In A*, Inc. v. G*, the Appellate Division, First Department, affirmed a $7.57 million judgment in favor of A*, Inc. and its affiliate H** Industries against the G* family, stemming from a long-running environmental indemnification dispute. The case centered on a 2005 property sale involving a manufacturing site located within an EPA Superfund zone. As part of the transaction, G* agreed to indemnify A* for certain environmental remediation costs.
Over time, Am* incurred substantial cleanup expenses—over $7.5 million—and consistently shared documentation with G*, including budgets, technical plans, and invoices. The court found that A* had met its contractual duty to keep G reasonably informed and had not interfered with their co-management rights under the agreement.
G* challenged the judgment on multiple fronts. They argued that A* had agreed to suspend remediation work and that their own expert supported this claim. However, the court rejected these assertions, noting that the EPA-mandated cleanup could not be unilaterally halted and that G*’s affidavits were contradicted by the documentary record. The court also reiterated that expert witnesses cannot opine on legal obligations under a contract—such determinations are reserved for the court.
Another point of contention was the interpretation of the indemnity cap. G* sought to compel disclosure of A*’s tax returns, arguing that post-tax values should factor into the cap calculation. The court disagreed, holding that the cap referred to the actual losses paid by G, not A*’s net tax position. If the parties had intended otherwise, the contract would have said so.
Procedurally, G attempted to deem A*’s motion abandoned under 22 NYCRR 202.48(a), citing delays in judgment execution. The court dismissed this as meritless, finding the appeal subsumed in the final judgment. Additionally, G’s counterclaim for reformation was dismissed on summary judgment, and their demand for a jury trial was struck—largely because they had asserted equitable claims, which under New York law waives the right to a jury.
In sum, the decision reinforces the primacy of documentary evidence in contract disputes, the limits of expert testimony on legal interpretation, and the importance of procedural precision in preserving rights. It also underscores how indemnity clauses in environmental transactions can remain active and enforceable decades after a deal closes—especially when tied to regulatory mandates.
The AD1 sure cleaned that up!
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DECISION