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This section contains the nature of the case and procedural background.

Di-Chem (D) was a chemical distributor. D leased space from Mel Frank (P). There were no face to face negotiations, but P was aware that D was going to store chemicals on the site. Some of the chemicals that D distributes are hazardous materials. The lease was to start June 1, 1994, and end May 31, 1997. The lease limited D’s usage to storage and distribution. The lease required D to make no unlawful use of the premises and to comply with all City Ordinances. There was also a destruction of premises provision that allowed termination under certain circumstances. On July 21, 1995, the city’s fire chief and several city authorities inspected the premises. That inspection resulted in a finding that the building did not comply with Code requirements and that the hazardous materials must be removed within seven days to eliminate the hazard. On August 2nd, D informed P of the city’s actions and then informed P of its intent to relocate to avoid civil and criminal penalties. On October 23rd, D then informed P that it was going to vacate the premises by the end of October. D stated to P that the structure was useless as a chemical warehouse. P then sued for breach of contract. The court found for P in that P had no reason to know or believe that chemicals classified as hazardous would be stored in the warehouse. D appealed.

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