Irma C. Pollack LLC v OP Dev. Corp. 2025 NY Slip Op 30083(U) January 8, 2025 Supreme Court, New York County Docket Number: Index No. 155868/2019 Judge: Andrea Masley Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 155868/2019 NYSCEF DOC. NO. 175 RECEIVED NYSCEF: 01/08/2025
SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. ANDREA MASLEY PART 48 Justice ---------------------------------------------------------------------------------X INDEX NO. 155868/2019 IRMA C. POLLACK LLC, MOTION DATE Plaintiff, MOTION SEQ. NO. 004 -v- OP DEVELOPMENT CORP., BENENSON CAPITAL PARTNERS, LLC, S&S CADILLAC MOTORS CORP., and DECISION + ORDER ON KRISTAL CHEVROLET MOTORS CORP., MOTION Defendants. ---------------------------------------------------------------------------------X
The following e-filed documents, listed by NYSCEF document number (Motion 004) 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 174 were read on this motion to/for JUDGMENT - SUMMARY .
This is an action for property damage. Plaintiff Irma C. Pollack, LLC owned real
property in Brooklyn, New York (Property) and alleges that defendants contaminated
the Property with hazardous substances from their auto dealerships. Defendant S&S
Cadillac Motors Corp. n/k/a Kristal Auto Mall Corp. (Kristal) moves, pursuant to CPLR
3212, for summary judgment dismissing the complaint. Kristal contends that the
remaining claims are barred by the statute of limitations and a 2017 stipulation declaring
all prior leases and subleases null and void.
Background
Kristal asserts that in 1968, a 1959 ground lease (Ground Lease) was assigned
to defendant OP Development Corp.1 (OP) (NYSCEF 6) pursuant to which OP took
1 Defendant OP filed for bankruptcy. (NYSCEF 99, Notice of Bankruptcy.) Defendant Benenson was dismissed. (Irma C. Pollack LLC v Op Dev. Corp., 2022 NY Slip Op 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 1 of 19 Motion No. 004
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possession of the Property while plaintiff was the owner of the Property. 2 (NYSCEF
124, Bical3 aff ¶ 3; NYSCEF 6, Ground Lease; NYSCEF 120, assignment to OP.) OP
installed an underground waste storage tank, a trench drain system that collected waste
oil and deposited it to the tank, two other underground tanks to store hydraulic fuel and
motor oil, and constructed buildings for an automobile dealership and repair shop.
(NYSCEF 114, tr at 17:10-16, 18:25-19:3 [Pollack depo]; NYSCEF 128, BCP
Application.)
In the assignment, OP promised to abide by the terms of the Ground Lease.
(NYSCEF 120, Assignment at 1-2.) The Ground Lease provides that OP: “keep [the
Property] in good and first-class order and condition. . . and . . . make any and all
repairs, replacements and renewals, ordinary or extraordinary, foreseen or unforeseen,
structural or otherwise, necessary for such purpose.” (NYSCEF 6, Ground Lease, Art.
5.) The Ground Lease provides that any assignee of the Ground Lease will have joint
and several liability. (NYSCEF 120, Ground Lease Art. 34.)
OP subleased the Property to GM. (NYSCEF 124, Bical aff ¶¶ 5, 14.) On
November 1, 1986, Kristal4 took possession of the Property pursuant to a sub-sublease
31541[U], *6 [Sup Ct, NY County 2022]; NYSCEF 79, Decision.) Defendant Kristal Chevrolet is not a movant and, it is undisputed that it was dissolved in 1996. (NYSCEF 125, NY Secretary of State Entity Information [ineffective date: June 26, 1996]; NYSCEF 167, Plaintiff’s Response to the Statement of Facts ¶ 9.) 2 Plaintiff inherited the Ground Lease from the prior owner. (NYSCEF 124, Bical aff ¶ 3.) 3 Sammy Bical owned Kristal since 1992. (NYSCEF 124, Bical aff ¶¶ 8, 9, 12.) 4 Kristal incorporated and began operating the Property in 1992. (NYSCEF 124, Bical aff ¶ 9.) Prior to that it was known as S&S Cadillac Motor Corp. (Id.) 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 2 of 19 Motion No. 004
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with GM which was extended several times. (NYSCEF 146, Sublease between GM and
Kristal and nonparty Kristal Cadillac Inc.;5 NYSCEF 148, Extension Requests.)
