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Singh, Kuldeep and Kuldip, Inc. - Decision and Order, December 17, 2003

Decision and Order, December 17, 2003

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
625 Broadway
Albany, New York 12233-1010

In the Matter of the Alleged Violations of
Article 17 of the Environmental Conservation Law of
the State of New York and Title 6, Parts 612 and 613
Of the Official Compilation of Codes, Rules, and
Regulations of the State of New York

- by -

KULDEEP SINGH and KULDIP, INC.,
Respondents.

DEC Case No. R2-20020308-56

DECISION AND ORDER
OF THE COMMISSIONER
December 17, 2003

DECISION AND ORDER OF THE COMMISSIONER

Staff of the Department of Environmental Conservation ("Staff") moves, pursuant to 6 NYCRR 622.15, for a default judgment against respondents Kuldeep Singh and Kuldip, Inc. For the reasons that follow, Staff's motion is granted as to Kuldeep Singh, but is denied as to Kuldip, Inc.

Facts and Procedural Background

The "proceedings," "default procedures" and "findings of fact" sections of the summary report of Administrative Law Judge ("ALJ") P. Nicholas Garlick (attached) are hereby adopted, subject to the following clarifications.

Staff alleges that respondents Kuldeep Singh and Kuldip, Inc. are the owners of a petroleum bulk storage facility located at 64 Frost Street, Brooklyn, New York. Although the facility was registered with the Department, that registration expired on April 23, 2001. The registration indicated that the facility contains nine tanks, with a combined capacity of 7,400 gallons, that were used for the retail sale of gasoline. An inspection by Staff in June 2001 disclosed that the inactive tanks were not properly closed as required by applicable Departmental regulations.

By complaint dated January 2, 2003, Staff alleged two causes of action against respondents: (1) that respondents failed to register the petroleum bulk storage facility in violation of ECL 17-1009 and 6 NYCRR 612.2, and (2) that respondents failed to remove all product from the tanks and piping system to the lowest draw-off point, failed to lock or securely bolt all manways, and failed to cap or plug all fill lines, gauge openings, or pump lines to prevent unauthorized use or tampering, in violation of ECL 17-1005 and 6 NYCRR 613.9.

Staff mailed a notice of hearing and the January 2003 complaint by certified mail to Kuldeep Singh to an address in Irvington, New Jersey, and to 392 Leonard Street, Brooklyn, New York. Staff also mailed by certified mail the notice of hearing and complaint to Kuldip, Inc., at the Leonard Street address. Respondents' addresses were confirmed by records of the New York State Department of State, Division of Corporations.

The notice of hearing indicated that a pre-hearing conference on the complaint was scheduled for January 31, 2003. The notice also indicated that, pursuant to 6 NYCRR 622.15, failure to timely answer, failure to attend a hearing, or failure to attend a pre-hearing conference would result in a default and a waiver of respondents' right to a hearing.

A return receipt card dated January 16, 2003, was returned to Staff indicating that delivery to Kuldeep Singh at the Irvington, New Jersey, address had been completed. The record contains no other return receipt cards for the January 2003 certified mailing.

In March 2003, Staff mailed to respondents a notice of hearing and complaint that was virtually identical to the January 2003 notice of hearing and complaint. The complaint was dated March 24, 2003, and the notice of hearing indicated that a pre-hearing conference was scheduled for April 20, 2003. The mailing was by certified mail and was sent to Kuldeep Singh at both the Irvington and Leonard Street addresses, and to Kuldip, Inc., at the Leonard Street address.

As a result of the second certified mailing, Staff received a return receipt card indicating that the mailing was delivered to Kuldeep Singh at the Leonard Street address on April 27, 2002. The record contains no other return receipt cards from the second mailing. However, all three envelopes Staff mailed to respondents were returned. The envelope addressed to Kuldeep Singh in Irvington was returned with the notation "refused," and the envelope addressed to Kuldeep Singh at Leonard Street was returned with the notation "Attempted Not Known." The envelope addressed to Kuldip, Inc., was also returned with the notation "Attempted Not Known."

In June 2003, Staff made a third attempt to affect service by certified mail. The third complaint, dated June 9, 2003, was identical to the March 2003 complaint, and the notice of hearing indicated that a pre-hearing conference was scheduled for July 9, 2003. The notice of hearing and complaint was sent by certified mail to Kuldeep Singh at both the Irvington and Leonard Street addresses. This time, however, the notice of hearing and complaint was sent to Kuldip, Inc., at 64 Frost Street, Brooklyn, New York, the location of the facility.

