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Chester Industrial Park Associates, LP and V. Paulius and Associates - Ruling, January 16, 1998

Ruling, January 16, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Alleged Violations of Article 24 of the Environmental Conservation Law ("ECL") of
the State of New York and of Section 663.4(a) of Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR")

- by -

CHESTER INDUSTRIAL PARK ASSOCIATES,
L.P., V. PAULIUS AND ASSOCIATES, and ABC
CORP., DEF CORP. and XYZ CORP.,

DEC Case No.

3-2914/9704

Respondents.

RULINGS OF THE ADMINISTRATIVE LAW JUDGE

Background

This action began with the Department Staff's service of a Complaint dated August 19, 1997 upon Respondents Chester Industrial Park Associates, L.P. ("Chester") and V. Paulius and Associates ("Paulius"). These two Respondents submitted an Answer dated August 27, 1997, basically denying the charges and asserting two affirmative defenses.

On October 7, 1997, the Department Staff initiated an Amended Complaint which added fictitious names for additional Respondents, to wit, ABC CORP., DEF CORP. and XYZ CORP. These additional three Respondents are allegedly construction lenders, contractors, subcontractors and/or materialmen, retained by or acting on behalf of the original two Respondents. The Staff stated that the true names of these three additional Respondents were unknown at the time of the Amended Complaint, but would be made known by further amendment of the Complaint in the instant matter.

The Staff amended the First Cause of Action to include the three unknown additional Respondents with Paulius as allegedly being involved with grading and filling activities within a freshwater wetland area on the Chester development site. They further amended the Second Cause of Action to include ABC CORP. (sic) and XYZ CORP. with Paulius in the grading and filling activities.

Additionally, the Staff seeks to increase the monetary penalty for the alleged wetlands violations from $6,000 in the original Complaint to $270,000 in the Amended Complaint. Staff's explanation of the requested increase is to bring the penalty into line with the Department's penalty guidance policies and with recent New York case law addressing calculation of penalties for recurring wetlands violations spanning more than a single day.

Department Staff's Position

The Staff asserts that, consistent with 6 NYCRR 622.5(b) and Civil Practice Law and Rules ("CPLR") R3025(b), a party may amend its pleading prior to any final decision with the permission of the ALJ, so long as the other parties are not prejudiced in their ability to respond. In amending its Complaint prior to the commencement of an adjudicatory hearing, Staff reasons that the Respondents in this matter are provided adequate notice of the remedies which the Department seeks. Staff asserts this is preferable to a post-hearing motion to conform the pleadings to the proof presented at hearing. Staff further maintains that the additional Respondents, who they propose to identify in the course of pre-hearing discovery, will be impleaded via the Amended Complaint without unnecessary and protracted motion practice. Staff states that since there has been no discovery in this matter, none of the Respondents are prejudiced by the Amended Complaint in the preliminary stages of this proceeding.

Respondents' Position

Respondents Chester and Paulius oppose the Staff's Amended Complaint, claiming that Staff has provided no justification for the proposed amendment. Further, Respondents contend that the Staff is barred from amending the ad damnum clause in its initial Complaint by failure to show the merits of its request and failure to explain why the increased damages were not sought in the first instance. As to the merits of Staff's request, Respondents contend the Staff has not provided any competent proof of the need to increase the penalty amount sought in the Amended Complaint. Respondents contend that any facts which would justify the higher sought amount have been available to the Staff since the summer of 1996, and that there is no change in circumstances which would justify the relief now sought in the Amended Complaint.

Discussion

"Consistent with the CPLR a party (to a DEC administrative enforcement proceeding) may amend its pleading at any time prior to the final decision of the (C)ommissioner by permission of the ALJ or the (C)ommissioner and absent prejudice to the ability of any other party to respond." [6 NYCRR 622.5(b)] Similarly, in civil court actions, "(A) party may amend his pleading, or supplement it by setting forth additional or subsequent transactions or occurrences, at any time by leave of the court or by stipulation of all parties. Leave shall be freely given upon such terms as may be just including the granting of costs and continuances." [CPLR R3025(b)]

In this instance, the Respondents claim that an increase in the requested penalty damages is highly prejudicial to them. However, at this early stage in the proceeding, the arguments of the two named Respondents fail to show how their ability to respond will be prejudiced.

