Pilgrim Enterprises Inc. et al. v. Kleen-Rite Inc., et al.

By Hicks Thomas LLP

Lawyers from Houston’s Hicks Thomas & Lilienstern won a defense verdict July 20 in a multimillion-dollar environmental contamination suit filed by a dry-cleaning company.

Hicks Thomas litigation partners Taylor M. Hicks Jr., John B. Thomas and O. Clayton Lilienstern and associates Brian M. Keller and Wade H. Whilden Jr. represented defendant R.R. Street & Co. of Naperville, Ill. Serving as co-counsel were shareholders Joe E. Luce and Alfred C. Koenig and associate Steven Hudgins of Houston’s Hudgins, Hudgins & Warrick. Serving as national counsel for R.R. Street were partners John R. Doyle and David F. Wentzel of McDermott, Will & Emery in Chicago.

Pilgrim Enterprises Inc. of Houston and Pilgrim Convenience Inc. of San Antonio filed the suit in Harris County in 1995, alleging R.R. Street sold defective drycleaning equipment that used the chemical cleaning solvent perchloroethylene (PERC). The plaintiffs contended that R.R. Street failed to warn them about the dangers of PERC, which they say discharged and leaked, causing contamination of soil and ground water at 16 dry-cleaning plants owned or leased by the Pilgrim entities in Houston and San Antonio. The suit claimed R.R. Street provided inspection and maintenance of the equipment at the Pilgrim plants to ensure that none of the chemical leaked or escaped.

Pilgrim Enterprises owned or leased the plants in Houston, and Pilgrim Convenience owned or leased the San Antonio plants, although the same family had an ownership interest in both corporate entities. Pilgrim Enterprises Inc. was represented by lead counsel Michael A. Pohl of The Law Offices of Michael A. Pohl in Houston and Mark A. Waite, an associate at the firm. Rafael Berk, a Houston solo, served as co-counsel. Representing Pilgrim Convenience and serving as cocounsel were partners Jean C. Frizzell and Jeffrey C. Alexander and associate Andrew L. Pickens of Houston’s Gibbs & Bruns.

When the Pilgrim company owners were in negotiations to sell their businesses in 1994, they discovered the contamination during an environmental assessment of the plants, Pohl says. The plaintiffs contended the contamination had been going on for decades, since the plants opened in the 1960s and 1970s. The old owners sold the business in 1996.

Jack Turk, a Houston businessman who owned three additional dry-cleaning plant sites that were contaminated, intervened in the suit against R.R. Street. Pilgrim Enterprises operated the three sites.

Turk was represented by David Mestemaker of Houston’s Mestemaker & Straub and Dennis Reich of Houston’s Reich & Binstock. Turk and the Pilgrim plaintiffs were seeking about $12 million in damages as reimbursement for cleanup costs. Thomas argued at trial that Pilgrim improperly stored and managed the chemical.

After about two months of testimony, a 215th District Court jury deliberated about a day and a half before finding R.R. Street was not negligent and did not commit fraud. The jury also found there was neither a design defect in the equipment nor a defect in marketing of the equipment.

Three other similar suits against R.R. Street are pending in Texas — two in Houston and one in Austin — and one is pending in California, Thomas says.

The Pilgrim plaintiffs settled with at least five defendants named in the suit. All of those defendants settled before trial, with the exception of Hoyt Corp., a drycleaning equipment manufacturer based in Westport, Mass., that reached a confidential settlement with the plaintiffs and Turk about a month after testimony began. About four to five other defendants were dismissed, Waite says.

Representing Hoyt were partner Richard S. Baron, as lead counsel, and senior associate Anthony J. Nellis of Kitch, Drutchas, Wagner & Kenney in Detroit. Timothy Hogan, a partner in Houston’s Beirne, Maynard & Parsons, served as local counsel for Hoyt.

Mestemaker says he will file a motion for new trial and a motion for judgment notwithstanding the verdict with 215th District Judge Dwight Jefferson, who has not yet signed a final judgment. Pohl and Frizzell on July 28 filed a motion asking Jefferson to enter judgment on a separate claim of strict liability. That issue by law must be decided by a judge, rather than a jury, Pohl says. A hearing on the motion is scheduled Aug. 17. — SUSAN