Opinion
19-CV-11699 (PAE) (SN)
05-24-2022
R&G ENTERPRISES, INC., Plaintiff, v. SOO JEONG CHOI, et al., Defendants.
HONORABLE PAUL E. ENGELMAYER JUDGE
REPORT & RECOMMENDATION
SARAH NETBURN, UNITED STATES MAGISTRATE JUDGE
Plaintiff R&G Enterprises (“R&G” or “Plaintiff”) has sued defendants Soo Jeong Choi (“Choi”), Rae H. Lee (“Lee”), and R&H Cleaners, Inc. (“R&H”) for violating the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. (“CERCLA”), breach of contract, breach of the duty of good faith and fair dealing, private and public nuisance, negligence, trespass, and strict liability. Plaintiff seeks compensatory, liquidated, and incidental damages along with attorney's fees and costs, as permitted by the parties' contract. ECF No. 1, Complaint (“Compl.”) ¶ 29. After Defendants Choi and R&H failed to appear, the Honorable Paul A. Engelmayer entered a default in R&G's favor and referred the matter to my docket to conduct an inquest on damages. ECF No. 29.
PROCEDURAL BACKGROUND
On December 20, 2019, Plaintiff filed its Complaint. Defendant R&H was served with the Complaint on January 3, 2020, and Defendant Choi was served on January 21, 2020. ECF Nos. 12, 13. After Defendants failed to appear, the Clerk of the Court entered Certificates of Default as to Defendant R&H and Defendant Choi (the “Defaulting Defendants”) on February 5 and February 13, 2020, respectively. ECF Nos. 18, 21.
After eight months of inactivity, the Court ordered the Plaintiff to show cause why the case against the Defaulting Defendants should not be dismissed for failure to prosecute. ECF No. 23. Because Plaintiff had not filed a proof of service on Defendant Lee, the Court also ordered Plaintiff to advise whether Defendant Lee had been timely served. Id.
In response, Plaintiff moved for a default judgment against the Defaulting Defendants. ECF No. 24. Plaintiff explained that it had attempted to serve Defendant Lee but had been unsuccessful, and therefore sought a default judgment against only Defendants Choi and R&H. Id., Ex. 3 at ¶ 9. The Court directed the Defaulting Defendants to oppose Plaintiff's motion for default by November 16, 2020. ECF No. 26. They did not appear or respond.
The Court entered a default against the Defaulting Defendants on November 17, 2020. ECF Nos. 28. The Court ordered the Defaulting Defendants to file their opposition to Plaintiff's Motion for the Entry of Default Judgment within 30 days, ECF No. 30, but they have failed to appear or otherwise respond.
DISCUSSION
I. Legal Standard
The Court of Appeals set forth the procedural rules applicable to the entry of a default judgment in City of New York v. Mickalis Pawn Shop, LLC:
“Federal Rule of Civil Procedure 55 is the basic procedure to be followed when there is a default in the course of litigation.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004). Rule 55 provides a “two-step process” for the entry of judgment against a party who fails to defend: first, the entry of a default, and second, the entry of a default judgment. New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The first step, entry of a default, formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff. . . . The second step, entry of a default judgment, converts the defendant's admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted by Rule 54(c).645 F.3d 114, 128 (2d Cir. 2011).
Where default has been entered against a defendant, courts are to accept as true all of the well-pleaded facts alleged in the complaint, except those concerning the amount of damages. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “Even after the default . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” In re Industrial Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000) (cleaned up). Where a plaintiff's well-pleaded facts are sufficient to state a claim on which relief can be granted, the only remaining issue in an inquest is if the plaintiff has provided adequate support for the requested relief. See Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)).
“[A] plaintiff seeking to recover damages against a defaulting defendant must prove its claim th[r]ough the submission of evidence . . . .” Malletier v. Carducci Leather Fashions, Inc., 648 F.Supp.2d. 501, 503 (S.D.N.Y. 2009). A court may determine the amount a plaintiff is entitled to recover without holding a hearing so long as (1) the court determines the proper rule for calculating damages, and (2) the evidence submitted by the plaintiff establishes “with reasonable certainty” the basis for the damages. Id. (first citing Credit Lyonnais Sec. (USA), Inc., 183 F.3d at 155, then citing Transatlantic Marine Claims Agency Inc., 109 F.3d at 111).
