The opinion of the court was delivered by: FOSCHIO
LESLIE G. FOSCHIO, UNITED STATES MAGISTRATE JUDGE
The parties to this matter executed a consent to proceed before the undersigned on the pending summary judgment motions on March 6, 1995. The matter is presently before the court on Defendant American Premier Underwriters, Inc.'s motion for partial summary judgment, filed April 17, 1995; Defendant Louis E. Wolfson's motion for summary judgment, dated April 17, 1995; and Defendants Witben Realty, Sereth Properties, Wolsher, Inc., and Universal Marion Corporation's motion for summary judgment, dated April 17, 1995.
Plaintiffs, Idylwoods Associates and Kam, Inc., filed the complaint in this action against Defendants Mader Capital ("Mader"), Slate Bottom Creek Apartments, Inc. ("SBC"), Marc Equity Partners I ("Marc Equity"), and the Trustees of the Mader Construction Corporation Employees Profit Sharing Plan (the "Trustees") on June 5, 1991, alleging four causes of action, including a claim under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a), claiming that Mader, SBC, Marc Equity, and the Trustees were strictly liable to Plaintiffs for costs and damages relating to the discovery of hazardous waste on property sold by these Defendants to Plaintiffs, along with state claims for false representation, breach of warranty, and fraudulent inducement to enter into a contract. Plaintiffs are seeking a declaratory judgment that these Defendants are liable to Plaintiffs for all past, present, and future response costs incurred in connection with the release, threat of release, or disposal of hazardous substances on the property; damages for costs associated with remediating the environmental conditions on the property, or, alternatively for damages in the amount by which the fair market value of the property has been diminished by the presence of toxic wastes; a declaration that toxic wastes were present on the property prior to the time the property was transferred to Plaintiffs; and, indemnification against any liability or claim which may be asserted with respect to the toxic wastes on the property. These Defendants answered the complaint on September 5, 1991.
On September 12, 1991, Defendants Mader, SBC, Marc Equity, and the Trustees filed a third-party complaint against Defendants Witben Realty Corporation ("Witben"), Sereth Properties ("Sereth"), Wolsher, Inc., and Universal Marion Corporation ("Universal Marion") alleging that the third-party Defendants were all present owners of portions of the property containing hazardous waste, and alleging causes of action against these Defendants under CERCLA, and state causes of action for creating and maintaining a continuing nuisance, trespass, strict liability, negligence, equitable subrogation, and restitution.
On August 3, 1992, the undersigned issued an order staying the proceedings in this action pending ongoing negotiations by certain parties with the New York State Department of Environmental Conservation ("NYSDEC"), except that Plaintiffs or any other party would be permitted to amend the complaint as needed. The parties were directed to report back to the undersigned every three months on the status of the negotiations.
On March 8, 1993, the court authorized the filing of an amended complaint, and, on the same day, an amended complaint was filed by Plaintiffs adding Witben, Sereth, Wolsher, Universal Marion, Penn Central Corporation ("Penn Central") and Louis E. Wolfson ("Wolfson") as named Defendants, and adding five causes of action for nuisance, trespass, strict liability for possession of hazardous wastes, negligence, and violation of New York Navigation Law § 173. Thereafter, on May 18, 1994, an order was entered substituting American Premier Underwriters, Inc. ("APU"), as a successor corporation, for Defendant Penn Central.
On May 18, 1994, the court vacated the stay of all proceedings imposed on August 4, 1992 with respect to APU, Wolfson, Universal Marion, Wolsher, Witben, and Sereth. The stay, however, remained in effect for Plaintiffs and Mader, SBC, Marc Equity, and the Trustees.
