Opinion
No. 28284/2011.
11-25-2014
ZAHAV ENTERPRISES, INC. and Ephraim Shurka, Petitioners–Plaintiffs, v. Joseph MARTENS, as Commissioner of New York State Department of Environmental Conservation, the New York State Department of Environmental Conservation and John K. Urda, Assistant DEC Regional Attorney, Respondents–Defendents, and W 16 East New York, LLC and Unicorp National Developments, Inc., Respondents, Defendants–Necessary Parties.
Petitioner Law Office of Frederick Eisenbud, Commack, NY, for Respondent, Martens. Gregory J. Nolan, esq. Assistant Attorney General, Eric T. Schneiderman, AG for NYS New York, NY, for Respondent, UNICORP and W16. Paul S. Levy, esq., Hempstead NY, for Petitioners-plaintiffs, ZAHAV ENTERPRISES, INC. (ZAHAV) and EPHRAIM.
Petitioner Law Office of Frederick Eisenbud, Commack, NY, for Respondent, Martens.
Gregory J. Nolan, esq. Assistant Attorney General, Eric T. Schneiderman, AG for NYS New York, NY, for Respondent, UNICORP and W16.
Paul S. Levy, esq., Hempstead NY, for Petitioners-plaintiffs, ZAHAV ENTERPRISES, INC. (ZAHAV) and EPHRAIM.
Opinion
ARTHUR M. SCHACK, J.
SHURKA (SHURKA) commenced a hybrid CPLR Article 78 petition and complaint, pursuant to CPLR §§ 7803(1) and (3), 3001 and 3017, to challenge an October 24, 2011 order of respondent-defendant JOSEPH MARTENS (MARTENS), as Commissioner of the NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC). Commissioner MARTENS found petitioner-plaintiff ZAHAV liable for various violations of the New York State Environmental Conservation Law (ECL) and the New York State Navigation Law (NL) because of a petroleum spill caused by ZAHAV at a former gasoline station site owned by ZAHAV. ZAHAV sold the contaminated real property to respondents-defendants W 16 EAST NEW YORK, LLC (W 16) and/or UNICORP NATIONAL DEVELOPMENTS, INC. (UNICORP).
Respondent-defendant MARTENS, in his October 24, 2011 decision and order, also found ZAHAV in violation of a stipulation it had entered into with the DEC to clean up the petroleum spill. The Commissioner imposed upon ZAHAV a civil penalty of $60,000 and directed ZAHAV to investigate and remediate the site in accordance with the previously agreed-to stipulation and a DEC-approved work plan.
Petitioners-plaintiffs ZAHAV and SHURKA, in December 2011, commenced this hybrid CPLR Article 78 proceeding and complaint: to find that MARTENS October 24, 2011 decision and order was arbitrary and capricious, meriting reversal; to order declarative and injunctive relief against respondents-defendants MARTENS, DEC and JOHN K. URDA (URDA), Assistant DEC Regional Attorney; and, to find causes of action against respondents-defendants W 16 and UNICORP for breach of contract and tortious interference with the stipulation between ZAHAV and DEC. Subsequently, petitioners-plaintiffs amended their pleadings and later I granted them leave to amend their pleadings with a Second Amended Petition and Complaint, thereby allowing ZAHAV and SHURKA to raise a new objection, pursuant to CPLR § 7803(2), that MARTENS “proceeded ... without or in excess of jurisdiction.” Respondents-defendants MARTENS, DEC and URDA move, pursuant to CPLR Rule 3211(a)(7), to dismiss the petition-complaint or in the alternative: for summary judgment pursuant to CPLR Rule 3212(a) ; dismissal of the first cause of action in the complaint, pursuant to § 217; and, a transfer to the Appellate Division of the special proceeding because, pursuant to CPLR § 7804(g), a question of substantial evidence is raised. Petitioners-plaintiffs third and fourth causes of action against respondents-defendants W 16 and UNICORP are not at issue in the instant motion by respondents-defendants MARTENS, DEC and URDA. Therefore, these causes of action are not addressed by the Court.
