United States District Court, E.D. New York
September 28, 2005.
SOLOW BUILDING COMPANY., LLC AND SOLOVIEFF REALTY CO., LLC Plaintiffs,
ATC ASSOCIATES, INC. AND SAFEWAY ENVIRONMENTAL CORP. Defendants.
The opinion of the court was delivered by: DAVID TRAGER, District Judge
MEMORANDUM AND ORDER
Plaintiffs, Solow Building Company, LLC and Solovieff Realty
Co., LLC (collectively, "Solow" or "plaintiffs"), brought this
action against defendants, ATC Associates, Inc. ("ATC") and
Safeway Environmental Corp. ("Safeway") (collectively,
"defendants") alleging two causes of action in the amended
complaint. In the first plaintiffs bring a civil action under
42 U.S.C. § 7604 for defendants' alleged violations of the Clean Air
Act, 42 U.S.C. § 7401 et seq. (1990) ("CAA"). The second asks
for a declaratory judgment under 28 U.S.C. § 2201, requesting
indemnification against potential future claims brought against
plaintiffs by people injured as a result of defendants'
violations of the CAA. Defendants now move under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6) to dismiss the second claim
of plaintiffs' amended complaint for lack of subject matter
jurisdiction and failure to state a claim. For the reasons set forth below, defendants' motion is granted and the plaintiffs'
second cause of action is dismissed for lack of subject matter
Plaintiffs own a building located at 9 West 57th Street in
Manhattan, New York (the "Solow Building"). (Pl.'s First Am.
Compl. ("Am. Compl.") 1). Morgan Guaranty Trust Co. ("Morgan"), a
tenant in the Solow Building, hired ATC to conduct air testing
and monitoring, and Safeway to do asbestos abatement work on its
rented floors which Morgan was obligated under the lease to
demolish and renovate. (Am. Compl. 5).
Plaintiffs assert that before beginning work in late 1998,
defendants did not adequately inspect the area for asbestos. (Am.
Compl. 5). Defendant Safeway also failed to appropriately wet the
asbestos material. Id. Then, during the asbestos abatement
work, Safeway attached duct tape or pressure-fitted lumber
directly to the asbestos material. Id. When Safeway removed the
tape and lumber it released asbestos into the air. Id. These
actions resulted in fiber counts outside the containment area
that exceeded .01 fibers per cc. (Am. Compl. 6).
Defendants allegedly attempted to cover up Safeway's improper
actions. Safeway altered their work logs for the job by changing the date when they removed certain tape from the
asbestos fireproofing. (Am. Compl. 6-7). The work logs also
purportedly contained alterations pertaining to the
asbestos-worker certifications required by state and local laws.
(Am. Compl. 7). Additionally, ATC attempted to hide from
plaintiffs its failure to seal batches of air-test samples. Id.
Plaintiffs claim that these actions constitute violations of
regulations promulgated by the Environmental Protection Agency
under the CAA. Furthermore, these activities were contrary to the
procedures and regulations plaintiffs established regarding
asbestos handling. (Am. Compl. 6).
The abatement work was completed in 1999. Since that time no
party has come forward claiming to have been injured by
defendants' actions, and plaintiffs are not requesting relief
from any damages they suffered as a direct result of defendants'
actions. Instead, plaintiffs request a declaration, pursuant to
the Declaratory Judgment Act, 28 U.S.C. § 2201, "that
[d]efendants must indemnify [p]laintiffs for any damages or
penalties they are obligated to pay arising out of the violations
of the Clean Air Act or underlying conduct of [d]efendants . . .
for liability to workers and other third parties for exposure to
asbestos pursuant to state or federal common law." (Am. Compl.
(2) Solow originally brought this action in 2001. In 2003,
defendants moved for dismissal. At that time the parties were
ordered to first complete discovery in order to preserve any
evidence which might not be available if a potential asbestos
injury claim is asserted against Solow. Since that time
significant discovery has taken place and both sides report that
the majority of discovery is now complete. (Pl.s' Mem. of Law in
Opp'n to Def.s' Mot. to Dismiss ["Pl. Opp'n Mem."] 13; Reply Mem.
of Law in Further Supp. of Safeway Env't Corp.'s Mot. to Dismiss
Ripeness Standard in Declaratory Judgment Actions
As with any federal case, the party seeking declaratory
judgment has the burden to prove subject matter jurisdiction.
E.R. Squibb & Sons, Inc. v. Lloyd's & Co., 241 F.3d 154, 177
(2d Cir. 2001). A case must be ripe for adjudication for the
court to have subject matter jurisdiction. See Abbott Lab. v.
