105 Mt. Kisco Associates LLC et, al v. Paul Carozza et, al

Filing 174

OPINION & ORDER re: 115 MOTION to Dismiss the First Amended Complaint, filed by Village of Mount Kisco, 128 MOTION to Dismiss , filed by Teledyne Environmental, Inc., 121 MOTION to Dismiss , filed by Paul Carozza, 107 MOTION to Dismiss the Amended Complaint, filed by Westchester County Department of Health, 136 MOTION to Dismiss . MOTION for Summary Judgment . MOTION for Sanctions , filed by Merritt Envi ronmental Consulting Corp., Teledyne Environmental, Inc. (As Successor to Isotopes, Inc.) Defendant WCDOH's motion to dismiss is GRANTED in part and DENIED in part, Defendants Village of Mount Kisco/MKURA's motion to dismiss is GRANTED in part and DENIED in part, Defendant Carozza's motion to dismiss is GRANTED in part and DENIED in part, Defendant Merritt's motion to dismiss or for summary judgement and for sanctions is GRANTED in part and DENIED in part, and Defendan t Teledyne/Environmental Inc.'s motion to dismiss is GRANTED in its entirety. Defendants Merritt, Teledyne/Environmental Inc., and MKURA are dismissed from this action. Plaintiffs' claims for indemnification and contribution are dismissed as against all parties, and Plaintiffs' claims for "remediation" actions as defined by CERCLA are dismissed with prejudice. Plaintiffs' claim against Carozza subject to arbitration is dismissed as described herein. As to claim s not dismissed with prejudice, Plaintiffs are granted leave to file an amended complaint in conformance with this Opinion on or before April 29, 2017. The Defendants are directed to file responsive pleadings by May 29, 2017. The parties are direct ed to contact the chambers of Magistrate Judge McCarthy to schedule a status conference. The Clerk of Court is respectfully requested to terminate the motions at ECF Nos. 107, 115, 121, 128, and 136. So Ordered., (Merritt Environmental Consulting Corp. and Mt. Kisco Urban Renewal Agency terminated.) (Signed by Judge Nelson Stephen Roman on 3/30/17) (yv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
105 MT. KISCO ASSOCIATES LLC,
AMANDA'S LANE LLC, and MARK STAGG,
Plaintiffs,
-againstPAUL CAROZZA, RICHARD'S LUMBER &
BUILDING MATERIALS CENTER, INC.,
CANRAD as successor to CANADIAN RADIUM
& URANIUM CORP., VILLAGE OF MOUNT
KISCO, MT. KISCO URBAN RENEWAL
AGENCY, WESTCHESTER COUNTY
DEPARTMENT OF HEALTH, UNITED STATES,
TELEDYNE ENVIRONMENTAL, INC. as
successor to ISOTOPES INC., WESTWOOD
NUCLEAR CORP. as successor to ISOTOPES
INC., NDL ORGANIZATION, INC., as successor
to NUCLEAR DIAGNOSTICS LABORATORIES,
INC., MERRITT ENVIRONMENTAL
CONSULTING CORP., DOES 1through50, and
DOES 51through100,

No. 15 Civ. 5346 (NSR)
OPINION & ORDER

Defendants.
NELSON S. ROMAN, United States District Judge
Plaintiffs 105 Mt. Kisco Associates LLC ("105 Mt. Kisco Associates"), Amanda's Lane
LLC ("Amanda's Lane") and Mark Stagg ("Stagg") (collectively, "Plaintiffs") bring this action
pursuant to the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. § 9601 et. seq., against Defendants Paul Carozza ("Carozza"); Richards
Home Center & Lumber, Inc.; Village of Mount Kisco (the "Village"); Mt. Kisco Urban Renewal
Agency ("MKURA"); Westchester County Department of Health ("WCDOH"); the United States;

USDC ~;JJ. ii'
DOCUMENT
ELECTRONICALLY FILEL.
DOC#:
DATE FILED:

I

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Teledyne Environmental Inc. (“Environmental”) as successor to Isotopes, Inc.; Canrad as
successor to Canadian Radium & Uranium Corp.; Westwood Nuclear Corp. as successor to
Isotopes, Inc.; the NDL Organization as successor to Nuclear Diagnostics Laboratory, Inc.; Merritt
Environmental Consulting Corp. (“Merritt”); DOES 1 through 50 and DOES 51 through 100, in
connection with the contamination of real property located at 105 Kisco Avenue, Mt. Kisco, New
York (“the Property” or “105 Mt. Kisco”), the purchase of said Property and the operating
agreement for an LLC related to the Property. Before this Court are motions to dismiss filed by
Defendants

WCDOH,

the

Village

of

Mount

Kisco/MKURA,

Paul

Carozza,

and

Teledyne/Environmental Inc. as successor to Isotopes Inc., and a motion to dismiss or for summary
judgment and sanctions by Defendant Merritt. For the following reasons, Defendant WCDOH’s
motion is GRANTED in part and DENIED in part, Defendant Village/MKURA’s motion to
dismiss is GRANTED in part and DENIED in part, Defendant Carozza’s motion to dismiss is
GRANTED in part and DENIED in part, Defendant Merritt’s motion is GRANTED in part and
DENIED in part, and Defendant Environmental Inc.’s motion is GRANTED.
BACKGROUND
The following facts are derived from the Amended Complaint, and unless otherwise noted,
and are accepted as true for purposes of this motion. Given the extensive facts in this case, only
those relevant to these motions are included here.
105 Mt. Kisco “has a long history of radiological contamination stemming from the
Property’s involvement in the Manhattan Project during World War II.” (Am. Compl. (“FAC”) ¶
6, ECF No. 86.) The Property was first contaminated as a result of the operation of a uranium and
radium processing facility (the “Refinery”), which provided the United States with materials to
create the first atomic bomb. (Id. ¶¶ 72-74.) This Refinery, located on and around the Property,

2

was opened by Defendant Canrad in 1942. (Id.) Uranium residues were processed at the Refinery,
and “materials recovered at the refinery included radium, radium-D, polonium and actinium, which
are all highly radioactive substances.” (Id. ¶¶ 78-80.) As a result of the “waste inherent in the
uranium production processes,” radiological contamination was located throughout the Refinery
and in other areas. (Id. ¶ 85.)
After World War II, Canrad began to produce commercial quality radium and uranium at
the Refinery for instruments and other products at the Refinery. (Id. ¶ 87.) Throughout the 1940s
and 1950s, the government noted “deplorable conditions at the Refinery,” which led to high
exposure rates among employees. (Id. ¶¶ 88-89.) In 1958, Canrad began recovery operations, or
clean-up, after the NYSDOH directed it to dispose of radioactive waste originating on the Property,
which included multiple recovery operations from 1958 to 1966. (Id. ¶¶ 91-92.) However, Canrad
failed to decontaminate the Property. (Id. ¶ 92.)
In 1966, Defendant MKURA purchased the Property, as well as the adjoining 103 Kisco
Avenue, with the intention of rehabilitating it and returning it to the market. (Id. ¶¶ 93-94.)
MKURA owned and operated 105 Mt. Kisco and oversaw remediation, removal and disposal
efforts, including the demolition of the Refinery. (Id. ¶¶ 95.) MKURA coordinated with
Defendant WCDOH in November 1966 to expedite the demolition of the Refinery and
decontamination of the Property, and as a result, released radioactive materials over the Property
and contaminated previously clean areas. (Id. ¶¶ 95-97.) This release and distribution of
radioactive materials occurred because of “grossly negligent demolition of the Refinery,
construction of the adjacent Railroad Avenue and disposal of waste from” the Property, carried
out by MKURA, WCDOH, “and/or” the Village of Mount Kisco. (Id. ¶ 99.) Although, as
Plaintiffs allege “at all relevant times,” during the demolition and construction the Property was

3

owned and operated by MKURA (Id. ¶ 100) the Village of Mount Kisco arranged for and directed
the construction of Railroad Avenue, which further released and dispersed radioactive materials
throughout the Property. (Id. ¶ 101.) Defendant Teledyne (“and/or” Westwood) contracted with
MKURA, WCDOH, “and/or” the Village of Mount Kisco to dispose of contaminated material
from the former Refinery site. (Id. ¶ 103.) Teledyne and/or Westwood contaminated the Property
when it failed to dispose of large amounts of contaminated soil which was released and spread
throughout the Property. (Id.) Additionally, surveys conducted by WCDOH, NYSDOH, and other
entities indicate that residual hot spots of radium existed in parts of the Property even after various
attempts to rehabilitate the Property throughout 1970 by MKURA and the Village of Mount Kisco.
(Id. ¶ 106.)
From the late 1970s onward, local, state, and federal agencies investigated, discovered, and
reported on harmful contaminates at the Property. (Id. ¶ 108.) In 1980, the WCDOH reviewed
the Property and confirmed new areas of contamination. (Id. ¶ 109.) In 1993, the NYSDOH, in
coordination with the WCDOH, completed a survey of the Refinery site and identified multiple
hot spots that existed throughout the Property. (Id. ¶ 110.) In 1994, the EPA conducted an on-site
inspection to measure radon levels and exposure rates and to collect samples, and observed
“elevated” radioactive exposure rates on the Property. (Id. ¶ 111.) Another report of the Property
issued by another governmental entity in 1998 stated that radioactive materials were present in
other areas owned and controlled by Carozza and his partner. (Id. ¶¶ 113-116.) No further state
or federal reviews were initiated until 2013. (Id. ¶ 116.)
In 1980, Defendant Carozza began to operate Defendant Richard’s Lumber (a lumber and
hardware store located on the Property), located on the Property, and owned and operated
Richard’s Lumber from 1993 until 2012, exercising complete and unfettered control and dominion

4

over it. (Id. ¶¶ 117-118.) During the thirty-two years of operation and ownership, Carozza
oversaw disposal, release, and removal of radioactive soil and substances from the Property. (Id.
¶ 119.) Defendants Carozza’s and Richard’s Lumber’s regular disturbance, release, and disposal
of radioactive soil further contaminated and damaged the Property. (Id. ¶ 120.) Defendant
Carozza also arranged for the removal of contaminated soil from the Property, further dispersing
and releasing radioactive materials throughout the Property as noted in various governmental
reports. (Id. ¶ 121.)
In fact, as a result of a 1993 letter from the New York State Department of Environmental
Conservation (“NYSDEC”), which identified the possible contamination of the Property,
Richard’s Lumber commenced a lawsuit against the Village/Town of Mt. Kisco, alleging that the
Village failed to disclose the contamination to Richard’s Lumber when it negotiated a lease
agreement. (Id. ¶ 122.) During that litigation, Carozza submitted an affidavit, stating that he only
learned of the radiation “hot spots” on the Property in 1993, after he had already leased the
Property, and that Richard’s Lumber would not have leased the Property had it known it could not
disturb the soil for the purposes for which it was rented. (Id. ¶¶ 123-124.) Carozza was thus fully
aware in 1993 of contamination on the Property. (Id. ¶ 126.)
Additionally, in 1998, Carozza’s business partner in Richard’s Lumber attended a meeting
with members from various governmental entities and the Village of Mt. Kisco to discuss a survey
issued that year by the NYSDEC, and possible remediation at the Property. (Id. ¶ 127.) Plaintiffs
allege that Carozza’s partner kept Carozza apprised of all information communicated to him at that

