The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge
Plaintiff Dora Homes, Inc. ("Plaintiff" or "Dora Homes") brings
this diversity action against Defendants Stuart W. Epperson
("Epperson"), Edward G. Atsinger ("Atsinger") (Epperson and
Atsinger together are referred to as the "Individual
Defendants"), and Salem Communications Corporation ("SCC")
(collectively, the defendants are referred to as "Defendants").
This case arises out of the July 24, 1997 release of petroleum
(the "Petroleum Discharge") from undeveloped Staten Island real
property (the "Property") which Plaintiff purchased from Epperson
and Atsinger in a transaction that closed on August 29, 1996. The
New York State Department of Environmental Conservation
("NYSDEC") cleaned up the Petroleum Discharge. Thereafter,
Plaintiff voluntarily entered into a settlement agreement and
release with New York State pursuant to which it paid $250,000
(the "Settlement Money") to settle claims brought by the State
against Plaintiff for the cost it incurred to clean up the oil spill.
In this suit, Plaintiff seeks to recover the money that it paid
to the State as a result of the Petroleum Discharge and related
damages. In the complaint (the "Complaint" or "Compl."),
Plaintiff alleges statutory causes of action under the New York
State Navigation Law (the "Navigation Law"), and a common law
claim for indemnification.*fn1 Defendants now move for
summary judgment on Plaintiff's claims, arguing that the
Petroleum Discharge occurred when Plaintiff owned the Property,
they never had knowledge that underground oil tanks existed on
the Property, and there is no evidence that the oil leak started
prior to July 24, 1997. Plaintiff opposes Defendants' motion and
cross-moves for summary judgment on its Navigation Law claims,
asserting, inter alia, that the undisputed material facts
establish that Defendants' performance of an illegal demolition
on the Property in December 1990 constituted an "act or omission"
that caused the Petroleum Discharge, and that they are therefore
liable to Plaintiff for the Settlement Money.
For the reasons set forth below, Defendants' motion for summary
judgment is granted and Plaintiff's cross-motion for summary
judgment is denied.
The following genuine, material facts are undisputed. The
Property is located at Rumba Place and Powell Place in Staten
Island, New York and consists of approximately 13 acres of land.
(See Affidavit of Arnold Brown sworn to on March 13, 2003
("Brown 3/13/03 Aff.") ¶¶ 4-8). Relatively early in the twentieth
century, the Property was known as the "Rutherford Estate,"
because it was owned by Joseph Francis Rutherford, the second
president of the Watchtower Bible and Tract Society of
Philadelphia, of the Jehovah's Witnesses. (Id. ¶ 4). The
Jehovah's Witnesses had conducted certain of their activities on
the Property, and built a transmitter on it. (Id.; Gluckstern
Certification dated September 10, 2003 ("Gluckstern 9/10/03
Cert.") Exh. F). In or about 1959, the Jehovah's Witnesses sold
the Property to WPOW, a radio station, whose transmission
facilities were located on the Property.*fn2 (Brown 3/13/04
Aff. ¶ 5; Affidavit of John Linstra, sworn to on March 24, 2003
("Linstra 3/24/03 Aff.") ¶ 4).
According to Arnold Brown, who was employed by WPOW (and later
WNYM) as a broadcast engineer and program director and who worked
and lived on the Property between 1961 and 1990, and John
Linstra, who served as General Manager of WPOW (and later WNYM)
and worked on the Property between the early 1960's and 1985, no
one during this period knew of the following: (a) that
underground oil tanks existed on the Property; (b) that there had
been delivery of oil to an underground container on the Property;
and (c) that "appurtenances" existed on the Property to an
underground tank which would suggest to persons that an
underground tank was, or had been, present at any time on the
Property. (Brown Aff. ¶¶ 8, 12 sworn to on July 31, 2003 ("Brown
7/31/03 Aff."); Brown 3/13/03 Aff. ¶¶ 7-18; Linstra 3/24/03 Aff.
¶¶ 5-12). WNYM relocated its transmission facilities from the
Property in 1989 to a site in New Jersey. (Brown 3/13/03 Aff. ¶
10). Consistent with this background, neither Mr. Brown nor Mr.
Linstra informed the Individual Defendants that underground oil
tanks existed on the Property when it was sold to them. (Brown
3/13/03 Aff. ¶ 18; Linstra 3/24/03 Aff. ¶ 14). In fact, both Mr.
