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AMA Realty LLC v. 9440 Fairview Avenue LLC

United States District Court, D. New Jersey

December 28, 2017

AMA REALTY LLC, Plaintiff,
v.
9440 FAIRVIEW AVENUE LLC, et al, Defendants.

         Not for Publication

          OPINION

          John Michael Vazquez, U.S.D.J.

         This case comes before the Court on four separate motions for summary judgment: two by all Defendants except for Tilcon New York Inc. ("Tilcon")[1]; one by Joseph M. Sanzari Inc., Timothy Murray, North Bergen Asphalt LLC, and Joseph M. Sanzari (the "Sanzari Defendants"); and one by Plaintiff AMA Realty LLC ("AMA"). The underlying dispute is over alleged illegal dumping of hazardous materials in violation of both a lease and the relevant government regulations. Plaintiff alleges that Defendants' activities caused substantial damages to Plaintiffs property that will need costly remediation and may result in liability from government regulators. For the reasons set forth below, Defendants' motion as to Counts One and Two is GRANTED; the Sanzari Defendants' motion as to Count Three is GRANTED; Defendants' motion as to Counts Four, Five, Seven and Nine is GRANTED in part and DENIED in part; and Plaintiffs motion is DENIED.

         I. Factual Background

         The relevant facts are taken from the First Amended Complaint ("FAC"), the parties' respective statements of material fact, [2] and the documents annexed to their submissions. Plaintiff owns a parcel of land and a commercial structure located at 9501 Fairview Avenue in North Bergen, New Jersey (the "Property"), which is subject to a lease signed by Michael Aita for AMA and Joseph M. Sanzari. See Ex. 1 to the Certification of Bruce L. Goldstein, Esq. in Support of Plaintiff s Motion for Partial Summary Judgment (hereinafter "Goldstein Cert."). Aita is the president of AMA. FAC, D.E. 31 at ¶1. The parties agree that AMA is a party to the lease but dispute who is the other party. The lease term ran from July 1, 2007 to June 30, 2017. Id. at ¶¶1-2. The lease also contained an option to purchase after 10 years. Defendants' SOMF Count II at ¶6; FAC at ¶1, 26, 28. Plaintiff alleges that the lease was signed with the understanding that the property would be used for "construction equipment storage." FAC at ¶30.

         As noted, the parties dispute whether the lease is truly between AMA and Defendant 9440 Fairview Avenue LLC ("Fairview") or between AMA and Sanzari personally. See Defendants' SOMF Counts I and II at ¶2, Plaintiffs SOMF Counts I and II at ¶2. When Sanzari signed the lease, Fairview had not yet been formed but it was created before the effective date on the lease. See Ex. EE to the Certification of Timothy Corriston, D.E. 181-5 (hereinafter "Corriston Cert."); Ex. 1 to Goldstein Cert. Sanzari was president and majority stockholder in Fairview. Sanzari Defendants' SOMF Count III at ¶21. The title of the lease reads "Agreement of Lease between AMA Realty, a New Jersey Partnership ... and Joseph M. Sanzari, Tenant, " while the first paragraph names AMA Realty and 9440 Fairview Avenue Properties as the parties to the lease. See Ex. 1 to Goldstein Cert.

         Before August 2011, Defendant North Bergen Recycling LLC ("NBR"), which recycled asphalt and concrete, was located on a parcel adjacent to the AMA-owned land. Defendants' SOMF Counts I and II at ¶8. Trucks delivered asphalt and concrete to NBR, who would then process the material and ship it to a recycling plant. Defendants' SOMF Counts I and II at ¶34. Defendant Timothy Murphy managed and directed NBR, although Plaintiff contends that Sanzari was a principal of NBR. Plaintiffs SOMF Counts I and II at ¶8. Murphy is Sanzari's son-in-law. FAC at ¶32.

         In order to recycle the asphalt and concrete, NBR applied for a Class B permit from the New Jersey Department of Environmental Protection ("NJDEP") in 1991. FAC at ¶33. NBR was granted the permit in 1993, and it was renewed in 1999, 2004, and 2009. Id. at ¶¶ 35-36. Defendants claim that NBR received the permit in 1991. Defendants' SOMF Counts I and II at ¶35 (stating that a temporary permit was granted in 1991 and a final permit was issued in 1994). Plaintiffs alleges that the NJDEP initially "withheld" the permit in 1991 because NBR failed to disclose "the amount of residual waste expected from the recycling process." FAC at ¶34.

         As referenced, this case centers on the allegedly illegal dumping of hazardous materials, and related actions by certain Defendants, on the Property. Plaintiff claims that during the lease term, NBR wrongfully deposited the byproducts of their recycling operations on the Property. Plaintiffs SOMF Counts I and II at ¶17, FAC at ¶5-7. Plaintiff further alleges that NBR "engaged in filling in protected wetlands in an unauthorized expansion" of the Property, and "dumped contaminated and or hazardous materials directly into" adjacent creeks. FAC at ¶¶6-7. Plaintiff adds that Defendants expanded their operations on the Property without NJDEP approval and concealed residual waste from NJDEP. Id. at ¶¶5, 6, 41, 44. By dumping residual waste, recycled asphalt millings, and concrete aggregate on the Property, Plaintiff alleges Defendants changed the grade of the Property, forming a "slope now directed toward the building, " which in turn causes flooding. FAC at ¶11. Plaintiff states that before the dumping, the grade of the property ran away from the building on the Property. Id. at ¶51. Due to the change in the grade, Plaintiff asserts that the building now floods and that certain Defendants also improperly installed storm drains. Id. As a result of the foregoing actions, Plaintiff alleges that Defendants violated the terms of the lease and engaged in a scheme to defraud both Plaintiff and the NJDEP.

