Citations
- 532 F. Supp. 2d 477
Full opinion text
ORDER
RICHARD J. ARCARA, Chief Judge.
This case was referred to Magistrate Judge H. Kenneth Schroeder, Jr., pursuant to 28 U.S.C. § 636(b)(1). During pretrial proceedings, the parties filed various motions for summary judgment and to dismiss. On June 29, 2007, Magistrate Judge Schroeder filed a Report and Recommendation, addressing the various motions.
Both plaintiff and defendants Booth Oil Co., Inc., Lonsdale Slater Schofield, Ahsen Yelkin, EC Holdings, Inc., Joseph Chalhoub, Breslube Industries Limited, and Speedy Oil Services, Inc., filed objections to the Report and Recommendation on August 15, 2007. Oral argument on the objections was held on September 19, 2007. On September 24, 2007, defendant Lonsdale Slater Schofield filed a reply memorandum, with the Court’s permission.
Pursuant to 28 U.S.C. § 636(b)(1), this Court must make a de novo determination of those portions of the Report and Recommendation to which objections have been made. Upon a de novo review of the Report and Recommendation, and after reviewing the submissions and hearing argument from the parties, the Court adopts the proposed findings of the Report and Recommendation.
Accordingly, for the reasons set forth in Magistrate Judge Schroederis Report and Recommendation, the Court:
GRANTS Lonsdale Schofield’s motion (Dkt.# 162), to dismiss the first cause of action (CERCLA), without prejudice;
DENIES Lonsdale Schofield’s motion (Dkt.# 162), to dismiss the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan);
GRANTS Lonsdale Schofield’s motion (Dkt.# 162), to dismiss the sixth cause of action (New York Debtor & Creditor Law § 276);
GRANTS Lonsdale Schofield’s motion (Dkt.# 162), to dismiss the seventh cause of action (New York Debtor & Creditor Law § 273); and
DENIES Lonsdale Schofield’s motion (Dkt.# 162), to dismiss the eighth cause of action (breach of fiduciary duty);
GRANTS Schofield Oil’s motion (Dkt.# 162), to dismiss the first cause of action (CERCLA), without prejudice;
GRANTS Schofield Oil’s motion (Dkt.# 162), to dismiss the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan), without prejudice on the ground that it is not properly before the court;
GRANTS Schofield Oil’s motion (Dkt.# 162), to dismiss the sixth cause of action (New York Debtor & Creditor Law § 276), without prejudice on the ground that it is not properly before the court;
GRANTS Schofield Oil’s motion (Dkt.# 162), to dismiss the seventh cause of action (New York Debtor & Creditor Law § 273), without prejudice on the ground that it is not properly before the court;
ORDERS that Schofield Oil be terminated as a defendant in this action;
DENIES Booth Oil’s motion (Dkt.# 165), for partial summary judgment dismissing the fifth cause of action (accounting);
DENIES Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss land/or for summary judgment on the first cause of action (CERCLA);
DENIES Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the second and third causes of action (Navigation Law liability);
DENIES Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan);
GRANTS Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the sixth cause of action (New York Debtor & Creditor Law § 276);
GRANTS Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the seventh cause of action (New York Debtor & Creditor Law § 273);
DENIES Joseph Chalhoub’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the eighth cause of action (breach of fiduciary duty);
DENIES Breslube Industries’ motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the first cause of action (CERCLA);
DENIES Breslube Industries’ motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the second & third causes of action (New York Navigation Law);
GRANTS 118958 Canada’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan), without prejudice on the ground that it is not properly before the court;
GRANTS 118958 Canada’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the sixth cause of action (New York Debtor & Creditor Law § 276);
GRANTS 118958 Canada’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the seventh cause of action (New York Debtor & Creditor Law § 273);
ORDERS that 118958 Canada be terminated as a defendant in this action;
DENIES Speedy Oil’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the first cause of action (CERCLA);
GRANTS Speedy Oil’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan), without prejudice on the ground that it is not properly before the court;
GRANTS Speedy Oil’s motion (Dkt.## 173 & 179), to dismiss and/or for summary judgment on the sixth cause of action (New York Debtor & Creditor Law § 276), without prejudice on the ground that it is not properly before the court;
GRANTS plaintiffs motion (Dkt.# 175), for summary judgment against Booth Oil on the first cause of action (CERCLA liability);
GRANTS plaintiffs motion (Dkt.# 175), for summary judgment against Booth Oil on the second and third causes of action (Navigation Law liability);
DENIES plaintiffs motion (Dkt.# 175), for judgment in the amount of $1,475,000.00, as a matter of law, against Booth Oil as damages on the environmental claims;
GRANTS plaintiffs motion (Dkt.# 175), for a declaration that Booth Oil’s transfer of $450,000 to EC Holdings violated the terms of the Liquidating Plan;
GRANTS plaintiffs motion (Dkt.# 175), for a declaration that Booth Oil’s transfer of $300,000 to Katherine Street Properties on August 15, 1994, violated the terms of the Liquidating Plan;
GRANTS plaintiffs motion (Dkt.# 175), for a declaration that Booth Oil’s transfer of $275,000 to George Booth, III on October 7, 1994, violated the terms of the Liquidating Plan;
DENIES plaintiffs motion (Dkt.# 189), for summary judgment against George Booth, III, Joseph Chalhoub, Lonsdale Schofield, EC Holdings, Ahsen Yelkin, and Katherine Street Properties with respect to the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan);
GRANTS plaintiffs motion (Dkt.# 175), for summary judgment with respect to the fifth cause of action against Booth Oil (accounting);
DENIES Ahsen Yelkin’s motion (Dkt.# 183), to dismiss and/or for summary judgment on the first cause of action (CERCLA);
DENIES Ahsen Yelkin’s motion (Dkt.# 183), to dismiss and/or for summary judgment on the second & third causes of action (Navigation Law liability);
GRANTS Ahsen Yelkin’s motion (Dkt.# 183), to dismiss and/or for summary judgment on the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan); and
DENIES Ahsen Yelkin’s motion (Dkt.# 183), to dismiss and/or for summary judgment on the sixth cause of action (New York Debtor & Creditor Law § 276);
GRANTS EC Holdings’ motion (Dkt.# 183), to dismiss and/or for summary judgment on the fourth cause of action (enforcement of Booth Oil’s Liquidating Plan); and
DENIES EC Holdings’ motion (Dkt.# 183), to dismiss and/or for summary judgment on the sixth cause of action (New York Debtor & Creditor Law § 276).
Counsel shall appear on October 31, 2007, at 9:00 a.m. for a meeting to set a trial date.
IT IS SO ORDERED.
REPORT, RECOMMENDATION AND ORDER
H. KENNETH SCHROEDER, JR., United States Magistrate Judge.
This matter was referred to the undersigned by the Hon. Richard J. Arcara, in accordance with 28 U.S.C. § 636(b), for all pretrial matters and to hear and report upon dispositive motions. Dkt. # 120.
