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CHRISTIE-SPENCER CORP. v. HAUSMAN REALTY CO.

October 23, 2000

CHRISTIE-SPENCER CORPORATION, PLAINTIFF,
V.
HAUSMAN REALTY CO., INC., DOROTHY KAHN, NANCY H. BLUMENTHAL, AND ROBERT TODD LANG AND STEPHEN D. KAHN, AS EXECUTORS OF THE ESTATE OF ROBERT JAMES HAUSMAN, MIMI CLEANERS INC., BERNARD GROSSMAN, AND THOMAS GROSSMAN, DEFENDANTS.



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

   
MEMORANDUM ORDER DENYING REQUEST FOR PRELIMINARY INJUNCTION AND DISSOLVING TEMPORARY RESTRAINING ORDER

Christie-Spencer Corp. brings this action under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, as amended ("RCRA"), 42 U.S.C. § 6901 et seq., the New York Navigation Law § 176 and 181(5), and New York State common law against Hausman Realty Co, Inc. ("HRC"), its predecessors in interest Dorothy Kahn, Nancy Blumenthal and Robert J. Hausman, and Mimi Cleaners, Inc., Bernard Grossman and Thomas Grossman (the "Mimi Defendants") for environmental damage caused by Mimi Cleaners, the former subtenant of plaintiff's building at 58 Christie Place, Scarsdale, New York (the "Site").

In July 2000, HRC, which holds a ground lease on the subject property through 2012, commenced work under an agreement with the New York State Department of Environmental Conservation (DEC) to clean the site of certain hazardous chemicals that had been released from Mimi's dry cleaning operation. Pursuant to its agreement with DEC, HRC undertook to remove over 70 tons of soil located under the building. In the process, HRC discovered that the contamination extended beyond the perimeter of the excavation. On the advice of environmental engineers, HRC began installing a system of pipes and pumps below the surface of the site to perform an operation known as a "soil vapor extraction" ("SVE"). Over time the SVE system will remove most of the remaining contamination, in a manner explained below. Once this system is in, defendants plan to re-seal the floor and then sub-let the property to new tenants.

Even though DEC has approved of defendant's approach, plaintiff seeks a mandatory preliminary injunction requiring HRC to fully remediate all contamination at the Site — including potential bedrock and groundwater contamination. To that end, plaintiff originally asked this court to enjoin HRC from completing installation of the SVE system, and to order HRC to remove any and all contaminated soils from under its property. At oral argument on the motion for injunction, plaintiff also demanded that, at a minimum, defendant HRC be ordered to test the bedrock under the site and adjacent groundwater (if any) for contamination, and to remediate it. They seek an injunction pendente lite on the grounds that HRC's planned actions (1) pose an imminent and substantial danger to the public health in violation of RCRA; (2) violate Article Four, which require HRC to keep the property in good repair and to comply with all laws and regulations relating to the property; and (3) constitute "alterations" in excess of $1,000 which, under Article 23 of the ground lease from Christie-Spencer, require the owner's permission.

For the following reasons, plaintiff's request for a preliminary injunction is denied.

FINDINGS OF FACT

The ground lease

Christie-Spencer ("Christie"), a New York corporation, is the owner of real property located at 58 Christie Place, Scarsdale, New York, in a commercial area of downtown Scarsdale. Defendant HRC operates a small shopping center on the Site, pursuant to a ground lease dated October 15, 1951 (the "ground lease"). The site is upgrade from the Bronx River, although separated from the river by several city blocks and the Scarsdale Metro-North tracks and terminal.

The prior owner of the Site, Parkway-Spencer Corp., entered into the initial lease with a company called Marx B. Hausman. As a result of a series of assignments of the ground lease on both sides, on August 1, 1959, Christie became the lessor, and on July 1, 1961, HRC became the lessee. The ground lease has been renewed twice and runs through December 31, 2012.

Defendants Dorothy Kahn, Nancy Blumenthal, and Robert Hausman,*fn1 predecessors in interest to HRC, sublet the Site to defendants Mimi Cleaners, Inc., Bernard Grossman and Thomas Grossman ("Mimi") or their predecessors in interest. The Site is currently vacant and has been for at least a year. Other retail establishments occupy adjacent stores in the same building. The U.S. Post Office stands next door.

In the ground lease, HRC agreed to keep the Site in good repair, and to comply — and to ensure that its subtenant Mimi Cleaners complied — with all laws, regulations, rules and requirements of every kind, with respect to the Site. HRC also agreed to pay the full cost of any failure by it or its subtenant to comply with these laws and regulations. (Pl.Compl. at Exh. A at 9.) The ground lease also requires HRC to indemnify Christie-Spencer "from all expense and/or damages by reason of any notices, orders, violations or penalties filed against or imposed upon the premises, or against [Christie] as owner thereof, because of the failure of [HRC] to comply with [all laws and regulations]." (Id. at 9-10.)

Article Twenty-Third of the lease also prohibits HRC from making any alterations to the Site that cost more than $1,000 without Christie's prior written consent, but says that the Lessor shall "not withhold unreasonably such consent from the Lessee." (Id. at 7.)

Site contamination

During an inspection of the site in 1998 (which was at the time or shortly before Mimi Cleaners closed), HRC observed conditions that led HRC to suspect that hazardous substances had been released at the Site. HRC therefore hired Chazen Environmental Services, Inc. ("Chazen"), an environmental consulting firm, to evaluate environmental conditions at the Site.

Chazen conducted an initial site investigation in late 1998. A visual inspection revealed evidence of PCE spills on the floor around the dry cleaning machine and on the floor near chemical drums and containers throughout the facility. From this Chazen concluded that Mimi Cleaners had released PCE at the Site. In January and February, Chazen took soil samples from underneath the concrete floor within the dry cleaners and at other areas outside the cleaners. It reported its findings in March 1999.

