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HLP Properties, LLC v. Consolidated Edison Company of New York, Inc.

United States District Court, S.D. New York

November 21, 2014

HLP PROPERTIES, LLC, et al., Plaintiffs,
v.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge.

Plaintiffs HLP Properties, LLC ("HLP"), West 17th Property, LLC, f/k/a/West 17th Development, LLC ("West 17th Street"), West 58th Street Mini Storage Corp. ("W58MS") and PLH Enterprises, Inc. ("PLH") assert claims against Defendant Consolidated Edison Company of New York, Inc. under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), and under New York law. Defendant moves to dismiss the Complaint. For the reasons that follow, Defendant's motion is granted in part and denied in part.

I. BACKGROUND

A. Facts

Plaintiffs HLP, W58MS and PLH are current and former owners of property located in Manhattan between 17th and 18th Streets and 10th and 11th Avenues (the "Site"). Plaintiff West 17th Street is the prospective developer of the Site. The Site and surrounding plots of land were previously owned by Defendant's predecessors, Manhattan Gas Light Company and the Consolidated Gas Company. The predecessors operated a Manufactured Gas Plant ("MGP") in the area, and the Site served as the location for the main gas production facilities. The MGP was operated from 1834 until the early 1900s, when it was closed and the land on which it was located was divided into parcels and sold. The Site's subsequent owners were unaffiliated with Plaintiffs and Defendant until 1983, when the predecessor of one of the Plaintiffs purchased the Site for use as a parking lot.

The MGP heavily contaminated the Site, leaving coal tar residue, heavy metals, and various volatile and semi-volatile compounds in the soil and groundwater. Starting in 2002, Defendant began the process for remediation of the Site, acting pursuant to a Voluntary Cleanup Agreement administered by the New York State Department of Environmental Conservation ("DEC"). Defendant conducted various studies over the course of several years to evaluate contamination levels and determine the appropriate remediation methods.

In January 2007, three of the Plaintiffs - HLP, West 17th Street and PLH by its predecessor Edison Mini Storage Corp. - submitted an application to enter the Site into the Brownfield Cleanup Program ("BCP"), a program created by the New York State Legislature in 2003 to "encourage persons to voluntarily remediate brownfield sites for reuse and redevelopment." Matter of HLP Props. LLC v. New York State Dept. of Envtl. Conservation, 21 Misc.3d 658, 864 N.Y.S.2d 285 (N.Y. 2008). At the same time, Defendant submitted its own application to enter the Site into the BCP. Id. Parties participating in the BCP receive a Certificate of Completion and release of future liability if they successfully carry out a DEC-approved remediation program. Those who receive a Certificate of Completion by December 31, 2015, are eligible for various tax credits for remediation costs and for redevelopment of a previously contaminated site.

On August 2, 2007, the DEC denied both Plaintiffs' and Defendant's applications. Matter of HLP, 21 Misc.3d at 665. The Plaintiff applicants, but not Defendant, challenged the denial in state court. While the case was pending in 2008, legislation was passed that amended the BCP to reduce the tax credits available for participation in the program. The Plaintiff applicants accordingly requested that the state court enter an order requiring the DEC to admit them into the BCP as it existed prior to the 2008 legislation. On September 12, 2008, the Supreme Court, New York County, found that the DEC's denial of the application of the Plaintiff applicants was arbitrary and capricious and/or an abuse of discretion, and ordered the DEC to accept the Site into the pre-2008 BCP. Id. at 671-72. On February 11, 2010, the First Department affirmed the lower court's decision. 70 A.D.3d 469, 898 N.Y.S.2d 449 (1st Dep't 2010).

On December 22, 2010, West 17th Street and HLP (the "BCA Plaintiffs")[1] submitted an amended BCP application to the DEC. The BCA Plaintiffs and the DEC subsequently entered into a Brownfield Site Cleanup Agreement ("BCA"), which became effective December 31, 2010, the date it was signed by the DEC Commissioner's designee.

