MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

After more than six years of litigation, in a case generating over 700 docket entries, this contract dispute involving the proposed sale of 1,250 acres of land in Prince George's County, Maryland, has narrowed to two basic issues: whether there are materials present on the property of a type, from a source, and to a degree sufficient to breach the environmental representations and warranties of the parties' contract, and whether the seller's conduct in responding to a formal request for entry constituted a material breach. In order to resolve those issues, a bench trial was held from March 31 to April 15, 2014. Upon consideration of the evidence adduced at trial, and the parties' arguments with respect thereto, the court now issues findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).1

I. Background

On November 15, 2005, Plaintiff/Counter-Defendant U.S. Home Corporation ("U.S. Home"), a subsidiary of Counter-Defendant Lennar Corporation ("Lennar"; together with U.S. Home, "Purchaser"), entered into an agreement to purchase the sole membership interest in Defendant/Counter-Plaintiff Washington Park Estates, LLC ("WPE"), held by Defendant/Counter-Plaintiff Settlers Crossing, LLC ("Settlers Crossing"). The agreement ("Purchase Agreement") contemplated that, at the time of settlement, WPE would hold title to approximately 1,250 acres of undeveloped real estate in Prince George's County, Maryland, known as the Bevard property ("the Property"). Thus, by acquiring Settlers Crossing's membership interest in WPE, U.S. Home would acquire the Property, upon which it planned to build a large residential community. Concomitantly with the Purchase Agreement, U.S. Home entered into a contract with Defendant/Counter-Plaintiff Bevard Development Company ("BDC"), pursuant to which BDC was to complete certain development work on the Property ("Contract for Services"). The combined price of the Purchase Agreement and Contract for Services was $200 million, and U.S. Home paid deposits totaling $20 million. Defendant Steven Sandler ("Mr. Sandler") — who controlled Settlers Crossing, WPE, and BDC (collectively, "Seller") — personally guaranteed Seller's obligations under the contracts, promising repayment of the deposits in the event of a breach. (ECF No. 649, stipulations).

For several months prior to entering into the agreements, Purchaser was given free access to the Property in order to conduct feasibility testing. As reflected in the Purchase Agreement, Seller provided U.S. Home with "all site plans, lease agreements, title reports, surveys, environmental reports, soil studies, arch[a]eological studies, geotechnical reports and other tests, studies and documents prepared by third parties pertaining to the Property... in [its] possession[.]" (JTX 41 ¶ 9).2 Those reports included a 2001 Phase I Environmental Site Assessment ("ESA") conducted by Schnabel Engineering North, LLC ("Schnabel"), Schnabel's September 2004 update to the Phase I ESA, a Phase I Archaeological Survey conducted by URS Corporation, Inc. ("URS"), and reports of geotechnical and subsurface investigations prepared by Hardin-Kight Associates, Inc. ("Hardin-Kight"). (ECF No. 649 ¶ 11).

The stated purpose of Schnabel's 2001 Phase I ESA was "to obtain information that would allow the development of an opinion regarding the potential for `recognized environmental conditions' being present on or near the site that could present major development difficulties, liability exposure, or the need for Phase II sampling and testing." (JTX 25, at SCH0000061). Schnabel defined the term "recognized environmental conditions," in accordance with guidelines set by the American Society for Testing and Materials ("ASTM"), as

(Id.). The report noted that "the site and adjacent properties ha[d] been used agriculturally and mined for sand and gravel since 1957" and that "Area 1 was heavily mined and replenished with fill material that has the potential to contain heavy metals, sludge, and varying debris." (Id. at SCH00000599).3 Schnabel opined that the "[p]otential fill material throughout Area 1" constituted a "`recognized environmental condition[]' under the ASTM guidelines" (id. at SCH00000616), and advised that the "extent and character of the fill material w[ould] be identified upon completion of the geotechnical portion of th[e] investigation" (id. at SCH00000599).

Schnabel updated its Phase I ESA in 2004 "to document changes to the site and surrounding area that may have occurred since the previous report was issued." (JTX 29, at ECC 00001129). In initially summarizing its prior work, Schnabel noted the results of its geotechnical investigation:

(JTX 29, at ECC 00001138). Schnabel found "[n]o significant changes to the subject properties ... since the previous assessment" (id. at ECC 00001129); identified no "recognized environmental conditions" on the Property (id. at ECC 00001150); and recommended "no additional environmental investigations" (id. at ECC 00001129). It cautioned, however, that "[a]ll conclusions are qualified by the fact that no soil or ground water sampling or chemical testing was conducted under this contract." (Id. at ECC 00001135).

URS provided a report of its Phase I Archaeological Survey in June 2005, the stated purpose of which was "to evaluate the presence or absence of archaeological resources" on the Property. (JTX 35, at USH-00029069). URS noted that the Property was "known to have extensive prehistoric and historic occupations," but that "most of the area is also known to have been mined by the Silver Hill Sand & Gravel Company in the late twentieth century." (Id.). It generally attributed the lack of artifacts found on the Property to "disturbed fill layers" and other "soil characteristics [that] reflected the mining process[.]" (Id.). This conclusion was supported by information it learned regarding the prior mining operation:

(Id. at USH-00029077). The URS report further observed that a wastewater treatment plant operated on the Property and that sludge from that plant had been applied to a small portion:

(Id. at USH-00029077, 78).

Hardin-Kight's geotechnical and subsurface studies "consisted of a field investigation, laboratory testing, review of geological literature, [] review of a previous investigation of the site[, and] ... the performance of ... standard penetration soil borings that were drilled to depths ranging from 15 to 40 feet." (JTX 32, at HK00001666). It "identified and logged the soil characteristics during drilling and... soil samples were selected and tested in the laboratory for natural moisture content, grain size distribution and plasticity characteristics." (Id.). Hardin-Kight noted that "[f]ill or possible fill" was "encountered in several of the borings," but that the fill material "appear[ed] to be clean, free of construction debris or deleterious materials[, and] ... indigenous to the site." (Id. at HK 00001670). It advised that "[f]urther investigation of the fill/possible fill areas should be conducted when the proposed final site layout is established if development is proposed in the identified fill areas," including "conducting sufficient test pits and borings to confirm that the fill is as consistent as indicated by the preliminary investigations." (Id.). Nevertheless, it concluded that "[t]he site is suitable for the proposed development." (Id. at HK 00001663).

After entering into the Purchase Agreement, U.S. Home independently commissioned a number of additional studies. Hardin-Kight was retained to conduct further investigations of soil stability. It drilled "several hundred" soil borings on the Property, encountering areas of "uncontrolled fill" material in the process. (T. 4/4/14, at 73). American Infrastructure was hired "to put some ... costs together for dealing with ... the uncontrolled fill" and directed the excavation of "[t]est pits" at certain locations. (Id. at 85-86). Dewberry & Davis, LLC, was contracted to complete certain grading and engineering work on the Property. (DTX 585, 586). Additionally, Purchaser retained Environmental Consultants and Contractors, Inc. ("ECC"), to conduct an independent Phase I ESA. When asked at his deposition why Purchaser commissioned another Phase I ESA, U.S. Home Division President Robert Jacoby explained:

(DTX 614, Jacoby depo., at 142-43).

ECC's Phase I ESA report, issued May 8, 2006, identified three "recognized environmental conditions" on the Property:

(JTX 52 § 1.0). To address these issues, ECC recommended that Purchaser take a number of actions:

(Id. (internal emphasis removed)). The ECC report expressly "d[id] not address naturally occurring hazardous substances such as elevated heavy metal concentrations in plants and soil" and indicated that "[n]o soil or groundwater sampling was performed[.]" (Id. at § 2.0).

Purchaser later retained ECC to "abandon potable wells and septic systems, remove underground storage tanks and aboveground storage tanks, and ... [conduct] asbestos aba[t]ement" on the Property. (T. 4/4/14, at 28). At least initially, however, it did not take further steps to assess the soil and groundwater quality; indeed, it believed such measures were not necessary. (DTX 614, Jacoby depo., at 113).

