of Chapman Machine's lease. As part of that process, the plaintiff retained HRP Associates, Inc. ("HRP"), an environmental consulting firm, to conduct an environmental investigation, or so-called Phase I Environmental Site Assessment, of the property. This investigation revealed the presence of three underground storage tanks on the property.
The plaintiff subsequently hired HRP to excavate and remove the tanks. HRP removed the tanks on December 15, 1997, and observed possible environmental contamination from at least two of the tanks. Subsequent environmental testing of the soil around two of the tank — graves revealed the presence of contaminants that exceeded the DEP's Remediation Standard Regulations ("RSRs"). See Regs., Conn. State Agencies § 22a-133k-1 et seq.
As a result of this finding, the plaintiff conducted a Phase II investigation of the property, which included an attempt to ascertain whether other areas of the property might be contaminated. These efforts included soil borings, test pits and the installation of groundwater monitoring wells.
In its Phase II report, HRP concluded that three areas of the property had been polluted by the manufacturing activities on the site. HRP also concluded that contamination detected in one of the monitoring wells may have come from an unknown, up-gradient off-site source.
HRP then conducted a partial remediation of the site by removing contaminated soil, but these actions were not sufficient to achieve full compliance with DEP's RSRs. HRP informed the plaintiff that because the property was not in compliance with the applicable standards, he would be required to file a Environmental Land Use Restriction on the land records. HRP's Phase II report also indicated that, in light of its findings, the property constitutes an "establishment" within the meaning of General Statutes § 22a-134 et seq. (the "Transfer Act"). HRP further advised the plaintiff that if the property were transferred in the future to a new owner, the plaintiff could be obligated to make certain filings with the DEP under the Transfer Act.
General Statutes § 22a-134(3) defines an "establishment" to mean, in relevant part: "[A]ny real property at which (A) on or after November 19, 1980, there was generated . . . more than one hundred kilograms of hazardous waste in any one month . . ."
The plaintiff listed the property for sale on July 1, 1999, for $399,000. Sometime during the fall of 1999, the defendant contacted the plaintiff to inquire about purchasing the property but did not make an offer at that time. In early 2000, the defendant contacted the plaintiff again about the property and, with his attorney, conducted a cursory inspection of the property. Shortly thereafter, the plaintiff orally offered to sell the defendant the property at a reduced price provided that the defendant was willing to assume any environmental liabilities for the site. During this period, the plaintiff gave the defendant copies of HRP's environmental reports pertaining to the property.
Defendant refers to Larry G. Grela only, unless otherwise indicated.
Negotiations between the plaintiff and the defendant resumed later in 2000. In November 2000, the plaintiff and the defendant had a meeting at the law office of the plaintiff's attorney, David Preleski. Both parties were represented by counsel at this meeting. Michael Ainsworth of HRP also attended the meeting to discuss the environmental condition of the site and to answer questions regarding HRP's reports.
During this meeting, the parties discussed a purchase price for the property and whether the defendant would be willing to agree to assume all environmental liabilities for the site. Sometime shortly after this meeting, the defendant agreed to purchase the property for $240,000.
A draft "Real Estate Purchase and Sale Agreement" was then prepared by the plaintiff's attorney. The draft agreement, in paragraph 4.(e), provided that: "Except as otherwise provided herein, the Buyer [defendant] represents to the seller: that he assumes all environmental matters relating to the property and acknowledges the receipt of phase I and phase II environmental reports. Buyer assumes all costs of environmental remediation and monitoring and shall hold Seller [plaintiff] harmless from and against any future claims which may be made by the buyer."
The parties, through their representatives, discussed the draft and made certain changes to it. The agreement was signed by the defendant on November 15, 2000, and by the plaintiff on November 22, 2000. Astoundingly, the defendant did not review the agreement before he signed it.
The closing for the sale of the property was conducted on December 19, 2000. Prior to the closing the defendant assigned his rights and interests under the "Real Estate Purchase and Sale Agreement" to J. and L. Grela Ventures, LLC. As a result, the property at the closing was conveyed by the plaintiff to J. and L. Grela Ventures, LLC.
