## Facts

- Cedar Real Estate Group, LLP owned a 6.2-acre parcel in Lake County, Indiana that had been used as a trucking terminal and contained underground storage tanks.
- In May 1998, Cedar listed the property for sale through a real-estate agent.
- On June 4, 1998, Thomas Keith Allen, Jr., acting through his agent, submitted a written offer to buy the property for $360,000 using a preprinted purchase agreement containing boilerplate provisions.
- Allen’s written offer conditioned the deal on Allen receiving an “acceptable environmental audit.”
- The purchase paperwork described the sale as “as is” and contained a timing clause providing that specified periods expired at midnight on the stated date unless the parties agreed in writing to a different date or time.
- Cedar responded with a written counteroffer that made only minimal changes to Allen’s offer.
- Allen signed the counteroffer, asserting acceptance and contending that a binding agreement to purchase and sell the property existed.
- The environmental audit later revealed unexpected soil and groundwater contamination and indicated that environmental remediation would be expensive.
- After the audit, the parties negotiated for approximately four months about who would bear the cleanup costs and related risks, but they did not reach agreement.
- Allen argued that an Indiana statute (absent a waiver by the buyer) made a seller partially responsible for environmental cleanup costs and that this rule should resolve the dispute over allocation.
- Cedar ended the transaction after the negotiations failed and informed Allen that it would sell the property to someone else and/or put it back on the market.
- Allen filed a federal diversity action in the Northern District of Indiana seeking damages and/or specific performance based on an alleged land-sale contract.
- The district court granted summary judgment for Cedar on the ground that no enforceable contract existed, and Allen appealed.

## Issues

1. Whether, under Indiana contract law, the parties formed an enforceable land-sale contract when the offer was conditioned on an “acceptable” environmental audit and the parties never agreed on responsibility for remediation after contamination was discovered.
2. Whether Indiana environmental-cleanup liability rules could supply the missing allocation-of-costs term and convert the parties’ unsuccessful post-audit negotiations into an enforceable contract.
3. Whether summary judgment was proper on the contract-formation question based on the written documents and undisputed course of dealing.

## Decision

- The Seventh Circuit affirmed the district court’s grant of summary judgment for Cedar.
- The court held that no enforceable contract existed because, after the audit revealed contamination, the parties’ extended but unsuccessful negotiations showed there was no final agreement on a key term: allocation of remediation costs and risk.
- The court rejected Allen’s reliance on state environmental-law cost-allocation concepts as a substitute for the parties’ own agreement on who would pay for cleanup in this transaction.

## Legal Principles

- Under Indiana law, a contract requires mutual assent to the essential terms; if the parties’ objective conduct shows they treated a key term as still open for negotiation, a court may find no contract was formed.
- A condition tied to an “acceptable” environmental audit can prevent a duty to close from arising when the audit reveals contamination and the parties do not agree on how to handle the resulting costs and risks.
- Statutory environmental-liability provisions do not automatically supply a negotiated purchase-term allocating remediation costs between buyer and seller for purposes of enforcing a private land-sale agreement.
- Summary judgment is appropriate in a contract-formation dispute when the writings and undisputed post-agreement conduct show only continued negotiation rather than a completed bargain.

## Conclusion

The Seventh Circuit affirmed summary judgment for Cedar because the environmental audit revealed significant contamination, the parties spent months trying and failing to agree on who would bear remediation costs, and Indiana law required agreement on that essential term before a binding land-sale contract could be enforced; state environmental-liability rules did not fill the gap left by the parties’ lack of agreement.


Allen v. Cedar Real Estate Group, 236 F.3d 374 (2001)