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July 11, 1990


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

Carlyle Piermont Corporation ("Carlyle") instituted this action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. (Supp. 1987) ("CERCLA" or "Superfund"), and under New York common law for consequential damages, punitive damages and response costs incurred during the discovery, investigation and ultimate clean-up by excavation and physical removal of hazardous solvents from the soil on land which Carlyle now owns and seeks to develop and which defendants Federal Paper Board Co., Inc. ("Federal") and Continental Can Co., Inc. ("Continental") formerly owned and operated. Federal has asserted cross-claims against Continental, and has filed a third-party complaint against other third-party defendants for contribution and indemnification.

Federal and Continental move for partial summary judgment on the ground that Carlyle's response costs were not consistent with the requirements of the National Oil and Hazardous Substances Pollution Contingency Plan ("NCP"), 40 C.F.R. § 300 (1989). Federal also moves to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, because the only claim against it is based on CERCLA. Carlyle cross-moves for partial summary judgment on liability, for initial investigative and monitoring costs, for attorneys' fees and for sanctions pursuant to Fed. R.Civ.P. 11.


Carlyle purchased approximately thirty acres of waterfront property in October 1986 from defendant Clevepak Corporation and Federal's and Continental's successors in interest. The property is located on the Piermont Pier, in Piermont, New York, and is bordered on the north by the Hudson River, to the south by the Piermont Marsh, a National Estuarine Sanctuary containing 944 acres of wetlands, and to the east by village parkland. Between 1964 and 1984 Continental and then Federal owned and operated a paper mill and folding carton plant on the property. One of the buildings on the property, building 41b, located in a 1.5 acre area ("the site"), was a printing facility which used various solvents, including the hazardous substances toluene, ethylbenzene and xylene, which were stored in tanks on the site.

Between November 1986 and April 1988 the Village Board of Piermont conducted and completed an environmental analysis of Carlyle's proposed development of the property and request for a zoning change, pursuant to the State Environmental Quality Review Act ("SEQRA"), N.Y.Envtl.Conserv.L., Art. 8 (McKinney 1984). Although testing and investigation during the SEQRA process had not revealed significant concentrations of hazardous substances on the site, persistent allegations of the presence of such substances there led the New York Department of Environmental Conservation ("DEC") to inspect the property in April and May 1988 and to request additional information from Carlyle. Following several weeks of soil sampling and testing by Carlyle's engineers, in conjunction with representatives of the DEC, concentrations of toluene, ethylbenzene and xylene were detected in the soil surrounding building 41b, which had been recently demolished by Carlyle.

Carlyle's project manager, Gary Koehnken, cordoned off the area and arranged for additional testing. Carlyle notified the Village Board of its discovery and decided to reopen the SEQRA process to file a draft supplemental environmental impact statement (the "DSEIS"), and, following public hearings and comment, a final supplemental environmental impact statement (the "FSEIS").

In July 1988 Carlyle's environmental consultants proposed a "Remedial Action Plan" to clean up the site. The consultants had determined, following further investigation, that unacceptably high levels of solvents were present in the soil and groundwater near an abandoned dry well on the site. The Remedial Action Plan proposed excavating approximately 100 cubic yards of soil in and around the site to determine whether the actual level of contamination was so high that the soil should be transported off-site, or whether the level was sufficiently low that the soil could be used as backfill. The Remedial Action Plan was included in the DSEIS, and later in the FSEIS, which was accepted by the Village Board at the conclusion of supplemental SEQRA proceedings.

Koehnken states in his affidavit that he and the various consulting scientists hired by Carlyle, as well as representatives of the DEC, considered various alternative remedial actions including the following: on-site encapsulation, on-site biological treatment, hog and haul removal, on-site aeration, off-site incineration, injection well steam recovery, and no action.*fn1

In a letter to Federal and Continental dated July 14, 1988, Carlyle's attorney, Ronald J. Offenkrantz, informed them of the discovery of the hazardous solvents and stated:

    We have reason to believe that your firm was the
  actual polluter of the material found on the site
  and therefore has a liability to Carlyle as the
  owner for all costs of remediation as well as for
  such consequential damages as may have been
  incurred as a result of your use of the property.
    We suggest that you place this matter in the
  hands of your attorneys and instruct them to
  contact this firm on receipt so that the matter
  and its resolution may be further discussed.*fn2

Counsel for the defendants replied in separate letters requesting additional information and stating that they were investigating whether they had indeed owned the property.*fn3 Offenkrantz responded to both letters on July 27, stating in his letter to Federal:

  What we seek is your cooperation in remediating
  the problem with DEC. We wrote to you because we
  intend to commence a plan of remediation and to do
  it promptly since to delay would result in
  increased damages to our client as the developer
  and ultimately to your client as the polluter.
    We would hope that Federal Paper Board will see
  that it is to its advantage to cooperate in the
  remediation and minimize everyone's costs and

On the following day Offenkrantz wrote again to Federal and Continental to advise them that after a conference with the DEC, remediation of the site was scheduled to begin on August 15. Federal thereafter arranged for its chief engineer to visit the site on August 19 to discuss the situation with Carlyle's engineers.

On September 15, 1988, Federal's counsel, John T. Flynn, wrote to Koehnken to express Federal's concern that the speed at which a clean-up program was being planned by Carlyle, "obviously affords us no participation whatever in the remediation program. Further, implementing same in such a hasty fashion could well result in a scientifically unsound or unnecessarily costly program."*fn5 Flynn also explained that Federal was still reviewing the extent of its responsibility for the Piermont site. On September 20, 1988, Margaret Murphy, outside counsel for Federal, wrote to Offenkrantz to confirm that Federal was a prior owner of the site and to state that upon receipt of additional information regarding the DEC's involvement in the situation, Federal would "cooperate in remediation of the property to the extent such remediation is required by the DEC."*fn6

From September until October, when Carlyle completed excavating the contaminated soil and shipped it to a Wayne, Michigan hazardous substances landfill, Carlyle continued to attempt to involve Federal and Continental in the clean-up planning. The defendants continued to seek additional information which they asserted was necessary for them to evaluate the cost effectiveness of, and alternatives to, the proposed action. The record indicates that Carlyle became increasingly concerned with implementing its plan before November 8, 1988, the effective date for new federal prohibitions on land disposal of solvent-contaminated soil. See 40 C.F.R. § 268.30 (1989). The excavation and shipment of approximately 2600 tons of solvent-contaminated soil from the site to a hazardous waste disposal facility/landfill in Wayne, Michigan was completed before the November 8 deadline. Carlyle alleges that its total response costs exceed $1 million, of which $278,000 were spent for initial monitoring and investigation.


One of the major objectives of the private recovery provisions of CERCLA is to "assure an incentive for private parties, including those who may themselves be subject to liability under the statute, to take a leading role in cleaning up hazardous waste facilities as rapidly and completely as possible." City of New York v. Exxon Corp., 633 F. Supp. 609, 617 (S.D.N.Y. 1986). CERCLA section 107(a), 42 U.S.C. § 9607(a) (Supp. 1987), provides in relevant part that:

  (2) any person who at the time of disposal of any
  hazardous substance owned or operated any facility
  at which such hazardous ...

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