Court Opinion

ID: 988775
Source: CourtListenerOpinion
Date Created: 2013-07-03 22:57:31.559723+00
Date Added: 2024-06-11T09:18:08.219915
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RICHMAN ENTERPRISES, LIMITED;
FABRIC RESOURCES INTERNATIONAL,
LIMITED,
Plaintiffs-Appellants,

v.

R. B. PAMPLIN, in his capacity as
Trustee of the R. B. Pamplin
Corporation and Subsidiaries
Pension Plan (previously known as
the Mount Vernon Mills,
Incorporated Pension Plan); MOUNT    No. 95-1142
VERNON MILLS, INCORPORATED
PENSION PLAN, in its capacity as
Administrator of the R. B. Pamplin
Corporation and Subsidiaries
Pension Plan,
Defendants-Appellees,

and

R. B. PAMPLIN CORPORATION AND
SUBSIDIARIES PENSION PLAN,
Defendant.
RICHMAN ENTERPRISES, LIMITED;
FABRIC RESOURCES INTERNATIONAL,
LIMITED,
Plaintiffs-Appellees,

v.

R. B. PAMPLIN, in his capacity as
Trustee of the R. B. Pamplin
Corporation and Subsidiaries
Pension Plan (previously known as
the Mount Vernon Mills,
Incorporated Pension Plan); MOUNT                              No. 95-1216
VERNON MILLS, INCORPORATED
PENSION PLAN, in its capacity as
Administrator of the R. B. Pamplin
Corporation and Subsidiaries
Pension Plan,
Defendants-Appellants,

and

R. B. PAMPLIN CORPORATION AND
SUBSIDIARIES PENSION PLAN,
Defendant.

Appeals from the United States District Court
for the District of South Carolina, at Anderson.
G. Ross Anderson, Jr., District Judge.
(CA-93-3356)

Argued: December 4, 1995

Decided: March 19, 1996

Before MURNAGHAN and MICHAEL, Circuit Judges, and
MICHAEL, Senior United States District Judge for the Western
District of Virginia, sitting by designation.

                    2
Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Howard Jay Schwartz, PORZIO, BROMBERG & NEW-
MAN, Morristown, New Jersey, for Appellants. James Henry Wat-
son, Jr., LEATHERWOOD, WALKER, TODD & MANN,
Greenville, South Carolina, for Appellees. ON BRIEF: Diane Mulli-
gan Siana, PORZIO, BROMBERG & NEWMAN, Morristown, New
Jersey, for Appellants. Michael J. Giese, Robert D. Moseley, Jr.,
LEATHERWOOD, WALKER, TODD & MANN, Greenville, South
Carolina, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

This matter comes before the court upon the appeal of an Order by
the United States District Court for the District of South Carolina,
Anderson Division, Judge G. Ross Anderson, Jr., finding that the
appellants were not entitled to recover damages for an alleged breach
of contract where the terms of a contract provide that if the appellees
fail to fulfill certain contractual obligations, then the remedial provi-
sions of the contract limit the appellants either to declare the contract
null and void or to proceed to closing and sue for damages, and the
appellants did not proceed to closing. We agree with the district court.

I.

The appellant, Fabric Resources International, Ltd. ("FRI"), is a
textile manufacturer1 with manufacturing facilities located in New
_________________________________________________________________
1 FRI manufactures greige -- a raw silk -- and other finished goods.
The court assumes that FRI is either owned by, controlled by, or affili-

                     3
Jersey and Rock Hill, South Carolina. In 1990, FRI decided to expand
its operations and began to search for another facility in South Caro-
lina. FRI was shown property located in Whitmire, South Carolina
(the "Property"). The Property consisted of a one-story facility which
had been used in the manufacturing sector for most of its thirty-year
existence. The Property was then owned by the appellee, Mount Ver-
non Mills, Incorporated ("Mount Vernon"). 2 Mount Vernon provided
FRI with a brochure outlining the characteristics and condition of the
Property. FRI claims that the brochure failed to identify Cone Mills'
ownership of the Property and that the brochure expressly stated:
"ENVIRONMENTAL CONSIDERATIONS -- NO KNOWN OR
EXPECTED ENVIRONMENTAL HAZARDS."

