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A. J. Properties, LLC v. Stanley Black & Decker, Inc.

United States District Court, D. Massachusetts

November 22, 2013

A. J. PROPERTIES, LLC, Plaintiff,

For A.J. Properties, LLC, Plaintiff: John A. Mavricos, Jonah M. Temple, Christopher, Hays, Wojcik & Mavricos, Worcester, MA.

For Stanley Black & Decker, Inc., Defendant: Christopher A. Duggan, LEAD ATTORNEY, Smith & Duggan, L.L.P., Boston, MA; Andrew D. Black, Smith Duggan Buell & Rufo LLP., Lincoln, MA; Gerard A. Butler, Jr., Smith & Duggan LLP, Lincoln, MA.


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F. Dennis Saylor IV, United States District Judge.

This dispute concerns the proceeds from a performance bond issued for the environmental

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remediation of a contaminated parcel of land in Worcester, Massachusetts. Plaintiff A.J. Properties, LLC alleges that defendant Stanley Black & Decker, Inc. wrongfully collected payment under the bond after it had assigned its rights to those proceeds to a third party, the Wyman-Gordon Company, which in turn allegedly assigned them to A.J. Properties. Jurisdiction is based on diversity of citizenship.

The Court granted partial summary judgment for A.J. Properties, holding that it had been assigned Stanley's interest in the proceeds of the performance bond. The key issue on summary judgment was whether the right to collect from the surety to the performance bond was included in the series of assignments. After holding that it was so included, and granting summary judgment for plaintiff on that basis, the Court stayed the case and certified the underlying question of state law to the SJC pursuant to the method detailed in Supreme Judicial Court Rule 1:03.

In the meantime, Stanley discovered a release filed in the Registry of Deeds, signed by A.J. Properties, that it contends moots the present dispute. The Court lifted the stay in order to address the potential effect of the stay. Stanley then amended its answer and filed a second motion for summary judgment on the ground that the release prevents A.J. Properties from bringing any future claims relating to the property against it. A.J. Properties opposed the motion, contending that the release does not bar claims brought as assignee of Wyman-Gordon and that it is in unenforceable for lack of consideration or as against public policy. For the reasons set forth below, defendant's motion will be denied.

I. Background

The following facts are presented in the light most favorable to the non-moving party, the plaintiff.

A. Factual Background

During the early and mid-1990s, Stanley-Bostitch, Inc., a predecessor to defendant Stanley Black & Decker, Inc., a Connecticut corporation (collectively, " Stanley" ), operated a small-tools manufacturing facility on a site located at 149 Washington Street in Worcester (" the 149 property" ). (Joint Appendix to Mots. Summ. J. (" J.A." ) at 146, 215).[1]

In March 1995, Stanley became aware of substantial levels of soil and groundwater contamination on portions of the 149 property. (J.A. at 215). The area surrounding the 149 property had a long history of industrial use, and it is not clear from the record what portion of the contamination was attributable to Stanley. (J.A. at 145, 515, 843). Nonetheless, it appears that at least some of the degradation resulted from Stanley's manufacturing operations. ( Id. ). In any event, the company submitted a release notice to the Massachusetts Department of Environmental Protection, as required by the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Mass. Gen. Laws ch. 21E. (J.A. at 878). Environmental assessments undertaken around that time indicated that the contamination on the 149 property extended to an adjacent parcel at 105 Madison Street, where the Wyman-Gordon Company operated an industrial facility. (J.A. at 145-47).

Stanley ceased operations at the 149 property in July 1996. (J.A. at 147). In October 1997, Vargo & Associates Environmental Consulting Corporation (" Vargo

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Corp." ) completed a " Phase III Remedial Action Plan" for the site that included a risk analysis and evaluation of remedial alternatives. (J.A. at 141-44). Vargo Corp. and its president, Patrick Vargo, were in the business of evaluating, purchasing, and remediating contaminated properties. (J.A. at 7).

On December 31, 1997, Stanley and Vargo Corp. entered into an agreement by which Vargo Corp. would purchase the 149 property for one dollar. (J.A. at 1). Stanley also agreed to pay $400,000 in exchange for Vargo Corp.'s promise to remediate both the 149 property and the Wyman-Gordon property. (J.A. at 2-4).[2] The agreement provided that as conditions for the closing of the sale, Vargo Corp. would (1) deliver an indemnity agreement executed by it and its principal, Patrick Vargo; (2) obtain a performance bond in the amount of $800,000; and (3) grant Stanley a mortgage on the 149 property that would " secure all obligations of [Vargo Corp.] and Vargo to [Stanley] under the Indemnity Agreement, this Agreement and all other agreements between [Stanley] and [Vargo Corp.]" (J.A. at 8).

Also on December 31, 1997, the parties executed an Environmental Compliance and Indemnity Agreement to satisfy the first condition of closing under the Purchase and Sale Agreement. (J.A. at 82-106). In that document, Patrick Vargo and Vargo Corp. agreed to " take all action necessary to obtain all permits, approvals, licenses and the like . . . to fully remediate the Site." (J.A. at 84). In addition, they promised " to protect, indemnify, reimburse, defend and hold harmless Stanley . . . from and against any and all liabilities" arising from any breach by Vargo Corp. of the ...

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