5

meeting by the government agencies regarding the radioactive contamination at the Property. (Id.
¶ 128.)
As to the fraud allegedly committed by Carozza, in late summer 2012, Carozza informed
Plaintiff Stagg, who later became Carozza’s co-member in 105 Mt. Kisco Associates LLC, that
Richard’s Lumber was in dire straits because it had defaulted on its mortgage for the Property, and
the Local Teamsters Union had outstanding judgments against Richard’s Lumber for more than
$200,000. (Id. ¶ 133.) Plaintiffs allege that Carozza “schemed to draw Stagg into a partnership,
offload the Property” and satisfy the mortgage and debts, recognizing that Stagg would never
purchase property contaminated by radioactive materials. (Id. ¶¶ 135-136.) Without knowledge
of the radioactive contamination, Stagg decided to partner with Carozza. (Id. at 139.) Together,
Stagg and Carozza formed two LLCs, NY Stone and 105 Mt. Kisco Associates, to start a masonry
supply business; the former would serve as the operating entity, a masonry and lumber store, and
the later would serve as landlord. (Id. ¶¶ 140, 143.) As part of the agreement, Stagg, acting through
his wholly owned LLC, Plaintiffs Amanda’s Lane, agreed to purchase the Property from Richard’s
Lumber and assume the mortgage. (Id. ¶ 141.) Carozza never divulged information about the
radioactive contamination and left Stagg uninformed regarding the hazardous radium and uranium
waste at the Property. (Id. ¶ 145.)
In December 2012, Plaintiff Amanda’s Lane purchased the Property and assumed the
mortgage on the Property. (Id. ¶ 150.) Stagg personally assumed all responsibility for Richard’s
Lumber’s mortgage loan and guaranteed the Assumption of Mortgage without any guaranty from
Carozza or Richard’s Lumber, taking on all the loan liability personally. (Id. ¶ 151.) Later, Stagg,
through Plaintiff Amanda’s Lane paid $488,326.40 to Defendant Richard’s Lumber to satisfy the
Teamsters judgment, with some of the funds going directly to Carozza, in order to clear his

6

partner’s debts to start their relationship with a clean slate. (Id. ¶¶ 153-154.) In 2013, Stagg loaned
nearly three million to NY Stone to pay for various renovations and modifications both before and
after its opening, contributions Stagg never would have made had he known of the radioactive
contamination at the Property. (Id. at 155-159.)
Later, in 2013, following repeated reports from multiple government agencies for over
thirty years, the EPA decided to investigate the Property. (Id. ¶ 129.) In September 2013, EPA
investigators commenced an on-site reconnaissance and gamma radiation screening at the
Property. (Id. ¶ 130.) Plaintiffs were not made aware of this renewed investigation until recently,
and were not informed of the contamination until 2015. (Id. ¶ 130.) The EPA found radium
contamination at the Property, and that the Property’s condition had not changed significantly
since 1998. (Id. ¶ 131.)
In March 2014, Stagg and Carozza executed an Operating Agreement, an agreement Stagg
would never have entered into had Stagg known about the contamination, which included an
arbitration clause for certain disputes regarding the Property. (Id. ¶¶ 162-165.) The Operating
Agreement does allow, however, for its members to petition a court for injunctive relief. (Id. ¶¶
164-165.) By allegedly concealing information regarding the contamination on the Property,
Carozza breached his fiduciary obligation to Stagg under the agreement. (Id. ¶¶ 167-171.) Indeed,
as part of this fraud, Carozza allegedly concealed an investigation of the Property conducted by
the EPA in 2013-2014. (Id. ¶¶ 164-172.)
From 2012-2014, NY Stone used Stagg’s personal funds and issued monthly checks to pay
the mortgage on the Property. (Id. ¶ 173.) In 2014, the parties refinanced the mortgage through
Bank United (“the Bank”), which sought a Phase I Environmental Assessment. (Id. ¶ 175.) The
Bank and Merritt contracted for Merritt to conduct a comprehensive assessment (“Phase I

7

Report”). (Id. ¶ 176.) Merritt allegedly knew the costs of the assessment would ultimately be
borne by 105 Mt. Kisco Associates at closing because it wanted to refinance the mortgage,
intended for the agreement to benefit 105 Mt. Kisco as the sole purpose of the assessment was to
facilitate the mortgage refinance, knew that its work product would be relied upon, and that the
refinancing was contingent upon it. (Id. ¶¶ 178-180.)
Pursuant to the Phase I Contract, Merritt agreed that it would be responsible for performing
the assessment in accord with the applicable guideline as set forth by the American Society of
Testing Materials (“ATSM”). (Id. ¶ 181.) The assessment was intended to uncover the presence
or likely presence of hazardous substances, but Merritt failed to conduct the assessment in accord
with the applicable standards, including failing to interview relevant parties or further investigate
the hazardous waste history of surrounding properties. (Id. ¶¶ 183-186, 191-199.) Plaintiff alleges
Carozza provided false and misleading answers to Merritt in the “Owner’s Questionnaire,”
indicating he had never been informed of the past existence of hazardous substances. (Id. ¶ 187.)
Plaintiffs allege that if Merritt had conducted a proper investigation, then it would have noted the
significant radium and uranium contamination on the property, and history of governmental
investigations. (Id. ¶ 200.)
In June 2015, the EPA, NYSDEC and NYSDOH met with Plaintiffs to discuss remediation
of the Property, and the EPA informed Plaintiffs that it would issue an order directing remediation
of the Property. (Id. ¶ 20.) To date, Plaintiffs have expended tens of thousands of dollars
researching and investigating the extent of radiological contamination, and plan to spend
significantly more to fully comprehend and remedy it. (Id. ¶ 132.)

8

STANDARD ON A MOTION TO DISMISS
Under Rule 12(b)(6), the inquiry is whether the complaint “contain[s] sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); accord
Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010). To survive a motion to dismiss, a complaint
must supply “factual allegations sufficient ‘to raise a right to relief above the speculative level.’”
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 550
U.S. at 555). The Court must take all material factual allegations as true and draw reasonable
inferences in the non-moving party’s favor, but the Court is “‘not bound to accept as true a legal
conclusion couched as a factual allegation,’” or to credit “mere conclusory statements” or
“[t]hreadbare recitals of the elements of a cause of action.” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 555). In determining whether a complaint states a plausible claim for relief,
a district court must consider the context and “draw on its judicial experience and common sense.”
Id. at 662. A claim is facially plausible when the factual content pleaded allows a court “to draw
a reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.
DISCUSSION
Arguments Relevant to Movants Individually
I.

Merritt 1
a. Negligent Misrepresentation and Breach of Contract
Plaintiffs allege that Merritt was negligent in its assessment of the Property, made negligent

misrepresentations and omissions in its Phase I Report about the history and quality of the land,
and that Plaintiffs relied upon the Report in its decision to refinance its mortgage on the Property.

1

The Court addresses arguments made by multiple movants below, supra at 34.

9

(FAC ¶¶ 301, 302, 303.) Although Bank United contracted Merritt to perform the assessment,
Plaintiffs assert that Merritt knew that its work product would be used to inform 105 Mt. Kisco
Associates’ decision to refinance its mortgage loan on the Property, and that Merritt knew 105 Mt.
Kisco Associates would bear the cost of the assessment. (Id. ¶¶ 178-179.) Defendant contends
that Plaintiffs have failed to allege a level of contact between the parties sufficient to approach that
of contractual privity, and that Merrit was merely conducting due diligence as part of the Bank’s
underwriting process for the benefit of the Bank. (See, e.g., Merritt Mem., at 4.)
It is well established that a claim for negligent misrepresentation requires the plaintiff to
plausibly allege “(1) the existence of a special or privity-like relationship imposing a duty on the
defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and
(3) reasonable reliance on the information.” Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d
173, 180 (2011) (citing J.A.O. Acquisition Corp. v. Stavitsky, 8 N.Y.3d 144, 148 (2007)). Because
no actual contractual relationship exists between the parties, to satisfy the first prong, Plaintiffs
must sufficiently allege the establishment of a relationship tantamount to contractual privity.
Ridge Seneca Plaza, LLC v. BP Prod. N. Am. Inc., 545 F. App’x 44, 46 (2d Cir. 2013) (summary
order) (citing Prudential Ins. Co. of Am. v. Dewey, Ballantine, Bushby, Palmer & Wood, 80 N.Y.2d
377, 382 (1992)).
To assert that a relationship nearing privity exists, the factual allegations in Plaintiffs’
complaint must plausibly allege: (1) that Merritt was aware its Phase I Report would be used for
the particular purpose of informing Plaintiffs’ loan refinance decision; (2) that Plaintiffs, a known
party to Merritt, relied on the Report in furtherance of its refinance decision; and (3) that there was
some conduct by Merritt linking it to Plaintiffs and evincing Merrit’s understanding that Plaintiffs
would rely on the Report. Id.; State of California Pub. Employees’ Ret. Sys. v. Shearman &

10

Sterling, 95 N.Y.2d 427, 434 (same).
Plaintiffs’ Amended Complaint fails to allege sufficient factual content to indicate that
there could have been a privity-like relationship between the parties. Instead, Plaintiffs’ Amended
Complaint merely concludes that Merritt was aware Plaintiff 105 Mt. Kisco Associates was going
to rely on its Phase I Report, that the assessment and subsequent Report were formulated for this
purpose, and that Plaintiff relied on the Report to its detriment. (See, e.g., FAC ¶¶ 297, 299; Pl.’s
Opp. Re Merritt at 11.) To remedy this deficiency, in their Opposition, Plaintiffs point to the
Service Agreement, which is presumably the contract between Merritt and Bank United for the
Phase I Report, annexed to Peter Skelos’ Declaration in Support of Merritt’s Motion, to
demonstrate that Merritt was aware of 105 Mt. Kisco Associates, and cognizant that it would rely
upon the report. (See Pl.’s Opp. Re Merritt at 11.) Specifically, Plaintiffs describe general
language in the agreement indicating that Merritt “should” determine if the report is being utilized
by Bank United for any transaction, that “all reports completed” should be addressed to Bank
United and “the borrower,” and a directive that “each report” contain language indicating Bank
United “and/or a limited number of investors involved the transaction” may rely upon the report
in connection with a planned loan. (See id.) 2 Merritt contends that the agreement contains express
language limiting the rights in the contract to the parties to the exclusion of third-parties, and that
the Phase I Report does not identify any of the Plaintiffs as the “borrower,” nor was it addressed
to Plaintiffs. (See Merritt Mem. at 6.) 3 The Court notes that the actual Phase I Report, annexed to
Plaintiffs’ Complaint, does not identify or address Plaintiffs, nor do Plaintiffs allege that it received

2
Plaintiffs argue that it has not been afforded an opportunity to see a full version of the Service Agreement, or to
obtain discovery regarding the same, and appear to attempt to reserve the right to challenge whether this document is
in fact the agreement between Merritt and the Bank relating to the Phase I Report. (See Pl. Mem. Re Merritt at 3)
(“Merritt annexed an agreement that it purports is the service agreement related to Phase I conducted at the
Property…”).)
3
The cover sheet of the Report states that the Report was “prepared for Bank United”. (FAC Ex. D at 1.)