Prior to the closing, the parties agreed that the plaintiff would file a Form I certification, pursuant to the Transfer Act, with the DEP. A Form I certification, under the Transfer Act, "means a written certification by the transferor of an establishment . . . that (A) No discharge, spillage, uncontrolled loss, seepage or filtration of hazardous waste or a hazardous substance has occurred at the establishment which certification is based on an investigation of the parcel in accordance with prevailing standards and guidelines, or (B) no discharge spillage, uncontrolled loss, seepage or filtration of hazardous waste has occurred at the establishment based upon an investigation of the parcel in accordance with the prevailing standards and guidelines and the commissioner has determined, in writing, or a licensed environmental professional has verified, in writing, that any discharge, spillage, uncontrolled loss, seepage or filtration of a hazardous substance has been remediated in accordance with the remediation standards and that since any such written approval or verification, including any approval or verification for a portion of an establishment, no discharge, spillage, uncontrolled loss, seepage or filtration of hazardous waste or hazardous substances has occurred at any portion of the establishment . . ." General Statutes § 22a-134(10).
As discussed at greater length above, the DEP has since taken the position that, based upon HRP's findings at the site, it was improper to file a Form I and that the Transfer Act required the filing of a Form III. The plaintiff's decision to file a Form I was based upon advice provided by HRP in one of its investigative reports that "[i]t may also be possible to file a Form I that states release of 'hazardous waste' ever occurred on site because the release of fuel oil was not technically a listed or characteristic hazardous waste. This would require confirmation that the low levels of chlorinated solvents and other volatile organic compounds present in groundwater during the initial sampling have either dissipated or can be attributed to off-site upgradient sources."
The Form I was filed with the DEP on December 18, 2000. It was signed, as required by the Transfer Act, by the plaintiff as the transferor of the property. Significantly, J. and L. Grela Ventures, LLC paid the fee associated with the Form I filing.
On April 10, 2003, long after the closing and transfer of the property, DEP notified the plaintiff that it had completed its review of HRP's environmental reports, which were attached to the Form I filing, and that it questioned whether a Form I filing was appropriate under the circumstances. DEP asked that the plaintiff to submit additional information to support his use of a Form I filing.
The plaintiff submitted, through HRP, additional information to DEP. Based upon this submission, DEP rejected the plaintiff's use of the Form I and demanded that the plaintiff submit a Form III certification, along with an Environmental Condition Assessment Form ("ECAF") and an appropriate filing fee.
Under the Transfer Act, a Form III "means a written certification signed by a certifying party . . . which certification states that (A) a discharge, spillage, uncontrolled loss, seepage or filtration of hazardous waste or a hazardous substance has occurred at the establishment or the environmental conditions at the establishment are unknown, and (B) that the person signing the certification agrees to investigate the parcel in accordance with prevailing standards and guidelines and to remediate pollution caused by any release of a hazardous waste or hazardous substance from the establishment in accordance with the remediation standards . . ." General Statutes § 22a-134(12).
The plaintiff then made a demand upon the defendants to assume responsibility for the Form III filing, arguing that the "Real Estate Purchase and Sale Agreement" requires the defendant Grela to assume all post-closing environmental liabilities, including monitoring and compliance responsibilities. Through counsel, the plaintiff also notified DEP of its position that the defendants were responsible for any future filings. Based upon this position, the plaintiff did not file a Form III or an ECAF with the DEP.
On December 10, 2003, the DEP issued a notice of violation ("NOV") to the plaintiff and the two defendants. The NOV demands that the parties correct the violation by filing a Form III, ECAF and the $3,000 filing fee within thirty days. Although the plaintiff continued to demand that the defendant(s) make this filing, they have refused. In order to avoid an enforcement action by the DEP against him (in which he could be assessed civil penalties of up to $25,000, the plaintiff subsequently submitted, through, HRP, a Form III, ECAF and $3,000 fee to the DEP.
