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Schenectady Industrial Corp. v. Upstate Textiles

November 24, 2008

SCHENECTADY INDUSTRIAL CORP., PLAINTIFF,
v.
UPSTATE TEXTILES, INC., SAFER EQUIPMENT CORP., COMMERCEWEST BANK, N.A., DEFENDANTS.



The opinion of the court was delivered by: Gary L. Sharpe U.S. District Judge

DECISION AND ORDER

Plaintiff Schenectady Industrial Corporation ("Schenectady") brought this action against Commercewest Bank ("Bank"), Upstate Textiles, Inc. ("Upstate"), and Safer Equipment Corp. ("Safer") to recover damages for the use of Schenectady's buildings and the removal/cleanup of petroleum substances from those buildings. Pending before this court are: (1) the Bank's motion for summary judgment; (2) Schenectady's motion for partial summary judgment; (3) Schenectady's first motion to amend the complaint or, in the alternative, to dismiss the action without prejudice; (4) Upstate and Safer's motion for summary judgment; and (5) Schenectady's second motion to amend the complaint. Naturally, all the parties want this court to grant their motions. However, following review of the motions, briefs in support thereof, the responses, and the record on the matter, the court grants Schenectady's first motion to amend the complaint and the Bank's motion for summary judgment, but denies the remaining motions.

BACKGROUND

Schenectady is a New York corporation, Upstate is a New Jersey corporation, Safer is a New Jersey corporation, and the Bank is a federally chartered institution with its principal place of business in California. See Complaint at ¶¶ 1-4; Dkt. No. 1. Schenectady is the owner of several buildings in Schenectady, New York. Id. at ¶ 8. Schenectady's property was leased to Twin Rivers Textile Printing & Finishing ("Twin Rivers"). Id. at ¶ 9. Twin Rivers became a subsidiary of Guilford Mills, Inc. ("Guilford"). Id. at ¶ 11. Subsequently, Guilford filed bankruptcy under Chapter 11. Id. at ¶ 12. In the course of the bankruptcy proceedings, Twin Rivers' assets were sold to Greenblatt &Co. ("Greenblatt"). Id. at ¶ 13.

The Bank extended credit to Greenblatt and that credit was secured by Greenblatt's assets. Id. at ¶ 14. When Greenblatt defaulted on its obligations to the Bank, the Bank foreclosed and took possession of Greenblatt's assets. Id. at ¶ 16. Thereafter, Twin Prints, LLC ("Twin Prints") acquired the Bank's interest in Greenblatt's collateral. Id. at ¶ 17. Twin Prints executed a security agreement, which granted the Bank a first priority security interest in secured property. Id. at ¶ 17-18; see also Bank's Statement of Material Facts at ¶ 9, Dkt. No. 27. Later, Twin Prints merged with Mohawk Valley Textiles Printing, LLC ("Mohawk") and Twin Prints transferred its assets to Mohawk. See Complaint at ¶ 19. Eventually, Mohawk entered into agreements with the Bank to assume Twin Print's responsibilities to the Bank. Id. at ¶¶ 20-21. Pursuant to the agreements, the Bank obtained a security interest in Mohawk's assets. Id.

Mohawk eventually defaulted on its obligations to the Bank and surrendered its assets to the Bank. Id. at ¶¶ 23-24. Thereafter, Safer acquired the Bank's interest in Mohawk's collateral. Id. at¶ 26. Subsequently, Safer transferred that interest to Upstate. Id. at¶ 27. Eventually, Upstate left Schenectady's buildings. Id. at ¶ 29.

Based upon diversity jurisdiction, Schenectady filed a complaint against the Bank, Upstate, and Safer seeking compensation for, among other things, use and occupation of its property under New York Real Property Law. In addition, Schenectady sought compensatory damages from the Bank for the cleanup of toxic substances. Specifically, Schenectady pursued damages for violations of the Federal Toxic Substances Control Act, Federal Solid Waste Disposal Act, New York State Industrial Hazardous Waste Management Act, New York Navigation Law, and for leaving waste in Schenectady's property.

The Bank then moved for summary judgment asserting, among other things, that Schenectady had no cause of action under the Federal Toxic Substances Control Act, Federal Solid Waste Disposal Act, and the New York State Industrial Hazardous Waste Management Act. Soon thereafter, Schenectady moved for summary judgment. However, at the same time, realizing its claims under the previously mentioned Acts were not viable, Schenectady also filed a motion to amend its complaint or, in the alternative, to dismiss the action without prejudice. Thereafter, Upstate and Safer also moved for summary judgment. Months later, Schenectady then filed yet another motion to amend its complaint. The court analyses each motion in turn.

II. DISCUSSION

1. Schenectady's First Motion to Amend the Complaint or, in the Alternative, Dismiss the Action without Prejudice

Rule 15(a) directs that leave to amend should be "freely given." See Fed.R.Civ.P. 15(a)(2); see Aetna Cas. and Sur. Co. v. Aniero Concrete Co., Inc., 404 F3d 566, 603 (2d Cir. 2005). "The Second Circuit has held that a Rule 15(a) motion 'should be denied only for such reasons as undue delay, bad faith, futility to the amendment, and perhaps mostimportant, the resulting prejudice to the opposing party.'" See Aetna Cas. and Sur, 404 F.3d at 603-04 (citing Richardson Greenshields Sec., Inc. v. Lau, 825 F.2d 647, 653 n. 6 (2d Cir. 1987) (emphasis added) and Foman v. Davis, 371 U.S. 178, 182 (1962)).

Here, Schenectady's first motion to amend asserts two additional claims against Upstate and Safer and none against the Bank. The two claims asserted by Schenectady are a claim under the Comprehensive Environmental Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et. seq., and a common law negligence/nuisance claim.

In determining whether the proposed new claims would cause undue prejudice, the court considers "whether the assertion of the new claim would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction." See Block v. First Blood Associates, 988 F.2d 344, 350 (2d Cir. 1993).

The court determines that with the proposed new claims, there will be no significant resources needed to conduct discovery, no significant additional delay of the resolution of the dispute, or an element of surprise as to the type of relief sought by Schenectady in its previous complaint (recovery of costs for the alleged cleaning and removal of hazardous substances). Thus, the court concludes Upstate and Safer will not be prejudiced by Schenectady's proposed new claims. See Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d 442, 446 (2d Cir. 1985) (affirming a district court determination that an amendment was prejudicial because the "proposed [] claims allege[d] an entirely new ...


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