II. Facts Related to Liability
The following facts are established by the admissible evidence submitted in support of Plaintiff's motion for a default judgment and the allegations in the Amended Complaint, which are deemed admitted except to the extent they concern the amount of damages. See Greyhound, 973 F.2d at 158.
Plaintiff is a corporation with a registered business address in Scarsdale, New York, although it avers that all of its activities are directed, controlled, and coordinated at 25 East Spring Valley Avenue, Suite 260, Maywood, New Jersey 07607. Compl. ¶ 1. In or about September 2007, Plaintiff entered into a written lease agreement (the “Lease”) with Lee and R&H pursuant to which Lee and R&H agreed to rent Plaintiff's commercial property at 616 Melrose Avenue, Bronx, New York (the “Premises”) from October 1, 2007, through December 21, 2015, for the purpose of operating a “dry cleaners and related tailoring business only.” Id. at ¶ 8; ECF No. 24, Ex. 12 (“Lease”) ¶ 2. The Lease stipulated the following relevant provisions regarding contamination and conditions at the Premises:
4. Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in the demised premises, or permit or suffer the demised premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the building by reason of noise, odors, and/or vibrations, or interfere in any way with other tenants or those having business therein (“noxious gas prohibition”).
10. Tenant shall not bring or permit to be brought or kept in or on the demised Premises, any inflammable, combustible, or explosive, or hazardous fluid, materials, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors, to permeate or emanate from the demised premises (“combustible materials prohibition”).
62.....Tenant shall remain liable for the removal of all garbage, refuse, rubbish and any and all hazardous materials, substances and chemicals at the Premises. Tenant assumes sole responsibility and liability necessary to assure that the Premises are always in compliance with all governmental and environmental guidelines
throughout the term of the Lease, and upon their vacating the Premises (“clean-up and regulatory obligations”).
78. Tenant covenants that the Premises shall be kept free of Hazardous Materials in accordance with applicable law, and shall not be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, and Tenant shall not cause or permit, as a result of any intentional or unintentional act or omission on the part of Tenant or any assignee, sublessee or occupant, the installation or placement of Hazardous Materials in or on the Premises or suffer the presence of Hazardous Materials on the Premises . . . Tenant shall conduct and complete all investigations, studies, sampling, and testing and all remedial, removal, and any other actions necessary to clean up and remove all Hazardous Materials, on, from or affecting the demised Premises in accordance with all applicable federal, state and local laws, ordinances, rules, regulations, and policies. The term “Hazardous Materials” as used in this Lease shall include any toxic or hazardous materials or substances, as defined by any federal, state or local laws, ordinance, rule or regulation. The obligations and liabilities of Tenant under this paragraph shall survive the assignment, subletting and termination of this Lease (“Hazardous Materials prohibition and remediation obligations”).Lease ¶¶ 62, 78; ECF No. 24, Ex. 12 Rules and Regulations Attached to and Made a Part of this Lease (“Rules and Regulations”) ¶¶ 4, 10. The Lease also required the Tenant to “take good care” of the Premises and, upon expiration or termination of the Lease, surrender the Premises in “good order and condition.” Lease ¶¶ 4, 21 (“good order and condition obligation”).
Defendants Lee and R&H leased the Premises from approximately October 1, 2007, through approximately January 2014, after which they assigned the Lease to Defendant Choi. Compl. ¶ 11. Choi and R&G executed a Lease Extension and Assumption (“Lease Extension”) in December 2015, which extended terms of the lease until December 31, 2030. Id. at ¶¶ 12-13; see ECF No. 24, Ex. 13. The Lease Extension reaffirmed all the terms and conditions in the original Lease, and Choi agreed to assume full responsibility “for all of the obligations under the Lease.” ECF No. 24, Ex. 13. Plaintiff alleges that all Defendants were jointly operating a dry-cleaning business at the Premises. Compl. ¶ 16.
Choi defaulted on her obligation to pay rent pursuant to the Lease Extension, and Plaintiff initiated eviction proceedings in the Bronx County Civil Court in 2018. Id. at ¶ 14. That court issued a warrant of eviction and entered a $54,842.50 money judgment against Choi on December 13, 2018. ECF No. 24, Ex. 17. Plaintiff regained possession of the Premises in or around April 2019. Compl. ¶ 15.
