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UNITED STATES v. A & N CLEANERS & LAUNDERERS

May 26, 1994

UNITED STATES OF AMERICA, Plaintiff,
v.
A & N CLEANERS AND LAUNDERERS, INC., BEN FORCUCCI, MARINE MIDLAND BANK, N.A., JORDAN W. BERKMAN, JOHN A. PETRILLO, JOSEPH CURTO and MARIO CURTO, Defendants. MARINE MIDLAND BANK, N.A., Third-Party Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, ST. PAUL MERCURY INSURANCE COMPANY, UTICA MUTUAL INSURANCE COMPANY, THE NORTH RIVER INSURANCE COMPANY and UNITED STATES FIRE INSURANCE COMPANY, Third-Party Defendants. MARINE MIDLAND BANK, N.A., Third-Party Plaintiff, v. VILLAGE OF BREWSTER, Third-Party Defendant.


SWEET


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D. J.

 Plaintiff United States of America (the "Government") brought this action to hold defendants Jordan W. Berkman ("Berkman"), John A. Petrillo ("Petrillo"), and Joseph and Mario Curto (the "Curtos") (collectively, the "Berkman Defendants") liable under CERCLA § 107(a), 42 U.S.C. § 9607(a), of the Comprehensive Environmental-Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. §§ 9601-9675, for costs incurred and to be incurred by the Government at the Brewster Wellfield Site (the "Well Field" or "Site") in Putnam County, New York, and elsewhere, in response to a release or threatened release of hazardous substances from real estate owned by the Berkman Defendants located at the intersection of Routes 6 and 22 in the Town of Southeast, Putnam County, New York (the "Property").

 From April 1 to April 4, 1994, this Court held a hearing on the question of the Berkman Defendants' right to claim the protections of the statutory affirmative defenses set forth in CERCLA § 107(b), 42 U.S.C. § 9607(b). Upon all the proceedings had herein and the following findings of fact and conclusions of law, I regretfully find that the Berkman Defendants are unable to claim the protection of CERCLA's affirmative defenses.

 Prior Proceedings

 The Government filed its complaint on October 16, 1989. On September 20, 1990, the Court denied a motion by third-party defendant Utica Mutual Insurance Company to dismiss a third-party claim brought against them by Marine Midland Bank, N.A. ("Marine"). See United States v. A & N Cleaners & Launderers, 747 F. Supp. 1014 (S.D.N.Y. 1990). On June 5, 1991, this Court ordered that the case be bifurcated for the litigation of liability and damages.

 On April 3, 1992 (the "April 3 Opinion"), this Court granted the Government's motion for summary judgment as to the CERCLA liability of the Berkman defendants, but held that triable issues of fact remained as to two statutory affirmative defenses pled by the Berkman defendants, the Third-Party Defense and the Innocent Landowner Defense. See United States v. A & N Cleaners & Launderers, 788 F. Supp. 1317 (S.D.N.Y. 1992). The Government made a second 'notion for summary judgment predicated on newly-discovered evidence, which motion was also denied. The opinion disposing of this motion also ordered that a separate "Phase I" trial be held on the question of the Berkman Defendants' right to the protection afforded by CERCLA's statutory affirmative defenses. See United States v. A & N Cleaners & Launderers, 842 F. Supp. 1543 (S.D.N.Y. 1994).

 After additional discovery, from April 1 to April 4, 1994, the Court conducted the trial. The Court received post-trial submissions from the parties by April 28, 1994, and on May 9, 1994, the Government supplied the Court with a copy of Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., 14 F.3d 321 (7th Cir. 1994). The Berkman Defendants responded to this submission by letter received by this Court on May 11, 1994. This matter was considered fully submitted as of May 11, 1994.

