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The Marion Superior Court was wrong to grant summary judgment for a company in a home builder’s claims of negligence
following the discovery of contaminants on lots in a subdivision, the Indiana Court of Appeals ruled.
KB Home Indiana filed suit against Rockville TBD Corp. for damages for negligence, nuisance, and trespass after KB discovered
Rockville’s plant years earlier had discharged pollutants into the land that subsequently became a subdivision.
The land used to build the subdivision was farmland owned by George and Patricia Kopetsky. They purchased land next to the
predecessor of Rockville, which manufactured airplane parts. The company used chemical solvents, including trichloroethylene,
which eventually leached into the ground and surrounding farmland. Use of TCE ended sometime in 1993.
The Kopetskys sold some of their land to Dura Builder to create the Cedar Park residential subdivision. Neither party did
an environmental or chemical assessment of the land at that time. In 2001, George Kopetsky learned of the contamination, but
didn’t tell Dura or KB, which purchased Dura in 2004, about contamination. After KB learned of the contamination in
2005, it stopped building homes on the land. It then filed its suit in 2007 against Rockville, Kopetsky, and others.
The trial court granted summary judgment to Rockville on all of KB’s claims.
In KB
Home Indiana Inc. v. Rockville TBD Corp., No. 49A02-0909-CV-881, the Court of Appeals concluded that the trial court
erred in finding the economic loss doctrine precludes KB from pursuing its negligence claim.
Under the economic loss doctrine, a contract is the sole remedy for the failure of a product or service to perform as expected,
wrote Chief Judge John Baker. If the plaintiff isn’t seeking damages involving the benefit of the bargain or other matters
governed by contract, the economic loss doctrine does not bar a negligence action.
KB didn’t have a contract with Rockville to buy the property, nor did it assert any product liability or comparable
claim. Koptesky’s breach of warrant that the land was free of contaminants doesn’t absolve Rockville of responsibility
for its negligent conduct that may have caused the contamination, wrote the chief judge.
The appellate court upheld summary judgment for Rockville on KB’s claims of nuisance and trespass. Rockville’s
contamination ended in 1993 and it the sold property to a subsequent buyer. Under these circumstance, KB didn’t show
that a nuisance existed or was ongoing that could be abated or enjoined. KB also failed to show a departure from the “long-established
principle” that a party must possess the land at the time of the activity that causes the alleged trespass, wrote Chief
Judge Baker.
The Court of Appeals remanded the cause for trial on KB’s negligence claim.
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