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Green Island Tree Spray, Inc. - Rulings 2, December 17, 1997

Rulings 2, December 17, 1997

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter

of

the Alleged Violations of Article 33 of the Environmental Conservation Law of
the State of New York and Title 6, Parts 320 and 329, of the Official Compilation
of Codes, Rules and Regulations of the State of New York

- by -

ROBERT J. WARD, individually, and as
president of Green Island Tree Spray, Inc., and

JERRY DOWNES, individually, and as
corporate officer of Green Island Tree Spray, Inc., and

GREEN ISLAND TREE SPRAY, INC., d/b/a
GREEN ISLAND TREE SPRAYING, INC., and
GREEN ISLAND TREE & SHRUB CARE, INC.,

Respondents.

RULINGS OF THE ADMINISTRATIVE LAW JUDGE

(DEC File Nos. 1-4629, 1-5097 and 1-5109)

BACKGROUND

This action began with service of a complaint dated July 28, 1995, against the above-named Respondents. The Respondents submitted an answer dated September 11, 1995, basically denying the charges and asserting six affirmative defenses. Up until earlier this year, the parties attempted, unsuccessfully, to settle the matter. On June 26, 1997, I issued a ruling addressing a discovery dispute and requiring the Respondents to provide a statement of facts supporting their first affirmative defense. (A statement dated July 29, 1997, which supplements the Respondents' answer, has since been received.)

By papers dated August 8, 1997, Department Staff moved to amend its complaint by adding new allegations, increasing monetary penalties, and requesting for the first time revocation of Respondent Ward's commercial pesticide applicator certification as well as Respondent Green Island Tree Spray's pesticide business registration. In a second set of papers dated August 29, 1997, Staff moved to add even more allegations as a basis for the requested revocations.

I had a conference call on September 18, 1997, with counsel for the parties. Because the Respondents opposed the motions to amend the complaint and because both parties had other motions to make, counsel negotiated a schedule for written submissions. Pursuant to that schedule, the Respondents submitted a legal memorandum opposing Staff's motions to amend the complaint. This was coupled with a cross-motion, dated October 21, 1997, for an immediate hearing on their first affirmative defense, which is that they were denied an opportunity for hearing within reasonable time, in violation of State Administrative Procedure Act Section 301(1).

Department Staff submitted a letter dated October 22, 1997, addressing the Respondents' motion for immediate hearing on the first affirmative defense. This was followed by Staff's own motion, dated November 4, 1997, to dismiss the Respondents' first, second, third and fifth affirmative defenses. Staff also provided a reply affirmation, dated November 5, 1997, supporting its motions to amend the complaint.

The Respondents submitted a legal memorandum dated November 21, 1997, opposing Department Staff's motion to dismiss affirmative defenses. The pending motions may now be decided, the parties having had a full opportunity to address them.

Motions to Amend the Complaint

Department Staff seeks to add the following allegations to the complaint:

  1. The Respondents' application of "Mavrik" (Aqua Flow) on or about July 10, 1995, at a property in North Babylon, causing drift onto neighboring premises where five people were exposed to the pesticide, in violation of 6 NYCRR 325.2(b) ["the O'Brien violation"]; and
  2. Respondent Ward's submission to DEC in 1987 of false information which DEC relied upon in issuing his certification as a commercial pesticide applicator and Respondent Green Island Tree Spray's successive registrations as a pesticide business.

More particularly, it is alleged that:

  • As part of his application to become a commercial pesticide applicator, Respondent Ward submitted a document signed by Timothy G. Hassell, a certified pesticide applicator, that he and his company had employed Ward for three years as a pesticide applicator, when in fact Ward had never worked for Hassell.
  • As part of Green Island Tree Spray's initial application to become registered as a pesticide business, Respondent Ward stated both (1) that Paul Alfred was the certified applicator employee of the company (when in fact Mr. Alfred was never employed by and never worked for Green Island); and (2) that Ward had passed the commercial pesticide applicator certification examination (when in fact he took and passed the test nine days after the date on the application papers).

Based on the new allegations of false information having been provided to the DEC as well as the prior allegations of pesticide misuse, Department Staff now want to amend the complaint's relief clause to include demands that Respondent Ward's applicator certification and Respondent Green Island Tree Spray's business registration both be revoked. Staff also wants its request for monetary relief increased from $96,000 to $319,500, having reconsidered all of the violations alleged in the complaint.