 Findings of Fact

 This action arises out of the Government's investigation of and remedial actions relating to contamination at the Site. The factual background of this matter has been discussed in prior opinions of this Court, familiarity with which is assumed. See, e.g., United States v. A & N Cleaners & Launderers, 842 F. Supp. 1543 (S.D.N.Y. 1994); United States v. A & N Cleaners & Launderers, 788 F. Supp. 1317 (S.D.N.Y. 1992); United States v. A & N Cleaners & Launderers, 747 F. Supp. 1014 (S.D.N.Y. 1990).

 Berkman and Petrillo each hold a one-third interest and the Curtos together hold a one-third interest in the Property, which is located at the intersection of Routes 6 and 22 in the Town of Southeast, Putnam County, New York. The Berkman Defendants purchased the Property on March 2, 1979, and own it as tenants-in-common. The Berkman Defendants knew that a dry cleaning business was located on the Property prior to March 2, 1979. (Tr. at 132-33.)

 Berkman is an attorney admitted to practice in New York State who specializes in real estate law. He was the Town Attorney for the Village of Brewster from 1975 through 1990.

 Petrillo is a builder engaged in the construction business. The Curtos are retired individuals.

 Forcucci is the sole shareholder, officer, and director of A & N Cleaners and Launderers, Inc., a/k/a Alben Cleaners & Launderers ("A & N"). At all relevant times, he alone was responsible for the day-to-day operation of the dry cleaning machines at A & N and the disposal of waste.

 The Property consists of a one-story brick building (the "Building") akin to a shopping mall, which is surrounded by a parking lot and adjacent grassy area on a total of approximately 1.8 acres. The Building occupies 12,500 square feet. A floor drain (the "Floor Drain") traverses the entire length of the interior of the Building and emptied into a dry well (the "Dry Well") under the parking lot in the rear of the Property until August of 1991.

 Defendant Marine was the lessee of the Property from 1970 through 1990. From 1970 to the present, Marine has maintained a branch bank at the Property. Since 1990, Marine's lease at the Property relates only to that part occupied by its branch office. Beginning in October 1990, and continuing to date, A & N has paid rent for that portion of the Building occupied by A & N directly to the Berkman Defendants.

 The Well Field has been in operation since 1954. Over the years, the Well Field's configuration and utilization has changed as wells have been installed and replaced. These wells have generally extracted between 300,000 and 400,000 gallons of water per day from the aquifer. The presence of volatile halogenated organic compounds ("VHO's") was first detected in the ground water at the Well Field in 1978.

 In December 1982, the Well Field was placed on the National Priorities List ("NPL"). *fn1" On January 18, 1984, the United States Environmental Protection Agency ("EPA") and the New York State Department of Environmental Conservation ("NYDEC") entered into a cooperative agreement, pursuant to CERCLA, whereby NYDEC would perform the Remedial Investigation and Feasibility Study ("RI/FS") *fn2" for the Site with funds provided by the Superfund. In 1985, NYDEC retained GHR Engineering Associates, Inc. ("GHR") to perform the RI/FS. The purpose of the GHR RI/FS was to determine the nature and extent of contamination at and in the vicinity of the Site.

 The Record of Decision ("ROD"), *fn3" signed by EPA on September 30, 1986, selected operation of an air stripping system and the "design and construction of a groundwater management system, consisting of extraction wells, treatment of the extracted water by an additional off-Site air stripper, and reinjection of the treated water, to contain the plume of contamination and restore ground-water quality south of the East Branch Croton River." This phase of the remedial activities was called Operable Unit One ("OU 1").

 In 1987 and 1988, a supplemental RI/FS was performed for the EPA by Ebasco Services, Inc. ("EBASCO"). The purpose of the EBASCO RI/FS was to "determine the location, nature and extent of areas of VHO-contaminated soil within the study area that could be considered as 'sources' of contamination affecting the aquifer (groundwater) supplying the Brewster Well Field," and to "gather additional information to better define the location of the zone of maximum concentration in the groundwater contamination plume and to confirm the location of the VHO isoconcentration lines determined on the basis of the initial RI/FS."

