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Dvl, Inc v. General Electric Company

December 6, 2010




Plaintiff DVL, Inc. ("DVL") brought this action against Defendants Niagra Mohawk Power Corporation ("NMPC"), National Grid USA Service Company, National Grid USA, and National Grid (collectively with NMPC, "Niagra Mohawk Defendants") and General Electric Company ("GE") under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., and the New York State common law of indemnification, trespass, and nuisance. Compl. (Dkt. No. 1). DVL seeks injunctive relief, as well as costs and damages that it has expended or will incur in responding to the release and/or threatened release of hazardous wastes on a DVL-owned property. Id.

Presently before the Court are DVL's Motion for partial summary judgment (Dkt. No. 40); GE's Motion for summary judgment (Dkt. No. 38) and Cross-Motion to strike certain testimony (Dkt. No. 52); and the Niagra Mohawk Defendants' Motion for summary judgment (Dkt. No 44).

For the reasons that follow, DVL's Motion for partial summary judgment is denied, and GE's Motion for summary judgment and Cross-Motion to strike are granted, as is the Niagra Mohawk Defendants' Motion for summary judgment.


A. Factual History

Plaintiff DVL is a corporation organized under Delaware law with a principal place of business in New York State. Compl. ¶ 5. It is engaged in the ownership and operation of commercial real estate properties throughout the United States. Id. ¶ 6. Among DVL's holdings is a property located at 354 Upper Broadway (State Route 4), Fort Edward, New York (the "subject property" or "DVL Site "). Id. ¶ 13. The DVL Site, which DVL acquired from Fort Edwards Associates*fn2 by foreclosure in 2002 for a purchase price of $500,000, is bounded by Upper Broadway, Gates Avenue, Burgoyne Avenue, and Ethan Allen Street. Carames Decl. (Dkt. No. 40-11) ¶¶ 8-9, Abdulla Aff., Ex. C ("Carames Dep.") (Dkt. No. 44-4) at 20-21. Prior to DVL's acquisition of the subject property, Fort Edwards Associates leased the site to the Grand Union Company, which operated a supermarket there; prior to that, the subject property housed a scrap or salvage yard known as the "Caputo Garage." Carames Decl.¶ 9; Compl. ¶ 15. At the time that DVL acquired the subject property, the soil contained quantities of Polychlorinated biphenyls ("PCBs"). DVL did not know of this fact prior to its acquisition of the subject property and did not inquire or otherwise investigate the environmental condition of that property before purchasing it. Carames Decl. ¶ 10; Carames Dep. at 19:18-23.

Since the mid-1940s, Defendant GE has owned and operated a manufacturing plant in Fort Edward, New York on Upper Broadway (the "GE Property"), which is nearly adjacent to the DVL Site. Prevost Decl. (Dkt. No. 38-12) ¶ 5; GE Answer (Dkt. No. 24) ¶ 20. The GE Property sits approximately 50 yards north of the DVL Site and on the other side of Upper Broadway. Prevost Decl. (Dkt. No. 38-12) ¶ 5. Ground water flows due south from the GE Property. West Dep. (Dkt. No. 38-11) 59:15-16.

GE manufactures capacitors and other electrical components on the GE Property and had used PCBs there. GE Answer ¶ 21; West Dep. at (Dkt. No. 38-11) 19:13-14, 22:14-17, 33:16-23. Although GE stopped using PCB oils at the Fort Edward Facility in June 1977, PCB fluids are still present in the surface soil and subsurface of the GE Property. West Dep. at 25:6-23, 26:1:13. PCBs were also used at GE's Hudson Falls site, approximately one mile from the GE Property. Id. at 36:23, 37:1. The two predominant types of PCBs used at both facilities were Aroclor 1242 and Aroclor 1254. Id. at 38:22; 39:5.

GE has never owned or operated any portion of the DVL Site. GE Answer ¶ 59. GE insists that it has "never generated, stored, disposed of or arranged for disposal of any hazardous substances and/or wastes (including, without limitation, PCBs) on the DVL site," and it asserts that there is no evidence in the record to the contrary. Id. ¶ 60; GE's Disc. Resp. to DVL Interrog. No. 11 (Dkt. No. 38-7); see also West Dep. at 65-66. DVL admits that it "has never observed any GE capacitors on the DVL property." DVL Resp. SOMF (Dkt. No. 53-1) ¶ A17.

