11-26-cv
DVL, Inc. v. Niagara Mohawk Power Corp.



                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                          SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.


       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 2nd day of August, two thousand twelve.

PRESENT: GUIDO CALABRESI,
           GERARD E. LYNCH,
           RAYMOND J. LOHIER, JR.,
                      Circuit Judges.
_____________________________________

DVL, INC.,

                             Plaintiff-Appellant,

                   v.                                              11-26-cv

NIAGARA MOHAWK POWER
CORPORATION, NATIONAL GRID USA,
NATIONAL GRID, NATIONAL GRID
USA SERVICE COMPANY, INC.,
GENERAL ELECTRIC COMPANY,

                 Defendants-Appellees.*
_____________________________________

FOR APPELLANT:                                       DAVID A. ENGEL (Shannan C.


         *
             The Clerk of Court is respectfully requested to amend the caption as set forth
above.
                                                 Krasnokutski, on the brief), Nolan &
                                                 Heller, LLP, Albany, NY.

FOR APPELLEE GENERAL                             ARTHUR J. SIEGEL (Kimberlee S. Parker,
ELECTRIC COMPANY:                                on the brief), Bond, Schoeneck & King,
                                                 PLLC, Albany, NY.

FOR APPELLEES NIAGARA                            KARIM A. ABDULLA, Hiscock & Barclay,
MOHAWK POWER CORPORATION,                        LLP, Buffalo, NY.
NATIONAL GRID USA, NATIONAL
GRID, and NATIONAL GRID USA
SERVICE COMPANY, INC.:

       Appeal from the judgment of the United States District Court for the Northern

District of New York (Lawrence E. Kahn, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district court is AFFIRMED.

       Plaintiff-appellant DVL, Inc. (“DVL”) is a commercial real estate owner that

acquired a piece of property in Fort Edward, New York (the “DVL Site” or “Site”) in

2002. At the time of acquisition, DVL was unaware that soil at the Site contained

quantities of polychlorinated biphenyls (“PCBs”). In 2003, DVL learned that the New

York State Department of Environmental Conservation (“DEC”) was concerned about

PCB contamination at the DVL Site. A preliminary site assessment conducted by an

engineering firm retained by DEC from 2003 to 2004 revealed the presence of several

types of PCBs in soil at the Site. DVL subsequently hired an environmental consulting

firm to investigate and remediate the contamination at the Site, thereby incurring

substantial expenses.

       On October 11, 2007, DVL initiated this action against defendants-appellees

Niagara Mohawk Power Corporation, National Grid USA, National Grid, and National

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Grid USA Service Company, Inc. (collectively, “Niagara”), and General Electric

Company (“GE”), alleging that they had disposed of PCBs at the DVL Site and were

therefore liable for DVL’s clean-up costs and damages. DVL’s complaint asserts claims

under the Comprehensive Environmental Response, Compensation, and Liability Act

(“CERCLA”), 42 U.S.C. § 9601 et seq., and the New York State common law of

indemnification, trespass, and nuisance. On December 6, 2010, the district court denied

DVL’s motion for partial summary judgment as to liability, granted Niagara’s and GE’s

motions for summary judgment, and granted GE’s cross-motion to strike certain

undisclosed expert testimony. See DVL, Inc. v. Gen. Elec. Co., 811 F. Supp. 2d 579

(N.D.N.Y. 2010). We affirm for substantially the reasons set forth in the district court’s

thorough and well-reasoned opinion. We assume the parties’ familiarity with the

underlying facts.

I. Motion to Strike Undisclosed Expert Testimony

       In support of its motion for partial summary judgment, DVL submitted a

declaration from James Ludlam, who worked as a DEC engineer from 1977 to 2008.

According to his declaration, Ludlam worked on hazardous waste disposal sites

throughout New York State during his career, including several sites containing PCBs for

which either Niagara or GE were responsible. Ludlam also supervised investigation and

remedial activities at the DVL Site. As the district court noted, the declaration details

Ludlam’s “education, expertise, and qualifications, and ultimately states conclusions that

the presence of certain Aroclor types found on the DVL Site indicate that they were of




                                              3
GE and Niagara Mohawk origin.” Id. at 589.1 DVL also filed a supplemental declaration

by Ludlam in support of its opposition to the defendants’ summary judgment motions,

which contained similar testimony.

       GE filed a motion to strike Ludlam’s declarations on the ground that they

contained expert testimony that had not been disclosed to the defense in discovery. The

district court granted the motion to strike in large part, finding that the declarations

consisted mainly of expert testimony. See DVL, 811 F. Supp. 2d at 590 (“Many of the

‘observations’ and essentially all of the ‘conclusions’ that Ludlam offers are not rationally

based on his first-hand perceptions, but are rather based on scientific, technical, or

specialized knowledge.”). However, the court declined to strike certain portions of

Ludlam’s declarations that contained non-expert testimony. See id. at 591 (refusing to

strike Ludlam’s first-hand observation of the migration of water from the GE plant to the

DVL Site and his testimony based on his “familiarity through his professional experience

with GE’s historical disposal practices”).

