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NEW YORK STATE ENERGY RESEARCH & DEV. AUTH. v. NUC

April 7, 1983

NEW YORK STATE ENERGY RESEARCH and DEVELOPMENT AUTHORITY, Plaintiff,
v.
NUCLEAR FUEL SERVICES, INC., GETTY OIL COMPANY, COMMONWEALTH EDISON COMPANY, GENERAL PUBLIC UTILITIES CORP., GENERAL PUBLIC UTILITIES SERVICE CORPORATION, JERSEY CENTRAL POWER & LIGHT CO. and WISCONSIN ELECTRIC POWER COMPANY, Defendants



The opinion of the court was delivered by: ELFVIN

MEMORANDUM and ORDER

 This action constitutes another effort by plaintiff New York State Energy Research and Development Authority ("NYSERDA") in this court to facilitate and bring about the correction of conditions hazardous to the public at the nuclear fuels disposal and reprocessing center at West Valley, N.Y. ("the Center"), which NYSERDA owns. Earlier, in an action bearing docket number CIV-81-18 in this Court, NYSERDA sued its tenant and former operator of the Center, Nuclear Fuel Services, Inc. ("NFS"), and NFS's parent, Getty Oil Co. ("Getty"), defendants here also, to bring about the transfer of the Center from NFS to the United States Department of Energy ("the DOE") in order to enable the DOE to implement the West Valley Demonstration Project Act of 1980, Pub.L. 96-368, 94 Stat. 1347. This Act, hereafter referred to as "the federal Project Act," authorized the DOE to carry out a high-level liquid nuclear waste management demonstration project at the Center. After a legal battle re partial summary judgment and injunctive relief requiring NFS to surrender the Center to the DOE, that action and the related suit by NFS against NYSERDA, CIV-81-683, became subject to a settlement agreement dated February 18, 1982, providing inter alia for transfer of the Center to the DOE and apportioning liability for allegedly deficient or improper conditions at the Center. That settlement agreement became final with NYSERDA's exercise September 16, 1982 of its option to finalize and an Order of dismissal, based on a November 15, 1982 stipulation requesting the dismissal of both actions. This finalization effectively negated a clause of the Settlement Agreement which otherwise would have imperiled a final settlement if responsibility for all of the spent fuel at the Center would not have been finally determined, by agreement or by litigation, within a certain period of time.

 In this action NYSERDA seeks among other things to obtain declaratory, injunctive and monetary relief against NFS, Getty and five public utility companies -- GPU Service Corporation ("GPUSC"), Jersey Central Power and Light Company ("Jersey") (sometimes collectively referred to hereafter as "the GPU defendants"), their parent, General Public Utilities Corporation, Commonwealth Edison Company ("Comm. Ed."), and Wisconsin Electric Power Company ("Wisconsin") -- alleging their liability for removal of spent nuclear fuel stored at the Center and for pecuniary compensation for storage of such fuel. Relief is sought upon theories of trespass, breach of contract and unjust enrichment.

 NYSERDA has moved for partial summary judgment declaring Jersey, Comm. Ed. and Wisconsin the owners of numbers of spent nuclear fuel assemblies and rods containing an aggregate of some 107.4 metric tons of uranium, and declaring the GPU defendants, Comm. Ed. and Wisconsin responsible to NYSERDA for the prompt removal of such spent fuel, on the trespass and breach of contract theories, and liable to plaintiff under an implied contract for their unjust enrichment from the assertedly improper storage.

 The defendants against whom partial summary judgment is sought will hereafter sometimes be referred to collectively as "the utility defendants." NFS and Getty have joined in support of NYSERDA's motion for partial summary judgment.

 The utility defendants have cross-moved to strike all or a large part of the affidavit of Carmine J. Clemente, NYSERDA's General Counsel, in support of plaintiff's motion for summary judgment, and the exhibits attached to said affidavit, on the grounds that the affidavit is not, as is required by Fed.R.Civ.P. rule 56(e), based on personal knowledge and that it impermissibly contains inadmissible hearsay and legal argument intertwined with asserted facts. The exhibits are attacked as not having been sworn to or certified as required by the rule and as containing such hearsay. The GPU defendants have also cross-moved for a continuance of NYSERDA's motion in order to permit them to conduct discovery of additional facts with which to oppose NYSERDA's motion.