As will be explained, the Court grants the motion of respondents-defendants MARTENS, DEC and URDA to the following extent: dismissal of the Article 78 petition against them; and, summary judgment and dismissal the first two causes of action of the complaint against them.
Background
ZAHAV acquired title in 1985 to the gasoline station site, 1124–1134 East New York Avenue, Brooklyn, New York. The site contained underground petroleum storage tanks. ZAHAV, in November 2007, sold the site to W 16, a holding company for UNICORP. UNICORP purchased the site to develop a drugstore and parking lot for Walgreens.
Prior to the November 2007 sale, UNICORP conducted a subsurface investigation at the site and found soil contamination by an unpermitted petroleum discharge from three active 4,000–gallon tanks on the site. The discharge was known but not reported by ZAHAV at that time, as required by law, and ZAHAV, the discharger, did not immediately clean up the discharge. When the tanks were subsequently removed in June 2008, gasoline was found to be leaking from one of the tanks and at that time thirty additional 550–gallon tanks were discovered at the site and removed. The tank removal contractor reported the spill. However, the removal of the tanks did not render the site free of contamination. The groundwater and soil under the tanks remained contaminated with spilled petroleum and required remediation, pursuant to the ECL and the NL. ZAHAV made a number of submissions to the DEC which the DEC staff deemed unsatisfactory.
Ultimately, the DEC and ZAHAV entered into a stipulation, effective January 27, 2010, requiring ZAHAV to investigate and remediate the petroleum contamination, pursuant to a corrective action plan. The stipulation imposed no penalty on ZAHAV and ZAHAV executed the stipulation. However, ZAHAV failed to prepare the remedial action plan required by the corrective action plan and submitted various plans that DEC staff found inadequate to clean up the groundwater and soil contamination on the site.
Thereafter, the DEC initiated a formal administrative enforcement proceeding on March 30, 2011, by serving an administrative motion for an order without hearing, pursuant to 6 NYCRR § 622.12, which is the DEC's administrative equivalent of a judicial summary judgment motion in lieu of a complaint. ZAHAV opposed the DEC's administrative motion with a cross-motion for an order without hearing.
After consideration of DEC's and ZAHAV's submissions, Administrative Law Judge (ALJ) Helene Goldberger (GOLDBERGER) issued a report with 24 enumerated findings of fact, a discussion of the applicable legal standards for an order without hearing, for liability and for the penalty imposed. ALJ GOLDBERGER concluded that ZAHAV failed to put forward any material issues of fact that would defeat DEC's motion, She found ZAHAV responsible for: the illegal petroleum discharge; failing to immediately contain the discharge upon discovery; and, failing to comply with the January 27, 2010 stipulation. These findings held ZAHAV in violation of ECL §§ 17–501, 17–0807 and Navigation Law §§ 173, 176 for the discharge of a pollutant, petroleum, into the waters of New York State, failure to immediately contain the prohibited discharge and failure to comply with the January 27, 2010 stipulation to submit a required remedial investigation report. Further, ALJ GOLDBERGER found ZAHAV's opposition without merit and insufficient to warrant a hearing. She imposed a penalty of $60,000, which was less than the penalty requested by the DEC staff, for reasons set forth in her decision.
Commissioner MARTENS adopted the ALJ's report, with his own comments, in his October 24, 2011 order, which confirmed: the $60,000 civil penalty; and, ZAHAV's liability for the spill and cleanup of the site pursuant to the terms of the January 27, 2010 stipulation.
The instant hybrid proceeding
ZAHAV and SHURKA, one of its principals, in their second amended petition-complaint challenge the Commissioner's October 24, 2011 order, pursuant to CPLR Article 78. They claim that Commissioner MARTENS' determinations are: the result of bad faith and bias on the part of the DEC's Assistant Regional Attorney URDA, who brought the administrative enforcement action; not supported by the evidence because the Commissioner failed to apply the proper evidentiary standard; arbitrary and capricious in finding ZAHAV liable for discharges that may have occurred prior to ZAHAV's ownership of the subject property, ignoring that UNICORP, the party currently in possession of the subject site, is in a far superior position than ZAHAV to undertake remediation; and, made despite the Commissioner lacking subject matter jurisdiction to impose penalties.
