Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 1 of 25 PageID #: 10864
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`NEXT MILLENNIUM REALTY, L.L.C. and
`101 FROST STREET ASSOCIATES,
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`Plaintiffs,
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`MEMORANDUM AND
`ORDER
`CV 03-5985 (ARL)
`-against-
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`ADCHEM CORP., LINCOLN PROCESSING CORP.,
`NORTHERN STATE REALTY CORP., NORTHERN
`STATE REALTY CO., and PUFAHL REALTY CORP.,
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`Defendants.
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`ADCHEM CORP., LINCOLN PROCESSING CORP.,
`NORTHERN STATE REALTY CORP., NORTHERN
`STATE REALTY CO., and PUFAHL REALTY CORP.,
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`Third-Party Plaintiffs,
`
`
`-against-
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`THE ESTATE OF JERRY SPIEGEL, and ALAN
`EIDLER, PAMELA SPIEGEL SANDERS, and
`LISE SPIEGELWILKS, as Executors of the
`Estate of Jerry Spiegel,
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`Third-Party Defendants.
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`LINDSAY, Magistrate Judge:
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`Plaintiffs Next Millennium Realty, L.L.C. and 101 Frost Street Associations
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`(“plaintiffs”), who are the current owners of 89 Frost Street, 101 Frost Street and 770 Main Street
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`properties located in North Hempstead, New York (the “Frost Street Properties” or the “Site”),
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`commenced this action against defendants Adchem Corp., Lincoln Processing Corp.(“Lincoln”),
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`Northern State Realty Corp., Northern State Realty Co. (“NRS Co.”) and Pufahl Realty Corp.
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`(“Pufahl Realty” or the “Tenant”) (collectively “defendants”) pursuant to the Comprehensive
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 2 of 25 PageID #: 10865
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`Environmental Response Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.
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`(“CERCLA”) for contribution for past and future environmental response costs under §§ 9607
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`and 9613(f)(3)(B) and a declaratory judgment under §§ 9607 and 9613(g)(2) holding defendants
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`jointly and severally liable for future response costs to be incurred by plaintiffs. In addition,
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`plaintiffs assert a nuisance claim pursuant to state law. The parties have consented to the
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`undersigned’s jurisdiction pursuant to 28 U.S.C. § 636. Before the court are (1) plaintiffs’
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`motion for partial summary judgment pursuant to Federal Rule of Civil Procedure (“Rule”) 56;
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`and (2) defendants’ cross-motion for partial summary judgment pursuant to Rule 56. The court
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`finds the motions fully briefed and oral argument unnecessary. For the reasons set forth below,
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`plaintiffs’ motion is denied, and defendants’ cross-motion is granted.
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`BACKGROUND
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`This case arises from the release of perchloroethylene (“PCE”) and other contaminants
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`from a building located at 89 Frost Street in 1976 (the “89 Frost Street Site”). The following
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`facts, drawn from the Complaint and the parties’ respective Local Civil Rule 56.1 (“Rule 56.1”)
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`Statements of Facts, are undisputed, unless otherwise noted.
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`(1)
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`Plaintiffs’ Remediation of the Site
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`The New York State Department of Environmental Conservation (“NYSDEC”)
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`designated the Frost Street Properties as State Superfund Sites, including the 89 Frost Street Site.
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`(Defs. 56.1 Counter Stmt. ¶ 1.) The Records of Decisions (“RODs”) for the Frost Street
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`Properties identify PCE as a major contaminant of concern that has been released at the 89 Frost
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`Street Site. (Id. at ¶¶ 2-3.) Plaintiffs entered into three Consent Orders with the NYSDEC
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`agreeing to remediate the 89 Frost Street Site (“Consent Orders”). (Id. at ¶ 4.) Plaintiffs have
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 3 of 25 PageID #: 10866
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`incurred costs remediating the 89 Frost Street Site pursuant to the Consent Order obligations.
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`(Id. at ¶ 5.)