As the certifying party of the Form III, the plaintiff is required to further investigate and remediate the property in accordance with the RSRs. This work was to begin shortly before the trial of this matter.
As a result of the defendants' refusal to assume responsibility for these environmental issues relating to the property, the plaintiff instituted this breach of contract action on June 27, 2007. The plaintiff's complaint seeks, inter alia, damages and declaration that the defendants are liable for all future costs and expenses associated with the investigation, remediation, and monitoring of any pollution at the site.
A court trial was conducted over several days. The court has also received and reviewed the post-trial briefs of the parties. Additional finds of the court are set forth below as necessary to resolve the claims of the parties.
II. DISCUSSION
The principle issue to be decided by the court is the meaning of various provisions within the "Real Estate Purchase and Sale Agreement" executed by the parties. Before the court engages in this analysis, it is necessary to address a preliminary question regarding whether it is permissible under Connecticut law for a seller and purchaser of real property to contractually agree to shift responsibility to comply with the Transfer Act from the seller of the property to the purchaser of the property. If it is not legally permissible to shift the obligation to comply with the Transfer Act from the seller to the buyer, the plaintiff's argument regarding the meaning of the relevant contractual provisions would be moot.
The defendants concedes in their reply brief that the duties imposed by the Transfer Act may be contractually shifted from seller to the buyer. In other points of their brief, however, they appear to rely on provisions of the Transfer Act that, in their view, militate against any conclusion that the Transfer Act obligation may be contractually shifted. In an abundance of caution, the court addresses this question.
The court first turns to the language of the Transfer Act. First, it is important to note that nothing in the Transfer Act expressly preempts the law of contracts or prohibits a buyer of land from agreeing to assume statutory obligations typically imposed on the transferor. It is true, as the defendants note, that the Transfer Act requires that a Form I be filed by "the transferor of an establishment." This requirement, however, was met in this case when the plaintiff filed the Form I. The plaintiff does not argue that the defendants were contractually obligated to file a Form I in this case.
Unlike a Form I, the Transfer Act only requires that a Form III certification be signed by a "certifying party." § 22a-134(12). A certifying party, with respect to a Form III filing, is defined as "person associated with the transfer of an establishment who signs a Form III . . . and who agrees to investigate the parcel . . . and to remediate pollution caused by any release at the establishment . . ." § 22a-134(6). A person "associated with the transfer of an establishment" is further defined to mean (1) the present or past owner of the establishment, (2) the owner of the real property on which the establishment is located, or (3) "the transferor, transferee, lender, guarantor or indemnitor." § 22a-134(7) (Emphasis added.)
Thus, the Transfer Act itself expressly contemplates instances in which the transferee may contractually agree to take on the responsibility of complying with the Transfer Act's Obligations, including the investigation and remediation of pollution on the property. Indeed, a contrary interpretation of the Transfer Act could frustrate the so-called "brownfields" problem because the owners of contaminated sites, who lack the resources to remediate the property, would be deterred from conveying the property to persons or entities with the financial ability to conduct the necessary remediation activities and put the property to another use.
The term "brownfields" typically refers to former industrial land that is either contaminated or perceived to be contaminated but could be redeveloped in the future. Many brownfields sites go unused for many years because of perceptions that the cost of remediation would exceed the land's value even after development.
To the extent that the defendants rely on General Statutes § 22a-134a(c), that reliance is misplaced. Section 22a-134a(c) provides in relevant: "If no other party associated with the transfer of an establishment prepares and signs the proper form as a certifying party, the transferor shall have the obligation for such preparation and signing." This provision cannot be construed to explicitly or even implicitly prevent parties from shifting the obligation to comply with the Transfer Act from seller to buyer. Indeed, the plain language explicitly contemplates that a party other than the transferor may be the certifying party.
