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WESTWOOD PHARMACEUTICALS v. NAT. FUEL GAS

May 21, 1990

WESTWOOD PHARMACEUTICALS, INC., PLAINTIFF,
v.
NATIONAL FUEL GAS DISTRIBUTION CORPORATION, AS SUCCESSOR IN INTEREST TO IROQUOIS GAS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Curtin, District Judge.

  BACKGROUND

Plaintiff Westwood Pharmaceuticals, Inc. ("Westwood"), claims that defendant National Fuel Gas Distribution Corporation ("National Fuel") is liable for Westwood's past and future response costs associated with the release of hazardous substances on a parcel of land in Buffalo, New York, purchased by Westwood from National Fuel's predecessor in interest, Iroquois Gas Corporation ("Iroquois"). Westwood has asserted four causes of action alleging that National Fuel is liable under either the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub.L. No. 99-499, 100 Stat. 1613 (1986), or the New York State common law of nuisance and unjust enrichment. National Fuel has moved for summary judgment dismissing Westwood's complaint and holding Westwood liable on National Fuel's counterclaims for its past response costs and for any future response costs it may incur. Westwood has moved for partial summary judgment under Section 107(a) of CERCLA, 42 U.S.C. § 9607(a), for Westwood's past response costs; for declaratory judgment pursuant to CERCLA Sections 107(a) and 113(g)(2), 42 U.S.C. § 9607(a), 9613(g)(2), and the Declaratory Judgment Act, 28 U.S.C. § 2201(a), on National Fuel's liability for any future response costs that Westwood may incur; and for summary judgment as to most of the affirmative defenses asserted by National Fuel.*fn1

FACTS

The site at issue encompasses approximately 8.8 acres bounded on the west by DeWitt Street, on the south by Bradley Street, on the east by Dart Street, and on the north by land owned by the Buffalo Structural Steel Corporation. The northwest corner of the site is bounded by Scajaquada Creek. It appears that the site has been put to industrial use since 1866. Before the land was purchased by People's Gas Company ("People's"), it was used for operations such as a sawmill, an iron-products manufacturing plant, a carriage and sleigh works, and a carriage-top manufacturing company. When People's bought the land in 1897, it constructed a gas-manufacturing plant. In 1925, Iroquois purchased the site for $375,000, gaining title by a referee's deed, and People's was subsequently dissolved in 1932.

Iroquois conducted gas-manufacturing and storage operations on the site through 1951. According to National Fuel,

  [t]ars and waste oils produced by the Iroquois
  operations were extracted in concrete tar
  separator pits and stored in tanks pending sale
  or off-site disposal. . . . Spent oxides
  generated in the gas purification process were
  taken offsite for disposal. . . . Ash and cinders
  were stored on site temporarily and then removed
  for use or disposal elsewhere.

Item 14 at 4. Iroquois halted gas-manufacturing operations at the site in 1951, but continued to use the location for gas compression and storage for several years thereafter. In 1968, it had certain structures on the premises demolished, primarily, it appears, on the northern portion of the site. The structures that were demolished included a 1.75-million-cubic-foot gas holder, a one-million-gallon oil tank, a relief holder, a gas-purifying house, and at least two tar-separator pits. Other structures on the southern portion of the premises were left standing. National Fuel states that

  [i]n connection with the demolition, oils, tars,
  coal, coke, spent oxides, and various wastes from
  the gas manufacturing process were removed from
  the site for sale or disposal. . . . Underground
  pipelines were purged with an inert gas and
  plugged. . . . The tar separator pits were pumped
  out, the above-ground portions were collapsed
  into the sub-surface sections . . . and were
  covered with a clay cap.

Item 14 at 5.

In 1972, Westwood, which since at least 1942 had occupied what appears to be an adjacent parcel, purchased the property from Iroquois in order to accommodate its planned expansion; the purchase price was $60,100. The sales contract, which provided that it was to be "governed by and construed in accordance with the laws of the State of New York," Item 13, Affidavit of Robert E. Glanville ("Glanville Affidavit"), Exhibit L at ¶ 14, provided Westwood the right to pre-closing access to the property to

  (a) inspect the Premises upon reasonable notice
  to the Seller; (b) enter the Premises for
  purposes of inspection and planning for
  Purchaser's occupancy and for the demolition of
  buildings and improvements; and (c) commence the
  demolition of buildings and improvements situated
  upon the Premises. . . .

Id., Exhibit L at ¶ 5. Westwood subsequently demolished the remaining structures at the site. According to Westwood, although it was told that "all buildings, tanks, pipelines and other improvements situate [sic] on the premises had been purged of natural gas and other chemicals" used in the business operations on the site, it was never told "of the existence of the partially demolished remains of buildings, process equipment, and waste residues left buried at the premises." Item 16 at 3.*fn2 For its part, National Fuel claims that Iroquois was never told of Westwood's development plans prior to the sale, Item 14 at 6, although it seems unlikely that Iroquois was not aware that construction of some type would be undertaken at the site.