Further, petitioners-plaintiffs seek declaratory relief, pursuant to CPLR §§ 3001 and 3017, in the first two causes of action of the complaint portion of their pleadings. ZAHAV and SHURKA seek declarations that: the January 27, 2010 stipulation is and void because of alleged bad faith by URDA; and, URDA violated Public Officers Law (POL) §§ 74(3)(d) and (f) by unethical conduct, warranting an injunction barring URDA from any future enforcement action involving SHURKA or any SHURKA-owned entity.
Discussion
In analyzing the instant motion to dismiss the Article 78 claims and the causes of action against the State respondents-defendants, the Court will first discuss the Article 78 petition and then the two causes of action in the complaint against respondent-defendants MARTENS, DEC and URDA.
In an Article 78 proceeding the Court's function is to determine whether the action of an administrative agency had a rational basis or was arbitrary and capricious. (Pell v. Board of Educ. of Union School District No.1 of the Towns of Scarsdale and Mamaroneck, Westchester County, 34 N.Y.2d 222, 230–231 [1974] ). “Arbitrary action is without sound basis in reason and is generally taken without regard to the fact.” (Pell at 231). A rational basis exists where the determination is “[supported] by proof sufficient to satisfy a reasonable [person], of all the facts necessary to be proved in order to authorize the determination.” (Ador Realty, LLC v. Division of Housing and Community Renewal, 25 AD3d 128, 139–140 [2d Dept 2005], quoting Pell at 231).
A reviewing court will not substitute its own judgment for that of the agency unless the agency's determination is arbitrary, capricious or contrary to law. (See Pell at 231; Diocese of Rochester v. Planning Bd. of Town of Brighton, 1 N.Y.2d 508, 520 [1956] ; Matter of Brockport Cent. School Dist. v. New York State & Local Employees' Retirement System, 270 A.D.2d 706, 707–708 [3d Dept 2000] ). Pursuant to CPLR § 7803(3), the question raised in an Article 78 proceeding is “whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion.”
Further, it is well settled that “where ... the judgment of the agency involves factual evaluations in the area of the agency's expertise and is supported by the record, such judgment must be accorded great weight and judicial deference.” (Flacke v. Onondaga Landfill Sys., 69 N.Y.2d 355, 363 [1987] ). (See Awl Indus., Inc. v. Triborough Bridge & Tunnel Auth., 41 AD3d 141, 142 [1d Dept 2007] ). Moreover, “[w]here the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom, the courts regularly defer to the governmental agency charged with the responsibility for administration of the statute.” (Matter of Gruber [New York City Dept. of Personnel–Sweeney], 89 N.Y.2d 225, 231[1996], quoting Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459 [1980] ). (See Matter of Rodriguez v. Perales, 86 N.Y.2d 361, 367 [1995] ; Espada 2001 v. New York City Campaign Fin. Bd., 59 AD3d 57, 64 [1d Dept 2008] ; Maggio v. DeBuono, 277 A.D.2d 456, 457 [2d Dept 2000] ; Matter of Herzog v. Joy, 74 A.D.2d 372, 375 [1d Dept 1980], aff'd 53 N.Y.2d 821 [1981] ).
Article 78 review is limited to the facts and the record made before the agency at the time of the challenged action. (Levine v. New York State Liquor Authority, 23 N.Y.2d 863, 864 [1969] ; Celestial Food Corp. v. New York State Liquor Authority, 99 A.D.2d 25, 26–27 [2d Dept 1984] ; Fanelli v. New York City Conciliation and Appeals Board, 90 A.D.2d 756, 757 [1d Dept 1982] ; Sun v. Division of Housing and Community Renewal, 137 Misc.2d 434, 436 [Sup Ct, N.Y. Co.1987] ). Petitioners-plaintiffs amended their pleadings to raise a new objection, pursuant to CPLR § 7803(2), relief in the nature of prohibition, asserting that DEC lacked subject matter jurisdiction to administratively impose the penalties assessed by Commissioner MARTENS. This claim amounts to stating that the DEC exercised its jurisdiction in an arbitrary and capricious manner. However, ZAHAV and SHURKA failed to raise the validity of the Commissioner's penalty assessment in the administrative proceeding, as they acknowledge at page 7 of their Memorandum of Law. This question is not part of the administrative record. Therefore, it is not properly before this Court for review and therefore must be denied.