Gardner, 387 U.S. 136, 148 (1967) (the "basic rational [for
ripeness] is to prevent the courts, through avoidance of
premature adjudication, from entangling themselves in abstract
disagreements."). A request for declaratory judgment is ripe only
if "there is a substantial controversy, . . . of sufficient
immediacy and reality." Olin Corp. v. Consolidated Aluminum Corp., 5 F.3d 10, 17 (2d Cir. 1993) (citing Maryland Cas. Co.
v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)); see also
28 U.S.C. § 2201(a) ("In a case of actual controversy . . . any
court of the United States . . . may declare the rights and other
legal relations of any interested party"). Whether a matter is
sufficiently immediate and real is a question that prohibits a
single rule or answer, but rather requires a case-by-case
analysis. Kidder, Peabody & Co. Inc. v. Maxus Energy Corp.,
925 F.2d 556, 562 (2d Cir. 1991). In this analysis, relief should
only be granted where it can be "of a conclusive character, as
distinguished from an opinion advising what the law would be upon
a hypothetical state of facts." E.R. Squibb & Sons, Inc.,
241 F.3d at 177 (internal citations omitted).
The Party's Arguments
Defendants move to dismiss plaintiffs' declaratory judgment
cause of action on the ground that plaintiffs' claim is not ripe
for decision and, therefore, the subject matter jurisdiction over
the claim is lacking. Defendants argue that even if everything in
plaintiffs' complaint is true and defendants did in fact release
asbestos, neither in the amended complaint nor in any of
plaintiffs' answering papers have they ever identified any
individual who was injured by defendants' actions.
In their opposition brief, plaintiffs argue that their claim is ripe because defendants' actions created "a practical and
probable likelihood that injuries will arise and that
[d]efendants' liability will be triggered." (Pl. Opp'n Mem. 5).
Plaintiffs contend, in light of the large number of asbestos
cases that have been filed nationwide and the bankruptcies of
several asbestos manufacturers, parties injured by defendants'
actions while abating the Solow Building will eventually sue
plaintiffs simply because, as building owners, plaintiffs will be
the last "deep pockets" left standing. Plaintiffs assert that in
evaluating a claim for declaratory relief a court should not look
at the number of "if's" (i.e. how many facts are contingent), but
rather the court should examine the "likelihood that the asserted
injury will occur." (Pl. Opp'n Mem. 11 (citing Midwest
Foundation Independent Physicians Assoc. v. United States of
America, No. C-1-85-1482, 1986 U.S. Dist. LEXIS 27060 (S.D. Ohio
Apr. 8, 1986)).
Based on this "likelihood" analysis, plaintiffs claim that they
can sue for a declaratory judgment, entitling them to
indemnification, before any underlying action has been commenced.
For this proposition, plaintiffs rely on cases decided under the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. § 9601 et seq., ("CERCLA"). See, e.g. Prisco
v. State of N.Y., 902 F. Supp. 374 (S.D.N.Y. 1995); Allied
Princess Bay Co. No. 2 v. Atochem N. Am., Inc., 855 F. Supp. 595
(E.D.N.Y. 1993); Alloy Briquetting Corp. v. Niagara Vest, Inc.,
756 F. Supp. 713 (W.D.N.Y. 1991). In the cited cases, parties were
granted declaratory relief for indemnification despite the fact
that the federal government had not yet, and might never have,
brought suit to require the parties to pay for cleaning up the
Plaintiffs Fail to Prove Ripeness
Plaintiffs are correct that a declaratory judgment action can
be ripe despite the fact that not every fact is currently known.
See Associated Indem. Corp. v. Fairchild Indus., Inc.,
961 F.2d 32, 35 (2d Cir. 1992) ("That the liability may be contingent
does not necessarily defeat jurisdiction of a declaratory
judgment action. Rather courts should focus on the practical
likelihood that the contingencies will occur.") (internal
citations omitted). While plaintiffs' statement of law is
accurate, their assertion that defendants' actions have created a
situation where liability is sufficiently probable and immediate
so as to warrant declaratory relief is not. There is no
underlying law suit, no threat of a suit, and no indication so
far that anyone was even injured. Therefore, any ruling based on
a hypothetical future claimant is premature.