On May 1, 2005, OP subleased the Property to Kristal and Kristal Chevrolet
(Sublease). (NYSCEF 7, Sublease.) The Sublease required Kristal to leave the
buildings, structures, and equipment on the Property in “good order and condition,” to
comply with the terms of the Ground Lease, which included the obligation to keep the
Premises in “good and first-class order and condition,” comply with applicable law and
regulations, “repair, replace, rebuild, and restore” damage caused to the Property
“within a reasonable time,” and not use the premises in any way that violates any
“present or future . . laws, rules, regulations, ordinances or requirements.” (Id. Art. 5, 6,
7, 9, 11, 32.) Kristal agreed to indemnification and to comply with the ground lease, that
“[t]he obligations of each of the parties comprising Lessee hereunder shall be joint and
several.” (Id. Art. 5, 15, 40.)
In 2007, OP retained Testwell Laboratories (Testwell) to test the Property for
contaminants. (NYSCEF126, Testwell Report.) Testwell discovered that the soil and
groundwater were contaminated by petroleum, chlorinated solvents, and semi-volatile
organic chemicals, and that the contamination was associated with the trench drain
system and a leaking subsurface waste oil tank. (Id.; NYSCEF 156, Testwell Additional
Remedial Report; NYSCEF 157, Testwell Proposed RAWP.) Testwell reported the
results to the New York State Department of Environmental Conservation (DEC).
(NYSCEF 124, Bical ¶ 18.)
5 Defendant Kristal Cadillac Inc.’s corporate certificate lists its name as Kristal Cadillac Corporation. (NYSCEF 147, Secretary of State Entity Information.) 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 3 of 19 Motion No. 004
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“Immediately upon learning about” the test results, Kristal installed new
aboveground storage tanks and a new waste oil system that did not rely on the old
trench drains. (NYSCEF 124, Bical aff ¶ 19). At DEC’s direction, Kristal
decommissioned the underground storage tanks. (Id. ¶ 20.)
Plaintiff and Kristal agreed to terminate the Sublease as of August 7, 2008, and
“any and all prior agreements, if any, relating to Respondents' occupancy of the
Premises, whether oral or written, are hereby rendered null and void, terminated and
without any legal force and effect” (Standstill Agreement).6 (NYSCEF 25, Holdover
Petition, Exhibit 20, August 8, 2008 Stand-Still Agreement at 20/24.7) Under the
Standstill Agreement, Kristal was to comply with its obligations under the Sublease
going forward, for the duration of the Standstill Agreement to September 30, 2008. (Id.
¶ 3.)
The Sublease and the Ground Lease expired on August 31, 2008, after which
OP and Kristal held over. (NYSCEF 6, Ground Lease, Renewal Art 29 at 47/608.) On
November 14, 2008, plaintiff brought an eviction proceeding against them based on the
Standstill Agreement. (NYSCEF 25, Holdover Petition.) In December 2008, the Civil
Court of the City of New York, Kings County, found OP and Kristal liable as tenant and
subtenant for holding over and for use and occupancy.9 (NYSCEF 124, Bical aff ¶ 26.)
6 The Standstill Agreement is executed by Kristal only. However, plaintiff relied on the Standstill Agreement in its Holdover Petition against Kristal, complaining that OP refused to execute it. (NYSCEF 25, Holdover Petition ¶ 10.) 7 NYSCEF pagination. 8 NYSCEF pagination. 9 Judge Silver’s decision is not filed in NYSCEF. (See NYSCEF 78, May 11, 2022
Decision at 13/27.) 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 4 of 19 Motion No. 004
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In December 2011, plaintiff applied to enter the Property into the New York State
Brownfields Cleanup Program (BCP) (Environmental Conservation Law § 27-1401, et
seq). (NYSCEF 128, BCP application; NYSCEF 163, April 2012 Pollack and BCP
agreement.) Bical opines that this meant that plaintiff would be taking responsibility for
remediation in exchange for significant tax credits. (NYSCEF 124, Bical aff ¶ 30.)