11

the report from Merritt, or make any representations with regard to how it received the Report for
that matter. (See FAC Ex. D.)
The Court need not look outside of the Amended Complaint to determine that Plaintiffs’
cause of action for negligent misrepresentation is deficient. Plaintiffs fail to provide factual
allegations upon which the Court could conclude that there may have been a privity-like
relationship between the parties. Plaintiffs argue that privity was established by Merritt’s “actions
in assessing the Property, interviewing individuals, 4 and preparing the Phase I [Report],” (FAC ¶
307), but fail to elaborate as to the linking connection between Plaintiffs and Merritt. Linking
conduct generally consists of “some form of direct contact between the [the parties], such as a
face-to-face conversation, the sharing of documents, or other ‘substantive communication’
between the parties.” Sec. Inv’r Prot. Corp. v. BDO Seidman, LLP, 222 F.3d 63, 75 (2d Cir.),
certified question accepted, 95 N.Y.2d 831(2000), and certified question answered, 95 N.Y.2d
702, 746 (2001) (internal quotation marks and citations omitted) (noting the standard for
establishing “linking conduct” is “high”); see CRT Investments, Ltd. v. BDO Seidman, LLP, 85
A.D.3d 470, 472 (2011) (“the fact that plaintiffs were entitled to and received a copy of the …
financial statements, or that [Defendant] knew that the investors would rely upon the information
contained in the financial statements, does not establish the requisite linking conduct” for purposes
of negligent misrepresentation). Furthermore, the New York Court of Appeals has refused to
permit recovery “by any foreseeable plaintiff who relied on [a] negligently prepared report, and
have rejected even a somewhat narrower rule that would permit recovery where the reliant party
or class of parties was actually known or foreseen by the defendants but the individual defendant’s

4

The Court notes that Plaintiffs criticize Defendant due to an alleged failure to make sufficient contact, and argues
that Defendant was negligent in its assessment because it failed to speak with more than a single individual, Defendant
Carrozza. (FAC ¶ 186.)

12

conduct did not link it to that third party.” Mandarin Trading Ltd., 16 N.Y.3d at 181 (citing
Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 424–25 (1989)
(internal quotation marks) (emphasis added)). Notably, although Plaintiffs should be able to allege
some factual content with regard to direct conduct “linking” the parties, they do not do so.
Additionally, the Phase I Report specifically states that the report has been prepared for the
sole use of Merritt’s client, the Bank, and that “no other party may use the report without the
written authority” of Merritt, under a section clearly labeled, “Reliance.” (See Decl. of Peter
Skelos in Support of Merritt Mot. to Dismiss, Phase I Report, at ¶ 4.2.6, ECF No. 138, Ex. 1382). 5 Thus, the very document Plaintiffs rely on undermine their ability to satisfy the reliance prong
necessary to allege that a privity-like relationship exists, and belies Plaintiffs’ negligent
misrepresentation claim. See Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 73
N.Y.2d at 424–25 (collecting caselaw indicating reliance by non-party plaintiff must have been an
“end aim” of the report provided).
For similar reasons, Plaintiffs also fail to plausibly allege their breach of contract claim,
premised upon their role as “third-party beneficiary.” (See Pl. Mem. Re Merritt at 14-16);
India.Com, Inc. v. Dalal, 412 F.3d 315, 321 (2d Cir. 2005) (citing Nepco Forged Prods., Inc. v.
Consolidated Edison Co. of N.Y., Inc., 99 A.D.2d 508 (2d Dep’t 1984)) (“Under New York law,
the effectiveness of a negating clause to preclude third-party beneficiary status is well-established:
‘[w]here a provision exists … expressly negating an intent to permit enforcement by third parties,

5

Although portions of the Phase I Report are annexed to the Amended Complaint, Merritt provides the Phase I Report
in its entirety. As the Report is “integral to the complaint … and Plaintiffs assert claims arising directly from [its]
terms … the Court may properly consider it on Defendant’s motion to dismiss.” Barbato v. U.S. Bank Nat'l Ass'n,
No. 14-CV-2233 (NSR), 2016 WL 158588, at *5 (S.D.N.Y. Jan. 12, 2016) (internal quotation marks and citations
omitted). This version of the Report identifies the Bank as the entity for which the Report was prepared in at least
two places. (See ECF No. 138-2 at 2, 3.) The undersigned notes that this version is accompanied by an invoice from
Merritt to Bank United for a fee in connection with the Report. (Id. at 1.) Because it is unclear whether this forms
part of the Report or stands alone as an independent document, the Court does not rely on this.

13

... that provision is decisive.’”); Bd. of Educ. of Northport-E. Northport Union Free Sch. Dist. v.
Long Island Power Auth., 130 A.D.3d 953, 956 (N.Y. App. Div. 2015) (language expressly
negating enforcement by third parties can serve as documentary evidence to refute a third-party
beneficiary claim); see also LaSalle Nat. Bank v. Ernst & Young LLP, 285 A.D.2d 101, 108, 729
N.Y.S.2d 671 (2001) “[a] non-party may sue for breach of contract only if it is an intended, and
not a mere incidental, beneficiary … [and] parties’ intent to benefit the third party must be
apparent”). 6 The Phase I Report provided by Plaintiffs negates the premise that any of the
Plaintiffs were intended third-party beneficiaries. On these bases, the Court dismisses Plaintiffs’
claims for negligent misrepresentation and breach of contract as against Merritt. 7
II.

Westchester County Department of Health
a) Whether WCDOH Can Be Named as a Party
Defendant WCDOH argues that it cannot be sued because it is a municipal department and

“administrative arm” of Westchester County (the “County”), with no legal identity of its own.
(See, e.g., Reply Mem. in Support of WCDOH’s Mot. to Dismiss (“WCDOH Reply”) at 1, ECF
No. 112.) To demonstrate that its status precludes suit, WCDOH directs the Court to the
Westchester County Charter § 149.01. (WCDOH Mem. In Support of Mot. to Dismiss (“WCDOH

6

Plaintiffs’ allegations against Merritt stem from the claim that misrepresentations in the Phase I Report led them to
refinance the mortgage on the Property in 2014 (see FAC ¶¶ 174-180). Plaintiffs claim that “in … 2014 … plaintiff
Stagg and defendant Carozza decided to refinance the mortgage,” and as a result, the Bank contracted for Merritt to
perform the inspection and analysis leading to the Phase I Report. (See id. ¶ 174) Though possible Plaintiffs made
the preliminary decision to refinance at an earlier date, the Court notes that the Report is dated as having been issued
in 2013, which appears to be before the time period when Plaintiffs made the decision to refinance. (See ECF No.
138-2 at 3.)
7
The Court declines to convert this motion into a motion for summary judgment. Finnegan v. Univ. of Rochester
Med. Ctr., 21 F. Supp. 2d 223, 228 (W.D.N.Y. 1998) (“Because summary judgment is a drastic device, it should not
be granted where parties have yet to exercise their opportunity for pre-trial discovery.” (internal quotation marks and
citations omitted)). Nor, at this time, will the Court oblige Merritt’s request to sanction Plaintiffs. See Rothberg v.
Phil's Main Roofing, LLC, No. 14-CV-10195 (NSR), 2016 WL 2344882, at *4 (S.D.N.Y. May 2, 2016) (denying
sanctions where “the Court [was] not of the opinion that Defendant’s motion was completely without factual and legal
basis or definitively made in bad faith”); see also Ipcon Collections LLC v. Costco Wholesale Corp., 698 F.3d 58, 63
(2d Cir. 2012) (stating that “sanctions under Rule 11 are discretionary, not mandatory”).

14

Mem.”) at 9, n. 44, ECF No. 109.); WCDOH Reply at 1, n. 3.) This section establishes the County
Department of Health, but does not indicate whether WCDOH is an administrative body exempt
from suit. WCDOH invites the Court to make an inferential leap based upon this citation, with
little explanation, but provides no legal argument or case law to argue, for instance, that this
language is indicative of the kind barring suit against municipal, administrative entities. 8
Other sections of the Charter contemplate that County Departments may be named in suits.
For example, Chapter 617, Section 194.51 of the Westchester County Charter states “[t]he
assignment and transfer of the functions … shall not affect any action or proceeding, civil or
criminal, but the same may be prosecuted or defended in the name of the county or the department
to which such assignment is made, and such department shall be deemed substituted as a party…”.
See “Westchester County Charter,” https://www.municode.com/library/ny/westchester_county
/codes/code_of_ordinances?nodeId=CHADCOWECO, (last visited on March 25, 2017). 9 Chapter
617, Section 194.61 states “[a]ll notices of claim, … for the commencement of actions and legal
proceedings against the County of Westchester or any commission, department or bureau thereof
shall be served as provided by law and all actions or proceedings wherein the County of
Westchester or any agency, commission, department or bureau thereof is a party shall be brought
… in the County of Westchester.” Id. Furthermore, the Westchester Department of Health has its
own, designated website (http://health.westchestergov.com/), a factor considered when determine
whether a department is a legal entity separate from the County. See Humphrey v. Onondaga Cty.
Dep’t of Soc. Servs., 05-CV-0987, 2008 WL 1945231, at *3 (N.D.N.Y. May 1, 2008) (“counsel

8

Plaintiffs counter with a slew of cases in which various County Departments, including the WCDOH, participated
in suits as Defendants. (See Pl.’s Mem. in Opp. to WCDOH Mot. to Dismiss (“Pl. Mem. Re WCDOH”) at 9, ECF
No.111.)
9
See Wells Fargo Bank, N.A. v. Wrights Mill Holdings, LLC, No. 14-CV-9783, 2015 WL 5122590, at *7 (S.D.N.Y.
Aug. 31, 2015) (stating it is “clearly proper to take judicial notice” of “documents retrieved from official government
websites” and that “Courts routinely take judicial notice of such governmental records”).

15

for the County does not … explain how or why the Department is not a viable legal entity.
Moreover, review of the … County government’s official website reveals a designated page for
the Department … Thus, the Court has no basis presently to dismiss plaintiff’s claim based on
failure to name the proper defendant.”).

For these reasons, the Court declines to dismiss

Defendant’s claim on the basis that WCDOH is an improper party. It may ultimately be most
appropriate to substitute the County for WCDOH in this action, but the Court finds that Plaintiffs’
claims are appropriately alleged against WCDOH at this time. 10
b) Timeliness of Plaintiffs’ Claims
“For cost recovery actions under § 107, CERCLA ‘distinguishes between two kinds of
response: remedial actions—generally long-term or permanent containment or disposal
programs—and removal efforts—typically short-term cleanup arrangements.’” MPM Silicones,
LLC v. Union Carbide Corp., 111-CV-1542 (BKS) (ATB), 2016 WL 3962630, at *11 (N.D.N.Y.
July 7, 2016) (citing Schaefer v. Town of Victor, 457 F.3d 188, 195 (2d Cir. 2006) (quoting New
York v. Shore Realty Corp., 759 F.2d 1032, 1040 (2d Cir. 1985)). The statute of limitations for
the recovery of costs incurred in relation to “‘removal actions’ is three years after the completion
of the removal action ... while the limitations period for the recovery of costs related to ‘remedial
actions’ is six years after the initiation of physical on-site construction of the remediation.” Id.
(citing Schaefer F.3d at 195; 42 U.S.C. § 9613(g)(2)).
Both parties appear to acknowledge that remediation and removal efforts consistent with
CERCLA, whether successful or not, took place prior to Plaintiffs’ involvement with the Property.
(See, e.g., WCDOH Mem. at 11, 13; FAC ¶¶ 22, 43, 95.) Defendant argues that the statute

10

To the extent Westchester County is deemed to be the proper party the County need only be substituted in WCDOH’s
place. Okongwu v. Cty. of Erie, 14-CV-0832 (WMS), 2016 WL 4678979, at *3 (W.D.N.Y. Sept. 7, 2016) (citing St.
John Rennalls v. County of Westchester, 159 F.R.D. 418, 419 n. 1 (S.D.N.Y. 1994).)