A full explanation of the charges and the circumstances which may support the increased penalties which the Staff seek is nevertheless merited as a matter of fairness, given the Respondents' notation that, in January 1997, the Staff apparently reviewed and approved of the Respondents' activities on the subject site in conjunction with settlement of a consent order. At that time, the Staff returned the Respondents' $310,000 surety/letter of credit, purportedly connected with Staff's confirmation of the Respondents' compliance and performance related to a 1991 Order on Consent with respect to the subject property. I note particularly that the charges of grading and filling of the freshwater wetland in question allegedly occurred "In or about the summer and fall of the year 1996," or immediately prior to the Staff's returning the Respondents' surety for work to be done under the terms of the consent order.

With respect to the Staff's proposed inclusion of unidentified, fictitiously-named Respondents in the Amended Complaint, the justification provided by Staff is insufficient to sustain an amendment. The Staff has indicated it will seek another amendment of the Complaint when it identifies these potential Respondents. If the Department Staff is going to move against potential respondents, both for the benefit of the presiding ALJ and the proposed respondents, said respondents need to be identified, notified and apprised at the earliest possible time of the alleged actions for which they are being cited. The Staff should not pursue violations of the ECL and attendant rules and regulations until the information required for a complaint is fully developed, such that, to the extent possible, there will be no necessity for future amendments to the complaint. It is wasteful of the time of all involved for the Staff to initiate a complaint and then seek one or more amendments to clarify and/or supplement the complaint.

A hearing in this matter has not yet begun. Furthermore, there has been no discovery yet in the proceeding. Contrary to Respondents' stated preference, it is much more desirable, from the standpoints of practicality, of fundamental fairness and of ensuring judicial economy, to deal with any amendments to a complaint at such early phases of a proceeding, rather than waiting until the close of the hearing to entertain motions to amend to conform to the evidence, e.g. -- see CPLR R3025(c).

Ruling

The Department Staff seeks to amend its original Complaint by adding new proposed Respondents and increasing its requested relief. The granting of such an amendment at this time, and based upon the information currently available to me, is premature. With respect to the request to add new proposed Respondents, the Staff's motion is denied without prejudice until such time as the additional Respondents are positively identified, their roles in the alleged violations are detailed and they can be properly served with a complaint. With respect to the request to increase the relief in this matter, the Staff's motion is likewise denied without prejudice, pending a submittal to me and the named Respondents of a detailed explanation of the $270,000 penalty now sought, i.e. -- a breakdown of the penalty and how it is apportioned between/among the Respondents with respect to each of the charges, how the penalty was calculated pursuant to ECL Article 71 and applicable case law, and an explanation of why the increased amount was not sought in the original Complaint, dated only seven weeks earlier.

Appeals

Pursuant to 6 NYCRR 622.10(d), these Rulings may be appealed in writing to the Commissioner within ten days of receipt of the Rulings.

Any appeals must be received at the office of Commissioner John P. Cahill (NYSDEC, Room 608, 50 Wolf Road, Albany, New York 12233-1010) no later than the close of business on February 2, 1998.

Any appeals sent to the Commissioner's Office must include an original and two copies. Additionally, one copy of all appeal papers must be sent to me and to each person on the Service List below at the same time and in the same manner as to the Commissioner. Please note that transmission of appeal papers by facsimile (fax) is not authorized.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: ROBERT P. O'CONNOR
ADMINISTRATIVE LAW JUDGE

Dated: Albany, New York
January 16, 1998

To: Rajat P. Mundkur, Esq.
Ostrer & Cione, LLP
Route 17M, Quickway Plaza
Suite 200, P.O. Box 509
Chester, New York 10918

Steven Goverman, Esq.
Assistant Regional Attorney
Region 3, Division of Legal Affairs
New York State Department of
Environmental Conservation
21 South Putt Corners Road
New Paltz, New York 12561-1696

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