A proceeding seeking prohibition is usually brought prospectively to prevent an agency from acting outside its jurisdiction. In the instant proceeding it is sought retrospectively. The DEC has, and has had, subject matter jurisdiction in the administrative proceeding here challenged. It is the agency charged with implementing and enforcing the ECL and the oil spill provisions of NL. Courts have repeatedly denied relief in the nature of prohibition brought on similar grounds, that the DEC did not have jurisdiction or authority to take some specific kind of enforcement action. (See Portville Forest Prods. v. Commissioner of N.Y. State Dept. of Envtl. Conservation, 117 Misc.2d 770 [Sup Ct., Livingston County 1982] ; Matter of Johnson Orchards & Farms, Inc. 70 Misc.2d 647 [Sup Ct, Albany County 1972] ). The Court, in Matter of City of New York v. Maltbie (248 AD 36 [3d Dept 1936], affd 274 N.Y. 464 [1937] ) held:
Prohibition is not favored by the courts, and is never issued as a matter of right, but only in a sound discretion when there is no other remedy; it is not given for the correction of errors, but only to prevent usurpation of jurisdiction, or the exercise of power in an illegal manner or beyond the jurisdiction conferred; and it will be granted only in extreme necessity when the grievance cannot be redressed by the ordinary proceedings at law, in equity, or by appeal.
If the question of penalties were properly raised during an administrative proceeding it would be subject to certiorari review by the Court as part of the administrative record, where the review standard is whether the action taken was arbitrary or capricious. (Pell at 231; Village of Camillus v. Diamond, 76 Misc.2d 319 [Sup Ct, Onondaga County 1973], affd 45 A.D.2d 982 [4d Dept 1974], appeal denied 35 N.Y.2d 645 [1974], cert denied 421 U.S. 931 [1975] ). Commissioner MARTENS had a rational basis for his October 24, 2011 decision. He applied the proper evidentiary standard. There was no bad faith or bias on the part of respondents-defendants MARTENS, DEC and URDA.
Further, in the instant Article 78 proceeding there is no dispute as to the facts. Therefore, there is no need to transfer this matter to the Appellate Division for a determination of whether the Commissioner's decision to assess penalties against ZAHAV is supported by “substantial evidence,” pursuant to CPLR § 7803(4). (Sunrise Manor Center for Nursing and Rehabilitation ex. rel. Gronert v. Novelo, 19 AD3d 426 [2d Dept 2005] ). “The mere fact that the petition alleges the lack of substantial evidence supporting the determination is not dispositive, for the question of whether an article 78 proceeding must be transferred to the Appellate Division is one to be decided by [Supreme Court], not by petitioners.” (Bonded Concrete, Inc. v. Town Bd. of Town of Rotterdam, 176 A.D.2d 1137, 1137 [3d Dept 1991], quoting Matter of Save the Pine Bush, Inc. v. Planning Bd. of the City of Albany, 83 A.D.2d 741 [3d Dept 1981] ). (See Cornelius v. City of Oneonta, 71 AD3d 1282 [3d Dept 2011] ). “Here, there is no substantial evidence question as the facts are not in controversy and the only question is whether the agency exercised its authority in an arbitrary and capricious manner. Thus, a transfer to the Appellate Division is not warranted.” (McAtee v. Environmental Control Board, 34 Misc.3d 547, 549 [Sup Ct, Kings County 2011] ). It is clear that the actions of the Commissioner were not arbitrary and capricious or an abuse of discretion.