On June 20, 1994, Defendant APU filed a cross-claim against Defendants Witben, Sereth, Wolsher, Universal Marion, and Wolfson alleging three causes of action, two claims under CERCLA and one state claim for contribution based on APU's agreement to undertake the remedial work required by the NYSDEC on the property. On June 22, 1995, Sereth filed two counterclaims against Plaintiffs and two cross-claims against the adverse parties under CERCLA, and for common law contribution and indemnification, and seven cross-claims against Penn Central (now APU) for a violation of Article 12 of the New York Navigation Law, contractual indemnification, negligence, negligence per se, trespass, private nuisance, and public nuisance. On the same day, Defendants Universal Marion, Wolsher, Witben, and Wolfson filed the same counterclaims and cross-claims as Sereth against Plaintiffs, the adverse parties, and APU.
On April 17, 1995, Defendant APU filed a motion for partial summary judgment on its first and second cross-claims against Wolfson, Universal Marion, and Witben. On the same day, Defendant Wolfson filed a motion for summary judgment on the ground that Wolfson was not liable to APU for any damages or costs under CERCLA or any other theory of liability. Similarly, Defendants Witben, Sereth, Wolsher, and Universal Marion filed a motion for summary judgment on the ground that those Defendants were not liable to APU for any damages or costs under CERCLA or any other theory of liability. Supporting and opposition memoranda and affidavits were filed between April 17, 1995 and June 5, 1995.
Oral argument on the motions was held on June 21, 1995.
For the reasons as set forth below, Defendant APU's motion for partial summary judgment is GRANTED in part and DENIED in part; Defendant Wolfson's motion for summary judgment is GRANTED in part and DENIED in part; and, Defendants Witben, Sereth, Wolsher, and Universal Marion's motion for summary judgment is GRANTED in part and DENIED in part.
Between 1920 and 1959, the New York Central Railroad Company ("NYCRC") and a subsidiary, the New York State Realty & Terminal Company (the "Terminal"), jointly owned approximately 1131 acres of property located in the Towns of Cheektowaga and West Seneca, New York near the intersections of Union and French Roads and Losson Road.
During that time, NYCRC operated a railroad classification and maintenance yard on the site known as the Gardenville Yard. According to Edmund C. Wesolowski, a laborer for NYCRC from May 14, 1920 until November 30, 1970 who worked at the Gardenville Yard from 1940 until 1955, Deposition of Wesolowski, Exhibit 9, Affidavit of Louis E. Wolfson, at pp. 4, 8, 27 ("Wesolowski Deposition"), railroad cars carrying drums of waste, such as oil, spoiled food, sludge, and scrap, Wesolowski Deposition, at pp. 14-17, were brought to the roundhouse situated at the Gardenville Yard, and dumped into a pit approximately once a month. Wesolowski Deposition, at pp. 26, 28-29. Other items such as stone and bricks were dumped in between the monthly dumpings of waste. Wesolowski Deposition, at p. 34. The drums were then reused, not left at the site. Wesolowski Deposition, at p. 26. The dumping occurred only in that one area near the roundhouse, and on no other portion near the property. Wesolowski Deposition, at p. 31. NYCRC ceased its operations at the Gardenville Yard in or about 1955. Memorandum of Law of Defendant APU, dated April 17, 1995, at p. 8.
Universal Marion is a publicly held Florida corporation with a principal place of business in Jacksonville. Wolfson, an investor, owns approximately 11% of the stock, and, when combined with other family members, the Wolfson block holds approximately 39% of the stock of Universal Marion. In the 1950's Universal Marion was primarily in the industrial supply business. Wolfson Deposition, Exhibits in Support of Defendants Witben, et al's Motion for Summary Judgment, at p. 10. During that time, Universal Marion became involved in real estate investing and development, although, according to Wolfson, Universal Marion did not remain in that business as the head of its real estate division passed away. Wolfson Deposition, at p. 11.