On February 14, 1991, the parties executed a "Contract of Purchase
and Sale" (the "Contract") to govern FRI's purchase of the Property.
Because the court's analysis turns on the language of the contractual
provisions at issue, the court will devote considerable space in setting
forth the relevant provisions:

          1.5: Closing. Consummation of this Contract, hereinafter
          referred to as the "Closing," shall be held on April 1,
          1991 . . . .

        1.8.5: PURCHASER to Inspect Property (Environmental
        Inspection). PURCHASER, at PURCHASER'S
        expense, shall have the right to obtain an environmen-
        tal inspection (which inspection may include on-site
        testing, procedures, and sampling to determine the
        identification of Hazardous Materials (as defined in
        Section 2.1.13) on or in close proximity to the Subject
_________________________________________________________________

ated with the co-appellant, Richman Enterprises, Ltd. The court will refer
to the appellants collectively as "FRI."
2 The Property had previously been owned by several manufacturing
entities: Cone Mills built the property in 1962 and operated thereon until
1976; Riegel Textile Corporation owned the Property from 1976 until
1985; Mount Vernon acquired the property in 1985 and carried on busi-
ness there until 1987; Kings Mill Realty acquired the Property in 1987,
but Mount Vernon reacquired the Property by foreclosure in 1989.

                    4
      Property, the cost of removal of same, and the source
      of same) of the Subject Property by licensed profes-
      sionals and contractors. In the event said inspection
      discloses the presence of any Hazardous Materials,
      notice of the presence of Hazardous Materials shall be
      given to SELLER or SELLER'S agent by PUR-
      CHASER in writing on or before Closing. Upon such
      notice, SELLER shall endeavor to remove from the
      Subject Property prior to Closing such Hazardous
      Materials in accordance with all federal, state, and local
      statutes, regulations, ordinances, and other laws. If
      SELLER is unable to remove such Hazardous Materi-
      als to the reasonable satisfaction of PURCHASER
      within a reasonable time (not to exceed thirty days (30)
      after receipt of said notice), PURCHASER may declare
      this Contract null and void and receive a full refund of
      the Initial Payment and its Earnest Money in accor-
      dance with Section 4.2. If the Contract is declared null
      and void in accordance with this section, SELLER shall
      reimburse PURCHASER for one-half (1/2) of any and
      all reasonable fees, expenses, and costs, not to exceed
      Ten Thousand and no/100 Dollars ($10,000.00),
      incurred by PURCHASER regarding the environmental
      inspection(s) of the Subject Property.

      2.1: SELLER'S Representations, Warranties, and
      Covenants. As an inducement to PURCHASER to
      enter into this Contract, SELLER, after appropriate
      inquiry and investigation and with the knowledge that
      PURCHASER is purchasing the Subject Property in
      full reliance thereon, represents, warrants, and cove-
      nants that:

...

      2.1.13: SELLER has not caused or permitted the Subject
      Property to be used to generate, manufacture, refine,
      transport, treat, store, handle, dispose, transfer, pro-
      duce, or process Hazardous Materials, or other danger-
      ous, regulated or toxic substances, or solid wastes,

                5
except in compliance with all applicable Federal, State,
and local laws or regulations, and has not caused or
permitted and has no knowledge of the release, as
defined in the [CERCLA] of any Hazardous Materials,
or other dangerous, regulated, or toxic substances, on
or in close proximity to SELLER'S Subject Prop-
erty. . . .

2.1.14: No representation or warranty in this agreement
nor any statement or certificate furnished or to be fur-
nished to the PURCHASER pursuant hereto, or in con-
nection with this transaction contains or will contain
any untrue statement of a material fact, or omits or will
omit to state a material fact regarding SELLER or the
Subject Property which would reasonably affect a pru-
dent investor's decision to purchase any of the assets
being sold to PURCHASER herein.

4.2.2: If, subsequent to the execution of this contract,
SELLER breaches any of the provisions in Section 1 of
this Contract or any of the SELLER'S representations
and warranties contained in Section 2 of this Contract
are proven false, then the PURCHASER shall have the
option to (i) declare this Contract to be null and void,
receive a full refund of the Earnest Money with any
accrued interest thereon, and enforce any additional
remedies available to PURCHASER at law or in
equity, or (ii) to proceed to Closing and reserve such
rights and remedies as may be available to PUR-
CHASER at law or in equity.