In June 2017, plaintiff and Kristal settled the holdover action (Stipulation),
providing that Kristal would pay use and occupancy, that it was an occupant of the
premises subject to the terms of the Stipulation and not a tenant, and that it would
vacate by November 30, 2017. (NYSCEF 130, Stipulation of Settlement and Surrender
¶¶ 7, 10, 12.) Under paragraph 5 of the Stipulation, “[E]xcept as provided otherwise in
this Stipulation, any and all prior agreements, if any, relating to [OP’s and Kristal’s]
occupancy of the Premises, whether oral or written, are hereby rendered null and void,
terminated and without any legal force and effect.” (Id. ¶ 5) Paragraph 6(c) provides
that “any lease, sublease, license, sublicense, statutory or common law tenancy or
occupancy rights in existence pursuant to which Respondents were occupants, tenants
and/or licensees, and all other rights, if any, of possession or occupancy by the
Respondents of the Premises, have terminated as of the date of execution of this
Stipulation, subject to the terms and conditions of this Stipulation.” (Id. ¶ 6[c])
Paragraph 11 of the Stipulation provides:
“Except as otherwise provided herein, Respondents shall occupy the Premises in the same manner as the Premises were occupied prior to this Stipulation and in full compliance with all laws and the terms of a certain terminated sublease, dated May 1, 2005 (the "Sublease") between Respondents, as sublessees, and non-party OP Development Corp., as sublessor. Petitioner and Respondents shall abide by all the terms of the Sublease as if it were in effect between the parties with Petitioner, as sublessor including, but not limited to, the obligation to maintain, insurance and pay any and all premiums, pay any and all real estate
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property taxes as they become due and maintain the premises in the condition required thereunder.” (Id. ¶11)
As a result, Kristal became a month-to-month tenant without a lease and paying rent
directly to plaintiff. (NYSCEF 124, Bical aff ¶¶ 34, 38). The vacate date was extended
several times, and OP and Kristal vacated the Property on March 31, 2018.10 (Id.)
In 2017, plaintiff agreed to sell the Property for $16 million with the purchaser
agreeing to remediate the Property if plaintiff delivered the Property without any tenants
and without altering the Property. (NYSCEF 129, 2017 Purchase and Sale Agreement
[PSA].) On October 2017, the prospective purchaser requested a seven days’
extension under the 2017 PSA. Peter Pollack, responded, “No extension. October 24
Yes or No!!,” which caused the 2017 PSA to be terminated. (NYSCEF 114, tr at 60:2-4
[Pollack Depo]; NYSCEF 117, Pollack Email.) The prospective purchaser did not
cancel the 2017 PSA “because of the Contamination” as plaintiff alleges. (NYSCEF 5,
Complaint ¶ 51.) Plaintiff seeks damages based on this failed transaction.
Kristal asserts that it returned the Property on March 31, 2018 in the same
condition as existed at the execution of the Stipulation, both as to the subsurface
contamination and the condition of structures. (NYSCEF 124, Bical aff ¶ 48; NYSCEF
122, Burke Report at 7.)11
On June 5, 2018, plaintiff sold the Property to the current owner for $9.2 million
(2018 PSA). (NYSCEF 131, 2018 PSA.) The current owner agreed to “be solely
10 Bical states that Kristal vacated on both April 18, 2018 and March 31, 2018.
(NYSCEF 124, Bical aff ¶¶ 48, 51.) The court uses March 31, 2018 consistent with plaintiff’s allegation in the verified complaint. (NYSCEF 5, Complaint ¶¶ 3, 24, 32, 58.) 11 Michael Burke, PG, CHMM is a geologist who has worked for 25 years in remediation
of sites impacted by petroleum and other contaminants and BCP sites. (NYSCEF 122, Burke Report.) 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 6 of 19 Motion No. 004
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responsible for compliance with” the BCP remediation plan, and plaintiff promised not to
“materially alter” the Property. (NYSCEF 131, 2018 PSA ¶¶ 27.6, 10.3.7.) Bical opines
that the reason for plaintiff’s promise not to materially alter was to prevent a decrease in
tax credits accruing to the buyer. (NYSCEF 124, Bical aff ¶ 30.) The current owner
completed remediation pursuant to the BCP and received over $9.7 million in tax
credits. (NYSCEF 124, Bical aff ¶ 52.) Plaintiff also paid for remediation and received
tax credits. (NYSCEF 128, BCP Application.) BCP tax credits are treated as an
overpayment of taxes and as taxable gross income, so “the tax credits essentially paid
for the Property.” (NYSCEF 122, Burke aff ¶¶ 9, 13.)
