759 F.2d 1032 (2nd Cir. 1985), 606, State of N.Y. v. Shore Realty Corp.

Docket Nº:606, Docket 84-7925.
Citation:759 F.2d 1032
Party Name:The STATE OF NEW YORK, Appellee, v. SHORE REALTY CORP. and Donald LeoGrande, Appellants.
Case Date:April 04, 1985
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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759 F.2d 1032 (2nd Cir. 1985)

The STATE OF NEW YORK, Appellee,


SHORE REALTY CORP. and Donald LeoGrande, Appellants.

No. 606, Docket 84-7925.

United States Court of Appeals, Second Circuit

April 4, 1985

Argued Dec. 5, 1984.

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David H. Peirez, Garden City, NY (Reisman, Peirez & Reisman, William R. Ginsberg, Charles A. Singer, Garden City, N.Y., of counsel), for appellants.

Gordon J. Johnson, Asst. Atty. Gen., New York City (Robert Abrams, Atty. Gen. of the State of N.Y., Peter H. Schiff, Deputy Sol. Gen., James A. Sevinsky, Albany, N.Y., Stuart Miller, Nancy Stearns, Asst. Attys. Gen., New York City, of counsel), for appellee.

(F. Henry Habicht II, Asst. Atty. Gen., Washington, D.C., Raymond J. Dearie, U.S. Atty., for the E.D. of New York, Janice Siegel, Asst. U.S. Atty., Brooklyn, N.Y., Nancy B. Firestone, Diane Donley, Donald

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T. Hornstein, Dept. of Justice, Washington, D.C., of counsel), for amicus curiae U.S.

Before FEINBERG, Chief Judge, OAKES and NEWMAN, Circuit Judges.

OAKES, Circuit Judge:

This case involves several novel questions about the scope of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Secs. 9601-9657 (1982) ("CERCLA"), and the interplay between that statute and New York public nuisance law. CERCLA--adopted in the waning hours of the Ninety-sixth Congress, and signed by President Carter on December 11, 1980--was intended to provide means for cleaning up hazardous waste sites and spills, and may generally be known to the public as authorizing the so-called Superfund, the $1.6 billion Hazardous Substances Response Trust Fund, 42 U.S.C. Secs. 9631-9633.

On February 29, 1984, the State of New York brought suit against Shore Realty Corp. ("Shore") and Donald LeoGrande, its officer and stockholder, to clean up a hazardous waste disposal site at One Shore Road, Glenwood Landing, New York, which Shore had acquired for land development purposes. At the time of the acquisition, LeoGrande knew that hazardous waste was stored on the site and that cleanup would be expensive, though neither Shore nor LeoGrande had participated in the generation or transportation of the nearly 700,000 gallons of hazardous waste now on the premises. The State's suit under CERCLA for an injunction and damages was brought in the United States District Court for the Eastern District of New York, Henry Bramwell, Judge. The complaint also contained pendent state law nuisance claims, based on both common law and N.Y.Real Prop.Acts.Law Sec. 841 (McKinney 1979). On October 15, 1984, the district court granted the State's motion for partial summary judgment. Apparently relying at least in part on CERCLA, it directed by permanent injunction that Shore and LeoGrande remove the hazardous waste stored on the property, subject to monitoring by the State, and held them liable for the State's "response costs," see 42 U.S.C. Sec. 9607(a)(4)(A). In the alternative the court based the injunction on a finding that the Shore Road site was a public nuisance. Following a remand by this court on December 14, 1984, the district court on January 11, 1985, stated with more particularity the undisputed material facts underlying its decision finding defendants liable for the State's response costs and clarifying its earlier decision by basing the injunction solely on state public nuisance law. The court also modified its earlier decision by suggesting that CERCLA does not authorize injunctive relief in this case. 1

We affirm, concluding that Shore is liable under CERCLA for the State's response costs. We hold that Shore properly was found to be a covered person under 42 U.S.C. Sec. 9607(a); that the nonlisting by the Environmental Protection Agency ("EPA") 2 of the site on the National Priorities List ("NPL"), 42 U.S.C. Sec. 9605(8)(B), is irrelevant to Shore's liability; that Shore cannot rely on any of CERCLA's affirmative defenses; but that, as suggested in the amicus brief filed for the United States and the district court's supplemental memorandum, injunctive relief under CERCLA is not available to the State. We nevertheless hold that the district court, exercising its pendent jurisdiction, properly granted the permanent injunction based on New York public nuisance law. Moreover, we hold LeoGrande jointly and severally liable under both CERCLA and New York law.