4.3.1: Default in Performance. Without limiting any other
rights PURCHASER may have at law or in equity, in
the event of a material breach by SELLER in the per-
formance of this Contract which is discovered by the
PURCHASER after the Closing, PURCHASER shall
be entitled to recover the payments theretofore made
and to take any other action permitted at law or in
equity for the enforcement of PURCHASER'S rights
under said Contract.

          6
         5.12: Governing Law. This Contract shall be governed by
         and construed in accordance with the laws of the
         State of South Carolina, notwithstanding any choice-
         of-law rules thereof.

(emphasis added).

FRI retained Westinghouse Engineering and Geotechnical Ser-
vices, Inc. ("Westinghouse") to conduct an environmental survey of
the Property. The results of the Westinghouse tests revealed large
quantities of certain hazardous materials (dichloroethene, tetra-
chloroethene, and trichloroethene).3 Mount Vernon retained Sirrine
Environmental Consultants ("Sirrine") to conduct a second survey of
the groundwater on the Property. The Sirrine survey revealed higher
levels of the same contaminants and additionally revealed the pres-
ence of tetrachloroethylene. The evidence suggests that the levels of
these identified contaminants exceeded the permissible levels speci-
fied by relevant environmental laws, including the federal so-called
"Safe Drinking Water Act," 42 U.S.C. #8E8E # 300f et seq. (1986), the
South Carolina so-called "Pollution Control Act," S.C. Code Ann.
§ 48-1-10, and the South Carolina Water Classifications and Stan-
dards, S.C. Code Regs. 61-68.

The closing date specified in the Contract, April 1, 1991, elapsed
without the parties effecting a closing and without the parties agreeing
upon an extension. In May 1991, FRI notified Mount Vernon that FRI
considered Mount Vernon to be in breach of the Contract and that FRI
intended to seek monetary damages. In October 1991, Mount Vernon
returned the earnest money to FRI and characterized the Contract as
"terminated by mutual assent."4 On October 10, 1991, FRI responded
that it was "incorrect for [Mount Vernon] to state that the parties have
terminated the contract by mutual assent. It is also incorrect for
_________________________________________________________________

3 The parties do not appear to dispute that these materials constitute
"hazardous materials" as that term is defined in the Contract.
4 FRI accepted the return of the earnest money and endorsed the check,
but noted on the check that its acceptance of the earnest money did not
prejudice its right to pursue any other legal remedy provided by law,
including breach of contract.

                    7
[Mount Vernon] to imply that the purchaser's remedies are limited to
refund of the deposit under these circumstances."

FRI filed suit seeking to recover compensatory damages under the
theory that Mount Vernon breached the Contract by failing to deliver
the Property in accordance with the provisions of the Contract relating
to environmental conditions and by making certain false representa-
tions relating to the disposal and release of certain hazardous materi-
als on the Property. FRI brought also a claim sounding in tort based
upon negligent misrepresentation and nondisclosure. Mount Vernon
moved the district court for summary judgment on all claims.5 The
district court granted Mount Vernons motion and concluded that FRI
could not declare the contract void and sue for breach. The district
court concluded also that FRI could not prove justifiable reliance
upon the alleged negligent misrepresentation or nondisclosure of
Mount Vernon and, consequently, granted Mount Vernon's motion
for summary judgment on the tort claim. FRI now prosecutes this
appeal.

II.

We review the district court's grant of summary judgment de novo.
Farwell v. Un, 902 F.2d 282, 287 (4th Cir. 1990). Summary judgment
is appropriate "if there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(c). The movant is entitled to summary judgment"[w]here the
record taken as a whole could not lead a rational trier of fact to find
for the non-moving party, there [being] no genuine issue for trial."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587
(1986). The nonmovant, however, is entitled to the most favorable
inferences that may reasonably be drawn from the forecast evidence,
Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.
1985), but it "cannot create a genuine issue of material fact through
mere speculation or the building of one inference upon another,"
Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985). The essence of the
inquiry the court must make is "whether the evidence presents a suffi-
_________________________________________________________________
5 The defendant had filed a counterclaim in the action but had agreed
to a dismissal. Accordingly, Judge Anderson granted the plaintiffs'
motion for summary judgment on the counterclaim.

                    8
cient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).