Pursuant to a consent order between GE and New York State Department of Environmental Conservation ("DEC"), GE has taken remedial measures to investigate and address the PCB contamination on the GE Property. West Dep. at 40-41; see also Jensen


Gen. Elec. Co., 82 N.Y.2d 77, 81 (1993).*fn3 Those measures included the installation of collection systems and the removal of contaminated soil. West. Dep. at 41-46. In 1996, GE also set up two monitoring wells on the DVL property as part of a remedial investigation at the request of DEC; the wells were installed to help determine whether there was any migration of contamination from the GE Property to property to the east side of Broadway, including the DVL Site. West Dep. at 58-59. They have always sampled negative for PCBs. Carames Dep. (Dkt. No. 38-10) 145:24-25.

Defendant NMPC provides electrical service in the Fort Edwards area. Other investor owned utilities and a number of smaller municipal utilities are interspersed and/or immediately adjacent to the service territory of NMPC. Reynolds Aff. (Dkt. No. 63-2) ¶ 6. NMPC previously employed "commonly used" distribution line transformers that contained Aroclor 1260, a PCB also found in hydraulic fluids, de-dusting agents, as well as a plasticizer, and reinforcing agent. Niagra Mohawk SOMF ¶¶ 81-82; Reynolds Aff. ¶ 7; Castle Aff. (Dkt. No. 63-1) ¶ 4. It purchased these transformers from a variety of manufacturers, though mostly from GE and Westinghouse. Castle Aff. ¶ 4. Niagra Mohawk SOMF ¶¶ 81-82; Reynolds Aff. ¶ 7. Because the transformers came from multiple sources and had no distinctive markings denoting Niagra Mohawk ownership, NMPC contends that the only way to visually determine such ownership is by comparing serial numbers assigned to each transformer to NMPC property records. Castle Aff. ¶ 9.

NMPC's records identify only a single vendor, M. Wallace Son, Inc. ("Wallace"), that is known to have obtained retired transformers from NMPC's Eastern Division during the relevant period. See generally Abdullah Aff., Wallace Dep., Sterge Dep., Ex. J (Dkt. No. 44-5). Sidney Wallace identified three sites where transformer shells were shipped after being stripped at his facility in Cobbleskill, New York; the Caputo garage was not one of the three identified sites. Abdullah Aff., Wallace Dep., Ex. J (Dkt. No. 44-5) at 100. The Wallace Site was itself identified as a hazardous waste site by the State of New York, and NMPC paid costs associated with its remediation. Niagra Mohawk Defs.' SOMF ¶¶ 105-07.

In 2003, the DEC raised concerns over possible contamination at the Upper Broadway Barrel Site in Fort Edward, New York, an area containing the DVL Site. Carames Decl. ¶ 11. The Upper Broadway site was identified as an area of concern in the early 1980s after groundwater samples were collected from residential wells as part of investigations being conducted for the GE Fort Edwards site - groundwater sampling had indicated the presence of PCBs. See Abdulla Aff., Ex. K (Dkt. No. 46) ("DEC Report") at 1-5. The resulting extensive geophysical investigation, was guided, in part, by three items of concerns raised in interviews with local residents:

During the 1970s and 1980s, storm water that accumulated on the west side of Upper Broadway would be pumped over to the east side of Upper Broadway. There is concern that the water pumped to the east side of Upper Broadway may have been contaminated by the GE site; The McDonald's and former Grand Union properties were reportedly used as an automobile repair business in the 1930s and 1940s, then later as a dealership in the 1940s and 1950s. There are some concerns that a solvent pit was used to clean auto parts with spent solvents obtained from the GE plant . . .; and Finally, drums, allegedly from GE, were stored on site some time in the past. The fate of the drums is unknown, and they may have been buried on site.Id.

Between May 2003 and April 2004, Ecology and Environmental Engineering ("E&E"), acting on behalf of DEC, conducted a preliminary site assessment ("PSA") of this area, alerting DVL to possible contamination on its land. Carames Decl. ¶ 11. On or around August 27, 2004, DEC advised DVL that the PSA revealed PCB contamination on the DVL Site. Carames Decl. ¶¶ 12-13; Carames Dep. at 49-50. When the E&E/DEC final report was issued in October of 2004, see DEC Report (Dkt. No. 46), it noted that PCBs were present at background (below-criteria) levels in surface soils, storm water sediments, storm sewer samples or groundwater samples, concluding that, "[i]n general, only low levels of contamination are present at the Upper Broadway site . . . [and] are likely not site related, but are commonly present in urban/industrial areas." DEC Report at 4-1. Certain "areas of concern" were noted, however, including a test pit located in the wooded section southeast of the former Grand Union and another test pit on the northern end of the former Grand Union property. Id. at 3:21-22; 4-2. Subsurface test pit samples in these areas revealed the presence of PCBs, including Aroclors 1242, 1254, and 1260. Id. at 3-24, G-40. No PCBs were detected in the groundwater samples. Id. at 3-26.