The BCA, together with its Appendix A, outlines the rights and responsibilities of the BCA Plaintiffs and the DEC in investigating and remediating the Site, and requires the BCA Plaintiffs to pay certain costs to the State of New York. Upon successful completion of the remediation program, the BCA provides that the DEC will issue a Certificate of Completion. Upon receipt of the Certificate of Completion, the BCA Plaintiffs are entitled to a liability limitation resolving their liability "to the state upon any statutory or common law cause of action." ECL § 27-1421. The BCA also gives the BCA Plaintiffs the right to "receive contribution protection and/or to seek contribution" for costs incurred in the remediation, subject to the constraints of the regulations implementing the BCP and the Environmental Conservation Law. One of those regulations states that "the remedial party shall be deemed to have entered into an administrative settlement of liability and to have resolved its liability to the State for purposes of contribution protection provided by [CERCLA]... [and] by entering into such administrative settlement of liability, ... the remedial party is entitled to seek contribution... under [CERCLA]." 6 NYCRR § 375-1.5(b)(5).

According to the Complaint, since entering into the BCP, Plaintiffs collectively (and without further delineation) have incurred at least $3.6 million in remediation costs, and they anticipate spending a total of $24 million. On March 3, 2014, Plaintiffs filed the Complaint in this action, asserting that Defendant, as the successor of the original contaminators of the Site, is responsible for reimbursing Plaintiffs for present and future remediation costs. Plaintiffs assert claims for costs under CERCLA § 107, or in the alternative, under CERCLA § 113; declaratory relief under CERCLA; indemnification and restitution under New York law; and declaratory relief under New York law.

B. Statutory Framework

CERCLA was enacted to "assur[e] that those responsible for any damage, environmental harm, or injury from chemical poisons bear the costs of their actions." Niagara Mohawk Power Corp. v. Chevron U.S.A. Inc., 596 F.3d 112, 120 (2d Cir. 2010) (quoting S. Rep. No. 96-848, at 13 (1980)). To effectuate this purpose, "CERCLA looks backward in time and imposes wide-ranging liability." Marsh v. Rosenbloom, 499 F.3d 165, 178 (2d Cir. 2007). Specifically, CERCLA imposes strict liability on all "potentially responsible parties, " or "PRPs, " which include facility owners and operators, persons who at the time of disposal of any hazardous substance owned or operated a facility, persons who arranged for the disposal or treatment of hazardous waste at the relevant site and persons who transported hazardous waste to the site. See 42 U.S.C. § 9607(a)(1)-(4).

CERCLA enables parties to recoup costs for cleanup of contaminated sites in one of two ways. First, under § 107, the United States, a state, or "any other person" that has incurred costs in remediating a contaminated site may bring a cost recovery action against a PRP. Id. § 9607(a)(4)(B). Second, under § 113, a party may seek contribution from other PRPs if it either (1) has settled its CERCLA liability with a state or the United States through an administrative or judicially approved settlement, 42 U.S.C. § 9613(f)(3)(B); or (2) has been sued under § 107, see id. § 9613(f)(1). See also Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 160-61 (2004) (holding that a party must have been sued under § 107 or § 106 in order to bring a contribution claim under § 113(f)(1)). Two significant differences between § 113 and § 107 are that § 107 provides for joint and several liability, and has a six-year statute of limitations.[2] In contrast, § 113 provides for equitable distribution of costs, and has a three-year statute of limitations. See U.S. v. Atl. Research Corp., 551 U.S. 128, 139-40 (2007); Niagara, 596 F.3d at 121.

The Supreme Court has held that a party "eligible to seek contribution under § 113... cannot simultaneously seek to recover the same expenses under § 107(a)." Atl. Research, 551 U.S. at 139; see also Cooper Indus., Inc., 543 U.S. at 163 ("In short, ... CERCLA provide[s] for a right to cost recovery in certain circumstances, § 107(a), and separate rights to contribution in other circumstances, §§ 113(f)(1), 113(f)(3)(B).") (emphasis added); Niagara, 596 F.3d at 122. Instead, a party that is eligible for contribution costs under § 113 or response costs under § 107(a) must proceed under § 113.

II. STANDARD

On a motion to dismiss, a court should "draw all reasonable inferences in Plaintiff['s] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks omitted). To withstand dismissal, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. While "detailed factual allegations'" are not necessary, the pleading must be supported by more than mere "labels and conclusions' or a formulaic recitation of the elements of a cause of action.'" Id. (quoting Twombly, 550 U.S. at 555). "Nor does a complaint suffice if it tenders naked assertion[s]' devoid of further factual enhancement.'" Id. (alteration in original) (quoting Twombly, 550 U.S. at 557). Rule 8 of the Federal Rules of Civil Procedure "requires factual allegations that are sufficient to give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 182 (2d Cir. 2012) (alteration in original) (quoting Twombly, 550 ...


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