In or around late 2006, Purchaser sought to renegotiate the Bevard contracts related to a decline in the residential housing market. According to Mr. Jacoby:

(Id. at 49-50). At around the same time, Seller was experiencing financial difficulties of its own and sought to take out a loan from Defendant/Counter-Plaintiff iStar Financial, Inc. ("iStar"), related to the Property. (ECF No. 649 ¶ 18; DTX 595, at USH-00005745; T. 4/10/14, at 70-79).

After extensive negotiations, Seller and Purchaser entered into a Second Amendment to the Purchase Agreement on May 16, 2007 ("Second Amendment"). Among other things, the Second Amendment significantly reduced the purchase price of Settlers Crossing's membership interest in WPE in exchange for a guaranty of specific performance by Lennar — i.e., a "provision that [] require[d] Lennar ... to actually close on the purchase of the [P]roperty, assuming [Seller] had satisfied [its] obligations under the contract." (T. 3/31/14, at 109).4 U.S. Home expressly "agree[d] and confirm[ed]" that it "ha[d] no actual knowledge" that any of Seller's initial representations and warranties were not true (JTX 56 ¶ 15), and Seller permitted it to begin pre-closing development work on the Property — i.e., "clearing, grading and other activities desired by Purchaser in connection with its proposed development" (id. at ¶ 13). The Second Agreement also permitted Settlers Crossing to obtain financing in an amount not to exceed $100 million, provided that "any and all deeds of trust, mortgages, assignments, financing statements or other financing documents ... that encumber the Property shall be satisfied and released at [s]ettlement at Settlers Crossing's sole expense." (Id. at ¶ 34). Settlement under the Second Amendment was scheduled to occur on December 5, 2007, but if "any condition precedent ... [was] not satisfied or waived in writing by Purchaser at least ten (10) days prior to the [s]ettlement [d]ate[,] ... then the [s]ettlement [d]ate [was to] be automatically extended to that date which is thirty (30) days after all conditions precedent to [s]ettlement ... have been satisfied" (id. at ¶ 21).

On June 19, 2007, consistent with the terms of the Second Amendment, iStar provided Seller with a $100 million first mortgage bridge loan with repayment contemplated from the Bevard settlement proceeds. (ECF No. 649 ¶ 20). As security, iStar accepted collateral assignments of Seller's interests under the Purchase Agreement and Contract for Services. (Id. at ¶ 21). On the same date, Seller and Purchaser entered into a third (and final) amendment to the Purchase Agreement, which provided, in the event of foreclosure by iStar, that the Purchase Agreement would convert from a sale of Settlers Crossing's membership interest in WPE to a sale of the Bevard Property itself. (Id. at ¶ 22). Also on June 19, iStar entered into a Consent and Estoppel Agreement with Purchaser ("Consent and Estoppel Agreement"), by which Purchaser acknowledged Seller's assignment of rights and made certain representations regarding the Property and the status of conditions precedent to settlement. As relevant here, Purchaser warranted that,

(DTX 259 § 3).

At around the same time that Purchaser entered into these agreements, it was actively seeking a joint venture partner or land bank to reduce the total asset value of the Bevard transaction on its corporate ledger by the end of its fiscal year. (DTX 591, at USH_00326906). In summarizing a proposed transaction with one joint venture partner, Lennar represented, inter alia, that "[i]ndependent environmental assessments have not identified any hazardous conditions [on the Property] requiring extraordinary measures or higher level studies." (T. 3/31/14, at 165; DTX 243). When initial efforts to find a partner were unsuccessful, Lennar began to investigate strategies to delay the scheduled settlement date, if not to avoid closing altogether. At the project level, however, Purchaser was engaged in substantial pre-closing development work on the Property, spending approximately $6 million in an effort to "get all of the approvals necessary to develop the [P]roperty and get all of the engineering positions so that 30 days from that point in time [it] could actually have a grading permit in [its] hand." (DTX 614, Jacoby depo., at 59, 142).

At a meeting with regional managers on October 1, 2007, Lennar Chief Executive Officer Stuart Miller ordered that all spending related to the Property be stopped immediately, that general counsel scrutinize the Purchase Agreement and develop a strategy to delay closing, and that other managers continue to search for a partner to take the Bevard contracts off of Lennar's corporate books. (DTX 589, at USH_00324625; DTX 614, Jacoby depo., at 57-62). Mr. Jacoby, who had been primarily responsible for managing the Bevard project up to that point, strongly disagreed with this decision, but was told by Mr. Miller, "essentially[,] ... `I am the boss. I don't care what your position is on this. Stop spending money." (DTX 614, Jacoby depo., at 147).

Following that meeting, there was a shift in management on Purchaser's side of the transaction from the local project managers at U.S. Home to Lennar's corporate officers. Lennar Executive Vice President Richard Beckwitt had previously directed Lennar's land divisions to "put together... various reports" related to Lennar's contracts, one of which was "a core and hit list report." (T. 3/31/14, at 124).5 He explained that if a given project was designated as "core," it meant that it did not "need any adjustment to it, the product [wa]s working, the ... contract ma[de] sense." (Id.). Transactions on the "hit list," on the other hand, were those that "needed some sort of review or adjustment[.]" (Id.). Lennar's Chief Operating Officer, Jon Jaffe, had a somewhat different understanding of the "hit list" designation:

(DTX. 614, Jaffe depo., at 110-11). As of September 30, 2007, the Bevard contracts were on Lennar's corporate "hit list," with its strategy being to "[s]top all engineering and other consulting expenditures" and to "[r]e-review [the] contract for [an] escape clause[.]" (DTX 328; T. 3/31/14, at 184). Lennar retained "a team of high priced lawyers and consultants [to] work feverishly at ... making a case for delaying ... the Bevard closing." (DTX 380). By October 15, 2007, Lennar's general counsel, Mark Sustana, was specially assigned to the Bevard transaction to "analyz[e] the agreements" and another Lennar executive was charged with "looking at ways to off-load the deal." (DTX 351; T. 3/31/14, at 187).

Seller perceived that something was amiss. In addition to observing that Purchaser's development work on the Property had ground to a halt, Seller's principals — namely, Mr. Sandler, Nathan Benson, and Daniel Colton — learned from Purchaser's departing project manager that Lennar was seeking to get out of the contract. (T. 4/10/14, at 55-57). When Mr. Sandler attempted to inquire further, Mr. Jacoby advised that he would "get back to [him], and that was the extent of it." (Id. at 57). At around the same time, Seller began transmitting closing documents in advance of the scheduled December 5 settlement date (DTX 445, 452), but received no response from Purchaser (T. 4/3/14, at 60). Concerned about Purchaser's non-responsiveness, Seller's counsel, James Brennan, contacted transactional counsel for Purchaser, Matthew Wineman, to inquire as to whether "U.S. Home was going to look to get out of the contract and whether they were going to come to ... settlement[.]" (Id. at 49). Mr. Wineman "wouldn't give [him] an answer one way or another and he said he couldn't talk about it[.]" (Id.).

A clearer indication of Purchaser's intention was communicated by a letter from Mr. Wineman dated November 21, 2007, in which he advised of Purchaser's position that Seller had "failed to satisfy the conditions precedent to Settlement in accordance with the provisions of the [Purchase Agreement,] ... including but not limited to those conditions relating to certain off-site easements[.]" (JTX 63, at 1-2).7 "As a result," Purchaser declared, "the Settlement Date is automatically extended as provided in the Agreement." (Id. at 2). Seller insisted that all pre-closing conditions had been satisfied and demanded a full accounting of those that Purchaser believed were not. By a letter dated November 27, Purchaser identified four specific problems with off-site easements, but qualified that this "list of unsatisfied conditions precedent to Settlement [wa]s not exclusive, and d[id] not represent U.S. Home['s] ... final review of all conditions precedent to Settlement." (JTX 64, at 3). Moreover, Purchaser asserted, "[t]he burden to satisfy all of the conditions precedent to Settlement rests upon the Seller, and U.S. Home Corporation cannot and will not be put in a position to rely upon various verbal, unsubstantiated or inaccurate claims regarding the status of the conditions precedent to Settlement." (Id. at 3-4).