The Complaint
Plaintiff seeks to recover the costs of the remediation and for the diminution in
the value of the Property. (NYSCEF 5, Complaint.) The causes of action are: (1)
breach of contract (¶¶ 54-62), (2) indemnification (¶¶ 63-65), (3) Navigation Law
(Navigation Law § 170 et. seq.) liability (¶¶ 66-69), and (4) trespass (¶¶ 70-73). Plaintiff
alleges that the Property was not polluted when the ground lease commenced, but that
defendants contaminated it. Plaintiff alleges contamination by three pollutants:
chlorinated solvent, petroleum and volatile organic compounds. (Id. ¶ 30.) Plaintiff
asserts three breaches of the Ground Lease and Sublease: (1) a failure to remediate
prior to vacating the Property; (2) a failure to investigate the contamination; and (3) a
failure to remediate while in possession of the Property. (Irma C. Pollack LLC v Op
Dev. Corp., 2022 NY Slip Op 31541[U], *6 [Sup Ct, NY County 2022]; NYSCEF 79,
Decision.) With regard to the contract, trespass, and indemnification claims, plaintiff
seeks the following damages: (1) “diminution in value of the Property because of the
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Contamination”; (2) costs incurred (i) for “entering the Property into the New York State
Brownfield Cleanup Program,” (ii) to “investigate and delineate the nature and extent of
the Contamination, including doing so to comply with the requirements of the BCP,” (iii)
to “prepare and implement a plan of interim remediation of the Contamination as
required by DEC,” and (iv) to “otherwise comply with the requirements imposed by DEC
and BCP;” (3) “attorneys’ fees and costs;” and (4) “pre-judgment interest.” (NYSCEF 5,
Complaint ¶ 5.) As to the Navigation Law claim, plaintiff seeks statutory damages for
investigation, clean-up and removal, remediation, and diminution. (Id. ¶¶ 68, 69.) The
Standstill Agreement and Stipulation are not mentioned in the complaint. Rather the
breach of contract is limited to breach of the Ground Lease and Sublease.
On May 11, 2022, the Court dismissed plaintiff’s third cause of action for violation
of the Navigation Law to the extent it seeks recovery for diminution in the Property’s
value; this claim survived as to diminution caused by chlorinated solvents and
remediation costs. The fourth cause of action for trespass by volatile organic chemicals
and petroleum was also dismissed on statute of limitations grounds. (NYSCEF 79,
Decision.) However, the issue of when the chlorinated solvents were discovered could
not be resolved at the CPLR 3211 stage. (Id.) Plaintiff’s 2008 notice of default, on
which the court relied, did not mention chlorinated solvents. (Id., 2022 NY Slip Op
31541[U], *10.) Accordingly, the trespass claim based on chlorinated solvents
survived. The court denied the motion to dismiss the contract claims as barred by the
statute of limitations because the court found that the issue of whether 214 ( c ) (2)
applied to the contract claims was not properly before the court.
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Analysis
On a motion for summary judgment, the moving party must affirmatively
demonstrate the merit of its claim or defense, rather than merely pointing to gaps in the
opposing party's proof. (Bryan v 250 Church Assocs., LLC, 60 AD3d 578, 578 [1st Dept
2009.) Where a movant fails to demonstrate its right to summary judgment, the motion
will be denied, regardless of the sufficiency of the opposing papers. (Cugini v System
Lumber Co., 111 AD2d 114, 115 [1st Dept 1985].)
As a procedural matter, the court rejects Kristal various arguments for dismissal
because plaintiff fails to offer any evidence of contamination by Kristal or as to the value
of the Property when the November 27, 1959 Ground Lease and May 1, 2005 Sublease
commenced. Plaintiff’s lack of proof is not a reason to grant Kristal’s motion for
summary judgment. Rather, on a summary judgment motion, the moving party must
first meet its burden of proof. (Liberty Taxi Mgt., Inc. v Gincherman, 32 AD3d 276, 278
n [1st Dept 2006]). As discussed below, the court finds that Kristal has done so.
Plaintiff’s response to Kristal’s statement of material facts, alone, is inadequate to
counter Kristal’s overwhelming evidence or to raise an issue of fact.12 (NYSCEF 167,
Plaintiff’s February 16, 2024 Response to Kristal’s Statement of Facts.) There is no
memo of law responding to Kristal’s legal arguments or tying together the rebuttal
affidavit of Charles J. McGucken, plaintiff’s environmental engineer, or explaining the
context for the documents plaintiff offers. There is no affidavit from a person with
knowledge opposing Kristal’s fact affidavit from Bical.