Brown and Mr. Linstra did not become aware of the existence of
the underground oil tanks until they spoke with Defendants'
counsel in late 2002 during the pendency of this case. (3/13/03
Brown Aff. ¶ 16; Linstra 3/24/03 Aff. ¶ 13). Similarly, until
late 2002, shortly before the initiation of this lawsuit,
Defendants were not aware that underground oil tanks existed on
the Property this was well after they had sold the Property to
Plaintiff. (Affidavit of Stuart Epperson sworn to on May 30, 2003
("Epperson 5/30/03 Aff.") ¶¶ 8, 11; Affidavit of Edward Atsinger
sworn to on May 30, 2003 ("Atsinger 5/30/03 Aff." ¶¶ 9, 11).
The Individual Defendants purchased the Property from WPOW
pursuant to a contract dated February 8, 1985. (Defs. Rule 56.1
Statement ("Defs. 56.1 Statement") ¶ 1; Gluckstern Aff. Exh. A).
Epperson and Atsinger entered into a lease of the Property with
Salem Media Corporation ("SMC"),*fn3 a California radio
broadcasting company, which operated a radio station on the
Property from February 1985 until September 1989, when it
terminated the lease and removed all of its equipment from the
Property. (Compl. ¶ 10; Brown 3/13/03 Aff. ¶ 10).
By agreement dated November 20, 1990, the Individual Defendants
contracted with Venstruct, Inc. (the "Contractor"), whose
principal was Anthony M. Ventura ("Ventura"), to demolish all building structures located on the
Property and to remove all debris from it. (Russo Aff. Exh. O).
The Contractor agreed that the demolition and removal of
structures from the Property "shall be done strictly in
compliance with all applicable federal, state and local laws,
ordinances, regulations, and rules currently in existence or
promulgated during the term of" the agreement. (Id. ¶ 6). In
addition, the Contractor represented that it would "obtain all
necessary permits, and arrange for all necessary inspections, as
may be required by applicable federal, state, and local agencies
having jurisdiction over the demolition project." (Id. ¶ 7).
Nonetheless, Plaintiff alleges that the demolition project was
conducted in violation of certain New York City regulations.
(Savo Aff. ¶ 4).
On May 1, 1996, Plaintiff's principals, through their
corporation, Sophia Homes, Inc., entered into a contract (the
"Contract") with Epperson and Atsinger to purchase the Property.
(Defs. 56.1 Statement ¶ 2; Gluckstern 6/9/03 Cert. Exh. B). In
relevant part, the Contract stated that Plaintiff "has inspected
the buildings on the Premises and the personal property included
in this sale and is thoroughly acquainted with their condition.
Purchaser agrees to purchase them `as is' and . . . shall have
the right, after reasonable notice to the Seller, to inspect them
before closing." (Gluckstern 6/9/03 Cert. Exh. B ¶ 21). The only
due diligence which Plaintiff conducted as part of the
transaction to purchase the Property consisted of a cursory
review of the vacant and overgrown Property, and review of one
survey which Defendants conducted in 1994 (the "1994 Survey").
(Pl. Rule 56.1 Statement ("Pl. 56.1 Statement") ¶ 2).
The addendum to the Contract stated that the Property is
conveyed subject to "[a]ny state of facts which an accurate
survey would show." (Gluckstern 6/9/03 Cert. Exh. B, Addendum ¶ 1(A)). After the parties executed the
Contract, the Individual Defendants presented Plaintiff with a
copy of the 1994 Survey. (Savo Aff. ¶ 4). That survey did not
reveal the existence of underground oil tanks on the Property.
(Id.) Plaintiff alleges that the Individual Defendants withheld
two surveys, one from 1956 (the "1956 Survey") and the other from
1974 (the "1974 Survey"). Plaintiff claims these surveys reveal
the existence of the two subsurface oil tanks on the Property
which caused the Petroleum Discharge. However, with respect to
the 1956 Survey, it was not discovered until 2002 by Mr. Linstra,
whose family once owned the Property, when he was asked by
Defendants' counsel to review documents in his possession
relating to the Property. (Affidavit of John Linstra sworn to on
August 8, 2003 ("Linstra 8/8/03 Aff.") ¶¶ 6-10). Further, neither
the 1956 Survey nor the 1974 Survey reveal the existence of two
underground oil tanks on the Property; rather they show the
existence of two underground water tanks once used by the
Jehovah's Witnesses when they owned the Property. (Russo. Aff.