Other courts have concluded that the statutory obligations imposed by the Transfer Act, or similar statutes, may be reallocated between a transferor and transferee. See, e.g., Visconti v. Pepper Partners Limited Partnership, 77 Conn.App. 675, 684-86, 825 A.2d 210 (2003) (construing contract to have shifted Transfer Act obligation to the purchaser); Alcoa Composites, Inc. v. BTI Technology, Superior Court, judicial district of Middlesex, Docket No. CV 00 0093208 (September 11, 2003, Wolven, J.) [ 35 Conn. L. Rptr. 646]; Case v. Smith, Superior Court, judicial district of Tolland, Docket No. CV 03 0080383 (August 15, 2006, Peck J.); see also White Consolidated Industries, Inc. v. Westinghouse Electric Corp., 179 F.3d 403, 409 (6th Cir. 1999); Aluminum Company of America v. Beazer East, Inc., 124 F.3d 551, 566 (3d Cir. 1997); Dixon Venture v. Joseph Dixon Crucible, 122 N.J. 228, 584 A.2d 797 (1991).
In light of the conclusion that the parties were free to contractually shift responsibility for compliance with the Transfer Act from the seller to the buyer, the court turns to the specific language of the "Real Estate Purchase and Sale Agreement" to ascertain whether the plaintiff and the defendant in fact so agreed.
As our Supreme Court has often stated: "When construing a contract, we seek to determine the intent of the parties from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. The intent of the parties is to be ascertained by a fair and reasonable construction of the written words and the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract. When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract. Extrinsic evidence is always admissible, however, to explain an ambiguity appearing in the instrument. When the language of a contract is ambiguous, the determination of the parties' intent is a question of fact. When the language is clear and unambiguous, however, the contract must be given effect according to its terms, and the determination of the parties' intent is a question of law." (Internal quotation marks omitted; internal citations omitted.) Isham v. Isham, 292 Conn. 170, 180-81, 972 A.2d 228 (2009).
In so doing in this case, the court notes at the outset that the document is among the most poorly drafted, ambiguous, confusing and sometimes self-contradictory contracts that it has been forced to review. The pertinent portions of the contract are set forth below:
"4. REPRESENTATIONS AS TO THE CONDITION OF THE PREMISES.
Except as otherwise provided herein, the Buyer represents to the seller:
(a) that he has examined the Premises . . .
(b) that he is fully satisfied with the physical condition of the Premises . . .
(c) that neither the Seller nor any representative of the Seller has made any representation or promise upon which the Buyer has relied concerning the condition of the Premises . . .
(d) that his understanding that the intention of the parties to the Agreement is that the Premises are to be conveyed in 'as is' condition, subject to addendum attached hereto.
The court finds that there is no addendum to the contract.
(e) that he assumes all environmental matters relating to the property and acknowledges the receipts of phase I and phase II environmental reports. Buyer assumes all costs of environmental post remediation and monitoring and shall hold harmless from and against any future environmental claims which may be made by Buyer. Refer to Paragraph 10; exceptions to title regarding Land Use Exceptions.
Except as otherwise provided herein, the Seller represents to Buyer as follows:
. . .
(e) Seller shall transfer the property within the Department of Environmental Protection's provisions for Environmental Land Use Restrictions. Refer to Paragraph 10, exceptions to title regarding Land Use Exceptions.
(f) The conclusions of HRP's 'After Action' report prepared on or about February 1999 are attached hereto and incorporated by reference . . ."
"6. CLOSING. The closing of title shall take place on or before December 29, 2000 or at such time as all parties agreed [and as may be required by State of Connecticut Transfer Act — concerning Environment.]"
The bracketed material was handwritten onto the contract and subsequently initialed by the parties to indicate that they both agreed to the handwritten language.
"10. EXCEPTIONS OF TITLE. The premises shall be conveyed subject to:
(e) The Department of Environmental Protection's Land Use Restrictions."
