## Facts

- Ridge Seneca Plaza, LLC owned a shopping plaza in Rochester, New York, adjacent to a gasoline station alleged to have released petroleum that migrated onto the plaza property.
- In 2000, First Allied Shopping Center, L.P. agreed to sell the shopping plaza to Sylvan Enterprise Corp.; at the February 27, 2001 closing, Sylvan assigned its rights to Ridge Seneca.
- Before closing, the buyer had contractual inspection rights and engaged an engineering firm to perform a Phase I environmental site assessment.
- The purchase agreement sold the property “as is” and “with all faults,” and included an express waiver of claims relating to environmental contamination, whether known or unknown.
- After the purchase, Ridge Seneca discovered petroleum contamination and sued multiple parties, including First Allied as the seller.
- Ridge Seneca’s claims against First Allied principally alleged fraudulent concealment/failure to disclose, based on First Allied’s alleged nondisclosure of environmental information (including a 1997 report referencing a tank failure and contamination at the nearby gas station).
- First Allied moved for summary judgment seeking dismissal of all claims against it.

## Issues

1. Whether a commercial real estate seller had a duty to disclose environmental information to the buyer despite an “as is” sale and an express contractual waiver of environmental claims.
2. Whether the “as is” clause and environmental waiver barred fraud-based and nondisclosure claims given the buyer’s inspection rights and pre-closing due diligence.
3. Whether the record showed a genuine dispute of material fact on actionable misrepresentation, concealment, or justifiable reliance sufficient to defeat summary judgment.

## Decision

- The court granted First Allied’s motion for summary judgment and dismissed Ridge Seneca’s claims against First Allied.
- The court held the purchase agreement’s “as is” language and specific waiver allocating environmental risk to the buyer were enforceable in an arms-length commercial transaction.
- The court found no basis to impose an affirmative disclosure duty on First Allied under the circumstances (no special relationship and no evidence of active concealment or misleading partial disclosure).
- The court concluded Ridge Seneca could not show justifiable reliance in light of the contract terms, the buyer’s opportunity to investigate, and the buyer’s actual environmental due diligence.
- The court found no genuine issue of material fact requiring trial as to First Allied’s liability.

## Legal Principles

- In New York commercial real estate transactions, caveat emptor generally applies; absent a special relationship, active concealment, or misleading partial disclosure, a seller has no affirmative duty to disclose defects or risks.
- Clear “as is/with all faults” provisions and express waivers can allocate environmental risk to the buyer and bar claims based on undisclosed contamination, including conditions unknown at closing.
- Fraud-based claims require justifiable reliance; sophisticated parties represented by counsel, with contractual disclaimers and inspection rights, face substantial barriers to proving reasonable reliance on omissions.
- Summary judgment is appropriate where contractual risk allocation and undisputed facts foreclose a legally cognizable duty to disclose and eliminate triable issues on misrepresentation, concealment, and reliance.

## Conclusion

The court enforced the parties’ contractual allocation of environmental risk in a commercial property sale and, applying caveat emptor principles and the requirement of justifiable reliance, granted summary judgment to the seller on claims premised on alleged nondisclosure of environmental information.


Ridge Seneca Plaza, LLC v. BP Prods. N. Am., Inc., 820 F. Supp. 2d 461 (W.D.N.Y. 2011)