        We review a district court’s evidentiary rulings for abuse of discretion. See

United States v. Garcia, 413 F.3d 201, 210 (2d Cir. 2005); see also Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 141-43 (1997). As we have previously noted, Federal Rule of

Evidence 701 was amended in 2001 “to provide that testimony cannot be received as lay

opinion if it is based on scientific, technical, or other specialized knowledge.” Garcia,




       1
           Different types of PCBs are `referred to by “Aroclor” numbers, such as “Aroclor 1260.”


                                                 4
413 F.3d at 215 (citing Fed. R. Evid. 701(c)).2 The purpose of Rule 701(c) is to “prevent

a party from conflating expert and lay opinion testimony thereby conferring an aura of

expertise on a witness without satisfying the reliability standard for expert testimony set

forth in Rule 702 and the pre-trial disclosure requirements set forth” in Federal Rule of

Civil Procedure 26. Id.; see also Bank of China v. NBM LLC, 359 F.3d 171, 181 (2d Cir.

2004). Under Rule 26, a party must “disclose to the other parties the identity of any

witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703,

or 705,” and must make such disclosures “at the times and in the sequence that the court

orders.” Fed. R. Civ. P. 26(a)(2)(A) & (D).

       DVL does not dispute that it never designated Ludlam as an expert. Rather, DVL

argues that the district court erred by characterizing the bulk of Ludlam’s testimony as

expert testimony, rather than as lay opinion testimony. We, however, see no error in the

district court’s conclusion that Ludlam relied on technical and scientific knowledge in

making most of the observations and conclusions in the declarations. For example, his

conclusion that the flow of water from GE’s manufacturing plant to the DVL Site “would

have inevitably caused the migration of PCB contamination to the present DVL Site,”

could not have been based on the “reasoning processes familiar to the average person in

everyday life,” Garcia, 413 F.3d at 216, since ordinary lay persons would have no

knowledge of the conditions under which chemical contamination of soil can migrate


       2
        Rule 701 provides in full that “[i]f a witness is not testifying as an expert,
testimony in the form of an opinion is limited to one that is: (a) rationally based on the
witness’s perception; (b) helpful to clearly understanding the witness’s testimony or to
determining a fact in issue; and (c) not based on scientific, technical, or other specialized
knowledge within the scope of Rule 702.”

                                              5
from site to site.3 Rather, the persuasiveness of Ludlam’s conclusions could only derive

from specialized knowledge regarding the chemical properties of PCBs that Ludlam had

developed over several decades of working on hazardous waste clean-up projects.

       DVL also argues that, even if Ludlam’s testimony was properly characterized as

expert testimony, the district court erred by striking it. Federal Rule of Civil Procedure

37(c) provides that “[i]f a party fails to . . . identify a witness as required by Rule 26(a) or

(e), the party is not allowed to use that . . . witness to supply evidence on a motion, at a

hearing, or at a trial, unless the failure was substantially justified or is harmless.”

Although DVL does not suggest that its failure to designate Ludlam as an expert was

substantially justified, it does claim that its failure was harmless because it identified

Ludlam as a possible lay witness pursuant to Rule 26(a)(1). See Fed. R. Civ. P.

26(a)(1)(A)(i) (requiring parties to disclose the identity of “each individual likely to have

discoverable information . . . along with the subjects of that information”).

       However, as the district court noted, DVL’s identification of Ludlam in its initial

disclosures was “insufficient to put Defendants on notice that Ludlam, one among many

       3
         DVL relies heavily upon the Third Circuit’s decision in Wilburn v. Maritrans GP
Inc., which held that a “lay witness with first hand knowledge can offer an opinion akin to
expert testimony in most cases, so long as the trial judge determines that the witness
possesses sufficient and relevant specialized knowledge or experience to offer the
opinion.” 139 F.3d 350, 356 (3d Cir. 1998) (internal quotation marks omitted).
However, as GE notes, that decision was abrogated by the amendment of Rule 701 in
2000, under which “a witness’[s] testimony must be scrutinized under the rules regulating
expert opinion to the extent that the witness is providing testimony based on scientific,
technical, or other specialized knowledge within the scope of Rule 702.” Fed. R. Evid.
701 advisory committee’s note. Under the current version of Rule 701, if an “opinion
rests ‘in any way’ upon scientific, technical, or other specialized knowledge, its
admissibility must be determined by reference to Rule 702, not Rule 701.” Garcia, 413
F.3d at 215 (quoting 4 Weinstein’s Federal Evidence § 701.03[1]).