The court begins its analysis by focusing on the contractual language of Paragraph 4(e) (Buyer's Representations): "[The buyer represents] that he assumes all environmental matters relating to the property and acknowledges receipt of phase I and phase II environmental reports." The first sentence of that paragraph is broadly drafted and appears to indicate and memorialize two important contractual principles. First, the sentence reflects that the buyer (defendant) is fully aware of the significant environmental problems on the property by acknowledging receipt of the HRP's environmental studies of the property. Second, the sentence indicates the defendants' willingness to assume all environmental matters relating to the Property. Standing alone, this sentence is seemingly quite clear and favors the plaintiff's position.
There are, of course, two paragraphs 4.(e). This is just one of many examples of the sloppy drafting contained in the contract. The court's initial focus is on the paragraph 4.(e) regarding the buyer's representations.
The following sentence, however, injects substantial ambiguity and uncertainty as to the meaning of the first sentence: "Buyer assumes all costs of environmental post remediation and monitoring and shall hold seller harmless from and against any future environmental claims which may be made by the buyer." First, the meaning of the phase "all costs of environmental post remediation and monitoring" is far from clear for several reasons. First, it appears to be a non-sequitor because, as a matter of common sense, what other environmental costs could there be after the contamination on the property has been both remedied and monitored? If there are, logically, no such costs, then the buyer would not be agreeing to assume anything.
Second, the defendants argue in their brief that this language clearly limits the buyer's obligations for environmental matters on the property only to those that "arise after Seller has fulfill[ed] his Transfer Act obligation, including [any] remediation and monitoring . . ." The problem with this contention is that it asks the court to simultaneously construe contractual language that, by its terms, requires the buyer to assume environmental costs, to also mean, in the same breath, that the buyer is relieved of the most significant potential costs or liabilities that may exist with respect to the property.
Third, the meaning of the phrase "all costs of environmental post remediation and monitoring" cannot be read in isolation from the sentence that precedes it or the remainder of the sentence that contains the phrase. The preceding sentence plainly states that the buyer is both aware of and assumes "all environmental matters relating to the property." Thus, it is difficult to square the defendants' attempt to read the first part of the second sentence to mean that the buyers have virtually no contractual responsibility for the environmental problems on the site with its explicit agreement in the first sentence to assume "all environmental matters relating to the property." In the same manner, the defendants' construction of the first part of the second sentence is undermined by the broad "hold harmless" language contained in the second part of that sentence. This language speaks broadly to require the buyer to hold the seller harmless from any future environmental claims.
"Contract language is unambiguous when it has a definite and precise meaning . . . concerning which there is no reasonable basis for a difference of opinion . . . Levine v. Advest, Inc., 244 Conn. 732, 746, 714 A.2d 649 (1998). The proper inquiry focuses on whether the agreement on its face is reasonably susceptible of more than one interpretation. Id.; see also Poole v. Waterbury, [ 226 Conn. 68, 96, 831 A.2d 211 (2003)] (agreement is ambiguous when language of agreement is susceptible to more than one reasonable interpretation)." Isham v. Isham, 292 Conn. 181-82.
It is true that "the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." Eckert v. Eckert, 285 Conn. 687, 692, 941 A.2d 301 (2008). "A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." Id.
In this case, the contractual language of paragraph 4(e) is easily susceptible to more than one interpretation. One plausible interpretation is that the language of this provision was intended by the parties to shift at the time of the closing all environmental matters relating to the property to the buyer after the closing. The court certainly does not need to torture this language to reach that conclusion. Although the defendants' interpretation is less compelling than the plaintiff's construction, they too have advanced a plausible construction.
Because the court's view is that the contract is ambiguous, it permitted, over the defendants' objection, the parties to introduce parol evidence regarding the intent of the parties. This evidence was admitted, not to vary or contradict the express terms of the contract but to help the court ascertain the meaning of the contractual language actually employed by the parties. The factual findings set forth above are based in part on this parol evidence.
