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EMERSON ENTERPRISES, LLC v. KENNETH CROSBY-NEW YORK

August 9, 2005.

EMERSON ENTERPRISES, LLC, Plaintiff,
v.
KENNETH CROSBY-NEW YORK, INC., KENNETH CROSBY CO., INC., T.T. BEARING CO., INC., ROCHESTER TOOL CORP., JASCO TOOLS, INC., JAYNE C. SUMMERS, CLARK WITBECK, INC., BRIAN J. CAIN, BARBARA GOODRICH as Executor of the Estate of VERNON GOODRICH, DEAN BRODIE, CURTIS S. KLING, THE HARTFORD INSURANCE CO., CONTINENTAL INSURANCE COMPANY, GLENS FALLS INSURANCE CO., FIREMEN'S INSURANCE COMPANY OF NEWARK, NJ, THE TRAVELERS INDEMNITY CO., PG INSURANCE CO. OF NEW YORK, JOHN DOE CORPORATIONS, JOHN DOES, and JOHN DOE INSURANCE COMPANIES, Defendants.



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

DECISION AND ORDER

INTRODUCTION

  This is an action pursuant to, inter alia, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq., the New York Environmental Conservation Law ("ECL"), and New York Navigation Law. Now before the Court are a number of motions and cross-motions for summary judgment. For the reasons that follow, the applications by PG Insurance Co. ("PG"), Glens Falls Insurance Co. ("Glens Falls"), Continental Insurance Co. ("Continental"), and Firemen's Insurance Co. of Newark, NJ ("Firemen's") [#134] [#139] [#143][#146] are GRANTED, and the applications by plaintiff Emerson Enterprises, LLC ("plaintiff") [#122], Dean Brodie ("Brodie") [#112], and Barbara Goodrich as Executor of the Estate of Vernon Goodrich ("Goodrich") [#116] are DENIED.

  BACKGROUND

  Unless otherwise noted, the following are the undisputed facts of this case. This action involves environmental contamination of a parcel of land known as 640 Trolley Drive ("640 Trolley Drive," "the property," or "the site") in the Town of Gates, County of Monroe and State of New York. According to the complaint in this action, "since about 1948, the property has been owned by members of the Ciufo family or business entities that they controlled." Second Amended Complaint ("Complaint") ¶ 47. One of these business entities was a partnership known as Trolley Park Associates. Plaintiff is a New York limited liability company formed on July 28, 1998. For some unspecified time prior to that date, plaintiff was a general partnership, and was the managing partner of Trolley Park Associates. According to the complaint, "[o]n February 8, 1989, plaintiff became an owner of the Property." Id. at ¶ 52. (emphasis added). On December 21, 1989, Trolley Park Associates dissolved and assigned most or all of its assets to plaintiff.

  Prior to 1960, the property was vacant land. In or about 1960, a 12,300 square-foot masonry structure was constructed on 640 Trolley Drive, and since that time the owners have leased out the premises for industrial purposes. Defendant Clark Witbeck, Inc. ("Clark Witbeck") leased the property from the early 1960s until 1992. Clark Witbeck's business involved distributing industrial tools and supplies, including abrasives, cutting tools, fasteners, and other products. In 1992, defendant Kenneth Crosby Acquisition Corp. ("Kenneth Crosby Acquisition") purchased Clark Witbeck's assets, and from 1992 until 2000, Kenneth Crosby Acquisition leased the property from plaintiff. Kenneth Crosby Acquisition's CEO, defendant Jayne C. Summers ("Summers"), personally guaranteed the Kenneth Crosby Acquisition lease. During the period between 1992 and 2000, Kenneth Crosby Acquisition continued the Clark Witbeck business, with many key employees doing the same jobs and similar working conditions and processes. During that same period, Summers operated other businesses on the premises, including defendants Rochester Tool Corp. ("Rochester Tool") and T.T. Bearing Co., Inc. ("T.T. Bearing."). The complaint further alleges that defendant JascoTools, Inc. ("Jasco") conducted operations on the premises. Kenneth Crosby Acquisition's lease term ended on December 30, 2000, however, at some time prior to October 2000, Kenneth Crosby Acquisition, Rochester Tool, T.T. Bearing, and Jasco vacated the premises.