Currently before the Court are the following:
I. Motion (Dkt.# 162), by Lonsdale Schofield and Schofield Oil Limited (“Schofield Oil”), to dismiss the amended complaint;
2. Motion (Dkt.# 165), by Booth Oil Company, Inc. (“Booth Oil”), for partial summary judgment dismissing the fifth cause of action seeking an accounting;
3. Motion (Dkt.## 173 & 179), by Joseph Chalhoub, Breslube Industries Limited (“Breslube Industries”), 118958 Canada (“118958 Canada”), and Speedy Oil Services, Inc. (“Speedy Oil”), to dismiss and/or for summary judgment;
4. Motion (Dkt.# 175), for summary judgment by Booth Oil Site Administrative Group (“plaintiff’), against Booth Oil;
5. Motion (Dkt.# 183), by Ahsen Yelkin and EC Holdings, Inc. (“EC Holdings”), to join in the motions of Joseph Chalhoub and Lonsdale Schofield; and
6.Motion (Dkt.# 189), by plaintiff for summary judgment against George Booth, III; Booth Oil; Joseph Chalhoub; Lonsdale Schofield; EC Holdings; Ahsen Yelkin; and Katherine Street Properties, Inc. (“Katherine Street Properties”).
BACKGROUND
George Booth moved his waste oil business to Robinson Street in North Tonawanda in 1939. Dkt. # 175-8, p. 6. From approximately 1948 through 1960, George Booth and George Booth, Jr. operated George Booth & Son as a partnership. Dkt. # 175-8, p. 7. George Booth purchased the property from the Erie Railroad Company on August 12, 1951. Dkt. # 175-2, ¶ 12. In early 1960, they incorporated George Booth & Son, Inc., and transferred the property to the corporation. Dkt. # 175-2, ¶ 13. George Booth, III, became involved in the business in approximately 1970. Dkt. # 175-2, ¶ 14.
The name of the business was changed to Booth Oil on February 1, 1971. Dkt. # 175-2, ¶ 13. In addition to the parcel owned by Booth Oil, the Robinson Street facility also consists of a parcel owned by Conrail and leased by Booth Oil (“Conrail parcel”). Dkt. #87, Exh. A, No. 11-13.
In 1978, the New York State Department of Environmental Conservation (“NYSDEC”), investigated sources of waste oil collected by Booth Oil and concluded that the company had been receiving significant quantities of oil contaminated with PCBs. Dkt. # 175-4, p. 7. The Niagara County Health Department also determined that an oil slick in the Niagara River was caused by Booth Oil discharges to the storm sewer adjacent to the Robinson Street facility. Dkt. # 175-4, p. 7. The matter was referred to the Attorney General of the State of New York in December, 1979. Dkt. #202-2.
By Order on Consent between Booth Oil and the NYSDEC, Booth Oil agreed to cease all processing operations at the Robinson Street facility and commence operations at a new facility on Katherine Street in the City of Buffalo by January, 1982. Dkt. # 87, ¶ 34; Dkt. # 202-2. The Order on Consent binds Booth Oil to a “Proposal and Schedule” for closure of the site and states that if the terms of that proposal are not met, Booth Oil will be liable for liquidated damages in the sum of $65,000, which is the estimated cost of the proposal. Dkt. # 117, ¶ 7; Dkt. # 202-2. The NYS-DEC agreed that “no violation of the Environmental Conservation Law of the State of New York shall be instituted by the Department, its employees, or agents for as long as Booth adheres to and fully complies with the terms and provisions of said Proposal and Schedule.” Dkt. # 202-2, p. 4.
On January 5, 1983, a fire at the Katherine Street facility shut down operations for approximately seven months. Dkt. # 108, ¶ 4; Dkt. # 117, Exh. 6.
As of February 1, 1983, Booth Oil advised the NYSDEC that in excess of 149,-790 gallons of oil-water mix was stored at the Robinson Street facility, excluding Tank # 60. Dkt. # 117, Exh. 6.
On February 28, 1983, Booth Oil applied for a Part 360 operating permit to continue use of Tank # 60 at Booth Oil’s Robinson Street facility. Dkt. # 108, ¶ ¶ 11 & 13. Booth Oil needed the tank because its Katherine Street facility only had enough storage for two days of operation. Dkt. # 108, ¶ 12. The application indicates that:
The Storage Facility operated by [Booth Oil] on Robinson Street utilizes Tank # 60 exclusively. Tank # 60 is protected by an earthen berm of compacted soils which surrounds the entire tank providing for spill containment and has a capacity of approximately 280,000 gallons. The Tank # 60 area is underlain with a strata of impermeable clay-type soils as a sub-base to prevent any vertical migration of contaminants. Additionally, the interior of the bermed area surrounding Tank # 60 has been regraded to drain any spilled materials into the sump. The sump is to be equipped with a “Filter Scavenger” device which will provide for effective oil-water separation and the retrieval of any spilled hydrocarbons with the remaining water being discharged to the sewer. Should any leak develop beneath the tank, the material in all likelihood will find its way to the sump and be processed by the “Filter Scavenger”. Tank # 60 is a 500,000 gallon tank constructed of carbon steel which is approximately 50’ in diameter and is used to store industrial and crankcase oils for subsequent processing at the Katherine Street Facility owned and operated by Booth Oil Co., Inc. At no time will a level of more than 20’ be maintained in Tank # 60 (see Appendix VI).
Dkt. # 108, Exh. 6. The application also indicates, and the permit required, that “Manifests for all manifested loads of crankcase and industrial oils off-loaded to Tank # 60 will be kept at the Katherine Street Facility” and that the “operating record of the Katherine Street Facility will reflect all movements into and out of Tank # 60.” Dkt. # 108, Exh. 6 & 9.
On March 4, 1983, the NYSDEC inspected Booth Oil’s Robinson Street facility and noted that all processing equipment had been removed and that Tank # 60 was the only tank which remained in operation. Dkt. # 108, ¶ 12 & Exh. 7.
On June 28, 1983, Lonsdale Schofield gave George Booth, Jr. 200,000 gallons of used oil which Schofield Oil had in storage in Toronto, Ontario in exchange for 15% of the outstanding common stock of Booth Oil. Dkt. # 87, Exh. 2, ¶¶ 6-7; Dkt. # 108, ¶ 3; Dkt. # 114, Exh. A. Lonsdale Schofield affirms that this oil was delivered, in truck loads of approximately 7,000 gallons, to Booth Oil’s Katherine Street facility in Buffalo. Dkt. # 87, Exh. 2, ¶ 8. Lonsdale Schofield affirms that none of the oil was delivered to the Robinson Street facility in North Tonawanda. Dkt. # 87, Exh. 2, ¶ 9. In support of this assertion, Lonsdale Schofield submitted the agreement stating that the “[o]il will be delivered to Booth Oil f.o.b. at its plant in Buffalo, New York,” as well as accounts receivable indicating multiple deliveries to Katherine Street between June 23, 1983 and August 29, 1983. Dkt. # 114, Exh. A & B. Lonsdale Schofield also affirms that, because of testing requirements in Ontario, the oil delivered to the Katherine Street facility must have contained less than 5 ppm PCBs. Dkt. # 87, Exh. 2, ¶ 16.