Position of Department Staff

The nature and substance of the newly alleged violations are substantially similar to those alleged in the original complaint. The proposed amendments will not prejudice the Respondents in their defense of this action, especially since it has not yet gone to hearing. Even before the formal motion to amend the complaint, the Respondents had notice of the facts which constitute the additional violations, including supporting documentation previously provided by DEC. The addition of language requesting revocation of Ward's applicator certification and Green Island Tree Spray's business registration is necessary to conform the relief to the new allegations Staff intends to prove. The new, higher penalties are appropriate given the number and seriousness of the violations, and the fact DEC is proceeding to hearing rather than settling this matter. The new factual allegations are based on good cause and proposed in good faith, with no intent to harass. The motion is not being made to further delay the hearing; in fact, amending the complaint would avoid the need for Staff to launch a second action on the new allegations. The Respondents are under no time constraints which would affect their ability to answer properly.

Position of the Respondents

The Respondents will be significantly and irreparably prejudiced if DEC Staff is allowed to make the proposed amendments to its complaint. DEC's unexplained delay in asserting the proposed amendments, which address matters up to 10 years old, is gross and inexcusable, and violates DEC's own pesticide enforcement guidance memorandum, which stresses timely, quick responses to alleged violations. The facts that form the basis of Staff's claims of reliance on false information were known to DEC at least as early as 1991, yet the Department did not seek then or in the six years thereafter to revoke Green Island's registration, during which time substantial investments were made in the business. These claims have surfaced now because the Respondents refused to sign an unacceptable consent order addressing charges in the original complaint. Staff is acting in bad faith, for the purpose of punishing or harassing Green Island for not settling this case. Finally, DEC's new allegations about false information, even if true, are palpably insufficient to support the causes of action asserted or the relief requested in the proposed amendments, and therefore should be kept out of the complaint.

Discussion

Consistent with the state's Civil Practice Law and Rules (CPLR) a party to a DEC administrative enforcement proceeding may amend its pleading at any time prior to the final decision of the Commissioner by permission of the ALJ or the Commissioner 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 or add to its pleading at any time by leave of the court, which shall be "freely given upon such terms as may be just" [CPLR Section 3025(b)].

DEC seeks to amend its complaint by adding new allegations and adjusting its request for relief. I hereby grant this request given the early stage of this action and the fact that any prejudice to the Respondents may be cured by allowing them to likewise amend their answer to address the new material.

Although the original complaint was issued more than two years ago, a hearing in this matter has not yet begun. No hearing has been held because of delays caused initially by settlement discussions (which failed to produce a consent order) and then by discovery disputes (which may still require my attention, despite my previous ruling). Although the Respondents claim they would be "significantly and irreparably" prejudiced if the amendments are allowed, their arguments do not place that prejudice in the history of this action. This is a critical consideration, since prejudice sufficient to defeat an amendment under CPLR 3025(b) "must obviously be a showing of prejudice traceable not simply to the new matter sought to be added, but also to the fact that it is only being added now . . . The showing of prejudice that will defeat the amendment must be traced right back to the omission from the original pleading of whatever it is that the amended pleading wants to add - - some special right lost in the interim, some change of position or some significant trouble or expense that could have been avoided had the original pleading contained what the amended one now wants to add" (David Siegel, New York Practice, Second Edition, Section 237, p.353) (Emphasis added).

Staff's proposed amendments do not alter the facts or theory of any charge in the original complaint. Instead, they add new allegations, in effect supplementing the complaint. Allowing the amendments does not cost the Respondents any right or defense they would have had if the allegations had been part of the original pleading. Also, because the new allegations do not affect the initial charges, no expense incurred already to defend against the complaint would be wasted by addition of the new material.

Finally, if Staff did not seek to bring the new allegations into this action, it could have launched a separate action, requiring the Respondents to defend on two fronts simultaneously, with the attendant prejudice that would have generated. Since the old and new allegations both concern the pesticide laws, and since taken together they could, if true, support the relief now requested, it is efficient to hear them all together. This is another reason for allowing the amendments.

Motions Concerning Respondents' Affirmative Defenses

The Respondents have moved for an immediate hearing on their first affirmative defense, while Department Staff have moved to dismiss the Respondents' first, second, third and fifth affirmative defenses. As an administrative law judge, I have power to rule upon these motions [6 NYCRR 622.10(b)], although my rulings may be appealed to the Commissioner [6 NYCRR 622.10(d)]. I lack authority to strike any defense from the pleadings, but I can "dismiss" those defenses I will not consider further in this proceeding.

First Affirmative Defense - - The claims set forth in the complaint are barred, in whole or in part, by State Administrative Procedure Act Section 301(1) in that Respondents have been denied "an opportunity for hearing within reasonable time."