12 The court notes that plaintiff’s response to Kristal’s statement of material facts (NYSCEF 167) contains hyperlinks that do not work and citations that are wrong, e.g. NYSCEF 1 is a Summons with Notice, not a ground lease. 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 9 of 19 Motion No. 004
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Plaintiff has no excuse for such failure. Plaintiff had notice of the deadline for
summary judgment since June 22, 2022. (NYSCEF 88, PC Order.) Kristal filed this
motion on December 1, 2023. (NYSCEF 112, Notice of Motion.) Plaintiff requested and
received numerous extensions of time on consent and later by court order, and still was
not able to submit proper opposition.13
Plaintiff cannot fix its briefing failure by springing new arguments on Kristal and
the court at argument. For example, the court rejects plaintiff’s procedural argument
based on 3211(a)(5) which was raised for the first time at argument; “3211,”
“stipulation,” “release” or “statute of limitations” are not mentioned in plaintiff’s response.
(See NYSCEF 167, Plaintiff’s Response to Kristal’s Statement of Facts [argument is not
mentioned].) Indeed, all of plaintiff’s legal arguments raised for the first time at
argument are rejected.
Trespass
The trespass claim is time-barred by CPLR 214-c (2). (Pollack, 2022 NY Slip Op
31541[U], *8). This action commenced in June 2019. Kristal alleges that plaintiff
learned of the contamination in 2007. Except as to chlorinated solvents, the court
previously found plaintiff to have knowledge from May 15, 2008, when plaintiff sent OP
a notice of default that the property was contaminated. (Id.) However, chlorinated
13 Kristal agreed to a 30-day adjournment. (NYSCEF 134, Stipulation.) However, Kristal finally objected to plaintiff’s sixth adjournment request. (NYSCEF 136, Kristal’s opposition to plaintiff’s request for adjournment.) Plaintiff’s excuses, though facially reasonable, became less so when viewed together. In all instances, plaintiff did not file late, but asked for yet another adjournment demonstrating no effort to get the work done. Plaintiff shall file in NYSCEF all his requests for adjournments whether they be by letter or email to the court or Kristal, if not already filed. These adjournments demonstrate to the court that plaintiff is in no hurry to resolve this matter; delay is an unacceptable litigation strategy. 155868/2019 IRMA C. POLLACK LLC vs. OP DEVELOPMENT CORP. Page 10 of 19 Motion No. 004
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solvents were not mentioned in plaintiff’s notice. (Id.) According to Kristal’s expert,
chlorinated solvents are a type of volatile organic chemical (VOC). ….”. (NYSCEF 122,
Burke Report at 5.) Plaintiff fails to counter Burke’s opinion. Accordingly, plaintiff’s
reference to VOCs in the 2008 notice of default included chlorinated solvents.
(NYSCEF 122, Burke Report at 5.) Testwell also identified all three types of
contaminants and identified the leaking waste oil system as the source of
contamination. (NYSCEF 122, Burke Report at 5; NYSCEF 126, April 27, 2007 Testwell
Report.) Moreover, Roux advised plaintiff of the presence of chlorinated solvents in
2008. (NYSCEF 115, January 7, 2008 Roux Email.) Finally, plaintiff was clearly aware
of the chlorinated solvent contamination by 2011, when plaintiff certified on its BCP
application that the Property was contaminated with petroleum, SVOCs, and
“chlorinated solvents.” (NYSCEF 128, December 9, 2011 BCP Application at 4;
NYSCEF 114, tr at 36:21-25; 37:2-5 [Pollack Depo].) Hence, the limitations period for
CPLR 214-c ended in 2007, or 2011, at the latest, more than three years before this
2019 case began. Therefore, the fourth cause of action is dismissed.
Breach of Contract
Plaintiff’s claims for breach of the Ground Lease and the Sublease are dismissed
because those agreements expired in 2008 under the Standstill Agreement and June
2017 under the Stipulation, agreements between both plaintiff and Kristal. A party may
not recover damages under an agreement declared null and void. (Northville Industries
Corp. v Ft. Neck Oil Terminals Corp., 100 AD2d 865, 867 ([2d Dept 1984] [“where the
parties have clearly expressed or manifested their intention that a subsequent
agreement supersede…an old agreement, the subsequent agreement extinguishes the
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old one and the remedy for any breach thereof is to sue on the superseding
agreement”], affd 64 NY2d 930 [1985]; See also Citigifts, Inc. v Pechnik, 112 AD2d 832
[1st Dept 1985], affd, 67 NY2d 774 [1986].) “Once an agreement has been rescinded,
there can be no claims based on the cancelled agreement unless the right to make such
claims is expressly or impliedly reserved within the terms of the rescission.” (Milan
Music, Inc. v Emmel Communications Booking, Inc., 37 AD3d 206 [1st Dept 2007].)