 The cross-motion to strike the Clemente affidavit can be quickly disposed of. The deficiencies of the affidavit in regards to Clemente's statement of his personal knowledge of facts set forth and as to the authenticity of the attached documents has been cured by his supplemental affidavit in opposition to the cross-motion, detailing his years of involvement with the events and dealings at and pertaining to the Center. The cross-movants in reply have enumerated those paragraphs and portions of Clemente's original affidavit which were not in their view made acceptable by the supplemental affidavit. To the extent that the basis for their continued exception is that certain paragraphs contain "legal argument or interpretation," the movants' point is well taken. To remedy this defect it will suffice that I shall endeavor not to mistake such legal advocacy for assertions of fact within the affiant's personal knowledge. *fn1" See United States v. Alessi, 599 F.2d 513, 514-515 (2d Cir. 1979); Perma Research and Development Company v. Singer Company, 410 F.2d 572, 578-579 (2d Cir. 1969). Other matters as to which Clemente is quite obviously unable to assert personal knowledge -- mainly regarding dealings between NFS and the public utility defendants -- will be disregarded. However, much or all of such matter is set forth upon personal knowledge in the affidavit of Henry W. Brook, NFS's General Counsel from December 1971 to May 1981, submitted in support of NYSERDA's motion for summary judgment.

 In 1963 NYSERDA, which owns the Center in the name of the State of New York, entered into several agreements with NFS pursuant to which NFS constructed facilities for and undertook the enterprise of there reprocessing nuclear fuel wastes. The agreements -- a Lease, a Waste Storage Agreement and a Facilities Contract (hereafter referred to collectively as "the West Valley Agreements") -- contemplated an initial term ending December 31, 1980.

 Pursuant to the Facilities Contract NFS constructed among other facilities a Fuel Receiving Facility, at which spent fuel was received and temporarily stored pending reprocessing. NYSERDA paid NFS for the construction of this facility and was vested with the title thereof upon its completion. The spent fuel in dispute in this action is located in the Fuel Receiving Facility's "storage pool."

 In 1963 NFS contracted with the United States Atomic Energy Commission, predecessor of the United States Nuclear Regulatory Commission (both referred to hereinafter as "the NRC") and with several public utility companies, including Comm. Ed., to reprocess spent fuel when the Center became operational, as it did in May 1966. NFS reprocessed spent fuel at the Center from 1966 until March 1972, when reprocessing was suspended in order to complete an enlargement and modification of the Center's facilities. NFS dismantled portions of the reprocessing plant in preparation for the planned improvements, making it unusable for fuel reprocessing.

 In 1972 the NRC instructed NFS to halt its improvements until a construction permit had been obtained, and in October 1973 NFS applied to the NRC for such permit. During this period NFS continued to solicit new reprocessing business and formed agreements with several utility companies, including GPUSC as agent for Jersey (January 10, 1975), Wisconsin (October 16, 1974) and Comm. Ed. (July 3, 1973), to receive spent fuel and store it pending the resumption of reprocessing.

 In the course of the ensuing four years or so, the NRC increased regulatory requirements pertinent to NFS's permit application and the permit never was obtained. NFS decided in September 1976 to withdraw from the reprocessing business. The utility defendants were notified of this intent and were invited to discuss the disposition of their fuel then stored at the Center.

 On June 23, 1977 NFS and Wisconsin entered into an agreement providing terms for continued storage and eventual removal by Wisconsin of its spent fuel at the Center. Affidavit of Henry W. Brook, Exhibit 1. In the part pertinent to NYSERDA's motion for summary judgment this agreement provides, in paragraph (2)(b) thereof:

 
"* * * It is recognized * * * that NFS may have to request the Customer to remove the stored assemblies (a 'request for removal') if regulatory authorizations cannot be maintained or if the New York State Energy Research and Development Authority (NYSERDA) requests NFS to have the stored assemblies removed in connection with NYSERDA's disposition of the site prior to or upon the expiration of the lease between NFS and NYSERDA on December 31, 1980. NFS's request for removal shall specify the date when removal shall commence which shall be no less than thirty days after the date of the request for removal. NFS agrees to notify the Customer as soon as NFS is notified by NYSERDA with respect to its intention regarding continued storage of spent fuel at West Valley and to keep the Customer periodically informed of any developments which might affect the status of the stored assemblies. The Customer agrees to remove the stored assemblies from West Valley commencing on the date specified in the request for removal. * * *"

 The NFS agreement with Wisconsin further provides, in paragraph (2)(c): "Title to the stored assemblies shall remain at all times in [Wisconsin]."

