United States District Court, S.D. New York
OPINION AND ORDER
Vincent L. Briccetti, United States District Judge.
plumbing supply store sits between two gas stations-a Mobil
station and a Gulf station. One or both stations has spilled
petroleum that has migrated onto plaintiff's property,
contaminating the air, soil, and groundwater. Plaintiff seeks
to hold liable the past and present owners of one or both
stations in an effort to remediate the contamination.
opinion addresses two motions concerning claims and
counterclaims between third-party plaintiff CPD NY Energy
Corp. (“CPD”), the Mobil station's current
owner, and Groundwater & Environmental Services, Inc.
(“GES”), the environmental consulting firm CPD
hired to remediate the contamination on plaintiff's
property. GES moves (Doc. #370) to dismiss CPD's fraud
claim, the eleventh cause of action in CPD's Third
Amended Third Party Complaint (“TATPC”) (Doc.
#363). CPD moves (Doc. #391) to dismiss GES's
counterclaims and to strike the third, sixth, eleventh, and
twelfth affirmative defenses in GES's Amended Answer to
the TATPC (“answer” or “Ans.”) (Doc.
reasons discussed below, GES's motion is DENIED, and
CPD's motion is GRANTED in part and DENIED in part.
Court has subject matter jurisdiction under 28 U.S.C.
§§ 1331 and 1367(a).
Allegations in the TATPC
2006, plaintiff has owned and operated a plumbing supply
store called Faucet Works and the site on which it is
located, at 395 White Plains Road in Eastchester, New York.
Farms, Inc. (“CFI”), owned and operated the Gulf
station immediately south of Faucet Works from September 2003
until selling it after the events described in the TATPC took
owned and operated the Mobil station immediately north of
Faucet Works since January 2011. ExxonMobil Oil Corporation
(“EMOC”) owned the Mobil station previously.
plaintiff purchased Faucet Works, petroleum migrated onto the
property, contaminating the air, soil, and groundwater. For
years, plaintiff, EMOC, and CPD assumed the contamination was
from a particular spill at the Mobil station, documented with
the New York State Department of Environmental Conservation
(“DEC”) as administrative Spill No. 89-13000. As
a result, EMOC, and later CPD, tried to remediate
plaintiff's property. EMOC hired GES to remediate
beginning in 2007. After CPD bought the Mobil station, CPD
and GES entered into a contract, the Fixed Price Remediation
Agreement (the “Agreement”), under which GES
agreed to remediate Faucet Works and several other CPD-owned
sites. The Agreement also obligated GES to pursue CFI to take
responsibility for the Faucet Works contamination.
however, CPD alleges the contamination came from the Gulf
station on the other side of the property, and that GES knew
this long before the parties entered into the Agreement. CPD
claims GES has done remediation work at the Gulf station site
since 1999, knows that groundwater flows from the Gulf
station toward Faucet Works, and discovered contamination on
the boundary between the Gulf station and Faucet Works in
2002 and 2008. CPD also claims GES wrote a letter in 2004
indicating the contamination at Faucet Works came from the
Gulf station, and another letter in 2008 indicating it may
have come from there. Then, in 2009, EMOC wrote to CFI and
GES indicating CFI was responsible for the ongoing
contamination at Faucet Works. Also in 2009, EMOC and GES
jointly drafted “Planning Assumptions” for the
Mobil station that indicated “impacts to the sump at
the Faucet Works property . . . likely originate from the
Gulf Station.” (TATPC ¶ 190).
also claims, after CPD and GES executed the Agreement, the
GES project manager assigned to the Faucet Works project
analyzed the site and concluded the Gulf station caused the
contamination. The project manager drafted a letter to the
DEC attributing the Faucet Works contamination to the Gulf
station, but GES management allegedly told him not to submit
TATPC also alleges GES intentionally withheld its knowledge
about the contamination's true source and misled CPD to
believe it came solely from the Mobil station. When CPD and
GES were negotiating the Agreement in November 2010,
GES's Senior Project Manager and its Junior Geologist
provided CPD with a “Phase 1” written report
stating “GES installed a carbon filtration system and
AS system on the [F]aucet [W]orks property to treat sump
water in association with [DEC] Spill # 89-13000” and
there was “no ‘evidence of surface or subsurface
(soil &/or GW) contamination'” at the Gulf
station site. (TATPC ¶ 194). During negotiations,
GES's vice president allegedly withheld GES's
knowledge about the contamination's source.