Purchaser did not attend settlement on December 5, and continued to refuse contact with Seller's principals. The following day, Mr. Jacoby stated in an email to Mr. Beckwitt:

(DTX 401).

On December 6, 2007, Seller commenced an action in the United States District Court for the Eastern District of Virginia ("the initial action"), seeking a declaration as to what conditions precedent, if any, remained unsatisfied. (DTX 590). Notably, the complaint in the initial action did not allege that Purchaser had breached the Purchase Agreement or any duty arising thereunder; rather, Seller sought the court's assistance in identifying any obstacles to closing so that it might address them and proceed to settlement.8

On January 3, 2008, Purchaser, through litigation counsel, transmitted a letter to Seller requesting permission "to enter onto the property to perform investigations, studies and tests that [Purchaser] deem[s] necessary or appropriate." (JTX 66, at iStar00019491). The letter set forth a laundry list of issues that Purchaser purportedly sought to investigate — the vast majority of which had previously been addressed by the parties — and cited as the basis of the request a contractual right to access under § 13(a) of the Purchase Agreement and a right to discovery under Fed.R.Civ.P. 34(a)(2). According to Mr. Beckwitt, the request for access was primarily motivated by Seller filing the initial action:

(T. 3/31/14, at 130). Asked what Lennar expected that its investigation would find, he testified:

(Id. at 132).

Due primarily to residual distrust stemming from the failed settlement on December 5, and believing that Purchaser's request for access was simply pretext for further delay, Seller resolved to deny the request. Its counsel responded on January 4, 2008, addressing each point raised in Purchaser's letter and suggesting that, upon receipt of "a complete statement of unsatisfied conditions precedent to settlement," the parties would "be in a position to assess what discovery needs to be done in this case." (DTX 417, at 2). When a second request for access was refused, U.S. Home sought relief in the initial action, serving Seller with a motion to compel an inspection of the Property "pursuant to Rule 34 of the Federal Rules of Civil Procedure and/or pursuant to the express terms of the parties' contract." (Civ. No. DKC 08-0267, ECF No. 31, at 2). On April 29, Seller "proposed a compromise... that [the parties select] an independent and unaffiliated firm to conduct an agreed upon scope of environmental testing on selected portions of the Property," but Purchaser declined. (DTX 565, at 2). A "core and hit list" report dated March 31, 2008, reflected that Purchaser's strategy for Bevard as of that date was to "[t]erminate [the] contract and get [its] deposit back via legal action." (DTX 443; T. 3/31/14, at 213).

Meanwhile, Seller continued to work toward closing by addressing certain issues that it believed would erase any doubt that all conditions precedent had been satisfied. As Mr. Colton testified, "we made an active decision to knock down every straw man stood up by Lennar as it related to conditions to closing.... [W]e felt we would go the extra yard or extra mile to answer every request or every statement we could get from Lennar about the conditions to closing." (T. 4/10/14, at 9). In Seller's view, any such issue had been resolved by April 28, 2008, when it called for settlement to occur on May 27. (DTX 445). Eleven days prior to that closing date, however — as Seller began forwarding closing documents and with the motion to compel inspection of the Property still pending — U.S. Home served a notice of default related to Seller's refusal to permit access (ECF No. 649 ¶ 30), thereby triggering cure periods by Seller under the Purchase Agreement and by iStar under the Consent and Estoppel Agreement, the latter of which would expire in early July (JTX 41 § 15(b); DTX 259 ¶ 11). By letter dated May 23, 2008, U.S. Home advised Seller of its position that "all conditions precedent to Settlement [were], in fact, not satisfied, and as such, Settlement will not occur on May 27, 2008." (ECF No. 649 ¶ 31).

On May 30, after U.S. Home failed to attend the scheduled settlement, Seller served a default notice of its own, asserting that Purchaser had "wrongfully failed to make [s]ettlement[.]" (DTX 458). On the same date, Seller's counsel responded to U.S. Home's notice of default, characterizing its prior requests for access as a discovery dispute that would be addressed by United States Magistrate Judge William Connelly in due course. Insofar as U.S. Home contended that it had a right to access under the Purchase Agreement, Seller argued that there could be no default because U.S. Home had failed to satisfy its own obligations:

(DTX 565, at 2).

On June 27, 2008, prior to expiration of iStar's cure period under the Consent and Estoppel Agreement, Judge Connelly issued an order finding that "U.S. Home has a contractual right to inspect the property" pursuant to § 13(a) of the Purchase Agreement and Fed.R.Civ.P. 34(a)(2). (DTX 460 ¶ 8). The court permitted inspection "for a six week period as detailed in the March 25, 2008[,] Proposed Scope of Work and Schedule [submitted by Purchaser's consultant] Environmental Resources Management, Inc." (Id. at ¶ 10). From Purchaser's perspective, this order came too soon. In an email to Lennar corporate officers dated June 25, 2008, Sam Sparks, a regional president, reported that he had "asked [Purchaser's litigation counsel] to file a supplemental brief either Friday [June 27] or Monday [June 30], in the hope that filing will raise additional questions and push an order out past July 3, ... the date that Sandler and [iStar's] right to cure expires[.]" (DTX 566). On June 30, counsel for iStar advised Purchaser that Seller would "comply with the June 27 Order," adding that the order effectively resolved Purchaser's notice of default because there was "nothing for [iStar] to cure." (DTX 461, at 1-2).

Despite the fact that Purchaser had gained the right of access it purportedly sought, it never availed itself of that right. Instead, Purchaser elected to terminate the Purchase Agreement, as it had planned to do since shortly after the request for access was denied. (DTX 443; T. 3/31/14, at 213; DTX 566). By a letter dated July 3, 2008, Purchaser advised:

(JTX 73, at 2). When Seller and Mr. Sandler did not return the deposits upon demand, U.S. Home commenced the instant action on July 17, 2008.9

In its initial complaint, U.S. Home alleged that Seller breached the Purchase Agreement when it refused the request for access to investigate the environmental condition of the Property, but Purchaser had not yet finally resolved why further investigation was warranted. The complaint recited that, in light of the prior sand and gravel mining operations on the Property, such investigation was necessary to shelter Purchaser from any future liability regarding "the release and threatened release of hazardous materials" under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq. (ECF No. 1 ¶ 49). The express purpose of the Phase I ESAs conducted by Schnabel and ECC, however, was to satisfy these obligations, and Purchaser warranted, in both the Second Amendment and the Consent and Estoppel agreement, that, having made due inquiry, it was unaware of any environmental issue. Thus, even after requesting access and serving a notice of default when permission was denied, Purchaser was, in effect, searching for a firmer basis upon which to justify its request.

Purchaser's post hoc strategy began to crystalize in mid-2008. In seeking to avoid the May 27 closing date, Purchaser "reached out to [local] earthwork contractors in hopes of locating someone who may have [firsthand] knowledge of the [historic sand and gravel mining] operations" on the Property. (DTX 568). One of those contractors advised that previous owners, before WPE, "had a contract with Maryland Environmental Services ... to haul treated sludge from the Blue Plains sewage treatment plant to the Bevard site." (Id.). Although the parties' environmental consultants had searched all relevant databases, conducted interviews, and made requests for information from appropriate agencies, they did not discover that sewage sludge (also known as "biosolids") had been applied to the Property. Upon further investigation, Purchaser learned that this practice was extensive — from the mid-1970s to the late 1980s, thousands of tons of treated sewage sludge was transported from various regional wastewater treatment plants and applied to the Bevard Property.