During 1959, however, Wolfson learned that NYCRC was interested in conveying the Gardenville property. Leon Kaye, head of Universal Marion's real estate division, went to Buffalo at Wolfson'S direction, and met with James Oppenheimer, a Buffalo real estate broker, to assess the property and its potential for industrial development. Notice of Motion by APU, Statement of Material Facts, at p. 8, PP45-47. Thereafter, in 1959, NYCRC entered into a lease agreement and executory contract with Wolfson with respect to the entire parcel of 1131 acres. Notice of Motion by APU, Statement of Material Facts, at p. 2, P6. In that agreement, Wolfson leased a parcel of 535 acres from the NYCRC, and, in addition, was granted an option to purchase or lease an additional approximately 600 acres (later found to be 595 acres) of the NYCRC property. Notice of Motion by APU, Statement of Material Facts, at p. 2-3, P6. Subsequently, on December 14 and 18, 1959, Wolfson purchased the 535 acres by two deeds, one for 266 acres, the other for 269 acres.
On December 14, 1959, Wolfson conveyed the 266 acres to Defendant Sereth, a corporation; on December 21, 1959, Wolfson conveyed the other 269 acres to four couples who were friends of Wolfson and his brother. Notice of Motion by APU, Statement of Material Facts, at pp. 3-4, PP9, 14-15. Wolfson, however, retained the rights to fill, gravel, and cinders on both parcels until December, 1962. Notice of Motion by APU, Statement of Material Facts, at p. 5, P23.
On June 17, 1960, Witben Realty Corporation was formed by the four couples. The 269 acres was then deeded to Witben shortly thereafter. The majority of the inactive hazardous waste disposal site known as the Union Road Site at issue in this case is located on these 269 acres, which includes the former railroad roundhouse area. Notice of Motion by APU, Statement of Material Facts, at p. 4, PP17-18.
Also in 1960, Universal Marion acquired 100% of the stock of Witben and Sereth. Notice of Motion by APU, Statement of Material Facts, at p. 5, P20. The officers and directors of Universal Marion were also the officers and directors of both Witben and Sereth. Notice of Motion by APU, Statement of Material Facts, at p. 8, P40.
The rights to fill, gravel, and cinders on both parcels were deeded to Sereth and Witben in December, 1962. Notice of Motion by APU, Statement of Material Facts, at p. 5, P23.
On August 21, 1961, Wolfson exercised his option on the remaining approximately 595 acres from NYCRC when he executed an "Assignment of Lease and Executory Contract" by which he assigned an undivided one-fourth interest in the lease agreement to his friend, Isidore Sherman. On the same day, Wolfson and Sherman assigned the agreement to Wolsher, Inc., a Florida corporation. Notice of Motion by APU, Statement of Material Facts, at p. 5, P 24-25. Wolsher leased the approximately 595 acres from NYCRC by Indenture of Lease, dated April 12, 1965. Notice of Motion by APU, Statement of Material Facts, at p. 6, P27. In 1968, Penn Central became the successor corporation to NYCRC. At that time, Penn Central conveyed the approximately 595 acres comprising the balance of the former Gardenville Yard to Wolsher in six separate deeds. Notice of Motion by APU, Statement of Material Facts, at p. 6, P28.
In 1966, Sereth deeded its portion of the property, the 266 acres, to Witben.
Wolsher, whose two shareholders were Wolfson and Universal Marion, was liquidated in 1971. Notice of Motion by APU, Statement of Material Facts, at pp. 6-7, P32. Title to Wolsher's property holdings in the former Gardenville Yard was conveyed to Wolfson and Universal Marion by deed executed May 14, 1971 with an undivided three-fourths interest going to Universal Marion and an undivided one-fourth interest going to Wolfson. Notice of Motion by APU, Statement of Material Facts, at p. 7, P33. Wolsher's holdings included a 7.5 acre parcel that is now included in the boundary of the Union Road Site. Notice of Motion by APU, Statement of Material Facts, at p. 7, P34. According to APU, at this time, Universal and Witben jointly hold title to that 7.5 acre parcel. Notice of Motion by APU, Statement of Material Facts, at p. 7, P37.
