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General Motors LLC v. Lewis Bros., L.L.C.

United States District Court, W.D. New York

May 5, 2014



WILLIAM M. SKRETNY, Chief District Judge.


Plaintiff General Motors LLC ("GM") commenced this action on September 2, 2010, seeking to recover, among other things, costs it has incurred responding to environmental contamination at its property allegedly caused by Defendants' unlawful release of hazardous substances.

Presently before this Court is Plaintiff's Motion for Default Judgment, filed on January 8, 2014. (Docket No. 130). Defendants were afforded an opportunity to oppose the motion, but have not done so, and briefing is now closed. For the reasons discussed below, this Court finds that an entry of default judgment is warranted.


A. Factual Background

The extensive facts in this case have been discussed in prior opinions[1] and are repeated here only to the extent relevant to the pending motion. Lewis Bros. owns a parcel of property in Tonawanda, New York that previously was part of a larger tract of land owned by GM. GM once operated both an Engine Plant and a Forge Facility on the property. The Engine Plant and Forge Facility shared utilities, including a system that drew "mill water" from the Niagara River to cool machinery and for fire protection.

The used mill water, along with storm water and wastewater from both operations, was collected in a shared storm sewer, sent to a corrugated plate interceptor ("CPI"), and returned to the Niagara River as allowed under a New York State Pollutant Discharge Elimination ("SPDES") permit. The electric power needed to run both facilities was managed by a primary electric substation.

In 1994, GMC sold the parcel on which the Forge Facility is situated to American Axle and Manufacturing, Inc. ("AAM"). Both the CPI and electric substation are located on the parcel GM retained2014i.e., the Engine Plant site. GM and AAM agreed that, following the sale, GM would continue to provide utilities to AAM via the existing shared systems. The entities entered into a Tonawanda Services Agreement (the "Services Agreement"), a Tonawanda Wastewaters and Stormwater Services Agreement (the "Wastewaters Agreement"), an Asset Purchase Agreement ("APA"), and a Deed transferring title.

In 2008, AAM entered into a contract to sell the Forge Facility property to Defendant Lewis Bros., and title was transferred on December 3, 2008. The 1994 deed from GM to AAM and the 2008 deed from AAM to Lewis Bros. contain covenants and restrictions that prohibit Lewis Bros. from using the property for the treatment, storage, or disposal of hazardous or toxic materials, substances, or wastes. As part of the AAM to Lewis Bros. property transaction, AAM, Lewis Bros., and GM executed an Assignment Agreement, assigning the Wastewaters Agreement and Services Agreement, as amended and modified, from AAM to Lewis Bros.

The GM Complaint alleges that, as of the filing date, there had been three occasions on which flood waters containing PCBs migrated from the Lewis Bros. property to the GM property in violation of various provisions in the deeds and agreements, statutory law, and common law. Following one such occasion, GM notified Lewis Bros. that it was in breach of the Assignment Agreement and GM was therefore terminating the Agreement. On July 9, 2010, GM shut off all electric service to the Forge Facility and turned off the mill and firewater supply. It also plugged storm sewer pipes from the Forge Facility at the property line.

In early 2010, the New York State Department of Environmental Conservation ("DEC") directed Lewis Bros. to contain and remove a petroleum spill that had occurred at the Forge Facility in or about August 2009. The DEC ultimately commenced remediation activities due to Lewis Bros.' inaction. After a further PCB spill occurred on December 19, 2011, the DEC directed Lewis Bros. to begin treating contaminated water collecting on the property. Lewis Bros. engaged a contractor to operate an on-site water treatment system. As of late June 2012, water that had collected in low areas, trenches, and pits had been pumped and treated, all pits had been cleaned in accordance with DEC instructions, and all but one had been backfilled.

In May 2012, the DEC retained its own contractor to operate a second on-site treatment system. While the Lewis Bros. contractor treated ponded surface water, the DEC contractor treated water that was collecting at the Forge Facility in the plugged storm sewer pipes.

B. Procedural Background

GM commenced this action on September 2, 2010, asserting twelve claims for relief: (1) enforcement of restrictive covenants, (2) breach of contract, (3) for account stated, (4) breach of implied contract or quantum meruit, (5) unjust enrichment, (6) trespass, (7) private nuisance, (8) recovery of response costs under CERCLA section 107 from Lewis Bros. as owner of contaminated property, (9) recovery of response costs under CERCLA section 107 from Samuel Lewis as operator of a facility, (10) recovery of cleanup and removal costs under New York Navigation Law, (11) avoidance of fraudulent conveyances under New York Debtor and Creditor Law, and (12) breach of fiduciary duty by directors and officers of an insolvent corporation.

Defendants, through counsel, filed an answer on December 13, 2010. On March 14, 2011, GM moved for a preliminary injunction and appointment of a receiver.

Defendants' attorney moved to withdraw as counsel on September 21, 2011. The motion was denied on October 18, 2011. Thereafter, counsel filed a motion to compel on Defendants' behalf, opposed GM's motion for preliminary injunction[2], and opposed a GM motion to compel. Counsel filed a second motion to withdraw on January 23, 2012, which was granted on February 22, 2012.

This Court subsequently scheduled a status conference for May 7, 2012, noted that Lewis Bros. was not represented, and directed that new counsel for the corporate defendant enter an appearance prior to the conference. No Defendant appeared on May 7, 2012, and only Defendant Samuel Lewis appeared at the next scheduled conference. This Court scheduled a further conference for June 1, 2012, and again directed that the corporate defendant must appear by counsel.

New counsel entered an appearance on behalf of all Defendants on May 31, 2012, and proceeded to respond to outstanding motions. However, less than one year later, on April 12, 2013, counsel moved to withdraw due to Defendants' ongoing failures to communicate and cooperate with him regarding discovery and ...

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