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`(2)
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`Lease Agreement for 89 Frost Street Site
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`On April 1, 1966, Jerry Spiegel (“Spiegel” or the “Landlord”), the then owner of the 89
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`Frost Street Site, entered into a lease with a purchase option with defendant Pufahl Realty, a real
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`estate management company, for the 89 Frost Street Site (the “Lease Agreement” or the
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`“Lease”). (Id. at ¶¶ 7-8.) The Lease was drafted using a standard “Blumberg Improved Gilacy
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`Form Lease” with two addenda, and the lease was for a 20-year term, which was a standard term
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`for an industrial tenant. (Defs. 56.1 Stmt. ¶¶ 56, 63-64; Pls. 56.1 Counter Stmt. ¶¶ 56, 63-64.)
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`The Lease is a typical commercial lease reflecting the usual relationship between a landlord and a
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`single industrial tenant. (Defs. 56.1 Stmt. ¶ 57.) The Lease provided that in the event the
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`Tenant remained in the premises at the expiration of the term of the lease, “such holding over
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`shall not constitute a renewal or extension of the term but such holding over shall be construed as
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`a tenancy from month to month.” (Maldonado Decl., dated January 28, 2014, Ex. 3 at ¶ 59.) The
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`lease was a triple net lease, obligating Pufahl Realty to pay utility costs, insurance, assessments
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`and taxes, except for inheritance, transfer or corporate franchise taxes. (Id. at ¶¶ 28, 30, 35; Pls.
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`56.1 Counter Stmt. ¶¶ 99-101.) At the end of the lease term, the Lease provided that Pufahl
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`Realty return the leased premises to the landlord “in good order or condition, damages by the
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`elements excepted, and reasonable wear and tear excepted.” (Pls. 56.1 Counter Stmt. ¶ 66.)
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`During the Lease term, Spiegel had the authority to assign his interests under the Lease, to
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`Plaintiffs did not provide any facts or evidence to dispute that the Lease is “typical” but
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`state that the characterization of the Lease as “typical” or “usual” by experts in this case is of no
`import. (Pls. 56.1 Counter Stmt. ¶ 57.)
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 4 of 25 PageID #: 10867
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`mortgage the underlying property, or to alienate the 89 Frost Street site. (Id. at ¶ 73.)
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`Pursuant to the terms of the Lease Agreement, the Landlord agreed to construct a
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`manufacturing facility on the 89 Frost Street Site that met the specifications approved by the
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`Tenant. (Defs. 56.1 Counter Stmt. ¶ 11.) In the event that Spiegel was unable to obtain a
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`mortgage on the Property to finance the construction of the building within six weeks of the date
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`of the Lease, the Landlord had the right to terminate the Lease. (Pls. 56.1 Counter Stmt. ¶ 76.)
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`In addition, Spiegel had the right to terminate the Lease if Pufahl Realty did not agree to any new
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`or altered terms of the Lease imposed by a mortgagee. (Id. at ¶ 77.) On May 24, 1966, Spiegel
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`obtained a mortgage from the Prudential Insurance Company (“Prudential”), and as required
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`under the Lease terms, Pufahl Realty entered into a “certificate and agreement” with the Landlord
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`and Prudential, whereby certain terms of the Lease were altered for the benefit of Prudential (the
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`“Mortgage”). (Id. at ¶ 78.) The Mortgage identified Spiegel as “the present owner in fee simple”
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`of 89 Frost Street. (Id. at ¶ 79.)
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`The Lease provided that “any and all loans . . . made by the Tenant from any one of or
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`more of the stockholders, officers and/or directors of said tenant, shall be subordinate to this
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`lease . . . and all mortgages.” (Id. at ¶ 97.) Moreover, the Lease prohibited the tenant’s interest
`3
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`from constituting a lien and stated that it remained subordinate to Spiegel’s mortgage. (Id. at ¶
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`98.)
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`Although Pufahl Realty could assign the Lease or sublease the premises, it could do so
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`The parties dispute whether the building at the 89 Frost Street Site was constructed prior
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`to the execution of the Lease Purchase Agreement. (Id. at ¶ 11; Pls. 56.1 Stmt. ¶ 11.)
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`This provision was made self-executing and appointed Spiegel as Pufahl Realty’s
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`“attorney in fact.” (Id.)
