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NEW YORK v. LONGBOAT

March 14, 2001

STATE OF NEW YORK AND JOHN P. CAHILL, AS TRUSTEE OF THE NATURAL RESOURCES, PLAINTIFFS,
V.
LONGBOAT, INC. AND JAMES BARRY, DEFENDANTS.



The opinion of the court was delivered by: Scullin, Chief Judge.

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs commenced this action on April 28, 2000, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 ("CERCLA"), as amended. Plaintiffs allege that Defendant Longboat, Inc. ("Longboat") and Defendant James Barry ("Barry") are responsible, as the current owners and/or operators of the Napanoch Paper Mill Site ("Site"), for all recovery costs incurred by Plaintiff New York State and for all future response costs and natural resource damages in connection with the disposal of hazardous substances at the Site. Plaintiffs also seek recovery under the state law theories of unjust enrichment and public nuisance.

Presently before the Court is Defendant Barry's motion to dismiss and his request for a more definite statement.

II. BACKGROUND

The Site is a 19-acre former paper mill that has been operated by various companies over the past century. See Complaint at ¶ 8. The Site has not been used for any manufacturing business since a fire occurred there in 1977. See id. at ¶ 9. Plaintiffs allege that hazardous substances, including polychlorinated biphenyls ("PCBs"), were used in the operations of the various paper mills and were discharged with wastewater into lagoons located on the Site. See id. at ¶ 10. The overflow from those lagoons was discharged into Rondout Creek. See id. at ¶ 11.

Beginning in 1986, the New York State Department of Environmental Conservation ("DEC") conducted investigations of the Site to determine the nature and scope of the contamination. See id. at ¶ 13. The DEC designated the Site as an inactive hazardous waste disposal site pursuant to New York's Environmental Conservation Law ("ECL") § 27-1301(2). The DEC classified the Site as a Class 2 site or one that presents a significant threat to the public health or environment and which requires action. See id. at ¶ 14. As a result of the risk level, the DEC undertook an Interim Remedial Measure ("IRM") to remove the PCB-contaminated materials. The DEC removed approximately 6,750 tons of PCB-contaminated paper sludge and soil. See id. at ¶¶ 15-16. The DEC then initiated a Remedial Investigation/Feasibility Study ("RI/FS") in March of 1994. See id. at ¶¶ 17-18. The final report indicated the presence of PCBs and/or polyaromatic hydrocarbons ("PAHs") on the Site. The report noted that other various substances, including arsenic, chromium, lead and mercury were also present at the Site. See id. at ¶ 19. The DEC concluded that the appropriate remedy was the removal of the PCB-contaminated papers rolls, the excavation and off-site disposal of contaminated soil, and the excavation and dewatering of Rondout Creek to remove the contaminated sediment. See id. at ¶ 22. This action was commenced in 1996 and is now substantially completed. See id. at ¶ 23. The State of New York has incurred response costs, not including interest or enforcement, of over $20 million. See id. at ¶ 24.

Plaintiffs claim that since Defendants*fn1 have been the owner/operators of the Site since 1985, pursuant to sections 9607(a)(1) and 9613(g)(2) of CERCLA, they are jointly and severally liable for all response costs the State has incurred. See id. at ¶¶ 33-36. Plaintiffs also seek relief for unjust enrichment from Defendants. Plaintiffs argue that Defendants failed to perform their duties and obligations and that, therefore, the State had to do so in order to ensure the protection of the public health and environment. See id. at ¶¶ 37-40. Plaintiffs claim that Defendants were unjustly enriched by the State's performance of those duties owed by Defendants. The State, therefore, seeks restitution for the expenses incurred. See id. at ¶¶ 43-44. Finally, Plaintiffs claim that Defendants maintained a continuing public nuisance at the Site and are, therefore, liable to the State under the common law of public nuisance and the New York Real Property and Proceedings Law § 841 for all costs arising from the State's abatement of this public nuisance. See id. at ¶¶ 46-48.

Defendant Barry, in support of his motion to dismiss, brought pursuant to Rule 12 of the Federal Rules of Civil Procedure, asserts the following arguments: 1) improper venue pursuant to 12(b)(3);*fn2 2) failure to state a claim for which relief can be granted pursuant to 12(b)(6); and 3) failure to join necessary parties under Rule 19 pursuant to 12(b)(7). See Def.'s Notice of Motion to Dismiss at 1. Defendant Barry also requests a more definite statement pursuant to Rule 12(e) and raises the issue of Defendant Longboat's capacity to be sued.

The Court will address Defendant Barry's arguments seriatim.*fn3

III. DISCUSSION

A. Defendant Longboat's capacity to be subject to suit

Defendant Barry maintains that Defendant Longboat was dissolved in 1989 and left all its assets to the State.*fn4 See Notice of Motion to Dismiss at 2. Defendant Barry maintains that, therefore, Defendant Longboat is not subject to this suit.

Plaintiffs respond that, even assuming arguendo, that Defendant Longboat was properly dissolved, the company is still subject to suit in this CERCLA action because a dissolved company continues to exist for purposes of winding up its affairs. See Pls.' Memorandum of Law at 4 (citing New York Business Corporation Law ยง 1006). Plaintiffs claim that they are seeking relief from Longboat for its actions beginning in 1985 before it was dissolved. District courts have held that defunct companies can be liable under CERCLA ...


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