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QP Service Station Corporation - Ruling 2, July 8, 2003

Ruling 2, July 8, 2003

STATE OF NEW YORK: DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter

of

the Alleged violations of Article 17 of the Environmental Conservation Law
of the State of New York (ECL), and Title 6 of the Official Compilation of
Codes, Rules and Regulations of the State of New York (6 NYCRR) Parts 612 and 613 by

Ruling on Staff's Motion for
Order without Hearing
DEC Case No. R2-20021001-319

QP SERVICE STATION CORPORATION,
ANTICO REALTY CORPORATION, and
GREGORY IOVINE,

Respondents.

July 8, 2003

PROCEEDINGS

This enforcement action commenced with service, by certified mail, return receipt requested, of a notice of hearing and complaint dated October 23, 2002 upon Respondents, the QP Service Station Corporation (QP Service), the Antico Reality Corporation (Antico), the Lucolo Bus Corporation (Lucolo), and Gregory Iovine. Subsequently, Staff from the NYS Department of Environmental Conservation (Department Staff or Staff) filed a notice of motion for order without hearing dated April 11, 2003. Staff's motion papers consist of a notice of motion dated April 11, 2002, a copy of the October 23, 2002 complaint, an affirmation by David S. Rubinton, Esq., Staff's attorney, and affidavits by Charles Nabone, Anthony Sigona, Edward Rossan, and Steven Farrand. Attached to Staff's motion, as Exhibit F, was a copy of a petroleum bulk storage registration application by QP Service. Finally, the motion papers included an affidavit of service of the notice of motion for order without hearing by Louise Munster.

Ms. Munster's affidavit is dated April 11, 2003.

With a notice of motion dated May 19, 2003, Respondents requested leave to file interrogatories and to depose Staff's witnesses, and leave to file an amended answer. Respondents also moved to dismiss the charges alleged in the complaint against Lucolo. Respondents' motion included a proposed amended answer dated May 13, 2003. With a cover letter dated May 27, 2003, Staff filed an affirmation opposing Respondents' motion. Staff, however, did not oppose Respondents' motion concerning Lucolo, and withdrew the complaint against that corporation. Consequently, Lucolo is no longer a Respondent to this enforcement action.

In a ruling dated May 30, 2003, I denied Respondents' motion to file interrogatories and to depose Staff's witnesses. Upon review of the parties' motion papers, I learned that Respondents had filed a joint answer dated November 27, 2002. Consequently, I reserved ruling on Respondents' motion for leave to file an amended answer until Respondents provided me with a copy of their initial answer. With a cover letter dated June 2, 2003, Respondents provided me with a copy of their November 27, 2002 answer.

In the November 27, 2002 answer, Respondents denied the allegations concerning each of the three causes of action. In the November 27, 2002 answer, Respondents did not assert any affirmative defenses. Respondents' proposed amended answer dated May 13, 2003, similarly denied the allegations concerning each of the three causes of action; however, it also included five affirmative defenses.

Staff objected to Respondents' motion to amend their answer. However, in a ruling dated June 6, 2003, I granted Respondents' motion to amend their answer because Staff did not claim any prejudice.

After service of Staff's motion for order without hearing, the parties agreed to set the return date for Respondents' reply to June 3, 2003. As of June 6, 2003, however, Respondents had not filed their reply to Staff's motion. Respondents did not offer any explanation for not filing their reply by June 6, 2003. Nevertheless, the June 6, 2003 ruling provided Respondents until noon on June 9, 2003 to file their reply.

A faxed copy of Respondents' reply was timely received on June 9, 2003. Hard copy was received the following day via overnight mail. Respondents' reply papers consist of a reply affirmation by Respondents' counsel, Marvin E. Kramer, Esq. Attached to the affirmation were 5 copies of Respondents amended answer dated May 13, 2003, and an affidavit of service by Christina Arslani dated June 9, 2003.

Staff's Complaint

In the complaint, Staff contended that QP Service owns and operates a petroleum bulk storage facility at 1317 Castleton Avenue, Staten Island, New York (the Facility). The complaint contended further that Antico, and Gregory Iovine also own the real property located at 1317 Castleton Avenue.

