Tenant Pays for Agency Delays

The recent Trends newsletter published by the ABA environmental section highlighted Jaasma v. Shell Oil Co. 412 F.3d 501 (2005). The landlord leased the property to Shell with a remediation clause that upon termination of the lease, the property would be restored to its original condition.

The New Jersey Dept. of Environmental Protection was notified after contamination was found from a leaking tank. Shell remediated the site. However, it was over two full years later that the NJDEP isssued an NFA (no further action) letter. The landlord sought damages from the tenant for two years of unmarketability.

The lower court held that damages were not cognizable. Yet the Third Circuit ultimately held, even a clean sampling will not prevent damages assessment for agency delays outside party control.

Moral of the story?