On August 11, 1983, Booth Oil obtained a Part 360 permit to operate Tank # 60 at Booth Oil’s Robinson Street facility. Dkt. # 108, ¶ 53.
On September 26, 1983, Schofield Oil, through its wholly owned subsidiary L & R Schofield Holdings, Inc., sold its operating assets to Breslube Enterprises in exchange for a 49% limited partnership interest in Breslube Enterprises. Dkt. # 108, ¶ 5. This sale included inventory of 196,000 gallons of used oil. Dkt. # 108, ¶ 6. As the sole general partner of Breslube Enterprises, Breslube Industries is liable for the debts of Breslube Enterprises. Dkt. #108, ¶ 2.
George Booth, III testified at his deposition that the Robinson Street site was a destination for pick-ups of used oil in 1983. Dkt. # 108, Exh. 2, p. 59. Records suggest delivery of oil to Tank # 60 during February and March of 1983. Dkt. # 117, Exh. 13. Records also suggest that Breslube Industries (a.k.a.CanAm), was delivering oil to Booth Oil during this time frame. Dkt. # 117, Exh. 13; Dkt. # 189-5.
Booth Oil advised the NYSDEC that “[t]here have not been any in-going or outgoing shipments for the Tank # 60 facility during the quarterly time period of October 1 — December 31, 1983.” Dkt. # 117, Exh. 5. Quarterly reports for Tank # 60 indicate that no shipments were received between January 1, 1984 and September 30, 1984. Dkt. # 189-4. During this same time period, oil was being removed from Tank # 60, resulting in a drop in the level of oil contained within the tank from 16 feet to four feet, two inches. Dkt. # 189-4.
As of June 18, 1984, Booth Oil advised NYSDEC that approximately 466,610 gallons of oil-water mix was stored at the Robinson Street facility, including Tank # 60. Dkt. # 117, Exh. 7. Booth Oil further advised that
Since the 6/84 inventory was taken, approximately 14,000 gallons have been removed from 60 tank.
Presently we are planning to remove two loads of liquid (14,000 gallons) every week until we remove all the liquid. Based on the above numbers, it will take 32 weeks to empty the site. Therefore, we are requesting until March, 1985 for completely emptying the tanks.
Dkt. # 117, Exh. 7.
On August 17, 1984, NYSDEC inspectors observed five underground storage tanks at the Robinson Street facility and determined that they were contaminated with PCBs. Dkt. # 108, ¶ 26; Dkt. # 175-2, ¶ 19. The NYSDEC also noted pools of oil sitting along the railroad tracks and concerns with the operation of oil recovery wells on the property. Dkt. # 175-15.
Booth Oil Company was insolvent on September 14, 1984, when 118958 Canada purchased 35% of the common stock of Booth Oil from George Booth, III. Dkt. # 87, ¶ ¶ 3, 55. 118958 Canada was a 50% owned subsidiary of Breslube Enterprises at that time. Dkt. # 87, ¶ 4. Breslube Industries owned a 22.7% interest in Breslube Enterprises. Dkt. # 87, ¶ 5. Joseph Chalhoub owned 100% of the outstanding shares of Breslube Industries. Dkt. # 87, ¶ 6. Schofield Oil, the sole parent company of L & R Schofield Holdings, Inc., which was a 49% limited partner of Breslube Enterprises, owned 15% of Booth Oil. Dkt. # 108, ¶ 18. Breslube Enterprises had an option to purchase the 15% of Booth Oil which was owned by Schofield Oil and had a voting trust agreement pursuant to which it held those shares as voting trustee. Dkt. # 108, ¶ 18. George Booth, III held 46.25% and G & H Oil held 3.75% of the remaining shares of Booth Oil Dkt. # 108, ¶ 19. Breslube Industries also held a 1% voting trust in the shares of George Booth, III. Dkt. # 108, ¶ 20. As a result, Joseph Chalhoub had 51% voting control of Booth Oil (35% of 118958 Canada; 15% of Schofield Oil; and 1% of George Booth, III). Dkt. #108, ¶ 22. Joseph Chalhoub also owned an option to purchase an additional 35% of Booth Oil from George Booth, III. Dkt. #108, ¶ 23.
George Booth, III testified at his deposition that Booth Oil hired David Peel at Joseph Chalhoub’s suggestion during the winter of 1985. Dkt. # 108, Exh. 2, p. 113. George Booth, III testified that David Peel ran Booth Oil, including the Robinson Street site. Dkt. # 108, Exh. 2, p. 114. When asked if David Peel reported to Mr. Chalhoub, Mr. Booth replied, “[ijndirectly.” Dkt. # 108, Exh. 2, p. 114. However, Mr. Booth testified that Mr. Peel was reporting the day-to-day operations of Booth Oil, especially with respect to Robinson Street, to Mr. Chalhoub, although he could not say with what level of detail. Dkt. # 108, Exh. 2, pp. 137,139 & 162.
On June 6, 1985, Booth Oil filed for bankruptcy pursuant to section 1107 of the bankruptcy code. Dkt. # 108, ¶ 57.
By letter dated February 25, 1986, on Breslube Group letterhead, David Peel, Director of Operations for Breslube Enterprises, advised the NYSDEC of its “intention to reorganize the Booth Oil Facility at Katherine Street ... under a new corporation which will be under the direct control and management of Breslube Enterprises.” Dkt. # 108, Exh. 16.
According to NYSDEC notes, Mr. Peel advised the NYSDEC by telephone on May 21, 1986 that “Breslube does not have $20,000” to dispose of the PCB contaminated fuel oil. Dkt. # 108, Exh. 17. Mr. Peel suggested transferring the fuel to a dedicated tank at the Katherine Street facility as a temporary solution, but NYS-DEC refused. Dkt. # 108, Exh. 17. By letter dated July 24, 1986 to David Peel, Director of Operations for Booth Oil, NYS-DEC advised that the tank containing the PCB contaminated fuel oil had to be disposed of before water from remaining tanks could be removed. Dkt. # 108, Exh. 18.
By letter dated June 12, 1986, counsel for the New York State Department of Law advised Joseph Chalhoub that the NYSDEC
has informed me that Breslube has taken over operation and management of the Booth Oil facility. I also understand that Breslube owns a majority of the stock in Booth Oil.
Pursuant to a judicial consent order in the above-referenced matter, Booth Oil agreed to make certain changes in its facility and operations and, in addition, agreed to pay a penalty to the State of New York, now in the amount of $4,000 (U.S.). I understand that you committed to make this payment in a meeting ... prior to Booth Oil seeking protection from the Bankruptcy Court. However, despite your representations to [NYS-DEC], this penalty has not been paid.
Dkt. #117, Exh. 2. A NYSDEC memo dated August 8, 1986 sets forth the following chronology of events at the Robinson Street facility:
Booth Oil processed and stored waste petroleum oils at the. Robinson Street Site in North Tonawanda for 50+ years. The operation was very sloppy and oh was spilled all over the site, saturating the ground. The steam stripping unit and an acid treatment process storage tank vents created irritating odor problems.