         Defendants vacated the Property on December 15, 2011, several years before the June 30, 2017 termination date. FAC at ¶12. In August 2011, NBR sold its recycling business to Defendant Tilcon, which continues to operate on the adjoining land. FAC at ¶40. Plaintiff alleges that Tilcon "permitted and continues to permit contaminated groundwater to flow" onto the Property. Id. at ¶14.

         Other facts pertinent to the specific claims are discussed in more detail below.

         II. Procedural History

         Plaintiff filed its initial Complaint on January 23, 2013. D.E. 1. It filed the FAC on September 9, 2013. D.E. 31. The FAC sets forth the following counts against all Defendants except Tilcon: Count One - violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), Count Two - RICO conspiracy, Count Three - breach of contract, Count Four - negligence, Count Five - unjust enrichment, Count Six - violations of the Clean Water Act ("CWA"), Count Seven - fraud, and Count Nine - punitive damages. Id., Count Eight is a claim for private nuisance against Tilcon. Defendants filed a motion to dismiss the FAC on September 18, 2013. D.E. 33. Tilcon filed a motion to dismiss shortly thereafter. D.E. 38. Judge McNulty denied both motions, finding that Plaintiff had set forth plausible allegations, on May 2, 2014. D.E. 52, 53.[3]

         On May 30, 2014, Plaintiff filed a motion for a permanent injunction to enjoin Defendants from entering Plaintiffs property, which was denied by Judge McNulty on August 14, 2014. D.E. 56, 78. In their amended Answer, Defendants filed a third-party complaint against Perfect Body & Fenders Co., Inc. ("PBF") for contribution and indemnification, and counterclaims against Plaintiff for breach of contract, breach of the duty of good faith and fair dealing, and unjust enrichment. D.E. 64.[4] PBF had entered into a sublease with Fairview for a portion of the building on the Property.

         Defendants filed the instant motions on December 23, 2016. D.E. 180, 181, [5]182. Plaintiff filed its opposition on February 3, 2017, D.E. 189, 190, 194, and Defendants replied on April 13 and 17, 2017. D.E. 211, 213, 214. Plaintiff also filed a motion for summary judgment as to the issue of Sanzari's personal liability on the lease on December 23, 2016. D.E. 184. Defendants opposed Plaintiffs motion, D.E. 187, to which Plaintiff replied on February 17, 2017. D.E. 199.

         III. Legal Standard

         a. Summary Judgment

          Summary judgment is proper where the moving party "shows that there is no genuine dispute as to any material fact, " and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Abraham v. Raso, 183 F.3d 279, 287 (3d Cir. 1999). A fact in dispute is material when it "might affect the outcome of the suit under the governing law" and is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary judgment. Id. "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the nonmoving party's evidence 'is to be believed and all justifiable inferences are to be drawn in his favor.'" Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255)). A court's role in deciding a motion for summary judgment is not to evaluate the evidence and decide the truth of the matter but rather "to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.

         A party moving for summary judgment has the initial burden of showing the basis for its motion and must demonstrate that there is an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). After the moving party adequately supports its motion, the burden shifts to the nonmoving party to "go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Id. at 324 (internal quotation marks omitted). To withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict the moving party. Anderson, 477 U.S. at 250. "[I]f the non-movant's evidence is merely 'colorable' or is 'not significantly probative, ' the court may grant summary judgment." Messa v. Omaha Prop. & Cas. Ins. Co., 122 F.Supp.2d 523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).

         Ultimately, there is "no genuine issue as to any material fact" if a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex Corp., 477 U.S. at 322. "If reasonable minds could differ as to the import of the evidence, " however, summary judgment is not appropriate. See Anderson, 477 U.S. at 250-51.[6]

         IV. Analysis

         a. RICO Claims - Counts One and Two

         RICO, 18U.S.C. § 1961 et seq., states that "[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c). Racketeering activity is defined in § 1961(1)(B) as "any act which is indictable under" a number of listed federal laws, including mail fraud; these federal offenses are called "predicate acts." See 18 U.S.C. § 1341; 18 U.S.C. § 1962(1)(B). To claim a violation of § 1962(c), a plaintiff must show "(1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity." Sedima, S.P.L.R. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985). A "pattern" of racketeering activities requires two acts of racketeering within a ten-year period. 18 U.S.C. § 1961(5). To prove civil liability under RICO, a plaintiff must prove injury to "his business or property." 18 U.S.C. § 1965(c).

         Plaintiff here alleges the predicate act of mail fraud, 18 U.S.C. § 1341. The mail and wire fraud statutes "prohibit the use of the mail or interstate wires for purposes of carrying out any scheme or artifice to defraud." Kolar v. Preferred Real Estate Investments, Inc.,361 Fed.Appx. 354, 362 (3d Cir. 2010). The scheme "need not be fraudulent on its face, but [it] must involve some sort of fraudulent misrepresentation or omission reasonably calculated to deceive persons of ordinary prudence and comprehension." Id. (citations omitted). "Just as the mailings are an element of the federal offense of mail fraud, so too is the scheme or artifice to defraud." Tabas v. Tabas,47 F.3d 1280, 1294 (3d Cir. 1995), see also Gagliardi v. Ward, 967 ...


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