After an internal report of the sludging operation was initially circulated among Purchaser's corporate officers, Mr. Jacoby "couldn't sleep ... thinking about whether or not [Purchaser] could have caught this earlier." (DTX 570, at USH_02035516). The next day, he reported to Lennar's managers that he had "reviewed all the environmental reports and discover[ed]... [that] [t]he 2001 Schnabel Phase 1 ... contains a statement that [t]he fill material may have the potential to contain heavy metals, sludge, and varying debris" and that "[v]arious chemical tests may be required on the fill material to determine if contamination exists." (Id. (internal marks omitted)). Mr. Jacoby further observed that although Schnabel's geotechnical investigation did not find evidence of "debris, sludge, or heavy metals[,] ... [t]he report does not disclose whether or not the boring samples were tested or just observed" and "[t]here are no lab results appended to the report." (Id.).10

Despite Mr. Jacoby's misgivings, Purchaser resolved to pursue a "toxic route" in court by late 2008 (DTX 561) — in other words, to rely on a theory that the land application of sewage sludge on the Property constituted a breach of Seller's environmental representations and warranties. U.S. Home unveiled this new theory in a pre-discovery motion for summary judgment, filed on December 23, 2008:

(ECF No. 32-1, at 6-7).

Shortly after that motion was denied, U.S. Home was permitted to file an amended complaint — its operative pleading in the instant case — in which it added, inter alia, claims of fraud, based on Seller's failure to disclose the sludging operation, and breach of environmental representations and warranties. (ECF No. 52). Armed with knowledge of the sludging operation, Purchaser renewed its discovery efforts to gain access to the Property in order to conduct extensive soil sampling and testing. Arrangements were made at a discovery hearing on May 4, 2010, after which Judge Connelly issued an order providing U.S. Home with a right to inspect the Property in June and July 2010. (ECF No. 114). Purchaser retained Environ International Corporation ("Environ") to conduct sampling and testing, and the results of Environ's investigation revealed the presence of what Purchaser believes are "Hazardous Materials," as that term is defined in the Purchase Agreement.

Seller and iStar filed a joint counterclaim on June 30, 2009, seeking declaratory relief and specific performance of Purchaser's obligations under the Purchase Agreement and Contract for Services. (ECF No. 66). iStar subsequently filed an amended counterclaim. (ECF No. 447). When the Bevard transaction did not close on the anticipated date, Seller defaulted on the iStar loan, which permitted iStar to exercise its rights under collateral assignments of the agreements. iStar later exercised those rights by initiating a foreclosure action in the Circuit Court for Prince George's County, Maryland.11 On November 17, 2009, the Bevard Property was sold to Piscataway Road — Clinton MD LLC ("Piscataway"), a limited liability company of which iStar is the sole member.12

II. Findings of Fact and Conclusions of Law

Following the court's ruling on post-discovery cross-motions for summary judgment (ECF Nos. 624, 625), two primary issues remained for trial: (1) whether, in light of the requirements of § 11(a) of the Purchase Agreement, Seller breached the environmental representations and warranties set forth in § 12.2(d), and (2) whether Seller breached § 13(a) of the Purchase Agreement by denying U.S. Home's request for access. If the answer to either of these questions is in the affirmative, U.S. Home will prevail and is entitled to the return of its deposits pursuant to § 15(b). If both questions are answered in the negative, iStar wins and may be entitled — pending resolution of an issue regarding lapsed zoning on a portion of the Property — to specific performance of Purchaser's obligations under the Purchase Agreement pursuant to §§ 15(a) and (d), as modified by the Second Amendment.

Both questions present claims for breach of contract under Maryland law.13 Under the objective theory of contract interpretation, which applies in Maryland, a court must "give effect to the plain meaning of an unambiguous term, and will evaluate a specific provision in light of the language of the entire contract." Weichert Co. of Md., Inc. v. Faust, 419 Md. 306, 324, 19 A.3d 393 (2011). Contract terms must be construed according to their "customary, ordinary and accepted meaning," regardless of the parties' intentions at the time the contract was formed. Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 448, 952 A.2d 275 (2008). Therefore, when interpreting a contract, the court's task is to "[d]etermine from the language of the agreement itself what a reasonable person in the position of the parties would have meant at the time it was effectuated." Calomiris v. Woods, 353 Md. 425, 436, 727 A.2d 358 (1999) (internal quotation marks omitted); see also Capital Select Realtors, LLC v. NRT Mid-Atl., LLC, 197 Md.App. 698, 711, 14 A.3d 1257 (2011) ("The [objective theory of contract interpretation] thus encourages parties to use language as precisely as possible, so as to forestall costly inquiries into their subjective intentions").

A. Breach of Environmental Representations and Warranties

In Count VI of its amended complaint, U.S. Home alleges that Seller breached the environmental representations and warranties set forth in § 12.2(d) of the Purchase Agreement by failing to disclose that "a massive sewage sludge disposal operation had been conducted on the Property in the 1970s and 1980s," and that, as a result, "the Property has been used for the disposal of Hazardous Materials and contains Hazardous Materials, as that term is defined in ... the Agreement." (ECF No. 52 ¶ 143). In Count VII, it seeks a declaration that it was not obligated to proceed to settlement on May 27, 2008, because Seller had not satisfied a condition precedent to U.S. Home's obligation to close — namely, § 11(a) of the Purchase Agreement, which provided that Seller's representations and warranties had to be true and correct as of the date of settlement. (Id. at ¶ 153). In Purchaser's view, because the environmental representations and warranties contained in § 12.2(d) were not accurate, it was not required to settle on that date and its failure to do so did not constitute a default. (Id. at 38).

In § 12.2(d), Settlers Crossing and WPE made the following representations and warranties concerning the environmental condition of the Property:

(JTX 41 § 12.2.d).14

While the accuracy of Seller's representations and warranties under § 12.2(d) is expressly based on its knowledge, another provision of the Purchase Agreement, § 11(a), purported to make it a condition precedent to Purchaser's obligation to settle that all representations and warranties be "actual[ly] correct[] as of the time of [s]ettlement[.]" (Id. at § 11(a)). On summary judgment, however, the court found that the "actual correctness" of Seller's representations and warranties was not a true condition precedent:

(ECF No. 624, at 67-68 (internal citations omitted)). Because the condition set forth in § 11(a) related to Seller's representations and warranties, the court determined that satisfaction "must be assessed in terms of whether there was a material breach" and "[a]ny breach could only be material if the environmental condition of the property in some way would have affected Purchaser's intended use for the land — i.e., the construction of a residential community." (Id. at 82).

In light of that interpretation of §§ 11(a) and 12.2(d), the burden at trial fell on Purchaser to prove that Seller's environmental representations and warranties were not true in fact. Therefore, it was incumbent upon U.S. Home to demonstrate, by a preponderance of the evidence: (1) that there are "Hazardous Materials" on the Property, as that term is defined in the Purchase Agreement; (2) that the source of those "Hazardous Materials" was something other than what was disclosed in the environmental reports provided by Seller; and (3) that those "Hazardous Materials" are present in amounts such that remediation of the Property is required.

At trial, Purchaser's theory was that elevated concentrations of "heavy metals" found on the Property — namely, arsenic, aluminum, iron, and vanadium — constituted "Hazardous Materials"; that the elevated concentration of those elements could only have resulted from the land application of sewage sludge, which was not disclosed in Seller's environmental reports; and that extensive remediation would be required in order to construct the planned residential community. To meet its burden, Purchaser relied principally upon the testimony of two expert witnesses: Robin Richards, the environmental expert from Environ who designed and implemented the sampling and analysis plan for the Property; and Karl Kalbacher, who authored a 2001 document setting forth soil and groundwater cleanup standards for the Maryland Department of the Environment ("MDE").

Ms. Richards testified that Environ was retained by Purchaser in March 2010 "to test the accuracy of the environmental representations and warranties provided in Section 12.2(d) of the [Purchase Agreement]." (T. 4/1/14, at 94). To accomplish that goal, she initially developed a "sampling and analysis plan" for the Property. (Id. at 67). Ms. Richards had developed and implemented "hundreds" of sampling and analysis plans over the course of her career, many of which focused on "getting the operating permits for the land farming of industrial sludges; in particular, refinery sludges." (Id. at 67-68). She explained that "land farming" is "a term of art" referring the process of "tak[ing] sludge, [] apply[ing] it to the top of the land, spread[ing] it out over the top of the land, com[ing] back and disk[ing] it into a level of about anywhere from three to nine inches, and then [] manag[ing] the soil to maximize the ability of the natural soil bacteria ... to degrade the organic material in these sludges[.]" (Id. at 68). Ms. Richards developed sampling and analysis plans in accordance with regulations and guidance issued by the United States Environmental Protection Agency ("EPA"), which required "characterizing the land farm site as well as characterizing the land farm operations, including the sl[u]dge characteristics[.]" (Id. at 69). Asked what "characterizing the land farm site" entailed, she testified:

(Id. at 69-71).