A. Contract Claims

This case requires this court to make a threshold determination of
what legal remedies are available to FRI pursuant both to the terms
of the Contract and to the law of the State of South Carolina. The dis-
trict court concluded that the Contracts remedial provisions limit FRI
to two alternative remedies: either (1) to declare the Contract null and
void and a return of the earnest money or (2) to affirm the Contract,
proceed to the closing and sue for damages. We agree.

The court finds it helpful to summarize its understanding of the
interplay between the relevant provisions of the contract. Pursuant to
section 1.8.5, FRI could conduct environmental testing. If the testing
revealed levels of hazardous materials in excess of the levels allowed
by applicable environmental regulations, then the FRI must notify
Mount Vernon. Within thirty days of FRI's notification, Mount Ver-
non must reduce the levels of hazardous materials to levels allowable
pursuant to these regulations and reasonably satisfactory to FRI. If
Mount Vernon cannot reduce the levels accordingly, then FRI may
declare the contract null and void, receive its earnest money (and any
interest thereon as allowed under section 4.2), and receive reimburse-
ment from Mount Vernon for one-half of its fees incurred in conduct-
ing the environmental testing, up to a limit of $10,000.00.

Pursuant to sections 2.1.13 and 2.1.14, Mount Vernon may make
certain representations concerning the characteristics or condition of
the Property. If any material representation is subsequently proven
false, then FRI has two options under section 4.2.2: (1) to declare the
contract null and void and receive any earnest money and interest
thereon, or (2) to close the purchase and seek its remedy at law or in
equity.

FRI argues that the district court erred in holding that FRI was not
entitled to seek money damages, as opposed to exercising what FRI
characterizes as "non-exclusive" contractual remedies. FRI claims
that under South Carolina law, "remedies provided in a contract are

                     9
not the exclusive remedies available to the nonbreaching party unless
specifically designated as such in the contract." FRI bases its proposi-
tion upon the case of Bannon v. Knauss, 320 S.E.2d 470 (S.C. 1984).
FRI recites the following passage from Bannon :

          In the absence of clear language in the contract to the con-
          trary, a nonbreaching party may normally elect either to pur-
          sue a remedy specified in the contract or to sue for any other
          remedy available for the breach. The presence of a liqui-
          dated damages clause in a contract does not in itself limit
          the remedies available to the nonbreaching party.

Id. at 472 (citations omitted). FRI, however, fails to account for the
first sentence of the very next paragraph of the Bannon opinion: "In
a contract for sale of real estate, a clause providing for forfeiture of
the earnest money if the purchaser defaults is ordinarily construed as
giving the seller the election to disaffirm the contract and retain the
earnest money or to affirm it and sue for the purchase price." Id. (cit-
ing First Trust & Savings Bank v. Pruitt, et al. , 113 S.E. 469 (S.C.
1922); Stewart v. Griffith, 217 U.S. 323 (1910); Biscayne Shores, Inc.
to Use of New Biscayne Shores Co. v. Cook, 67 F.2d 144 (3d Cir. 1933));6
see generally Richard R. Powell & Patrick J. Rohan, 6A Powell on
Real Property: Vendors and Purchasers ¶ 822[2] at 81-214 (1995)
("Upon breach by one of the parties, [either] the remedy of specific
performance or the alternative remedy of rescission and restitution
will more typically be chosen rather than settling for a judgment that
recognizes the breach but awards only nominal damages as compen-
sation for the breach."). Even where it is the purchaser which seeks
_________________________________________________________________

6 In Bannon, the seller initially sought specific performance of the con-
tract, but later mitigated damages by selling the property at a price less
than that contemplated by the parties' contract and then sought damages
for the difference between the contract price and the actual price
received. The court held that the seller was entitled to pursue damages.
The court concluded that there was no provision in the contract that made
"retention of the earnest money the seller's exclusive remedy" and that
"[n]othing suggest[ed] that the parties intended the forfeiture clause to
limit the purchaser's liability for breach." Id. Thus, the seller in Bannon
had expressly affirmed the contract and was properly entitled to pursue
damages.