In their post-trial briefs, the defendants continue to assert that the court improperly admitted parol evidence at trial and should not consider extrinsic evidence in deciding this case. The defendants, however, concede in their brief "that there may be ambiguity in Paragraph 4.(e) arising out of the fact that the first sentence puts forth a statement of alleged unlimited environmental obligations on the part of the buyer . . ." and that Paragraph 4.(e) "does lack clarity."
Accordingly, the court's task is to construe the language of the contract, in light of all of the relevant evidence to ascertain the parties' agreement regarding responsibility for compliance with the Transfer Act and for environmental liabilities at the site. For the following reasons, the court concludes that the intent of the parties at the time of the formation of the contract was to shift responsibility for the environmental matters from the buyer to the seller.
First, as discussed above, the broad language of the first sentence plainly supports a conclusion that the buyer was to assume responsibilities for all environmental matters relating to the property. Indeed, if it was not the intention of the buyer to assume such broad responsibility, it would have been unnecessary for the buyer to acknowledge receipt of the phase I and phase II environmental reports that delineated the history, nature, and extent of the environmental problems at the site because it would have no responsibility for such problems until they are all resolved by the seller.
Second, the buyer's agreement to hold the seller harmless for contamination at the site would make little sense if the agreement also required the seller to remediate the contamination. The defendants have failed to offer a persuasive (or even plausible) reason for why such a hold harmless provision would have been included in the contract if it was contemplated that the seller would be responsible for ensuring that the property has been remediated.
Third, the construction of paragraph 4.(e) urged by the plaintiff is the most consistent with language contained in other provisions of the contract. In paragraph 4.(b), the buyer represented that he was fully satisfied with the physical condition of the premises. Such a representation would be illogical if the defendants were of the view that the plaintiff might still be obligated to improve the property by having to clean up the very contamination the buyers knew was on the site by virtue of their receipt of the HRP reports.
More importantly, the buyers plainly understood and accepted that the premises were to be conveyed in "as is" condition. Paragraph 4(d). As our Supreme Court has held, "the purpose and effect of an 'as is' clause is to shift the burden of [a mistake about the extent of environmental contamination] to the accepting party." Holly Hill Holdings v. Lowman, 226 Conn. 748, 757, 628 A.2d 1298 (1993). "[P]arties to a contract for the sale of real property are free to disclaim responsibility for known environmental risks. Indeed, the agreed upon contract price for the property typically reflects an allocation of the known risks that attend ownership of property. Accordingly, as a general matter a clause for the sale of property 'as is' is enforceable." Id., 756.
Fourth, extrinsic evidence regarding the price at which the property sold supports an interpretation of the contract that it was intended to shift responsibilities for the environmental matters to the buyer. The court credits the testimony that the sale price of the property was reduced by approximately 40 percent, at least in part, as an exchange for the buyer being willing to take on the environmental liabilities. Although the buyer may not have understood the full extent of these liabilities, that misunderstanding did not arise because of any misrepresentations by the seller who fully disclosed HRP's environmental reports. The court does not credit the defendant's testimony that "[the plaintiff] would take care of all of the environmental issues to take to get me through Transfer Act."
Finally, it is highly significant to the court that the defendants paid, after the closing, the filing fee for the Form I. It is well-established that "[i]n construing the intended meaning of terms in a contract, the conduct of the parties regarding their use is a proper consideration. Lar-Rob Bus Corp. v. Fairfield, 170 Conn. 397, 407-08, 365 A.2d 1086 (1976); see also Associated Catalog Merchandisers, Inc. v. Chagnon, 210 Conn. 734, 743, 557 A.2d 525 (1989). Indeed, their conduct is given great weight in the interpretation of the agreement. 2 Restatement (Second), Contracts § 202(4) (1981). This is so because "[t]he parties to an agreement know best what they meant, and their action under it is often the strongest evidence of their meaning. Id., § 202, comment (g)."
