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BENDERSON DEV. COMPANY, INC. v. NEUMADE PROD. CORPORATION

June 13, 2005.

BENDERSON DEVELOPMENT COMPANY, INC., Plaintiff,
v.
NEUMADE PRODUCTS CORPORATION, Defendant.



The opinion of the court was delivered by: KEN SCHROEDER, Magistrate Judge

DECISION AND ORDER

Pursuant to 28 U.S.C. § 636(c), the parties have consented to the assignment of this case to the undersigned to conduct all proceedings in this case, including the entry of final judgment. Dkt. #8.

Currently before the Court is the plaintiff's renewed motion for summary judgment on the first and second causes of action claiming liability pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"); the fourth cause of action claiming breach of contract; and the sixth and eleventh causes of action claiming that Neumade engaged in an ultra-hazardous activity and created a public nuisance. Dkt. #54. For the following reasons, plaintiff's motion for summary judgment on its CERCLA contribution claim is granted, and the remainder of plaintiff's motion for summary judgment is denied. BACKGROUND

  On August 5, 1959, Benderson Development Company's ("Benderson's"), predecessor, Walden Industrial Park,*fn1 entered into a Memorandum of Lease with Morrison International Corporation regarding real property located at 2485 Walden Avenue. Slater Aff., ¶¶ 17, 19; Exh. 5. The term of the lease ran from February 1, 1960 through January 31, 1982, with a right to renew for two consecutive five-year terms. Slater Aff., ¶ 18; Exh. 6. On May 11, 1967, Benderson consented to the assignment of Morrison International Corporation's lease rights to Neumade Products Corporation ("Neumade"). Slater Aff., ¶ 19; Exh. 7. Neumade manufactures, sells and distributes equipment for the film industry, including storage equipment, overhead projectors, cabinets and lamp houses. Dkt. #59, ¶ 28. The lease was extended for two consecutive five-year terms, through January 31, 1991. Slater Aff., ¶ 20.

  On July 13, 1990, staff from the New York State Department of Environmental Conservation ("NYSDEC"), conducted a Resource, Conservation and Recovery Act ("RCRA"), inspection at Neumade. Exh. 12. A memorandum detailing that inspection states that
During the inspection, numerous Class I/High Priority violations were documented. The company was not complying with any of the hazardous waste requirements — claiming that they were unaware of our rules and regulations. Staff observed an area on-site near their parking lot where paint wastes were dumped on the ground (size of disposal area was 12' × 12').*fn2 There was also a paint stain across the parking lot at least 80 feet long where liquids migrated from the disposal area. Although company representatives did not admit to dumping their waste on the ground, the preponderance of the evidence supports the accusation.
Neumade manufactures metal film and audio storage racks. These racks are spray painted with a solvent base paint. A solvent thinner (xylene) is also used to clean equipment. MSD sheets indicate that most of these paints are ignitable and some contain lead and/or chromium.
* * *
Because of the seriousness of the violations and the potential for an environmental release, criminal violations should be evaluated.
Exh. 12. The staff person conducting the inspection noted that
 
It appears that waste paint and solvent has been accumulated in 4 or 5 drums which were dumped recently. The residue was still soft and there was a solvent odor in the area.
Exh. 12.
  On March 10, 1991, Neumade entered into an Order on Consent with the NYSDEC in which it was required to comply with each of the eighteen hazardous waste management regulations it had violated and to comply with the terms of a Spill Clean-Up Plan prepared by Snyder Engineering. Exh. 15. The eighteen violations cited by the NYSDEC included the following:
• Storage containers were not in good condition and leakage or spillage had occurred;
• Containers holding hazardous waste were stored in a manner that caused it to leak; and
• Neumade does not operate the facility to minimize the release of hazardous waste constituents to the environment.
Exh. H. Neumade plead guilty to one misdemeanor count of violating Environmental Conservation Law § 71-2711, endangering public health, safety or the environment, fourth degree, in the Town of Cheektowaga Court and paid a $25,000 fine. Exh. 16.