Plaintiff learned that during Defendants' tenancies at the Premises, in violation of the Hazardous Materials and noxious gas prohibitions, Defendants caused and/or allowed for chlorinated solvent contaminants and volatile organic compounds (“VOCs”), such as Perchloroethylene (“PCE”) and Trichloroethylene (“TCE”) (collectively, the “Contaminants”), to permeate throughout the Premises and into the soil, the groundwater, the building's indoor air, and the area surrounding the building, including an adjacent restaurant and grocery store. Id. at ¶¶ 17, 20. Defendants also allegedly failed to remediate those conditions and keep the Premises appropriately ventilated to prevent the Contaminants from permeating into the Premises and surrounding areas. Id. at ¶ 17. These Contaminants are toxic and/or hazardous substances, hazardous waste, and suspected carcinogens that are regulated by state and federal law. Id. at ¶¶ 18-19.
PCE is a hazardous air pollutant pursuant to 42 U.S.C. § 7412, and is subject to federal, state, and city regulations. See Compl. ¶ 19.
Plaintiff contends that Defendants violated the Lease by failing to maintain the Premises in a hazard free-condition. Id. at ¶ 20. As a result, the levels of PCE and other Contaminants found in soil, groundwater, and air in and around the Premises are well above state, federal, and local guidelines and regulations. Id. at ¶ 21.
Plaintiff incurred costs related to the investigation and remediation of these hazards. Id. at ¶ 22. Plaintiff paid an environmental consultant to investigate and remediate the impacts of the hazardous substances from Defendants' operation and use of the Premises. See ECF No. 24, Ex. 14. Plaintiff avers that it has also spent $20,800 to remediate non-environmental conditions and physical damage to the Premises and remove equipment that Choi left behind. Compl. ¶ 25.
In the case of default, the Lease provides that the tenant must:
pay Owner, as liquidated damages any deficiency between the rent hereby reserved and/or covenanted to be paid and the net amount, if any, of the rents collected on account of the subsequent lease or leases of the demised premises for each month of the period which would otherwise have constituted the balance of the term of [the] lease. The failure of Owner to re-let the demised premises or any part or parts thereof shall not release or affect Tenant's liability for damages. In computing such liquidated damages there shall be added to the said deficiency such expenses as Owner may incur in connection with re-letting, such as legal expenses, reasonable attorney's fees, brokerage, advertising and for keeping the demised premises in good order, or for preparing the same for re-letting “full-term rent obligation”).Lease ¶ 18. Plaintiff was unable to re-let the Premises due to the problems caused by Defendants. Compl. ¶ 30. In violation of the full-term rent obligation, Defendant Choi has failed to pay the additional rent that has been accumulating under the unexpired Lease Extension. Id. at ¶ 26.
III. Legal Claims
Plaintiff's complaint alleges breach of contract, breach of the duty of good faith and fair dealing, CERCLA violations, private and public nuisance, negligence, trespass, and strict liability. Plaintiff seeks $58,500 in environmental investigation and remediation costs, $20,800
in non-environmental cleanup costs, $82,992 in unpaid rent for the period from January 2019 to
September 2020, and $12,270 in attorney's fees and costs. ECF No. 24, Ex. 2. Plaintiff contends that Choi and R&H are jointly and severally liable for the remediation costs and attorney's fees, while Choi is solely liable for the non-environmental cleanup costs and unpaid rent. Id.
A. Breach of Contract
1. Liability
“To prevail on a breach of contract claim under New York law, a plaintiff must prove ‘(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.'” Terwilliger v. Terwilliger, 206 F.3d 240, 245-46 (2d Cir. 2000) (quoting First Inv'r Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998)). The Court applies New York state law because it sits in diversity. Bank of N.Y. v. Amoco Oil Co., 35 F.3d 643, 650 (2d Cir. 1994) (“A federal court sitting in diversity jurisdiction will, of course, apply the law of the forum state on outcome determinative issues.”).
Plaintiff is a corporation with a registered business address in Scarsdale, New York, although its “nerve center” is located in New Jersey. Compl. ¶¶ 1, 6; see also Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). Defendants are citizens of New York. Id. at ¶¶ 2,4. Because the parties are citizens of different states and the amount in controversy exceeds $75,000, this Court has jurisdiction pursuant to 28 U.S.C. § 1332.