Position of Department Staff

The first affirmative defense should be dismissed. There is no delay to speak of in this matter since the violations alleged in the original complaint continued from 1990 to 1995, when the complaint was issued. Also, when applying the factors relevant to a determination under SAPA Section 301(1), the Respondents' argument of undue delay "does not bode well."

Position of the Respondent

In cases where, as here, the Respondents claim that their ability to defend against the charges has been significantly and irreparably prejudiced by the Department's delay in commencing the action, the Respondents are entitled to an immediate hearing for the limited purpose of determining the extent of the claimed prejudice.

Discussion

As an administrative agency, DEC has a statutory duty to afford an opportunity for hearing with reasonable time. [State Administrative Procedure Act (SAPA) 301(1).] In determining whether such an opportunity has been provided, "An administrative body in the first instance, and the judiciary sitting in review, must weigh . . . (1) the nature of the private interest allegedly compromised by delay; (2) the actual prejudice to the private party; (3) the causal connection between the conduct of the parties and the delay; and (4) the underlying public policy advanced by governmental regulation" [Cortlandt Nursing Home v. Axelrod, 66 N.Y.2d 169, at 178 (1985)]. In assessing a claim under SAPA 301(1), it is "critical" to consider whether delay has caused "substantial prejudice" to the private party because "the agency . . . is authorized to dismiss the proceeding . . . where administrative delay has significantly and irreparably handicapped a private party in mounting a defense in an adversary proceeding" [Cortlandt, at 180] (emphasis added).

The Respondents contend that they have been substantially prejudiced because they are unable, through no fault of their own, to obtain the testimony and evidence necessary to mount a defense to the charges in the original complaint. According to their supplemented answer, since none of the individual Respondents were personally involved in the alleged pesticide applications or incidents upon which the charges are based, and since the persons involved are either no longer employed by the Respondents or, due to the large number of pesticide applications they perform, lack any recollection of the alleged incidents, the Respondents are not able to obtain the exculpatory testimony and evidence they might otherwise have secured if a hearing had been held within a reasonable time of the alleged incidents.

In another case involving alleged misapplication of pesticides, the Commissioner dismissed charges where the Respondents were able to demonstrate that they had been substantially prejudiced by Departmental delay in bringing its enforcement action and therefore had not been afforded a hearing within reasonable time. [See, In the Matter of Manor Maintenance Corp. and Richard Schultheis, Order of the Commissioner, February 12, 1996.]

In Manor Maintenance, the violation of SAPA 301(1) was established during a court-ordered administrative hearing held before the Department was allowed to present its case on the charges themselves. As the presiding ALJ, I had ruled that the Respondents' claim under SAPA 301(1), presented in its answer and as a motion to dismiss, would be heard after the Department completed its case. However, when the Respondents then went to court to enjoin the hearing, Justice John G. O'Connor of the State Supreme Court, Albany County, directed that the hearing address, in the first instance, proof and a final determination of the Respondents' motion to dismiss on grounds of delay. This he ordered be done "in the interest of justice" prior to taking evidence on the charges themselves. [Manor Maintenance Corp. v. Department of Environmental Conservation, Sup. Ct., Albany County, June 12, 1992.]

Department Staff now propose that the first affirmative defense be dismissed, arguing that the facts of this case differ significantly from those established by my hearing report and the Commissioner's confirming order in Manor Maintenance. On the other hand, the Respondents argue not only that the defense should not be dismissed, but that it should be heard immediately, consistent with Justice O'Connor's decision in that case.

My ruling is to hear the defense, but after the Department first has an opportunity to present its proof on the charges. The defense should not be dismissed since the issue of prejudice cannot be decided on the parties' written submissions. It requires a fact-finding hearing with an opportunity for cross-examination of witnesses who could prove what prejudice occurred here.

Although the defense should be heard, I do not intend to hear it as a first order of business. Affirmative defenses are customarily heard as part of the Respondents' case, after the Department has rested. I see no reason to make an exception here. Also, where the claim is prejudice to one's ability to defend, it makes sense to first hear the evidence one is obliged to defend against. Finally, as an ALJ, I have no authority to dismiss any of the Department's charges, only to recommend whether or not they be dismissed. Therefore, rather than bifurcate the hearing so that one of the Respondents' defenses is heard and decided even before the Staff presents its evidence on the charges, it seems more efficient to conduct one hearing - - on all issues - - and make one report to the Commissioner, who could then decide everything at once.

I recognize that in Manor Maintenance Justice O'Connor explained his decision to first hear the Respondents' defense by reasoning that if the motion to dismiss were granted, it would avoid a needless hearing on other issues. However, it is also true that if the defense does not prevail and the charges are not dismissed, hearing the Respondents' defense first will only further delay a hearing on the merits of complaint. Justice O'Connor also claimed that hearing the defense first would protect respondents from any claimed harm for further delay in the hearing process. However, according to the Respondents, the harm has already occurred, so by hearing the Department's evidence first, all that is delayed is their opportunity to prove it.

