Eskenazi v Mackoul
Annotate this CaseDecided on December 11, 2008
Supreme Court, Nassau County
Lynn Eskenazi and STEVEN KRITZBERG, Plaintiff(s),
against
Robert E. Mackoul, DEBORAH K. MACKOUL, THE HANOVER INSURANCE GROUP and ONE BEACON INSURANCE COMPANY, Defendant(s).
017248/06
Counsel are as follows:
Pittoni, Bonchonsky & Zaino, LLP
Attn: M. John Pittoni, Esq.
Attorneys for Plaintiffs
226 Seventh Street, Suite 200
Garden City, NY 11530
Sobel & Kelly, P.C.
Attn: Curtis Sobel, Esq.
Attorneys for Defendants Robert E. Mackoul,
Deborah K. Mackoul and The Hanover Insurance Group
464 New York Avenue, Suite 100
Huntington, NY 11743
Traub Lieberman Straus & Shrewsberry
Attn: Sheryl Bruzzese, Esq.
Attorneys for Defendant One Beacon Insurance Company
Mid-Westchester Executive Park
Seven Skyline Drive
Hawthorne, NY 10532
Thomas P. Phelan, J.
Motion by plaintiffs for partial summary judgment is granted to the extent
indicated below. Cross-motion by defendant One Beacon Insurance Company ("One Beacon")
for summary [*2]judgment dismissing the complaint and all
cross-claims is denied. Cross-motion by defendant One Beacon for sanctions is granted to the
extent indicated below. Cross-motion by defendants Robert E. Mackoul and Deborah K.
Mackoul ("Mackoul") and The Hanover Insurance Group ("Hanover") for summary judgment
dismissing the complaint is granted and denied to the extent indicated below.
This is an action to recover cleanup and removal costs of an oil spill pursuant to
Navigation Law § 181. Plaintiffs are the owners of a residential property located at 27 Eden
Road in Lido Beach. Defendants Mackoul own the home located at 23 Eden Road, which is
immediately to the east of plaintiffs' property. Robert E. Mackoul purchased his property at a
foreclosure sale in March 1993. When he acquired the property, it had no heating system. Mr.
Mackoul claims to have been unaware that there was an underground storage tank. Prior to
moving in, Mackoul installed gas heat in the property.
In October 2005, plaintiffs detected a noxious odor and then discovered oil in their
basement crawl space. Plaintiffs consulted with an environmental contractor, Action
Environmental, who determined that the oil was originating from a leaking storage tank or a
faulty supply/return line on the Mackoul property. On October 27, 2005, plaintiffs filed a report
concerning the oil spill with the New York State Department of Environmental Conservation
("DEC"). Plaintiffs also notified Mackoul of Action Environmental's finding.
Since March 5, 2002, Mackoul have been insured by defendant Hanover. Mackoul's
homeowner's policy has a liability limit of $300,000. They also have an "umbrella," or excess
liability, policy with Hanover (Def. Mackoul and Hanover Ex. F, p. 29). Prior to insuring with
Hanover, Mackoul had been insured by General Accident, the predecessor of defendant One
Beacon. Mackoul had been covered by General Accident or One Beacon from January 1, 1994, to
January 1, 2002, when One Beacon declined to renew the policy. According to Robert F.
Mackoul, who is himself an insurance broker, One Beacon declined to renew the homeowner's
policy because of a previous claim which he had submitted (Id., p. 25). On November 4,
2005, Mackoul filed a claim relating to the oil spill with Hanover.
On March 17, 2006, the DEC wrote to Mackoul and directed them to proceed with
an investigation/cleanup of the site within ten days (Def. One Beacon Ex. II). DEC stated that if
the storage tank was found to be the source of the spill, it would be required to be excavated and
removed. The DEC also stated that, at its discretion, all contaminated soil and debris would be
required to be replaced.
On May 3, 2006, Trade-Winds, an environmental contractor hired by Mackoul,
excavated the underground storage tank and sold it for salvage (Def. One Beacon Ex. Q). On
May 3 and May 5, part of the contaminated soil between the two homes was removed and
replaced. On May 9, 2006, One Beacon, Mackoul's former insurer, was notified of the oil spill on
the property. Trade-Winds continued with remediation work, including backfilling, soil sampling
and installing monitoring wells through June 6, 2006.* The total cost of performing this work
was $137,843.90.