16

contemplates that both a remedial and removal action can occur at the same facility, but that courts
have generally held there can only be a single remedial and removal action per facility. (See
WCDOH Mem. at 10.)11 On this basis, Defendant argues that Plaintiffs’ claims for reimbursement
under § 107(a), initiated in February 2016, are time-barred. Plaintiffs do not offer a substantive
response to this argument, and merely contends that a new statute of limitations runs each time a
new party begins removal or remediation actions. (See Pl’s. Opp. Re WCDOH, at 12, 14) (“statute
of limitations does not begin to run until the private party begins removing or remediating the
contamination … that a government agency negligently failed to clean a property years ago does
not bar a private party from recovering the costs it incurs to fix that agency’s negligence.”)
Plaintiffs do not cite a controlling case in which one party’s initiation of a remedial action was
found not to trigger the statute of limitations for another party that engaged in subsequent remedial
conduct, nor do Plaintiffs make any additional arguments to support its contention that its remedial
claims are not time-barred. (See Pl. Opp. Re WCDOH, at 12-15.)
“Distilled to its core, the key distinction between a remedial and removal action is the
purpose for which the action is undertaken.” Yankee Gas Servs. Co. v. UGI Utils., Inc., 616 F.
Supp. 2d 228, 270 (D. Conn. 2009). “Removal actions are generally clean-up measures taken in
response to immediate threats to public health and safety,” while “[r]emedial actions are typically
actions designed to permanently remediate hazardous waste.” N.Y. State Elec. & Gas Corp. v.
First Energy Corp. (“NYSEG”), 766 F.3d 212, 230–31 (2d Cir. 2014) (citing United States v. W.R.
Grace & Co., 429 F.3d 1224, 1244 (9th Cir. 2005) (“Courts have ... stressed the immediacy of a
threat in deciding whether a cleanup is a removal action.”); id. (citing Minnesota v. Kalman W.
Abrams Metals, Inc., 155 F.3d 1019, 1024 (8th Cir.1998) (removal actions are those “taken to

11

Defendant cites two cases from the Sixth and Tenth Circuit, and one case from a Connecticut district court in support
of this proposition. (See Def’s. Mem. at 10.)

17

counter imminent and substantial threats to public health and welfare”). Removal measures tend
to be shorter in duration and lower in cost than remedial measures, they are also “generally
designed to address contamination at its endpoint and not to permanently remediate the problem.”
Id.; see MPM Silicones, LLC, 2016 WL 3962630, at *12 (citing NYSEG, 766 F.3d at 233 (“[T]he
2004 cleanup has already taken several years and cost over $29 million, with costs expected to rise
to $54 million. This is in keeping with a remedial, rather than removal, action.”).
As to the number of remedial and removal actions that can occur at a single facility, the
Second Circuit has held:
We agree with the majority view and hold that there can only be one
remedial action at a site. The very nature of a remedial action is to
permanently remediate hazardous waste ... A remedial action is
supposed to be a final, once-and-for-all cleanup of a site, and once
a PRP completes an approved remediation plan, it would not be
logical—or fair—to subject that entity to additional CERCLA
lawsuits seeking yet additional permanent relief, although we
recognize that what seems final at a given point in time might come
to appear inadequate at a later date as scientific knowledge
progresses.
NYSEG, 766 F.3d at 236 (collecting cases). Thus the Second Circuit has barred suits to recover
costs for subsequent remedial work at facilities where previous remedial work was initiated more
than six years prior to the lawsuit. Id. 12
Additionally, in a suit before another district court in this Circuit, where a subsequent
owner had argued that a previous party’s actions could not trigger the statute of limitations for any
remedial work that party might engage in, the court found that the statute of limitations did in fact

12

In contrast, the Second Circuit explicitly “express[ed] no view [and took no position] as to whether there may only
be one removal action under CERCLA.” NYSEG, 766 F.3d at 236, n. 19. On a separate note, to the extent Plaintiffs
attempt to imply that this rule differs when governmental as opposed to private entities are involved – though they
make no argument to this effect – the Court is not aware of such a distinction, nor do Plaintiffs direct the Court to any
legal citation indicating as such. See Pl’s. Opp. Re WCDOH, at 12, 14) (“that a government agency negligently failed
to clean a property years ago does not bar a private party from recovering the costs it incurs to fix that agency’s
negligence.”)

18

begin to run when the prior owner commenced remedial action, and that the plaintiff’s claims to
recover response costs for their own remedial actions would be barred by the statute of limitations.
see MPM Silicones, LLC, 2016 WL 3962630, at *14 (“The Court agrees that following NYSEG,
the statute of limitations began to run when the prior owners commenced physical on-site
construction of the remedial action, and [new owner’s] CERCLA claim for remedial costs is timebarred.”)
Plaintiffs do not indicate whether it has, or plans to engage in remedial or removal actions.
(See Pl. Opp. Re WCDOH at 12-15; see id. at 14 (“Plaintiffs sued … well within the three or six
year statute of limitations”).) Nor can the Court discern the nature of Plaintiffs’ conduct at this
stage, whether categorically “remedial” or “removal” in nature. However, prevailing law indicates
that there can only be a single remedial action per facility, and the statute of limitations to recover
for that action began six years after its initiation. See 42 U.S.C. § 9613(g)(2). As to remedial work
previously engaged in at the Property beginning in the 1960s (see, e.g., FAC ¶¶ 94-95) (describing
remediation efforts), the statute of limitations clearly ran long before this action was commenced.
Thus, any claims alleged to recover response costs for remedial actions are barred under the statute
of limitations delineated in CERCLA § 107, and are dismissed with prejudice.
c) WCDOH’s Claims of Immunity
1. Eleventh Amendment Immunity
Defendant argues that because it was acting “at the behest of the State” the Eleventh
Amendment immunity “should be extended” to bar Plaintiffs’ suit against Defendant “in this
narrowly tailored instance.” (See, e.g., WCDOH. Mem. at 14; WCDOH Reply at 5.)
Defendant has identified itself as a “municipal corporation.” (See WCDOH Mem. at 8-9.)
Caselaw cited by WCDOH itself demonstrates that there is no blanket immunity for such an entity,

19

nor does WCDOH direct the Court’s attention to any case law in which a similarly situated entity
was granted immunity in the context of CERCLA for the work WCDOH allegedly performed here.
(WCDOH Mem. at 15) (citing B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1198–99 (2d Cir.
1992) (“[I]t is clear that a municipality may be liable as a potentially responsible party if it arranges
for the disposal of hazardous substances. CERCLA expressly includes municipalities, states, and
other political subdivisions within its definition of persons who can incur such liability under §
9607 …. [E]xpress exceptions to liability are strong evidence that municipalities are otherwise
subject to CERCLA liability … To construe CERCLA as providing an exemption … simply
because the municipality undertakes such action in furtherance of its sovereign status would create
an unwarranted break in the statutory chain of responsibility.”); see AMW Materials Testing, Inc.
v. Town of Babylon, 584 F.3d 436, 447 (2d Cir. 2009) (“state and local governments remain liable
under § 9607(a) for actions other than those involving emergency responses.”); see also N. Ins.
Co. of N.Y. v. Chatham Cty., Ga., 547 U.S. 189, 189 (2006) (“sovereign immunity does not extend
to counties … even when they “exercise a ‘slice of state power’”) (internal citations omitted);
Woods v. Rondout Valley Cent. Sch. Dist. Bd of Educ., 466 F.3d 232, 243 (2d Cir. 2006) (“Eleventh
Amendment immunity does not extend to a “municipal corporation,” … or a “political subdivision”
of the state .… or “units of local government, such as cities and counties”). 13
WCDOH also argues that it should not be held liable because its actions were akin to
instances where the “governmental unit [was] responsible only for promulgating disposal
regulations or … permitting disposal facilities;” activity that Defendant contends has been found
to present insufficient “nexus” “between the municipality and the hazardous substances” to hold

13

On reply, WCDOH provides no substantive response to Plaintiffs’ argument that it has described itself as a
municipal corporation, and that such entities are not covered under the Eleventh Amendment, and instead, merely
reiterates the points made in its initial memorandum. (See Pl. Opp. Re WCDOH at 16; WCDOH Mem. at 5.)

20

such an entity liable. (WCDOH Mem. at 15.) It would be inappropriate for the Court to make a
determination as to the nature and bounds of WCDOH’s actions at this stage.
Nor is the Court persuaded by Defendant’s argument that it should not be held liable
pursuant to CERCLA’s emergency response provision, 42 U.S.C. § 9607(d)(2). (See WCDOH
Mem. at 15.) Plaintiffs do not allege that Defendant acted in response to an emergency. (See Pl.
Mem. Re WCDOH at 18.)

Nor, in its initial memorandum, does Defendant point to any

documents attached to Plaintiffs’ Amended Complaint to indicate it acted in the context of an
emergency. (See Def’s. Mem. at 15-17); see AMW Materials Testing, Inc., 584 F.3d at 448 (citing
East Bay Mun. Util. Dist. v. U.S. Dep’t of Commerce, 142 F.3d 479, 483 (D.C.Cir. 1998) (“§
9607(d)(2) ‘gives state and local governments a partial defense against claims arising from their
emergency remediation efforts, limiting their liability to cases of gross negligence or intentional
misconduct’”) (emphasis added)). In its Reply, Defendant does appear to argue that it acted in the
context of an “environmental emergency” but provides no parenthetical to accompany a citation
that appears inapposite. (See WCDOH Reply at 5.) 14 Plaintiffs plausibly allege that WCDOH
engaged in the kind of activity that would incur liability under CERCLA. Because WCDOH has
provided no persuasive justification to dismiss Plaintiffs’ claims, the Court declines to do so.

14

On a separate note, the Court must reject WCDOH’s apparent contention that because Plaintiffs allege WCDOH
surveyed the premises of the Site, WCDOH has established by a preponderance of evidence that it “exercised due care
in address the hazardous substance” and is thus exempt from liability under 42 U.S.C. § 9607(b). WCDOH fails to
provide a legal citation to support this proposition, nor does it explain how the Court could make such a determination
at this juncture. (See WCDOH Mem. at 17 (citing 42 U.S.C. § 9607(b) (“There shall be no liability under subsection
(a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release
or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by … an act or
omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs
in connection with a contractual relationship, existing directly or indirectly, with the defendant … if the defendant
establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance
concerned, taking into consideration the characteristics of such hazardous substance…”)).

21

III.

MKURA and Village of Mount Kisco
a) MKURA
Plaintiffs choose not to address Defendants’ arguments that all claims against MKURA

must be dismissed because it lacks the capacity to be sued, and instead, focuses on the contention
that Plaintiffs have plausibly alleged successor liability against the Village of Mount Kisco. (See
Village of Mount Kisco/MKURA Mem. in Support of Mot. to Dismiss (“Village/MKURA Mem.”)
at 7-8, ECF No. 116; see generally Pl.’s Mem. in Opp. to Village/MKURA’s Mot to Dismiss (“Pl.
Opp. Re Village/MKURA”), ECF No.118).