In this case, J. and L. Grela Ventures, LLC's payment of the Form I filing fee represents an acknowledgement that it (and Larry Grela), by virtue of the contract, had responsibility for environmental matters on a going forward basis after the closing. Otherwise, there simply would have been no reason for it to pay the fee if it was a responsibility that belonged to the plaintiff under the agreement. This evidence is made even more probative in light of the fact that it occurred close in time to the formation of the contract when the parties' understanding of their contractual obligations was the most fresh.
It is true, as the defendants point out, that the final version of the paragraph 4.(e) differs from an earlier draft of the agreement. Specifically, the defendants point out that the final version of paragraph 4.(e) contains the phrase "all costs of environmental post remediation and monitoring" while the earlier draft did not contain the word "post." The defendants contend that there must be some legal significance to the addition of the word "-post" and that the only logical inference to be made from its addition is that the parties intended it to mean that the buyer would be responsible for environmental matters on the property only after the seller has complied with the Transfer Act and conduct any necessary remediation and monitoring.
The court declines to attach such significance to the addition of the word "post" for several reasons. First, there was little if any credible evidence on how and when the term "post" was added to the agreement. Indeed, both the plaintiff and the plaintiff's attorney credibly testified that between the time the draft agreement was circulated and when the final agreement was executed, there were no additional negotiations on the critical question of which party had responsibility for the environmental matters. It seems highly unlikely to the court that if the defendants, by adding the term "post" were truly trying to revise the draft agreement to shift responsibility for environmental matters on the property back to the seller, there would not have been additional discussions between the parties on this point.
Instead, the court concludes that the addition of the term "post" was simply meant to clarify that the shifting of responsibility for environmental matters on the property was to occur at the time of closing and that the buyer would not be responsible for the costs of the prior environmental work done at the site by HRP.
The fact that the plaintiff filed a Form III with the DEP did not have the legal effect of relieving the defendants of their obligations under the contract. The plaintiff filed the Form III to avoid the assessment of civil penalties and to otherwise mitigate his damages in this case.
The court's conclusion that the term "post" was intended by the parties to mean "post-closing" does not mean, as the defendants argue, that the court has imported terms that are simply missing from the contract or otherwise exercised its equitable power to "reform the contract." "An action for reformation rests on the equitable theory that the instrument sought to be reformed does not express the intention of the parties because it was executed as the result of mutual mistake or unilateral mistake coupled with fraud or inequitable conduct on the part of the other party. Greenwich Contracting Co. v. Bonwit Construction Co., 156 Conn. 123, 126, 239 A.2d 519 (1968). In many instances, words used by the parties in their writing are not particularly suitable to express their meaning, but they are nevertheless capable of being interpreted, even without an actual physical reformation of the contract . . . In such a case no equity power is required. D. Dobbs, Law of Remedies (2d Ed. 1993) § 11.6(3)." Shawmut Bank Connecticut, N.A. v. Connecticut Limousine Service, Inc., 40 Conn.App. 268, 273, 670 A.2d 880, cert. denied, 236 Conn. 915, 673 A.2d 1143 (1996).
Instead, the court concludes that, under all of the facts and circumstances of this case (including the credible extrinsic evidence) that the term "post" (as inartful as it might be) was intended by the parties to mean post-closing. Construing the term this way permits the court to harmonize all the sentences in Paragraph 4.(e) with each other and with other provisions in the agreement to indicate the parties' intent to contractually shift responsibility for environmental matters from seller to buyer at the time of the closing.
III. CONCLUSION
For all of these reasons, the court finds that the defendants are liable to plaintiff for post-closing expenses incurred by the plaintiff in dealing with and responding to DEP regarding the environmental issue on the property. Based upon the evidence submitted at trial, the court awards the plaintiff damages in the amount of $8,750 for the reasonable costs incurred in addressing these environmental issues. The costs include environmental consulting fees and DEP filing fees incurred in filing a Form III.
The court also enters a judgment declaring that the defendants are liable for all future costs and expenses associated with the investigation, remediation and monitoring of any pollution at the property, including any such costs and expenses incurred by the plaintiff since May 20, 2009.
Judgment shall enter accordingly.