Plaintiff has stated a claim for breach of contract under New York law against the Defaulting Defendants. Plaintiff produced both the Lease and the Lease Extension, ECF No. 24, Exs. 12 & 13, and identified the relevant terms breached. The Lease prohibits maintaining any “hazardous fluid, materials, chemical or substance,” requires the tenant to remove hazardous materials and comply with “all governmental and environmental guidelines,” and contemplates that the tenant will surrender the premises “‘broom clean,' in good order and condition” with all property removed. Compl. ¶¶ 9-10. Plaintiff alleges that the Defaulting Defendants caused PCE and TCE “to permeate throughout the Premises and into the soil, groundwater, building, including but not limited to the indoor air, and surrounding areas” in violation of state and federal law and failed to remediate as required by the Lease. Id. at ¶¶ 17-19. As a result, the Contaminants have been found in sub-slab vapors, soil, groundwater and air in and around the premises, forcing Plaintiff to “incur substantial costs to investigate and remediate such hazards at the premises.” Id. at ¶¶ 20-22.
In addition, Plaintiff alleges that Defendant Choi left the Premises not in good condition and that Plaintiff has paid more than $20,000 to repair damages to the premises and to remove equipment in violation of the lease's provision to leave the property in “good order and condition.” Id. at ¶ 25. Choi has also defaulted on her obligation to pay the full term of rent. Id. at 26.
As such, Plaintiff has adequately pleaded the existence of a contract, Defendants' breach, and damages.
2. Damages
Generally, a plaintiff in a breach of contract action is entitled to damages in the “amount necessary to put the plaintiff in the same economic position he would have been in had the defendant fulfilled his contract.” Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 495 (2d Cir. 1995) (citations omitted). However, “[p]arties to a contract have the right, under New York law, to specify within a contract the damages to be paid in the event of a breach” as long as that clause “is neither unconscionable nor contrary to public policy.” Rattigan v. Commodore Int'l Ltd., 739 F.Supp. 167, 169 (S.D.N.Y. 1990). Liquidated damages provisions are enforceable as long as the damages could not have been anticipated at the time the parties entered into the lease and the amount is not “plainly or grossly disproportionate to the probable loss.” Parsons & Whittemore, Inc. v. 405 Lexington LLC, 299 A.D.2d 156, 157 (1st Dep't 2002). Liquidated damages provisions “must ‘clearly and unambiguously' set forth ‘the amount of compensation the parties agreed ‘should be paid in order to satisfy any loss or injury flowing from a breach of [the parties'] contract.'” Deer Park Enter., LLC v. Ail Sys. Inc., 57 A.D.3d 711, 712 (2d Dep't 2008) (quoting Fed. Realty Ltd. P'ship v. Choices Women's Med. Ctr., 289 A.D.2d 439, 441 (2d Dep't 2001)). “[A] liquidated damages clause which is reasonable precludes any recovery of actual damages.” J.R. Stevenson Corp. v. Cnty. of Westchester, 113 A.D.2d 918, 921 (2d Dep't 1985).
Plaintiff seeks $82,992 in unpaid rent for the period from January 2019 to September 2020. ECF No. 24, Ex. 11, Affidavit Declaration of Bruce Laxer (“Laxer Aff.”) ¶ 21. The Lease obligates Defendant Choi to pay rent for the full term less any rent collected on a subsequent lease. This provision is enforceable under New York law because it “clearly and unambiguously permit[s] the plaintiff landlord to recover a reasonable amount of damages.” Fed. Realty Ltd. P'ship, 289 A.D.2d at 441. Because Plaintiff has been unable to re-let the Premises, Defendant Choi must pay the full rent amount through December 31, 2030, at a fixed monthly rate. ECF No. 24, Ex. 13. At the time Plaintiff filed its motion, the total amount owed through September 2020 was $82,992 ($3,952 x 21 months). In light of the passage of the time, the Court recommends that Plaintiff be permitted to submit any updated calculations within the 14-day objection period, calculating the current outstanding balance of rent due.