In the early 80’s, Booth was being pushed by the Niagara County Health Department and the Department of Environmental Conservation to clean up their [sic] act and they decided to shut down the Robinson Street site and install a new facility on Katherine Street in Buffalo.
The need for permitting the new facility was leverage enough to prompt Booth to prepare a closure plan for the Robinson Street site.
This plan (1981) included the installation of two drawdown wells to remove underground layers of oil for processing off-site. The closure plan also included the cleaning and removal of the storage tanks on the site.
Thousands of gallons of oil were pumped out and taken to the Katherine Street facility for processing. However, as late as June, 1984, there were still 45 + tanks containing waste oil and oily water on the Robinson Street site.
In August, 1984, a DEC inspection found an underground tank on the west portion of the site (owned by Conrail— leased to Booth). Booth claimed that they had no records or knowledge of this tank. A sampling of the tank and surrounding soil showed PCB’s. The tank contents showed PCB’s in excess of 50 ppm.
In early 1985, [Breslube] Enterprises— Breslau, Ontario was found to have an interest in Booth Oil Company. The [Breslube] people, pressured by DEC, got going in June, 1985, removing oil from the storage tanks. They sampled the sludge in the bottom of the tanks and found no contaminants. The sludge was removed from the site.
All the above ground tanks have been removed from the site except Tank # 60 which is the largest (225,000 gallons). This tank has been cleaned and is to be cut up and relocated to another site.
At DEC request, nine test pits were dug on the site and soil samples taken at 2:0 intervals. Verbal results of analysis show that where PCB’s were found, the PCB contamination did not exceed the EPA 50 ppm limit (environmental concern).
In May of this year, former employees informed us that there were more tanks buried on the adjacent Conrail property. A careful investigation located six buried tanks. Five contained water with a little oil slick. One was found to contain diesel oil contaminated with PCB’s above 50 ppm.
Booth was advised of disposal procedures and is obtaining quotes from SCA and two others for removal and incineration of the contaminated diesel oil and for the triple cleaning of the tank.
When this tank is clean, the other five will be pumped out and all six tanks will be removed.
The test pits showed that there is still a considerable amount of oil three to six feet down all over this site. We are waiting for copies of the test pit soil analysis to determine what is to be done before Booth Oil can walk away from the site.
Dkt. # 108, Exh. 19.
On August 28, 1986, Joseph Chalhoub, as President of Breslube Enterprises, by its Sole General Partner, Breslube Industries, identified George Booth, III, President and Joseph Chalhoub, Treasurer as responsible corporate officers of Booth Oil and identified Joseph Chalhoub, President, as well as two other individuals as responsible corporate officers of Breslube USA. Dkt. # 117, Exh. 3. Mr. Chalhoub also identified the following officials as duly authorized representatives of Breslube USA/Booth Oil:
Dave Peel, Director of Operations;
Ahsen Yelkin, General Manager, Manufacturing; and
Gary Farrar, General Manager, Supply
Dkt. # 117, Exh. 3. The certification notes that Breslube Enterprises “has controlling interest in Booth Oil and BresLube [sic] USA.” Dkt. # 117, Exh. 3.
By letter dated September 16, 1986, on Breslube letterhead, Mr. Peel advised Conrail that:
We are in the process of cleaning up the site of our old operations at Robinson Street, North Tonawanda. One of the remaining items of work still to be done is to clean out six underground tanks located as shown on the attached sketch.
Hi Hí # :¡: H* ❖
There is no evidence that these tanks in fact belong to Booth Oil, although we understand that they were used by Booth. On this basis we have elected to dispose of the contents of these tanks. However, in view of the facts [sic] that the land belongs to Conrail, and possibly the tanks, the proximity of the tanks to the railway and Booth’s Chapter [11] status, you may wish to assist with the excavation and backfill in order to avoid potential problems or future liabilities.
Dkt. #108, Exh. 22. Joseph Chalhoub was copied on this letter. Dkt. # 108, Exh. 22.
Mr. Peel and the NYSDEC exchanged correspondence regarding the removal of the underground storage tanks from the property, resulting in removal of the PCB contaminated material from T-5 on September 18, 1986, with Ahsen Yelkin, Manager of Manufacturing, Breslube Enterprises, present on behalf of Booth Oil. Dkt. # 108, Exh. 18-23. Ahsen Yelkin testified Joseph Chalhoub was his boss, that Mr. Chalhoub directed his work, and that he spoke to Mr. Chalhoub every day. Dkt. # 108, Exh. 29, pp. 40, 63, 66. He denied taking orders from George Booth, III. Dkt. # 108, Exh. 29, p. 63.
On May 29, 1987, Safety Kleen Corporation purchased the assets of Breslube Enterprises for consideration of approximately $10 million, largely comprising Safety Kleen stock. Dkt. # 108, ¶ 50. Joseph Chalhoub received slightly more than 50% of the stock and Lonsdale Schofield received slightly less than 50% of the stock. Dkt. # 108, ¶ 51. Breslube Enterprises and Breslube, Inc. were dissolved and their liabilities were transferred to the general partners, including Breslube Industries. Dkt. # 108, ¶ 61.
By letter dated June 2, 1987, on Booth Oil letterhead, Derek Wilkinson, Environmental Engineer for the Breslube Group, provided the NYSDEC a “closure plan for Tank 60 at our former site located at 76 Robinson Street in North Tonawanda.” Dkt. # 108, Exh. 24. The closure plan indicated that Tank 60 was the only remaining tank at the site and noted that “[n]o waste or waste handling equipment remains at the site, and no operations are being carried out there.” Dkt. # 108, Exh. 24. The letter was copied to Ahsen Yelkin. Dkt. # 108, Exh. 24. The tank was removed on October 12, 1987. Dkt. # 108, Exh. 27.
By letter dated October 1, 1987, NYS-DEC advised Booth Oil that
As you know, this Department has been investigating the repeated discharge of oil into the Niagara River from the Robinson Street storm sewer. On Tuesday, September 29, 1987, [George Booth, III] accompanied me on a site inspection of the storm sewer. At that time, we discovered the presence of oil in a catch basin and manhold adjacent to your property and near draw down well number two. No other catch basin or manhole had any evidence of oil being present. The ground surface around this catch basin had no signs of any spillage nearby that would explain the presence of oil.
Based on the information obtained from sampling data and physical field evidence, it is the determination of this Department that your property is the source of the oil discharge into the Niagara River. As such, your company is responsible for the proper containment, cleanup and removal of the oil and the reimbursement of the oil spill contingency fund for the monies expended to date on the investigation of the incident.
Dkt. # 117, Exh. 16.
By letter dated September 30, 1987, Derek Wilkinson, Environmental Engineer for the Breslube Group, informed the NYSDEC that they had contracted for the dismantling of Tank # 60. Dkt. # 108, Exh. 26.
