Rosenshein v. Kleban

• Decision Date: 26 February 1996
• Docket Number: No. 94 Civ. 8483 (WCC).,94 Civ. 8483 (WCC).
• Citation: 918 F. Supp. 98
• Parties: Bernard J. ROSENSHEIN, et al., Plaintiffs, v. Albert J. KLEBAN, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

918 F. Supp. 98

Bernard J. ROSENSHEIN, et al., Plaintiffs, v. Albert J. KLEBAN, et al., Defendants.

No. 94 Civ. 8483 (WCC).

United States District Court, S.D. New York.

February 26, 1996.

COPYRIGHT MATERIAL OMITTED

Chazkel & Associates, P.C., East Brunswick, New Jersey (Michael F. Chazkel, Of Counsel), for Plaintiffs and Intervening Plaintiff.

Kleban & Samor, P.C., Southport, Connecticut (Elliot I. Miller, Irve J. Goldman, Of Counsel), for Individual Defendants.

The Law Offices of Peter G. Eikenberry, New York City (Peter G. Eikenberry, Michael Valentine, Of Counsel), for Defendant White Consolidated Industries, Inc.

Robinson Silverman Pearce Aronsohn & Berman, New York City (Rand J. Levin, Of Counsel), for Defendant Chicago Title Insurance Company, Inc.

WILLIAM C. CONNER, Senior District Judge.

Plaintiffs have brought this action to recover the costs of environmental clean-up at a Connecticut property formerly owned by plaintiff Windsor Green Associates ("Windsor Green"). Certain defendants have moved for summary judgment; plaintiffs have cross-moved to amend the complaint. Bullard Square Corporation ("BSC"), the current owner of the property, has made an application to intervene. For the reasons set forth below, defendants' motions are granted in part and denied in part, plaintiffs' motion is denied, and BSC's application is granted.

BACKGROUND

On December 26, 1986, defendant White Consolidated Industries, Inc. ("White") sold a parcel of property, on which it had formerly manufactured heavy industrial tools, to defendant Alfred J. Kleban. Kleban then assigned the property to Windsor Green. In conjunction with the sale, White agreed to indemnify Windsor Green from liability to third parties for releases of hazardous or toxic substances that occurred on the property prior to the closing date.

On January 12, 1989, the individual defendants,¹ who were each partners in Windsor Green, sold their partnership interests to plaintiff Rosenshein Associates of Hamden, Inc. ("Hamden") and plaintiff Quaker Ridge Wykagyl Associates, Inc. ("Quaker Ridge"). Hamden and Quaker Ridge are corporations wholly owned by plaintiff Bernard J. Rosenshein. Plaintiffs allege that as part of this transaction, the individual defendants agreed to indemnify plaintiffs Hamden and Quaker Ridge for any losses that they might suffer as a result of environmental contamination to the property.

Windsor Green's primary purpose was to develop and operate the property, which was its only major asset, as retail space. Windsor Green obtained substantial construction loans from The Chase Manhattan Bank, N.A. ("Chase") in 1989 and 1990. On March 1, 1990, Windsor Green entered into a contract to develop and sell a portion of the property to Waban, Inc. ("Waban"), to be used as commercial condominiums. During the negotiations for that sale, Waban hired an environmental consultant who uncovered some areas of contamination. Plaintiffs allege that in order to proceed with the sale to Waban, they were obliged to expend substantial sums to perform the clean-up and remediation required by federal and state regulations. Plaintiffs allege that on August 28, 1990, Windsor Green gave written notice to White of the facts giving rise to White's liability for indemnification.

On December 6, 1990, Rosenshein filed for bankruptcy under Chapter 11. Quaker Ridge filed for bankruptcy under Chapter 11 on May 26, 1992. On July 16, 1992, Rosenshein filed a disclosure statement that describes the financial condition of various Chapter 11 debtors that he owned, including Quaker Ridge. On August 11, 1992, the bankruptcy court signed an order confirming the debtors' plan of reorganization and consolidating the various debtors. The order also consolidated the debtors with Hamden. It is not clear from the documents currently before this court whether Hamden had also filed for bankruptcy.

Meanwhile, on August 15, 1991, Windsor Green filed for bankruptcy under Chapter 11. Chase was by far its largest creditor, with outstanding balances on the construction loans totalling more than $20,000,000. Windsor Green, as debtor-in-possession, sold the property to BSC, to which Chase had transferred its claims. BSC purchased the property for $10,015,000, which it offset against its claims. On October 15, 1991, the bankruptcy court approved the sale. On November 5, 1993, the bankruptcy court signed an order confirming Windsor Green's plan of reorganization.