The complaint alleged three causes of action. First, Respondents allegedly violated Title 6 of the Official Compilation of Codes, Rules and Regulations (6 NYCRR) 612.2(d) when they undertook a substantial modification of the Facility in March 2002 by removing the underground petroleum storage tanks without prior notification to the Department. Second, Respondents allegedly violated 6 NYCRR 613.8 when they failed to report a petroleum discharge at the Facility to the Department within two hours of its discovery. The discharge allegedly occurred on March 7, 2002 [Spill #0200047]. Third, Respondents allegedly violated 6 NYCRR 613.9(c) by not giving the Department 30 days notice before Respondents permanently closed the underground petroleum storage tanks at the Facility.

For relief, Department Staff requested a civil penalty pursuant to Environmental Conservation Law (ECL) § 71-1929, which provides for a maximum civil penalty of $25,000 per day for each violation. In the motion papers, Staff specifically requested a total civil penalty of $240,000.00. Of that total amount, Staff recommended that half of the civil penalty [i.e., $120,000.00] be suspended, and the balance be payable. Staff also requested that the Commissioner order Respondents to remediate the site based on a plan pre-approved by Department Staff.

Respondents' Amended Answer and Reply

In their amended answer dated May 13, 2003, Respondents denied the allegations concerning each of the three causes of action. In addition, the amended answer asserted five affirmative defenses. As the first affirmative defense, Respondents contended that they retained Energy Storage Systems, Inc. (Energy Storage) as the Respondents' agent to: perform whatever work was necessary on the property in order to have the property and its approved tenant comply with all of the applicable Federal and State law, rules, regulations and statutes and to file all forms, notices and other documentation as required and mandated in connection therewith.

Since they did not know what was required and did not know what work had to be done at the site to bring the Facility into full compliance, Respondents contended they hired Energy Storage, who had full authority to act, and who was responsible for all activities at the Facility.

As the second affirmative defense, Respondents claimed that Energy Storage commenced work at the site in accordance with its delegated authority and responsibility. Respondents argued that they did not know about any requirement to file forms with the Department before modifying the Facility. In addition, Respondents contended that they were not aware of a petroleum spill on the site and, therefore, could not report it to the Department in a timely manner.

With respect to the third affirmative defense, Respondents presented the following. First, Respondents contended that Environmental Conservation Officer (ECO) Farrand issued a summons to Energy Storage on March 27, 2002 for a violation, and that Energy Storage pleaded guilty and paid a $1,000 fine. Second, Respondents claimed that the Department knew about at least two other violations, but did not charge Energy Storage with them. Given these circumstances, Respondents argued that the Department is precluded from pursuing the charges alleged in the complaint against them due to the legal doctrines of double jeopardy, res judicata, the law of the case, waiver, accord and satisfaction, or release.

As the fourth affirmative defense, Respondent Gregory Iovine contended that he does not own the property where the Facility is located, and that he never operated the Facility in his individual capacity.

The fifth affirmative defense relates to Lucolo. Since the Department has withdrawn the charges against this Respondent, the affirmative defense is no longer relevant.

In their reply affirmation, Respondents challenged the credibility and reliability of the information presented in the affidavits filed by the Department's witnesses. For example, Respondents characterized Mr. Nabone as an informant because he works for a competitor of the Respondents' consultant. Respondents argued that they have a right to depose Mr. Nabone before any order is granted.

In addition, Respondents contended that ECO Farrand's affidavit is deficient for two reasons. First, Respondents argued the affidavit identifies no evidence about when the alleged spill occurred. Second, the affidavit includes no evidence that Respondents knew, or should have known, about the alleged spill. In their reply, Respondents reiterated the contentions associated with their third affirmative defense. According to Respondents, it can be reasonably inferred from ECO Farrand's affidavit that the Department: (1) was aware of more than one potential violation, and (2) regarded Energy Storage, and not the Respondents, as the "primary perpetrator." Unlike violations of the Navigation Law, Respondents claimed there is no "absolute liability" associated with alleged violations of 6 NYCRR 613.8.

According to Respondents, the affidavits by Messrs. Sigona and Rossan are not reliable. Respondents contended that these witnesses had no personal knowledge of the violations alleged in the complaint. Rather, Respondents characterized the information presented in the affidavits as hearsay because the witnesses' statements are based upon their review of documents. Acknowledging that hearsay evidence is admissible in administrative proceedings, Respondents argued that they have the right to examine the Department's records before a final determination is made. Respondents argued further that the affidavits are "generic" and are not based on any independent investigations or data. Respondents concluded that Staff's motion should be denied.