Not all of the sampling and analysis plans Ms. Richards developed involved an assessment of "background" conditions. She explained:

(Id. at 72-73). She developed similar "focused, targeted, [and] biased" plans in circumstances in which she was investigating "a suspected source of contamination," such as when she "knew either from interviews or ... from historical documents where a spill or a release had occurred, and we were trying to ... find the hot spot and then be able to sample from that hot spot to determine how far the plume went out so that we could then figure out what needed to be done for assessing the risk and how to remediate." (Id. at 73).

The sampling and analysis plan that Ms. Richards designed for Bevard primarily involved "tak[ing] soil samples in locations where [she] had strong indication that sludge had been applied ... and analyz[ing] them for chemicals that [she] believed were indicative of the presence of sludge." (Id. at 94). She acknowledged that this was a "biased" sampling plan and that she was "just trying to find the ... evidence of sludge and the release of hazardous substances from the sludge." (T. 4/2/14, at 66). In other words, none of the samples that Environ tested were "from undisturbed, unsludged areas." (T. 4/1/14, at 200). In determining where to test, Ms. Richards relied primarily on historical sludge permitting documents — based on an assumption that, if the land application of sludge was permitted in an area, it was likely applied there — and interpretation of aerial photography and mapping provided by Aero-Data, a private consulting firm retained by Purchaser.

Ms. Richards said that she tested for "hazardous substances that [she] felt were indicative of the presence of sludge." (Id. at 95). She opined that "PCBs [i.e., polychlorinated biphenyls] ... were going to be one of [her] best indicators of whether sludges had been applied to this land and whether there had been a release of hazardous substances from those sludges":

(Id. at 100-01).

She also believed that aluminum and iron were "signatures for sludge":

(Id. at 102).

Ms. Richards tested for other elements — such as vanadium and arsenic — simply because they are "hazardous substances" that "were found at elevated levels in the primary soil investigations throughout the area ... as well as at depth." (Id. at 95). She "was not expecting" to find elevated arsenic levels on the Property, but historical data she subsequently received "for the sludges from Blue Plains and Piscataway, [as well as] Western Branch and Parkway [i.e., two other regional wastewater treatment plants that contributed sludge to the Bevard Property], ... [showed] that arsenic was present in the sludges." (Id. at 96).15

Ms. Richards summarized Environ's findings as follows:

(Id. at 93; PTX 274, 517). She opined that "[t]he only way there could be elevated levels of those substances was ... due to the release from sludging activities, [and] the elevation of those concentrations indicates hazardous substances are present at the site." (Id.). Asked by counsel for iStar whether she "made [any] effort at all to find" background levels — i.e. "what naturally occurring levels were on the Bevard Property" — Ms. Richards responded, "I didn't need to because the Maryland Department of the Environment has already defined what a background concentration would be for this area in the ATCs." (Id. at 187).

The term "ATCs," or Anticipated Typical Concentrations, refers to the background levels of various chemical elements found naturally in the soils of Maryland. These levels were initially set forth in a 2001 MDE document entitled "Cleanup Standards for Soil and Groundwater, Interim Final Guidance." (PTX 214). The principal author of that document was Karl Kalbacher, who testified at trial that the ATCs were derived from a "natural background study that was undertaken by [his] staff and [him]self to determine natural background concentration of metals in soil in geologic areas of the state of Maryland." (T. 4/2/14, at 99). This study was useful to the environmental community because "there were several metals whose human health risk-based calculated concentration was lower than the natural background concentration for metals in soil," such that "it would be impossible for anyone to clean up to the human health risk-based concentration because the natural concentration was higher." (Id. at 113). "Prior to the issuance of the guidelines," he explained, "there was no established provision for calculation of background outside of an individual conducting a site-specific background study." (Id. at 115). The guidelines addressed this problem by providing an indication as to what naturally-occurring background levels of certain elements an environmental consultant would expect to find at a given location, thereby eliminating the need for determining what the background levels actually were at the site prior to any contamination. According to Mr. Kalbacher, "[t]he Soil and Groundwater Cleanup Standards document is almost exclusively used by the regulated community to investigate and remediate sites"; the guidelines "are applied internally as well as externally, and they are used by multiple divisions within the Maryland Department of the Environment." (Id. at 101).

The study upon which the ATCs were based consisted of gathering "analytical data" from "federal and state Superfund sites" — i.e., contaminated sites that had been remediated by MDE — and "aggregat[ing] [the data] to calculate an arithmetic mean of the background metal concentrations, and then [] appl[ying] a standard deviation[.]" (Id. at 100). The results were then divided among three regions due to differing concentrations of metals found in the soils:

(Id. at 115). Because mountainous soils are generally less-weathered, substantially higher concentrations of metals were found to occur naturally in the soils in the western region of the state, lower concentrations were found in the central region, and the lowest concentrations were found in the eastern region. Mr. Kalbacher explained that the Bevard Property is located in the eastern geologic region (T. 4/2/14, at 115), meaning that the Anticipated Typical Concentrations of naturally-occurring metals were the lowest of any region in the State of Maryland.

In comparing the levels of arsenic, vanadium, iron, and aluminum found by Environ on the Property to the ATCs for the eastern region of Maryland, Mr. Kalbacher opined that "the site is contaminated with the release of controlled hazardous substances[.]" (Id. at 104). Asked the basis for characterizing these elements as "hazardous substances," he testified:

(Id. at 105-07). Asked, hypothetically, how he would advise a client who found the levels of these elements that Environ found on the Bevard Property, Mr. Kalbacher testified, "[m]y recommendation would be to report the results to the Maryland Department of the Environment and to seek consultation on how to effectuate a comprehensive investigation and subsequent remediation of the property." (Id. at 128).

The court does not find the testimony of Ms. Richards or Mr. Kalbacher to be persuasive and, in the case of Ms. Richards, it does not find it credible.17 Ms. Richards' testimony consisted essentially of the following syllogism: Environ tested soil samples exclusively from areas of the Property where sewage sludge was applied and those tests found elevated concentrations of heavy metals; therefore, the elevated concentrations of heavy metals were caused by a release from sewage sludge. The conclusion does not follow logically from the premises, relying instead upon the expert's ipse dixit opinion that "[t]he only way there could be elevated levels of those substances was ... due to the release from sludging activities[.]" (T. 4/1/14, at 93).18 An initial problem with this construct is that what Ms. Richards found on the Property was often not what she expected to find. According to Ms. Richards, PCBs "were going to be a very good indicator or signature of sludge disposal at the Bevard Properties" (T. 4/1/14, at 101), but she also acknowledged that PCBs are "ubiquitous in the environment" (id. at 155); none of the PCB levels she found exceeded cleanup standards (id., at 154); and she could only speculate as to why many of the PCB levels detected occurred at depths lower than where the sludge was expected to have been applied (id. at 188-90). Ms. Richards did not expect to find other elements, such as arsenic and vanadium, in sewage sludge, but when she found elevated levels on the Property, she simply assumed the cause was accumulated sludge based on very limited historical data. The historical testing data of the contributing wastewater treatment plants, moreover, showed that these elements were only sometimes detected and then only in minute amounts. (PTX 128, at EPA00004444-56; PTX 154; PTX 161; PTX 162; PTX 179; PTX 182; PTX 541; DTX 578; DTX 605; DTX 606, at PISC00045373). The court credits the testimony of Dr. Sally Brown, iStar's biosolids expert, who opined that, "in order for arsenic to be elevated in biosolids, there would need to be a source for arsenic. In all the treatment plants in question, there was no source for arsenic." (T. 4/8/14, at 74).19 Indeed, the testing data for arsenic at wastewater treatment plants showed levels "close to zero" or "effectively at zero," and many data points were below a detection limit of five parts per billion. (Id. at 57; PTX 128, at EPA00004444).

