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NEW YORK v. NATIONAL SERVICES INDUSTRIES

February 16, 2001

STATE OF NEW YORK, PLAINTIFF,
V.
NATIONAL SERVICES INDUSTRIES, INC. DEFENDANTS.



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

Memorandum Of Decision And Order

This is an action, brought by the State of New York (the "State") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), to hold National Service Indus., Inc. ("NSI") liable for cleanup costs incurred by the State at the Town of Islip municipal landfill on Blydenburgh Road in Islip, New York (the "Blydenburgh Landfill"). Presently before the Court are NSI's and the State's cross-motions for summary judgement. NSI requests that the Court grant summary judgment in its favor and dismiss the claims against it. The State cross-moves for partial summary judgement, requesting that NSI's fifth affirmative defense be dismissed,*fn1 and seeking a declaratory judgment that NSI is the legal successor to Serv-All Uniform Rental Corporation ("Serv-All") for purposes of CERCLA liability. For the following reasons, NSI's motion is denied, and the State's cross-motion is granted.

BACKGROUND

From 1962 until 1988, Serv-All operated an industrial garment rental service out of a facility located in the Town of Bayshore, New York. Serv-All rented uniforms and other industrial garments to commercial customers. As part of its service, Serv-All dry-cleaned the rented uniforms using the solvent perchloroehtylene ("PCE"). PCE is a hazardous substance within the meaning of Section 101(14) of CERCLA.

On or about June 1978, Serv-All arranged with Hicky Carting Co., Inc. ("Hicky") for the disposal or transport for disposal of several 55 gallon drums of liquid waste which contained PCE.*fn2 Hickey was not a "certified waste hauler." Serv-All had been provided with a list of "certified waste haulers" by the Suffolk County Department of Environmental Control, however, Serv-All chose to employ Hicky instead, allegedly because the approved waste haulers were more expensive.

In 1988 Ralph Colantuoni and William Lepido, Serve-All's two principals, decided to retire from the garment industry. On or about October 18, 1988, Initial Service Investments ("Initial") entered into an "Asset Sale Agreement", whereby it agreed to purchase certain assets, including customer contracts, customer lists, all of Serv-All's trucks, and the right to use or retire Serv-All's name. The purchase price was approximately $2,229,000.00. As part of the Asset Sale Agreement, Mr. Lepido and Mr. Colantuoni entered into covenants not to compete with NSI. These covenants required them not to use the Serv-All name and not to compete for seven years with NSI in the garment rental service business. On November 6, 1992, NSI acquired all shares in Initial, and on August 31, 1995 Initial merged into Serv-All.

The Blydenburgh Landfill was listed in the New York Registry of Hazardous Waste Sites in 1983, and the listing states that there was confirmed disposal of oil, trichlorethylene and vinyl chloride beginning in 1978, the date of the illegal disposal of wastes generated by Serv-All. The Blydenburgh Landfill was proposed for listing on the U.S. Environmental Protection Agency's Priority List in January 1987, and has since been listed on the federal National Priority List of the most contaminated hazardous waste sites in the United States.

NSI is not Serv-All Uniform Rental Corp.'s ("Serv-All") legal successor. Consequently, NSI bears no legal responsibility for the acts of Serv-All and cannot be liable for cleanup costs resulting from Serv-All's activities.

The State responds to this affirmative defense by asserting that NSI purchased Serv-All as an ongoing business and acquired all or substantially all of Serv-All's assets, and thus, is Serv-All's legal successor for CERCLA liability purposes.

STANDARD

A court should grant summary judgment if, when viewing the evidence in the light most favorable to the nonmovant, the court determines that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c): Eastman Kodak Co. v. Image Technical Serv., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). A party seeking summary judgment must demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant demonstrates an absence of material issues of fact, a limited burden of production shifts to the nonmovant, which must "demonstrate more than `some metaphysical doubt as to the material facts . . . [and] must come forward with specific facts showing that there is a genuine issue for trial.'" Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir. 1993) (citations and emphasis omitted). If the nonmovant fails to meet this burden, summary judgment should be granted.

Both NSI and the State agree that there are no genuine issues of material fact concerning the issue of successor liability. Accordingly, the parties have conceded that ...


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