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 5 of 25 PageID #: 10868
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`subject to the following conditions: (i) the Tenant remained liable under the original Lease for
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`the entire term; (ii) any assignee assumed all Lease conditions; (iii) any assignment was
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`recordable. (Id. at ¶¶ 104-05.) In addition, the Mortgage required that the Tenant assign the
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`lease to its purchaser or successor in the event that all or substantially all of the Tenant’s assets or
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`business were sold or transferred. (Id. at ¶¶ 80, 106.)
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`During the first two Lease years, Spiegel was obligated to make all repairs to the building
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`and all enumerated structural repairs thereafter, except those caused by the tenant. (Id. at ¶ 94.)
`4
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`Pufahl Realty was obligated to make all non-structural repairs commencing in the third year of
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`the Lease; if the tenant failed to do so, Spiegel could enter the premises and perform repairs at
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`the tenant’s expense or declare a default. (Id. at ¶ 95.) The Lease also granted (i) Spiegel the
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`right to enter the premises to make repairs; (ii) Spiegel and his agents the right to enter the
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`premises at all reasonable hours for the purposes of inspection and making repairs; and (iii)
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`nineteen years and three months into the lease term, the right to enter the premises to advertise
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`the building for sale and rent and to show the Site to prospective purchasers or tenants. (Id. at ¶¶
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`88-90.)
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`The Lease permitted the Tenant to “use and occupy the premises only for the lamination
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`and coating of papers, textiles and fabrics and for general manufacturing purposes not in
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`violation of” local zoning. (Id. at ¶ 59.) The Lease contained certain restrictions regarding the
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`Tenant’s occupancy of 89 Frost Street. For example, the Lease prohibited Pufahl Realty (i) from
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`making alterations to the premises without the written consent of the Landlord; (ii) from
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`Pufahl Realty was originally permitted to make repairs that the Landlord should have
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`made but had failed to make, after giving fifteen days’ written notice to Spiegel; however this
`provision was deleted by the Mortgage agreement. (Id. at ¶ 96.)
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 6 of 25 PageID #: 10869
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`committing waste or injury to the premises; (iii) from encumbering or obstructing the sidewalks
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`or hallways, doing anything that would increase the cost of fire insurance or posting signs except
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`in compliance with Spiegel’s terms; (iv) from performing or allowing any other person to
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`perform any activity that would increase the cost of fire insurance; and required the Tenant to (v)
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`“keep the grass trimmed and maintain the grounds in presentable condition and . . . keep
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`sidewalks and entrance ways unobstructed;” and (vi) to keep the premises free and clear of all
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`cuttings, rubbish, waste paper, ice and snow and other waste material. (Id. at ¶¶ 67, 70, 71, 72,
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`75.)
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`Pufahl Realty had the right to remove improvements to the premises subject to the
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`requirements that (i) Spiegel be informed, in writing, via certified or registered mail, 30 days in
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`advance of the proposed removal, and (ii) Pufahl Realty first deposit with the Landlord any
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`increase in the security deposit necessary to cover the costs of restoring the premises after
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`removal of improvements. (Id. at ¶ 68.) The Lease further provided that any such increases in
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`the security deposit “shall in no way release the Tenant from the obligations and liability for
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`restoration and repair of the premises.” (Id.)
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`The Lease required Pufahl Realty to maintain liability and boiler insurance protecting the
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`Landlord and to reimburse Spiegel for fire insurance premiums on 89 Frost Street for the
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`Landlord’s benefit in the form of additional rent. (Id. at ¶¶ 102-03.) Pufahl Realty’s failure to do
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`so would constitute a default and permit the Spiegel to terminate the lease. (Id.) Pursuant to its
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`terms, Spiegel could also terminate the Lease (i) in case of fire or other damage to the building;
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`and in the event that the building was destroyed, the Lease permitted the Landlord, at his sole
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`discretion, to rebuild the premises or to terminate the Lease; (ii) upon total condemnation of the
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 7 of 25 PageID #: 10870
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`demised premises, or condemnation of a portion of the demised premises that substantially
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`affected the Tenant’s use of its equipment and machinery ; and (iii) upon any default of the
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`Tenant. (Id. at ¶¶ 81, 82, 85.) To enforce its terms, the Lease provided Spiegel the rights to
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`enter and inspect the premises, declare tenant defaults and to use summary proceedings or
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`ejectment against the lessees. (Id. at ¶ 85.)