[*3]
It is the position of all parties, including the
DEC, that further remediation work is necessary. Several environmental contractors have
submitted "remedial action work plans" for additional cleanup. Notably, one plan was prepared
by Clean Solutions Technologies in June 2006 (Def. Mackoul and Hanover Ex. M). While
Hanover characterizes the entire plan as having been
* Although Doug Schrimpf, a senior project manager for Trade-Winds, claims
that the last date of service was May 16, 2006, Schrimpf's affidavit is contradicted by
Trade-Winds' invoice dated June 26, 2006.
approved by the DEC, it is clear that what the agency approved was a "pilot study."
(Id., Ex. N). The Clean Solutions' plan does not include a cost estimate. On September
28, 2006, Hanover wrote to plaintiffs offering to pay for the reasonable cost of remediation up to
its $300,000 policy limit. However, Hanover indicated that it was unwilling to be a party to the
remediation contract (Id., Ex. O).
Plaintiffs commenced this action on October 20, 2006, seeking to recover cleanup
and removal costs pursuant to Navigation Law § l81. Plaintiffs also assert common law
claims for negligence, trespass and nuisance. Plaintiffs seek damages for both property damage
and personal injury. Plaintiffs also seek a mandatory injunction, ordering defendants to complete
the remediation in a manner acceptable to both plaintiffs and the DEC. Plaintiffs named as
defendants Mackoul, as well as their current and former insurance companies.
On November 7, 2006, One Beacon denied coverage asserting that the spill occurred
between two and six months before it was discovered and well after the termination of One
Beacon's policy. Hanover initially undertook Mackoul's defense. However, Hanover and
Mackoul subsequently moved to amend their answer in order to seek a declaration that One
Beacon was obligated to defend Mackoul and to share in the cost of defense on a "pro rata basis."
Hanover and Mackoul asserted that the date of discharge could not be determined as of the time
of the motion. By order dated January 15, 2008, the court held that the burden of proof was on
One Beacon to establish that plaintiffs' damages were sustained outside the effective dates of the
policy. Because One Beacon failed to meet that burden, the court determined that One Beacon
was under a duty to defend. The court further determined that the cost of defense would be
apportioned by the trial court on a "pro rata basis."
Plaintiffs are moving for partial summary judgment as to liability on their Navigation
Law claim. Defendant One Beacon is cross-moving for summary judgment dismissing the
complaint, asserting that there is no evidence that the discharge occurred during the term of its
policy. Alternatively, One Beacon moves to limit plaintiffs' damages, asserting that plaintiffs'
claims of stigma and physical injury are not supported by the evidence. One Beacon further
argues that plaintiffs failed to mitigate damages by interfering with the remediation of their
property. [*4]Additionally, One Beacon moves for a discovery
sanction pursuant to CPLR 3126 on the ground that Mackoul disposed of the storage tank and
surrounding soil before One Beacon was notified of the loss. Mackoul and Hanover cross-move
for partial summary judgment based on plaintiffs' failure to mitigate damages and, with respect to
plaintiffs' claim for personal injury, based on failure to establish causality.
Navigation Law § 181(1) provides that "Any person who has discharged
petroleum shall be strictly liable, without regard to fault, for all cleanup and removal costs and all
direct and indirect damages, no matter by whom sustained, as defined in this section." While
§ 181 does not require proof of fault or knowledge, landowners are not in all instances
liable for spills occurring on their property (New York v. Green, 96 NY2d 403, 407
[2001]). Thus, a landowner would not be liable as a "discharger" if an "errant oil truck" were to
spill fuel on his property. However, a landowner will be liable if he or she is in a position "to
control the site and source of the discharge" (Id.). Section 181 applies to "anyone, large
or small," including a residential homeowner (New York v. New York Central Mut. Fire Ins.
Co., 147 AD2d 77, 78 [3d Dep't 1989]).
