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Mt. Hope Asphalt Corp. - Ruling 3, September 29, 1994

Ruling 3, September 29, 1994


Consolidated Hearing In the Matter of Alleged Violation of Articles 19 and 27 of the New York Environmental Conservation Law and Parts 201 and 360 of Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York, and Proceedings to Revoke All Permits Now Held by and Deny All Applications for Permits Filed by,



Individually, and In Their Capacity as Officers of MT. HOPE ASPHALT CORP., a/k/a





[Third Ruling]


On July 8, 1994, Staff filed an amended complaint in the above referenced matter, as directed in the June 22, 1994 ruling in this matter. In response, Respondents filed an amended answer dated September 1, 1994. That Answer set forth two affirmative defenses.

Motion to Dismiss Affirmative Defense

Staff, by motion dated September 8, 1994, seeks dismissal of the first affirmative defense, because respondents have failed to set forth a sufficient statement of facts, as required by 6 NYCRR 622.5, and also because it is a restatement of an affirmative defense previously pleaded, and dismissed in the June 22, 1994 ruling. Respondents' new first affirmative defense asserts that Mt. Hope conducted its stack testing with contaminated soil from sites identified by a NYSDEC spill number, and that Staff knowingly permitted respondent Mt. Hope to conduct full-scale operations of its facility utilizing non-hazardous petroleum contaminated soil.

This affirmative defense is distinct from those pled in response to the initial complaint in this action, and was not addressed by the June 22, 1994 ruling. As noted by Respondents, the June 22, 1994 ruling dismissing the second affirmative defense (to the initial complaint) found that the affirmative defense presented a constitutional issue regarding restraint of interstate commerce. The present affirmative defense is merely a reiteration of Respondents' earlier stated position expressed during many telephone conferences. While the defense could have been explicitly pleaded earlier, Staff has been on notice of this defense theory of the case.

Ruling: Staff's motion to dismiss respondents' first affirmative defense (in response to the amended complaint) is denied. Respondents may pursue this defense at hearing.

Motion to Disqualify Regional Attorney and Region 1 Staff

By motion filed September 1, 1994, Respondents seek an order disqualifying not only Staff's Regional Attorney, but also other Region I legal staff, from representing Department Staff in this action.

Respondents assert that DR5-102 of the Code of Professional Responsibility (adopted by the State of New York) requires disqualification in this case. DR5-102 states in pertinent part:

If, after taking employment in contemplated or pending litigation, a lawyer learns or it becomes obvious that the lawyer or a lawyer in his or her firm may be called as a witness other than on behalf of the client, the lawyer may continue the representation until it is apparent that the testimony is or may be prejudicial to the client, at which point the lawyer and the firm must withdraw from acting as an advocate before the tribunal.

Under Respondents' theory, the Regional Attorney will be a necessary witness on behalf of respondents, and the Regional Attorney's testimony will be prejudicial to Department Staff, the Regional Attorney's client. However, Respondents have not specified in what manner Department Staff will be prejudiced by that testimony. Instead, Respondents cite the Regional Attorney's affidavit (Affidavit of Regional Attorney, September 8, 1994), filed in the course of motion practice in this action. That affidavit states Department Staff's position that it did not know of documented violations concerning Respondents' receipt of material from New Jersey, prior to execution of the January, 1993 consent order (entered into by Respondent Mt. Hope and Department Staff).

Staff opposes this motion and asserts that no prejudice will accrue to Department Staff in the event Regional Attorney is called to testify on behalf of Respondents. While the Regional Attorney's affidavit is part of the record, it represents Department Staff's position in this matter. This is not something Staff seeks to avoid or hide in this action. This is merely a statement of Staff's theory of prosecution in this action.

"The Code of Professional Responsibility establishes ethical standard that guide attorneys in their professional conduct, and its importance is not to be diminished or denigrated by indifference [citation omitted]. When raised in litigation, however. . . the Code provisions cannot be applied as if they were controlling statutory or decisional law." S&S Hotel v 777 S. H. Corp., 69 NY2d 437 (1987). The S&S court also stated that the Code has rooted disqualification of a lawyer-witness in the concept that the lawyer's professional judgment should be exercised for the client's benefit (S&S at 444). The Court notes that "in the context of an ongoing lawsuit, disqualification of a plaintiff's law firm can stall and derail the proceedings, redounding to the strategic advantage of one party over another [citations omitted]" (S&S at 443). These considerations are applicable to the present motion.