DISCUSSION

Motion for Order without Hearing

Department Staff requested an order without hearing against Respondents pursuant to 6 NYCRR 622.12. That provision is governed by the same principles that govern summary judgment pursuant to CPLR 3212. Section 622.12(d) provides that a contested motion for an order without hearing will be granted if, upon all the papers and proof filed, the cause of action or defense is established sufficiently to warrant granting summary judgment under the CPLR in favor of any party.

The Commissioner recently provided extensive direction concerning the showing the parties must make in their respective motions and replies, and how the parties' filings will be evaluated (see Richard Locaparra, d/b/a L&L Scrap Metals, DEC Case No. 3-20000407-39, Final Decision and Order of the Commissioner [June 16, 2003]). The Commissioner's discussion includes numerous citations to case law, the Department's enforcement regulations, and CPLR 3212.

The party moving for summary judgment has the burden of establishing "his cause of action or defense 'sufficiently to warrant the court as a matter of law in directing judgment' in his favor (CPLR 3212, subd [b])" (Friends of Animals v. Associated Fur Mfrs., Inc., 46 NY2d 1065, 1067 [1979]). The moving party carries this burden by submitting evidence sufficient to demonstrate the absence of any material issues of fact (see Alvarez v. Prospect Hospital, 68 NY2d 320, 324 [1986]). The affidavit may not consist of mere conclusory statements but must include specific evidence establishing a prima facie case with respect to each element of the cause of action that is the subject of the motion. Similarly, a party responding to a motion for summary judgment may not merely rely on conclusory statements and denials but must lay bare its proof (see Hanson v. Ontario Milk Producers Coop., Inc., 58 Misc 2d 138, 141-142 [Sup Ct. Oswego County 1968]). The failure of a responding party to deny a fact alleged in the moving papers constitutes an admission of the fact (see Kuehne & Nagel, Inc. v. Baiden, 36 NY2d 539, 544 [1975]).

For the following reasons, I recommend that Staff's motion for an order without hearing be granted in part and denied in part.

Ownership

An element of the first and third causes of action is ownership of the Facility. Exhibit F to Staff's motion is a copy of a petroleum bulk storage application. The application lists the name and address of the Facility as the QP Service Station located at 1317 Castleton Avenue, Staten Island, New York. On the application, the owner of the Facility is also identified as the QP Service Station. Respondents offered nothing to rebut the information in Exhibit F. Therefore, Exhibit F establishes as a matter of law that QP Service owns and operates the Facility.

Paragraph 3 of the October 23, 2002 complaint alleges, among other things, that Antico also owns the property where the Facility is located. Although the controlling pleading is Respondents' amended answer dated May 13, 2003, neither the original answer, dated November 27, 2002, nor the amended answer reply to Paragraph 3 of the complaint. The wording of the first nine paragraphs of the original answer, which Respondents filed before Staff moved for order without hearing, and the amended answer are identical. In Paragraph 1 of their initial and amended answers:

Respondents deny the allegations contained in Paragraphs of the Complaint designated "2", "4" and "5".

In Paragraph 2 of their initial and amended answers:

Respondents deny knowledge or information sufficient to form a response to allegations designated "7", "8", "9" and "10."

The answers are silent about the statements presented in Paragraph 3 of the complaint. With respect to an answer, 6 NYCRR 622.4(b) requires a respondent to specify which allegations it admits, which allegations it denies and which allegations it has insufficient information upon which to form an opinion regarding the allegation. CPLR 3018(a) requires the same, and states further that "[a]ll other statements of a pleading are deemed admitted" (see also Hanson, 58 Misc 2d at 141-142). Since Respondents' amended answer is silent about Paragraph 3 of the complaint, the statements asserted in Paragraph 3 of the complaint are deemed admitted by Respondents. Therefore, Antico's failure to deny the allegation in Paragraph 3 of the complaint establishes as a matter of law that Antico, in addition to QP Service, also owns the property located at 1317 Castleton Avenue.

Paragraph 4 of the complaint alleged, among other things, that Gregory Iovine owns the property located at 1317 Castleton Avenue, Staten Island. Respondents denied this allegation in Paragraph 1 of their original and amended answers. In the motion for order without hearing, Staff offered nothing to support the claim asserted in Paragraph 4 of the complaint concerning Mr. Iovine's ownership of the Facility. Therefore, Staff failed to establish as a matter of law that Respondent Gregory Iovine owns the property. Accordingly, an issue of fact on this point remains.

