U.S. v. 175 Inwood Associates Llp.

Page 213

330 F.Supp.2d 213

UNITED STATES of America, Plaintiff, v. 175 INWOOD ASSOCIATES LLP, 175 Roger Corp., Abraham Woldiger, Abraham Taub, Peter Hoffman (Pinchas), Defendants.

No. 96-CV-1471DRHETB.

United States District Court, E.D. New York.

August 6, 2004.

United States Attorney's Office for the Eastern District of New York by Kevin P. Mulry, Esq., Stanley Alpert, Esq., Central Islip, NY, for Plaintiff.

Joel Kenneth Dranove, Esq., New York City, for Defendants.

MEMORANDUM & ORDER

HURLEY, District Judge.

This is a civil action brought pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, 42 U.S.C. § 9601, et seq. Section 107(a) of CERCLA allows the United States to move rapidly to respond to the release or threatened release of hazardous substances by permitting the government to spend monies from a "Superfund" established by Congress to finance the initial cost of such response actions. In relevant part, the United States brings this action against 175 Inwood Associates, 175 Roger Corporation, Abraham Woldiger, Abraham Taub, and Peter (Pinchas) Hoffman ("Defendants") based on their liability under CERCLA. The United States seeks to recover costs incurred by the Environmental Protection Agency ("EPA") in response to the release or threat of release of hazardous substances at 175 Roger Avenue, Inwood, New York ("Inwood Site" or the "Site"). The United States also seeks to recover civil damages from the Defendants for failure to comply with (1) an Administrative Order issued by the EPA pursuant to Section 106(a) of CERCLA, 42 U.S.C. § 9606(a); (2) an Access Order issued by the EPA pursuant to Sections 104(e)(3) and (e)(5) of CERCLA, 42 U.S.C. § 9604(e)(3) and (e)(5); and (3) multiple Requests for Information issued by the EPA pursuant to Section 104(e)(2) of CERCLA, 42 U.S.C. § 9604(e)(2).

The Complaint was filed on March 26, 1996. This case received a non-jury trial before the undersigned on November 6, 2003. The parties submitted proposed findings of fact and conclusions of law after the trial. All such post-trial submissions, including the Defendants' reply and the government's sur-reply, were received in chambers by March 10, 2004.

This decision serves to provide the Court's Findings of Fact and Conclusions of Law pursuant to Federal Rule of Civil Procedure 52.

I. UNDISPUTED FACTS.

The following undisputed facts were set forth in the Pretrial Order Statement of Stipulated Facts filed June 29, 1999 ("Pretrial Order"), the evidence received in connection with the November 6, 2003 non-jury trial, and the proposed findings of fact submitted by both parties after the trial. The Court will identify several remaining disputed facts while recounting the undisputed facts. These identified disputed facts will be discussed later in the instant order.

175 Inwood Associates is a limited liability partnership under New York Partnership law. Plaintiff's Exhibit ("Pl.'s Ex.") 84. The partnership was established for the express purpose of buying property at the Inwood Site, which contained a commercial building. Pl.'s Ex. 84; Transcript of trial dated November 6, 2003 ("Tr.") 93. Under the original partnership agreement, executed in November 1988, Abraham Woldiger and Peter Hoffman were designated as general partners, and Abraham Taub was designated as the sole limited partner. Pl.'s Ex. 84; Defendants' Exhibit ("Defs.' Ex.") K. In order to finance the purchase of the Inwood Site, interests in the partnership were assigned to various investors who became limited partners. Defs.' Ex. K. In early 1989, Woldiger, Taub, and Hoffman executed an amended partnership agreement that named all three as general partners of 175 Inwood Associates. Defs.' Ex. K; Tr. 93. Currently, 175 Inwood Associates has no assets. Tr. 102, 115-16. The question of whether liability attaches individually to Woldiger, Taub, and Hoffman as general partners of 175 Inwood Associates is governed by New York Partnership law and will be addressed in Part II of this Order.

In January 1989, 175 Inwood Associates purchased the Inwood Site, subject to a $3.63 million mortgage held by Citytrust. Pretrial Order ¶ 1. Prior to agreeing to a contract of sale for the property, and in order to protect that entity's security interest in the Inwood Site, Citytrust required that Hoffman be a general partner of 175 Inwood Associates as discussed supra. Tr. 78. In addition, Woldiger and Hoffman also gave personal guarantees to Citytrust in order to complete the transaction. Tr. 77, 93. At the time of the purchase, Woldiger believed the property was worth approximately $4 million. Tr. 94.

When 175 Inwood Associates took title to the Inwood Site in January 1989, the main tenant in the building was Rockaway Metal Products, Inc. ("Rockaway Metal"). Pl.'s Ex. 19; Tr. 115. Rockaway Metal leased the premises from the previous owner of the building, Einbinder Realty ("Einbinder"), in May 1987. Defs.' Ex. D; Pl.'s Ex. 19. Rockaway Metal's lease was assigned to 175 Inwood Associates when the partnership took title to the Site in January 1989. Pl.'s Ex. 19; Defs.' Ex. K.