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`The Lease contained an option to purchase the premises in the twelfth year of the Lease
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`provided that the tenant had “fully and completely performed all of the [Lease] terms and
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`conditions.” (Id. at ¶¶ 91-93.)
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`(3)
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`Operations at the 89 Frost Street Site
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`Shortly after the Property’s certificate of occupancy was issued in August 1966, Lincoln ,8
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`a textile processor, subleased and operated at 89 Frost Street until about 1972. (Id. at ¶¶ 107-09.)
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`On March 25, 1969, Pufahl Realty changed its name to Northern State Realty Corp., and on May
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`The Lease provided that, in the event of such condemnation and termination, Pufahl
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`Realty lost all interest in the premises without any part of the condemnation award, and in the
`instance of condemnation, Pufahl Realty “shall have no claim against the [L]andlord for the
`value of any unexpired term in said [L]ease.” (Id. at 82.)
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`In the event of a default, the Lease provided that Spiegel the right to re-enter the
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`premises “by force, summary proceeding or otherwise and to remove all persons therefrom
`without being liable to prosecution . . . and the Tenant . . . waives the service of notice in
`writing.” (Id. at ¶ 86.)
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`Spiegel set an option price of $490,000 based on his calculation that he would have
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`substantially recouped his Site investment in the twelfth Lease year. (Id.)
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`Charles Pufahl, Joseph Pufahl and Herman Pufahl (collectively the “Pufahl Brothers”)
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`were the shareholders, officers and directors of Lincoln from approximately 1961 until the
`dissolution of Lincoln in approximately 1977. (Id. at ¶ 13.)
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 8 of 25 PageID #: 10871
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`21, 1973, Northern State Realty Corp. assigned the Lease to NSR Co. , a general partnership that
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`managed real property. (Defs. 56.1 Counter Stmt. ¶¶ 9-10.) The Pufahl Brothers were the
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`partners of NSR Co. from its formation in 1973 until the death of Herman Pufahl in 1995. (Id. at
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`¶ 13.)
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`On May 22, 1973, NSR Co. subleased 89 Frost Street to 89 Frost Street Leasing Co. for a
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`term to commence June 1, 1973 (the “Sublease”). (Pls. 56.1 Counter Stmt. ¶ 15.) Pursuant to a
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`rider to the Sublease, 89 Frost Street was occupied by Marvex Processing and Finishing
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`Corporation (“Marvex”), a non-party dissolved corporation, from 1973-76. (Id.) Marvex
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`installed a dry cleaning machine at the site that was connected to an above-ground storage tank
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`that contained PCE, which was regularly refilled via tanker truck delivery. (Id. at ¶¶ 16, 122.)
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`Marvex’s dry cleaning machine was connected to a solvent still, and Marvex stored 55-gallon
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`drums at the site during the term of the Sublease. (Id. at ¶¶ 123-24.)
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`On May 30, 1976, there was a fire at 89 Frost Street which destroyed the manufacturing
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`area of the site, including Marvex’s dry cleaning machine (the “1976 Fire”). (Id. at ¶¶ 128-29.)
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`The PCE released in the fire was released to the subsurface at 89 Frost Street via floor drains.
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`(Id. at ¶ 131.) Marvex’s foreman was convicted of arson in connection with the 1976 fire. (Id.
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`at ¶ 133.) It is undisputed that either through its manufacturing activity or following the fire,
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`Marvex contributed PCE to the 89 Frost Street Site.
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`(4)
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`Post Fire Litigation and Release
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`The 1976 Fire occurred in the tenth year of the Lease, two years before the Tenant’s
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`Defendants Pufahl Realty, Northern State Realty Corp. and NSR Co. are referred
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`together as “Lessee Defendants.”