One factor to be considered in this motion is whether the Regional Attorney is a necessary witness. Staff asserts that the Regional Attorney is not a necessary witness in this proceeding, because other members of Staff are available. As in the S&S case, it appears that the Regional Attorney does not have firsthand knowledge of the disputed facts regarding a key issue in the case -- i.e., at what point in time did Staff have knowledge of Respondents' receipt of consignments of petroleum contaminated soil originating in New Jersey, and whether, as a result of that knowledge, Staff implicitly approved Respondents' activities in receiving and using such soil. Instead, the Regional technical Staff would presumably have firsthand knowledge of these events.

Respondents assert that the fact that the existence of other Departmental employees having knowledge of the material issues, does not negate Regional Attorney's role as a witness. However, the issue on the motion for disqualification is whether the Regional Attorney is an necessary witness. Respondents also assert that the testimony of other Department Staff witnesses will be pitted against the Regional Counsel's testimony, thereby creating issues of credibility. However, that assumes that testimony of these other witnesses will contradict the Staff position set out in the Regional Attorney's affidavit - - something which Respondents have not demonstrated. For these reasons, Respondents have not shown that the Regional Attorney is a necessary witness in this action.

Another factor considered by the S&S court is a party's valued right to choose its own counsel. S&S, supra at 443. The court noted that where a sophisticated plaintiff, "knowingly chooses to forego the testimony of its lawyer because it prefers to continue the representation of its law firm, it is curious indeed for the adversary to insist that the lawyer ought to be called as a witness for that client, and for a court on that basis to disqualify the firm [citations omitted]." S&S, supra at 445. Here, Staff, clearly a sophisticated party in environmental litigation, relies solely on Regional legal Staff for representation in administrative actions. To disqualify the Regional Attorney and Regional legal Staff, as Respondents seek, would occasion great disruption to Staff's pursuit of this action.

Lastly, Staff states that in the event the Regional Attorney is called to testify, Staff will assert attorney-client privilege. Respondents assert that Staff has waived this privilege in responding to discovery requests in the parallel criminal proceeding. Staff's response on the criminal proceeding has produced documents relied upon by Respondents in the present motion, for which Staff asserts various privileges, including exemption from Freedom of Information Law (FOIL; Public Officers Law, Article 6) and attorney-client privilege.

Ruling: Respondents' motion to disqualify Regional Attorney and Region 1 legal Staff is denied. The parties are directed to brief the issue of applicability of attorney-client privilege and exemption from FOIL in this administrative proceeding, when potentially privileged documents have been received by Respondents through parallel criminal discovery proceedings. Briefs should be received by this Office by October 17, 1994. No replies are to be filed.

Other Matters

Staff has indicated that it will file a second amended complaint alleging additional administrative violations, by September 30, 1994. Additionally, Respondents have stated they will advise the ALJ whether they continue to oppose Staff's motion to adjourn this action, pending disposition on the parallel criminal proceeding, by October 3, 1994. Without any explanation, Staff has stated it will require at minimum, eight weeks to ready its case for hearing. This is an unacceptably lengthy, unexplained delay. At this point, the parties are advised that I am disinclined to allow a further amendment of the Complaint to add additional causes of action, thereby occasioning further delay in this action. The parties are directed to reserve the week of October 31, 1994 for hearing in this matter, in the event Respondents state their continued opposition to Staff's motion for adjournment.

Administrative Law Judge

Albany, New York
September 29, 1994

Sanford Strenger, Esq.
Farrell, Fritz, Caemmerer, Cleary
Barnosky & Armentano, P.C.
Attorneys for Respondents
EAB Plaza
Uniondale, New York 11556-0120

Lori Riley
Regional Attorney
NYSDEC Region 1
SUNY Campus - Building 40
Stony Brook, New York 11790-2356

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