                    10
to recover upon the alleged breach by the seller , we are unable to per-
ceive the necessity of departing from this well established premise of
South Carolina law, especially where, as here, the contractual terms
reflect that well-established premise.7

FRI argues also that the court erred in concluding that the remedies
provided pursuant to section 4.2.2 of the Contract are exclusive. FRI
relies upon the evolutionary history related to section 4.1.1 to prove
its point. FRI's argument proves too much however. Section 4.1.1
provides that

          If, subsequent to the execution of this Contract, PUR-
          CHASER breaches [the Contract] . . . SELLER shall have
          the right to declare this Contract to be null and void and
          retain from the Earnest Money its actual damages caused by
          PURCHASER, but shall not be precluded from pursuing
          any other rights SELLER might have at law or in equity.

As an initial matter, the court notes that the remedial provision of sec-
tion 4.1.1 is triggered when it is the purchaser who has allegedly
breached the Contract. Of course, in the instant action it is the seller
who has allegedly breached the Contract, and, therefore, section 4.1.1
is inapplicable to the substantive issue of this case. However, the
court is influenced by the inclusion of section 4.1.1 in the Contract.
The drafters clearly crafted section 4.1.1 to provide that the Contract's
remedial provisions were not to be considered exclusive where the
purchaser allegedly breached. However, it is significant that the
drafters chose not to use comparable language when addressing the
remedies available to the purchaser upon an alleged breach by the seller.8
_________________________________________________________________
7 See generally Powell & Rohan, 6A Powell on Real Property: Pur-
chaser and Vendor, supra, ¶ 882[2] at 81-223 ("Although the liquidated
damages agreement can apply to a breach of contract by either the pur-
chaser or the seller, usually the liquidated damages clause is intended to
function only in the case of the purchaser's breach.") In the instant case,
however, the drafters departed from the "usual" application of the liqui-
dated damages clause, and expressly provided a liquidated damages
clause applicable to an alleged breach of contract by the seller.
8 The court finds it inherently proper to closely scrutinize the language
of these respective provisions:

                    11
Accordingly, because the drafters knew how to provide for the non-
exclusivity of remedies available to the seller for the purchaser's
alleged breach, as set forth in section 4.1.1, but purposefully limited
the remedies available to the purchaser and declined to include an
express non-exclusivity provision, as set forth in section 4.2.2, the
court is convinced that the district court correctly concluded that the
purchaser was limited to the two remedial options set forth in section
4.2.2.9 The court now turns its attention to which of these two reme-
dial options FRI chose.

The district court stated that FRI "has already taken its remedy in
the contract." This court assumes that the district court concluded that
FRI took its remedy in the Contract by accepting the proffered refund
of its earnest money. The district court obviously concluded that the
FRI's acceptance of its earnest money evinced its intention of rescind-
ing the Contract and taking the applicable remedy as provided by the
_________________________________________________________________

          The parties themselves may fix the remedy for breach in the con-
          tract through a liquidated damages provision. Often, the lan-
          guage of the liquidated damages clause is flexibly designed to
          preserve the option of the non-breaching party to use the liqui-
          dated damages remedy or to seek one of the normal remedies for
          breach. Occasionally, however, the language may tie the parties
          to the liquidated damages remedy as the exclusive remedy.

Powell & Rohan, 6A Powell on Property, supra, at 81-215. The court
concludes that the drafters did not "flexibly design" the language of sec-
tion 4.2.2 to permit the purchaser to seek non-contractual remedies. The
court is not bothered by the absence of "magic words" such as, "The rem-
edies enunciated herein shall be the exclusive remedies of the PUR-
CHASER."

9 Similarly, section 4.3.1 is inapplicable yet instructive. Section 4.3.1
provides that the purchaser shall be entitled to recover all payments ten-
dered and may take any other action permitted at law or in equity for an
alleged breach by the seller which is discovered by the purchaser after
the Closing. Section 4.3.1 is inapplicable to the instant action because
FRI did not proceed to closing. However, section 4.3.1 is instructive
because it is again apparent to the court that the drafters of the contract
knew how to specify whether contractual remedies were to be non-
exclusive.

                     12
Contract -- "a full refund of the Earnest Money." FRI argues, how-
ever, that it "never declared the Contract null and void." FRI argues
that when it became apparent that Mount Vernon could not remedy
the environmental condition of the Property, then FRI "declared a
breach and advised Mt. Vernon that FRI would seek to recover all
damages caused by the breach." The court is called upon to determine
which remedial option of section 4.2.2 -- rescission or affirmation of
the Contract -- is implicated by FRI's behavior.