Any breaches from 2008 to 2017 would be under the Standstill Agreement which
incorporated the terms of the Sublease. The Standstill Agreement is not mentioned in
the complaint. Any breaches from 2017 to March 31, 2018, when Kristal vacated, would
be under the 2017 Stipulation, but it is not mentioned in the complaint.
However, plaintiff cannot assert a breach of the Sublease against Kristal since
plaintiff is not a party to the Sublease between OP and Kristal. This third-party
beneficiary theory is not mentioned in the complaint (Suffolk Cnty. v Long Island
Lighting Co., 728 F2d 52, 63 [2d Cir. 1984] [nonparty must be intended beneficiary of
contract term to succeed on third-party beneficiary theory].) As OP’s third-party
beneficiary, plaintiff would have to prove the condition of the property when Kristal
entered the Sublease, that Kristal contaminated the Property, and Kristal did not vacate
the Property in 2005 condition. (Diaz v Cunningham, 68 Misc 3d 319, 323 [City Ct,
Orange County 2020] [“the landlord must prove the tenant’s occupancy caused
damage”].) As discussed below, plaintiff fails to counter Kristal’s proof and legal
arguments. Plaintiff also fails to assert any relevant issue of fact.
Even if plaintiff could enforce the Stipulation which required Kristal to “maintain
the premises in the condition required” and to keep and return the Property in “good and
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first-class order and condition” Kristal has established that it returned the property in the
same 2017 condition. (NYSCEF 7, Sublease, Article 5, 6, 7, 9, 11, 32.) This covenant
obligates a tenant to “return the property in as good state as received.” (Mahoney v
Broadway Brewing & Malting Co., 157 Misc 430 [Sup Ct, Erie County 1907]; Granger
Univ. Ave. Corp. v First State Ins. Co., 99 AD2d 1022, 1023 [1st Dept 1984] [obligation
to “return them at the end of the lease term in the same condition except for ordinary
wear and tear”].) Kristal returned the Property to plaintiff on March 31, 2018 in the
same condition it was in when the parties entered into the Stipulation in 2017.
(NYSCEF 124, Bical aff ¶¶ 48-49.) Otherwise, plaintiff would have been in violation of
its PSAs to sell the Property which required no changes to the Property to preserve the
tax credits. (NYSCEF 131, 2018 Purchase and Sale Agreement.) The burden shifts to
plaintiff who offers no evidence otherwise. There is also no proof that plaintiff violated
the PSA because Kristal modified the Property.
Even if the Ground Lease and Sublease were enforceable by plaintiff against
Kristal, to prove breach of contract, plaintiff must establish that Kristal caused the
contamination, which devalued the Property. Bical blames the contamination on OP
and the prior auto dealers onsite for 24 years before Kristal came on the scene as a
sub-subtenant in 1992. (NYSCEF 122, Bical aff ¶¶ 22, 25.) In the complaint, plaintiff
alleges that the Property became contaminated during OP’s tenancy, which began in
1968. (NYSCEF 5, Complaint ¶ 2.) Burke opines that “[i]t is likely that the
Contamination . . . existed prior to [Kristal’s] operation at the Property.” (NYSCEF 122,
Burke Report at 7-8.) Kristal did not enter a lease with OP until 2005, and there were
no environmental investigations conducted until 2007. (NYSCEF 124, Bical aff ¶¶ 14,
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17-18.) Thus, there is no evidence of the condition of the Property at the time the
Sublease began, and no evidence to establish that Kristal contaminated the Property.
Moreover, “there is no evidence that [Kristal’s] use of the system increased the remedial
costs.” (NYSCEF 122, Burke Report at 7.)