On December 11, 1987, the Robinson Street facility was referred to NYSDEC for issuance of a demand letter for a Remedial Investigation/Feasibility Study (“RI/FS”), based on the following:
On June 22, 1987, during a period of very heavy rainfall ... a sample of oily scum was taken by NYSDEC from the oil boom located at the discharge of the Robinson Street Sewer into the Niagara River. This sample showed a PCB content of 379 ppm. In September 1987, during a less intense rainfall, more oily scum was collected by the boom. This too analyzed over 50 ppm PCBs.
The Robinson Street Sewer starts in front of the Booth Oil property. Catch basins receive runoff from Booth Oil, Robinson Street and the railroad crossings. There is no other source of oil or oily waste.
The oil boom was installed and is maintained by Booth Oil under Consent Order 82-10 (prompted by oil spills to the Niagara River in the early 80’s)....
Responsible parties would be Booth Oil as owner and operator, Conrail as owner and several generators listed on the attaehed page from the Right-to-Know listing (1985).
Dkt. # 108, Exh. 27.
The summary of a January 15, 1988 meeting with Joseph Chalhoub, Ahsen Yelkin and NYSDEC representatives, inter alia, indicates that the NYSDEC
opened the meeting by stating the Katherine Street operation, regardless of Chapter 11 bankruptcy and ownership uncertainties, must promptly meet both Part 370 series Regulation and all Consent Order requirements. Recurring consent order violations, delays in responding to Part 373 Application NOD’s and Insurance/Assurance requirements were defined. [NYSDEC] also asked for an answer to our September 1, 1987 letter requesting owner/operator relationships for the site.
Mr. Chalhoub generally described some of the relationships between Safety Kleen/Breslube/Booth. These appear to be still evolving and some of the relationships were not precisely defined.
Dkt. # 108, Exh. 11. As of January 15, 1988, George Booth, III owned 46.25% of the stock of Booth Oil; 118958 Canada Ltd owned 35%; Schofield Oil, Ltd. owned 15%; and G & H Oil Co. owned 3.75%. Dkt. #87, Exh. B. The NYSDEC notes consider Breslube and Safety Kleen “the site operators.” Dkt. # 108, Exh. 11.
By letter dated February 18, 1988, the NYSDEC informed Booth Oil that its Robinson Street facility “constitutes a significant threat to the environment” and that it had documented a release or threatened release of hazardous substances from the site. Dkt. # 194-2, p. 2.
In a memorandum dated June 7, 1988, the NYSDEC documented closure of Tank 60, stating:
Tank 60 was separately permitted under Part 360 Permit 3425 on August 11, 1983. This waste oil storage tank was located within an earth containment dike in the midst of other uncontained operational and storage units at this Booth Oil rerefining site.
The overall site is contaminated with waste oil. Some evidence of PCB contamination exists. The overall site closure is being handled by the Inactive Site Group and has been referred to DEE for PRP identification.
This letter documents formal closure of VT-60 but not of the overall site. In summary, Tank 60 was drained, residue tested and found to be nonhazardous. Tank was then cleaned, removed in pieces and scrapped. Soil samples were taken and analyzed beneath and adjacent to the tank within the dike area. Analysis confirmed the visual indication that waste oil contamination was present at the south end within the dike .... Approximately 187 tons of soil were removed and the contaminated area re-sampled and analyzed. Oil and grease levels were reduced to a level of 11.6 ppm from a previous 13,000 ppm. An independent professional engineer registered in New York State certified the closure ....
I believe that there is little risk in accepting closure of this separately permitted tank. Overall site contamination is being handled by a separate action, and extensive inactive site remediation will probably be required.
Dkt. # 87, Exh. C. By letter dated July 19, 1988, NYSDEC advised Booth Oil that:
This letter is to confirm the receipt of owner/operator and independent professional engineer’s certification ... of RCRA closure for this facility [VT-60 Tank]. We now consider this facility officially closed. Your authority to operate as a Treatment, Storage, and Disposal Facility (TSDF) is terminated.
Please be advised that the United States Environmental Protection Agency has determined that the corrective action provisions of the Hazardous and Solid Waste Amendments (HSWA) Section 3800(h) apply to all TSDF’s which have acquired interim status.
Your waste facility is presently undergoing corrective action under the direction of the Department’s Buffalo Division of Remediation. Once the corrective action provisions of HSWA have been met by the facility, the facility can have their interim status terminated.
Dkt. # 117, Exh. 15.
On July 5, 1989, Booth Oil filed a Debt- or’s Liquidating Plan of Reorganization, with Disclosure Statement. Dkt. # 108, ¶ 63. This plan, as amended on September 29, 1989, proposed that Speedy Oil would purchase the assets of Booth Oil for $1,000,000, which would be used to satisfy priority claims with the remainder, in addition to any other surplus, going into a contingency fund for environmental and other administrative creditors. Dkt. # 108, ¶¶ 66-67 & Exh. 32. Specifically, the Plan provides that:
Booth will collect in the normal course of business and apply the funds collected to liabilities such as administrative expenses, post-petition accounts payable, taxes, payroll, etc. Surplus, if any, will be maintained as a contingency for certain other liabilities which will be explained below in this Disclosure statement.
Dkt. # 186-3, p. 25. The Plan is clear that
The holders of issued and outstanding equity shares of Booth will receive no distribution under the Plan. The equity shares of Booth will be cancelled under the Plan and the Company dissolved.
Dkt. # 108, ¶ 68.
On July 13, 1989, George Booth, III moved the bankruptcy court for approval for Booth Oil to enter into a contract with Ahsen Yelkin. Dkt. # 108, Exh. 35. In support of that motion, Ahsen Yelkin affirmed that he was an employee of Speedy Oil between April 1986 and June 1987 and an employee of Safety Kleen Oil Services, Inc. (“Safety Kleen”), since June of 1987. Dkt. # 108, Exh. 35. The bankruptcy court advised Booth Oil Company that “such an order is unnecessary” because “a mere employment contract ... requires no court approval.” Dkt. # 108, Exh. 35.
The Debtor’s Liquidating Plan of Reorganization was confirmed by the bankruptcy court on December 28, 1989. Dkt. # 108, ¶ 69; Dkt. # 189-11.
In 1990, the NYSDEC initiated an RI/FS to assess the nature and extent of contamination at the site. Dkt. # 175-4, p. 8.
In early 1991, the NYSDEC commenced an investigation into alleged storage of PCB contaminated waste at Booth Oil’s Katherine Street facility and allegations that Safety-Kleen was “cocktailing” PCB oil, ie., mixing oil containing more than 50 ppm PCBs with oil with no or lower concentrations of PCBs so that the resulting mixture contained less than 50 ppm PCBs and therefore, was not required to be handled as waste. Dkt. # 108, ¶¶ 81-82.
On December 20, 1991, Booth Oil loaned Ahsen Yelkin $80,000 at 6% interest. Dkt. # 108, ¶ 73. Ahsen Yelkin used $75,000 of that money to purchase a mortgage on George Booth, Ill’s residence in Williams-ville, New York. Dkt. # 223, ¶ 5.