Chazen reported concentrations of PCE and its degradation product dichloroethylene ("DCE") in the soil under and within the vicinity of the dry cleaning equipment. The tests indicated levels of contaminants of 9.9 mg/kg under the floor slab. This was below the recommended soil cleanup objective for human health listed in the New York State Department of Environmental Conservation ("DEC") TAGM # 4046 of 14 mg/kg. It was also below the Risk-Based Concentration (RBC) for residential health for PCE of 12 mg/kg provided by USEPA Region III. It thus appeared that the Site did not pose a danger to human health. However, the tests indicated PCE concentrations at levels above the DEC (TAGM # 4046) recommended soil cleanup objectives of 1.4 mg/kg. (Savarese Decl. at Exh. C at 2-1.) The TAGM # 4046 soil cleanup objectives were developed by the State to protect groundwater. (Savarese Decl. at Exh. A at 5.)

In its report, Chazen described the geology of the Site:

The material just below the slab consisted of construction fill material of varying grain size. The soils encountered beneath the cellar floor were primarily made up of gray, medium to coarse sand and gravel with little to some silt. The soils beneath the cellar were saturated at a depth of approximately one-foot below grade. The fill material beneath the slab supporting the dry-cleaning machine was primarily brown fine to coarse sand with little fine to medium gravel. The soils were moist in some instances, but not saturated.

(Id. at 2-3.) Chazen found bedrock below the soil "at relatively shallow depth in all borings." (Id. at 3.) The bedrock was "at about three to four feet beneath the cellar and between two and seven feet throughout the building." (Id.)

Preliminary bedrock contamination considerations

Chazen noted that the bedrock was "fairly dense" and "may be dense enough so that it acts as a boundary to contaminant migration." However, if the bedrock was "modified by construction activities," Chazen opined that this "could have implication for contaminant transport." (Id. at 1-2.) In other words, blasting or ripping the rock could change it from a "barrier" to a method of transporting contaminants down into the bedrock. Chazen did not investigate possible contamination of the bedrock layer or any groundwater systems below the bedrock.

In a July 1999 letter proposing cleanup services to HRC, its environmental engineering consultants, Lawler, Matusky and Skelly ("LMS"), informed HRC of the possibility of bedrock contamination:

The concentrations reported for the site by the contract laboratory include some high values that indicate to us the likelihood that product was historically released at the site. If that was the case, some PCE would have likely penetrated the bedrock, potentially as dense nonacqueous phase liquid (DNAPL).

(Savarese Decl. at Exh. F.) A discussion of HRC's cleanup options followed:

Excavation of the most highly contaminated soil beneath the dry cleaning machines has the advantage of removing the most contaminated material completely in that area of the site. Furthermore, the removal will expose the surface of the bedrock. If there is evidence of contaminant penetration into the rock other technologies can be applied to the surface of the rock to mitigate additional migration.

(Id.) At the time of this letter LMS had not yet begun work, or even opened up the Site to examine it below grade, let alone tested the bedrock for contamination. It was therefore not opining that the bedrock actually was contaminated.

HRC's voluntary cleanup agreement and work plan

HRC informed Christie of the contamination in April 1999. In September 1999, HRC applied to the DEC's Voluntary Cleanup Program. In this program, volunteers enter into an agreement with DEC to perform a site cleanup in exchange for a release from the agency from further action seeking costs for investigation and remediation of the contamination. Voluntary cleanup agreements also typically provide for DEC's issuance of "no further action" letters upon satisfactory implementation of the remedial work plan. A "no further action" letter states that a DEC-approved cleanup had been performed at the property. HRC executed a Voluntary Cleanup Agreement ("VCA") with DEC in April 2000.

The VCA requires that any remediation undertaken pursuant to the VCA will not "prevent or interfere significantly with any proposed, ongoing or completed remedial programs at the Site" or "expose the public health or the environment to a significantly increased threat of harm or damage." (Savarese Decl. at Exh. D.) The VCA further contemplates the implementation of additional measures "in the event that contamination previously unknown is encountered," or in the event DEC determines that the remediation is not sufficiently protective of human health and the environment for the contemplated use. (Id.)

LMS submitted a proposed Remediation Work Plan to DEC in May 2000. The objectives of this work plan were to: (1) "[a]scertain the areal extent of contaminated soils in the vicinity of the former dry cleaning machines," and (2) "[e]xcavate and remove the heavily contaminated soils to the extent practical, considering such factors as the structural integrity of the building and any unforeseen obstacles." (Savarese Decl. at Exh. C at 1-3.) LMS planned to remove a portion of the floor inside the Site and excavate PCE-contaminated soil that exceeded DEC-recommended soil cleanup objectives of 1.4 parts per million, as practicable. LMS would also replace the contaminated soil with clean fill, and collect and analyze soil gas and ambient air samples within the retail space to verify that the excavation met DEC cleanup criteria.

In the work plan, LMS addressed the possibility of groundwater contamination:

The [DEC] recommended soil cleanup objective assumes that contaminants located in unsaturated soils will migrate to the groundwater table. Based on the level of contamination detected in the site soils by Chazen, the hypothetical mechanism for potential contamination migration to groundwater would be via surface water infiltration. However, surface water infiltration is unlikely at the site due to the location of the subsurface soil contamination (within a building and below a concrete slab) and the preponderance of paved surfaces surrounding the site.

(Savarese Decl. at Exh. C at 2-1.) (emphasis added.) The fact that the area of concern was located within a building, below a concrete slab, and adjacent to paved or concrete areas "eliminates subsurface contaminant migration via surface water infiltration." In addition, LMS notes Chazen's ...


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