April 2012 through the end of 2015, the GES project manager
submitted reports to CPD “reporting the contamination
of the Faucet Works Property under spill number 89-13000
associated with contamination from the [Mobil
station].” (TATPC ¶ 204). These reports did not
indicate contamination was coming from the Gulf station. The
project manager and another GES employee also submitted
invoices to CPD that “implicitly and explicitly assured
CPD that the work being performed to mitigate contamination
at the Faucet Works Property was associated with spill number
89-13000.” (Id. ¶ 205). CPD paid these
invoices, relying on GES's assurances that the
contamination came from a spill at the Mobil station.
claims GES was motivated to mislead CPD for two different
reasons: to keep costs down, and to curry favor with CFI.
First, under the Agreement, if funds allotted to the
remediation of a particular site are left over after
remediation is complete, GES keeps 50% of the leftover funds.
CPD contends GES chose to remediate Faucet Works as though
the Mobil station was the sole source of contamination
because it was less costly to do so. Second, in 2012, after
CPD and GES executed the Agreement, GES entered into a
contract with CFI worth significantly more money than its
contract with CPD. CPD claims when GES told CFI the
contamination at Faucet Works may have come from the Gulf
station, CFI told GES to stop investigating this possibility.
GES never disclosed to CPD its relationship with CFI.
GES's misrepresentations and omissions about the
contamination's source, CPD claims it “(a) may not
have purchased the [Mobil station], (b) may have renegotiated
the Purchase Agreement with [EMOC], (c) would not have
authorized payments under the [Agreement] as demanded by GES,
(d) may have pursued available remedies against or a
resolution with GES well before any action was pursued by the
Plaintiff Faucet Works and/or (e) would have provided proper
notice to the [DEC] of the conditions at the Faucet Works
Property so as to prompt [DEC] to include CFI as a
Responsible Party.” (TATPC ¶ 212).
GES's Affirmative Defenses and Counterclaims
asserts three counterclaims based on CPD's alleged
breaches of the Agreement.
GES claims CPD breached its obligation under Section 5(c) of
the Agreement to “provide reasonable access for GES and
its subcontractors to the properties and [to] enter into
any other access agreements with other third party property
owners, as necessary to complete the performance of the
scopes of work.” (Ans. ¶ 237). GES contends it
needed access to CFI's property to perform the scope of
work because the Gulf station caused the contamination. CPD
allegedly did not enter into an agreement to procure this
GES claims CPD breached Sections 8 and 16(b) of the
Agreement. The Agreement provides for GES to remediate
“covered contamination, ” which, by definition,
“arose from [EMOC's] operations prior to the
closing date.” (Ans. ¶ 249). If GES and CPD
discover contamination that is not “covered, ”
Section 8 requires them to negotiate in good faith to set
prices and determine what remediation is necessary, and
Section 16(b) requires CPD to name an independent consultant
and engage in technical dispute resolution with GES. GES
alleges the Faucet Works contamination is not covered
contamination because it came from the Gulf station and thus
was not caused by EMOC's prior operations. Yet, CPD
allegedly has not negotiated in good faith or named an
independent consultant, and has refused technical dispute
third counterclaim alleges CPD “breached the
[Agreement] with GES in this matter” but does not
specify how. (Ans. ¶ 279). GES also claims CPD's
unspecified actions are the sole proximate cause of any
damages to plaintiff and CPD.
three counterclaims assert “GES hereby denies any
negligence, carelessness, fault, breach of contract,
statutory violations, or other culpable conduct on its part
with respect to the occurrence described in the complaints
and the third-party complaints, including the [TATPC].”
(Ans. ¶¶ 246, 276, 281). Moreover, all three
counterclaims allege CPD's breaches of the Agreement
caused the damages to plaintiff and CPD, either in whole or
in part. GES claims it is entitled to indemnification and/or
contribution from CPD against any judgment plaintiff recovers
from GES in this action “to the ...