Plaintiffs’ choice not to oppose Defendants’

arguments with regard to MKURA are deemed purposeful, and all claims against MKURA
individually are considered abandoned. See Tuman v. VL GEM LLC, No. 15-CV-7801 (NSR),
2017 WL 781486, at *7–8 (S.D.N.Y. Feb. 27, 2017) (citing Westchester Cty. Indep. Party v.
Astorino, 137 F. Supp. 3d 586, 618 (S.D.N.Y. 2015) (“abandonment constitutes an[ ] independent
ground for dismissal”)).
b) Successor Liability
Plaintiffs contend that Defendant Village has “succeeded to or otherwise assumed the
liabilities of Defendant MKURA.” (FAC ¶ 50.) Defendants Village/MKURA argue that because
the Legislature dissolved MKURA without transferring its obligations or liabilities to the Village,
and Plaintiffs fail to allege sufficient facts for the Court to infer an exception to the general rule
that the acquisition of one business’s assets by another business does not result in successor
liability, Plaintiffs’ claims of successor liability against the Village must fail. (Village/MKURA
Mem. at 12.)
In 1964, MKURA was created pursuant to New York General Municipal Law (“GML”) §
577 as a “body corporate and politic,” composed of the “village mayor … and four village

22

trustees.” See Affidavit of Whitney Singleton in Support of Motion to Dismiss (“Singleton
Affidavit”), Ex. G, N.Y. Gen. Mun. Law § 577); 15 see also N.Y. Gen. Mun. Law § 553 (a
“[municipal urban renewal] agency shall be a corporate governmental agency, constituting a public
benefit corporation”). As an urban renewal agency MKURA had the capacity to: “to sue and be
sued; … to make and execute contracts and all other instruments necessary or convenient for the
exercise of its powers and functions; … to appoint officers, agents and employees, prescribe their
duties, fix their compensation and delegate to one of more of such officers, agents or employees
such powers or duties as it may deem proper; … [and,] with the consent of the municipality to use
agents, employees, and facilities of the municipality, paying to the municipality its agreed
proportion of the compensation or costs.” N.Y. Gen. Mun. Law § 554.
In 2012, the New York Legislature repealed MKURA through Chapter 373 of the Laws of
1971, and declared that “any existing records, property, rights, titles and interest … shall vest in
and be possessed by the village of Mount Kisco and its successor and assigns.” See Singleton
Affidavit, Ex. H. at 3, § 12); 2011 Bill Text NY A.B. 8823. As WCDOH notes, though the
Legislature transferred “obligations and liabilities” of industrial development agencies repealed by
the same legislation to their respective municipalities, it declined to transfer MKURA’s obligations
and liabilities to the Village. (See id., §§ 154-190.) Aside from this omission, the language in
many of the sections repealing other agencies is essentially identical to that of the section repealing
MKURA. 16
“‘CERCLA encompasses successor liability,’ which is governed by federal common law.”
N.Y. v. Town of Clarkstown, 95 F. Supp. 3d 660, 682 (S.D.N.Y. 2015) (citing New York v. Nat.

15

The Court may take judicial notice of public information. See Pub. Employees' Ret. Sys. of Mississippi v. Goldman
Sachs Grp., Inc., 09-CV-1110 (HB), 2011 WL 135821, at *1 n.1 (S.D.N.Y. Jan. 12, 2011).
16
Plaintiffs do not take issue with these contentions as set forth by WCDOH.

23

Serv. Indus., Inc., 460 F.3d 201, 206 (2d Cir. 2006)). According to “both New York and traditional
common law, ‘a corporation that purchases the assets of another corporation is generally not liable
for the seller’s liabilities.’” Id. (citing Nat. Serv. Indus., Inc., 460 F.3d at 209.) However, a buyer
of a corporation’s assets can be held liable as its successor under one of the following exceptions:
“(1) it expressly or impliedly assumed the predecessor’s tort liability, (2) there was a consolidation
or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the
selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations.”
Id. (internal quotation marks omitted).” Thus, “to state a claim based on successor liability, a
plaintiff must plead enough facts for the Court to infer that one of the exceptions to “the general
rule finding that a business entity acquiring the assets from another business generally results in
no successor liability.” Id. (emphasis added).
Plaintiffs assert the second exception applies, and that the dissolution of MKURA was
“really a de facto consolidation or merger of MKURA and the Village.” (See Pl’s. Opp. Re
Village/MKURA, at 11-12.) To this end, Plaintiffs claim that MKURA was made up of members
of the Village Board of Trustees and the Village mayor, and was eventually dissolved because its
responsibilities were redundant to that of the Village. (See id. at 11.) Thus, Plaintiffs argue that
the entities are one in the same, and that upon dissolution, the Village acquired MKURA’s
responsibilities and tasks. (See Pl. Opp. to Village, at 12-13.) As support, Plaintiffs cite the
minutes to the meetings held by the Village Board of Trustees, during which individuals such as
the Mayor and Village Attorney state that the “Village/Town Board is the Urban Renewal Board.”
(See id. at 12.)
The “hall-marks” of a de facto merger are: “(1) continuity of ownership; (2) cessation of
ordinary business and dissolution of the acquired corporation as soon as possible; (3) assumption

24

by the purchaser of the liabilities ordinarily necessary for the uninterrupted continuation of the
business of the acquired corporation; and (4) continuity of management, personnel, physical
location, assets, and general business operation.” N.Y. v. Nat’l Serv. Indus., Inc., 460 F.3d 201,
209 (2d Cir. 2006). The first element, continuity of ownership “‘is designed to identify situations
where the shareholders of a seller corporation retain some ownership interest in their assets after
cleansing those assets of liability.’” City of Syracuse v. Loomis Armored US, LLC, 900 F. Supp.
2d 274, 288–89 (N.D.N.Y. 2012) (citing New York v. National Service Indus., Inc., 460 F.3d 201,
211 (2d Cir. 2006); id. at 289 (“Where one corporation purchases another corporation’s assets, a
continuity of ownership exists where the predecessor corporation’s shareholders become direct or
indirect shareholders of the successor corporation.”); (see also Pl. Opp Re Village/MKURA at 10
(citing caselaw for the proposition that CERCLA liability is established where corporation
purchased assets of entity).) This element has been recognized by the Second Circuit as the
“‘essence of a merger’ and thus a necessary predicate to a finding of a de facto merger” in New
York. Nat’l Serv. Indus., Inc., 460 F.3d at 212.
Neither Plaintiffs’ complaint nor opposition papers allege any factual allegations with
regard to continuity of ownership, or explain how the law applies to Plaintiffs’ circumstances in
this context. While Plaintiffs may assert factual allegations in relation to the second and fourth
elements – dissolution, and continuity of management 17 and business operations 18 – the Second

17

Courts in this district have recognized agencies created under the GML to be “separate and distinct entities” with
existences independent of the municipalities in which they operate, despite the fact that their members consist of the
town supervisors and councilmen by statutory design. Field Day, LLC v. Cty. of Suffolk, 799 F. Supp. 2d 186, 193
(E.D.N.Y. 2011); see also New York State Comptroller, 1978 WL 4811, at *1 (“As a general proposition, a sponsoring
municipality is not liable for debts and liabilities incurred by an urban renewal agency, although such a municipality
may agree to make itself so liable .... It then follows that as a general proposition, the agency itself and not the
sponsoring municipality would be primarily liable for debts and liabilities incurred by the agency.”) Under these
circumstances, it is unclear whether overlap in membership alone would suffice to satisfy the “continuity of
management” element. However, the Court need not decide, as the claim is insufficient as pled.
18
As to continuity of business operations, also part of the fourth element of a de-facto merger, Plaintiffs argue both
that the entities performed the same task and were thus redundant, and that the Village assumed MKURA’s

25

Circuit has found this insufficient to support a claim of de facto merger. See Priestley v.
Headminder, Inc., 647 F.3d 497, 506 (2d Cir. 2011) (allegation regarding “continuity of …
officers,” without sufficient facts to allege continuity of ownership is insufficient to support claim
of de facto merger). For these reasons, Plaintiffs’ claims against the Village arising out of
successor liability are dismissed.
IV.

Teledyne/Environmental Inc.
a) Successor liability
Defendant Environmental Inc., formerly known as Teledyne Environmental, Inc.

(“Environmental Inc.”), correctly notes that the only allegation purporting to establish that it is a
successor to Isotopes, Inc. reads as follows:
Upon information and belief, based on official state records, defendant Teledyne,
as successor to Isotopes, Inc., was and is a duly organized foreign corporation doing
business and/or transacting business in the State of New York and/or should have
expected its acts to have consequences within the State of New York. At all times
relevant, Teledyne, by contract, agreement or otherwise, arranged for the removal
and transport of hazardous materials to and from the Mt. Kisco Property.
(FAC ¶ 57; see Environmental, Inc. Mem. In Support of Mot. to Dismiss (“Environ. Mem.”) at 4,
ECF No.129.) 19 Thus, the Amended Complaint fails to plead any facts that would “allow the Court
to infer that one of the exceptions to the general rule finding that a business entity acquiring the
assets from another business generally results in no successor liability,” and instead, proffers only
a single, bare, conclusory allegation to support the contention that Environmental Inc. is liable as
successor to Isotopes, Inc. Clarkstown, 95 F. Supp. at 682; see also id. at 660 (mere allegation

responsibilities. To the extent the entities were redundant, it follows that the Village merely continued to perform the
same tasks it had performed previously, and a dissolved MKURA would no longer be able to engage in duplicative
work. Though Plaintiffs’ arguments may border on contradiction, drawing all reasonable inferences in favor of
Plaintiffs at this stage, the Court assumes Plaintiffs argue that the Village assumed tasks and responsibilities previously
belonging solely to MKURA.
19
Plaintiffs effectively concede this point, and do not attempt to cite additional allegations in their Amended Complaint
they believe bolster this claim.

26

that party is successor to another entity, “standing alone, is insufficient for the Court to infer that
the general rule governing successor liability does not apply”).
To correct this deficiency, Plaintiffs argues that the third exception to the general rule
governing successor liability – that the purchasing corporation was a mere continuation of the
selling corporation – applies. (See supra at 24 identifying the four exceptions to the general rule
precluding successor liability where entity purchases assets of another entity); see also Pl. Mem.
in Opp. to Environ. Mot. to Dismiss (“Pl. Opp. Re Environ.”) at 3, ECF No. 131.) According to
Plaintiffs, under this exception the “‘substantial continuity’ theory … is often applied,” and should
presumably be applied here. (Pl. Opp. Re Environ., at 12-13.) In this vein, Plaintiffs ignore what
has now been well-established for a decade – “the substantial continuity doctrine … is no longer
good law” and “cannot be applied to determine successor liability under CERCLA.” N.Y. v. Nat’l
Servs. Indus., Inc., 352 F.3d 682, 683, 687 (2d Cir. 2003). Instead, to plead that one entity is a
“mere continuation” of another, Plaintiffs must plausibly allege sufficient facts for the Court to
infer that “‘it is not simply the business of the original corporation which continues, but the
corporate entity itself and there is a common identity of directors, stockholders, and the existence
of only one corporation at the completion of the transfer.” Martin Hilti Family Trust v. Knoedler
Gallery, LLC, 137 F. Supp. 3d 430, 457–58 (S.D.N.Y. 2015) (internal quotation marks and
citations omitted); see Nat’l Servs. Indus., Inc., 352 F.3d at 685 (finding “mere continuation” based
upon “the existence of a single corporation after the transfer of assets, with an identity of stock,
stockholders, and directors between the successor and predecessor corporations.”); see Martin,
137 F. Supp. 3d at 458 (plaintiff plausibly alleged “mere continuation” where management
remained the same, and “predecessor entity transferred not only its assets, but also its business
location, employees, management, and good will to the successor.”); Societe Anonyme Dauphitex

27

v. Schoenfelder Corp., 07-CV-489, 2007 WL 3253592, at *5-7 (S.D.N.Y. Nov. 2, 2007) (plaintiff
sufficiently alleged “mere continuation” where predecessor and successor company had shared
office space, an address, employees and management, and where it was logical to infer that the
successor company was created to avoid contractual liability). Neither Plaintiffs’ sole allegation
that “Environmental Inc. [is a] successor to Isotopes,” (see FAC ¶ 57), nor Plaintiffs’ contention
that “Isotopes became what is now known as Environmental Inc. … through a number of name
changes and mergers,” (see Pl. Opp. Re Environ., at 13) or related arguments, are sufficient to
establish a plausible claim for successor liability. 20 Because Plaintiffs fail to plausibly allege that
Environmental is successor to Isotopes, and the CERCLA claims against Environmental appear to
be alleged against it only in the role as successor, all claims against Environmental Inc. are
dismissed.

(See Pl. Mem. Re Environ. at 9, 11, 12) (indicating CERCLA claims against

Environmental Inc. arise out of its alleged role as successor).
V.

