Judge agrees to transfer dispute over soil contamination cleanup in Metairie to federal court in Illinois

By William Sassani | Aug 7, 2018

NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana recently ruled that a soil contamination case involving KFC and Iron Rooster can be transferred to the federal court in Illinois.

In her 34-page ruling on July 31, U.S. District Judge Sarah S. Vance said that a third-party defendant, Professional Services Industries Inc. (PSI), had a valid argument that the case can move to the U.S. District Court for Northern District of Illinois because a contract between Iron Rooster and PSI contains what’s called a “forum selection clause” that opens the possibility of a new venue in regards to litigation. 

The companies are involved in a lawsuit in which property in Metairie purchased by KFC in 1991 contained perchloroethylene (PCE) from a dry-cleaning business previously located on the site and another adjoining property. KFC agreed in 2000 to pay for the cleanup of both sites and contracted with PSI to provide environmental consulting for the cleanup in 2005. 

By 2013, Iron Rooster agreed to buy the property from KFC. A 30-day due diligence period allowed for Iron Rooster to inspect the property and cancel the sale if it desired. Iron Rooster says that KFC told PSI to serve the company and “treat Iron Rooster as if it were a client,” court documents said. PSI issued a new report in 2014 and recommended a certification of completion. Iron Rooster says in the suit that it based its decision to buy the property on PSI’s recommendations. 

When Iron Rooster bought the land in 2014, the agreement stipulated that Iron Rooster agreed to take over from KFC any obligations related to the contamination. However, the Louisiana Department of Environmental Quality in 2016 said that it believed that cleanup work had stopped after Iron Rooster purchased the property. It said that KFC is still obligated to continue the cleanup. 

KFC filed a lawsuit against Iron Rooster for violating its contract agreement in 2016.

In 2018, Iron Rooster filed its own lawsuit against PSI for breach of contract and other issues. It seeks “indemnification for any damages Iron Rooster may owe KFC Corporation.” Iron Rooster also says that PSI failed to disclose to Iron Rooster information relevant to the “status of the environmental remediation.”

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