Plaintiff also seeks $20,800 to remediate non-environmental conditions and physical damage to the Premises and to remove equipment left by Defendant Choi. Plaintiff submitted a paid invoice from the National Cleaners Association listing the work performed, including the clean-out, removal, and disposal of a dry-cleaning machine and high-pressure steam boiler and return system. ECF No. 24, Ex. 15 at 2. The total cost for these services is $11,500, which Plaintiff paid via credit card. Id. at 3. In addition, Solozano Contracting performed demolition and clean-up work on the property. ECF No. 24, Ex. 16 at 2. Plaintiff has submitted copies of two checks showing it paid $9,300 for these services. ECF No. 24, Ex. 14 at 5-6. Plaintiff has proven its claimed damages of $20,800 with reasonable certainty. Laxer Aff. ¶ 19. See 1029 Sixth, LLC v. Riniv Corp., 9 A.D.3d 142, 147 (1st Dep't 2004) (holding that where the lease required the tenant to surrender the premises “broom clean, in good order and condition,” tenants who left garbage bags, refuse and shelving in the property violated the covenant).
Plaintiff seeks $58,500 in costs incurred in remediating the environmental damages caused by both Defaulting Defendants because the contamination began during R&H's tenancy and continued through Choi's. See City of New York v. Pennsylvania R.R. Co., 37 N.Y.2d 298, 301 (1975) (an action for the breach of a tenant's covenant to repair or other provisions in the contract may be brought after the expiration of the lease). These damages are recoverable as a breach of the Hazardous Materials prohibition and remediation obligations of the Lease and under the tenant's obligation to pay any costs necessary to prepare the Premises for reletting. Lease ¶ 18. Federal courts interpreting New York law have held that maintaining a property in “good order . . . is inconsistent with contamination by a hazardous chemical.” Tobin v. Gluck, 137 F.Supp.3d 278, 300-01 (E.D.N.Y. 2015).
In support of this claim, Plaintiff submitted a “Customer QuickReport” from Reliance Environmental Inc. for services performed for “R&G Enterprises: 614 Melrose Avenue,” beginning in May 2016 through March 2020, totaling $58,560. ECF No. 24, Ex. 14 at 2. Plaintiff also submitted an invoice dated October 31, 2019, for certain services listed on the Customer QuickReport. ECF No. 24, Ex. 14 at 4. This invoice is for $4,450 and covers indoor air quality and sub-slab soil gas sampling and a project management fee.
Plaintiff, through its president, affirms that the costs listed on the Customer QuickReport were “to investigate and remediate the impacts with hazardous substances from Defendants' operation and use of the Premises and other non-environmental conditions,” and that $58,500 was “paid to Plaintiff's environmental consultant, Reliance Environmental, Inc.” See Laxer Aff. ¶ 17. Although the Customer QuickReport does not detail the services performed, I am satisfied to a reasonable degree of certainty that the costs incurred were for environmental remediation at the Premises. Plaintiff's president affirms under oath that they were, and the invoice for services performed from September 1, 2019, to October 31, 2019, corroborates this fact. Additionally, Plaintiff has not provided proof that it paid these costs, but its president swears they were “paid.” To the extent Plaintiff is able, he is encouraged to submit to the Court within the 14-day objection period any proof of the nature of the services listed on the Customer QuickReport (such as the underlying invoices) and proof that these services were paid. Even on this record, however, I recommend that Plaintiff be awarded $58,500 in environmental remediation costs.
3. Attorney's Fees and Costs
Lastly, Plaintiff seeks reasonable attorney's fees and costs. Attorney's fees and costs are recoverable under both the liquidated damages provision of the Lease - which entitles Plaintiff to “reasonable attorney's fees” “in connection with re-letting” - and the Lease's default provision -which entitles Plaintiff to “reasonable attorney's fees” and costs in prosecuting an action upon the default of any term or covenant within the Lease.
Plaintiff requests $12,270.48 in attorney's fees and costs. ECF No. 24, Ex. 3, Declaration of Michael J. Forino, Esq. (‘Torino Decl.”) ¶ 20. Mr. Forino's sworn declaration includes a chart detailing his firm's work on the case from October 2019 to August 2020, as well as anticipated fees for the preparation of the default judgment motion in October 2020. Mr. Forino reports a total of 38.9 hours of work at an hourly rate of $300 and .4 hours of work at an hourly rate of $200. Id. at ¶ 17. Mr. Forino is a 2006 law graduate and an associate at Archer & Greiner, P.C. (the “Firm”). Id. at ¶ 12. In addition, Mr. Forino affirms that Deborah Rosen, a partner at the Firm, spent .4 hours reviewing and revising the complaint at an hourly rate of $400. Id. at ¶¶ 15-17.