 On September 29, 1978 NFS entered into a storage agreement with GPUSC as agent for Jersey, which agreement is in pertinent part substantially identical to that with Wisconsin in the portions of paragraphs (2)(b) and (2)(c) quoted above, but the last above-quoted sentence in (2)(b) continues as follows:

 
"subject to the Customer using its best efforts to arrange for a carrier and shipping cask to transfer the stored assemblies and for a licensed storage location to ship them to." Brook Affidavit Exhibit 2.

 On November 27, 1978 NFS entered into a storage agreement with Comm. Ed., which agreement in the relevant part differed materially from that between NFS and Wisconsin -- chiefly in that NFS promised to use reasonable efforts to arrange for continued storage of Comm. Ed.'s spent fuel with any subsequent operator of the Center, that Comm. Ed. was allowed a minimum of twelve months to remove its spent fuel after commencement of removal and that Comm. Ed.'s agreement to commence removal on the date specified by NFS was made "subject to its obtaining proper governmental authorizations and/or permits." Paragraph (4)(c) of this storage agreement provides, as do the corresponding paragraphs (2)(c) of the agreements with Wisconsin and the GPU defendants, that "title to the stored assemblies shall remain at all times" in the utility customer.

 On September 21, 1979 NYSERDA notified NFS by letter that NFS was in default of various of its obligations under the West Valley agreements, including the continued storage of spent fuel in the Fuel Receiving Facility without the intention to reprocess such fuel. Clemente Affidavit Exhibit H, pp. 4, 7. NYSERDA informed NFS by letter dated December 19, 1980 of its intention to terminate NFS's lease as of December 30, 1980 unless the defaults specified in the letter should have been remedied by that date, and demanded that NFS remove all spent nuclear fuel stored in the Fuel Receiving Facility "without further delay" (id., Exh. J, p. 3). NYSERDA, believing that the alleged defaults were not being remedied, announced its termination of the NFS lease December 30, 1980. The lease expired by its terms the next day even without the termination.

 Thereafter NYSERDA refused to accept surrender of the Center from NFS, insisting on NFS's compliance with terms of the West Valley Agreements relating to the condition of the Center. Under regulatory constraint NFS retained occupancy of the Center during the pendency of the litigation already referred to above, which resulted in settlement and transfer of the Center to the DOE.

 On December 8, 1980 Clemente wrote to each of the utility defendants offering to discuss "alternatives to the continued storage of spent fuel at the Center, or the terms and conditions upon which the fuel * * * might continue to be stored at the Center." In response to this invitation, on various dates in January 1981 representatives of each of the utility defendants met with NYSERDA representatives. Each utility defendant avers by affidavit that no demand for removal of the spent fuel was made at these meetings; NYSERDA does not suggest otherwise, but notes that each utility defendant was advised at these meetings that NYSERDA had requested NFS to have all of the spent fuel removed. Clemente Reply Affidavit, para. 6.

 By letters dated April 7, 1981 NFS informed each of the utility defendants of the circumstances involved in NFS's continued occupancy of the Center despite the lease termination, contending that as of the termination date "NFS had no further contractual rights or obligations with respect to the [Center]." These letters noted that "NFS's legal right to store spent fuel pursuant to the storage agreement[s] terminated on December 31, 1980" and cited the failure of NFS's attempts to negotiate continued storage of the spent fuel. The letters also noted NYSERDA's "seemingly inconsistent position" evidenced by the December 19, 1980 demand that NFS effect removal of the spent fuel and the offers made to the utility defendants to arrange for continued storage; the letters stated that nevertheless NFS was compelled to request the removal of all utility spent fuel stored at the Center, commencing June 1, 1981. Wisconsin and Comm. Ed. replied by letter to the effect that removal of the spent fuel was considered "inappropriate" in view of various difficulties involved and unstated considerations of the "public interest." The GPU defendants did not reply to NFS's April 7, 1981 demand for removal.

 On September 30, 1981 the NRC issued an amendment to NFS's and NYSERDA's licenses pertaining to the Center, authorizing NFS to transfer the Center to the DOE.

 On October 27, 1981 NYSERDA's Chairman James L. LaRocca sent letters to each of the utility defendants stating NYSERDA's position that NFS's storage of spent fuel at the Center had been improper beginning in 1976 when NFS had announced its withdrawal from the reprocessing business and certainly was improper as of NYSERDA's December 30, 1980 termination of the Lease. The letters noted that the receiving and storage facility was to be used in carrying out the federal demonstration project and that the presence of the spent fuel in the storage pool would result in additional costs to NYSERDA. The letters concluded with demands for prompt removal of all spent fuel and for payment of storage fees (said by defendants to be considerably in excess of NFS's storage fee under the storage agreements) for the period from the date of the DOE's takeover of the Center (which finally occurred February 25, 1982) through September 30, 1982 or until the spent fuel is removed, whichever occurred first. The removal and payment demands were said to be without prejudice to NYSERDA's right to demand payment for periods before the DOE's entrance onto the Center, or any other claims, defenses or interests of NYSERDA.