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 9 of 25 PageID #: 10872
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`option to purchase 89 Frost Street vested. (Id. at ¶ 134.) On June 24, 1976, Spiegel sent NSR
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`Co. a letter giving notice that the Lease had terminated on May 30, 1976 pursuant to its terms.
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`(Id. at ¶ 135.) In addition, Spiegel sent a letter to Marvex informing Marvex that the Lease had
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`been terminated and demanding that Marvex remove its property from the premises. (Id.) On
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`July 1, 1976, NSR Co. sued Spiegel and Allendale Insurance Company (the issuer of the fire
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`insurance policy for the 89 Frost Street Site), seeking a declaration that the Lease purchase option
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`had not been terminated or an order directing Allendale Insurance Company to either pay the
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`insurance proceeds to NSR Co. or to Spiegel with the stipulation that Spiegel would use the
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`proceeds to rebuild 89 Frost Street. (Id. ¶¶ 137-38.) In 1977, the litigation settled with the
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`execution of six collateral agreements between the parties, Northern State Realty Corp., Lincoln
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`and Adchem. (Id. at ¶ 145.)
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` The settlement provided in relevant part for (i) the termination of
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`the Lease; (ii) Allendale Insurance Company to issue the $855,000 in fire insurance proceeds to
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`Spiegel; (iii) payment of $75,000 to NSR Co. by Spiegel; (iv) five-year extensions of the leases
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`on two other properties; and (v) a release from Spiegel and his successors and assigns. (Id. ¶¶
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`145-152.)
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`The release executed by Spiegel released defendants and their
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`respective heirs, executors, administrators, successors and assigns from all
`actions, causes of action, suits, debts, dues, sums of money, account reckonings,
`bonds, bills, specialties, covenants, contracts, controversies, agreements,
`promises, variances, trespasses, damages, judgments, extents, executions, claims,
`and demands, whatsoever, in law, admiralty or equity, which against the
`Releasees, the Releasor’s heirs, executors, administrators, successors and assigns
`ever had, now have or hereafter can, shall or may, have for, upon or by reason of
`any matter, cause or thing whatsoever from the beginning of the world to the day
`of the date of this Release, arising out of and in connection with a certain lease
`dated April 1, 1966 made between JERRY SPIEGEL, as landlord and PUFAHL
`REALTY CORP., as tenant covering the premises described in Schedule A
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 10 of 25 PageID #: 10873
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`annexed to said lease and known as and by number 89 Frost Street, New Cassel,
`Town of Hempstead, County of Nassau, State of New York, including but not
`limited to a certain option granted to the tenant to purchase said property as more
`fully provided in paragraph 65 of said lease an any and all other terms, covenants,
`conditions and obligations contained in said lease and with respect to a certain
`action commenced in the Supreme Court, Nassau County, by NORTHERN
`STATE REALTY CO., plaintiff against JERRY SPIEGEL, Allendale Mutual
`Insurance Company and Factory Mutual Insurance Company, defendants bearing
`index number 10154/76, which action settled on April 20, 1977 before Mr. Justice
`William J. Sullivan, presiding in Special Term Part V-B of said Court, pursuant to
`a stipulation of settlement entered into and consented to by all parties to the
`aforementioned action in open Court before Justice Sullivan.
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`(Id. ¶ 147.)
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`Spiegel reconstructed the building at 89 Frost Street in 1978. (Id. ¶ 153.) Spiegel and/or
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`his successors have continued to lease the new building at the site until 1998 when it was
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`demolished to make way for a department store. (Id. ¶¶ 154-55.)