Dr. Brown and iStar's soil science expert, Dr. Walter Lee Daniels, agreed that, like PCBs, arsenic and vanadium were often found at depths not suggestive of a release from the surface application of sewage sludge. (T. 4/8/14, at 75; T. 4/9/14, at 206-07). With respect to vanadium, Dr. Brown testified that current regulations of biosolids do not limit that element because it "was never considered to be a risk in a soil system, and vanadium was never considered as a major contaminant in the biosolids ... in the U.S." (T. 4/8/14, at 49). In her review of historical documents related to the application of sewage sludge at the Property, moreover, she did "not see[] any evidence of a source of vanadium." (Id. at 83). Ms. Richards, by comparison, merely speculated that wastewater associated with "printing operations" of the Washington Post was "probably a major source" of vanadium. (T. 4/2/14, at 48). Lisa Williams, another highly credible iStar expert who had worked with the land application of biosolids from the same wastewater treatment plants for many years, testified that she had no understanding of vanadium content in sewage sludge because "we haven't tested or been required to test for vanadium in sewage sludge." (T. 4/9/14, at 83).

While the parties' experts generally agreed that contributing wastewater treatment plants added aluminum and iron to the sludges that were applied to the Property, Dr. Brown testified that aluminum is "ubiquitous and a major constituent of soil" (T. 4/8/14, at 83); Ms. Williams explained that "iron and aluminum are naturally in the soils" and that "[h]igh levels of that are actually added [to the sludge] because it's a good thing" (T. 4/9/14, at 99); and Dr. Daniels opined that "[t]he levels of aluminum and iron ... in these soils are typical of soils of this region" and "do not reflect contamination or excessive levels" (id. at 195-96). The court credits the testimony of Ms. Williams that quality controls at the wastewater treatment plants in question have remained fairly consistent over time (T. 4/8/14, at 175-77), and the testing data demonstrated that aluminum and iron levels were consistently monitored. The court further credits the testimony of Dr. Daniels that "iron and aluminum oxides ... are well documented in their affinity to specifically bind and absorb arsenic and vanadium," which "would be beneficial to any soil over time[.]" (T. 4/9/14, at 198). As explained in a 1985 report of metals found in the sludge produced by regional wastewater treatment plants, iron and aluminum do not represent "a potentially serious hazard ... to plants, animals, or humans" and, although they were added to the sludge, such that the sludge itself often "contain[ed] high levels of iron and/or aluminum, these elements do not pose a problem [in terms of crop production or plant accumulation] provided that the application site is well managed." (DTX 606, at PISC00045353, 54). The evidence generally reflected that the Bevard application was well managed, under the supervision of on-site inspectors and in compliance with permits. (DTX 612A, J. Bevard depo.).20 Thus, aside from the fact that the concentration of these elements exceeded ATC levels, there is little to suggest that aluminum and iron pose any real concern.

It is difficult to know what to make of Mr. Kalbacher's testimony. iStar did not specifically rebut this witness, and neither party asked any of the Maryland environmental consultants who testified if they had a similar understanding of the import of ATCs. There is, however, ample reason to conclude that the ATCs for the eastern region of Maryland cannot serve as a viable substitute for naturally-occurring background levels on the Property. For one thing, the ATCs have never been adopted by statute or regulation in Maryland, nor is the term mentioned in case law. Mr. Kalbacher acknowledged on cross-examination that the 2001 document setting forth the ATCs merely provides "guidance" and "is not compulsory." (T. 4/2/14, at 164). The guidance document itself recognized that the investigation upon which the ATCs were based "does not constitute a rigorous scientific analysis conducted in a controlled experimental setting" and that "ATC reference levels" were intended to "serve as general indicators of background levels of metals and trace elements in soil until a more rigorous and thorough background investigation can be completed." (T. 4/2/14, at 158; PTX 214, at 47). To date, no subsequent investigation has been completed. Moreover, Mr. Kalbacher agreed that the Maryland Department of the Environment "endorses, runs, and oversees the Maryland state biosolids program." (Id. at 153). Thus, if sewage sludge contains elevated levels of heavy metals, MDE could potentially "endorse the inappropriate land application of hazardous materials," a result that he agreed would be anomalous. (T. 4/2/14, at 153). Additionally, due to substantial differences in the concentrations of elements that Mr. Kalbacher's study found in different geological regions of the state, levels that are presumed to be naturally occurring in the western and central regions would, according to his testimony, require remediation in the eastern region where the Bevard Property is located. (Id. at 160-61). As Dr. Daniels explained, metal concentrations in soil can vary widely at a given property (T. 4/9/14, at 196-97); thus, ATCs, based on a mean of limited testing data across an entire region of the state, would seem a poor substitute for site-specific testing to determine background levels.

The 2001 guidance document authored by Mr. Kalbacher also points to a more fundamental problem with Purchaser's evidence. The document suggests that "to determine if more than one population of data exists at a property" — such as, for example, sewage sludge and background soils — "[t]he data collected from any sampling approach must be evaluated by statistical means[.]" (PTX 214, at 14; T. 4/2/14, at 15). Ms. Richards similarly testified that, in "look[ing] at the impact of sludging" at a given site, EPA guidance provided that a sampling and analysis plan should involve "a statistical comparison between the land farm conditions to the background conditions." (T. 4/1/14, at 7). But that is not what the sampling and analysis plan implemented at the Bevard Property did. While the stated purpose of the plan was to test the accuracy of Seller's environmental representations and warranties, Environ's methodology did not factor in critical language of § 12.2(d) — namely, that conditions "disclosed in Seller's environmental reports" were specifically excepted. (JTX 41 § 12.2(d)). Those reports revealed that from approximately 1957 to 1991, the Property was extensively mined for sand and gravel and that large portions were replenished with fill material of unknown quality. (JTX 25, at SCH00000599). Indeed, sewage sludge was applied to the Property with the intent of improving the quality of the soil, which had been diminished due to decades of mining activities. (DTX 612A, J. Bevard depo.). The URS report noted that mining operations had depleted the soil, that the Piscataway Wastewater Treatment Plant system ran through 300 acres of the Property, and that a small portion of the Property was on the State's master list of hazardous sites related to an experimental project by the EPA involving the land application of sludges generated by the wastewater treatment plant. (JTX 35, at USH-00029077-78).21 Schnabel cautioned that neither the Phase I ESA nor the 2004 update included soil sampling or testing (JTX 29, at ECC 00001135), and while it did not visually observe evidence of questionable materials in the soil, Purchaser either knew or should have known that the chemical content of the soil was an unknown factor, a point alluded to by Mr. Jacoby when the sludging operation was initially discussed at Lennar. (DTX 570, at USH_02035516).

Indeed, Purchaser later retained ECC to conduct an independent Phase I ESA, and that consultant's specific recommendation that Purchaser "assess native soil quality" in certain portions of the Property was largely ignored. (JTX 52 § 1). Asked on cross-examination by Purchaser's counsel whether any of the items listed in the ECC report were "intended to alert Lennar that there was heavy metal contamination on the property," Joseph King, who supervised the ECC environmental site assessment of the Property, responded, "[n]ot specifically heavy metal contamination, but that there were areas of unknown conditions — soil conditions." (T. 4/4/14, at 59). Nevertheless, Purchaser subsequently represented to Seller (in the Second Amendment), to iStar (in the Consent and Estoppel Agreement), and to at least one potential joint venture partner that it was satisfied with the environmental condition of the Property. As Mr. Beckwitt acknowledged at trial, when Purchaser requested access to the Property in early 2008, it was not seeking to investigate any specific environmental condition. (T. 3/31/14, at 132). To the contrary, the evidence strongly supports that this request was essentially a fishing expedition designed to delay closing and to search for a reason to avoid it altogether.