This total includes $10,680 in fees and costs incurred prior to October 2020, $990 in fees for “Work in Progress,” and $600 for “anticipated fees.” Plaintiff is not entitled to fees for work not yet performed. Accordingly, the Court will deduct $600 from the total fee request.
While the Court takes no objection to the hourly rate or the number of hours performed to do the work, counsel has not provided a proper invoice or certified that the hours presented were contemporaneously maintained. The Forino chart appears to have been created for the litigation. It therefore does not satisfy the Court of Appeals' requirement that, absent “the rarest of cases,” “all applications for attorney's fees [must] be supported by contemporaneous records.” Scott v. City of New York, 626 F.3d 130, 132-33 (2d Cir. 2010) (citing New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983)).
Accordingly, during the 14-day objection period, Plaintiff may submit proof of contemporaneous records - which presumptively would be a report from a time-keeping program, but at a minimum would include a sworn statement from counsel that the records were maintained contemporaneously.
The Forino chart also includes $1,016.48 in costs, including WestLaw fees, filing fees, service fees, and Federal Express charges. Id. ¶ 17. While the Court may take judicial notice of costs reflected on the docket, Counsel has failed to submit documentation of the remaining costs. Whitehead v. Mix Unit, LLC, No. 17-cv-9476 (VSB)(JLC), 2019 WL 384446, at *6 (Jan. 31, 2019), report and recommendation adopted 2019 WL 1746007 (S.D.N.Y. Apr. 18, 2019). I recommend that the Court take judicial notice of the court filing fee and award Plaintiff $400 in costs but deny the remaining costs for lack of documentation. Once again, Plaintiff is permitted the 14-day objection period to supplement its record.
4. Prejudgment Interest
Plaintiff is entitled to prejudgment interest on any “sum awarded because of a breach of performance of a contract.” N.Y. CPLR § 5001(a); see Days Inns Worldwide, Inc. v. Hosp. Corp. of the Carolinas, No. 13-cv-8941 (JPO), 2015 WL 5333847, at *5-6 (S.D.N.Y. Sept. 14, 2015) (awarding prejudgment interest on liquidated damages for breach of contract). The prejudgment interest rate is nine percent per year, N.Y. CPLR § 5004, and is computed “from the earliest ascertainable date the cause of action existed,” id. § 5001(b). Prejudgment interest for breach of contract is measured from the date of breach. Van Nostrand v. Froehlich, 44 A.D.3d 54, 56 (2d Dep't 2007) (citing De Long Corp. v. Morrison-Knudsen Co., 14 N.Y.2d 346, 348 (1964)). Where damages are incurred at various times, interest may be calculated from a “single reasonable intermediate date.” CPLR § 5001(b).
Interest on the rent damages shall be calculated from the midpoint of January 1, 2019, to either September 30, 2020 (which is November 15, 2019), or if Plaintiff provides proof of additional rent damages, from the midpoint of January 1, 2019, to the final date of back rent due.
Interest on the non-environmental cleanup damages shall be calculated from July 1, 2019. Interest on the environmental remediation damages shall be calculated from April 8, 2018, which is the midpoint between the services performed by Reliance Environmental.
B. CERCLA
1. Liability
CERCLA § 107(a)(4)(B) establishes a private right of action to recover the costs of environmental cleanup at hazardous waste sites from potentially responsible parties. 42 U.S.C. § 9607(a)(4)(B); see also U.S. v. Atl. Rsch. Corp., 551 U.S. 128, 131 (2007). To plead a prima facie case of liability under CERCLA, “a plaintiff must show that (1) the site is a ‘facility' as defined in CERCLA, (2) a release or threatened release of a hazardous substance has occurred, (3) the release or threatened release has caused the plaintiff to incur response costs that were necessary and consistent with the National Contingency Plan set up by CERCLA, and (4) the defendants fall within one or more of the four classes of responsible persons described in CERCLA § 107(a).” Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160, 163 (2d Cir. 1999). CERCLA § 107(a) imposes liability for removal or remediation costs on “(1) the owner or operator of a vessel or facility; (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of; [or] (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, . . . of hazardous substances owned or possessed by such person . . . .” 42 U.S.C. § 9607(a). Plaintiffs are precluded from “‘recovering compensation for the same removal costs or damages or claims' under both CERCLA and state or other federal laws.” State of New York v. Shore Realty Corp., 759 F.2d 1032, 1041 (2d Cir. 1985) (quoting 42 U.S.C. § 9614(b)).