Test pit excavations found tires, bricks, concrete debris, and metal debris, but no transformers, electrical components, or buried drums. DEC Report at 3-21, 4-2. The DEC report noted the source of the PCB contaminants, including Aroclors 1248, 1254, and 1260, as "unknown." DEC Report at 3-19, 3-20, 4-1. This finding was made despite the Report's being guided, in part, by concerns regarding GE's role in the contamination. Id. at 1-5. None of the Niagra Mohawk Defendants are mentioned in the Report as a potential source of contamination.

DVL retained the services of Malcolm Pirnie, Inc., an environmental consulting firm, which, between 2004 and 2007, oversaw, managed, and conducted investigations of the DVL Site to determine the extent of contamination and remediate the contamination discovered through the DEC investigation. Carames Decl. ¶¶ 14-15, Carames Dep. 50:10-11. Malcolm Pirnie prepared a work plan that was approved by DEC in September 2004. Carames Dep. at 58. Between 2004 and 2007, Bruce Nelson acted as Malcom Pirnie's project manager. Nelson regularly communicated with DVL, which, in turn, regularly communicated with DEC, often through DEC's employee, James Ludlam. Carames Decl. ¶¶ 15-16.

DVL paid for the costs and expenses related to the investigations conducted by Malcolm Pirnie, as well as for the excavation, removal, transport, and disposal of PCB-contaminated soil from the Site performed by SCL or Op-Tech, both remediation companies. Carames Decl. ¶ 18; Carames Dep. at 56:7-23, 65:3-4. DVL undertook investigations and remediation measures including soil sampling and removal. These investigations and remediation activities occurred both prior to March 9, 2005, when DVL received a "no further concern action" letter regarding the site and subsequent to that date in relation to the potential sale of the property. DVL Resp. SOMF ¶¶ 43-45; Carames Dep. at 54:3-7. DVL never performed an investigation, nor did it hire anyone to conduct an investigation into the source of the PCBs at the Site. Carames Dep. 100:15-21.

To date, the costs associated with these investigation and remediation activities is $1,065,396.18. Carames Decl. ¶ 18. DVL now seeks to recover these costs. Compl. Defendants, however, allege that the majority of DVL's expenses were incurred not as a result of being required by DEC to perform the clean-up. Carames Dep. 70, 73:13-22. Rather, Defendants argue that "the sole motivation for having this work done, this investigation done, and possible remediation done" was because DVL was in contract to sell the property. Carames Dep. at 72:20-25, 73:1-8; see also GE SOMF (Dkt. No. 38-1) ¶ 3; Niagra Mohawk Defs.' SOMF ¶¶ 34-43.

Dennis Prevost, who grew up in Fort Edward, testified that, as a boy, he "personally observed conditions" at the subject property. He testifies that "[i]t is [his] understanding and knowledge that electrical capacitors were manufactured at the [GE Property] for more than 30 years . . . . and that such manufacturing included the use, handling and disposal of . . . PCBs." Prevost Decl. ¶5. During the 1960s Prevost recalls bicycling and "engag[ing] in youthful activities" on the DVL Site when the Caputo Garage was using the property for the salvage of vehicles, vehicle parts, and other equipment; he "observed large 'bucket' objects at the property. These objects had markings which indicated that they had been owned by Niagara Mohawk Power Corporation. Upon information, knowledge and belief, those 'bucket' objects were electrical transformers." Prevost Decl. ¶¶ 6-7. Prevost later clarified this observation, stating that as a young boy, he "observed bucket-type transformers with similar looking markings on utility poles in the area and observ[ed] one of these transformers being replaced in one instance by Niagra Mohawk . . . . I have no personal knowldge of the source of the transformers I observed on the [DVL] Site." Abdulla Aff., Ex. E (Dkt. No. 44-4) ("Prevost Aff.") ¶ 4. Prevost confirmed that the objects he remembers seeing on the DVL Site "did not bear Niagra Mohawk's name, initials or any other symbols or logos indicative of Niagra Mohawk ownership or sourcing." Prevost Aff. ¶ 5 (Dkt. No. 44-4).

Prevost also recalls observing as a boy "the presence of [gray] objects which [he] understand[s] to be electrical capacitors at the present DVL Site." Prevost Decl. ¶ 8. The capacitors "bore no signs of wear and tear." Prevost Aff. ¶ 9(c). Prevost further recalls observing "soils or other fill material" being brought to the DVL Site, where they were used for road leveling and other development projects on that property. Prevost Decl. ¶ 9.