Plaintiff fails to raise an issue of fact as to whether the tanks leaked during
Kristal’s tenure. In its response to Kristal’s statement of facts, plaintiff relies on
allegations in OP’s action against GM. (NYSCEF 170, March 3, 2008 Complaint.) In
the complaint, signed by OP’s attorney, OP references a forensic analysis OP had
performed which revealed pre-1985 gasoline and waste oil contamination connected to
GM’s leasehold and more recent contamination which implicates Kristal. (Id.) The
complaint is not verified. The court rejects plaintiff’s footnote that the complaint proves
the tanks leaked during Kristal’s tenure, based on an attorneys’ duty to investigate
claims in a pleading and not assert frivolous arguments. (NYSCEF 167, Plaintiff’s
Response to Kristal’s Statement of Facts, n 5; 22 NYCRR 130-1a.) The complaint is
useless without the report disclosed therein. The data is not in the complaint to support
the assertions implicating Kristal and allegations in an unverified complaint are simply
not sufficient. Moreover, there was no motion for spoliation for failure to produce this
earlier report.
Plaintiff cannot establish contract damages for two reasons. First, plaintiff is not
entitled to diminution damages. Where a tenant covenants to return property in good
condition, “the damages are what it would cost to put the premises in the required state
of repair.” (City of New York v Penn. R.R. Co., 37 NY2d 298, 301 [1975]; Farrell Lines,
Inc. v City of New York, 30 NY2d 76, 84 [1972] [“when an action is brought by a landlord
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for breach of a covenant to keep in good repair after the expiration of the lease, the cost
of accomplishing what should have been done measures the lessor's damages”].)
“[T]he cost of repairing the injury will be the proper measure of damages, so long as the
cost of restoring the land to its former condition is less than the diminution in the market
value of the whole property by reason of the injury.” (Prashant Enterprises Inc. v State,
228 AD2d 144, 147-48 [3d Dept 1996].)
Second, the unconsummated sale for $16 million is insufficient to establish
damages. Even if plaintiff were entitled to the diminution in value, which it is not, there
is no evidence in the record to support such a calculation. While the 2017 PSA is
admissible to show the value of the Property when that contract was made in 2017, it is
superseded by the 2018 contract that closed and the value of the Property from the start
of Kristal’s tenancy is absent. (In re Searingtown Rd., Town of N. Hempstead, Nassau
County, 68 Misc 2d 405, 406 [Sup Ct, Nassau County 1971] [“Contracts of sale entered
into in good faith are not only evidence of value, they are the value, at the time they are
made… in the absence of any evidence tending to impeach the good faith of the
transaction or show that the property was sacrificed, [the price] affords a fair indication
of its value at the time the contract was made and should be considered in arriving at its
value when taken.”].) Plaintiff, and thus Kristal, was prohibited from making any
changes to the Property between 2017 and 2018 by plaintiff’s PSAs and there is no
allegation of a breach of the PSA for altering the property from 2017 to 2018. Moreover,
the 2017 and 2018 contracts for $16 million and $9 million undermine plaintiff’s theory
that there was a diminution in value during Kristal’s tenancy. There is no expert
appraisal showing that the value of the Property was greater before.
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Finally, plaintiff’s failure to offer a valuation expert is fatal to this claim. (§ 146:12
Experts, 4G N.Y. Prac., Com. Litig. in New York State Courts § 146:12 [5th ed.]
[“Valuing real property always entails expert opinion”].)
Alternatively, the breach of contract claim is dismissed as barred by the statute of
limitations discussed above with regard to trespass. (Miller Realty Assoc. v Amendola,
51 AD3d 987, 988-89 [2d Dept 2008] [applying CPLR 214-c to breach of contract for
property damage due to contamination].)
Therefore, the first cause of action for breach of contract is dismissed.
Indemnification
Plaintiff asserts an indemnification claim for clean-up costs as a breach of the
lease. (NYSCEF 5, Complaint ¶ 65.) This claim is barred by CPLR 214-c for
remediation damages expended up to 2013 (=2019-6 years). Plaintiff also seeks
reimbursement for cleanup costs that it paid since 2013 which is not barred by the
statute of limitations. An action for indemnity or contribution accrues when the payment
is made by the party seeking recovery. (Tedesco v A.P. Green Industries, Inc., 8 NY3d
243, 247 [2007]). However, as discussed above, like the contract claim, the contractual
indemnification claim must be dismissed for the same reasons.
Likewise, plaintiff’s contractual claim for joint and several liability is dismissed for
the same reasons.
Navigation Law
Property Damage: Diminution in value
This court dismissed plaintiff’s claim to recover for diminution of property value as
time-barred under CPLR 214-c (2). (Pollack, 2022 NY Slip Op 31541[U], *10.)
