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Sunoco, Inc. (R&M) v. 175-33 Horace Harding Realty Corp.

United States District Court, E.D. New York

September 4, 2013

SUNOCO, INC. (R&M), Plaintiff,
v.
175-33 HORACE HARDING REALTY CORP., Defendant

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[Copyrighted Material Omitted]

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For Plaintiff: Michael C. Falk, Esq., Reed Smith LLP, Philadelphia, PA; Othiamba Nkosi Lovelace, Esq., Reed Smith LLP, New York, NY.

For Defendant: Kenneth L. Robinson, Esq., Robinson & Associates, P.C., Syosset, NY.

OPINION

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MEMORANDUM & ORDER

SEYBERT, District Judge

Plaintiff Sunoco, Inc. (R& M) (" Plaintiff" or " Sunoco" ) commenced this action on May 12, 2011 against Defendant 175-33 Horace Harding Realty Corp. (" Defendant" or " Horace Harding" ) asserting claims for breach of contract, declaratory judgment, and violation of the New York Navigation Law. Defendant answered and filed counterclaims for breach of contract, indemnification, and violation of the New York Navigation Law. Currently pending before the Court are: (1) Plaintiff's motion for partial summary judgment on the liability portion of its breach of contract claim and on Defendant's counterclaims; and (2) Defendant's motion for summary judgment seeking that the Court dismiss all of Plaintiff's claims and grant Defendant summary judgment on its counterclaims. For the following reasons Plaintiff's motion for partial summary judgment is GRANTED IN PART and DENIED IN PART and Defendant's motion is DENIED.

BACKGROUND[1]

On November 30, 1998, Plaintiff and Defendant entered into an " Agreement of Sale" pursuant to which Plaintiff agreed to sell, and Defendant agreed to buy, property at 175-33 Horace Harding Expressway in Flushing, New York (the " Property" or the " Site" ). (Pl.'s 56.1 Stmt. ¶ 2; Def.'s 56.1 Stmt. ¶ 2.) Prior to the sale, both parties were aware that the Property was contaminated, and in fact the New York State Department of Environmental Conservation (" NYSDEC" ) had assigned Spill No. 99-9665 regarding a November 9, 1999 report of petroleum contamination at the Property. (Def.'s 56.1 Stmt. ¶ ¶ 3-4.) As such and pursuant to the Agreement of Sale, Plaintiff agreed to be responsible, at its cost and expense, for remediating to the satisfaction of the NYSDEC, any environmental contamination at the Property that existed prior to the sale to Defendant. (See Pl.'s 56.1 Stmt. ¶ 5.)

The Agreement of Sale also provided that if there was a " New Release" of contaminates while Plaintiff was conducting environmental activity in accordance with the Agreement but after the Settlement Date,[2] Defendant would be responsible for the additional cost of remediation attributable to the New Release. (Pl.'s 56.1 Stmt. ¶ 5.) If there was a dispute regarding a New Release, the Agreement of Sale further provided that:

BUYER and SELLER will mutually agree on an environmental consultant to make a determination as to the quantity of contamination resulting from the New Release and (i) whether there is a New Release, and if a New Release, (ii) the increase in the cost of remediation due to the New Release . . . . The method of

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selection of the environmental consultant will be as follows: Initial consideration will be given to the consultant hired by the SELLER to conduct to remediation [sic] or monitoring. If BUYER and SELLER do not agree to use this consultant, SELLER will submit to BUYER a list of four consultants from which BUYER will select one within ten days after receiving the list.

(Agreement of Sale ¶ 12(g).)

Defendant took title to the Property on May 20, 1999 and has operated a retail gas station on the Site since then. (Pl.'s 56.1 Stmt. ¶ ¶ 7, 12; Def.'s 56.1 Stmt. ¶ ¶ 1, 8.) In or about April 2002, Global Construction, a corporation that constructs gasoline and service stations, had been working on the Property making repairs. (Pl.'s 56.1 Stmt. ¶ 17.) As part of that work, Mr. Russell McCroy, a Global Construction employee at the time, began investigating a possible gas leak. (Pl.'s 56.1 Stmt. ¶ ¶ 16, 19.) Mr. McCroy first performed a helium test at the Site, but was unable to locate the leak. (Pl.'s 56.1 Stmt. ¶ 20.) As such, Global Construction excavated the lines, and according to Plaintiff, ultimately discovered a leak. (Pl.'s 56.1 Stmt. ¶ 21.)

On April 1, 2002, an unknown individual reported a " line test failure" at the Property to the NYSDEC. (Pl.'s 56.1 Stmt. ¶ 14; Def.'s 56.1 Stmt. ¶ 11.) The NYSDEC thus opened a spill number for the Property (the " 2002 Spill Report" ). (Pl.'s 56.1 Stmt. ¶ 13.) Defendant disputes that there was a release of contaminates and avers that the 2002 Spill Report does not indicate that any petroleum was discharged. (Def.'s 56.1 Stmt. ¶ 13.)

According to Plaintiff, Global Construction fixed the leak and, as was its usual practice, contacted another company--Crompco--to test the underground storage tanks and the lines, piping, and equipment. (Pl.'s 56.1 Stmt. ¶ ¶ 23-26.) Crompco tested the Site, and the system passed all tests. (Pl.'s 56.1 Stmt. ¶ 26.)

On July 22, 2002, and on other occasions, Plaintiff notified Defendant that it believed that a New Release had occurred at the Site due to the aforementioned events and that action pursuant to Paragraph 12(g) of the Agreement of Sale was required. (Pl.'s 56.1 Stmt. ¶ 32.) Defendant disputed any New Release and did not agree to an environmental consultant hired by Plaintiff. (Pl.'s 56.1 Stmt. ¶ ¶ 33-34.)

According to Plaintiff, the parties then followed the terms of the Agreement of Sale and jointly selected EnviroTrac Ltd. (" EnviroTrac" ) " to conduct a forensic investigation and remediation cost allocation analysis with respect to the Site." (Pl.'s 56.1 Stmt. ¶ 36.) Defendant maintains that it agreed to the joint selection of an environmental consultant in an attempt to negotiate a settlement, but not necessarily pursuant to the Agreement of Sale. (Def.'s 56.1 Stmt. ¶ 28.) Furthermore, Defendant asserts that EnviroTrac was to determine only the quantity of contamination, if a New Release occurred, and the increased cost of remediation attributable to the New Release. (Def.s' 56.1 Counterstmt. ¶ 14.) EnviroTrac, says Defendant, was not to determine the percentages of liability. (Def.'s 56.1 Counterstmt. ¶ 14.)

In March 2006, Joseph Byrnes, President of EnviroTrac, produced a report entitled " Environmental Forensic Evaluation and Remediation Cost Allocation" (" EnviroTrac Report" ). (Pl.'s 56.1 Stmt. ¶ 41.) EnviroTrac determined that multiple New Releases occurred after the Settlement Date, and it allocated responsibility for remediation of contamination at the Property with 5% responsibility to Plaintiff and 95% to Defendant. (Pl.'s 56.1 Stmt. ¶ 47.) Plaintiff conducted remediation, but Defendant has refused to pay. (Pl.'s 56.1 Stmt. ¶ 56.)

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DISCUSSION

The Court will first discuss the applicable standard of review before addressing the ...


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