If the Court disagrees with my conclusion that the environmental remediation costs are covered by the liquidated damages provision of the Lease, I recommend that it find that Plaintiff has sufficiently stated a cause of action under CERCLA § 107(a). The Complaint alleges that: (a) “the Premises is a ‘facility' within the meaning of . . . 42 U.S.C. § 9601(9)”; (b) “PCE, TCE and the other Contaminants are ‘hazardous substances' within the meaning of 42 U.S.C. § 9601(14); (c) Defendants were an “operator” within the meaning of 42 U.S.C. § 9601(20)(A); (d) [t]he Contaminants were released and/or discharged from or at the Premises within the meaning of 42 U.S.C. § 9601 (22); and (e) “Defendants are jointly and severally liable pursuant to 42 U.S.C. § 9607(a)(2) . . . for all costs [Plaintiff] incurred in connection with the investigation and remediation of such contamination, and said costs are consistent with the National Contingency Plan.” Compl. ¶¶ 61-67. Courts in the Second Circuit have held that a heightened pleading standard does apply to CERCLA claims, and “an allegation that [a] plaintiff has incurred and will continue to incur expenses and costs” that are consistent with the National Contingency Plan is sufficient to withstand a motion to dismiss. Brooklyn Union Gas Co. v. Exxon Mobil Corp., 554 F.Supp.3d 448, 463-67 (E.D.N.Y. 2021) (citations omitted) (collecting cases). Plaintiff has therefore pleaded the elements of a cause of action under CERCLA § 107(a), including that it has incurred costs consistent with the National Contingency Plan in investigating and remediating contamination, and is liable under the statute.
2. Damages
“CERCLA in essence requires that all parties, who at any time caused an environmental hazard to exist whether by affirmative act or failure to take action, be responsible in damages for ‘response costs.'” State of New York v. SCA Serv., Inc., 785 F.Supp. 1154, 1156 (S.D.N.Y. 1992). Former operators who contributed to the contamination of a hazardous waste site are jointly and severally liable for these costs. Id.; see also Atl. Rsch. Corp., 551 U.S. at 140 n.7. Defendants Choi and R&H Cleaners are jointly and severally liable for the environmental clean- up costs incurred by Plaintiff. Accordingly, in the alternative, Plaintiff may be awarded $58,500 under CERCLA.
C. Remaining Claims
Plaintiff raises six additional claims, including for breach of the duty of good faith and fair dealing, private and public nuisance, negligence, trespass, and strict liability. Because these causes of action are either duplicative of Plaintiff's breach of contract claim or would not provide additional relief, I decline to recommend an award and instead recommend that they be dismissed. To the extent the Court disagrees with that assessment, the Court may remand the matter to me for further consideration.
CONCLUSION
In conclusion, I recommend that the Court award Plaintiff:
• Back rent damages against Defendant Choi in the amount of $82,992 for unpaid rent for the period from January 2019 to September 2020, with prejudgment interest at 9% per annum calculated from November 15, 2019. In the alternative, given the passage of time, within 14 days Plaintiff may supplement the record for back rent due since September 2020. In such case, any prejudgment interest would run from the midpoint of January 1, 2019, to the final date of back rent due.
• Non-environmental damages against Defendant Choi in the amount of $20,800, with prejudgment interest at 9% per annum calculated from July 1, 2019.
• Environmental remediation damages against Defendants Choi and R&H, jointly and severally, in the amount of $58,500, with prejudgment interest at 9% per annum calculated from April 8, 2018.
• Assuming Plaintiff supplements its attorney's fees application, it is entitled to an award of $11,670.48 in attorney's fees. It is further entitled to costs of $400 unless it provides support for its additional costs up to a total of $1,016.48.
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NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Paul A. Engelmayer at the United States Courthouse, 40 Foley Square, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Engelmayer. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).