  Thereafter, plaintiff leased the premises to an entity known as AAA Environmental, Inc. ("AAA"). On October 27, 2000, AAA was clearing brush from around the building when it discovered a dry well containing substances later determined to include polychlorinated biphenyls ("PCBs"), 1,1,1-trichloroethane ("TCA"), and other volatile organic compounds ("VOCs"), semi-volatile organic compounds ("SVOCs"), acetone, and petroleum (including xylene and other petroleum constituents.).

  Upon being notified of the contamination, the New York Department of Environmental Conservation ("NYDEC") listed the property on the state's Registry of Inactive Hazardous Waste Disposal Sites, and arranged for the dry well to be removed in January 2002. The complaint alleges that the NYDEC plans to conduct further investigation of the property, and if necessary further remedial work. Plaintiff further contends that the NYDEC had demanded that plaintiff pay for the investigation and remediation of the contamination at the property.

  On October 27, 2003, plaintiff commenced this action. In addition to suing Clark Witbeck, Kenneth Crosby Acquisition Corp., Summers, Rochester Tool, T.T. Bearing, and Jasco, plaintiff sued various companies allegedly associated with Kenneth Crosby Acquisition, including Kenneth Crosby Co., Inc., Kenneth Crosby-New York, Inc., and Jasco Tools. Plaintiff also sued the former owners of Clark Witbeck, including Brian J. Cain, Curtis S. Kling, Goodrich, and Brodie. Plaintiff additionally sued various insurance companies, including Glens Falls, PG, Continental, and Firemen's.

  The undersigned referred the case to the Honorable Marian W. Payson, United States Magistrate Judge, for all non-dispositive pre-trial matters. Following a scheduling conference, Magistrate Judge Payson set deadlines for discovery "regarding issues relating to insurance coverage." Scheduling Order [#53]. The scheduling order specifically provided that the parties could seek discovery on insurance coverage issues by way of requests for production of documents and written interrogatories. Magistrate Judge Payson further scheduled a settlement conference to take place following the completion of that discovery, and directed that following the settlement conference, if necessary, she would issue a further scheduling order for any remaining discovery. Id. Subsequently, the parties requested that Magistrate Judge Payson cancel the settlement conference, and instead schedule a status conference. At that time, counsel, in a joint letter to the Court, stated that the issue of the insurers' duty to defend was "ripe for briefing and argument." Letter Order [#74], p. 1.*fn1 Subsequently, Magistrate Judge Payson set a deadline for filing summary judgment motions regarding the insurance companies' duty to defend. See, Order [#77].

  Magistrate Judge Payson subsequently granted plaintiff leave to file a second amended complaint, and extended the deadline for filing motions on the issue of the insurers' duty to defend. On June 2, 2005, plaintiff filed and served the Second Amended Complaint [#100], which is now the operative complaint in this action. The Second Amended Complaint purports to allege seventeen separate causes of action: 1) a claim that all defendants, except the insurance company defendants, are strictly liable for cleanup costs pursuant to CERCLA, 42 U.S.C. § 9607(a); 2) a claim that all defendants, except the insurance company defendants, Kling, and the John Doe defendants, are liable to remedy and abate the alleged contamination, pursuant to 42 U.S.C. § 6972(a)(1)(B); 3) a claim for breach of contract against Kenneth Crosby NY and Summers; 4) a claim for breach of contract against Clark Witbeck; 5) a claim that the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants, are strictly liable for damages under New York State Environmental Conservation Law ("ECL") Article 37; 6) a claim for negligence against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 7) a claim that the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants are strictly liable for cleanup costs; 8) a claim for public nuisance against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 9) a claim for waste against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 10) a claim for equitable or implied indemnification against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 11) a claim for restitution against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 12) a claim for trespass against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 13) a claim for private nuisance against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 14) a claim for strict liability under the Navigation Law against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 15) a claim for indemnification and contribution under the Navigation Law against the Kenneth Crosby corporations, Clark Witbeck defendants, and John Doe defendants; 16) a claim for a declaratory judgment that the defendant insurance companies have an obligation to defend and indemnifiy; and 17) a claim for strict liability under Navigation Law § 190 and/or Navigation Law § 176(8) against the insurance company defendants.