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`Plaintiffs commenced the instant action on November 24, 2003 in the United States
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`District Court for the Eastern District of New York (Feuerstein, D.J.) against defendants (1)
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`seeking response costs under § 113(f)(1) of CERCLA for the 89 Frost Street Site; 101 Frost
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`Street Site; and 770 Main Street Site; (2) contribution costs incurred pursuant to the terms of the
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`Consent Orders pursuant to § 113(f)(3)(B); (3) a declaratory judgment pursuant to § 113(g)(2)
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`State of New York et al. v. Next Millenium Realty, LLC et al., CV 06-1133 (SJF)(MLO)
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`was consolidated into lead case, Next Millenium Realty, LLC et al. v. Adchem Corp. et al., CV
`03-5985 on May 4, 2006 as related actions. Order, dated May 4, 2006 (Feuerstein, D.J.). Case
`number CV 06-1133 was administratively closed by Order, dated May 4, 2006. Id. Thereafter,
`the two actions were severed for all purposes on September 8, 2010, and the Clerk of the Court
`was directed to reopen the case entitled State of New York et al. v. Next Millenium Realty, LLC et
`al., under docket number CV 06-1133. Order, dated September 8, 2010 (Feuerstein, D.J.).
`Thereafter, Magistrate Judge Orenstein retired and the undersigned was assigned as the
`magistrate judge on the cases. On July 26, 2012, the parties in the case entitled Next Millenium
`Realty, LLC et al. v. Adchem Corp. et al., CV 03-5985 consented to the undersigned’s
`jurisdiction pursuant to 28 U.S.C. § 636 and the case was reassigned for all purposes. (Docket
`Entry Nos. 646, 648.)
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 11 of 25 PageID #: 10874
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`holding defendants liable to past, current and future cleanup costs for the 89 Frost Street Site;
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`and (4) damages for common law nuisance for the three sites. (Compl., dated November 24,
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`2003). Plaintiff amended the Complaint to add new parties on May 20, 2008. (Am. Compl.,
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`dated May 20, 2008.) Although plaintiffs filed a motion for leave to amend the complaint and
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`proposed a Second Amended Complaint on February 1, 2008, the court neither accepted nor
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`approved it, and it was denied as moot. (Docket Entry Nos. 249, 644.) The parties entered a
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`Stipulation wherein the plaintiffs agreed inter alia to file an amended complaint which would
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`limit the recovery sought to response costs and damages arising from alleged groundwater
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`contamination on the Frost Street Sites and dismiss all of their claims against the Upgradient
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`Defendants. (Docket Entry No. 644.) Plaintiffs filed a Third Amended Complaint on July 12,
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`2012. (Third Am. Compl., dated July 12, 2012.)
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`Plaintiffs now move for partial summary judgment on the First, Second and Third Causes
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`of Action contained in the Third Amended Complaint pursuant to Fed. R. Civ. P. 56 for
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`judgment on liability against the Lessee Defendants as “owners” under CERCLA, 42 U.S.C. §
`11
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`9601 et seq. Defendants now cross move for partial summary judgment on the First, Second and
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`Third Causes of Action contained in the Third Amended Complaint pursuant to Fed. R. Civ. P.
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`56 for judgment dismissing plaintiffs’ claims that the Lessee Defendants are liable as “owners”
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`under CERCLA.
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`Plaintiffs’ motion specifies that it seeks a judgment on liability against defendant NSR
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`Co., but notes that [a]ll defendants are related entities with common beneficial ownership,
`management and involvement.” (Pl. Mem. of Law, at 2 & n.1.) Moreover, the Third Amended
`Complaint refers to the defendants as having “sufficient indicia of ownership to be de facto
`owners under CERCLA” by virtue of the lease agreement. (Third Am. Compl., ¶ 51.) Thus, for
`clarity in establishing CERCLA liability, the court will refer to the appropriate defendants as the
`Lessee Defendants.
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 12 of 25 PageID #: 10875
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`DISCUSSION
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`I.
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`Applicable Law and Legal Standards
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`A.
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`Summary Judgment
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`Summary judgment is proper only “if the pleadings, depositions, answers to
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`interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
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`genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
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`of law.” Fed. R. Civ. P. 56(c). “An issue of fact is genuine if ‘the evidence is such that a
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`reasonable jury could return a verdict for the nonmoving party.’ A fact is material if it ‘might
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`affect the outcome of the suit under the governing law.’” Roe v. City of Waterbury, 542 F.3d 31,
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`35 (2d Cir. 2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In
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`determining whether an issue is genuine, “[t]he inferences to be drawn from the underlying
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`affidavits, exhibits, interrogatory answers, and depositions must be viewed in the light most
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`favorable to the party opposing the motion,” Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d
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`Cir. 1995) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); see
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`Dickerson v. Napolitano, 604 F.3d 732, 740 (2d Cir. 2010) (same), and “when cross-motions for
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`summary judgment are filed, against the party whose motion is under consideration,” Tindall v.