  On November 26, 1991, Benderson reported a petroleum spill caused by five failing underground storage tanks located around a building adjacent to Walden Avenue. Exh. B & C.

  On December 9, 1991, Benderson and Neumade entered into a new lease, which, inter alia, provided as follows:
HAZARDOUS SUBSTANCES
54. A. Lessee shall not conduct any activities with respect to the Demised Premises or the shopping center which result in the generation, storage or release of any toxic, hazardous or similar substances (as those terms may be defined from time to time in any federal, state or local law, rule or regulation). Lessee shall bear all liability for any claim, injury, loss or damage to any person or the environment as a result of any such toxic, hazardous or similar substances and Lessee will save Lessor harmless and indemnify Lessor against any such loss, claim, injury or damage.
* * * 54. C. Environmental Cleanup. At the end of the Lease term, including any renewal or extension thereof, Lessee will provide Lessor with any environmental clearance which may be required by any governmental authority having jurisdiction. Until such time as the Demised Premises are delivered to the Lessor by the Lessee in a "clean" condition, as specified by law, Lessee will pay to Lessor the monthly rental based upon the then fair market value during said interim period, and will notify Lessor at least ninety (90) days prior to obtaining a clean condition report as specified by law.
* * *
54. E. Lessee further agrees to properly and accurately label and segregate all materials stored at the Demised Premises, as required by law. At all times during the term hereof, and upon the termination of the terms hereof, Lessee shall comply with all applicable environmental protection laws, rules or requirements and shall promptly cure all violations thereof arising from its non-compliance, including but not limited to the preparation, delivery and/or filing with the applicable governmental authorities and with the Lessor, of all forms, certificates, notices, documents, plans and other writings, and the furnishing of such other information as may be required or requested by the Lessor, its mortgagee or any applicable governmental authority in connection with the sale, lease, transfer, mortgaging or other disposition of the building and/or lands. It is specifically acknowledged and agreed that the provisions of this paragraph shall survive the termination of the Lease, regardless of the reason or cause thereof.
Exh. 8.

  In a memorandum dated April 15, 1992, NYSDEC Representative Tom Johnson detailed the remedial work being performed in accordance with the cleanup plan prepared by Snyder Engineering. Exh. T. With respect to Area #5, "located on the south end of the blacktop loading area," the memorandum recounted that Visible paint waste is seen solidified on the soil surface in this area. A pick was used to penetrate the ½ "— 1" layer of paint for soil sampling. Immediate solvent odors were given off upon penetration. HNU readings ranged from 250-300 ppm in the soils.

  * * *

 
Holes were punched into the blacktop near the edge of the drive with no HNU readings registered. Contamination appears to have migrated downward to an unknown depth. Excavation of this area appears to be a feasible means of cleanup to remediate the paint disposal.
Exh. T.
  As part of proposed revisions to the cleanup plan, Snyder Engineering noted the following:
Area 5 is located on the Southeast side of the building at the edge of the blacktopped area. This area is suspected by the NYSDEC of being a paint and waste solvent disposal area. The dried paint was scraped away and an Hnu meter reading of greater than 20 ppm was obtained from the ambient air. A hole was dug down to a depth of approximately 12 inches. Strong solvent odors were noted during this digging. The Hnu meter indicated the presence of significant concentrations of volatile organics in the material encountered during the digging process. . . . Based upon these preliminary findings, it appears that the solvent concentrations decrease significantly with depth. Due to the degree of contamination present in this area, a determination was made that additional shallow depth sampling and analysis in this area would serve no purpose until the material which is obviously contaminated (based on Hnu readings) is removed. The actual lateral and vertical extent of volatile organic contamination must be ascertained as part of the excavation process.
Exh. 17. On January 20, 1993, Snyder Engineering submitted a "Remediation Action Certification Report for Neumade Products, Inc. in Cheektowaga, New York." Exh. 18. This report indicated that approximately 70 cubic yards of material "contaminated with paint solvents (xylene, toluene, and ethylbenzene) and paint sludge" were removed from Area #5. Exh. 18; Exh. S. In addition, material "characterized by an odor different than the paint solvents" was also removed. Exh. 18. Tom Johnson, the NYSDEC representative onsite during this excavation noted that
 