The First Cause of Action

In the first cause of action, Department Staff alleged that Respondents violated 6 NYCRR 612.2(d) when they substantially modified the Facility in March 2002 by removing the underground petroleum storage tanks without prior notification to the Department. Section 612.2(d) applies to owners, and requires them to provide the Department 30 days advance notice before substantially modifying a facility. A definition of the term, "substantial modification," is found at 6 NYCRR 612.1(27), and includes the replacement or permanent closure of existing or leaking tanks.

As noted above, Respondents, in their reply, attempted to challenge the credibility and reliability of the statements presented in the affidavits filed by the Department's witnesses. Credibility issues, however, are outside the scope of a motion for summary relief (see State v. Arthur L. Moon, Inc., 228 AD2d 826, 828 [3rd Dept.], lv denied 89 NY2d 861 [1996]).

Staff established as a matter of law that Respondents QP Service and Antico violated

6 NYCRR 612.2(d). According to Mr. Nabone's affidavit, he observed the removal of the underground petroleum storage tanks from the Facility on March 7, 2002. According to ECO Farrand's affidavit, he went to the Facility on March 27, 2002 and observed that the site had been disturbed. During his investigation, ECO Farrand interviewed Reid Turoff, who stated that the underground petroleum storage tanks at the Facility had been removed recently. Mr. Sigona's affidavit and the information presented in Exhibit F establish that the Department did not receive notice 30 days before Respondents QP Service and Antico, as the Facility's owners, substantially modified the Facility by removing underground petroleum storage tanks from the Facility between March 7 and 27, 2002. It was not until April 2, 2002, that the Department received notice of the substantial modification at the Facility.

As explained above, Respondents alleged in their first affirmative defense that they were not liable for the violations alleged in the complaint because they retained Energy Storage as their agent to remove the underground petroleum storage tanks at the Facility. I reject this affirmative defense because Respondents offered neither any legal argument nor any facts to support it.

The Second Cause of Action

Paragraph 7 of the complaint states, in full, that "[o]n April 2, 2002, DEC staff was notified of a petroleum spill at the facility (spill #0200047) by a party other than the Respondents." In the second cause of action, Staff alleged that Respondents violated 6 NYCRR 613.8 because they failed to report the spill. Section 613.8 requires "any person with knowledge of a spill, leak or discharge of petroleum" to report it to the Department within two hours of discovery. Pursuant to 6 NYCRR 612.1(24), a "spill" means any escape of petroleum from the ordinary containers normally used to store, transfer, or process petroleum.

Respondents alleged as their second affirmative defense that they retained Energy Storage as their agent to remove the underground storage tanks at the Facility. Since Energy Storage was working on the site, Respondents argued that they did not know about the spill and, therefore, are not liable for a violation of 6 NYCRR 613.8.

In the motion papers, Staff did not identify the legal or factual basis for the claim that Respondents QP Service, Antico, and Gregory Iovine knew or should have known about the spill at the Facility. Staff failed to establish a prima facie entitlement to a judgment as a matter of law. Therefore, I deny Staff's motion with respect to the second cause of action.

Although Staff did not make a prima facie showing, I note that Respondents are not entitled to judgement in their favor. Respondents' reply included neither any legal argument nor any facts to support the assertions made as part of their second affirmative defense. Therefore, issues of fact remain concerning the allegations supporting the second cause of action.

The Third Cause of Action

In the third cause of action, Staff alleged that Respondents violated 6 NYCRR 613.9(c) because Respondents did not notify the Department 30 days prior to permanently closing the tanks at the Facility. The notice requirement outlined in 6 NYCRR 613.9(c), like that in

6 NYCRR 612.2(d), applies to owners. The proof offered by Staff to support the first cause of action is the same proof needed to support this cause of action. Since Respondents' have offered nothing to rebut Staff's evidence, Staff established as a matter of law that Respondents QP Service Station and Antico violated 6 NYCRR 613.9(c) by failing to notify the Department 30 days before permanently closing the tanks at the Facility.

Respondents' Third Affirmative Defense

Paragraph 37 of Respondents' amended answer states in full:

That to now pursue the Defendants for these violations constitutes one or all of the following: (i) Double jeopardy, (ii) Res judicata, (iii) The law of the case, (iv) Waiver, (v) Accord and satisfaction, (vi) Release

According to the amended answer, the basis for this affirmative defense is that ECO Farrand issued a summons to Energy Storage on March 27, 2002 for a violation. Subsequently, Energy Storage pleaded guilty and paid a $1,000 fine, according to Respondents. Respondents claimed further that the Department knew about two other violations at the site, but failed to charge Energy Storage with these additional violations. Because the Department failed to commence additional enforcement actions against Energy Storage, Respondents argued that Staff is precluded from pursuing this action now against them based on the legal doctrines listed above.