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Likewise, the diminution of value must be dismissed as to chlorinated solvent
contamination as time-barred for the same reasons that the trespass claim is.
Reimbursement of Cleanup Costs:
Plaintiff’s remaining claim is for reimbursement for clean-up costs under the
Navigation Law that plaintiff paid since 2013. (State v Stewart's Ice Cream Co., Inc., 64
NY2d 83 [1984] [six-year statute of limitations].) Navigation Law § 181(1) states “[a]ny
person who has discharged petroleum” to be strictly liable for costs of remediation,
without regard to fault, and Navigation Law § 172(8) defines a “discharge” as “any
intentional or unintentional action or omission resulting in” a petroleum spill. A plaintiff
can maintain this Navigation Law claim, effectively one for a contribution or
indemnification, even though the plaintiff is barred by the statute of limitations from
bringing a direct action for the underlying wrong, if all the essential elements of a
Navigation Law cause of action against the proposed contributor or indemnitor can be
made out. (Calcutti v SBU, Inc., 273 F Supp 2d 488, 497 [SD NY 2003]; Scaccia v
Wallin, 121 AD2d 709, 710 [2d Dept 1986]). In this case, to recover cleanup costs,
plaintiff must establish that Kristal reasonably knew that petroleum was present on the
property and Kristal was responsible for its discharge. (State of NY v Metro Resources,
Inc., 14 AD3d 982, 983 [3d Dept 2005] [“An owner's claim for reimbursement under
Navigation Law § 181 (5) requires proof that the other party ‘actually caused or
contributed to the discharge” to establish liability’” (citation omitted)].)
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As discussed above, Bical denies any discharge and blames GM.14 Plaintiff fails
to offer any evidence to counter Bical to show that Kristal discharged petroleum. As a
result, there is neither a credibility issue nor an issue of fact.
Likewise, there is no evidence that Kristal failed to remediate. Kristal lacked
capacity to clean up prior to its tenancy with OP and after plaintiff entered the Property
in the BCP. (C & J Cleaners v GACO Fashioned Furniture, Inc., 85 AD3d 1079 [2d
Dept 2011] [summary judgment granted to tenant of adjacent building as they were
neither dischargers nor had “capacity to take action to prevent the spill or to clean up
the resulting contamination”]; NYSCEF 122, Burke Report ¶¶ 6, 9-11; NYSCEF 124,
Bical aff ¶ 30-33; NYSCEF 114, Pollack Dep 34:7-11.) Likewise, Kristal could not
remediate after plaintiff executed the 2017 and 2018 PSAs which required no alterations
to the Property to preserve the tax credits. That leaves the period 2005, Kristal’s
sublease with OP, to 2011, when plaintiff entered the BCP. The contamination was not
discovered until 2007, and thus, there was nothing for Kristal to clean up. In 2007, as
directed by DEC, Kristal installed aboveground tanks and decommissioned the
underground storage tanks. From 2008 to 2018, Kristal was a month-to-month
14 (NYSCEF 122, Bical aff ¶¶ 22, 25.) In the complaint, plaintiff alleges that the Property became contaminated during OP’s tenancy, which began in 1968. (NYSCEF 5, Complaint ¶ 2.) Burke opines that “[i]t is likely that the Contamination . . . existed prior to [Kristal’s] operation at the Property.” (NYSCEF 122, Burke Report at 7-8.) Kristal did not enter a lease with OP until 2005, and there were no environmental investigations conducted until 2007. (NYSCEF 124, Bical aff ¶¶ 14, 17-18.) Thus, there is no evidence of the condition of the Property at the time the Sublease began, and no evidence to establish that Kristal contaminated the Property. Moreover, “there is no evidence that [Kristal’s] use of the system increased the remedial costs.” (NYSCEF 122, Burke Report at 7.)
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occupant with no tenancy rights, and thus, no capacity to perform remediation.
Therefore, the Navigation Law claim is dismissed in its entirety.
The court has considered the parties’ remaining arguments and finds them
unavailing without merit or otherwise not requiring an alternate result.
Accordingly, it is
ORDERED that the motion for summary judgment by defendant S&S Cadillac
Motors Corp. n/k/a Kristal Auto Mall Corp. is granted and the action is dismissed with
costs and disbursements to defendant as taxed by the Clerk upon the submission of an
appropriate bill of costs; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
1/8/2025 DATE ANDREA MASLEY, J.S.C. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION
□ X GRANTED DENIED GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
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