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VOLUNTEERS OF AMERICA OF WESTERN N Y v. HEINRICH

January 12, 2000

VOLUNTEERS OF AMERICA OF WESTERN NEW YORK, PLAINTIFF,
V.
JONATHAN C. HEINRICH, DAVID W. HEINRICH, HEINRICH MOTORS, INC., LOIS GORDON, AS EXECUTRIX FOR THE ESTATE OF WILLIAM R. GORDON, BILL GORDON CHEVROLET, INC., ROCHESTER GAS & ELECTRIC CORP., KAPLAN CONTAINER, INC., AND JOHN DOE INSURANCE COMPANIES, DEFENDANTS, JONATHAN C. HEINRICH, DAVID W. HEINRICH, AND HEINRICH MOTORS, INC., THIRD-PARTY PLAINTIFFS, V. MOBIL CORPORATION, THIRD-PARTY DEFENDANT.



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

DECISION and ORDER

INTRODUCTION

Plaintiff, the Volunteers of America of Western New York ("VOA"), brings this action under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. ("RCRA"), and New York State statutory and common law, seeking damages for environmental contamination of two parcels of real property located at 214 Lake Avenue, Rochester, New York ("the Site"). Plaintiff claims that petroleum, hazardous waste, and contaminants have been released by the defendants, previous owners or operators of the Site. Among other damages, plaintiff claims that it has been forced to spend substantial sums in environmental "response costs" to date and will be forced to spend even more to clean-up the environmental contamination caused by the defendants.

For the reasons set forth below, the defendants' joint motion to dismiss is granted in part and denied in part.

BACKGROUND

History of the Site

Plaintiff alleges that defendants Jonathan Heinrich, David Heinrich, and Heinrich Motors, Inc. (hereinafter collectively "the Heinrich Defendants"), owned and operated an automobile dealership at the Site from the 1930's to the 1980's. Plaintiff alleges that defendants William R. Gordon (now deceased and represented by Lois Gordon as executrix of the Estate of William R. Gordon) and Bill Gordon Chevrolet, Inc. (collectively "Bill Gordon") owned and operated a car dealership at the Site from the 1980's until 1997. Plaintiff alleges that defendant Rochester Gas and Electric Corp. (RG & E) owned and operated a pipe yard, coal pipe storage and barrel storage area on the back lot ("Parcel B") of the Site from approximately the 1930's through the 1970's. Finally, plaintiff alleges that defendant Kaplan Contain, Inc.*fn1 ("Kaplan") formerly conducted barrel operations at the Site from the 1930's through the 1970's.

Plaintiff alleges that the various defendants have engaged in activities which resulted in the release of large quantities of petroleum (which is not classified as a CERCLA "hazardous waste") and various hazardous waste contaminants into the soil and groundwater of the Site. Plaintiff points especially to the presence of underground storage tanks that stored gasoline for Heinrich's operation of a gasoline service station from 1938 to 1966. Those tanks were removed in 1966, but plaintiff alleges that they released large quantities of petroleum at the Site which has now migrated into on-site and off-site soil and groundwater. Plaintiff also points to various "Toxic Chemicals" which Heinrich and Bill Gordon allegedly released at the Site into underground storage tanks, floor drains, sewers, sumps, and catch basins. Finally, plaintiff points to toxic contaminants allegedly released by RG & E and Kaplan on Parcel 2 of the Site, resulting from their operations of the pipe yard, coal pipe storage, barrel making, and barrel storage operations.

Plaintiff alleges that the New York State Department of Environmental Conservation ("DEC") contends that petroleum and possibly toxic chemicals from the Site have migrated into deep bedrock groundwater and may be migrating into Monroe County's combined sewer overflow tunnel, or into the Genesee River.

Plaintiff's Acquisition of the Site

In 1995, VOA began looking for a possible site to relocate its existing day care centers, to build a super thrift store, and to consolidate its administrative offices. VOA alleges that, if it failed to provide a new day care facility for approximately 300 inner-city children by 1998, it risked losing federal funding. VOA asserts that it searched for a new location in the City of Rochester for over a year, but was unable to find a suitable location to meet its requirements, until 1996 when it discovered the Site.

In September of 1996, while considering whether to purchase the Site, VOA learned that an environmental "Phase II" site assessment had already been completed by GZA GeoEnvironmental, Inc. ("GZA") for a former prospective purchaser of the Site ("the GZA Phase II Report"). That Report revealed the presence of petroleum contamination in subsurface soil and groundwater on Parcels A and B, and isolated toxic chemicals on Parcel B.

VOA agreed to perform investigative work pending preliminary consideration by the State and County Departments of Health ("DOH's") as to whether the Site could be used for VOA's contemplated uses. The DOH's made certain recommendations (including, inter alia, installation of a separate air ventilation system for the day care center, capping the contamination area with two feet of clean soil, and completing remediation work). VOA contracted with GZA to perform a Supplemental Phase II Report, testing soil and groundwater. That investigation revealed further contamination by heavy lube oil and various other chemical compounds.

Nonetheless, VOA remained interested in purchasing and developing the Site due to the availability of the DEC's "Voluntary Cleanup Program" ("VCP"), which allows "volunteers" (parties not responsible for the contamination) who redevelop a contaminated site, to receive an assignable liability release to run with the land.

From January, 1997 to November, 1997, VOA engaged in negotiations with Bill Gordon for acquisition of the Site and with the City of Rochester for approvals for the project. The City required VOA to enter into a PILOT Agreement to pay taxes and requested an option on Parcel B, which VOA granted.

On October 30, 1997, VOA submitted an application to the DEC for the VCP. Before receiving any indication as to whether it would be eligible for the VCP, VOA nonetheless purchased the Site on November 19, 1997. Several days later, VOA representatives met with the DEC to make a presentation regarding the Site. The DEC suggested that VOA undertake limited remedial activities prior to preparation of a formal Remedial Action Plan.

On December 5, 1997, DEC determined that VOA was eligible to participate in the VCP. VOA began remediation activities — installation of geoprobe boreholes and groundwater monitoring wells, removal of underground storage tanks, removal of floor drains, and remediation of soil. However, the DEC staff previously assigned to the project were reassigned and the new staff determined that much more extensive work, including drilling bedrock wells, would be necessary. DEC did eventually agree to pay for the bedrock wells.

On August 26, 1998, VOA executed a Warranty Deed, conveying the Site to the County of Monroe Industrial Development Agency ("COMIDA"), and leased the property back from COMIDA. VOA was never able to negotiate an agreement with the DEC to make VOA a VCP. VOA has completed its redevelopment of the Site and some remediation activities, including replacing the soil to a depth of approximately 15 feet and remediation of the groundwater plume. Plaintiff claims that the Site's value has been diminished by approximately $1.8 million and that the cost of further remediation will be substantial.

Plaintiff alleges the following causes of action: (1) strict liability under CERCLA § 107 against all defendants as past "owners" or "operators" of the facility for past and future response costs; (2) for contribution under CERCLA § 113(f)(1) against all defendants for contribution of their individual shares of the response costs; (3) to "abate an imminent and substantial endangerment" pursuant to RCRA § 7002(a)(1)(B), seeking an Order of this Court directing all defendants to remediate the contamination; (4) strict liability pursuant to New York Navigation Law § 181(5) for response costs relating to petroleum contamination; (5) for indemnification or contribution and declaratory judgment under Navigation Law Article 12; (6) common law negligence; (7) common law claim for strict liability for abnormally hazardous activities; (8) common law claim for public nuisance; (9) common law claim for indemnification and contribution relating to costs incurred pursuant to the New York State Superfund Law; ...


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