While digging at the northwest corner of the pit a flow of blackish water flowed into the hole from under the blacktop. A petroleum sheen was observed in this area. Further excavation exposed a black, oily, aromatic material.
Exh. S. As a result of this discovery additional excavation was undertaken until the "black stained material came to an end." Exh. S.

  On September 14, 1993, upon review of a report dated August 4, 1993 (which does not appear to have been included in the record before the Court), the NYSDEC "determined that the remedial requirements of the Order have been complied with." Exh. S.

  Benderson removed the five underground petroleum storage tanks and 80 tons of contaminated soil on December 4, 1993. Exh. C. The NYSDEC closed the site on January 4, 1994 after determining that soil samples in the excavation area were below its soil guidance values. Exh. C. By letter dated November 26, 1996, counsel for Benderson advised counsel for Neumade that
During our routine pre-vacancy inspection conducted by Bruce Marchese of our office and Mr. King Mix of Neumade on November 21, 1996, several environmental concerns were noted. These are directly related to the nature of the Lessee's use of the Premises.
Prior to the expiration of the Lease, please provide us with an inspection of the leased Premises by a mutually acceptable environmental firm confirming the leased Premises are not in violation of any applicable environmental law or regulations.
Exh. 10.

  On March 27, 1997, at the request of Benderson, GZA conducted a site visit to assess potential environmental concerns at the site and observed, inter alia, a "paint shop with several paint booths" and "55 gallon drums of metal fragments" in the loading dock area, which was marked as a "hazardous waste storage area." Exh. 26. GZA recommended collection of soil samples in the areas identified as being of concern and a sediment sample from the "loading dock sump adjacent to the hazardous waste storage area." Exh. 26.

  On April 1, 1997, GZA obtained soil samples from the paint shop area, under the asphalt outside the rear door, and from sediment in the loading dock sump. Exh. 27. GZA reported that
Several volatile organic chemicals and petroleum-based chemicals were found. NYSDEC TAGM*fn3 levels for acetone of 2,000 ppb were exceeded in the paint shop area which had a soil sample concentration of 4,600 ppb, and in sump sediments in the loading dock area where a concentration of 21,000 ppb was recorded. Levels for m, p-xylenes 7,400 ppb and o-xylenes 3,100 ppb were detected in the paint shop area. Sump sediments in the loading dock area contained m, p-xylenes 15,000 ppb and o-xylenes of 6,300 ppb.
Exh. 31.

  On April 4, 1997, the parties reached a Lease Modification Agreement, which extended the term of the lease and set rent through June 30, 1997, at which time Neumade agreed to "promptly vacate and surrender the Demised Premises . . . time being of the essence." Exh. 9.