With respect to the first two causes of action in the complaint against the State defendants, seeking declaratory relief that: the January 27, 2010 stipulation between the DEC and ZAHAV is and void because the DEC materially breached the stipulation by its bad faith; and, the actions of URDA violated POL §§ 74(3)(d) and (f) and URDA should be enjoined as a DEC employee from any future involvement in any DEC action against any entity in which SHURKA has an ownership or managerial interest: they rely upon an incorrect application of relevant law and fail to state a cause action. Both of these causes of action are actually claims that should have been made pursuant to CPLR Article 78.
The first cause of action is a challenge to the propriety of an administrative action. It asserts that the January 27, 2010 stipulation was arbitrary and capricious because of DEC's alleged bias and bad faith. This claim replicates the Article 78 claim made before and rejected by Commissioner MARTENS. Further, since this proceeding-action was brought more than four months after the execution of the January 27, 2010 stipulation the cause of action is time-barred, pursuant to CPLR § 217. The stipulation was in effect on January 27, 2010, and the acts alleged all occurred in 2010, except the initiation of the enforcement action, in March 2011. This proceeding-action was brought in December 2011, well beyond the four months within which a challenge to an administrative action is allowed. (CPLR § 217[1] ). If “examination reveals that the rights of the parties sought to be stabilized in the action for declaratory relief are, or have been, open to resolution through a form of proceeding for which a specific limitation period is statutorily provided, then that period limits the time for commencement of the declaratory judgment action.” (Solnick v. Whalen, 49 N.Y.2d 224, 230–231 [1980] ). Here the rights of the parties were subject to “stabilization” by a timely-brought Article 78 proceeding challenging the January 27, 2010 stipulation and any DEC actions alleged to have been performed in bad faith.
The second cause of action sounds in mandamus, seeking to have the Court compel action which is not ministerial, but instead within the discretion of Commissioner MARTENS, the assignment of the DEC staff. The Court has no subject matter jurisdiction to provide this relief. Mandamus does not lie to compel the exercise of administrative discretion. “The writ of mandamus is an extraordinary remedy that lies only to compel the performance of acts which are mandatory, not discretionary, and only when there is a clear legal right to the relief sought.” (Johnson v. Corbitt, 87 AD3d 1214, 1215 [3d Dept 2011] ), lv denied, 18 NY3d 802 [2011] ). (See Klosterman v. Cuomo, 61 N.Y.2d 525, 439 [1984] ; Justice v. Evans, 117 AD3d 1365 [3d Dept 2014] ; Morrison v. Hynes, 82 AD3d 772 [2d Dept 2011] ). Though characterized as an action for an injunction, the Court has the power to treat this action both procedurally and substantively for what it is, namely an Article 78 proceeding. (See Verbanic v. Nyquist, 41 A.D.2d 466 [3d Dept 1973] ).
Moreover, petitioners-plaintiffs' allegations of bad faith and bias by the DEC and URDA, are not founded in fact but are merely conclusory and based upon unsupported suspicion. This does not establish any clear legal right to any relief and certainly not to the extraordinary relief of mandamus. Mandamus may issue to compel the performance of an official duty clearly imposed by law, where there is no other adequate specific remedy. The duty must be positive, not discretionary, and the right to its performance must be so clear as to not admit any reasonable doubt or controversy. “The extraordinary remedy of mandamus will lie only to compel the performance of a ministerial act, and only where there exists a clear legal right to the relief sought.” (Morales v. Gugerty, 120 AD3d 1349 [2d Dept 2014] ).
The allegations of bias and bad faith made in the two causes of action asserted in the “complaint” portion of petitioners-plaintiffs' pleadings are substantially identical to those asserted in opposition to the DEC's administrative enforcement action. Those claims, conclusory in nature and unsupported by facts, were properly rejected by Commissioner MARTENS and are similarly rejected by this Court. Conclusory assertions will not defeat summary judgment. (Freedom v. Chemical Construction Corp., 43 N.Y.2d 260, 264 [1977] ). Where a defendant, as in the administrative enforcement proceeding that is the subject of this litigation, merely makes conclusory statements and maintains that questions of fact were raised, such statements are insufficient to defeat a properly made motion for summary judgment. (Albany Medical Center Hospital v. Huberty, 76 A.D.2d 949 [3d Dept 1980] ; Gordon v. Allstate Insurance Company, 71 A.D.2d 850 [2d Dept 1979] ). The sworn statements of Assistant Regional Attorney URDA and DEC staff member Jonathan Kolleeny constitute evidentiary proof in admissible form sufficient not only to support the Commissioners' order, but also to defeat any claim of bias and bad faith.
