The Pennsylvania Superior Court has upheld the dismissal of a case filed by auto repair shop owners claiming the landlord of the strip mall in which they’re located should have indemnified them for a settlement the owners reached over groundwater pollution.
A three-judge panel of the Superior Court consisting of Judges Jack Panella, Judith Ference Olson and Correale Stevens also upheld a Delaware County judge’s decision to grant landlords William and Joanne Salerno attorney fees stemming from the litigation.
Plaintiffs James and John Flick, the owners of Qyst Automotive, were sued by a neighboring Wawa for costs associated with water testing and groundwater remediation the company claimed was necessary because of oil and chemical pollution coming from the garage.
The Flicks settled the case for $700,000, then sued the Salernos and their insurer claiming that they breached the sale agreement of the property in which the auto shop occupies by failing to indemnify them for the settlement.
A Delaware County judge dismissed the case and ordered that the Salernos be awarded attorney fees. The Flicks appealed to the Superior Court.
“Based upon the undisputed facts of record, the court found the Flicks had not timely filed their breach of contract claims against the Salernos,” Panella wrote in the court’s opinion.
According to Panella, the Flicks notified the Salernos of Wawa’s claims in 2003 and received no response. They did not file their complaint until 2014.
“The Flicks argue their indemnification claim did not mature until the court entered judgment on Wawa’s claims. They correctly argue that pure indemnification claims are not viable until the indemnitee makes payment on a judgment or settlement,” Panella said. “However, the indemnification clause at issue here was not a pure indemnification clause; it also required the Salernos to defend the Flicks from pollution claims. Furthermore, this distinction was not lost on the Flicks. In their Sept. 15, 2003, letter, they requested the Salernos defend them from Wawa’s claims. Thus, when the Salernos refused to defend the Flicks, they [sic] Flicks had notice that they had suffered an injury. The Flicks’ first claim on appeal merits no relief.”
The Flicks argued that the court erred in awarding attorney fees under the Clean Streams Law because the Flicks did not bring their case under that law.
“On its face, the Flicks’ argument is compelling. However, it misrepresents the record. In their complaint, the Flicks assert a claim for statutory indemnification under the CSL. Thus, the trial court’s order granting summary judgment was, in part, a final order ‘brought pursuant’ to the CSL,” Panella said.
The Flicks are represented by Mark J. Hill.
“We are considering further appellate options. The court’s decision that a private commercial contractual indemnification claim was extinguished by the contract statute of limitations before the indemnitee’s obligation to pay accrued appears to be a troubling departure from long standing appellate authority,” Hill said in an email.
Andrew Klein of Land Air Water Legal Solutions represents the Salernos and declined to comment.