  On June 17, 1997, Benderson sent Neumade a letter noting Neumade's failure to respond to its letter of November 26, 1996, referencing the Hazardous Substances provisions in the lease, and specifically advising that
As set forth in paragraph 54C of the Lease, Neumade must provide Benderson Development with an environmental clearance for the premises and must continue to pay rent for ninety (90) days after providing us with a clean condition report on the premises.
It is our concern that there are significant environmental problems as a result of your use of the premises. As a result, we solicited a proposal from GZA, Geo Environmental of New York for subsurface explorations and a sump evaluation of the site, a copy of which is attached for your review. The issues surrounding your contamination of the property must be resolved as soon as possible. Please contact me at your earliest convenience regarding a proposed resolution to this problem.
Exh. 11. Benderson commenced this action on April 8, 1998. Dkt. #1.
  In a report to counsel for Benderson dated April 6, 1999, GZA concluded that
Residual contamination (ethylbenzene, xylene and acetone) was detected at several locations on-site. These areas include the former paint shop area, spill area #5 and B-1 (north of the building).
The concentrations of ethylbenzene and xylenes (compounds commonly associated with petroleum) detected in soil samples (for the samples described in this report) are below the NYSDEC guidance for remediation of petroleum contaminated sites (STARS) with the exception of B-3 (m&p xylene at 181 ug/kg). The NYSDEC guidance for mixed xylenes is 100 ug/kg. Location B-3 is associated with Spill Area #5 which reportedly was suspected to be a paint and waste solvent disposal area. Additional criteria for cleanup of these compounds includes the NYSDEC recommended soil cleanup objective (TAGM 4046), for use at inactive hazardous waste site. [sic] The TAGM 4046 criteria for total xylene is 1,200 ug/kg. The total detected xylene at B-3 (291 ug/kg) is below the TAGM 4046 criteria.
The concentration of acetone detected in soil samples are below the NYSDEC recommended soil cleanup objective for use at inactive hazardous waste site [sic] (TAGM 4046) for acetone. It is also noted that acetone is a common laboratory contaminant, and its reported presence is often an artifact of the analytical process.
Based on the sampling and testing for this report, no additional work related to impacted soil is recommended. However, impact from possible sump water contamination is not known.
Exh. 29. Neumade's former plant manager, King Mix, was deposed on August 3, 1999. Exh. 19. He admitted Neumade's use of products containing acetone and xylene. Exh. 19. In addition, Material Safety Data Sheets, Waste Disposal Notification Sheets and Neumade's List of Hazardous Compounds and Reportable Quantities contained in it's Spill Prevention Control and Countermeasure Plan all indicate that Neumade utilized acetone, ethylbenzene, toluene and xylene in its production process. Exh. 21, 22 & 23. Mr. Mix explained that the paint sludge in the parking lot area resulted from Feldman Barrel employees tipping over 55-gallon paint drums to dump water which had accumulated in the empty barrels before loading them onto their truck for removal from the premises. Exh. 19. Prior to 1991, "Feldman Barrel would remove the empty barrels from Neumade's property, refurbish them and return them to the manufacturer of the paint." Mix Aff., ¶¶ 7, 9.

  By letter dated September 8, 1999, GZA reported the following results of "additional subsurface explorations . . . to further evaluate possible soil and drainage structure sediment contamination:"

  Geoprobe Samples

 
Toluene, ethylbenzene, and/or xylenes were detected at eight of the eleven geoprobe soil samples tested. The concentrations of toluene (detected in three samples) ranged from 10 ppb to 22 ppb, ethylbenzene (four samples) from 40 ppb to 3,340 ppb, and xylenes (eight samples) from 16 ppb to 11,700 ppb. Acetone was detected at ten of the eleven soil samples tested. The acetone concentration detected ranged from 48 ppb to 2,660 ppb. . . .
Drainage Structure Samples
Various volatile organic compounds . . . were detected in the three drainage structures sampled. The highest concentration of ethylbenzene (3,500 ppb), toluene (2,050 ppb), xylenes (7,800 ppb) and acetone (3,450 ppb) were detected in the ramp sump sediment sample.
Exh. 30. GZA noted that
 
The NYSDEC TAGM clean-up criteria were exceeded only in the sump (at the loading dock) and in soil boring B-22 (borings at one foot yielded results for m, p-xylene at 5,900 ppb and o-xylene at 1,490 xylenes of 1,200 ppb and at a depth of five feet yielded readings of m, p-xylene of 11,700 ppb).
Exh. 31.

  CRA Services conducted a Phase I Environmental Site Assessment for a prospective tenant in November of 1999 and determined that there were no recognized environmental conditions or ...


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