Federal courts generally decline to award declaratory relief in
indemnification actions, especially before any underlying suit has been filed. In Lear Corp. v. Johnson Elec. Holdings Ltd.,
353 F.3d 580 (7th Cir. 2003), Lear Corp. ("Lear") sold a
manufacturing division to Johnson Electric ("Johnson"). Id. at
581. Both companies were sued in Mississippi state court because
hazardous substances had leaked from one of the manufacturing
plants that Lear sold Johnson. Id. Lear filed suit in federal
court asking for a declaratory judgment that Johnson had to
indemnify Lear. Id. at 582. Judge Easterbrook declared that all
"decisions about indemnity should be postponed until the
underlying liability has been established." Id. at 583. Making
any decision earlier may not produce an advisory opinion in the
strictest sense, Judge Easterbrook stated, but "it could be a
mistake, because it would consume judicial time in order to
produce a decision that may turn out to be irrelevant." Id.;
see also Travelers Prop. Cas. Corp. v. Winterthur Int'l,
02-cv-2406, 2002 WL 1391920 (S.D.N.Y. 2002) (deciding that a
declaratory judgment for indemnification between a landlord and
tenant was not ripe where the underlying liability had not yet
been established); FSP, Ind. v. Societe General, 02-cv-4786,
2003 WL 124515, at *4 (S.D.N.Y. 2003) ("Claims concerning
indemnification obligations, however, are not ripe for
adjudication until liability has been imposed.").
In the present action, not only have plaintiffs not yet been
sued; after more than three years of discovery their papers do not even mention anyone who was exposed to asbestos. At best,
plaintiffs have shown evidence that defendants released asbestos
into the air at the construction site. (Pl. Opp'n Mem. 11).
However, plaintiffs' amended complaint clearly requests
indemnification "for liability to workers and other third parties
for exposure to asbestos." (Am. Comp. ¶ 41.2).*fn1 It is at
this point, some six years after the work has been competed, too
great a conjectural leap to say that because asbestos may have
been released, that there is a probable likelihood that someone
was injured. Such a leap would require an opinion based purely on
possible facts and would fall far short of the immediacy and
reality standard required for a declaratory judgment. See Olin
Corp., 5 F.3d at 17
Additionally, even if plaintiffs were able to establish
definitively that someone was exposed to asbestos, plaintiffs
failed to show how they would be liable to that person.
Plaintiffs contend that they are blameless in this matter. (Pl.
Opp'n Mem. 5). Defendants were not hired by plaintiffs; they were
hired by Morgan, a tenant in the Solow Building. Plaintiffs had
no contractual or supervisory relationship with defendants. (Pl.
Opp'n Mem. 11; Am. Compl. ¶¶ 17, 41.1). Plaintiffs claim that defendants violated the practices established by plaintiffs
for safe handling of asbestos. (Am. Compl. 6). Plaintiffs provide
no case, under similar circumstances, where a building owner has
been successfully sued. They simply provide the conclusory
statement that they "may be viewed as the only `deep pocket'
around" and as a result they are under the increased threat of an
impeding lawsuit. (Pl. Opp'n Mem. 5). Again, this statement alone
is insufficient to make the potential of liability immediate and
real. Since plaintiffs have not yet been sued and have shown no
case law indicating they would be responsible for injuries caused
by defendants' actions the potential liability required for
indemnification is even more remote than that in the Lear case.
Given these problems in plaintiffs' analysis, their reliance on
CERCLA cases raises a false analogy. In those cases the
indemnification requested was for the cost of cleaning up damage
to property. Prisco, 902 F. Supp. at 381; Allied Princess Bay
Co. No. 2, 855 F. Supp. at 598; Alloy Briquetting Corp.,
756 F. Supp. at 716. The parties knew the damage to the property had
been done. Prisco, 902 F. Supp. at 380-1; Allied Princess Bay
Co. No. 2, 855 F. Supp. at 598-9; Alloy Briquetting Corp.,
756 F. Supp. at 716. Either the moving parties had already incurred
at least some expenses in cleaning up the property, Prisco,
902 F. Supp. at 380-1, or it was highly likely that they would incur
the expenses in the near future. Allied Princess Bay Co. No. 2,
855 F. Supp. at 599; Alloy Briquetting Corp., 756 F. Supp. at 716.
These cases are, therefore, quite dissimilar to the present
matter where there is no evidence that anyone was injured by
Finally, any harm caused to plaintiffs by making them wait to
settle the indemnity issue until liability has been established
has already been mitigated by the extensive discovery undertaken
by the parties. Plaintiffs have had ample opportunity to preserve
any evidence that they will need to later establish whether
defendants indeed owe plaintiffs a duty to indemnify them for
For the forgoing reasons, defendants' motion to dismiss the
second count of plaintiffs' first amended complaint is granted.
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