 Comm. Ed. and Wisconsin replied to LaRocca's letter on November 12th and 23rd, respectively, inquiring as to the terms on which NYSERDA would continue to store their spent fuel and as to the basis of the requested storage fee amount. NYSERDA did not respond to their inquiries. The GPU defendants apparently did not reply to LaRocca's October 27th letter, due perhaps to their having concluded that NYSERDA had no legal right to demand removal of the spent fuel (Cherry Affidavit, paras. 62, 63).

 On or about February 10, 1982 NYSERDA asked the GPU defendants to execute an "Acknowledgment of Responsibility" pertaining to the spent fuel, indicating that NYSERDA would defer the removal demand temporarily to permit negotiation of an agreement for continued storage of the spent fuel at the Center. The same request was made of Wisconsin and Comm. Ed. by letters dated March 1, 1982. The letters from LaRocca to the utility defendants stated that early resolution of the status of the spent fuel was important to the DOE's implementation of the federal project. LaRocca's letters to Wisconsin and Comm. Ed. stated also that the acknowledgments would facilitate the negotiation of agreements for continued storage at the Center.

 The utility defendants soon complied with LaRocca's request, executing acknowledgments that are in most respects here pertinent substantially identical to one another, providing as follows:

 
"[The utility defendant] acknowledges responsibility, as between [the utility defendant] and [NYSERDA], for the storage, removal and transportation from [the Center], and ultimate disposition of [the utility defendant's] [spent nuclear fuel] which [is] currently stored at the Center, and for entering into serious bona fide negotiations with [NYSERDA] for the purpose of reaching a definitive agreement with respect thereto; provided, that nothing in this Acknowledgment shall diminish or otherwise affect any claims, rights, powers, defenses, or remedies [the utility defendant] may have against any person or entity if such negotiations do not result in a definitive agreement; except, that if such negotiations do not result in a definitive agreement, [the utility defendant] nevertheless acknowledges that it owns such [spent fuel], such [spent fuel] is currently stored at the Center, [the utility defendant] does not have a contract with [NYSERDA] for storage of such [spent fuel], and [NYSERDA] has no responsibility for any loss or damage to or caused by such assemblies or rods or for the continued storage of such [spent fuel] or for the removal, transportation, and ultimate disposition of such [spent fuel]."

 Wisconsin's Acknowledgment of Responsibility differs in material aspects from the foregoing only in that it does not explicitly state in the closing "except clause" that Wisconsin owns the spent fuel and that such is stored at the Center; however, the except clause does refer to the spent fuel as "Wisconsin Electric's."

 The utility defendants met with NYSERDA to negotiate long-term storage agreements on several occasions subsequent to their execution of the Acknowledgments, but without success.

 The utility defendants complain that NYSERDA was intransigent in these negotiations, refusing so much as to provide a basis for NYSERDA's proposed storage charges, and that NYSERDA's institution of this lawsuit May 14, 1982 was not a reasonable deferrence of action as NYSERDA had promised in soliciting the Acknowledgments.

 The DOE and NYSERDA, pursuant to the Federal Project Act, entered into a Cooperative Agreement October 1, 1980, delineating the rights and responsibilities of the parties respecting the Project and the Center. Section 4.05(d) thereof gives NYSERDA the right "to continue to allow the storage of" the spent fuel in the Fuel Receiving Facility. Further, under section 4.11 NYSERDA is responsible for the costs of the DOE's maintenance of the utility defendants' spent fuel.

 Wisconsin and Comm. Ed. aver by their officers' affidavits that they have offered to pay NYSERDA an amount for storage of their respective quantities of spent fuel equal to the DOE's charges therefor plus NYSERDA's additional reasonable charges. The GPU defendants assert that they have at all times been prepared to pay NYSERDA a storage fee "consistent with existing contractual requirements," -- i.e., with their 1978 Storage Agreement with NFS. Cherry Affidavit, para. 72.

 When the DOE took possession of the Center, pursuant to the NRC's amendment of NFS's operating license NFS lost its rights to use and possess the Center and all of the radioactive materials there stored.