The court agrees with the district court that FRI rescinded the Con-
tract. In order to recover monetary damages for a breach of the Con-
tract, FRI was required to "proceed to Closing and reserve such rights
and remedies as may be available to PURCHASER at law or in
equity." Section 1.5 of the Contract specified April 1, 1991, as the
Closing date. It is undisputed that the parties did not close on April
1, 1991, and there is no evidence in the record that the parties
expressly extended the closing date. Additionally, section 5.6 of the
Contract provided that "[t]ime is of the essence." However, the court
acknowledges that parties may waive a "time is of the essence" provi-
sion expressly by modifying the terms of the contract or implicitly by
extending the time of performance. See generally 77 Am. Jur. 2d:
Vendor and Purchaser, § 80 at 266 (1975). Accordingly, the court
discounts the binding effect of the "time is of the essence" provision
because the parties may have implicitly extended the time of perfor-
mance by continuing to negotiate after the stipulated closing date of
April 1, 1991. Thus, while the closing date of April 1, 1991, elapsed
without the parties effecting the closing and while there was a "time
is of the essence" provision resident in the Contract, the court con-
cludes that FRI did not necessarily elect to rescind the Contract by
failing to proceed to closing on April 1, 1991.

However, FRI did expressly decline to effect the closing at a later
date. By letter dated July 26, 1991, Mount Vernon's representative,
E. G. Cochrane II ("Cochrane"), wrote to counsel for FRI:

          Please let us know at once whether your client wishes to
          proceed to closing. We would like to have the closing on or
          before Tuesday, August 20, 1991. If your client does not
          want to do this, and desires to get out of the purchase con-

                    13
          tract, we have no objection, and we will refund the deposit
          (with its accrued interest).

By letter dated June 17, 1991,10 counsel for FRI responded: "This law
firm is studying the remedies available to Purchaser. In the interim,
we wanted to inform you that Purchaser has no intention `to proceed
to closing' as provided in your letter of July 26, 1991." (emphasis
added). Accordingly, by examining the totality of FRI's conduct dur-
ing the period from February 14, 1991 to sometime after July 26,
1991 -- (1) the elapsing of the closing date without effecting a clos-
ing; (2) the May 15, 1991 declaration that FRI considered Mount Ver-
non to be in breach; and (3) the post-July 26, 1991 explicit refusal "to
proceed to closing" -- the court concludes that FRI rescinded the
Contract between it and Mount Vernon because FRI expressly elected
not to avail itself of its only alternative remedy:"to proceed to Clos-
ing and reserve such rights and remedies as may be available to PUR-
CHASER at law or in equity."

B. Tort Claims

FRI appeals also the district court's denial of its claim sounding in
tort for negligent misrepresentation or nondisclosure. The district
court concluded that FRI could not demonstrate that it justifiably
relied upon the representations of Mount Vernon concerning the envi-
ronmental condition of the Property in deciding to pursue the pur-
chase. Again, we agree.

Pursuant to South Carolina law, an entity may bring a common law
action in tort for negligent misrepresentation. Gilliland v. Elmwood
Properties, 391 S.E.2d 577 (S.C. 1990); Winburn v. Insurance Co. of
North America, 339 S.E.2d 142 (S.C. Ct. App. 1985). "A seller does
have a duty to disclose `an artificially created, and concealed, unsta-
ble condition.'" Greenwood Mills, Inc. v. Russell Corp., 981 F.2d
148, 150 (4th Cir. 1992) (quoting Lawson v. Citizens & S. Nat'l Bank
of S.C., 193 S.E.2d 124, 128 (S.C. 1972)); see also Lawson, 193
S.E.2d at 128 ("Where material facts are accessible to the vendor
_________________________________________________________________
10 The court notes the obviously incorrect date of June 17, 1991. The
letter dated June 17, 1991, recites the date of Mount Vernon's letter --
July 26, 1991.

