State of NY v. Shore Realty Corp.

• Decision Date: 10 October 1986
• Docket Number: No. 84-CV-0864.,84-CV-0864.
• Citation: 648 F. Supp. 255
• Parties: The STATE OF NEW YORK, Plaintiff, v. SHORE REALTY CORP. and Donald Leogrande, Defendants. SHORE REALTY CORP. and Donald Leogrande, Third-Party Plaintiffs, v. AAR TECHNICAL SERVICE CENTER, et al., Third-Party Defendants.
• Court: U.S. District Court — Eastern District of New York

648 F. Supp. 255

The STATE OF NEW YORK, Plaintiff, v. SHORE REALTY CORP. and Donald Leogrande, Defendants.

SHORE REALTY CORP. and Donald Leogrande, Third-Party Plaintiffs, v. AAR TECHNICAL SERVICE CENTER, et al., Third-Party Defendants.

No. 84-CV-0864.

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

October 10, 1986.

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BRAMWELL, District Judge.

Plaintiff, the State of New York, commenced this action against Shore Realty Corp. and its president and sole shareholder, Donald LeoGrande, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq. (CERCLA) and New York State statutory and common law, to compel defendants to clean up a hazardous waste disposal site located at One Shore Road, Glenwood Landing, New York, and to recoup alleged response costs incurred by the State in connection with the site. In turn, the defendants (collectively referred to as "Shore") instituted a third-party action for contribution, under CERCLA and State Law, against ninety-five other alleged responsible parties, including past owners and operators of the site, and those who allegedly generated, transported, received, stored, or disposed of the hazardous wastes discovered on the premises (collectively referred to as "generators"). The third-party complaint also purports to state a civil rights claim under 42 U.S.C. § 1983 against Robert F. Flacke and Henry G. Williams, the former and current Commissioners of the New York State Department of Environmental Conservation (DEC).

Presently before the Court are three motions directed at the third-party complaint under Rules 12(b)(1) and (6) of the Federal Rules of Civil Procedure. First, a group of sixty purported generators ("participating generators") has moved to dismiss Shore's CERCLA claim. This motion is joined by three past owners of the site, Phillips Petroleum, Joseph Saleh, and Amnon Bartur, and, in part, by the United States Coast Guard and the United States Veterans' Administration ("federal agencies"), also purported generators. Second, the federal agencies move to dismiss the state law claims raised against them in the third-party complaint. Third, Flacke and Williams move to dismiss the allegations pertaining to them under 42 U.S.C. § 1983. Also before the Court is a motion by third-party defendant Westinghouse Electric Corporation ("Westinghouse") for imposition of sanctions against Shore pursuant to Rule 11 of the Federal Rules of Civil Procedure. For the reasons set forth below, all motions are denied except for those of Flack and Williams.

I. BACKGROUND FACTS

The property at issue in this action is a 3.2 acre peninsula on the eastern shore of Hempstead Harbor in Glenwood Landing, New York. Although the current owner of the site, Shore did not participate in the generation or transportation of the more than 700,000 gallons of hazardous waste discovered on the premises. In 1978, the property was owned by Phillips Petroleum, Co. ("Phillips") and leased to Mattiace Petroleum, a hazardous waste disposal concern. In October of that year, an undisclosed spill occurred on the site, causing a toxic solvent to leak into the harbor. The leak was discovered by the United States Coast Guard, but before any enforcement action was taken, Phillips sold the property to Goldwep Realty Corp. ("Goldwep"), which was owned by Joseph Saleh and Amnor Bartur. Goldwep, in turn, sold the site to Saleh and Bartur, individually, in June, 1980.

Thereafter, Saleh and Bartur entered into a lease agreement with Hazardous Waste Disposal, Inc. ("HWD"), a hazardous waste transporter and, later, with Applied Environmental Services ("AES"), a hazardous waste treatment company. Both HWD and AES were and are owned by George Lawrence, who, through the two companies, illegally operated a hazardous waste facility on the site. Numerous generators named as third-party defendants contracted with HWD to transport hazardous substances to the site between 1980 and 1984.

On July 14, 1983, Shore contracted to purchase the property for the purpose of constructing condominiums. Before taking title, Shore had an environmental study conducted by WTM Management Corp. ("WTM") which showed that approximately 700,000 gallons of hazardous wastes were stored in five large tanks and other smaller tanks and containers on the site, and that warehouses contained over 400 drums of chemicals. The tanks and drums, the report indicated, were poorly maintained and showed evidence of corrosion and leaking. Also according to the report, there was evidence of past hazardous spills at the site and continuous leaking of hazardous substances into the bay. WTM estimated that the cost of an environmental cleanup would range from $650,000 to $1,000,000. Although Shore had retained the option of voiding the purchase contract if the results of the study were unsatisfactory, Shore took title on October 13, 1983. On January 5, 1984, Shore obtained the eviction of HWD and AES, but not before some additional 90,000 gallons of hazardous substances had been added to the tanks.