In short, the reports provided by Seller prior to execution of the Purchase Agreement put Purchaser, a sophisticated homebuilder, on inquiry notice of the potential for contamination, at least as it related to the historic mining operation. See Poffenberger v. Risser, 290 Md. 631, 637, 431 A.2d 677 (1981) (a plaintiff is on inquiry notice when it has "knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry (thus, charging the individual) with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued"). Thus, to test the environmental representations and warranties, Environ had to demonstrate the presence of "Hazardous Materials" related to some other source. As set forth in its amended complaint (ECF No. 52 ¶ 143), Purchaser's late-developing theory as to the cause of a "release" of heavy metals on the Property that was not disclosed by Sellers was sewage sludge, but its expert's sampling and analysis plan could not confirm that theory because of its "biased" nature. There was no credible evidence supporting Ms. Richards' ipse dixit conclusion that sewage sludge was the source of any heavy metals on the Property and substantial evidence suggested otherwise. Counsel for iStar vigorously cross-examined Ms. Richards regarding her disavowal of prior statements that certain sampling sites were outside of the areas where sludge was applied, and two of iStar's experts — Dr. Daniels and Dr. Shahrokh Rouhani — opined that there was essentially no difference between the quality of soils in these areas and those that were believed to have been applied with sludge. (T. 4/9/14, at 188; T. 4/11/15, at 126). Ultimately, however, even assuming that Environ tested only "sludged" areas, it could not establish that sewage sludge released "Hazardous Materials" without conducting a statistical comparison with background soils on the Property. Purchaser suggested that the ATCs served as a valid comparator, but the ATCs, if credited as a substitute for background, could only show that there were excessive levels of heavy metals — not what put them there. Accordingly, Purchaser has not met its burden of demonstrating that the source of "Hazardous Materials" on the Property was something other than what was disclosed in the environmental reports provided by Seller.

In light of that conclusion, the court need not reach the question of whether there were "Hazardous Materials" on the Property in material amounts, but Purchaser fell short in this regard as well. Under § 12.2(d) of the Purchase Agreement, the term "Hazardous Materials" is defined as "hazardous wastes, hazardous substances, and toxic materials prohibited or regulated by federal, state or local law, regulation, or order, ... [and] polychlorinated [biphenyls] ("PCBs")." It is undisputed that PCBS were not found on the Property in amounts sufficient to constitute a material breach of Seller's environmental representations and warranties. To establish that the arsenic, vanadium, iron, and aluminum levels constituted "Hazardous Materials," Purchaser seemingly relies on the ATCs, but it has not shown that the non-compulsory guidance constitutes a "federal, state or local law, regulation, or order." In its closing argument, Purchaser asserted that "[e]ach [element] is a hazardous material under Article [7]-201(l) ... [of] the environmental article" of the Maryland Code. (T. 4/15/14, at 29). That section defines a "hazardous substance" as "any substance ... [d]efined as a hazardous substance under § 101(14) of the federal act; or ... [i]dentified as a controlled hazardous substance by the Department in the Code of Maryland Regulations." Pursuant to section 101(14) of CERCLA, "[t]he term `hazardous substance' means ... any hazardous waste having the characteristics identified under or listed pursuant to section 3001 of the Solid Waste Disposal Act [42 U.S.C. § 6921] (but not including any waste the regulation of which under the Solid Waste Disposal Act ... has been suspended by Act of Congress) [.]" 42 U.S.C. § 9601(14). Under 40 C.F.R. § 261.4(a)(1), however, "[d]omestic sewage" and "[a]ny mixture of domestic sewage and other wastes that passes through a sewer system to a publicly-owned treatment works" is expressly excluded from the definition of "solid wastes" under CERCLA. Similarly, in Maryland, COMAR 26.13.02.04 excludes from the State's definition of "solid wastes" "[d]omestic sewage ... that passes through a sewer system to a publicly owned treatment work for treatment," as well as certain industrial wastewater, and defines "[d]omestic sewage" as "untreated sanitary wastes that pass through a sewer system." Thus, sewage sludge, consisting essentially of wastes that pass through a sewer system that are then treated by publicly owned treatment works and approved for land application by regulatory authorities, appear to be excluded from the definition of hazardous substances under state and federal law. Counsel for iStar argued as much in closing (T. 4/15/14, at 95-96), and Purchaser did not challenge this argument in its rebuttal.

B. Refusal of Access

Resolution of Counts I — III and, to a limited extent, Count VII of U.S. Home's amended complaint turn on the question of whether Seller's refusal of U.S. Home's request for access to the Property constituted a breach of § 13(a) of the Purchase Agreement vis-à-vis § 15(b). Specifically, Count I alleges breach against Settlers Crossing and WPE related to their "refusal to allow U.S. Home to inspect the Property" (ECF No. 52 ¶ 99); Count II alleges breach against BDC for failing to return U.S. Home's deposit on the Contract for Services following the alleged breach (id. at ¶ 114); Count III alleges breach of guaranty against Mr. Sandler for his failure to return deposits under the parties' agreements upon demand (id. at ¶ 122); and Count VII seeks, in relevant part, a declaration that "U.S. Home properly terminated the Agreement on July 3, 2008, based on [] Seller's material breach of Section 13(a) of the Purchase Agreement" (id. at 38).

At trial, the parties presented extensive evidence, and argued at length, regarding whether Seller's refusal to permit Purchaser access to the Property to conduct investigations constituted a breach of § 13(a). That section provided, in relevant portion, that "Purchaser shall have the right .... with the prior approval of WPE, in each instance, until Settlement, to make such investigations, studies and tests with respect to the Property as Purchaser deems necessary or appropriate." (JTX 41 ¶ 13(a)). Pursuant to § 15(b), "[i]f Settlers Crossing shall ... breach any of its representations, warranties or covenants ... in any material respect ... then Purchaser shall have the right, as its sole and exclusive remedy, ... [to] terminate this Agreement and receive a return of its Deposit[.]" (Id. at ¶ 15(b)). In Purchaser's view, U.S. Home's request for access to the Property in early 2008 was entirely reasonable and Seller denied permission for no legitimate reason; thus, it is entitled to a refund of its deposits. According to Seller, Purchaser's request for access was an unreasonable "sham request" and it was within its rights to refuse permission.

Purchaser cannot prevail on its claim for breach of contract related to Seller's refusal of access for three reasons. The first relates to the fact that the access issue was resolved prior to expiration of iStar's cure period under the Consent and Estoppel Agreement. Pursuant to § 10 of that contract, Purchaser agreed that "if Settlers Crossing or WPE defaults under the terms of the Purchase [Agreement], [it would] promptly notify [iStar] ... and, before taking any action against Settlers Crossing or WPE, or terminating the Purchase [Agreement], provide [iStar] with a reasonable period of time to cure such default[.]" (DTX 259 § 10). While the agreement contemplated cure periods of varying duration depending on the circumstances, and it is unclear which applied, there appears to be no dispute that iStar's cure period expired on July 2, 2008. (JTX 73, at 2). Prior to that date — specifically, on June 27, 2008 — Judge Connelly issued an order granting U.S. Home's motion to compel inspection of the Property in the initial action. (DTX 460). Thus, Purchaser was granted the right to inspect the Property prior to expiration of iStar's right to cure and, as iStar communicated by letter dated June 30, there was "nothing for [it] to cure." (DTX 461, at USH-00004666).

During closing arguments, counsel for Purchaser asserted that "Maryland law is clear" that "a breach cannot be cured by a court order" (T. 4/15/14, at 119), but he cited no case law in support of that proposition, nor is the court aware of any.22 Notably, at the time Purchaser provided notice of default to Seller and iStar, a fully-briefed motion to compel access in the initial action had been pending for more than two weeks. Thus, Purchaser was aware that the access issue might be resolved by court order prior to expiration of the applicable cure periods. In fact, it actively sought to avoid that possibility by directing counsel "to file a [post-hearing] supplemental brief ... in the hope that filing will raise additional questions and push an order out past July 3[,] ... the date that Sandler and [iStar's] right to cure expires[.]" (DTX 566). As it happened, Judge Connelly resolved the issue before that date and iStar promptly gave notice advising that Seller would comply the court's order. (DTX 361, at USH-00004666). At best, Purchaser has shown that its request for access was delayed from January 3 to June 27, 2008, a time period when, the evidence overwhelmingly supports, it had not yet resolved why access was necessary or what it would look for if it gained access to the Property. Section 15(b) of the Purchase Agreement authorized Purchaser to terminate the agreement for a breach of Seller's representations, warranties, or covenants "in any material respect[.]" (JTX 41 § 15(b)). To the extent Seller's refusal of access was a breach, Judge Connelly's order, issued prior to expiration of iStar's right to cure, rendered that breach immaterial. See Gresham v. Lumbermen's Mut. Cas. Co., 404 F.3d 253, 260 (4th Cir.2005) ("A breach is material `if it affects the purpose of the contract in an important or vital way.'" (quoting Sachs v. Regal Sav. Bank, FSB, 119 Md.App. 276, 283, 705 A.2d 1 (1998)).

