Manage
My Account

Who Owns the Asbestos? Determining the Parties Responsible for Hazardous Substance Remediation in a Pending Real Estate Sale

As Flaster/Greenberg environmental attorneys well know, a retrofit of a retail space from one tenant to another can trigger a number of unexpected and surprising events. Such was the case in a supposedly routine renovation of a large retail space in a Paramus, New Jersey, shopping center.

Our attorneys represented the owner of the shopping center, which had entered into a 20-year lease of the site with a national retail big-box chain. The big-box claimed that in attempting to retrofit the 50,000 square-foot space (created from numerous smaller retail spaces) to conform as closely as possible to its interior brand design, it had discovered the presence of wide-spread asbestos and incurred millions of dollars in remediation costs due to the presence of asbestos and its need to design and build a second internal retrofit of the retail space. Additionally, it claimed that our client had misrepresented during the lease negotiations and in the lease, itself, that the retail space was asbestos-free. Because the chain had been readying the space for the busy Thanksgiving and Christmas holiday shopping season, the asbestos removal and re-retrofit caused a slow-down in the renovation schedule, forcing substantial additional charges to be incurred in order to finish the space on time for the holiday season.

From the outset, the space seemed to be a curious choice for this particular retail chain. It was clear that the existing building could not be renovated to make the interior look like the signature brand which characterized the rest of the stores in the retail chain. The building included a roof-top parking deck, and of necessity, there was flame-retardant material (asbestos) below the base of the parking deck, a sealed area which was not part of the leased space. The local municipality, fearing any possible adverse effect on the required flame retardant buffer between the retail space and the roof-top parking lot, refused to allow the chain to alter and raise the interior ceiling level. This decision precluded the big-box from creating its signature brand of high industrial-level ceilings in the interior retail space. Within these limits, the big-box designed and built a new and different type of interior.

Our attorneys reviewed tens of thousands of documents supplied by the tenant’s asbestos contractor, asbestos monitor and the national chain. Their investigation brought several interesting facts to light:

As a result of the information garnered during our attorneys’ investigation in the discovery phase, the case was resolved. Our client paid out no money and only made a minor concession to the national chain on the back end of the lease. The concession was made to avoid the additional costs of litigation and trial. Subsequently, our attorneys sued the insurance carrier on behalf of the client. The insurance carrier had previously denied coverage. The recovery from the insurance carrier was more than 80 percent of the legal fees and expenses incurred to defend the action by the national chain and 100 percent of the legal fees and expenses incurred to bring the action against the insurance carrier.

According to our attorneys, one of the lessons to be learned is to keep asking questions and to keep digging until the “facts” make sense. When facts come out that are not within “the realm of reasonability,” consider other motivations, for example, the perfect storm of a disreputable contractor and the mutuality of interest with others in taking a gambit (whether justified or not) for the almighty dollar.

Learn More

In light of recent changes to data protection laws, we have updated our Privacy Policy and Terms & Conditions, which explain how we collect, use, maintain, and secure your information. By using this site, you agree to our updated Privacy & Terms of Use Policies