As a result of the third mailing, two envelopes were returned to Staff. The first envelope, sent to Kuldeep Singh at the Leonard Street address, was returned with the notation "refused." The second envelope, sent to Kuldip, Inc., at the Frost Street address, was returned with the notation "UNK." The record contains none of the return receipts from the third mailing.

By motion dated July 29, 2003, Staff moved for a default judgment against respondents. A copy of the notice of motion for a default judgment was filed with the Department's Office of Hearings and Mediation Services, and the matter was assigned to ALJ Garlick. In his summary hearing report, the ALJ found that by failing to answer the January 2003 complaint, respondents were in default. Accordingly, the ALJ recommended that Staff's motion be granted. I adopt the ALJ's conclusion, in part.

Discussion

In its motion papers, Staff claims that respondents failed to file any answers with the Department and that respondents failed to appear at any of the pre-hearing conferences. Accordingly, Staff seeks an order holding respondents liable upon default for the causes of action alleged in the complaints, and imposing a penalty upon respondents, individually and jointly.

Under the Department's regulations, an administrative enforcement proceeding may be commenced, among other methods, by service upon a respondent of a notice of hearing and complaint (see 6 NYCRR 622.3[a][1]). The notice of hearing may provide for a respondent's attendance at pre-hearing conference (see 6 NYCRR 622.8[a]). Service of the notice of hearing and complaint may be by personal service consistent with the CPLR, or by certified mail (see 6 NYCRR 622.3[a][3]). Where service is by certified mail, service is complete when the notice of hearing and complaint is received (see id.).

Within 20 days of receipt of a notice of hearing and complaint, a respondent must serve an answer upon Department staff (see 6 NYCRR 622.4[a]). A respondent's failure to file a timely answer constitutes a default and a waiver of respondent's right to a hearing (see id.; 6 NYCRR 622.15[a]). Moreover, whether or not a timely answer is filed, failure to appear at the hearing or the pre-hearing conference, if one has been duly scheduled, also constitutes a default and a waiver of respondent's right to a hearing (see 6 NYCRR 622.l5[a]).

If any of these events occur, Staff may make a motion for a default judgment (see id.). A motion for a default judgment will be granted upon a showing, among other things, of proof of service upon the respondent of the notice of hearing and complaint, and proof of the respondent's failure to appear or failure to file a timely answer (see 6 NYCRR 622.15[b][l],[2]).

Kuldeep Singh

The ALJ correctly held that Staff's motion, insofar as it seeks a default judgment against Kuldeep Singh, should be granted. As the ALJ correctly observed, Staff's motion demonstrates that the January 2003 notice of hearing and complaint was served upon Kuldeep Singh at the Irvington address. The return receipt establishes that the notice of hearing and complaint was received by Kuldeep Singh and, therefore, the service by certified mail, as authorized by Department regulations, was completed (see 6 NYCRR 622.3[a][3]). Staff's submissions also demonstrate that Kuldeep Singh failed to answer that complaint. Accordingly, Kuldeep Singh is in default by virtue of his failure to timely answer the January 2003 complaint, and Staff's allegations in that complaint are deemed to have been admitted by Mr. Singh.

Kuldeep Singh's failure to appear at the pre-hearing conferences scheduled in the January 2003 notice of hearing, however, cannot serve as a basis for a default judgment. The record reveals that the January 2003 notice of hearing and complaint was not received by Mr. Singh until January 16, 2003. Accordingly, the pre-hearing conference scheduled for January 31, 2003, fell within the 20-day period Mr. Singh had to answer the complaint. Because a respondent is afforded the full regulatory period within which to answer, the failure to appear at a pre-answer, pre-hearing conference should not be used as a basis for a default judgment against respondent.

Kuldip, Inc.

Although the ALJ correctly concluded that Staff effected service of the January 2003 notice of hearing and complaint upon Kuldeep Singh, he erred in concluding that service was effected upon Kuldip, Inc. Staff attempted to serve the January 2003 notice of hearing and complaint upon Kuldip, Inc., by certified mail at the corporation's Leonard Street address, which address was confirmed by the Department of State's records. However, no return receipt from that January 2003 mailing is provided in Staff's papers and, thus, no evidence is provided indicating that the corporation received the notice of hearing and complaint. Moreover, nothing in the record indicates that Staff attempted to personally serve the corporation (see CPLR 311 [a][1] [personal service upon a corporation]; CPLR 312-a [personal service by mail]; Business Corporation Law § 306 [personal service upon the Secretary of State as agent of a domestic corporation]; CPLR 3215[g][4] [additional service by first class mail where default judgment sought against a corporation served process pursuant to Business Corporation Law § 306]). Thus, Staff failed to prove that it served the January 2003 notice of hearing and complaint upon Kuldip, Inc.