During the 1970's and 1980's, Universal Marion and Witben, and Universal Marion and Sereth jointly conveyed portions of the real property, not including any property located on the Union Road Site, to third-parties. Defendants Mader, SBC, Marc Equity, and the Trustees were third-party purchasers of parcels of real property from Witben and/or Universal Marion. The proceeds from all of the sales of real property were deposited in Universal Marion's accounts as Witben and Sereth did not maintain separate accounts from Universal Marion. Notice of Motion by APU, Statement of Material Facts, at pp. 8-9, PP42, 50-51. Harry Prince, an employee of Universal Marion who was responsible for Universal Marion's real estate operations handled maintenance, sales, and marketing of the property. Notice of Motion by APU, Statement of Material Facts, at pp. 6, 9, PP29, 49. During this time period, Universal Marion and Witben shared a common office, shared corporate officers, had joint books and records, and filed consolidated tax returns. Notice of Motion by APU, Statement of Material Facts, at pp. 8-10, PP43, 52-53, 55-56. Also, Universal Marion paid all of the property taxes for the property owned by Witben, including the parcels which subsequently fell within the boundaries of the Union Road Site, from 1973 until 1983. Notice of Motion by APU, Statement of Material Facts, at p. 9, P54.
Prior to October, 1984, Universal Marion sold all of the property owned by Witben, with the exception of a parcel of property known as the Losson Road property. Notice of Motion by APU, Statement of Material Facts, at p. 12, P71. The Union Road Site falls largely within the boundary of the Losson Road property. Notice of Motion by APU, Statement of Material Facts, at p. 2, P1.
In late 1982, inspectors from the Erie County Department of Environment and Planning ("DEP") inspected an area of property, now known as the Union Road Site, located adjacent to Losson Road in response to a complaint. Notice of Motion by APU, Statement of Material Facts, at p. 12, P72-73. The inspectors found a depression measuring approximately 80 feet by 140 feet containing a tar-like material and approximately 50 drums filled with unidentified substances. Notice of Motion by APU, Statement of Material Facts, at p. 13, P74. The area was also found to be littered with "a great deal of construction and demolition type debris," along with household trash. Notice of Motion by APU, Statement of Material Facts, at p. 13, P75. Surface water was observed to be passing from the depression or pit, through a marshy area, and draining into an adjacent creek known as Slate Bottom Creek. Notice of Motion by APU, Statement of Material Facts, at p. 13, P75. Many drums were found abandoned in the tar pit, although the source of these drums was not known as the practice of the railroad was to reuse the drums and not to dispose of the drums in the pit. Notice of Motion by APU, Statement of Material Facts, at p. 16, P93. The tar-like material was subsequently sampled, along with the water, and some concentrations of metal, asphalt, and lubrication oil were found, along with polychlorinated biphenyls ("PCBs") and small amounts of phenol and phenolic compounds. Notice of Motion by APU, Statement of Material Facts, at p. 13, P77-78.
The DEP notified Universal Marion, by letter dated December 30, 1982, that an abandoned disposal site had been discovered on the property, and requested cooperation in cleaning up the site. Notice of Motion by APU, Statement of Material Facts, at p. 13-14, PP79-80. Counsel for Universal Marion, Charles P. Maxwell, replied to the letter, stating that the situation "may have been caused by the contractors in connection with the Losson Road relocation," a prior construction project. Notice of Motion by APU, Statement of Material Facts, at p. 14, P81. A January 14, 1983 letter from DEP to Universal Marion indicated that site ownership needed to be determined. Notice of Motion by APU, Statement of Material Facts, at p. 14, P83.
On July 20, 1983, Universal Marion retained a consulting firm, Recra Research, Inc. to perform testing at the waste disposal site, and paid for the sampling and analysis which was performed. Notice of Motion by APU, Statement of Material Facts, at p. 14, P84-85. The field tests were performed in August, 1983, and, on March 13, 1984, Recra submitted its report to Maxwell stating, among other things, that waste material had been discovered which should be removed and disposed of, and that there was a source of contamination. Notice of Motion by APU, Statement of Material Facts, at p. 15, P91. On May 9, 1984, Maxwell submitted the report to the New York State Department of Environmental Conservation ("DEC"). Notice of Motion by APU, Statement of Material Facts, at p. 16, P95.
