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SHAPIRO v. ALEXANDERSON

July 9, 1990

SAUL SHAPIRO, PLAINTIFF,
v.
PETER C. ALEXANDERSON, AS COUNTY EXECUTIVE OF THE COUNTY OF PUTNAM, COUNTY OF PUTNAM AND EMIL LANDAU, DEFENDANTS. PETER C. ALEXANDERSON, AS COUNTY EXECUTIVE OF THE COUNTY OF PUTNAM, COUNTY OF PUTNAM, THIRD PARTY PLAINTIFFS, V. STEVEN ESTRIN, INDIVIDUALLY, STEVEN A. ESTRIN, INC., EBERLIN & EBERLIN, P.C., LEONARD J. EDER, ENVIRONMENTAL DESIGN ENGINEERS, INDIVIDUALLY AND D/B/A EBERLIN, EDER AND ESTRIN, A JOINT VENTURE, NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, AND SUBURBAN CARTING, GREEN REFUSE AND A & M CARTING, THIRD PARTY DEFENDANTS.



The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.

  OPINION AND ORDER

Plaintiff Saul Shapiro ("Shapiro") moves and defendants Peter C. Alexanderson and the County of Putnam ("the County") cross-move for summary judgment, pursuant to Federal Rule of Civil Procedure 56. Defendant Emil Landau ("Landau") moves to amend his answer, pursuant to Federal Rule of Civil Procedure 15.

Background

In December 1968, Shapiro and Landau purchased, as tenants in common, an undeveloped 100 acre parcel of land in Putnam County on Old Route 6, Carmel, New York. On March 25, 1975, the County executed a contract to purchase from Landau and Shapiro ("the owners") approximately half of said parcel ("the site") for use as a solid waste disposal site, also commonly known as a landfill. At the time, it was not disclosed to the County that the owners paid Frank Barbarita ("Barbarita"), the County Director of Civil Defense, an illegal commission for acting as the real estate broker on the deal. The contract of sale provided in part:

    The purchasers, after signature on this contract
  and resolution by the Board of Supervisors of the
  County of Putnam, State of New York, shall have
  the right to enter upon the premises and to
  commence landfill operations and any other
  operations, tests, experiments needed for

  the use of the premises initially as a landfill
  operation.
    Should this contract not be consummated, the
  purchasers, in consideration of being able to
  enter upon the land, shall restore the property to
  its status quo ante.

Record on Appeal at 533, Emil Landau and Saul Shapiro v. Joseph Percacciolo, et al., No. 704/1976 (N.Y. Sup. Ct., Dec. 21, 1977).

On March 27, 1975, third party defendant New York State Department of Environmental Conservation ("the DEC") granted approval for the County to construct and operate for ninety days a solid waste management facility at the site in accordance with plans drawn up for the County by third party defendant Eberlin, Eder & Estrin. Third party defendant Steven A. Estrin, Inc. ("Estrin") proceeded to manage the County's landfill operation at the site until May 6, 1975. On May 7, 1975 the County Highway Department took over management responsibilities at the site.

The closing on the contract between the County and the owners was then delayed when two taxpayer suits were brought in October 1975 seeking injunctions against the closing on the grounds that the contract was null and void. The New York State Supreme Court enjoined the closing through injunctions issued on October 6, 1975 and October 20, 1975, respectively. All injunctions were dissolved on April 13, 1976 by an order of the New York State Supreme Court. The Supreme Court's order also dismissed the taxpayer suits and declared the contract to be valid.

In June 1976, Landau and Shapiro brought suit against the County seeking specific performance of the contract and compensation for damage caused to the site by the County. In July 1976, following a series of proceedings between the County and the DEC, as well as the disclosure that Barbarita had received a commission, the County terminated its approximately sixteen months of use of the site as a landfill and passed a resolution rescinding the contract.

In December 1977, the State Supreme Court ruled that Shapiro and Landau were entitled to specific performance of the contract. Then on December 29, 1978, the Appellate Division reversed the Supreme Court decision on the grounds that the contract was unenforceable because the commission received by Barbarita violated the terms of the contract, state law and public policy. Landau v. Percacciolo, 66 A.D.2d 80, 412 N.Y.S.2d 378 (2d Dept. 1978). The New York Court of Appeals affirmed the Appellate Division's decision. 50 N.Y.2d 430, 429 N.Y.S.2d 566, 407 N.E.2d 412 (1980). A subsequent, unappealed decision by the Supreme Court denied requests by Landau and Shapiro for compensation for damages to the site caused by the County during its operation of the landfill, because "they [the owners] cannot maintain this action for alleged damages arising from a properly rescinded unenforceable contract, notwithstanding the possible harsh consequences." Ex. I to Shapiro Aff. (Sept. 7, 1989).

In 1980, the DEC informed Shapiro and Landau that a preliminary investigation had revealed that the site contained hazardous materials which were leaching into the water supply. In November 1985, Shapiro requested a portion of all samples taken by the DEC from the site. Shapiro claims to have employed Nanco Lab, Inc. and Estrin and to analyze water samples. In March 1986, Shapiro retained Hart Associates, Inc. (Hart) to investigate the site and set forth a plan for remedying the hazardous substance problems at the site. To facilitate the Hart project, Shapiro employed the firm of Badey & Watson to conduct "survey and mapping work." Shapiro Aff. at 12, ¶ 29 (Sept. 7, 1989). In 1986, Shapiro also retained the law firm of Beveridge & Diamond "to advise me of my rights under [the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.] CERCLA and common law to enforce compliance and recover my response costs from the County and Landau." Id. at 10, ¶ 23.

Discussion

I. Res Judicata and Collateral Estoppel

The state court decisions described above denied the validity of the contract for the sale of the site and denied the owners' requests for compensation for damage to the site caused by the County. The County argues that those decisions have res judicata and collateral estoppel effect in this action. Under 28 U.S.C. § 1738, these New York State court judgments must be given the same effect they would have in the courts of the state under state law. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380-81, 105 S.Ct. 1327, 1331-32, 84 L.Ed.2d 274 (1985).

The Second Circuit recently observed that "New York law is clear [that]. . . . a claim is not barred by res judicata if the court in which the first action was brought lacked subject matter jurisdiction to adjudicate the claim." Cullen v. Margiotta, 811 F.2d 698, 732 (2d Cir.) (citing Salwen Paper Co. v. Merrill Lynch, Pierce Fenner & Smith, Inc., 72 A.D.2d 385, 424 N.Y.S.2d 918, 922 (2d Dept. 1980); Mural Arts, Inc. v. Sonsandi, 82 N.Y.S.2d 153, 154-55 (N.Y. Sup. Ct. 1948); Restatement (Second) of Judgments § 26(1)(c) (1982); 5 Weinstein, Korn & Miller, New York Civil Practice at 50-140, ¶ 5011.18 (1985)), cert. denied sub nom., Nassau County Republican Committee v. Cullen, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987); see also Marrese, 470 U.S. at 384 n. 3, 105 S.Ct. at 1333 n. 3 ("we do not believe that federal courts should fashion a federal rule to preclude a claim that could not have been raised in ...


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