Rockaway Metal was in the business of manufacturing steel partitions for offices, and it conducted its manufacturing operation at the Inwood Site. Tr. 94, 95. Prior to the purchase of the Site by 175 Inwood Associates, Rockaway Metal had experienced significant financial difficulties. By way of example, Rockaway Metal filed for Chapter 11 Bankruptcy in October 1987. Defs.' Ex. C. The following year, Rockaway Metal sold a portion of its business known as the "storage box division." Defs.' Ex. D. As a result of this sale, Rockaway Metal no longer required all of the demised premises at the Inwood Site and in October 1988 it agreed to a partial surrender of its lease. Defs.' Ex. D. Einbinder, who at that point was still the owner of the Inwood Site and Rockaway Metal's landlord, subleased the surrendered space to Elg Haniel Trading ("Elg Haniel"), a steel coil trader. Tr. 110. On November 13, 1988, Elg Haniel wrote a letter to Einbinder complaining that an oven previously used by Rockaway Metal had not been removed from the subleased space. Defs.' Ex. F. Defendants claim that Rockaway Metal's partial surrender of its lease and Elg Haniel's November 13 letter show that Rockaway Metal had ceased operating at the Site prior to 175 Inwood Associates' purchase of the property, but the government disputes this claim. The Court will address this dispute later in the instant order.

At the closing in January 1989, 175 Inwood Associates received an estoppel certificate from Einbinder, which stated that Rockaway Metal was a tenant on the premises and that there were no problems with the property. Defs.' Ex. L; Tr. 124. Prior to the closing, both Woldiger and Taub visited the Site, Tr. 93, 108, 114, but 175 Inwood Associates did not retain any consultants or engineers to give opinions on the property, nor were any environmental studies done on the property, Tr. 93.

Shortly after taking title to the Site, 175 Inwood Associates discovered that there was an environmental problem associated with Rockaway Metal's manufacturing operation. Tr. 78, 98. In May 1989, four months after 175 Inwood Associates closed on the property, Rockaway Metal "abandoned the Inwood Site, leaving behind hazardous substance-containing wastes generated in its manufacturing operations." Pretrial Order ¶ 2. The waste left at the Inwood Site by Rockaway Metal was contained in over two hundred barrels, an above-ground tank, and underground storage tanks. Tr. 97; Pl.'s Ex. 24. At some point after Rockaway Metal abandoned the Inwood Site, Hoffman discussed environmental problems at the Site with Peter Johnson, a vice president at Citytrust, Tr. 78-79; Pl.'s Exs. 77, 80, 85, but left the problem to be dealt with by Woldiger and Taub who were the day-to-day managers of the property. Tr. 79-80.

Additionally, in its last several months of tenancy at the Inwood Site during early 1989, Rockaway Metal bounced several rent checks and ceased paying rent altogether soon after 175 Inwood Associates purchased the Inwood Site. Tr. 109, 115. With no rent coming in from its primary tenant, 175 Inwood Associates also began experiencing financial problems, and it stopped making mortgage payments to Citytrust soon after buying the Inwood Site. Tr. 98. Rockaway Metal abandoned the Inwood Site in May 1989. Pretrial Order ¶ 2. In October 1989, Citytrust commenced a foreclosure action against 175 Inwood Associates. Pretrial Order ¶ 3.

In 1990, Citytrust had an environmental study prepared by Geraghty and Miller, an environmental consulting firm, concerning the Inwood Site. Pl.'s Ex. 88; Tr. 98. In the fall of 1990, both Hoffman and Woldiger received the results of Geraghty and Miller's study. Pl.'s Exs. 83, 88; Tr. 80-81, 98-99. Geraghty and Miller's assessment indicated that there were several environmental problems at the Inwood Site stemming from the waste left behind by Rockaway Metal that required remediation. Pl.'s Ex. 83. Geraghty and Miller, in an October 18, 1990 letter to Woldiger, described three activities as being most critical with respect to cleanup of the Inwood Site: (1) removal of chemical wastes and contaminated equipment; (2) removal of four underground storage tanks and one above ground tanker truck; and (3) an intrusive sampling program to determine the extent of soil and/or ground water contamination. Pl.'s Ex. 88. Hoffman made handwritten notations on a letter from Citytrust written to Hoffman and Woldiger, dated October 22, 1990, which characterized Geraghty and Miller's proposed plan as "very expensive" and "not practical." Pl.'s Ex. 85; Tr. 81-82.

On December 12, 1990, after inspecting the environmental condition of the Inwood Site, the Nassau County Department of Health ("NCDOH") wrote a letter to 175 Inwood Associates citing violations of county and...