The DEC, by letter dated June 29, 1984, recommended that Universal Marion undertake certain clean-up activities, including the removal of tars, the removal of drums, and additional sampling; the cost at that time thought to be approximately $ 500,000. Notice of Motion by APU, Statement of Material Facts, at pp. 16-17, P96, 100-101. Not receiving an answer, the DEC again wrote to Universal Marion on October 11, 1984. In the letter, the DEC noted that, in meetings between the DEC and Maxwell, that Maxwell had indicated that the property where the hazardous waste had been found was owned by Witben, not Universal Marion. Notice of Motion by APU, Statement of Material Facts, at p. 17, P98. The DEC requested financial statements from Witben and Universal Marion, as well as a title search showing present and previous owners. Universal Marion replied, through Maxwell, on October 26, 1984, stating that Witben had owned the parcel since 1960, and that the parcel was Witben's sole asset. Maxwell declined to send financial statements from Universal Marion, stating that the shareholders' position was that the land was owned by Witben. Notice of Motion by APU, Statement of Material Facts, at pp.17-18, PP103-105.
At a November 2, 1984 Universal Marion board meeting, Universal Marion voted to dissolve Universal Marion
; the shareholders voted unanimously to dissolve a few weeks later. Universal Marion then began to default on property tax bills, previously paid by Universal Marion on Witben's behalf, on the Parcel in question. Notice of Motion by APU, Statement of Material Facts, at p. 19, PP111-114. Liquidating distributions were made to the Universal Marion shareholders. Notice of Motion by APU, Statement of Material Facts, at p. 19, P115.
In 1984, the Town of Cheektowaga and the DEC notified counsel for Wolfson, Universal Marion, and Witben of their responsibility to secure the property from unauthorized dumping. Notice of Motion by APU, Statement of Material Facts, at p. 21, P124. No steps were taken, and the Town of Cheektowaga caused the property to be fenced, at the Town's expense, in February, 1986. Notice of Motion by APU, Statement of Material Facts, at p. 20, P120.
Meanwhile, on June 11, 1985, Mader, SBC, Marc Equity, and the Trustees entered into an agreement with Home Leasing Corporation by which they agreed to sell to Home Leasing certain apartment units and vacant land located in the Town of Cheektowaga near the hazardous waste site, known as the "Idylwoods Property." Complaint, dated June 5, 1991, at p. 3, P10. On August 8, 1985, Home Leasing assigned its rights to purchase the Idylwoods Property to Plaintiffs KAM and Idylwoods Associates. Complaint, dated June 5, 1991, at p. 3, P11. By deed dated August 29, 1985, Mader, SBC, Marc Equity, and the Trustees conveyed the Idylwoods Property to Plaintiffs. Complaint, dated June 5, 1991, at p. 4, P12.
Investigators inspecting the Union Road Site in 1986 found 81 drums, which were almost completely empty, except for some drums containing a solid material described as "stone with binder." Notice of Motion by APU, Statement of Material Facts, at p. 21, P129. The DEC notified Penn Central, in 1986, that the Union Road Site might constitute a threat to the environment, and that Penn Central was considered a potentially responsible party ("PRP")
; similar letters were sent to Witben and Universal Marion. Notice of Motion by APU, Statement of Material Facts, at pp. 21-22, P130-131. After the DEC found that the tar-like material had migrated from the pit to the banks of Slate Bottom Creek, the United States Environmental Protection Agency ("EPA"), in February, 1987, collected samples from the creek, and, in 1988, erected a high visibility fence and hazardous waste warning signs, which the DEC later replaced. Notice of Motion by APU, Statement of Material Facts, at p. 22, PP133-135.