U.S. Home's breach of contract claim also fails because it did not satisfy a precondition to its right of access under § 13(c) of the Purchase Agreement. That section provided, in relevant part:

(Id. at § 13(c)).

In response to U.S. Home's notice of default, Seller asserted that Purchaser was not entitled to enter the Property without providing the required certificate of insurance. (DTX 656, at 2). In an email dated June 4, 2008, Mr. Jacoby confirmed to several colleagues at Lennar that "[w]e never provided [Seller] with any Certificate of Insurance because we were never asked to." (DTX. 644). While it is true, as Mr. Jacoby further noted, that Seller gave Purchaser "free and unsupervised access to the property throughout the contract period until [Purchaser's] formal request" (id.), the § 13(a) request for access in early 2008 was of a fundamentally different character than the parties' prior dealings. This request was made at a time when the parties had essentially ceased all communications, other than through attorneys. Unlike prior occasions in which Purchaser accessed the Property, this request was formal, in writing, and specifically pointed to a contractual right that required Seller's approval. Moreover, this request was made in the context of litigation; in fact, it was couched in terms of both a contractual right and a discovery right to inspect the Property. (JTX 66, at iStar00019491). To the extent Purchaser suggests that Seller waived a right to require a Certificate of Insurance, § 18(G) of the parties' agreement provides that "[n]o waiver of any of the provisions of this Agreement shall be valid unless the same is in writing and is signed by the party against [] which it is [s]ought to be enforced." (JTX 41 ¶ 18(G)). The evidence does not reflect that any such waiver was ever signed by Seller.

According to the Restatement (Second) of Contracts, "[p]erformance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused." See generally Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md. 300, 13 A.3d 1268 (2011) (applying Restatement (Second) of Contracts § 225). Much like U.S. Home was not obligated to close until Seller had satisfied certain conditions precedent to settlement, Seller was under no obligation to permit U.S. Home to enter the Property until Purchaser produced a Certificate of Insurance. Because Purchaser never satisfied that condition, there could be no breach.

Finally, Seller acted within its rights in withholding permission. While the conduct of both parties related to the request for access is reminiscent of children throwing sand at each other in a sandbox, the touchstone for the court's analysis is reasonableness. As explained in the opinion deciding prediscovery summary judgment motions:

(ECF No. 41, at 27). Thus, the critical question with regard to the access issue is whether Seller's refusal of access was reasonable. In deciding the initial summary judgment motion, the court found there were "genuine issues of material fact regarding the underlying reason for U.S. Home's request and whether Seller's rejection of the request was reasonable." (Id. at 29). Upon consideration of the evidence at trial, the court concludes that U.S. Home's request for access was not made in good faith and, under the particular circumstances of this case, that Seller's refusal of access was reasonable.

The evidence demonstrated that, by at least October 1, 2007, Purchaser viewed the Bevard transaction as a financial albatross and actively sought to relieve itself of this burden. In the Second Amendment, executed less than five months earlier, Purchaser had already extracted significant concessions from Seller in light of the contracting housing market, resulting in a substantially reduced purchase price in exchange for a corporate guaranty by Lennar. (JTX 56). At the same time Lennar guaranteed to Seller that U.S. Home would go to settlement, it was actively searching for a joint venture partner to purchase the Property — a result that would have been prohibited, absent Seller's consent, under § 18(F) of the Purchase Agreement. (JTX 41 ¶ 18(F)). When Purchaser was unable to find a joint venture partner or land bank to assume its contractual obligations, it retained "a team of high priced lawyers and consultants" (DTX 380) to search for an "escape clause" in the Purchase Agreement (T. 3/31/14, at 184). When Seller began forwarding closing documents in advance of the December 5, 2007, settlement date, it received no response from Purchaser (T. 4/3/14, at 60); in fact, as the settlement date approached, project-level managers at U.S. Home were directed to have no contact with Seller's principals (DTX 401). Having learned that Purchaser was seeking to avoid the contract (T. 4/10/14, at 55-57), Seller was understandably concerned and commenced the initial action in response.

Thus, by January 3, 2008, when U.S. Home transmitted its request for access, there was good reason for Seller to be skeptical of Purchaser's motives. This skepticism was only amplified by the content of the letter itself, which cited various issues that had been specifically addressed by the parties over the prior two-plus years since the inception of the project. (T. 4/3/14, at 55). Mr. Beckwitt's testimony that the filing of the initial action was the impetus for requesting access to inspect the Property (T. 3/31/14, at 132), is belied by the fact that a draft letter requesting access had been circulated among Lennar executives before the law suit was commenced (DTX 399). Mr. Beckwitt acknowledged that Purchaser had "no reason to believe that there was anything wrong with the property" at the time of the request and that it "didn't know what [it would] find" if it gained access. (T. 3/31/14, at 132). The evidence shows that the purpose of Purchaser's request for access was to delay closing while it settled on a strategy to avoid its obligations under the Bevard contracts. This conclusion is supported by the fact that Purchaser later rejected Seller's offer of compromise as to the access issue (DTX 565, at 2) and that, after gaining a right of access to the Property through the court, Purchaser never exercised that right. Rather, as reflected in a March 31, 2008, "core and hit list report," Purchaser was determined to "[t]erminate [the] contract and get [its] deposit back via legal action." (DTX 443; T. 3/31/14, at 213).

Based on these facts, the court concludes that U.S. Home's request for access was not made in good faith and, consequently, that Seller's denial of that request was reasonable. Accordingly, Seller did not breach its obligations under § 13(a) of the Purchase Agreement.

III. Conclusion

For the foregoing reasons, the court concludes that Purchaser has not met its burden at trial as to any of the remaining claims in its amended complaint. Insofar as iStar's amended counterclaim seeks a declaration that Purchaser was "obligat[ed] to settle ... and pay the considerations due under the [Purchase Agreement] and the Contract for Services on May 27, 2008" (ECF No. 447 ¶ 82.a(2)), which is essentially the converse of the declaratory relief sought by U.S. Home, iStar appears to be entitled to relief under the Purchase Agreement upon Purchaser's default. Pursuant to § 15(a), as modified by the Second Amendment, upon default by U.S. Home, "Settlers Crossing shall be entitled to specific performance ... to complete the Settlement in accordance with the Agreement and pay the Purchase Price to Settlers Crossing." (JTX 56 ¶ 27 (modifying § 15(a)). Moreover, under § 15(d), also as modified by the Second Amendment, Lennar is liable as U.S. Home's corporate guarantor. (Id. at ¶ 28 (adding § 15(d)). As iStar now stands in the shoes of Settler's Crossing, it is entitled to specific performance under the Purchase Agreement.23

Before judgment may be entered, however, a question remains as to whether iStar can deliver the Property that was promised in the Purchase Agreement. Prior to the court's decision on the parties' cross-motions for summary judgment, Purchaser moved for leave to file a supplemental memorandum related to the alleged fact that zoning for a portion of the Property has lapsed. (ECF No. 611). The court denied that motion, without prejudice to renewal, finding that "[t]he rezoning is only relevant insofar as it might affect an award of damages if iStar were ultimately prevail." (ECF No. 624, at 2 n. 1). Further proceedings will be necessary to determine whether, or to what extent, the lapsed zoning affects iStar's remedy and the measure of damages in this case.

A separate order will follow.