The court concludes, as a matter of law, that even if Mackoul did not have
knowledge of the underground storage tank or that it was leaking, they were in a position to
control the site and source of the discharge. Accordingly, plaintiffs' motion for partial summary
judgment as to liability on the Navigation Law claim is granted as to the Mackoul defendants.
In a Navigation Law § 181 action, the injured party may recover as "indirect
damages" all costs associated with the cleanup and removal of a discharge, including litigation
costs (AMCO International, Inc. v. LIRR, 302 AD2d 338 [2d Dep't 2003]). If it is
established that despite efforts at remediation, the premises cannot be restored to its pre-spill
condition, "the proper measure of damages is the total amount of the diminution in value plus the
cost of repairs" (Turnbull v. MTA,
28 AD3d 647, 649 [2d Dep't 2006]). In determining whether a diminution in value has
occurred, the court may consider whether the "stigma" caused by the oil spill has had an impact
on the value of the property (Id.). Since "indirect damages" are limited to costs associated
with the cleanup, plaintiff may not recover for ensuing personal injury (Strand v.
Neglia, 232 AD2d 907 [3d Dep't 1996]). However, plaintiff may recover for personal
injury on a theory of negligence because Navigation Law § 181 does not preempt common
law claims (See Hilltop Nyack Corp. V. TRMI Holdings, Inc. 272 AD2d 521 [2d Dep't
2000]).
On a motion for summary judgment, it is the proponent's burden to make a prima
facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to
demonstrate the absence of any material issues of fact (JMD Holding Corp. v. Congress Financial Corp., 4 NY3d 373, 384
[2005]). Failure to make such a prima facie showing requires denial of the motion, regardless of
the sufficiency of the opposing papers (Id.). However, if this showing is made, the burden
shifts to the party opposing the summary judgment motion to produce evidentiary proof in
admissible form sufficient to establish the existence of material issues of fact which require a
trial (Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986]).
[*5]
On defendants' motion for summary judgment, it
is their burden to establish prima facie that plaintiffs did not suffer any physical injury as a result
of the oil spill and that there is no stigma effecting the value of the property. Although One
Beacon deprecates the report of plaintiffs' real estate expert, defendants do not submit their own
appraisal of the property. Plaintiffs' real estate expert found that there was a diminution in value
of at least 50% and that part of the diminution was due to the stigma associated with the oil spill
(Def. One Beacon Ex. W). Accordingly, defendants have not carried their burden with respect to
stigma on their summary judgment motion. However, defendants' expert, Dr. Leon Sultan, found
no evidence that plaintiffs suffered any orthopedic impairment as a result of heating oil vapors
(Id., Exs. AA and BB). Furthermore, Dr. Carl Friedman found that neither plaintiff
showed any evidence of respiratory abnormality (Id., Exs. CC and DD). The court
concludes that defendants have carried their prima facie burden with respect to lack of physical
injury and the burden shifts to plaintiffs to show a triable issue as to physical injury.
In response, plaintiffs submit a report from the Department of Health which states
that "[e]xposure to high levels of petroleum products can cause health effects, primarily on the
nervous and respiratory systems. People who inhaled elevated air levels of fuel oil vapors for
short periods of time had nausea, increased blood pressure, eye irritation, headaches,
light-headedness, and poor coordination. Longer term exposure to elevated levels of fuel oil
vapors can cause similar effects on the nervous and respiratory systems and may also effect the
blood, liver, and kidneys." (Avena Aff., Attachment G) Plaintiff Lynn Eskenazi testified that she
has experienced nausea, dizziness, and headaches and that her rheumatoid arthritis has become
aggravated since the oil spill (Def. Mackoul and Hanover Ex. E, p. 124). Plaintiff Steven
Kritzberg testified that he suffers from headaches, nausea, and back spasms (Id., p. 184).
Thus, plaintiffs' symptoms are consistent with those caused by exposure to fuel oil vapors.