 There are well-established standards governing consideration of a motion for summary judgment under Fed.R.Civ.P. rule 56. This rule provides a salutary mechanism for avoiding useless trials and should be so employed when such inutility has been made to appear clearly. "The rule of Arnstein v. Porter, 154 F.2d 464, 468 (2 Cir. 1946), that summary judgment may not be rendered when there is the 'slightest doubt' as to the facts no longer is good law." Beal v. Lindsay, 468 F.2d 287, 291 (2d Cir. 1972); Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1319 (2d Cir. 1975). Thus

 
"the mere possibility that a factual dispute may exist, without more, is not sufficient to overcome a convincing presentation by the moving party. * * *. The litigant opposing summary judgment, therefore, 'may not rest upon mere conclusory allegations or denials' as a vehicle for obtaining a trial. SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir. 1978). Rather, he must bring to the district court's attention some affirmative indication that his version of relevant events is not fanciful." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980).

 See, also, United States v. Potamkin Cadillac Corp., 689 F.2d 379 (2d Cir. 1982). Thus, the pertinent authorities strongly suggest that summary judgment is appropriate where the court is able to conclude that there exists no true dispute as to material facts.

 It is nonetheless to be stressed that summary judgment may not be used to resolve actual issues of material fact and that the burden is on the moving party to demonstrate that there is no genuine dispute as to any material fact, the court being obliged to "resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought." Heyman, supra, at 1320.

 These principles fully apply to disputes involving contracts the material terms of which are susceptible to more than one fairly reasonable interpretation; "the parties have a right to present oral testimony or other extrinsic evidence at trial to aid in interpreting a contract whose provisions are not wholly unambiguous." Ibid.

 As an initial matter there are the defendants' liminal contentions that NYSERDA is equitably estopped or contractually barred from bringing and prosecuting the instant suit by reason of its procurement of an Acknowledgment of Responsibility from each defendant by means of an offer not to sue (to have the spent fuel removed) "for a reasonable time" for the purpose of pursuing a negotiated solution. NYSERDA's protestations to the contrary notwithstanding, its letter to each utility defendant soliciting the latter's officer's signature on the respective acknowledgment is at least fairly susceptible of the defendants' interpretation -- to wit, that deferral of litigation for a reasonable time was offered as consideration for the acknowledgment.

 Defendants have failed to establish an essential element of equitable estoppel -- namely, that the party asserting the estoppel had relied to its injury upon a representation or action of the party sought to be estopped.

 
"An estoppel, this court has said, 'rests upon the word or deed of one party upon which another rightfully relies, and, so relying, changes his position to his injury.' * * *. Indeed, 'A party may not, even innocently, mislead an opponent and then claim the benefit of his deception.' * * *. And, more to the point, * * * an estoppel may be predicated upon evidence that the defendant, by resort to settlement negotiations, intended 'to lull the plaintiff into inactivity,' to 'induce it to continue negotiations until after the expiration of the * * * time within which an action' could be maintained. * * *" Triple Cities Const. Co. v. Maryland Cas. Co., 4 N.Y.2d 443, 448, 176 N.Y.S.2d 292, 295, 151 N.E.2d 856 (1958).

 Cf., United States v. Bedford Associates, 491 F. Supp. 851, 866-868 (S.D.N.Y. 1980). Defendants suggest that they were injured in reliance upon the offer to defer litigation for a reasonable time in that they executed acknowledgments that, by virtue of the except clauses (which alone purport by their terms to be valid despite the failure of negotiations), now may preclude them from asserting that NYSERDA has any obligation to continue to store the spent fuel at the facility. However, the only basis (other than unsubstantiated appeals to "the public interest") that defendants advance for such an obligation is that NYSERDA has become "successor bailee" to NFS, a claim having no merit. See, infra. Defendants point to no other even colorably prejudicial change of position in reliance on NYSERDA's alleged promise to defer litigation for a reasonable time.

 Moreover, even if the except clause did contain acknowledgements prejudicial to defendants, the latters' remedy would not embrace prevention of the instant lawsuit. The doctrine of equitable estoppel is not usable to gain a positive advantage over the person estopped, but is limited in its effects to measures necessary to place the parties in the same relative positions they would have enjoyed if the grounds for the estoppel had not existed. Parsons v. Lipe, 158 Misc. 32, 286 N.Y.S. 60 (S. Ct., Onon. Co., 1933), aff'd sub nom. Parsons v. First Trust & Deposit Co., 243 App.Div. 681, 277 N.Y.S. 426 and 428 (4th Dept. 1935), aff'd, 269 N.Y. 630, 200 N.E. 31 (1936). Thus the most that defendants could gain by successful assertion of an estoppel is a preclusion of any use by plaintiff of the acknowledgments. ...


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