For similar reasons, no evidence indicates that the March 2003 or June 2003 notices of hearing and complaint were served upon Kuldip, Inc. The notations "attempted, not known" and "UNK" on the envelopes returned to Staff do not establish that the corporation received the notices of hearing and complaint. Thus, the record contains no evidence that service by certified mail was effected upon the corporation. Accordingly, no basis exists for a default judgment as against Kuldip, Inc., either by virtue of its failure to answer the March 2003 or June 2003 complaints or its failure to appear at the pre-hearing conferences. Accordingly, Staff's motion for a default judgment as against Kuldip, Inc., must be denied.

Liability and Penalty Determination

As a consequence of Kuldeep Singh's default, he is deemed to have admitted the allegations set forth in the January 2003 complaint. The complaint alleges that the two violations were first observed by Staff on June 29, 2001, and continued for an unspecified period of time, but at least for thirty days. In the July 29, 2003 affirmation of David S. Rubinton, Esq., filed in support of the motion, Staff provided a July 21, 2003 end-date for the calculation of penalties. July 21, 2003 was the date the violations were last observed prior to the filing of the July 29, 2003 motion for a default judgment.

Staff analyzed the various components of penalty assessment under the Department's Civil Penalty Policy and applied them to the facts in this case. Staff recommended penalties of $100 per day for each of the two violations. However, penalties should not be awarded for violations alleged to have occurred after the date of the complaint. Thus, the period upon which the penalty is based begins on June 29, 2001 and ends on January 2, 2003, consisting of a total of 552 days.

Based on my review of the record in this matter, I concur with the Staff's recommended penalty for the violations of the tank closure requirements at 6 NYCRR 613.9, but am modifying the penalty for failure to renew the registration of the petroleum bulk storage facility. I agree with Staff's recommendation that one half of the penalty be suspended upon the condition that Kuldeep Singh comply with the remediation terms set forth herein.

Accordingly, a penalty in the amount of $70,200 is assessed, $35,100 of which will be suspended pending Kuldeep Singh's compliance with the remediation directed in this decision and order.

NOW, THEREFORE, having considered this matter, it is ORDERED that:

  1. Staff's motion for a default judgment is granted as against respondent Kuldeep Singh, and denied as against respondent Kuldip, Inc.
  2. Pursuant to 6 NYCRR 622.15, respondent Kuldeep Singh is found to be in default. Accordingly, the allegations in the complaint against respondent Kuldeep Singh are deemed to have been admitted by respondent.
  3. Respondent Kuldeep Singh is adjudged to have violated ECL 17-1009, 6 NYCRR 612.2, and 6 NYCRR 613.9, each on 552 separate occasions.
  4. Respondent Kuldeep Singh is liable for and shall pay a civil penalty in the amount of Seventy Thousand, Two Hundred Dollars ($70,200). Of this amount, Thirty-Five Thousand, One Hundred Dollars ($35,100) shall be due and payable immediately. Payment of this penalty shall be by cashier's check, certified check or money order drawn to the order of "NYSDEC" and delivered to the Department's Region 2 Director, NYS DEC Regional Headquarters, 47-40 21st Street, Long Island City, New York 11101-5407.
  5. The payment of the remaining Thirty-Five Thousand, One Hundred Dollars ($35,100) shall be suspended upon the condition that respondent Kuldeep Singh timely performs the five below specified tasks:
    1. Within 30 days of receipt of this order, respondent Kuldeep Singh shall close the facility in accordance with 6 NYCRR 613.9(b).
    2. Within 30 days of receipt of this order, respondent Kuldeep Singh shall file all forms necessary to register his facility (including all required registration fees) for the period from April 23, 2001 (when the last registration expired) to the date the facility is closed.
    3. Within 60 days of receipt of this order, respondent Kuldeep Singh shall submit to Region 2 Department Staff documentation accounting for the work performed to close the facility, including a site diagram and daily worksheets that include descriptions of work performed on each day.
    4. Within 15 days of receiving any comments from Department Staff regarding the documentation submitted, respondent Kuldeep Singh shall implement any additional required investigatory or remedial actions to properly close the facility.
    5. Within 30 days of completion of any additional required investigatory or remedial actions, respondent Kuldeep Singh shall submit documentation that such actions were completed properly.
  6. All communications from respondent Kuldeep Singh to the Department concerning this order shall be made to the Department's Region 2 Director, NYS DEC Regional Headquarters, 47-40 21st Street, Long Island City, New York 11101-5407.
  7. The provisions, terms and conditions of this order shall bind respondent Kuldeep Singh, his agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of respondent Kuldeep Singh.

