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Danny Fortune & Co., Inc. - Ruling 4, January 11, 2000

Ruling 4, January 11, 2000


In the Matter of

Alleged Violation of Article 23 of
the New York Environmental Conservation Law and Part 421 of Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York












This enforcement action was commenced by Notice of Hearing and Complaint dated September 13, 1999 alleging that the Respondents Danny Fortune & Co., Inc., Palumbo Block Company, Inc., Fortunato Palumbo and Anthony Palumbo (the "Respondents") are unlawfully mining without a permit (NYSDEC Case No. R3-19990909-52; the "Dover enforcement action") at the Dover Industrial Park site, Dover, New York. the Respondents excavated an area of the site pursuant to Town of Dover Planning Board approval in 1993 to construct a building referred to as "Building II". However, Staff assert that excavation of a two-acre area exceeded the Town approval, and further, the Respondents have not commenced building construction on the site. The Respondents own various mining interests in New York including sites in Dutchess County and Columbia County and are the owners and developers of the Dover Industrial Park. (A lengthier procedural history of this case is set forth in previous rulings in this action, dated November 12, 1999 and November 23, 1999.)

On December 3, 1999 at the request of the Respondents, an expedited adjudicatory hearing was scheduled in this matter pursuant to 6 NYCRR Section 622.13, since the complaint alleges mining without a permit (under two theories of liability.) The expedited adjudicatory hearing is scheduled to commence on January 13, 2000 and will continue on January 14, 2000 and January 20, 2000.

On December 1, 1999, Staff filed its first Demand for Discovery; on December 7, 1999, the Respondents filed a Demand for Discovery. On December 21, 1999, the Respondents filed a Response to Staff's first Demand. Although the parties had previously agreed to exchange responses (each consisting of a document index) on December 21, no response was filed by Staff.

By motion dated December 23, 1999, the Respondents sought dismissal of the complaint or sanctions against Staff for failure to timely respond to the Respondents' Demand. During a telephone conference on December 28, 1999, Staff provided no satisfactory reason for non-compliance with the discovery schedule previously negotiated with the Respondents. Nonetheless, Staff agreed to provide its response, consisting of the documents, rather than an index, to the Respondents by December 30, 1999. The Respondents agreed that if Staff filed their response by December 30, 1999, the Respondents would withdraw the motion to dismiss (and this is what occurred.)

Subsequently on December 28, 1999, Staff unilaterally rescinded the discovery agreement and demanded that the Respondents provide the actual documents by December 31, 1999. The Respondents, therefore, filed a second Discovery Response, dated December 30, 1999.

Staff's Second and Third Demands for Discovery

Further, Staff filed a Second Demand for Discovery and Demand for Expert Witness Information, both dated December 30, 1999. This was followed by Staff's Third Demand for Discovery, dated January 4, 2000. Staff's Third Demand seeks, to the extent not previously provided, all documents including inter alia, all plans, drawings, applications, surveys and inspection reports, regarding the Respondents' construction activities at the Dover Industrial Park (the site of the alleged mining without a permit.) On January 7, 2000, the Respondents filed a motion seeking a protective order regarding Staff's Second Demand for Discovery. Staff's Second Demand seeks inter alia, the Respondents' state and federal tax returns, checks, accounting books, receipts, bank statements filed or prepared by the Respondents, since 1994; and all documents including all receipts, plans, surveys, memoranda and statements related to the Respondents' mining and block plant operations since 1994.

The Respondents assert Staff's Second Demand ioverboardad and intended to cause unreasonable annoyance, expense and embarrassment to the Respondents. The Respondents assert that a response to the Second Demand would require the production of tens of thousands, if not hundreds of thousands, documents. The Respondents sought to limit the scope of the Second Demand, but Staff declined to consider any revision of its Second Demand. The Respondents seek a protective order precluding Staff's Second Demand for Discovery.

Staff filed a Notice of Cross-Motion Concerning Discovery, dated January 9, 2000. Staff contend that the information sought in the Staff's Second Demand is essential to show the Respondents' economic benefit, as described in the Department's Civil Penalty Policy (issued June 20, 1990). Through the Staff's Second Demand, Staff seek to discover the disposition of the excavated material at issue; and if the Respondents sold the excavated material, the value received for that material. Staff assert that in the alternative, the penalty phase of the hearing should be bifurcated and the heard at a later time so that the Respondents may produce the requested documents.

In their January 9, 2000 Cross-Motion, Staff also sought an order precluding the Respondents from offering any expert witness in this action. However, by letter dated January 11, 2000, Staff have withdrawn their request for an order of preclusion of Respondents' prospective expert witnesses.


Staff's First Demand for Discovery was very comprehensive. In fact, the information requested in Staff's Second and Third Demands is reasonably identified in Staff's First Demand. Also, Staff could have requested the material specifically identified in the Third Demand, sooner. I note that Staff have more than one way to prove economic benefit consistent with the Department's guidance documents. Finally, as has been stated previously, it is within Staff's discretion to withdraw the Complaint if they want additional time to develop their theory of the case.

In sum, in view of the brief time remaining before commencement of the adjudicatory hearing (January 13, 2000) and the length of time since Staff commenced this enforcement action (September 13, 1999) I agree with the Respondents that compliance with Staff's Second Demand would be unduly burdensome to the Respondents. See, 6 NYCRR §622.5(b) and CPLR §3103(a). Therefore, the Respondents' motion for a protective order is granted.

Staff's Motion to Amend the Complaint

Staff filed a Motion to Amend the Complaint, dated January 6, 2000. Staff assert that their recent site inspections lead them to believe that the extent of unpermitted mining is double what they previously alleged in their initial Complaint and first Amended Complaint. Staff seek to increase the penalty from the $55,000.00 penalty assessment set forth in the current Complaint.

The Respondents filed an affirmation of their attorney, Laura Zeisel, dated January 10, 2000, in opposition to Staff's motion to amend. The Respondents assert that the motion should be denied, since Staff seek to escalate the damages sought, but have not sought to amend the substantive allegations of the complaint regarding the volume of material excavated; nor have Staff provided an affidavit of any person having personal knowledge of the doubled volume of material allegedly excavated. Lastly, the Respondents assert that although Staff have alleged their motion to amend is based upon a recently completed site survey, no survey is attached to Staff's motion papers.

Staff previously were granted leave to amend, adding a second theory of liability for the alleged mining without a permit. In that motion to amend, Staff asserted that they are not seeking additional penalties for the second theory of liability. That motion was granted; Staff's proposed monetary penalty assessment in the current Amended Complaint remained $55,000.00. With the present Motion to Amend, Staff seek to amend the damages claim from $55,000.00 to an amount "to be determined by the facts and applicable law at the hearing of this case, and to be calculated in accordance with the Department's Civil Penalty Policy."

In a telephone conference on January 11, 2000, Staff confirmed that its survey has been provided to the Respondents on January 7, 2000, as I previously directed. However, the survey was not available when Staff filed the present motion to amend, and consequently the survey could not be included with that filing.


Staff's motion to amend the damages clause of the complaint is granted. Staff may file a Second Amended Complaint. However, the Respondents will be afforded an opportunity to respond to Staff's request for damages at the conclusion of the adjudicatory hearing. Further, since no new facts are alleged, Staff's amendment of the damages clause should not require filing of additional amended Answers by the Respondents. But this ruling does not preclude the Respondents from making such a filing, should they wish to do so.

Kevin J. Casutto
Administrative Law Judge

Albany, New York
January 11, 2000

To: Laura Zeisel, Esq. [By Fax]
Dominic R. Cordisco, Esq. [By Fax - DEC Region 3 Office]

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