Plaintiffs' claims against White and the individual defendants for environmental damage to the property were not listed on the schedules of assets that the debtors were required to file with the bankruptcy court. Furthermore, none of the debtors' disclosure statements referred to plaintiffs' claims. Instead, Windsor Green's disclosure statement affirmatively stated that as of June 28, 1992, its only assets consisted of $25,000 in cash. The disclosure statement filed by Rosenshein and Quaker Ridge on July 16, 1992, stated that Quaker Ridge's interest in Windsor Green had been deemed valueless by July 1992. Exhibit G to that disclosure statement listed a number of assets that Rosenshein was retaining but did not mention any claims for environmental damage to the property. Both disclosure statements attributed the failure of the various Rosenshein enterprises to the general economic downturn, credit problems and construction cost overruns.

Plaintiffs initiated this action on November 22, 1994. They assert claims against the individual defendants and against White for negligence, ultrahazardous activity, reimbursement for clean-up costs and indemnification. Plaintiffs also assert a claim against defendant Chicago Title Company ("Chicago Title") for failure to pay amounts due under a title insurance policy that Chicago Title issued on the property at the time that the individual defendants sold it to Hamden and Quaker Ridge.

The individual defendants have moved for summary judgment dismissing plaintiffs' claims. White has made a motion to dismiss or, in the alternative, a motion for summary judgment. Because White has submitted affidavits and documentary evidence to the court in connection with its motion, we will treat its motion as a motion for summary judgment. See Fed.R.Civ.P. 12(b); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1366 (1990). Chicago Title, at the court's request, delayed filing a summary judgment motion until we decided the instant motion. In response to the motions of White and the individual defendants, plaintiffs cross-moved to amend the complaint, and BSC applied for leave to intervene.

DISCUSSION

I. Defendants' Motions for Summary Judgment

Summary judgment should be granted when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Supreme Court has explained that "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). No such disputes exist in this case.

As a preliminary matter, we note that defendants argue that Windsor Green is the only entity bringing claims in this action. They contend that Quaker Ridge, Hamden and Rosenshein assert the claims at issue here only to the extent that they are "doing business as" Windsor Green. Although the caption of this action gives that impression, we cannot agree. The complaint alleges that all four plaintiffs have incurred the expense of cleaning up the property and that all four plaintiffs seek to recover under each cause of action. Clearly, only Windsor Green may assert the indemnification claim against White and the claim against Chicago Title, as plaintiffs allege that Windsor Green signed the agreements that give rise to those claims. See Complaint, at ¶ 12. Likewise, only Quaker Ridge and Hamden may assert claims for indemnification against the individual defendants, as Quaker Ridge and Hamden signed the purchase agreement that allegedly contains the relevant indemnification provisions.²See Exhibit 3, attached to Affidavit of Peter G. Eikenberry, dated June 26, 1995. The instant motions are not addressed to the merits, or lack thereof, of the remaining four claims, which are asserted by all four plaintiffs against White and the individual defendants. We express no opinion at this juncture on whether any or all of the plaintiffs have stated valid claims for negligence, ultra-hazardous activity or violations of various Connecticut environmental statutes. It is sufficient for our purposes to note that Windsor Green is not the only entity asserting claims in this action.

Plaintiffs concede that Windsor Green, Quaker Ridge and Rosenshein did not disclose any claims for environmental damage to the property at any point in their respective bankruptcy proceedings. It is not clear, however, whether Hamden ever filed for bankruptcy. Compare Rosenshein's Disclosure Statement, at 10-11, attached as Exhibit 5 to Eikenberry Aff. (as of July 16, 1992, Hamden "is not a Debtor before this Court") with Order Confirming Debtors' Third Amended Joint Consolidated Plan of Reorganization, dated August 11, 1992, at 5, attached as Exhibit 7 to Eikenberry Aff. (substantively consolidating debtors, including Rosenshein and Quaker Ridge, with Hamden). If it did, the parties have submitted no documents from which we can determine whether Hamden disclosed any claims that it may have. This factual distinction requires us to evaluate Hamden's claims separately from those asserted by Windsor Green, Quaker Ridge and Rosenshein.

A. Windsor Green, Quaker Ridge and Rosenshein's Claims

When a debtor files for bankruptcy, an estate is created that includes "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). The...