 During August and September 1987, as part of the supplemental RI, sediment sampling was undertaken from two depth intervals in the Dry Well below the water table, which samples indicated the presence of perchloroethylene ("PCE") and trichloroethylene ("TCE") at the concentrations of 62% and 3.2% respectively. *fn4" (Joint Pre-Trial Order, Stipulated Facts P 58.)

 The 1988 EBASCO RI Report identified the Dry Well on the Property as a "significant source of VHO contamination." A second ROD was signed by EPA on September 29, 1988. It provided for the excavation and disposal of the Dry Well, the Dry Well sediment, and, as necessary, the surrounding contaminated soils. This phase of the remedial activities was called Operable Unit Two ("OU 2"). Pursuant to the OU 2 ROD, the Dry Well was excavated and removed by EPA in August of 1991.

 Forcucci's dry cleaning process resulted in the production of a waste stream associated with his drying machines (the "Dryer Condensate"), which was contaminated with PCE and TCE. In addition, Forcucci's dry cleaning process resulted in the production of a waste stream associated with his ironing machines (the "Ironing Machine Condensate").

 Prior to March 1, 1979, Forcucci disposed of the Dryer Condensate down the Floor Drain. Forcucci previously gave conflicting accounts of when he had stopped disposing of the Dryer Condensate down the Floor Drain, which discrepancies can be attributed to Forcucci's misunderstanding the questions posed to him, the Government's misunderstanding Forcucci's responses, and the dimming of memory over time.

 At trial, Forcucci was able to fix the date at which he stopped disposing of Dryer Condensate down the Floor Drain by reference to the receipt of a letter from the NYDEC dated March 1, 1979, informing him that the NYDEC disapproved of his disposal practices. Forcucci testified with certainty that, by the time he received this letter, he had stopped disposing of the Dryer Condensate down the drain. (Tr. at 197-98.) This testimony established by a preponderance of the evidence that Forcucci stopped disposing of Dryer Condensate down the Floor Drain prior to the Berkman Defendants' purchase of the Property on March 2, 1979.

 Sands testified that "we were directed to the sampling point by the manager that was giving us the tour of the facility and we sampled the effluent that was described as the condensate that was being disposed of in the floor drain." (Tr. at 88.) Forcucci also testified that he had indicated the container from which to collect a sample of the Ironing Machine Condensate for testing, and that there was only one place from which such a sample could be taken. (Tr. at 183.)

 Forcucci did not remember that he actually watched Sands take the 1985 Sample. (Tr. at 183.) The Ironing Machine Condensate has always accumulated into a vacuum and, at the time that the 1985 Sample was taken, ran through a rubber hose from the vacuum to the floor drain. (Tr. at 159-61.)

 Sands could not identify a dry-cleaning vacuum when shown a picture of it. (Tr. at 81-82.) Sands testified that, although his memory was vague, he recalled obtaining the Sample from a cylindrical receptacle that was collecting the condensate. (Tr. at 81-82.)

 Defendants' Exhibit DU-10 is a photograph of the dryer at A & N, next to which is a cylindrical bucket. Forcucci testified that this bucket collected contaminated separator water which is collected into fiber containers for hazardous waste haulers to take away. Forcucci testified that a similar, cylindrical bucket stood at the front of the dryer to collect cleaning fluids, (Tr. at 155-56), so that, until one month before trial, a cylindrical bucket containing cleaning fluids stood at both the front and the rear of the dryer. (Tr. at 157-58.)

 On August 20, 1987, a second sample, also purportedly of the Ironing Machine Condensate, was taken at A & N by Mindy Sayres of EBASCO (the "1987 Sample"). Sayres' sampling procedures for the Ironing Machine Condensate are summarized in Government Exhibit 22, the Final Supplemental Remedial Investigation Report, at page 53. In pertinent part, this Report states that:

 
Standard procedure at this facility is to collect the condensate from the ironing machines in a 5-gallon bucket and periodically dispose of this fluid on site by ...

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