Some of the most heated arguments on this appeal involve whether certain material

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facts are undisputed. After careful scrutiny of the record and the district court's supplemental memorandum, we base our decision on the following facts.

LeoGrande incorporated Shore solely for the purpose of purchasing the Shore Road property. All corporate decisions and actions were made, directed, and controlled by him. By contract dated July 14, 1983, Shore agreed to purchase the 3.2 acre site, a small peninsula surrounded on three sides by the waters of Hempstead Harbor and Mott Cove, for condominium development. Five large tanks in a field in the center of the site hold most of some 700,000 gallons of hazardous chemicals located there, though there are six smaller tanks both above and below ground containing hazardous waste, as well as some empty tanks, on the property. The tanks are connected by pipe to a tank truck loading rack and dockage facilities for loading by barge. Four roll-on/roll-off containers and one tank truck trailer hold additional waste. And before June 15, 1984, one of the two dilapidated masonry warehouses on the site contained over 400 drums of chemicals and contaminated solids, many of which were corroded and leaking. 3

It is beyond dispute that the tanks and drums contain "hazardous substances" within the meaning of CERCLA. 42 U.S.C. Sec. 9601(14). The substances involved--including benzene, dichlorobenzenes, ethyl benzene, tetrachloroethylene, trichloroethylene, 1,1,1-trichloroethene, chlordane, polychlorinated biphenyls (commonly known as PCBs), and bis (2-ethylhexyl) phthalate--are toxic, in some cases carcinogenic, and dangerous by way of contact, inhalation, or ingestion. These substances are present at the site in various combinations, some of which may cause the toxic effect to be synergistic.

The purchase agreement provided that it could be voided by Shore without penalty if after conducting an environmental study Shore had decided not to proceed. LeoGrande was fully aware that the tenants, Applied Environmental Services, Inc., and Hazardous Waste Disposal, Inc., were then operating--illegally, it may be noted--a hazardous waste storage facility on the site. Shore's environmental consultant, WTM Management Corporation ("WTM"), prepared a detailed report in July, 1983, incorporated in the record and relied on by the district court for its findings. The report concluded that over the past several decades "the facility ha[d] received little if any preventive maintenance, the tanks (above ground and below ground), pipeline, loading rack, fire extinguishing system, and warehouse have deteriorated." WTM found that there had been several spills of hazardous waste at the site, including at least one large spill in 1978. Though there had been some attempts at cleanup, the WTM testing revealed that hazardous substances, such as benzene, were still leaching into the groundwater and the waters of the bay immediately adjacent to the bulkhead abutting Hempstead Harbor. 4 After a site visit on July 18, 1983, WTM reported firsthand on the sorry state of the facility, observing, among other things, "seepage from the bulkhead," "corrosion" on all the

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tanks, signs of possible leakage from some of the tanks, deterioration of the pipeline and loading rack, and fifty to one hundred fifty-five gallon drums containing contaminated earth in one of the warehouses. The report concluded that if the current tenants "close up the operation and leave the material at the site," the owners would be left with a "potential time bomb." WTM estimated that the cost of environmental cleanup and monitoring would range from $650,000 to over $1 million before development could begin. After receiving this report Shore sought a waiver from the State Department of Environmental Conservation ("DEC") of liability as landowners for the disposal of the hazardous waste stored at the site. Although the DEC denied the waiver, Shore took title on October 13, 1983, and obtained certain rights over against the tenants, whom it subsequently evicted on January 5, 1984.

Nevertheless, between October 13, 1983, and January 5, 1984, nearly 90,000 gallons of hazardous chemicals were added to the tanks. And during a state inspection on January 3, 1984, it became evident that the deteriorating and leaking drums of chemicals referred to above had also been brought onto the site. Needless to say, the tenants did not clean up the site before they left. Thus, conditions when Shore employees first entered the site were as bad as or worse than those described in the WTM report. As LeoGrande admitted by affidavit, "the various storage tanks, pipe lines and connections between these storage facilities were in a bad state of repair." While Shore claims to have made some improvements, such as sealing all the pipes and valves and continuing the cleanup of the damage from earlier spills, Shore did nothing about the hundreds of thousands of gallons of hazardous waste standing in deteriorating tanks. In addition, although a growing number of drums were leaking hazardous substances, Shore essentially ignored the problem until June, 1984. See supra note 3.

On September 19, 1984, a DEC inspector observed one of the large tanks, which held over...

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