Opinion ID: 199312
Heading Depth: 5
Heading Rank: 3

Heading: Environmental Problems

Text: 82 Invest Almaz's final allegation of fraud asserts that Temple-Inland concealed significant environmental problems at the plant, including the presence of hazardous and non-hazardous waste, chemical pollution, and radioactive material. Like the magistrate judge, who characterized the environmental issue as a red herring, we view this allegation with particular skepticism. While there were clearly environmental problems at the plant -- including both historical noncompliance with environmental regulations and present contamination of site soils and sediments -- we find it hard to discern how those problems were relevant to the equipment purchase Invest Almaz hoped to accomplish. 33 Invest Almaz does not appear to argue that the equipment itself was contaminated. Nor does Invest Almaz point to evidence suggesting that the plant was incapable of being operated in a non-polluting manner. Indeed, as we read the record, the environmental issues were only evaluated so that Pathex could decide whether or not to purchase the property on which the plant was built, an aspect of the transaction unrelated to the joint venture's purposes. 83 Furthermore, we think that the magistrate judge was plainly correct in concluding that, in view of the extensive interactions between Pathex and Temple-Inland regarding the environmental issues, no reasonable jury could find that Temple-Inland intentionally concealed environmental information in order to defraud either Pathex or Invest Almaz. See Hall v. Merrimack Mut. Fire Ins. Co., 13 A.2d 157, 160 (N.H. 1940) (fraud requires a deliberate falsehood . . . made for the purpose or with the intention of causing the other party to act upon it). Uncontradicted evidence in the record shows that the existence of environmental problems at the facility and the parties' respective obligations for analyzing and resolving those problems were discussed throughout the negotiations between Pathex and Temple-Inland, beginning, at latest, by mid-July 1993 -- before Pathex entered into the option agreement with Temple-Inland and well before Invest Almaz signed the joint-venture agreement. It is also beyond dispute that Pathex fully understood the importance of undertaking its own environmental assessment to determine the full scope of the environmental problems at the plant, 34 and there is no evidence that Temple-Inland sought to impede the assessments performed for Pathex by Aries. 35 Furthermore, the record indicates that Pathex and Temple-Inland continued to discuss the results of these environmental surveys, the progress of Temple-Inland's cleanup efforts, and the impact of environmental issues on the final shape of the Asset Purchase Agreement, throughout the option period. In our view, this uncontradicted evidence of extensive, ongoing discussions regarding environmental matters, begun before any agreement was signed and culminating in an unfettered opportunity to discover the true state of affairs prior to purchasing the property, precludes any reasonable jury from finding that Temple-Inland intentionally concealed any environmental problems the plant may have had. 36 84 Invest Almaz's arguments against this result are unpersuasive. Invest Almaz first suggests that giving Pathex notice of the environmental problems and the opportunity to learn more was not sufficient to avert a finding of fraudulent concealment. Instead, Invest Almaz argues, Temple-Inland was obliged to disclose the full environmental history of the plant and to do so from the outset. Invest Almaz offers no precedential support for this proposition, which strikes us as wholly at odds with established business practice. While we can certainly imagine circumstances in which notice and an opportunity to inspect would be inadequate -- as when the party providing notice intentionally misdirects the other party or prevents it from completing an investigation, see Bergeron v. Dupont, 359 A.2d 627, 629 (N.H. 1976) (plaintiff's own investigation not a defense to misrepresentation when the investigation was restricted by bad weather and by defendant's request that it be curtailed) -- we think it more generally the case that accepting such an opportunity prevents a party from later claiming that it acted in reliance on an adverse party's representations. See Restatement (Second) of Torts § 547(1) ([T]he maker of a fraudulent misrepresentation is not liable to another whose decision to engage in the transaction that the representation was intended to induce . . . is the result of an independent investigation by him.); see also Sipola, 66 A. at 966 (noting that, although there is generally no duty of purchaser to investigate the truthfulness of representations made by a seller, such a duty arises when the purchaser has knowledge of his own, or of any facts which would excite suspicion). 37 85 Invest Almaz's second argument is that, notwithstanding Temple-Inland's above-board dealings with respect to Pathex, Temple-Inland remains liable vis a vis Invest Almaz, because it failed to disclose the environmental problems at the plant during the tour and Invest Almaz relied on that omission to its detriment by signing the joint-venture agreement. Under this theory, Temple-Inland's disclosures to Pathex are not evidence of Temple-Inland's lack of fraudulent intent, because Temple-Inland was engaged in a separate fraud against Invest Almaz specifically. The problem with this contention is that it presumes a degree of coordination between Pathex and Temple-Inland for which there is simply no evidence. To conclude that Temple-Inland intentionally defrauded Invest Almaz alone, a jury would seemingly have to find that Temple-Inland withheld the environmental information knowing that Pathex also had not and would not reveal it; knowing that Invest Almaz was about to sign a deal committing itself to this plant (although the option clock still had time to run); and expecting and intending that Invest Almaz would rely on these omissions. Although Invest Almaz's briefs assert that such collusion occurred, the evidence presented at trial does not begin to support this elaborate chain of inferences. 86 Indeed, we think it questionable whether a reasonable jury could conclude that Temple-Inland even withheld the existence of environmental concerns from Invest Almaz during the tour. The packet of written information given to Invest Almaz's representatives by Earl Taylor specifically mentions that the plant equipment includes gauges containing radioactive materials; that the plant used phenol formaldehyde as a binder; and that Temple-Inland contracted with an entity named Jet Line for environmental services relating to hazardous waste, oil in the ponds and drums of waste at the facility. This information would appear sufficient to put Invest Almaz on notice and therefore to defeat any claim of reliance. See Sipola, 66 A. at 966. At the very least, we consider the fact that Taylor handed out this information fatal to any argument that Temple-Inland intended to conceal the plant's environmental problems during the tour. 87 Given the foregoing, we conclude that judgment as a matter of law was properly granted with respect to this final group of allegations of fraudulent concealment.