Respondents' amended answer and reply include neither any legal argument nor facts to support the assertions made as part of their third affirmative defense. Staff has established a prima facie entitlement to a judgement as a matter of law with respect to the first and third causes of action. With respect to the third affirmative defense, Respondent's did not rebut Staff's showing either by presenting a legal argument or by making a factual showing that would raise a triable issue of fact. Moreover, Respondent's failure does not entitle them to judgment in their favor with respect to the second cause of action.

Relief

As part of its motion, the Department requested an order from the Commissioner that would: (1) assess a total civil penalty of $240,000 for the three violations asserted in the complaint, and (2) direct Respondents to remediate the site according to a plan pre-approved by Staff. Respondents' reply was silent with respect to Staff's demand for relief. Since there are outstanding factual issues concerning the Respondents' liability, I reserve making a recommendation about the relief requested by Staff until after the hearing.

FINDINGS OF FACT

Based on the foregoing discussion, the facts established as a matter of law are:

  • The QP Service Station Corporation owns and operates a petroleum bulk storage facility at 1317 Castleton Avenue, Staten Island (Richmond County), New York 10310 (the Facility). The Facility consisted of 5 underground petroleum storage tanks. The capacity of each tank was 550 gallons.
  • In addition to QP Service, the Antico Realty Corporation is an owner of the property located at 1317 Castleton Avenue.
  • On or about March 7, 2002, Energy Storage, on behalf of QP Service and Antico, removed underground petroleum storage tanks from the Facility.
  • On April 2, 2002, the Department received notification from QP Service that the tanks at the Facility had been substantially modified.
  • Between March 7 and 27, 2002, a petroleum spill occurred at the Facility. Spill No. 0200047 was reported to the Department on April 2, 2002 by someone other than the Respondents

CONCLUSIONS

  • With respect to the first and third causes of action, Staff established as a matter of law that Respondents QP Service and Antico own the petroleum bulk storage facility located at 1317 Castleton Avenue, Staten Island, New York (the Facility).
  • However, Staff failed to establish as a matter of law that Gregory Iovine owns the petroleum bulk storage facility located at 1317 Castleton Avenue, Staten Island, New York.
  • Respondents QP Service and Antico violated 6 NYCRR 612.2(d) by removing underground petroleum storage tanks from the Facility between March 7 - 27, 2002 without providing the Department with 30 days advance notice.
  • Respondents QP Service and Antico violated 6 NYCRR 613.9(c) by permanently closing underground petroleum storage tanks at the Facility between March 7 - 27, 2002 without providing the Department with 30 days advance notice.
  • With respect to the second cause of action, Staff failed to establish prima facie entitlement to judgment as a matter of law that Respondents QP Service, Antico, and Gregory Iovine knew or should have known that a petroleum discharge occurred at the Facility between March 7 - 27, 2003.

RULING

As to the issue of liability on the first and third causes of action alleged in the October 23, 2002 complaint, I grant Staff's motion for order without hearing with respect to Respondents QP Service and Antico.

With respect to Respondent Gregory Iovine, I deny Staff's motion concerning the first and third causes of action alleged in the October 23, 2002 complaint. There is a factual issue about whether Mr. Iovine owns the Facility with Respondents QP Service and Antico.

Finally, I deny Staff's motion with respect to the second cause of action alleged in the October 23, 2002 complaint. There is a factual issue about whether Respondents QP Service, Antico and Gregory Iovine knew or should have known about the petroleum spill on the site, which was reported to the Department on April 2, 2002.

FURTHER PROCEEDINGS

I will schedule the adjudicatory hearing after I receive a statement of readiness consistent with the requirements outlined in 6 NYCRR 622.9. The statement of readiness must also include a list of hearing dates that are mutually agreeable to the parties' counsel and their respective witnesses.

___________/s/____________
Daniel P. O'Connell
NYS Department of Environmental Conservation
Office of Hearings and Mediation Services
625 Broadway, First Floor
Albany, New York 12233-1550

Dated: Albany, New York
July 8, 2003

To: Marvin E. Kramer, Esq.
Marvin E. Kramer and Associates, PC
1325 Franklin Avenue
Garden City, New York 11530

David S. Rubinton, Esq.
Assistant Regional Attorney
NYSDEC Region 2
47-40 21st Street
Long Island City, New York 11101-5407

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