In this proceeding, ZAHAV and SHURKA offer no more in support of their claims of bias and bad faith than the same mere conclusory assertions based upon speculation and their own bias. Plaintiffs' primary witness through his affidavits, James M. DeMartinis, worked as a consulting engineer employed by the contractor hired by ZAHAV and continues to work in the same or similar capacity for other entities controlled by SHURKA. Therefore, he is not a disinterested witness. Further, SHURKA who is a named petitioner-plaintiff in this hybrid proceeding is also not disinterested. Self-serving or not, their affidavits are nothing more than suppositions and conclusory allegations that are simply immaterial and irrelevant. It is all too easy for someone who was prosecuted and found liable for violations of law to accuse a regulator of bias since the regulator necessarily takes positions that limit what the violator would do and are arguably not in the interest of the violator. Such is the case in this matter. The sworn statements of URDA and Kolleeny demonstrate nothing but a routine course of administrative regulatory action, attempting to clean up a site by use of a stipulation that specifies the steps necessary for the cleanup and not imposing any penalty, followed by routine administrative enforcement when the stipulation was repeatedly not complied with. That De Martinis was “suprised” at the outcome and speculated that his client was being “set up” does not constitute proof of anything except the state of De Martinis' mind. The Court finds that this has no probative value.
Moreover, the two causes of action espoused by ZAHAV and SHURKA sound in malicious prosecution, but they do not begin to meet the requirements of such a claim: (1) the commencement or continuance of a proceeding by the defendant against the plaintiff; (2) the termination of that proceeding in favor of the plaintiff; (3) the absence of probable cause for the proceeding; and (4) actual malice. (Cantalino v. Danner, 96 N.Y.2d 391, 394 [2001] ). Though ZAHAV meets the first requirement, it fails to meet the other three. SHURKA fails to meet any of the requirements.
Moreover, there was a proceeding initiated by the DEC's Office of General Counsel, at the request of the DEC's staff, against ZAHAV. The proceeding did not terminate favorably for ZAHAV, which was found liable for violations of various statutes and the January 27, 2010 stipulation. Clearly, there was probable cause for the DEC's proceeding, since ZAHAV failed to comply with the stipulation. While ZAHAV and SHURKA allege bias and bad faith by URDA, they have failed to show any. They have only shown that URDA enforced the law as required of him.
The DEC and its staff have offered proof in evidentiary form, through their affirmation, affidavit and administrative record, sufficient to support summary judgment in their favor. Petitioners-plaintiffs have offered nothing more than what they presented in the administrative proceeding. Therefore, the State respondents-defendants are entitled to summary judgment dismissing the first and second causes of action in the complaint against them because they do not meet the requirements of an action sounding in malicious prosecution and fail to state a claim for which the Court may grant relief.
Conclusion
Accordingly, it is hereby
ORDERED, that the motion of respondents-defendants JOSEPH MARTENS, as Commissioner of New York State Department of Environmental Conservation, the NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION and JOHN K. URDA, Assistant DEC Regional Attorney, is granted to the following extent: dismissal of the CPLR Article 78 proceeding against them by petitioners-plaintiffs ZAHAV ENTERPRISES, INC. and EPHRAIM SHURKA, pursuant to CPLR Rule 3211(a)(7) ; and, summary judgment to respondents-defendants JOSEPH MARTENS, as Commissioner of New York State Department of Environmental Conservation, the NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION and JOHN K. URDA, Assistant DEC Regional Attorney and dismissal of the first and second causes of action in the complaint against them by petitioners-plaintiffs ZAHAV ENTERPRISES, INC. and EPHRAIM SHURKA, pursuant to CPLR Rule 3212(a).
This constitutes the Decision and Order of the Court.