Jury trial ordered in environmental remediation of property dispute between KFC Corp. and Iron Horse of Metairie

By Scott Holland | Apr 5, 2019

NEW ORLEANS — A federal judge ordered a jury trial in an environmental remediation dispute.

Judge Sarah Vance issued an opinion March 12 for the U.S. District Court for the Eastern District of Louisiana in a complaint KFC Corp. brought against Iron Horse of Metairie Road. At issue is a parcel KFC of California bought in 1991 at 702 Metairie Road in Metairie. That spot and the adjacent 800 Metairie Road properly were reportedly contaminated with perchloroethylene linked to a former dry cleaning facility on the site.

In 2000, after being sued by the owner of 800 Metairie Road and settling, KFC agreed to remediate both properties. In September 2013, Iron Horse agreed to buy the property from KFC, agreeing to assume any of KFC’s obligations related to the contamination, remediation and settlement. In June 2016, the Louisiana Department of Environmental Quality notified both parties of testing that indicated a need for additional remediation.

That December, KFC sued Iron Horse, saying the company failed to fulfill its contractual obligation. Iron Horse countersued in February 2017. In February 2018, Iron Hose was allowed to file a third-party complaint against KFC’s environmental consultant, Professional Service Industries, which PSI successfully transferred to federal court in Chicago.

KFC and Iron Horse entered settlement negotiations in July 2018. Though the parties at times appeared close to a resolution, KFC on Nov. 7 moved to reopen the case. The next day, Iron Horse moved to enforce a settlement deal it said both parties had agreed to sign based on a July 31 text message between lawyers, and filed a separate motion for a jury trial.

“There is no enforceable compromise between the parties because the record before the court indicates there was never a meeting of the minds as to the specific terms of a settlement,” Vance wrote. Although Iron Horse lawyer John Waters sent a text presenting proposed settlement terms, and although KFC lawyer Stephen Schott said KFC would be willing to settle because it assumed Iron Horse’s deal incorporated an earlier KFC proposal, Vance found insufficient written evidence to establish an actionable agreement.

Hours after the July 31 text, Vance noted, both parties had a clear disagreement about settlement terms, with emails revealing disagreement about KFC’s request for the right to reopen litigation if Iron Horse failed to complete remediation. Vance said the fact KFC continued to try to introduce new terms throughout August only proves KFC had a different understanding of Waters’ text to Schott.

“This misunderstanding surfaced only after the parties notified the court that they reached an agreement and set out to document the compromise,” Vance wrote. “In such a situation, there is no enforceable compromise between the parties.”

Vance further explained she ordered the jury trial at her own discretion, not because of Iron Horse’s request, which wasn’t tendered in compliance with Federal Rules of Civil Procedure. Since the remaining issues amount to a contract dispute, Vance continued, they are factual questions suitable for a jury as opposed to a judicial review of terms.

KFC didn’t show a jury trial would subject it to significant prejudice, and although it said it planned for a bench trial, Vance set the jury trial for the October, affording “time to tailor its evidence to be presented to a jury.”

However, Vance denied Iron Horse’s request for additional discovery, saying it didn’t “present any compelling reason” but “instead simply rehash(ed) the arguments” presented in earlier motions.

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