For the New York State Department
of Environmental Conservation

/s/
Erin M. Crotty, Commissioner

Dated: December 17, 2003

To: By Certified Mail

Mr. Kuldeep Singh
392 Leonard Street
Brooklyn, NY 11211

Mr. Kuldeep Singh
1208 Springfield Avenue
Irvington, NJ 07111

Kuldip, Inc.
64 Frost Street
Brooklyn, NY 11211

By Regular Mail

David S. Rubinton, Esq.
Assistant Regional Attorney
NYS DEC Region 2
47-40 21st Street
Long Island City, NY 11101-5407

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 and
Title 6, Parts 612 and 613 of the Official Compilation of
Codes, Rules and Regulations of the State of New York

-- By --

KULDEEP SINGH
and KULDIP, INC.
Respondents.

SUMMARY REPORT

Case No. R2-20020308-56

PROCEEDINGS

By a complaint dated January 2, 2003, staff of the Department of Environmental Conservation ("DEC Staff") alleged two causes of action against Kuldeep Singh and Kuldip, Inc. ("Respondents") for violations alleged to have occurred at the Respondents' Petroleum Bulk Storage ("PBS") facility located at 64 Frost Street, Brooklyn, New York. The PBS facility was registered with DEC Staff (PBS #2-200956) and the registration expired on April 23, 2001. This registration indicated that the site contained nine tanks with a combined capacity of 7,400 gallons and were used for the retail sale of gasoline. The registration indicates that the site was controlled by Respondent Kuldip, Inc. and was owned by Respondent Singh. An inspection by DEC Staff in June 2001 disclosed that the tanks were not active, but rather improperly closed.

The two causes of action alleged in the complaint assert that the Respondents: (1) failed to register its PBS facility in violation of ECL 17-1009 and 6 NYCRR 612.2; and (2) failed to remove petroleum product from the tanks and piping system, failed to lock or secure all manways, and failed to cap or plug all fill lines, gauge openings or pump lines in violation of ECL 17-1009 and 6 NYCRR 613.9.

DEC Staff mailed an identical complaint dated March 24, 2003 to the Respondents; however, service of the certified letter was refused by the Respondents and service was not perfected. DEC Staff sent a third identical Complaint to the Respondents dated June 9, 2003; again, the letter was refused and service was not perfected.

By notice of motion dated July 29, 2003, DEC Staff sought a judgment by default against the Respondent concerning alleged violations of Article 17 of the ECL and associated implementing regulations, specifically 6 NYCRR 612.2 and 613.9. In support of the motion, DEC Staff submitted an affirmation of DEC Staff Attorney David S. Rubinton (who served the Respondents via certified mail) and a proposed order. The first notice of hearing and complaint were received at the Respondents' executive office on January 16, 2003 (U.S.P.S. Article Number 7001 1940 0005 8674 0141).

To date, the Respondents have failed to serve an answer or otherwise move, although the time to do so expired on or about February 5, 2003.

The notice of motion for default judgment and supporting papers were mailed to the Respondents on or about July 29, 2003. Respondents have not opposed the motion.

DEFAULT PROCEDURES

Section 622.15, "Default Procedures" provides, in pertinent part: "(b) The motion for a default judgment... must contain: (1) proof of service upon the respondent of the notice of hearing and complaint or such other document which commenced the proceeding; (2) proof of the respondent's failure to appear or failure to file a timely answer; and (3) a proposed order."

The following findings are based upon the papers submitted, as identified above.

FINDINGS OF FACT

  1. On or about January 16, 2003, DEC Staff served a notice of hearing and complaint on Respondents Kuldeep Singh and Kuldip, Inc. The time to answer or otherwise move expired on or about February 5, 2003. No answer has been served to date.
  2. Staff served the motion for default judgment and supporting papers on Respondents on or about July 29, 2003. Respondents have not opposed said motion. The time to serve papers in opposition expired on or about August 8, 2003.
  3. The requirements for a default judgment have been adequately met as prescribed by 6 NYCRR 622.15(b).

CONCLUSION

The motion for default judgment should be granted. This default summary report and Staff's proposed order (attached hereto) are referred to the Commissioner for final determination.

____________/s/______________
P. Nicholas Garlick
Administrative Law Judge

To: Mr. Kuldeep Singh
392 Leonard Street
Brooklyn, NY 11211

Mr. Kuldeep Singh
1208 Springfield Avenue
Irvington, NJ 07111

Kuldip, Inc.
64 Frost Street
Brooklyn, NY 11211

David S. Rubinton, Esq.
Assistant Regional Attorney
NYS DEC Region 2
47-40 21st Street
Long Island City, NY 11101-5407

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