EC Holdings was incorporated on April 10, 1992, with Ahsen Yelkin as the sole shareholder and President. Dkt. #223, ¶ ¶ 10-11. George Booth, III testified at his deposition that EC Holdings was a corporation that Ahsen and he had setup to finance a new business on the East coast that was going to be in the waste water management business. Dkt. # 108, Exh. 2, p. 277.
On August 3, 1992, Booth Oil loaned EC Holdings $300,000 at 4.84% interest. Dkt. # 108, ¶ 75. The promissory note is signed by Ahsen Yelkin, as president of EC Holdings. Dkt. # 108, ¶ 75.
On October 28, 1992, Speedy Oil purchased the real estate and fixtures of the Katherine Street facility for $1 million. Dkt. #87, ¶ 66; Dkt. #175-2, ¶49. Thereafter, Speedy Oil leased the real estate and fixtures to Booth Oil at a rent of $50,000 per month. Dkt. #87, ¶ 67; Dkt. # 204-2, ¶ 50. Speedy Oil applied to the NYSDEC for transfer of the Booth Oil Part 350 Permit to operate the Katherine Street facility, but the application was never acted upon. Dkt. # 87, ¶ 68. Because the permit was not transferred, Booth Oil continued to reprocess oil on behalf of Safety Kleen Corp. Dkt. # 175-2, ¶ 50. However, Joseph Chalhoub affirms that neither he, Breslube Industries or Speedy Oil “continued the enterprise of Booth Oil.” Dkt. # 87, ¶ 69. Safety Kleen paid Booth Oil approximately $3.3 million for oil processing services in 1992 and approximately $4 million for oil processing services in 1993. Dkt. # 175-2, ¶ 50.
On December 18, 1992, George Booth, III, Joseph Chalhoub (on behalf of 118958 Ontario), and Lonsdale Schofield (on behalf of Schofield Oil), as the majority shareholders of Booth Oil, agreed in principle that a special fund be set up in the amount of $500,000 for the purpose of payment of any future claims or potential liabilities against Booth, and the associated legal fees that may result. Dkt. # 175-36.
In its annual report, distributed to shareholders on March 31, 1993, SafetyKleen Corporation disclosed that
In 1987, the Company purchased its oil processing business from enterprises controlled by Joseph Chalhoub. Mr. Chalhoub is now a Senior Vice President of the Company and supervises the Company’s oil reprocessing business. Mr. Chalhoub owns a 15% interest in Booth Oil Corporation (“Booth”). Booth is the operator of an oil reprocessing plant in Buffalo, New York.... The Company did not attempt to acquire the Buffalo plant at the time of the initial acquisition because Booth was in the process of a reorganization under Chapter 11 of the Bankruptcy Act and because the Company desired that certain environmental clean up work be done before it acquired the Plant. Speedy Oil Corporation (a company in which Mr. Chalhoub owns a 45% interest) (“SOC”) acquired the right to purchase the Buffalo Plant out of the Chapter 11 proceeding for $1 million and made approximately $900,000 in capital improvements at the Plant. SOC charged Booth $7,500 per month for use of the capital improvements pending SOC’s purchase of the Plant. The purchase was consummated on or about November 1, 1992, and thereafter, SOC leased the Plant (including the improvements made to it by SOC) back to Booth at a rental of $50,000 per month. In 1990 SOC granted the Company an option to purchase the Buffalo Plant from SOC for a price equal to SOC’s investment in the Plant plus interest on the investment at 12% per annum. The Company anticipates that upon obtaining the necessary environmental operating permits, it will exercise the option and directly operate the plant and the leaseback of the Plant to Booth will end. In 1993 the Company paid Booth approximately $4.0 million for processing services at the Plant. The Company believes that the prices it pays for processing services at the Buffalo Plant are competitive with the prices it would be required to pay at other third party facilities.
Dkt. # 175-26, p. 5.
On April 1, 1993, EC Holdings loaned Ahsen Yelkin $50,000. Dkt. # 223, ¶ 14. On April 22, 1993, Booth Oil loaned EC Holdings $150,000 at the applicable federal rate per annum. Dkt. # 108, ¶ 76. The promissory note is signed by Ahsen Yelkin. Dkt. # 108, ¶ 76. Subsequently, EC Holdings loaned Ahsen Yelkin another $50,000. Dkt. # 223, ¶ 14. George Booth, III testified at his deposition that Joseph Chalhoub had approved the loans to EC Holdings. Dkt. # 108, Exh. 2, pp. 277-78. Joseph Chalhoub testified that he did not discover these loans until approximately October, 1994; that he believed these payments were improper; but he did not attempt to recoup them. Dkt. # 108, Exh. 2, pp. 132-35; Dkt. # 213, ¶ 10. None of the payments were disclosed in status reports to the bankruptcy court. Dkt. # 175-2, ¶ 64; Dkt. # 228, ¶ 58.
On May 21, 1993, the bankruptcy court issued a final decree. Dkt. # 108, ¶ 77; Dkt. # 186-3, p. 41. Booth Oil indicated to the court that equity holders “received nothing under the Plan as stockholders.” Dkt. # 108, Exh. 43; Dkt. # 186-3, p. 46. Booth noted that:
The Amended Disclosure Statement and Plan of Reorganization contemplated the establishment of a contingency fund for class 4 (environmental) claimants. This fund is in the process of being set up. The amount of such a fund is dependent upon pension and other liabilities being fully identified and resolved.
Dkt. # 186-3, p. 46. Booth also explained that:
As noted, the Plan called for the Operating Assets, as defined in the Plan, to be purchased by Speedy for $1,000,000. Speedy conditioned the purchase upon the satisfaction of several conditions set forth in pages 9 through 10 of the Disclosure Statement. All of these conditions have been satisfied, except for the approval by the New York State Department of Environmental Conservation of a transfer of Part 373 Permit of Booth to Speedy. Notwithstanding the foregoing condition, on October 28, 1992, Speedy purchased the Operating Assets for the consideration described in the Plan. As described in the Amended Disclosure Statement, significant capital expenditures were made and paid for by Speedy necessary to satisfy New York State Department of Environmental Conservation mandates (“Speedy Improvements”). If the Speedy Improvements were not made, Booth would not have been permitted to operate. Booth was obligated to make payments to Speedy for use of the Speedy Improvements prior to October, 1992. After October, 1992, Booth may continue in operation until regulatory approval of the permit transfer, a date for which has not been established by the regulatory bodies. Pending approval of the permit transfer, Booth will be required to make payments to Speedy for the lease of the Katherine Street premises. Upon permit transfer and payment of the pension liabilities described in Item VI, a Final Report will be submitted and a motion for final decree closing the case will be made by Booth.
Dkt. # 108, Exh. 43; Dkt. # 186-3, p. 47. Thus, due to difficulties in obtaining approval from the NYSDEC for the transfer of Booth Oil’s operating permit to Speedy Oil, Booth Oil continued operations with the permit as its sole asset. Dkt. # 108, ¶ 80.