Although the Respondents claim they are entitled to an immediate hearing on the issue of prejudice, there is no entitlement with regard to when an issue is heard. According to the Department's enforcement hearing regulations, "The ALJ will determine the sequence in which the issues will be tried and otherwise regulate the conduct of the hearing in order to achieve a speedy and fair disposition of the matters at issue" [6 NYCRR 622.10(a)(4)] (emphasis added).

According to Department Staff, there is no delay to speak of because the violations alleged in the original complaint continued from 1990 to 1995, when the complaint was issued. Staff contrasts this to the situation in Manor Maintenance, where the alleged violations spanned the years 1981 to 1986, but the complaint was issued in 1991. Staff contends there was a five-year delay in Manor Maintenance, during which no action was being taken by DEC, whereas in this case, there is no delay at all.

Staff's analysis fails to recognize that this case is not about continuing violations; nor, for that matter, was Manor Maintenance. This case is about a series of discrete violations which are alleged to have occurred at separate times in separate places. To consider the issue of delay, one must look at each charge standing alone; a hearing may have been unreasonably delayed for some charges, but not others, depending on how the Respondents have been prejudiced in each particular circumstance.

Second Affirmative Defense - - DEC's claims are barred, in whole or in part, by the doctrine of waiver, in that in years 1990, 1991, 1992, 1993, 1994 and 1995, the DEC Commissioner granted Green Island's applications for business registration pursuant to 6 NYCRR 325.23.

Third Affirmative Defense - - DEC's claims are barred, in whole or in part, by the doctrine of estoppel, in that in the years 1990, 1991, 1992, 1993, 1994 and 1995, the DEC Commissioner granted Green Island's applications for business registration pursuant to 6 NYCRR 325.23.

Position of the Department Staff

The second and third affirmative defenses should be dismissed. The Respondents in their answer gave no statement of facts constituting the grounds for these defenses, in violation of 6 NYCRR 622.4. Allowing the defenses would prevent the Department from discharging its statutory duties to protect public health, safety and welfare. There is no law or regulation that either states or implies that because a business registration was automatically renewed, there are no violations against a pesticide company. The Respondents were continually made aware of the Department's case through inspections, investigations and correspondence with the Department. Finally, the Respondents are not only unable to assert any hardships suffered by the Department's continued renewal of their pesticide business registration, they assert facts indicating the growth of their business that show a beneficial reliance on the automatic renewal process.

Discussion

The Respondents' defenses of estoppel and waiver are based on a common set of facts - - the Department's annual renewals of Green Island's business registration for the years 1990 to 1995 - - and therefore should be discussed together.

Under the theory of estoppel, the Respondents argue that the registration renewals issued by DEC constituted a statement that Green Island was "in good standing" with the Department and that there were no outstanding violations, since the Department could have suspended or revoked the registrations if Green Island had failed to comply with some aspect of the pesticide law or regulations. [6 NYCRR 325.23(e)(5).] Respondent Ward claims he relied - - to his detriment - - on the registration renewals in making a decision to invest millions of dollars in the business, and that he would not have made the investment had he known DEC was "stockpiling" claims of alleged violations for eventual use in an enforcement proceeding.

In most cases, estoppel cannot be invoked against the government, as the parties' papers both acknowledge. Whether estoppel should provide a defense to some or all of the charges here depends on a number of matters in factual dispute, including what the Department told the Respondents about the alleged violations, and when they told them. According to Staff, the Respondents were "continually made aware of the Department's case through inspections, investigations and correspondence with the Department." However, the Respondents argue that they were not given notice of the alleged violations until this proceeding was commenced.

Even if the Respondents are not entitled to the dismissal on the basis of estoppel, their arguments, if true, might mitigate any relief that is ordered. Also, the Department's failure to act in a more timely manner may suggest that the violations are not as serious as it alleges. Finally, the defense has been stated sufficiently to put the Department on notice of its theory, so it should not be dismissed for failure to include a statement of facts.

The third affirmative defense, waiver is defined generally as the intentional relinquishment of a known right. The Respondents' claim of waiver is also based on the renewals of Green Island's business registration, which they say evinced DEC's intent to relinquish claims it could otherwise have pursued. As a defense, this claim would not be availing since it is well-established that public officers have no power or authority to waive law enforcement on behalf of the public, and that the public is not bound by their acts in this regard [57 NY Jur 2d, Estoppel, Ratification and Waiver, Section 77]. Since this defense could not prevail as a matter of law, it should be dismissed.