On February 29, 1984, the State of New York commenced this action charging Shore with violating the federal CERCLA statute, sections 27-0901 and 27-0903 of New York's Environmental Conservation Law, and section 841 of New York's Real Property Actions and Proceedings Law. The complaint also alleged a cause of action in common law public nuisance. Facing the State's prayer for both monetary and injunctive relief, Shore attempted to join the past owners and operators of the site, and the generators, as necessary parties. Judge Charles P. Sifton, to whom the case was originally assigned, denied that application, indicating that the proper procedure was to implead the other alleged responsible parties. Shore complied by filing its third-party complaint in July of 1984.

On June 15, 1984, just before the third-party action was commenced, Judge Sifton issued an order requiring defendants to remove approximately 410 drums of hazardous materials from the site under State supervision (the "June order"). Thereafter, on October 15, 1984, in an oral decision read from the bench, this Court granted the State's motion for partial summary judgment, found Shore liable under CERCLA for response costs incurred by the State in assessing and monitoring the site, and directed Shore by permanent injunction to remove the hazardous wastes stored on the property, subject to monitoring by the State. This bench decision was confirmed by order dated October 30, 1984 (the "October order"). On April 4, 1985, the Court of Appeals for the Second Circuit affirmed this Court's decision and order, holding, inter alia, that Shore was a covered person under 42 U.S.C. § 9607(a); that injunctive relief was properly granted under state public nuisance law; and that defendant LeoGrande was jointly and severally liable under both CERCLA and New York Law. New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir.1985). On September 9, 1985, the Court reduced to judgment the costs incurred by the state in the amount of $40,140.24.

In March, 1985, defendants were held in civil contempt for failing to proceed with the cleanup as ordered. During the summer of 1985, however, Shore, under State supervision, completed the removal of the drums that were the subject of the June order. See Letter of Gordon J. Johnson, Assistant Attorney General, September 25, 1985, docket # 377. The record indicates that Shore has incurred at least $49,000 in costs as a result of its compliance with the June order. See Supplemental Declaration of David H. Peirez, October 9, 1985, docket # 386. This information was communicated to all third-party defendants in a letter dated August 8, 1985.

II. DISCUSSION

A. The CERCLA claim

The participating generators move to dismiss the CERCLA claim raised in the third-party complaint. CERCLA was enacted in 1980 to ensure the prompt cleanup of dangerous or potentially dangerous waste sites. In addition to providing federal funds for response efforts (the Superfund), the statute also authorizes causes of action by a State or a private party to seek compensation from other responsible parties for costs incurred in effecting a cleanup. 42 U.S.C. § 9607(a)(4)(A) and (B).¹ Responsible parties include present and past owners and operators of hazardous waste sites, transporters of hazardous substances, and parties who arrange for the transport or disposal of hazardous substances. Id. § 9607(a)(1), (2) and (3).

In the present case, the State, proceeding under § 107(a)(4)(A) of CERCLA, sought and was granted recovery against Shore, the current owner of the site, for response costs "not inconsistent with the National Contingency Plan NCP." 42 U.S.C. § 9607(a)(4)(A). As a private party, however, Shore must base its third-party action for contribution from past owners and operators of the site and the generators of the waste on § 107(a)(4)(B) of CERCLA, which allows recovery of those response costs "consistent with the NCP." Id. § 9607(a)(4)(B). The right to contribution under CERCLA has been upheld by a number of district courts, see, e.g., United States v. Conservation Chemical Co., 619 F.Supp. 162, 222 (W.D.Mo.1985); Colorado v. Asarco, Inc., 608 F.Supp. 1484, 1492 (D.Colo.1985), and is not questioned by the movants here.² Rather, the attack on the federal aspect of the third-party complaint is two-fold. First, the participating generators argue that the Court lacks subject matter jurisdiction over the CERCLA claim because Shore failed to comply with the sixty-day notice requirement set forth in § 112(a) of the statute, 42 U.S.C. § 9612(a). Secondly, they contend that Shore has failed to state a valid claim under § 107(a)(4)(B) of CERCLA because it has not alleged actual incurrence of response costs consistent with the NCP. The Court is of the opinion that neither of these alleged deficiencies requires...