On August 15, 1994, Booth Oil issued a check to Katherine Street Properties for $300,000. Dkt. # 175-2, ¶ 52; Dkt. # 228, ¶ 63. The check is authorized by George Booth, III and Mary Brandys and endorsed by George Booth, III, president of Katherine Street Properties. Dkt. # 175-2, ¶ 52; Dkt. # 228, ¶ 64.
On August 18, 1994, at a special meeting of the Board of Directors, which included Joseph Chalhoub and Lonsdale Schofield, but excluded George Booth, III, Booth Oil accepted a plea agreement with respect to the NYSDEC investigation, which required Booth Oil to plead guilty to a state felony count of unlawful possession of hazardous waste and pay a criminal fíne of $100,000 to New York while Safety Kleen agreed to forfeit $1.9 million to the federal government but was absolved of criminal responsibility. Dkt. # 108, ¶ ¶ 83, 85. Because the felony conviction rendered Booth Oil ineligible to retain its waste permit and because the plea agreement called for the current management of Booth Oil’s Katherine Street facility to be removed within 15 days of the date of the plea, George Booth, III commenced state court proceedings challenging the board resolution accepting the plea. Dkt. # 108, ¶¶ 84, 86. The state court accepted the plea without prejudice to George Booth, Ill’s challenge to the validity of the corporate resolution authorizing the plea. Dkt. # 108, ¶ 86.
On August 19, 1994, Joseph Chalhoub sent revised banking resolutions, adopted at the August 18th Board of Directors’ meeting, to M & T Bank requiring that checks in circulation be authorized by Joseph Chalhoub or Lonsdale Schofield and that all future checks be signed by either Joseph Chalhoub as Treasurer or Susan Tunstall as Accountant. Dkt. # 108, ¶ 86.
By agreement signed October 7, 1994, George Booth, III, discontinued the litigation and approved the Board of Directors’ Resolution authorizing the plea agreement, then resigned as an employee, officer and director of Booth Oil and surrendered his stock certificates in return for $275,000 from Booth Oil, assignment of the promissory note evidencing the $80,000 loan to Ahsen Yelkin, and a consulting agreement with Safety Kleen. Dkt. # 108, ¶ 88; Dkt. # 189-7. Joseph Chalhoub declares that this payment was for settlement of the lawsuit, not redemption of the stock. Dkt. # 213, ¶¶ 18-19. The consulting agreement provided that Safety Kleen would pay George Booth, III $400,000 in return for his cooperation with Safety Kleen’s ongoing efforts to secure the permit for the facility. Dkt. # 108, ¶ 89.
In separate agreements, Safety Kleen paid Speedy Oil $2.4 million for the land at Katherine Street facility and the operating assets originally held by Booth Oil. Dkt. # 108, ¶ 92. Safety Kleen used employees of Booth Oil to operate the Katherine Street facility until some time in 1996, when the employees became Safety Kleen employees. Dkt. # 87, Exh. A, No. 84-88.
On June 28, 1996, the NYSDEC approved transfer of the permit to operate the Katherine Street facility from Booth Oil to Safety Kleen. Dkt. # 189-8; Dkt. # 204-2, ¶ 51.
Joseph Chalhoub sold his Safety Kleen stock in 1998 for more than $6 million. Dkt. # 108, ¶ 52.
The NYSDEC’s Amended Record of Decision, dated August, 2002, sets forth the remedial plan for the site and estimates an implementation cost of $6 million. Dkt. # 175^4, p. 15.
As of December 31, 2002, EC Holdings noted a liability of $450,000 plus $220,378 in accrued interest due Booth Oil. Dkt. #223, ¶¶ 17-23. EC Holdings dissolved on November 30, 2003, with Ahsen Yelkin assuming obligations of $641,635 to Booth Oil. Dkt. #223, ¶¶ 24-28.
On June 23, 2003, Conrail, Daimler Chrysler Corporation, Ford Motor Company, General Electric Company, General Motors Corporation, New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation, and VIACOM, Inc., signed an Order on Consent with the NYS-DEC. Dkt. # 242-2, p. 104. The Order on Consent is issued pursuant to the NYS-DEC’s authority under New York’s Environmental Conservation Law. Dkt. # 242-2, p. 104. The Order on Consent obligates these corporations to remediate the site and provides that:
If, after review, the [NYSDEC] accepts and approves the engineer’s certification that construction of the remedial program was completed in accordance with the Approved Remedial Design, then, unless a supplementary remedial program is required ... such acceptance shall constitute a release for each and every claim, demand, remedy or action whatsoever against [plaintiff], their respective directors, officers, employees, and their parents, affiliates, predecessors, successors and assigns who are not otherwise responsible parties which the [NYSDEC] has or may have pursuant to Article 27, Title 13 of the ECL or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.), relative to or arising from the disposal of hazardous waste or substances at the Site and except as specified herein, [plaintiffs] obligations pursuant to this Order shall be deemed satisfied and terminated; provided, however, that the [NYSDEC] specifically reserves all of its rights concerning, and such release and satisfaction shall not extend to claims for natural resources damages nor to any investigation or remediation the [NYSDEC] deems necessary due to environmental conditions on-Site or off-Site which are related to the disposal of wastes at the Site which indicate that the Approved Remedial Program is not sufficiently protective of human health or the environment.
Dkt. # 242-2, p. 111.
On or about March 8, 2004, additional underground storage tanks and soil contaminated with gasoline were discovered on the site and removed by plaintiff. Dkt. # 204-2, ¶¶ 19-21.
As of July 29, 2004, plaintiff affirms that it has expended $5,056,907.45 to clean up the property. Dkt. # 175-40, ¶ 4. Plaintiff expects to expend a minimum of $597,230.96 in future costs. Dkt. # 175-40, ¶ 12. Plaintiff has recovered approximately $1,312,888.98 in third party settlements and expects to recover an additional $26,938.00 from another settling party. Dkt. # 175-40, ¶ 13.
Booth Oil has informed plaintiff that it has approximately $450,000 available to pay its creditors. Dkt. # 175-2, ¶ 42. Plaintiff contends that if Booth Oil had not made improper disbursements to and for the benefit of George Booth, III and his business partner, Ahsen Yelkin, there would be an additional $1,025,000 available in the contingency fund. Dkt: # 175-2, ¶ 65.
DISCUSSION AND ANALYSIS
Capacity to Sue
As an initial matter, defendants challenge the ability of an unincorporated association to commence this action. Dkt.
# 174, p. 4. Defendants also complain that plaintiff failed to file a certificate of designation. Dkt. # 174, p. 4.
Plaintiff responds that it has the capacity to commence this action pursuant to Fed.R.Civ.P. 17(b) and New York General Associations Law § 12. Dkt. # 190, p. 5. Plaintiff also argues that a certificate of designation is not applicable. Dkt. # 190, p. 7. Finally, plaintiff asserts that defendants have waived this argument by failing to raise it as an affirmative defense in their answers, as required by Rule 9(a) of the Federal Rules of Civil Procedure. Dkt. #260, p. 18.
Rule 9(a) provides that
It is not necessary to aver the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, except to the extent required to show the jurisdiction of the court. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the party desiring to raise the issue shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader’s knowledge.