Pursuant to the public document exception to the hearsay rule, a report made by or
under the supervision of a public officer is admissible if the public officer is required by statute
or the nature of his duty to make the report (Richardson on Evidence § 8-1101). The report
is deemed sufficiently trustworthy because the public official ordinarily has no motive to distort
the truth of matters contained within the report (Id.). The Commissioner of Health is
directed to investigate the causes of disease and take cognizance of all matters pertaining to
public health (Public Health Law § 206(1)(a)(d)). Thus, the report concerning the health
effects of exposure to oil spills is clearly within his statutory mandate. While the report may not
be prima facie proof, it is nonetheless "some evidence" of the matters asserted therein
(Consolidated Midland Corp. v. Columbia Pharmaceutical Corp., 42 AD2d 601 [2d Dep't
1973]).
The Department of Health report, coupled with plaintiffs' testimony as to subjective
symptoms, might not be sufficient to show serious injury in a no-fault case (see Pommels v.
Perez, 4 NY3d 566 (2005). However, it is sufficient to show physical injury in an ordinary
negligence action. Accordingly, defendants' motions for partial summary judgment dismissing
plaintiffs' claims for physical injury are granted as to Navigation Law § 181 but denied as to
plaintiffs' common law negligence claims. Defendants' motions for partial summary judgment
limiting damages are [*6]denied as to plaintiffs' claims for stigma
and diminution in value of their property.
In an action brought by the State to recoup monies expended by the Oil Spill
Compensation Fund, the discharger is not permitted to challenge the reasonableness of cleanup
and removal costs (New York v. Speonk Fuel, Inc., 3 NY3d 720 [2004]). Nevertheless,
defendants argue that the injured party is under a duty to mitigate damages in a private cleanup
and removal cost action. The court notes that defendants do not cite any case holding that the
general duty to mitigate damages applies in a private Navigation Law action. There appears to be
no duty to mitigate damages under the corresponding federal environmental response statute
(National Acceptance Co. v. Regal Products, Inc., 155 F.R.D. 631 [E.D. Wis. 1994]).
Moreover, it is the discharger who has the primary responsibility to promptly clean up and
remove the oil spill (See Navigation Law § 187 (1)). Since the injured party does not have
the primary responsibility to clean up the discharge, its damages should not be diminished unless
it has affirmatively interfered with defendants' cleanup and removal efforts.
The court concludes as a matter of law that plaintiffs did not affirmatively interfere
with defendants' cleanup and removal efforts. Rather, plaintiffs simply refused to enter into a
remediation contract with Clean Solutions, defendants' environmental contractor. Plaintiffs'
refusal to deal with Clean Solutions was eminently reasonable because the contractor's proposal
did not contain a cost estimate and the obligation to undertake the cleanup belonged to
defendants. Defendants' motion for partial summary judgment based on plaintiffs' failure to
mitigate damages is denied.
Generally, it is for the insured to establish coverage and for the insurer to prove that
an exclusion in the policy applies to defeat coverage (Consolidated Edison Co. v. Allstate Ins.
Co., 98 NY2d 208, 218 [2002]). In Consolidated Edison, the court noted that it is
particularly appropriate to place the burden to establish coverage on the insured where the loss
was caused by environmental pollution (Id. at 220). The insured will have an incentive to
strive for early detection that it is releasing pollutants into the environment. Additionally, the
insured is the party having better and earlier access to the actual facts and circumstance
surrounding the discharge (Id.).
The present coverage dispute is not so much between insured and insurer as it is
between successive insurance companies. Although the actual policies have not been submitted
to the court, presumably they both include indemnity and liability coverage. Thus, if the spill
occurred during One Beacon's policy period, One Beacon must bear a share of the cost of the
remediation of Mackoul's property. If contamination of plaintiffs' property began during this
period, One Beacon must also bear a share of the cost of remediation of plaintiffs' property. If
One Beacon is to share the cost of remediation, the court will decide after trial on what basis the
policies shall be prorated. For example, the policies may be prorated based on the relative
amounts of time they were in effect or the proportion of damages sustained during the relevant
time periods (Consolidated Edison Co. v. Allstate Ins. Co., 98 NY2d at 224-25).
[*7]
The parties' experts base their estimates as to
when contamination of plaintiffs' property began upon estimates as to when the leak occurred and
the speed by which the oil traveled across Mackoul's property. Mackoul and their current insurer,
Hanover, had better and earlier access to the facts surrounding the discharge. Thus, it is
appropriate at trial to place on those defendants the burden of proving when the leak occurred
and when the contamination reached plaintiffs' property. Nevertheless, the burden to establish
prima facie entitlement to judgment remains on One Beacon for the purposes of the summary
judgment motion.