Fifth Affirmative Defense - - Certain evidence gathered in support of the complaint by DEC was obtained by virtue of an illegal and unconstitutional search of Respondents' records on June 12, 1995. Such search was procured without a warrant and through the use of deception in violation of the Fourth Amendment of the United States Constitution and Article I, Section 12 of the New York State Constitution, and therefore, any evidence gathered in such search should be suppressed.

Position of Department Staff

The fifth affirmative defense should be dismissed. The Respondents did not include in their answer a statement of facts constituting the grounds of this defense, in violation of 6 NYCRR 622.4(c). Any and all information the Department obtained on June 12, 1995, was lawfully obtained. At any rate, the defense asserts a constitutional claim that cannot be adjudicated in an administrative forum.

Discussion

The Respondents contend that searches of Green Island's Huntington Station facility on June 6, June 12 and July 14, 1995, were unlawfully made because DEC did not have a warrant or the knowing and voluntary consent of the Respondents, and because consent forms presented to Green Island after the searches confirmed that the searches were not routine inspections, as DEC Staff had alleged upon entry.

Because this defense is raised under protections of the U.S. and state constitutions, Department Staff argue that it cannot be asserted in this hearing and must be raised in an independent judicial proceeding. Staff is correct that claims asserting constitutional protections belong and should be decided in a court of law. [See, Matter of 303 West 42nd Street v. Klein, 46 N.Y.2d 686, 693 n.5 (1979), citing Matter of DiMaggio v. Brown, 19 N.Y.2d 283, 291-292 (1967).] However, that does not preclude the Commissioner from excluding from his own consideration evidence that he may find tainted or that he feels was gathered in an unfair manner. Also, even if the defense is ultimately decided by a reviewing court, the court would need a record on which to make its decision. Therefore, the hearing shall be used to compile a factual record for the court's use. No evidence shall be suppressed; however, the hearing report will note the evidence to which the Respondents object. The Respondents shall be allowed to state their objections to evidence gathered during the three inspections cited above in this discussion, even though only one of them, the inspection of June 12, 1995, was actually cited in its answer. To this extent I will consider the Respondents' answer amended.

SUMMARY OF RULINGS

  1. The Department's motions seeking leave to amend the complaint in this matter are granted. A new complaint incorporating the amendments proposed by Department Staff shall be sent to me and counsel for the Respondents as soon as practicable, but no later than 10 days from Staff's receipt of these rulings. Ordinary mail will be an acceptable manner of service upon the Respondents' counsel.
  2. Consistent with 6 NYCRR 622.4(a), within 20 days of receiving the amended complaint, counsel for the Respondents shall serve an amended answer on Department Staff, addressing the new material in the complaint.
  3. The Department's motion to dismiss the Respondents' first affirmative defense is denied. That defense will be heard, but after the Department presents its evidence on the charges. The Respondents' motion for an immediate hearing on this defense is denied.
  4. The Department's motion to dismiss the Respondents' second affirmative defenses (estoppel) is denied.
  5. The Department's motion to dismiss the Respondents' third affirmative defense (waiver) is granted.
  6. The Department's motion to dismiss the Respondents' fifth affirmative defense is denied. The facts related to this defense shall be developed for consideration by the Commissioner and any reviewing court. No evidence shall be suppressed, however.
  7. Pending decisions on the motions addressed in this ruling, the parties had agreed that the Respondents would defer submitting any objections they had to Department Staff's July 25, 1997, demand for the production of documents. In my rulings of June 26, 1997, I had directed that this demand be revised. Consistent with 6 NYCRR 622.7(c), the Respondents shall file any objections they have with me and Department Staff within 10 days of the date of these rulings, in a motion for protective order which shall include an affidavit of Respondents' counsel reciting good faith efforts to resolve the dispute with Department counsel without resort to a motion.

These rulings are being issued by FAX. You will also receive a copy by ordinary mail.

I will shortly schedule a conference call to discuss all remaining pre-hearing concerns so that the hearing itself can begin as soon as possible.

_____________/s/_____________
Edward Buhrmaster
Administrative Law Judge
Albany, New York

Dated: December 17, 1997

TO: Anthony S. Guardino, Esq.
Farrell, Fritz, Caemmerer, Cleary,
Barnosky & Armentano, P.C.
EAB Plaza
West Tower - 14th Floor
Uniondale, New York 11556-0120

Louise Aja, Esq.
New York State Department of
Environmental Conservation
Legal Affairs, Building 40- SUNY
Stony Brook, New York 11790-2356

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