A Proposed Remedial Action Plan was developed for the Union Road Site by the DEC, and, in February, 1992, APU, the successor to Penn Central, submitted comments on the plan and informed the DEC that it would participate in the remediation. Notice of Motion by APU, Statement of Material Facts, at p. 23, P140. The DEC requested the participation not only of APU, but of Witben, Universal Marion, and Wolfson in the implementation of the plan. While initially cooperating with negotiations, counsel for Witben, Universal Marion, and Wolfson subsequently withdrew from the negotiations. Notice of Motion by APU, Statement of Material Facts, at p. 23, P141-42. In June, 1993, the DEC approved APU's proposed work plan, and, on March 28, 1994, without admitting liability for the Union Road Site, APU entered into a consent order with the DEC, and agreed to perform the remedial action selected by the DEC at a cost of approximately $ 11 million. Notice of Motion by APU, Statement of Material Facts, at pp. 23-24, PP143-44.
Summary judgment will be granted pursuant to Fed.R.Civ.P. 56 when the moving party demonstrates that there are no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Rattner v. Netburn, 930 F.2d 204, 209 (2d Cir. 1991). The party moving for summary judgment bears the burden of establishing the nonexistence of a genuine issue of material fact. If there is any evidence in the record based upon any source from which a reasonable inference in the nonmoving party's favor may be drawn, the moving party cannot obtain a summary judgment. Eastway Construction Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985).
The function of a district court in considering a summary judgment motion is not to resolve disputed issues of fact, but to determine whether there is a genuine issue to be tried. Rattner, supra, at 209. In assessing the record, including any affidavits, exhibits, and other submissions, the court is required to resolve all ambiguities and to draw all factual inferences in favor of the nonmoving party. Anderson, supra, 477 U.S. at 255; Rattner, supra, at 209.
In this case, Defendant APU seeks summary judgment on its first and second cross-claims alleging causes of action under CERCLA against Defendants Witben, Universal Marion, and Wolfson. Defendant Wolfson seeks summary judgment against APU on the ground that he is not liable to APU for any damages under CERCLA or any other theory of liability; Defendants Witben, Sereth, Wolsher, and Universal Marion seek similar relief in their summary judgment motion against APU.
The Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., provides for the clean up of hazardous substances that threaten the environment and human health. B.F. Goodrich Company v. Murtha, 958 F.2d 1192, 1197 (2d Cir. 1992). The statute imposes strict liability for the costs associated with responding to the release or threatened release of the hazardous substance. B.F. Goodrich Co., supra, at 1198; State of New York v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir. 1985). Liability for response costs may be imposed on various classes of responsible persons, including past and present owners or operators of facilities, transporters of hazardous substances, and those who generate or arrange for the disposal or treatment of hazardous substances. 42 U.S.C. § 9607(a). The statute also allows any individual or entity who has incurred response costs in connection with the clean up of hazardous waste sites to sue a responsible defendant for these costs. 42 U.S.C. § 9607(a)(4)(B). In addition, as CERCLA liability is joint and several, any one party found to be liable for response costs is potentially liable for the entire cost of responding to a hazardous waste site. B.F. Goodrich Co., supra, at 1198.
"Covered persons" under CERCLA are classified into four categories: (1) the owner and operator of a vessel or a facility; (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of; (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment of hazardous substances at any facility; and, (4) any person who accepted any hazardous substances for transport to disposal or treatment facilities from which there was a release or a threatened release. 42 U.S.C. § 9607(a). A covered person may include an individual, corporation, or partnership. 42 U.S.C. § 9601(21).
There are three affirmative defenses available under CERCLA to these covered persons where it can be shown that the release or threatened release of hazardous substances were caused solely by: (1) an act of God; (2) an act of war; or (3) an act or omission of a third party other than an employee or agent of the covered person or where the act or omission occurs in connection with a contractual arrangement if the covered person can establish that he exercised due care with respect to the hazardous substance concerned, and he took precautions against foreseeable acts or omissions of the third party. 42 U.S.C. § 9607(b). The statute also provide that any combination of the first three affirmative defenses may be asserted as a defense. 42 U.S.C. § 9607(b)(4).
1. Witben Realty Corporation
APU seeks to hold Witben liable under CERCLA as the current owner of the Union Road Site. Witben, while conceding to be the owner of the Union Road Site, argues that it is entitled to the third party/innocent ...