Exhs. H & I; Gluckstern 9/10/03 Cert. Exh. H; Linstra 8/8/03 Aff.
¶¶ 5, 8). In any event, the "acceptance of a deed by the
purchaser shall be deemed to be a full performance and discharge
of every agreement and obligation on the part of the seller to be
performed pursuant to the provisions" of the Contract.
(Gluckstern 6/9/03 Cert. Exh. B, Addendum ¶ 6).
On July 24, 1997, a heavy rainstorm resulted in four or more
inches of rain falling in the New York City area. (Defs. 56.1
Statement ¶ 5). On July 24-25, 1997, a discharge of petroleum
entered a body of water located at the South Shore Golf Club,
which adjoins the Property. (Id. ¶ 8). South Shore employees
reported the petroleum discharge to government authorities.
(Id.) Because Plaintiff did not take immediate, appropriate action, the State of New York responded to and
cleaned up the spill. (Id.)
Miller Environmental Group ("MEG"), a consultant to the NYSDEC,
wrote a report, dated December 14, 1998, in which it determined
that the source of the spill was two underground tanks on the
Property containing petroleum. (Russo Aff. Exh. R). MEG reported
that each of the tanks had an approximate capacity of 18,000
gallons, and that one of the tanks was full and the other was
three-quarters empty. (Id.) The MEG Report concluded that the
"heavy rains on [July 24] somehow caused the oil release from the
underground storage tanks. MEG did not remove the tanks, which
was undertaken by the present property owner. Therefore, MEG does
not know if tank #2 had a sudden release, as indicated by the
liquid level in the tank." (Id.)
On or about November 19, 2001, the NYSDEC submitted to
Plaintiff an invoice in the amount of $260,068.30 for the costs
of the removal action. (Defs. 56.1 Statement ¶ 9). On October 2,
2002, Plaintiff, through one of its principals, Ottavio Savo,
settled New York State's claim against it by agreeing to pay
$250,000 to reimburse the State for the costs of cleanup and
removal. (Id. ¶ 10). Plaintiff received a release from all
liability due to the Petroleum Discharge from the State of New
York in consideration for its voluntary payment of the Settlement
Amount. (Id. ¶ 11). On May 17, 2002, Plaintiff, through its
counsel, notified Defendants by letter about the Petroleum
Discharge on the Property. (Id. ¶ 12; Gluckstern 6/9/03 Cert.
Exh. K). In that letter, Plaintiff put Defendants on notice that
it believed they were responsible for the Petroleum Discharge.
(Id.) This lawsuit was subsequently filed on September 23,
2002. III. DISCUSSION
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) provides that summary
judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits . . . show that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." A genuine issue as to a
material fact exists when there is sufficient evidence favoring
the nonmoving party such that a jury could return a verdict in
its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986). Therefore, the nonmoving party "may not rest upon the
mere allegations or denials" of its pleadings; rather, its
response must go beyond the pleadings to "set forth specific
facts showing that there is a genuine issue for trial."
Fed.R.Civ. P. 56(e); see also Celotex Corp. v. Catrett,
477 U.S. 317, 324 (1986). However, when evaluating a motion for summary
judgment, "[t]he courts must view the evidence in the light most
favorable to the party against whom summary judgment is sought
and must draw all reasonable inferences in his favor." L.B.
Foster Co. v. American Piles, Inc., 138 F.3d 81, 87 (2d Cir.
1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)).
B. Evidentiary Challenges
Before turning to the substantive arguments raised by the
parties with respect to their motions, the Court determines the
admissibility of the affidavits of Ottavio Savo (the "Savo
Affidavit") and John Cignatta (the "Cignatta Affidavit"), which
Plaintiff proffers to oppose Defendants' summary judgment motion.
Defendants argue that the Savo Affidavit, in whole or in part,
constitutes inadmissible hearsay, and that the Cignatta Affidavit is unreliable, and therefore the Court should
not consider them.
Under Fed.R. Civ. P. 56(e), an affidavit submitted in support
of or in opposition to a motion for summary judgment "shall set
forth such facts as would be admissible in evidence." It is
therefore well-established that a "hearsay affidavit is a nullity
on a motion for summary judgment." Schwimmer v. Sony Corp. Of
Am., 637 F.2d 41, 45 & n. 9 (2d Cir. 1980); see also
Amnesty America v. Town of West Hartford, 361 F.3d 113, 131 &
n. 12 (2d Cir. 2004) (district court deciding summary judgment
motion was required to disregard ...