                                               6
potential fact witnesses, would testify as to conclusions drawn separately and distinct

from those drawn by DEC” in the preliminary site assessment report. DVL, 811 F. Supp.

2d at 591. Thus, “[b]ecause DVL did not properly disclose Ludlam as an expert and only

provided his Declarations after the close of discovery, GE and Niagra Mohawk did not

have the opportunity to anticipate, challenge, or counter Ludlam’s statements,

assessments, methods, or conclusions.” Id. (footnote omitted). Accordingly, the district

court did not abuse its discretion in determining that DVL’s failure to designate Ludlam

as an expert caused the defendants prejudice.

II. Summary Judgment

       We review de novo a district court’s award of summary judgment, “construing the

evidence in the light most favorable to the nonmoving party and drawing all reasonable

inferences in that party’s favor.” Kuebel v. Black & Decker Inc., 643 F.3d 352, 358 (2d

Cir. 2011). Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a matter

of law.” Fed. R. Civ. P. 56(a). “A fact is material if it might affect the outcome of the

suit under the governing law, and an issue of fact is genuine if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.” Niagara Mohawk Power

Corp. v. Hudson River–Black River Regulating Dist., 673 F.3d 84, 94 (2d Cir. 2012)

(internal quotation marks omitted). If a party’s evidence “is merely colorable, or is not

significantly probative, summary judgment may be granted.” Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 249-50 (1986) (citations omitted).

       A. CERCLA Claims

       Under CERCLA, “property owners are strictly liable for the hazardous materials

                                              7
on their property, regardless of whether or not they deposited them there.” Niagara

Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 120 (2d Cir. 2010).

However, CERCLA allows owners of polluted property to seek reimbursement for

remedial expenses from another “potentially responsible party” (“PRP”). Id.; see also

ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 356 (2d Cir. 1997). In this

case, DVL claims that the defendants qualify as PRPs because they “arranged for” the

disposal of hazardous waste at the DVL Site. 42 U.S.C. § 9607(a)(3) (imposing liability

upon parties who “by contract, agreement, or otherwise arranged for disposal or

treatment, or arranged with a transporter for transport for disposal or treatment, of

hazardous substances owned or possessed by such person . . . at any facility . . . owned or

operated by another party”); see also Burlington N. & Sante Fe Ry. Co. v. United States,

556 U.S. 599, 610 (2009) (noting that “an entity may qualify as an arranger under

§ 9607(a)(3) when it takes intentional steps to dispose of a hazardous substance”).4

       As we have noted, “CERCLA liability may be inferred from the totality of the

circumstances as opposed to direct evidence.” Niagara Mohawk, 596 F.3d at 136.

Indeed, “when determining CERCLA liability, ‘there is nothing objectionable in basing

findings solely on circumstantial evidence, especially where the passage of time has made

direct evidence difficult or impossible to obtain.’” Id. at 131 (quoting Franklin County

Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 547 (6th



       4
        CERCLA defines the term “disposal” as “the discharge, deposit, injection,
dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on
any land or water so that such solid waste or hazardous waste or any constituent thereof
may enter the environment or be emitted into the air or discharged into any waters,
including ground waters.” 42 U.S.C. § 6903(3).

                                              8
Cir. 2001)). In addition, a party seeking contribution under CERCLA “need not establish

the precise amount of hazardous material discharged or prove with certainty that a PRP

defendant discharged the hazardous material to get their CERCLA claims past the

summary judgment stage.” Id. at 132. Nonetheless, a CERCLA plaintiff must still

“establish that the defendants qualify as PRPs under the statute and must demonstrate that

it is probable that the defendants discharged hazardous material.” Id.; see also United

States v. Alcan Aluminum Corp., 990 F.2d 711, 721 (2d Cir. 1993) (holding that a

CERCLA plaintiff asserting an “arranger” claim must show, inter alia, “that the defendant

generated hazardous waste at the clean-up site”).

       The district court held that DVL failed to adduce sufficient evidence that the

defendants disposed or arranged for the disposal of PCBs at the DVL Site, and

accordingly denied DVL’s motion for partial summary judgment as to liability and

granted the defendants’ motions for summary judgment. We agree with the district

court’s analysis, and therefore affirm.

       With respect to GE, DVL argues on appeal that it presented various pieces of

circumstantial evidence which, taken together, establish that GE arranged for the disposal

of PCBs at the DVL Site. However, much of this evidence concerns activities with no

connection to the DVL Site. As GE notes, its activities at its Fort Edward manufacturing

plant, and the presence of PCB contamination at that site, do not constitute “evidence that

GE disposed of PCBs at the DVL Site.” Appellee Gen. Elec. Co. Br. (“GE Br.”) at 8

(emphasis omitted). Similarly, evidence that GE disposed of PCBs at other sites in the

region “cannot substitute for evidence of its activities in relation to the property involved

in this dispute.” DVL, 811 F. Supp. 2d at 598.