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`Poultney High Sch. Dist., 414 F.3d 281, 284 (2d Cir. 2003) (internal quotation marks and
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`citations omitted)).
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`Once the moving party has met its burden, “the nonmoving party must come forward with
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`‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v.
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`Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting FED. R. CIV. P. 56(e)); see also Wright v.
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`Goord, 554 F.3d 255, 266 (2d Cir. 2009). The nonmoving party cannot survive summary
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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 13 of 25 PageID #: 10876
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`judgment by casting mere “metaphysical doubt” upon the evidence produced by the moving
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`party. Matsushita, 475 U.S. at 586. Summary judgment is appropriate when the moving party
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`can show that “little or no evidence may be found in support of the nonmoving party’s case.”
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`Gallo v. Prudential Residential Servs., Ltd., 22 F.3d 1219, 1223-24 (2d Cir. 1994) (citations
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`omitted). However, “the judge’s role in reviewing a motion for summary judgment is not to
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`weigh the evidence and determine the truth of the matter but to determine whether there is a
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`genuine issue for trial.” Anderson, 477 U.S. at 249. “When no rational jury could find in favor
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`of the nonmoving party because the evidence to support its case is so slight, there is no genuine
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`issue of material fact and a grant of summary judgment is proper.” Gallo, 22 F.3d at 1224.
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`B.
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`CERCLA
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`“CERCLA is a comprehensive federal law governing the remediation of sites
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`contaminated with pollutants.” Consolidated Edison Co. of N.Y. v. UGI Utilities, Inc., 423 F.3d
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`90, 94 (2d Cir. 2005). CERCLA’s “primary purposes are axiomatic: (1) to encourage the timely
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`cleanup of hazardous waste sites; and (2) to place the cost of that cleanup on those responsible
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`for creating or maintaining the hazardous condition.” W.R. Grace & Co.-Conn. v. Zotos Int’l,
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`Inc.. 559 F.3d 85, 88 (2d Cir. 2009) (internal quotation marks and citations omitted). “To
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`effectuate these goals, CERCLA looks backward in time and imposes wide-ranging liability.”
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`Marsh v. Rosenbloom, 499 F.3d 165, 178 (2d Cir. 2007). Thus, absent the availability of one of
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`CERCLA’s affirmative defenses, “the statute imposes strict liability on owners and facility
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`operators, on persons who arranged for the disposal or treatment of hazardous waste at the
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`relevant site, and on persons who transported hazardous waste to the site,” often collectively
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`13
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`

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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 14 of 25 PageID #: 10877
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`referred to as potentially responsible parties.
`12
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` Price Trucking Corp. v. Norampac Indus., Inc.,
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`748 F.3d 75, 79 (2d Cir. 2014) (citing 48 U.S.C. § 9607(a)(1)-(4)). CERCLA, however,
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`“provide[s] property owners an avenue of reprieve; it allows them to seek reimbursement of their
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`cleanup costs from others in the chain of title or from certain polluters – the so-called potentially
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`responsible parties.” Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 120
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`(2d Cir. 2010). For purposes of the within cross motions for partial summary judgment, the
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`relevant avenue of reprieve is 42 U.S.C. § 9607(a)(4)(A)-(B), which provides for cost recovery
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`actions by private parties against potentially responsible parties. 42 U.S.C. § 9607(a).
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`Under CERCLA, a person is liable as a past “owner” or “operator” if he “at the time of
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`disposal of any hazardous substance owned or operated any facility at which such hazardous
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`substances were disposed of.” Id. § 9607(a)(2). The term “owner or operator” is unhelpfully
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`defined “only by tautology . . . as ‘any person owning or operating’ a facility.” United States v.