Defendant Paul Carozza
a) Whether Plaintiffs Stagg & Amanda’s Lane Have Standing Under CERCLA
Defendant contends that Plaintiffs Stagg and Amanda’s Lane lack standing under

CERCLA because they have no ownership interest in the Property and Plaintiffs fail to plausibly
allege that either of these entites are involved in paying response costs. (See Carozza Opp. at 14.)
“To establish standing, a plaintiff must show three elements: (1) that it has suffered injuryin-fact; (2) that the defendant’s complained-of conduct caused such injury-in-fact; and (3) a

20

Plaintiffs contends that this claim, though insufficiently alleged, should survive because a successor liability claim
is subject to the more lenient pleading requirement delineated in Federal Rule of Civil Procedure 8(a), (see Pl. Mem.
Re Environ. at 11), and Plaintiffs should be permitted to engage in discovery to “confirm which entity bears Isotopes’
successor liability (see id. at 15).” These arguments are unavailing. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79
(2009) (“Rule 8 … does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”);
see also id. at 686 (holding that where complaint fails pleading requirements, plaintiff “is not entitled to discovery,
cabined or otherwise”); Main St. Legal Servs., Inc. v. Nat'l Sec. Council, 811 F.3d 542, 567 (2d Cir. 2016) (a plaintiff
who has failed adequately to state a claim is not entitled to discovery).

28

likelihood that the relief requested will redress the plaintiff’s claimed injury.” Solvent Chem. Co.
ICC Indus. v. E.I. Dupont De Nemours & Co., 242 F. Supp. 2d 196, 217 (W.D.N.Y. 2002) (citing
Steel Co. v. Citizens for a Better Envt., 523 U.S. 83, 103–04 (1998)).
Plaintiffs allege that Amanda’s Lane (Stagg’s wholly owned LLC) purchased and assumed
the mortgage on the Property on December 21, 2012, and that Stagg personally assumed all
responsibility for Richard’s Lumber’s mortgage loan and guaranteed the Assumption of Mortgage
without any guaranty from Carozza or Richard’s Lumber “thereby personally taking on all of the
loan liability.” (FAC ¶¶ 141, 150, 151.) Plaintiffs further allege that they have undertaken and
will continue to undertake investigations and response actions in connection with the Property to
address releases or threatened releases of hazardous substances and will continue to incur those
costs recoverable under CERCLA. (FAC ¶ 231.) Because Plaintiffs are “seeking to recover costs
associated with the cleanup of the site,” they can recover damages under CERCLA, and their
allegations are thus sufficient to confer standing. See Wademan v. Concra, 13 F. Supp. 2d 295,
302 (N.D.N.Y. 1998) (denying standing under CERCLA where Plaintiffs were “not seeking to
recover the costs associated with the cleanup of the site” and had failed to allege injury that could
be “redressed by a favorable decision”.)
b) Plaintiffs’ Claim for Equitable Estoppel
Carozza argues that Plaintiffs’ claim for equitable estoppel should be dismissed because
such a claim is not a cause of action, and cannot form the basis for a recovery of damages. (See
Carozza Mem. at 15.) On Reply, Carozza appears to abandon this argument, and contends that
Plaintiffs fail to plausibly allege an equitable estoppel claim.
As Plaintiffs point out, the Second Circuit does appear to recognize equitable estoppel as a
claim under New York law. Lee v. Burkhart, 991 F.2d 1004, 1010 (2d Cir. 1993) (finding “facts

29

are insufficient to support a claim for equitable estoppel” in ERISA context); Sabilia v. Richmond,
11-CV-739 (JPO) (MHD), 2011 WL 7091353, at *30 (S.D.N.Y. Oct. 26, 2011), report and
recommendation adopted, 11-CV-739 (JPO), 2012 WL 213656 (S.D.N.Y. Jan. 24, 2012)
(recommending dismissal of equitable estoppel claim where plaintiffs sought only money damages
and did “not seek to preclude defendants from asserting any right, privilege, defense, or claim, or
from engaging in certain conduct.”); see also Citibank, N.A. v. Morgan Stanley & Co. Int’l, PLC,
724 F. Supp. 2d 407, 419 (S.D.N.Y. 2010) (listing elements that must be pled to assert equitable
estoppel claim) (internal citations omitted).

“The elements of estoppel are (1) material

representation, (2) reliance and (3) damage.” Lee, 991 F.2d at 1009.
In support of this claim, Plaintiffs allege that Carozza actively concealed the Property’s
radioactive contamination from Plaintiffs, which, if known, “would have changed [Plaintiffs’]
position and prevented them from … purchasing the Property,” (Pl. Mem. in Opp. to Carozza at
12; see, e.g., FAC ¶¶ 135-137, 139, 146-149), that, if not for Carozza’s misrepresentations, 21
“Plaintiffs would not have entered into a partnership with him … paid off his … debts, …
purchased the contaminated Property, assumed the Mortgage, personally guaranteed the Mortgage
or put hundreds of thousands of dollars towards building a masonry business on the Property,” (Pl.
Mem. in Opp. to Carozza at 13; see, e.g., FAC ¶¶ 136-137, 146-149, 159, 165, 171), and that
“Plaintiffs have and will continue to suffer damages as a result of Carozza’s fraudulent
concealment of the contamination,” (see Pl. Mem. in Opp. to Carozza at 13; see, e.g., FAC ¶ 132,
154.) Furthermore, Plaintiffs seek not just monetary, but also declaratory and injunctive relief.
(See FAC ¶ 2.) Thus, at this stage, Plaintiffs have plausibly asserted equitable estoppel.

21

At this stage, Plaintiffs have plausibly alleged that Carozza’s failure to disclose the contamination on the Property
was a material misrepresentation.

30

c) Claims Subject to Arbitration
Carozza asserts that Plaintiffs’ “state law claims” arising out of the Operating Agreement
between Stagg and Carozza (as members of 105 Mt. Kisco Associates LLC) (see FAC Ex. O
“Agreement”), for rescission of the agreement based upon fraudulent inducement (FAC ¶¶ 248254), damages based upon fraudulent inducement (id. ¶¶ 255-265), unjust enrichment (id. ¶¶ 266274), and money had and received (id. ¶¶ 275-283) should be dismissed under Rule 12(b)(3) on
the basis that the Court lacks venue to adjudicate these claims because they are governed by a
binding arbitration agreement. (See Carozza Mem., at 17.)
As articulated by the Second Circuit, “any doubts concerning the scope of arbitrable issues
should be resolved in favor of arbitration … Accordingly, federal policy requires us to construe
arbitration clauses as broadly as possible.” In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d 113,
128 (2d Cir. 2011) (internal quotation marks and citations omitted). To this end, in deciding
whether claims are subject to arbitration, the Circuit Court has established a two part test, which
requires consideration of the following: “(1) whether the parties have entered into a valid
agreement to arbitrate, and, if so, (2) whether the dispute at issue comes within the scope of the
arbitration agreement.” Id. (internal citations omitted).
The Operating Agreement in the instant action was designed in part to set forth “the
agreement of the parties about their respective rights and duties as parties to the Agreement and
about the …LLC” formed by Carozza and Stagg (105 Mount Kisco Associates LLC). (FAC Ex.
O at 1.) As provided by the Agreement, “the principal purpose of the LLC [was] … to own, operate
and develop real property located at” the Property. (Id.) The Agreement contains a mandatory
arbitration clause which provides as follows:
If any dispute arises among the members under or relating to this Agreement or
relating to the LLC’s business or internal affairs that the members cannot resolve
31

voluntarily among themselves or by meditation under Section 26, then, unless the
members decide otherwise by unanimous vote at the time, they shall resolve the
dispute by arbitration …. the rules governing any arbitration under this Section 27
shall be the AAA’s Commercial Arbitration Rules … For purposes of this Section
27, arbitral matters shall compromise the following types of matters: (a) Scope,
Construction and Enforcement of This Section, Etc.[:] [a]rbitral matters shall
include matters concerning the scope, construction and enforcement of this Section;
(b) Matters Involving Material Interests of the LLC or the Members[:] [a]rbitral
matters shall include material matters that arise under or relate to this Agreement
or to the internal affairs of the LLC.
Agreement at 43-44.
Plaintiffs do not challenge the validity of the arbitration clause. In fact, Plaintiffs attempt
to assert rights under the mandatory arbitration section as well, (See Pl. Opp. Re Carozza at 16),22
and there is no indication this agreement to arbitrate is invalid. In re Am. Exp. Fin. Advisors Sec.
Litig., 672 F.3d at 127 (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford, Jr. Univ., 489
U.S. 468, 479 (1989); S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758, 1774 (2010)) (“Arbitration
under the [FAA] is a matter of consent, not coercion, and parties are generally free to structure
their arbitration agreements as they see fit … As with any other contract, the parties intentions
control.”). As to the scope of the Agreement and whether it encompasses Plaintiffs’ claims, the
Court finds that the parties consented to the arbitration of Stagg’s claim for rescission of the
Operating Agreement due to fraudulent inducement; a dispute encompassed by the arbitration
provision as a “material matter[] aris[ing] under [or in] relat[ion] to th[e] Agreement.” See Ipcon
Collections LLC v. Costco Wholesale Corp., 698 F.3d 58, 61 (2d Cir. 2012) (internal quotation
marks and citations omitted) (“challenges to a contract containing an arbitration clause fall into
two categories: those that challenge the contract as a whole, and those that challenge the arbitration

22

Plaintiffs argue that arbitral claims can be pursued in Court pursuant Section 27.5 of the Agreement, which provides
“notwithstanding any other provision of this Agreement, any member may bring suit in a court … to petition a court
for injunctive relief with respect to a matter arising under or relating to the Agreement or relating to the LLC.” (See
Pl. Opp. Re Carozza at 16; Agreement at 44.) However, Plaintiffs’ Amended Complaint fails to specify the basis for
the request for such relief.

32

clause in particular” … [the FAA,] however, “does not permit the federal court to consider claims
of fraud in the inducement of the contract generally.”). See Arrigo v. Blue Fish Commodities, Inc.,
408 F. App’x 480, 482 (2d Cir. 2011) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 440 (2006) (“‘unless the challenge is to the arbitration clause itself, the issue of the contract’s
validity is considered by the arbitrator in the first instance.’”).
However, the remaining claims Carozza seeks to have dismissed in favor of arbitration
appear to be claims brought by Plaintiff Amanda’s Lane, a non-signatory to the Agreement. These
claims include a cause of action for the rescission of Amanda’s Lane’s purchase of the Property
based upon fraudulent inducement; for unjust enrichment in relation to Amanda’s Lane’s
satisfaction of Defendant Richard’s Lumber’s mortgage loan; and for “money had and received”
in connection with the payment of the mortgage loan. (See FAC ¶¶ 255-279.) Carozza invites the
Court to find that Amanda’s Lane is bound to the terms of the Agreement, and thus required to
arbitrate the aforementioned claims, on the basis that Amanda’s Lane is Plaintiff Stagg’s alter ego,
agent, or a beneficiary of the Agreement. (See Carozza at 19-21.) As an initial matter, when the
arbitration clause contains language indicating it is designed to encompass disputes between
signatories (or “members”) only, as the clause in question does here, the provision is generally
found not to encompass disputes involving non-signatories. See Trade Arbed, Inc. v. M/V
KANDALAKSHA, 02-CV-5121, 2003 WL 22097460, at *3 (S.D.N.Y. June 23, 2003) (“narrow
arbitration clauses which provide that ‘disputes between owners and charterers’ must be arbitrated
generally apply only to disputes between the particular parties identified in the clause.”); cf
Limonium Mar., S.A. v. Mizushima Marinera, S.A., 201 F.3d 431 (2d Cir. 1999) (“the nonsignatory
still cannot be compelled to arbitrate unless the arbitration clause itself contains language broad
enough to allow nonsignatories disputes to be brought within its terms.”) (internal quotation marks

33

and citations omitted).
While it may ultimately be most efficient and perhaps appropriate for Amanda’s Lane to
arbitrate its “state claims” along with Plaintiff Stagg, at this early stage of litigation, the Court does
not have enough information to make a determination as to the relationship between Stagg and
Amanda’s Lane. See, e.g., Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n, AFL-CIO v. A
& M Heating, Air Conditioning, Ventilation & Sheet Metal, Inc., 314 F. Supp. 2d 332, 347
(S.D.N.Y. 2004) (“When considering whether a party is the alter ego of a signatory … the court
weighs a number of different factors, no single one of which is dispositive, including whether the
two entities have substantially identical management, business purpose, operation, equipment,
customers, supervision and ownership) (internal quotation marks and citations omitted). Nor does
Carozza specify the direct benefit it believes was confirmed upon Plaintiff through the Agreement,
not to mention that the Agreement explicitly indicates there are no third-party beneficiaries. (See
Carozza Mem. at 21.)
Thus, at this stage, the Court dismisses Plaintiffs’ fifth cause of action for recession of the
Operating Agreement due to fraudulent inducement as against Defendant Carozza, without
prejudice, in favor of arbitration.
Arguments Applicable to Multiple Movants
VI.