                                              9
       DVL did submit a declaration by Dennis Prevost, who claimed that he observed

electrical capacitors at the DVL Site as a child. However, as the district court noted,

“Prevost’s accounts do not identify GE as the source of the material that he saw,” which

makes any connection between GE and the capacitors speculative. Id. Likewise, in the

absence of expert testimony or other evidence that the water contained PCBs, Ludlam’s

observation of water flowing from GE’s manufacturing plant to the DVL Site “is

insufficient to establish GE as a PRP.” Id.

       Finally, DVL points to evidence that the PCB Aroclor types used and disposed at

the GE Fort Edward site matched those at the DVL Site. However, as GE notes, the

record is bereft of evidence – such as expert testimony – that would tie the PCBs at the

DVL Site to “a GE product as opposed to the many non-GE products using these

aroclors.” GE Br. at 10. Without such evidence, any inference that GE was responsible

for the PCBs at the DVL Site is too speculative to create a genuine issue of material fact.

See DVL, 811 F. Supp. 2d at 599; cf. Niagara Mohawk, 596 F.3d at 135 (holding that

there was a dispute of material fact for purposes of CERCLA liability where the plaintiff

introduced evidence, including expert testimony, showing that “hazardous materials . . .

originated at the [defendant’s] Plant” and then were carried by a creek to the plaintiff’s

property).

       DVL’s evidence with respect to Niagara is insufficient for similar reasons.

Niagara provides electrical service in the Fort Edward area, and at one time employed

“commonly used” distribution line transformers that contained Aroclor 1260, which was

also found at the DVL Site. DVL, 811 F. Supp. 2d at 584-85, 586. The district court held



                                              10
that the evidence in the record “does not suggest any Niagra Mohawk transformers went

to the DVL Site,” although it did not “foreclose that possibility.” Id. at 599.

       On appeal, DVL challenges that holding by pointing to Prevost’s statement that as

a boy he observed “large ‘bucket’ objects” at the DVL Site which he understood to be

electrical transformers. However, as Prevost clarified in his supplemental declaration,

these “objects did not bear Niagara Mohawk’s name, initials or any other symbols or

logos indicative of Niagara Mohawk ownership or sourcing.” The district court therefore

did not err in concluding that “Prevost’s testimony does not link the Niagra Mohawk

Defendants to the DVL Site.” Id. at 599.

       Similarly, as the district court noted, Ludlam had “no personal knowledge of

[Niagara] transformers being disposed on the DVL Site” and the DEC investigation that

he supervised “did not suggest [Niagara] was a responsible party, nor did it uncover any

debris that was later linked to [Niagara].” Id. at 600. In the absence of less speculative

direct or circumstantial evidence linking Niagara to the DVL Site, or admissible expert

testimony explaining why the Aroclor 1260 at the DVL Site was likely put there by

Niagara, DVL’s evidence that Niagara arranged to dispose of Aroclor 1260 at the DVL

Site is insufficient to create an issue of material fact for summary judgment. See

Anderson, 477 U.S. at 249-50 (noting that “summary judgment may be granted” where a

party’s evidence “is merely colorable”).

       B. State Law Claims

       DVL argues that the district court erred in holding its state law indemnification

claim preempted insofar as DVL sought the same damages covered by its CERCLA

claim. However, the district court also held that the indemnification claim failed as a

                                             11
matter of law because DVL was “unable to establish Defendant’s culpability.” DVL, 811

F. Supp. 2d at 596. DVL has not appealed that holding, which is dispositive of its

indemnification claim, and in any event any such appeal would be futile given our

discussion of DVL’s CERCLA claim. We therefore need not – and do not – address

DVL’s preemption arguments.

       DVL also appeals the district court’s dismissal of its trespass and nuisance claims,

arguing that the court erred by determining that those claims were time-barred. However,

as with the indemnification claim, the district court held that the trespass and nuisance

“claims fail as a matter of law because, as explained, DVL cannot establish the culpability

of any Defendant for contaminating the DVL Site.” Id. at 600. DVL has not challenged

that holding, or otherwise explained why the district court’s analysis of DVL’s CERCLA

claims is not dispositive of its trespass and nuisance claims. We therefore affirm the

district court’s dismissal of these claims, and do not reach DVL’s statute of limitations

arguments.

III. Conclusion

       We have considered all of the plaintiff’s arguments in light of all of the evidence

in the record and find them to be without merit. Accordingly, we AFFIRM the judgment

of the district court.

                                           FOR THE COURT:
                                           Catherine O’Hagan Wolfe, Clerk




                                             12