In the instant case, plaintiffs complaint and first amended complaint describe plaintiff as “an unincorporated association of corporations.” Dkt. #1, ¶ 5; Dkt. # 129, ¶ 12. Both the complaint and the first amended complaint identify the individual members of the group. Dkt. # 1, ¶ 5; Dkt. # 129, ¶ 20. Defendants did not raise plaintiffs capacity to sue as an affirmative defense in their answers to the complaint; in opposition to plaintiffs motion to amend the complaint; or as an affirmative defense in their answers to the first amended complaint. Accordingly, this issue is waived. See E.R. Squibb & Sons, Inc. v. Accident & Casualty Ins. Co., 160 F.3d 925, 936 (2d Cir.1998) (“Lack of capacity is generally not considered jurisdictional and is therefore waived if not specifically raised.”).
Even if the argument were to be considered, it would not warrant dismissal of plaintiffs lawsuit. Rule 17(b) of the Federal Rules of Civil Procedure provides that
The capacity of an individual, other than one acting in a representative capacity, to sue or be sued shall be determined by the law of the individual’s domicile. The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized. In all other cases capacity to sue or be sued shall be determined by the law of the state in which the district court is held, except (1) that a partnership or other unincorporated association, which has no such capacity by the law of such state, may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or law of the United States ....
New York’s General Associations Law affords an unincorporated association the capacity to sue through its president or treasurer. N.Y. Gen. Ass’ns Law § 12. Because the statute “is generally viewed as a pleading and procedural aid, and not as denying a right of action to an association lacking officers bearing such titles, suit can be brought in the name of an officer who is the functional equivalent to a president or treasurer.” Arbor Hill Concerned Citizens Neighborhood Ass’n v. City of Albany, 250 F.Supp.2d 48, 62 (N.D.N.Y.2003) (internal quotations and citations omitted). However, the filing of a lawsuit “in the name of the unincorporated association alone, and not through its president or treasurer, or an officer who executes equivalent functions ... is not a fatal defect and can be corrected” by filing an Amended Complaint in the name of the appropriate officer. Id. Accordingly, the Court finds that defendants have waived their argument regarding plaintiffs capacity to sue and that, in any event, plaintiffs error in filing this lawsuit in the name of the unincorporated association alone does not require dismissal of the lawsuit.
Finally, the Court notes that § 18 of the General Associations Law, which requires the filing of a certificate with the department of state, applies only to associations defined by statute as a “joint stock association” or a “business trust.” See Formula One Constructors Ass’n v. Watkins Glen Grand Prix Corp., 110 Misc.2d 247, 249, 441 N.Y.S.2d 864 (Sup.Ct. Schuyler County 1981).
First Cause of Action — CERCLA
The amended complaint asserts a CERCLA contribution action against defendants Booth Oil, George Booth, Jr., George Booth, III, Joseph Chalhoub, Ali-sen Yelkin, Breslube Industries (as the general partner of Breslube Enterprises), Lonsdale Schofield, Schofield Oil, and Speedy Oil. Dkt. # 129.
Standing
Defendants argue that plaintiff cannot maintain a CERCLA contribution claim because plaintiffs members executed the Order on Consent with NYSDEC in their individual capacities. Dkt. #239, p. 13; Dkt. # 262, p. 2.
Plaintiff explains that the name of the association was used for convenience because there were a large number of members and argues that a representative action is permissible because it is “seeking contribution, a form of restitution for the group as a whole, not individual damages for its individual members.” Dkt. #246, p. 1; Dkt. # 260, p. 20. However, plaintiff seeks permission to amend the complaint to name the eight remaining corporations, each of which were identified by name in the first amended complaint and were signatories to the Order on Consent with the NYSDEC, as representatives of the association. Dkt. #246, p. 11; Dkt. #260, pp. 19 & 21.
Members of an association may bring an action on behalf of themselves and all other members of the association. Section 12 of the General Associations Law, providing that an action may be maintained by the president or treasurer of an unincorporated association does not contradict the common-law rule that a representative action may be brought in the names of all of the members of an association.
McOwen v. Boccaccio, 79 A.D.2d 1098, 435 N.Y.S.2d 844 (4th Dep’t 1981); see Lefebvre v. Kelly, No. 83 CV 3211, 1987 WL 12036 at *3 (E.D.N.Y. May 21, 1987). However, it would be futile to permit an amendment of the complaint to permit the members to proceed as representatives of the group unless the group itself has standing.
The Supreme Court of the United States has “recognized that an association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Hunt v. Washington State Apple Adver. Comm’n, 432 U.S. 333, 344, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). In the instant case, the corporations who have funded cleanup of the site have standing to seek contribution from other responsible parties. Moreover, the very purpose of the Booth Oil Site Administrative Group is to administer and fund the cleanup of the site. With respect to the third prong, it is not necessary for each individual member to participate in this action because the Court has broad discretion to consider the absence of responsible parties from the action and the adequacy of the contribution of those parties which settled with the plaintiff when it apportions liability among responsible parties. See Goodrich Corp. v. Town of Middlebury, 311 F.3d 154, 170 (2d Cir.2002) (allocation of response costs is “an equitable determination based on the district court’s discretionary selection of the appropriate equitable factors in a given case.”), cert. denied, 539 U.S. 937, 123 S.Ct. 2577, 156 L.Ed.2d 621 (2003); Bedford Affiliates v. Sills, 156 F.3d 416, 429 (2d Cir.1998). Accordingly, it is recommended that plaintiff be permitted to amend its complaint to include the eight corporations as representatives of the association.
Before it can turn its attention to the merits of the various motions for summary judgment with respect to the CERCLA cause of action, the Court must first address the viability of the cause of action in light of the decision of the United States Supreme Court in Cooper Industries v. Aviall Services, Inc., 543 U.S. 157, 125 5.Ct. 577, 160 L.Ed.2d 548 (2004).
CERCLA’s contribution statute provides, inter alia, that
Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title.
42 U.S.C. § 9613(f)(1). In Cooper Industries, the Supreme Court considered “whether a private party who has not been sued under § 106 or § 107(a) may nevertheless obtain contribution under § 113(f)(1) from other liable parties”. 543 U.S. at 160-61, 125 S.Ct. 577. Upon review of the plain language of the statute, the Supreme Court held that a potentially responsible party cannot obtain contribution pursuant to 42 U.S.C. § 9613(f)(1) unless that party has been subjected to a civil action pursuant to 42 U.S.C. § 9606 or § 9607(a). Id. at 166-67, 125 S.Ct. 577. Since it is undisputed that no such civil action was commenced against plaintiff, Cooper Industries forecloses any claim pursuant to 42 U.S.C. § 9613(f) (1).
Plaintiff asserts that its administrative order on consent, executed by the NYS-DEC on June 23, 2003, satisfies 42 U.S.C. § 9613(f)(3)(B), because the Order on Consent resolves plaintiffs liability to New York. Dkt. # 241, p. 3.
Defendants argue that this docum