Movants as Potentially Responsible Parties Under CERCLA
“CERCLA attempts to provide for the cleanup of hazardous substances and imposes strict

liability upon responsible persons for the costs of responding to a release or a threatened release
of such substances.” Atl. Richfield Co. v. Current Controls, Inc., 93-CV-0950, 1996 WL 528601,
at *5 (W.D.N.Y. Sept. 6, 1996). “[T]o [plead] a prima facie case of liability, a plaintiff must
[allege] that (1) the site is a ‘facility’ as defined in CERCLA, (2) a release or threatened release of

34

a hazardous substance has occurred, (3) the release or threatened release has caused the plaintiff
to incur response costs that were necessary and consistent with the National Contingency Plan set
up by CERCLA, and (4) the defendants fall within one or more of the four classes of responsible
persons described in CERCLA § 107(a).” Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160, 163
(2d Cir. 1999). As discussed below, WCDOH, Carozza, the Village, and WCDOH contend that
Plaintiffs have failed to plausibly allege the fourth factor against them; that they fall within one of
the categories of responsible and thus liable parties.
CERCLA §107(a), 42 U.S.C. § 9607(a), imposes liability upon the following four classes
of responsible parties: “(1) the owner and operator of a vessel or a 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....” 42 U.S.C. § 9607(a).
a) Owner Liability
To assert a claim for owner liability under CERCLA, a plaintiff must allege that (1) the
defendant is an ‘owner’ under 42 U.S.C. § 9607(a)(1) or (2). See Next Millennium Realty, LLC,
160 F. Supp. at 504–05 (E.D.N.Y. 2016). “Section 9607(a)(1) applies to all current owners and
operators, while [S]ection 9607(a)(2) primarily covers prior owners and operators.” See id.

35

Owners of the property where the release took place can be held under § 107(a), regardless of any
control or lack of control over the disposal activities. See, e.g., Monsanto, 858 F.2d at 169.
1. Carozza
As to Plaintiffs’ characterization of Carozza as an owner (operator or transporter), Carozza
argues that Plaintiffs’ Amended Complaint provides only conclusory allegations that recite the
elements of a CERCLA claim, without explanation as to Carozza’s alleged involvement in
activities that could give rise to liability. (Carozza Mem., at 12.) 23 In essence, as relevant to this
section, Carozza challenges whether Plaintiffs have provided sufficient factual content to allege
that he may qualify as an owner under CERCLA.
Plaintiffs assert Carozza is liable under CERCLA Section 107(a)(2), (see Pl. Opp. at 8-9),
which covers prior owners and operators. N.Y. v. Next Millennium Realty, LLC, 160 F. Supp. 3d
485, 505 (E.D.N.Y. 2016) (citing State of New York v. Shore Realty Corp., 759 F.2d 1032, 1044
(2d Cir.1985)). Under this section, a prior owner can be held liable if, during the time they owned
the facility in question, hazardous substances were disposed of on that property. 42 U.S.C.
9607(a)(2). Disposal is defined as “the discharge, deposit, injection, dumping, spilling, leaking,
or placing of any solid waste or hazardous waste so that such … waste … may enter the
environment…” 42 U.S.C. § 6903; ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 358
(2d Cir. 1997) (noting the definition of disposal in the context of 42 USC 9607(a)).
To allege this claim, Plaintiffs assert the following: Carozza and his partner owned the
Property from 1993 until 2012; during that time, “Carozza oversaw the disposal, release and
removal of radioactive soil and substances” from the Property, and the “regular disturbance,
release and disposal of radioactive soil further contaminated and damaged” the Property. (See

23

Carozza sets forth this general contention as to all CERCLA claims, and does not offer specific arguments with
regard to Plaintiffs’ allegations against him as to owner, operator or transporter liability. (Carozza Mem. at 11-12.)

36

FAC at ¶ 31, 119, 120.) Thus, Plaintiffs plausibly allege that Carozza owned 105 Mt. Kisco during
the time hazardous substances were “leak[ed], spill[ed],” or disposed of on the Property.
2. Village of Mount Kisco
Defendant Village argues that Plaintiffs’ claim of owner liability against it arise out of
Plaintiffs’ claims against MKURA, and are asserted against the Village only as successor to
MKURA’s liabilities. Plaintiffs merely respond that it has plausibly alleged that the Village is
liable as an “owner” because the Amended Complaint “states that MKURA owned the Property
during the negligent remediation and that the Village owned it thereafter.” (See Pls’. Opp to
Village at 7.)
Though Plaintiffs’ owner liability claim against the Village arises from the allegation that
all Defendants, including the Village, “owned or operated” the Mt. Kisco Property when the
Refinery was demolished and Railroad Avenue was relocated (FAC ¶¶ 214-220), the complaint
specifically alleges that MKURA, rather than the Village, owned the property during the relevant
time period. (See FAC at ¶¶ 93-96, 100.) Plaintiffs do not allege that the Village is a current
owner (§ 9607(a)(1)), or that it is a prior owner that owned the Property at the time that hazardous
substances were disposed of at the facility, (see § 9706(a)(2)). Because Plaintiffs’ owner liability
claim against the Village appears to arise out of Plaintiffs’ previously dismissed successor liability
claim, and Plaintiffs fail to plausibly allege owner liability against the Village, this claim is
dismissed.
b) Operator Liability Claims
Pursuant to 42 U.S.C. § 9607(a)(1), an “operator” of a facility may also be held liable under
CERCLA. Under CERCLA, a person is liable as a past “operator” if he “at the time of disposal
of any hazardous substance … operated any facility at which such hazardous substances were

37

disposed of.” 42 U.S.C. § 9607(a)(2). More specifically, for a party to be held liable as an
“operator,” it must have “manage[d], direct[d], or conduct[d] operations specifically related to
pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or
decisions about compliance with environmental regulations.” N.Y. State Elec. & Gas Corp., 766
F.3d at 222. This has been understood to imply a “level of control over the hazardous substances
at issue.” Yankee Gas Servs. Co. v. UGI Utilities, 428 F. App’x 18, 19–20 (2d Cir. 2011) (summary
order) (internal citations omitted); see Next Millennium Realty, L.L.C. v. Adchem Corp., 03-CV5985 (ARL), 2015 WL 11090419, at *13 (E.D.N.Y. Mar. 31, 2015) (citing Commander Oil Corp.
v. Barlo Equip. Corp., 215 F.3d 321, 328 (2d Cir. 2000)). (“It is settled in this circuit that owner
and operator liability should be treated separately.”)
1. Carozza
Carozza argues that Plaintiffs have failed to proffer sufficient factual allegations to
plausibly allege that Carozza is an “operator” under CERCLA. (See Carozza Mem., at 11-13.) In
the Amended Complaint, Plaintiffs allege that Carozza operated the Richard Lumber’s facility on
the Property beginning in 1980, until 2012, that he oversaw the disposal, release and removal of
radioactive soil and substance from the Property, and that this “disturbance” of radioactive soil
contaminated and damaged the Property. (FAC ¶¶ 117, 118, 120, 121.) Although duplicative of
the allegations asserted to establish Plaintiffs’ ownership liability claim against Carozza, the Court
finds, at this stage, that Plaintiffs have provided sufficient detail to plausibly allege their operator
liability claim.
2. Village of Mount Kisco
Plaintiffs allege that the Village “directed the construction of Railroad Avenue, which
further released and dispersed radioactive materials throughout 105 Kisco Avenue” and that the

38

“grossly negligent demolition of the Refinery, construction of Railroad Avenue and disposal of
waste from the Mt. Kisco Property” caused by the Village and other defendants led to “the release
and distribution of radioactive materials at 105 Kisco Avenue.” (FAC ¶¶ 99, 101.) Drawing all
reasonable inferences in favor of Plaintiffs, to the extent this claim is alleged against the Village
based upon the Village’s own actions separate from MKURA, the Court finds that Plaintiffs have
plausibly alleged that the Village managed or conducted operations related to the disposal of
hazardous waste such that it may be liable as an “operator” under CERCLA.
c) Arranger Liability
Under 42 U.S.C. § 9607(a)(3), “arranger” liability is imposed upon:
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

42 U.S.C. § 9607. “Under the plain terms of the statute, [defendants] may be liable under §
[107(a)(3)] if they: (1) arranged for the disposal of, (2) hazardous substances, (3) owned or
possessed by them.” N.Y. v. Town of Clarkstown, 95 F. Supp. 3d 660, 678 (S.D.N.Y. 2015).
“Arranger liability can attach ‘to parties that do not have active involvement regarding the timing,
manner or location of disposal,’” but “there must be some nexus between the potentially
responsible party and the disposal of the hazardous substance.” Gen. Elec. Co. v. AAMCO
Transmissions, Inc., 962 F.2d 281, 286 (2d Cir. 1992). Where the party is not actively involved
in the disposal of waste, “it is the obligation to exercise control over hazardous waste disposal,
and not the mere ability or opportunity to control the disposal of hazardous substances that makes
an entity an arranger under CERCLA’s liability provision.” Id.