  The complaint contends that the contamination "was caused by discharges and releases . . . including the dumping . . . of contaminants into a dry well . . . located near the back door of the building on the property." Complaint ¶ 2. More specifically, the complaint alleges that "[e]mployees of Clark Witbeck dumped contaminants in the dry well, including PCBs, TCA and other VOCs, SVOCs, acetone, and petroleum (including xylene or other petroleum constituents), throughout its occupation of the property, upon information and belief beginning in the 1960s through 1992, or during part of that time." Id. at ¶ 74. The complaint further alleges that Clark Witbeck actively concealed the contaminated drywell. Id. at ¶ 71. However, in addition to these allegations of intentional dumping, the complaint contains the following statement: "Upon information and belief, some or all of the releases occurred in a sudden and accidental manner." Id. at ¶ 89. The defendants subsequently asserted counterclaims and cross-claims for, inter alia, indemnification and contribution.*fn2

  The parties then filed seven separate motions for summary judgment:
1) a summary judgment motion by Brodie against Glens Falls, Continental, and Firemen's [#112], in which Brodie seeks a declaratory judgment that the insurers have a duty to defend him in this case. Brodie alleges that these insurers insured the Clark Witbeck corporation between May 1981 and September 1987, when Brodie was an officer (President) and shareholder of Clark Witbeck. Brodie contends that the insurance policies cover him, since he was an officer of the insured company.
2) a summary judgment motion by Goodrich against Glens Falls [#116], in which she seeks a declaratory judgment that Glens Falls has a duty to defend her in this case. Goodrich alleges that Glens Falls insured the Clark Witbeck corporation between 1981 and 1987, when the late Vernon Goodrich was an officer, director, and shareholder of Clark Witbeck. Goodrich contends that the insurance policy covers Mr. Goodrich's Estate, since he was an officer of the insured company.
3) a summary judgment motion by plaintiff against Glens Falls, Continental, Firemen's, and PG [#122], in which plaintiff seeks a declaratory judgment that these insurance companies have a duty to defend plaintiff against the various counterclaims in this action. Plaintiff alleges that Glens Falls provided insurance coverage between 1983 and 1986; that Continental provided insurance coverage between 1983 and 1984, as well as 1987 to 1988; that Firemen's provided insurance coverage between 1986 and 1987; and that PG provided coverage between 1990 and 1992. Although these policies were actually issued to Clark Witbeck, plaintiff claims that it was listed on the policies as an additional insured. 4) a summary judgment motion by PG against plaintiff [#134], in which PG seeks a declaratory judgment that it has no duty to defend plaintiff. PG contends that it has no duty to defendant plaintiff, because its policy, unlike those allegedly issued by the other insurers, does not cover any pollution liability on the insured's premises. That is, while the other insurers' policies cover pollution as long as it was "sudden and accidental," PG's pollution exclusion excludes all pollution, even if it was sudden and accidental.
5) a summary judgment motion by Glens Falls, Continental, and Firemen's against plaintiff [#139], in which the insurance companies seek a declaratory judgment that they have no duty to defend plaintiff. The insurance companies contend that plaintiff has failed to come forward with any evidentiary proof that they insured Clark Witbeck or plaintiff, and that even if they did provide insurance, the "pollution exclusion" in their policies applies because the pollution here was not "sudden and accidental."
6) a summary judgment motion by Glens Falls against Brodie [#143], in which Glens Falls seeks a declaratory judgment that it has no duty to defend Brodie. Glens Falls contends that Brodie was never insured by Glens Falls, and that even if he was insured, ...

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