One Beacon's expert, Dr. Paul Boehm, stated that petroleum products released from
Mackoul's fuel tank could have traveled to plaintiffs' property with the hydrocarbon component
dissolved in groundwater or as "free," i.e. liquid, fuel oil traveling with the groundwater (Def.
One Beacon Ex. V). Dr. Boehm estimated the porous quality of Lido Beach soil by analyzing the
grain size, grain size distribution and presence of fine sand particles. Based on his estimate of the
porous quality of the soil between the two homes, Dr. Boehm estimated that free fuel oil would
travel from Mackoul's storage tank to plaintiffs' crawl space, a distance of fifteen feet, in
somewhere between 68 and 78 days. Because the oil would have to travel upwards to reach
plaintiffs' crawlspace, Dr. Boehm allowed additional time for fluctuations in the groundwater
level. Thus, Dr. Boehm concluded that the release of fuel oil from the storage tank occurred
between 2 and 6 months prior to the report of the spill in October 2005. Based upon Dr. Boehm's
report, One Beacon has established prima facie that the oil spill occurred outside their policy
period. Accordingly, the burden shifts to Hanover to show a triable issue as to whether the spill
occurred during the term of One Beacon's policy.
Hanover's experts, Friedman & Bruya, analyzed the extent to which the fuel oil was
biologically degraded (Sobel Aff., Ex. C). Based upon the absence of "normal alkanes,"
Friedman & Bruya estimated that the fuel oil had been released more than four years before it
was discovered. Additionally, based upon the level of corrosion, as indicated by the number of
holes in the storage tank, Friedman & Bruya estimated that the release actually occurred more
than five years before the spill was discovered. Because of variations in site conditions and oil
composition, Dr. Boehm did not consider Friedman & Bruya's bio-degradation method to be
generally accepted in the scientific community or sufficiently reliable. The weight to be given to
Friedman & Bruya's opinion will be for the jury. However, the court concludes that Hanover has
carried its burden of showing a triable issue as to whether the release occurred during the term of
One Beacon's policy. Defendant One Beacon's motion for summary judgment dismissing the
complaint and all cross-claims is denied.
Spoliation is the destruction of evidence (Kirkland v. Housing Authority, 236
AD2d 170, 173 [1st Dep't 1997]). Physical evidence is often the most eloquent, impartial
"witness" as to what really occurred. It is inherently unfair to allow a party to destroy physical
evidence and then benefit by depriving the adversary of an opportunity to inspect or test the
evidence (Id.). Spoliation sanctions, including deeming issues resolved against the
offending party, are appropriate where a litigant, intentionally or negligently, disposes of a
crucial item of evidence before the adversary [*8]has an
opportunity to inspect it (Id.).
By allowing Trade-Winds to dispose of the storage tank, Mackoul and Hanover
deprived One Beacon of the opportunity to inspect or test it. However, as Dr. Boehm's report
makes clear, One Beacon was not totally deprived of the opportunity to present expert testimony
as to when the spill occurred. Accordingly, One Beacon's motion for a sanction is granted to the
extent that Hanover and Mackoul are precluded from offering an expert opinion as to when the
oil spill occurred based upon the extent of corrosion of the storage tank.
This decision constitutes the order of the court.
Dated:December 11, 2008 Thomas P. Phelan
J.S.C.
Pittoni, Bonchonsky & Zaino, LLP
Attn: M. John Pittoni, Esq.
Attorneys for Plaintiffs
226 Seventh Street, Suite 200
Garden City, NY 11530
Sobel & Kelly, P.C.
Attn: Curtis Sobel, Esq.
Attorneys for Defendants Robert E. Mackoul,
Deborah K. Mackoul and The Hanover Insurance Group
464 New York Avenue, Suite 100
Huntington, NY 11743
Traub Lieberman Straus & Shrewsberry
Attn: Sheryl Bruzzese, Esq.
Attorneys for Defendant One Beacon Insurance Company
Mid-Westchester Executive Park
Seven Skyline Drive
Hawthorne, NY 10532
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