39

1. Carozza
Regarding Carozza’s role as an “arranger,” Plaintiffs allege that Carozza arranged for the
removal of contaminated soil from the Property, which further dispersed and released radioactive
materials throughout the property. (FAC ¶ 121.) Though a lean allegation, considered within the
context of the other allegations against Carozza, the Court finds that Plaintiffs have plausibly
alleged a claim for arranger liability.
2. Village of Mount Kisco
As to the Village, Plaintiffs alleges that the Village and others were involved in the disposal
of waste, that Teledyne and/or Westwood contracted with the Village and others to dispose of the
contaminated material from the former Canrad site, and that the contaminated material was
subsequently released and spread throughout the Property. (See FAC ¶¶ 99, 103, 232.) This is
sufficient for the Court to infer that the Village may have had a contractual obligation to exercise
control over hazardous waste disposal. On this basis, the Court finds that Plaintiff has plausibly
alleged a claim for arranger liability against the Village.
3. WCDOH
At the very least, drawing all inferences in Plaintiffs’ favor, the Amended Complaint
alleges that WCDOH participated in the negligent demolition and decontamination of the Refinery
(FAC ¶ 8), and in that effort effectively arranged for disposal or treatment of hazardous substances
at the Property, releasing radioactive materials into previously clean areas, including but not
limited to uranium and its constituents and byproducts (FAC ¶¶ 51, 96-99, 103, 232.) WCDOH
argues that these allegations are conclusory, and that the exhibits to the Amended Complaint
“could not be reasonably found to establish that the WCDOH owned or possessed the hazardous
materials.” (See WCDOH Mem. at 19.) Throughout its papers, WCDOH has made the argument

40

that the documents provided by Plaintiffs do not “prove” the allegations asserted, relying on an
absence of material to support its claim. The Court reminds the parties that at this stage, Plaintiffs
need only plausibly allege their claims.
It is perhaps a basic tenant that plaintiffs need not, and often at this stage, prior to
completion of discovery, cannot provide documentary evidence to support every allegation made
in the complaint, and are not expected to do so. See generally Ashcroft v. Iqbal, 556 U.S. 662
(2009). Although WCDOH could prevail by pointing to exhibits to the Amended Complaint that
refute Plaintiffs’ allegations, it does not do so here. The documents cited by WCDOH do not
refute, as alleged by Plaintiff, the possibility that WCDOH could have been involved in arranging
for the disposal of hazardous waste at some point during the course of response efforts. Thus,
drawing all reasonable inferences in favor of Plaintiff, as one must at this stage, the Court finds
that Plaintiffs have provided sufficient factual content to state a claim for arranger liability against
WCDOH. 24
d) Transporter Liability Claims
Under 42 USC § 9607(a)(4), “transporter” liability is imposed:
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.
“To [allege] a prima facie case of CERCLA transporter liability, “a plaintiff must first have made
a showing that a defendant transporter actually brought hazardous substances to the site, whether
knowingly or not.” United States v. Lyon, CVF-070491 (LJO) (GSA), 2008 WL 756294, at *3
(E.D. Cal. Mar. 17, 2008) (citing Prisco v. A & D Carting Corp., 168 F.3d 593, 604 (2 Cir. 1999)).

24

Given the Court’s ruling, WCDOH’s and Carozza’s arguments that the Court should decline to exercise pendant
jurisdiction over Plaintiffs’ state claims, which is premised upon the assumption federal claims against these
Defendants would be dismissed, is deemed moot.

41

Additionally, “a person is liable as a transporter … if it ultimately selects the disposal facility …
[or if] it actively participates in the disposal decision to the extent of having had substantial input
into which facility was ultimately chosen.” Id. (citing Tippins Inc. v. USX Corp., 37 F.3d 87, 94
(3rd Cir.1994). Thus, to establish liability as a transporter a plaintiff must “allege[] that the party
accepted hazardous substances for transport, and either selected the disposal facility or had
substantial input into deciding where hazardous substance should be disposed.” Id. (citing United
States v. USX Corp., 68 F.3d 811, 820 (3d Cir. 1995).
1. WCDOH
Plaintiffs’ Amended Complaint alleges only that WCDOH is “a person who transported or
who selected disposal or treatment sites’ for the disposal of hazardous substances, including, but
not limited to uranium and its constituents and byproducts from the Mt. Kisco Property.” (See
FAC ¶ 241.) Plaintiffs proffer no factual assertions in support of the allegation that WCDOH was
involved in the transport of hazardous waste to the Property, and its allegations largely mirror the
language of CERCLA. Because the Amended Complaint presents only a conclusory allegation as
to WCDOH’s transporter liability, and Plaintiffs’ opposition provides little explanation to
elucidate the basis for this allegation, the Court dismisses Plaintiffs’ transporter liability claims
against WCDOH.
2. Village of Mount Kisco
The Village contends that Plaintiffs’ transporter liability amounts to little more than a
formulaic recitation of CERCLA language. (Village/MKURA Mem. at 16.) The Court does not
disagree. Because Plaintiffs allege in a conclusory fashion that the Village can be found liable as
a transporter, without additional allegations as to its involvement in the transportation of hazardous
waste to the Property as an individual entity separate from MKURA (see FAC ¶ 103, 241; Pl. Opp.

42

Re Village/MKURA at 9 (citing FAC ¶ 95-99)), Plaintiffs’ transporter claim against the Village is
dismissed.
3. Defendant Carozza
As to Carozza, Plaintiffs essentially argue that the allegations for their arranger liability
claim are sufficient to state a claim for transporter liability. (See Pl. Opp. Re Carozza at 11) (“the
amended complaint alleges that Carozza oversaw and arranged for the disposal, release and
removal of radioactive substances from the Property, causing … radioactive waste to spread ....
[and] that the Property remains contaminated …. These allegations are sufficient to state a claim
for transporter liability.”).) Though under certain circumstances, overlapping factual allegations
could form the basis for allegations as to both categories of “potentially responsible parties,” in
this instance the Amended Complaint fails to plausibly allege that Carozza acted as a transporter
as described in 42 U.S.C. § 9607(a)(4).
To accept Plaintiffs’ contention that, if a party is an alleged “arranger” under CERCLA,
they must also be a “transporter,” would obliterate the difference between the two categories,
however related they may be. Notably, Plaintiffs do not cite any case law to support this
contention. The Court is unwilling to accept Plaintiffs’ inference that every arranger must also
have engaged in the conduct of a “transporter” absent additional allegations indicating the party
may be liable as such. For these reasons, the Court dismisses Plaintiffs’ claim for transporter
liability against Carozza.
VII.

Response Costs Under CERCLA
As stated previously, to present a prima facie case for the recovery of response costs

incurred from cleaning up a waste site, a private plaintiff must show: “1) that a defendant falls
under one of the four categories of covered persons, 2) that the site is a ‘facility’ as defined by

43

CERCLA, 3) that there has been a release or threat of release of a hazardous substance at the
facility, 4) that the release or threat of release caused the plaintiff to incur response costs, and 5)
that plaintiff’s costs were “necessary costs of response ... consistent with the National Contingency
Plan [(“NCP”)].” Warwick Admin. Grp. v. Avon Prod., Inc., 820 F. Supp. 116, 121 (S.D.N.Y.
1993) (citing 42 U.S.C. § 9607(a)). “The National Contingency Plan is essentially the federal
government’s toxic waste playbook, detailing the steps the government must take to identify,
evaluate, and respond to hazardous substances in the environment … Adherence to the [NCP] is
the gatekeeper to seeking reimbursement of response costs.” Next Millennium Realty, LLC, 160
F. Supp. 3d at 510 (internal citations omitted).
Defendants WCDOH, Carozza and the Village/MKURA essentially argue that Plaintiffs
fail to allege the fourth and fifth prong of a prima facie case for recovery. Defendants contend that
Plaintiffs fail to state a plausible claim for response costs under CERCLA because Plaintiffs’
expenses were incurred solely in preparation for litigation, and not in conjunction with any removal
or remediation efforts consistent with the NCP, that Plaintiffs fail to allege that any threat to human
health or the environment existed prior to the actions allegedly taken by Plaintiffs and instead, that
the costs asserted are a result of a failure to conduct prior due diligence before taking an ownership
interest in the Premises. (See WCDOH Mem. at 22-23; Carozza Mem. at 12, Village/MKURA
Mem. at 18.) In response, Plaintiffs merely contends that allegations of current and future costs
are sufficient to state a plausible claim for relief, and that its allegation that it has expended tens
of thousands of dollars “researching and investigating” the extent of contamination, and expects
to spend tens of thousands more can thus sustain its claim. (See, e.g., Pls’. Opp Re WCDOH at
18-19.)
At this stage, Plaintiffs must allege that it “incurred costs responding to the release or the

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threat [of release] and … [that] the costs and response conform to the National Contingency Plan.”
Price Trucking Corp. v. Norampac Indus., Inc., 748 F.3d 75, 80 (2d Cir. 2014). However,
Plaintiffs “need not particularize the costs incurred,” and “an allegation that plaintiff has incurred
and will continue to incur expenses and costs ... sufficiently allege[s] recoverable response costs”.
Alloy Briquetting Corp. v. Niagara Vest, Inc., 756 F. Supp. 713, 717 (W.D.N.Y. 1991). District
courts in this Circuit have found that expenses incurred during initial evaluations and
investigations are recoverable under CERCLA as response costs. MPM Silicones, LLC, 2016 WL
3962630, at *24. Furthermore, courts in this Circuit have found that “because initial monitoring,
assessment, and evaluation expenses are recoverable … the costs of … studies are all found to be
necessary costs consistent with the national contingency plan, as CERCLA requires”. Id. (internal
quotation marks and citations omitted).
Plaintiffs allege that they have undertaken, and will continue to undertake, investigations
and actions in response to the release or threatened releases of hazardous substances, that those
actions include the “environmental sampling and analysis, and coordinating with EPA and state
environmental authorities,” and that they have expended tens of thousands of dollars as a result.
(FAC ¶¶ 132, 240, 246.) As such, Plaintiffs have plausibly alleged recoverable responses costs
under CERCLA. Alloy Briquetting Corp., 756 F. Supp. at 717 (noting courts have found allegation
that plaintiff “has incurred and will continue to incur expenses and costs ...” sufficient to allege
recoverable response costs, and finding plaintiff alleged response costs with sufficient specificity
where it asserted it “incurred … costs for testing, investigation, and remediation of the releases
into the soil, subsoil, surface water, and ground water”); see also Commerce Holding Co. v.
Buckstone, 749 F. Supp. 441, 444 (E.D.N.Y. 1990) (“While a private party, to recover its response
costs, bears the burden of pleading and proving that the costs incurred are consistent with the NCP,

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the question of consistency with the NCP cannot be determined on the complaint alone but requires
the development of a factual record”).
d) Plaintiffs’ Claims for Contribution & Indemnification
Defendant Carozza, Merritt, and the Village assert that Plaintiffs’ claims for contribution
and indemnification are either preempted by CERCLA or not ripe. (See, e.g., Village/MKURA
Mem. at 23-25.) Again, Plaintiffs choose not to address challenges to its indemnification and
contribution claims in response to any of the three sets of motion papers set forth by these
Defendants. Plaintiffs’ choice not to oppose Defendants’ arguments are deemed purposeful, and
these claims are considered abandoned. See Tuman, 2017 WL 781486, at *7–8 (citing Westchester
Cty. Indep. Party v. Astorino, 137 F. Supp. 3d 586, 618 (S.D.N.Y. 2015) (“abandonment
constitutes an[ ] independent ground for dismissal”).
CONCLUSION
For the foregoing reasons, Defendant WCDOH’s motion to dismiss is GRANTED in part
and DENIED in part, Defendants Village of Mount Kisco/MKURA’s motion to dismiss is
GRANTED in part and DENIED in part, Defendant Carozza’s motion to dismiss is GRANTED in
part and DENIED in part, Defendant Merritt’s motion to dismiss or for summary judgement and
for sanctions is GRANTED in part and DENIED in part, and Defendant Teledyne/Environmental
Inc.’s

motion

to

dismiss

is

GRANTED

in

its

entirety.

Defendants

Merritt,

Teledyne/Environmental Inc., and MKURA are dismissed from this action. Plaintiffs’ claims for
indemnification and contribution are dismissed as against all parties, and Plaintiffs’ claims for
“remediation” actions as defined by CERCLA are dismissed with prejudice. Plaintiffs’ claim
against Carozza subject to arbitration is dismissed as described herein. As to claims not dismissed
with prejudice, Plaintiffs are granted leave to file an amended complaint in conformance with this

46

Opinion on or before April 29, 2017. The Defendants are directed to file responsive pleadings by
May 29, 2017. The parties are directed to contact the chambers of Magistrate Judge McCarthy to
schedule a status conference. The Clerk of Court is respectfully requested to terminate the motions
atECFNos. 107, 115, 121, 128, and 136.

Dated:

March~ 2017

White Plains, New York

United States District Judge

47