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55 Motor Ave. Co. v. Liberty Indus. Finishing Corp.

ELR Citation: 26 ELR 20087
Nos. No. CV 91-0968, 885 F. Supp. 410/(E.D.N.Y., 12/29/1994)

The court holds that it has jurisdiction over state-law claims that the current owner of contaminated property brought against several past owners, including the U.S. government, for nuisance, trespass, strict liability, contribution, restitution, and indemnity, and rules on several motions to dismiss. The court first holds that the U.S. government has waived its sovereign immunity and that there is a basis for the assertion of federal jurisdiction over all of the state-law tort and implied contract claims except for the strict liability claim. The Reconstruction Finance Corporation Act (RFCA) created the Reconstruction Finance Corporation (RFC), which is the government entity that once owned the site, and gave the RFC the authority to "sue and be sued" in any state or federal court of competent jurisdiction. The court notes that the jurisdiction that the "sue and be sued" clause confers is subject to the exclusive terms of the Federal Tort Claims Act (FTCA). The court holds that a letter that the current owners sent to the U.S. Department of Justice (DOJ) satisfies the FTCA's notice requirements at 28 U.S.C. §2675. The administrative claim need not satisfy formal pleading requirements. The court holds that because the notice of claim requirements are jurisdictional in nature, a complaint must allege presentment of the claim. The owners' complaint is deficient in that it fails to allege compliance with §2675; however, this deficiency is easily cured by amending the complaint. The court holds that the letter's statement of intent to sue in two weeks, rather than the six months that §2675 specifies, does not nullify the claim. But the fact that the current owner filed suit before the six months expired is problematic. The court holds that because the six months have long since passed, it would be an exercise of form over substance to require the owners to refile their tort claims. The court holds that a letter from the owners' attorney stating that he represents the owners and attaching a complaint that he intended to file on their behalf satisfies 28 C.F.R. §14.2's requirement that the notice present evidence of authority to present a claim on behalf of the claimant as agent. The statement of damages in any notice of claim must contain a sum certain, and the language in the notice letter requesting the government to pay undetermined future response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is not sufficiently definite to permit collection of a judgment in excess of the $609,100 the owners specifically allege they have incurred. The court thus limits the owners' claims for response costs to $609,100. The court next holds that the tort claims against the United States need not be dismissed even though the owners filed their notice of claim with the DOJ rather than the General Services Administration, because 28 C.F.R. §14.2 provides that where a claim is presented to the wrong agency, that agency shall transfer the claim to the appropriate agency. In sum, the court holds that the complaint attached to the notice letter satisfies the notice requirements set forth in 28 U.S.C. §2875 and 28 C.F.R. §14.2. Regarding the strict liability claim, the court holds that under the FTCA, the United States may only be held liable for negligent or wrongful acts or omissions of its employees. Following the reasoning of other cases, the court further holds that the strict liability claim cannot be maintained under the "sue and be sued" clause of the RFCA. The court next holds that the "sue and be sued" clause confers on the district court subject matter jurisdiction over the claims for restitution and equitable indemnity.

The court next addresses a private past owner's motion to dismiss the state-law claims against it. The court holds that it has jurisdiction over the claims. The current owners' federal and state claims all arise out of the same set of facts, including the disposal of hazardous waste on the property. Moreover, several courts in this circuit have recognized, in similar CERCLA cases, that they had the power to hear pendent state-law claims. The court next holds that it will exercise its jurisdiction to hear the claims because the U.S. government is a defendant in this action. Because tort claims against the government can only be heard in federal court, that is the only place where all of the current owners' claims can be heard together. The court next dismisses the current owners' claims against the past owner for negligent and intentional nuisance. The law of nuisance cannot be expanded to permit recovery where current owners of property seek recovery against a prior lessee of the land for a condition created on the land during the lessee's tenancy. In such circumstances, the offending condition is not present on the defendant's land and the conflict does not involve neighboring contemporaneous uses. The court declines to extend New York nuisance law to claims made by owners against prior owners where New York courts have yet to adopt such a theory of liability. The court next dismisses the current owners' strict liability claim against the prior owner. The one decision cited that allowed such a claim is recognized as noteworthy for its expansion of the doctrine of strict liability. The court declines to apply the doctrine of strict liability in this type of action in the absence of any clear indication or trend in New York case law to the suggesting that the New York Court of Appeals would do so. The court next dismisses the current owners' claim for continuing trespass. The court does not believe that New York courts would eliminate the basic element of a trespass claim, namely, the invasion of the property of another. The court notes that the majority of jurisdictions to address such claims have rejected them for this reason. The court next holds that the allegations that one owner expended sums of money to remedy contamination created and maintained by defendants in violation of environmental and common law, and that the actions it took were immediately necessary to satisfy the requirements of public health, facially set forth a claim for restitution. The court holds that defendants have failed to provide a basis to dismiss the restitution claim. It is not being sought merely as an element of damages of the dismissed claims of private nuisance, strict liability, or trespass, and the cases defendants cite do not support the proposition that the doctrine of caveat emptor bars the claim. The court next holds that the current owners have stated a claim for equitable indemnity. According to the complaint, the current owners were not at fault in creating the condition that now gives rise to the damages incurred as a result of the necessity to clean up the contamination. Their duty to clean up the premises does not equate to a fault that would bar a claim of indemnity. The court also holds, however, that New York law limits restitution and indemnity claims to recovery of expenses that have already been incurred. Accordingly, to the extent the current owners seek recovery of future costs, they are precluded from recovering these damages. Finally, the court refuses to dismiss the cross-claims against the past owner of two other private past owners for indemnification and contribution, and grants a motion for a more definite statement as to those claims.

Counsel for Plaintiffs
Deborah Goldberg
Arnold & Porter
399 Park Ave., New York NY 10022
(212) 715-1000

Counsel for Defendants
Michael Scher
One Old Country Rd., Carle Place NY 11514
(516) 746-5040