Westwood subsequently constructed a warehouse on the southern portion of the property. Soil borings associated with the construction were taken in 1973, and, according to National Fuel, those borings indicated "widespread petroleum-product contamination of the site." Item 14 at 8. Soil borings were also taken in 1984 and 1985 in connection with the construction of a warehouse on the northern portion of the site,*fn3 and they revealed petroleum-related contaminants and other wastes. During excavation for the second warehouse, Westwood encountered subsurface pipeline and the remains of three separator pits and a filter bed. According to Westwood, the separator pits were filled with "demolition debris, and a mixture of water, tar, and waste oil"; the filter bed contained "oily contaminated water"; and the pipes contained "various process residues and waste materials." Item 16 at 3-4. In February, 1985, Westwood had a consultant dig a series of test pits on the location of the planned warehouse, and soil samplings from the pits apparently also displayed signs of petroleum-related contamination. See Item 14 at 10.

National Fuel alleges that Westwood continued with construction far too prematurely. It claims that "[n]otwithstanding these repeated and detailed reports of widespread petroleum product contamination of the project area, Westwood did not initiate an investigation into the origin or scope of the contamination." Item 14 at 10. National Fuel also claims that Westwood likewise failed to confer with "its environmental consultants, its architects, its general construction contractor, or anyone else, to determine whether the conditions encountered required action to protect against a release of these substances into the environment." Id. at 10-11. National Fuel asserts that "[o]n numerous occasions" in late 1985 and early 1986 it expressed concern to Westwood about the manner and pace of the construction activities, and that its concern over containing the migration of suspected wastes on or from the site led it to ask Westwood at least to modify those activities. National Fuel states that it reiterated these concerns by letter in February, 1986, see Item 13, Glanville Affidavit, Exhibit D at 41-42; Item 3 at ¶ 42, but that Westwood nonetheless proceeded with construction on an "expedited basis." Item 14 at 14.

In any event, it appears that the clay cap was removed from the site in October, 1985, during the early phases of construction of the second warehouse, and that Westwood subsequently continued with construction activities. The initial phase of construction apparently involved stripping topsoil to a depth of eighteen inches, and, according to National Fuel, it was during this process that the clay cap was removed. See Item 14 at 11. It appears that the separator pits were initially discovered by Westwood in approximately November, 1985.

Westwood asserts that "[t]he investigations conducted to date have established the existence of a release of hazardous substances at the Premises and have confirmed that the hazardous substances found at the site are constituents of the wastes and by-products from the gas manufacturing operations conducted there by [Iroquois]." Item 16 at 4-5. Westwood states that it has thus far incurred over $650,000 in costs associated with the investigation and cleanup of the site, and that it expects to incur additional costs. National Fuel asserts that it has spent over $75,000 in costs associated with its own investigation of the site that was required by Westwood's construction activities.

DISCUSSION

The standards for adjudication of a motion for summary judgment are well settled. In order to prevail, the moving party must demonstrate "that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). See generally Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). A material fact is one "that might affect the outcome of the suit under the governing law . . . [f]actual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute about a material fact will be considered genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The court "must resolve all ambiguities and draw all reasonable inferences in favor of the party defending against the motion," Eastway Construction Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987), and "[u]ncertainty as to the true state of any material fact defeats the motion." United States v. One Tintoretto Painting, 691 F.2d 603, 606 (2d Cir. 1982) (citation omitted). See also Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 585-88, 106 S.Ct. 1348, 1355-57, 89 L.Ed.2d 538 (1986); United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

I. National Fuel's Motion for Summary Judgment

a) Disposal

National Fuel claims that it is not liable under CERCLA, arguing that depositing hazardous substances into concrete or steel structures covered by a clay cap does not constitute "disposal" within the meaning of CERCLA, and, therefore, that it did not own or operate the site at the time any such hazardous substances were disposed of as required for liability under Section 107(a) of CERCLA. Item 14 at 19-21. Referring to the hazardous substances at the site as having been "haphazardly abandoned" by National Fuel, Westwood responds that National Fuel's "disposal practices" made release of the toxins into the environment "inevitable," charging that, in addition to the tar-separator pits, National Fuel left waste materials and "process residues" in pipelines, in a filter bed, and within some concrete foundations. Item 19 at 3. Westwood claims that National Fuel has failed to produce "any substantiating evidence to the effect that it removed these hazardous substances or made any attempt to secure or contain them," id., and contends that National Fuel's actions in placing the wastes into the environment constituted disposal within the meaning of CERCLA. See Item 19 at 1-4.

  the discharge, deposit, injection, dumping,
  spilling, leaking, or placing of any solid waste
  or hazardous waste into or on any land or water
  so that such . . . waste or any constituent
  thereof may enter the environment or be emitted
  into ...

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