                    14
only, and he knows them not to be within the reach of the diligent
attention, observation and judgment of the purchaser, the vendor is
bound to disclose such facts and make them known to the pur-
chaser.") (emphasis added). In AMA Management Corp. v.
Strasburger, 420 S.E.2d 868, 872 (1992), the Court of Appeals of
South Carolina set forth the requisite elements of a claim of negligent
misrepresentation:

          If the damage alleged is a pecuniary loss, the plaintiff must
          allege and prove the following essential elements to estab-
          lish liability for negligent misrepresentation: (1) the defen-
          dant made a false representation to the plaintiff; (2) the
          defendant had a pecuniary interest in making the statement;
          (3) the defendant owed a duty of care to see that he commu-
          nicated truthful information to the plaintiff; (4) the defen-
          dant breached that duty by failing to exercise due care; (5)
          the plaintiff justifiably relied on the representation; and (6)
          the plaintiff suffered a pecuniary loss as the proximate result
          of his reliance upon the representation.

Id. (emphasis added). In determining whether the plaintiff justifiably
relied upon the representation, "[t]here is no liability for casual state-
ments, representations as to matters of law, or matters which plaintiff
could ascertain on his own in the exercise of due diligence." Id.

In the instant action, the court can ascertain only two possible
instances of alleged misrepresentation. First, FRI claims that Mount
Vernon did not disclose in the brochure that Cone Mills had previ-
ously owned the Property. Second, FRI claims that Mount Vernon
made several misrepresentations concerning the environmental condi-
tion of the Property. FRI claims that a false statement -- "ENVIRON-
MENTAL CONSIDERATIONS -- NO KNOWN OR EXPECTED
ENVIRONMENTAL HAZARDS" -- was purposefully included in
the brochure to induce FRI to purchase the property. FRI claims also
that Cochrane advised FRI that "there were no environmental prob-
lems with the Property." The court cannot conclude that FRI has dem-
onstrated that it justifiably relied upon either of these two
representations to its detriment.

First, the matter of Cone Mills' prior ownership of the property was
a fact that should have been readily discovered by FRI if it had exer-

                     15
cised due diligence in checking certain public records. Second,
although Mount Vernon represented that there were no known envi-
ronmental hazards or problems, the evidence clearly suggests that FRI
did not rely upon this representation to its detriment. Indeed, section
1.8.5 of the Contract indicates that the drafters anticipated that there
may exist concealed environmental problems, unknown to either
party, that could be revealed only upon detailed environmental
inspection. The Contract provided the mechanism by which FRI could
"conduct a thorough environmental investigation and avoid the losses
it might well have sustained if it had prematurely entered into a pur-
chase agreement." Greenwood Mills, 981 F.2d at 150. If FRI had
relied completely upon Mount Vernon's representations of environ-
mental condition, then presumably FRI would not have bargained for
the inclusion of section 1.8.5 in the Contract and would not have
incurred the costs of independent environmental testing. Additionally,
the court notes that FRI, like Russell Corporation in Greenwood
Mills, is a textile manufacturer and should have been aware that latent
environmental hazards could exist on the Property and that such envi-
ronmental hazards may be unknown to the present owner. Accord-
ingly, we will affirm the district court because we find, as a matter
of law, that FRI has failed to demonstrate that it justifiably and detri-
mentally relied upon the alleged misrepresentations of Mount Vernon.

III.

Under the circumstances of this case, the court is convinced, as
apparently was the district court, that FRI received exactly that for
which it bargained. Mount Vernon made certain representations con-
cerning the environmental condition of the Property; however, the
terms of the Contract anticipated that there may exist latent environ-
mental hazards. Accordingly, the Contract provided FRI with an "es-
cape" if subsequent environmental testing revealed hazards which
Mount Vernon could not remedy within thirty days. If Mount Vernon
could not remedy the revealed environmental hazards, then FRI was
entitled either to rescind the Contract and receive its earnest money
or to proceed to Closing and reserve its rights and remedies available
at law or in equity. The purchase scenario unfolded consistent with
the contingencies contemplated in the Contract: the environmental
testing revealed hazards that Mount Vernon could not satisfactorily
remedy within thirty days; FRI did not proceed to close on the estab-

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lished closing date and expressly declined to close at a later date; and,
Mount Vernon considered FRIs refusal to Close as a rescission of the
Contract and accordingly returned FRI's earnest money plus interest.
FRI has taken its remedy contemplated by the Contract. FRI cannot
now look to the courts to provide an extra-contractual remedy for
which it did not bargain. Accordingly, the judgment of the district
court shall be, and it hereby is,

AFFIRMED.

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