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`Bestfoods, 524 U.S. 51, 56 (1998) (quoting 42 U.S.C. § 9601(20)(A)(ii)). “It is settled in this
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`12
`
`CERCLA defines four classes of persons as potentially responsible parties:
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`(1) the owner and operator of a vessel or facility, (2) any person who at the time of
`disposal of any hazardous substance owned or operated any facility at which such
`hazardous substances were disposed of, (3) any person who by contract,
`agreement, or otherwise arranged for disposal or treatment, or arranged with a
`transporter for transport for disposal or treatment, of hazardous substances owned
`or possessed by such person, by any other party or entity, at any facility or
`incineration vessel owned or operated by another party or entity and containing
`such hazardous substances, and (4) any person who accepts or accepted any
`hazardous substances for transport to disposal or treatment facilities, incineration
`vessels or sites selected by such person from which there is a release, or a
`threatened release which causes the incurrence of response costs, of a hazardous
`substance.
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`42 U.S.C. § 9607(a)(1)-(4).
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`14
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`

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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 15 of 25 PageID #: 10878
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`circuit that owner and operator liability should be treated separately.” Commander Oil Corp. v.
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`Barlo Equipment Corp., 215 F.3d 321, 328 (2d Cir. 2000); cf. Bestfoods, 524 U.S. at 64 (“If the
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`Act rested liability entirely on ownership of a polluting facility, this opinion might end here; but
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`CERCLA liability may turn on operation as well as ownership”).
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`“To make out a prima facie case for liability under the Act, a plaintiff must establish that:
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`(1) the defendant is an ‘owner’ or is otherwise liable under 42 U.S.C. § 9607(a)(1)-(4); (2) the
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`site is a ‘facility’ as defined by 42 U.S.C. § 9601(9); (3) there has been a release or threatened
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`release of hazardous substances at the facility; (4) the plaintiff incurred costs responding to the
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`release or the threat; and (5) the costs and response conform to the National Contingency Plan.”
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`Price Tracking Corp., 748 F.3d at 79 -80 (citations omitted). For purposes of the parties’ cross
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`motions for partial summary judgment, the only contested issue is whether the Lessee Defendants
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`are “owners” within the meaning of 42 U.S.C. § 9607(a)(1).
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`II.
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`Plaintiffs’ and Defendants’ Cross Motions for Partial Summary Judgment
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`Plaintiffs contend that the Lessee Defendants had sufficient indicia of ownership pursuant
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`to the terms of the Lease to be liable as de facto “owners” under CERCLA for clean-up costs
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`caused by the actions of the Subtenant.
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`13
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` Defendants disagree and maintain that the Lease was a
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`typical commercial lease and as such their status as a lessee/sublessor did not make them liable
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`as de facto “owners” within the meaning of CERCLA. Alternatively, defendants assert that even
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`if the Lease did give rise to owner liability, Spiegel released defendants from CERCLA liability.
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`Both parties agree that the Second Circuit’s decision in Commander Oil Corp. v. Barlo Equip.
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`Plaintiffs also allege that defendants are liable as “operators” under 42 U.S.C. § 9607(a).
`13
`Although defendants deny such allegations, neither plaintiffs nor defendants have moved for
`summary judgment on that issue at this time.
`
`15
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`

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`Case 2:03-cv-05985-ARL Document 704 Filed 10/22/14 Page 16 of 25 PageID #: 10879
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`Corp., 215 F.3d 321 (2d Cir. 2000) is dispositive of this issue.
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`In Commander Oil, the Second Circuit analyzed as a question of first impression,
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`whether, and under what circumstances, a lessee/sublessor may be held liable as an “owner”
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`under CERCLA for contamination that a sublessee caused. 215 F.3d at 330-31. In that case,
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`Commander Oil owned two lots in Nassau County. Lot 7A was an office and warehouse space,
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`and Lot 7B was a fuel depot. Id. at 324. Commander Oil leased Lot 7A to Barlo Equipment
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`Corp. (“Barlo”) and Lot 7B to Pasley Solvents & Chemicals (“Pasley”). Id. at 325. Commander
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`Oil ther