B. Procedural History

DVL initiated this action on October 11, 2007. Compl. GE and the Niagra Mohawk Defendants filed Answers with Counterclaims and Cross-claims on February 4, 2008 and February 12, 2008, respectively. Dkt. Nos. 24, 27. A Uniform Pretrial Scheduling Order ("UPSO") issued on March 19, 2008 set a discovery deadline of March 15, 2009 and required Plaintiff to identify experts and serve the experts' written reports 90 days prior to that discovery deadline; Defendants were ordered to do the same no later than 45 days prior to the March 15, 2009 date. Dkt. No. 31 ¶ 6. The parties were ordered to identify all experts to be used to contradict opposing parties' expert testimony and to provide those experts' written reports no later than 30 days from the discovery deadline. Id. On December 2, 2008, the UPSO was amended, and the discovery deadline extended to July 15, 2009. Dkt. No. 35. On July 22, 2009, over Defendants' objections, the Magistrate Judge assigned to this matter granted Plaintiff's request for an additional extension of the discovery deadline until to January 1, 2010, despite the fact that Plaintiff had "yet to serve responses to outstanding written discovery demands from defendants and ha[d] not yet served expert witness disclosures, essential in this case, although the deadline for such disclosures passed on or about April 15, 2009." Scheduling Order (Dkt. No. 37).

On March 1, 2010, DVL filed its Motion for partial summary judgment ("DVL Motion") (Dkt. No. 40) on the issues of GE and NMPC's liability to DVL pursuant to CERCLA and common law indemnification principles for costs incurred by DVL in response to hazardous waste at the DVL Site, see Mem. in Supp. of DVL Mot. (Dkt. No. 40-14) at 1; on the same day, GE filed a Motion for summary judgment(Dkt. No 38) to dismiss all claims in the Complaint and all cross-claims asserted against it, and the Niagra Mohawk Defendants filed a separate Motion for summary judgment (Dkt. No. 44) to dismiss all claims in the Complaint against them. As an attachment to its Motion, DVL submitted the Declaration of James Ludlam ("Ludlam I"), an engineer employed by DEC between 1977 and 2008, whose professional experience with DEC "included working on hazardous waste sites for which [GE] had either primary or sole responsibility . . . . [including] GE's Hudson Falls and Fort Edward Plants." Ludlam I Decl. (Dkt. No. 40-12) ¶ 10. DVL attached a Supplemental Declaration from Ludlam ("Ludlam II") with its filings in opposition to Defendants' Motions for summary judgment. Ludlam II Decl. (Dkt. No. 53-2).


A. Advance Disclosure of Expert Witness' Identity and Written Reports Federal Rule of Civil Procedure 26(a)(2)(A) requires a party to disclose "the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705." FED. R. CIV. P. 26(a)(2)(A); see also FED. R. CIV. P. 26(e) (requiring parties to timely supplement Rule 26(a) disclosures); Lamere v. New York State Office for the Aging, No. 03-CV-0356, 2004 WL 1592669, at *1 (N.D.N.Y. July 14, 2004)("the identity of any witness who may be used to provide expert testimony, whether specifically retained for that purpose or not, must be disclosed."). Rule 26(a)(2)(B) requires the additional disclosure of "a written report -- prepared and signed by the witness -- if the witness is one retained or specially employed to provide expert testimony in the case or one whose duties as the party's employee regularly involve giving expert testimony." FED. R. CIV. P. 26(a)(2)(B); Lamere, 2004 WL 1592669, at *1; see also FED. R. CIV. P. 26, 1993 Advisory Committee Notes ("Paragraph [a](2)(B) requires that persons retained . . . to provide expert testimony . . . must prepare a detailed and complete written report . . . "). Disclosures made pursuant to Rule 26(a) must be provided "at the times and in the sequence that the court orders." FED. R. CIV. P. 26(a)(2)(C).

Under Federal Rule of Civil Procedure 37(c), "[i]f a party fails to . . . identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that . . . witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." FED. R. CIV. P. 37. In determining whether preclusion is appropriate, a court must consider "(1) the party's explanation for the failure to comply with the discovery order; (2) the importance of the testimony of the precluded witness; (3) the prejudice suffered by the opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility of a continuance." Softel, Inc. v. Dragon Med. & Scientific Commc'ns, Inc., 118 F.3d 955, 961 (2d Cir. 1997) (citation omitted). Rule 26(a)(2)(A) does not apply to lay witnesses, that is, those whose testimony is limited to "opinions or inferences which are (a) rationally based on ...

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