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J.R. Vinagro Corp. v. 96-108 Pine Street LLC

Superior Court of Rhode Island

February 16, 2018

J.R. VINAGRO CORPORATION
v.
96-108 PINE STREET LLC CLEAN HARBORS ENVIRONMENTAL SERVICES, INC.
v.
96-108 PINE STREET, LLC
v.
J.R. VINAGRO CORPORATION Third Party Defendant CLEAN HARBORS ENVIRONMENTAL SERVICES, INC.
v.
J.R. VINAGRO CORPORATION AND WESTCHESTER FIRE INSURANCE COMPANY

          For Vinagro: Michael A. Kelly, Esq.; Erin A. Hockensmith, Esq.; Jackson C. Parmenter, Esq.

          For 96-108 Pine St: Armando E. Batastini, Esq.; Jeffrey S. Brenner, Esq.

          DECISION

          LICHT, J.

          I

         Introduction

         This matter was tried upon the merits with the Court sitting without a jury for over eleven days from August 7, 2017 through September 19, 2017. The claims remaining for adjudication at trial were:

a. J.R. Vinagro Corporation's (Vinagro) direct claims against 96-108 Pine Street LLC (Pine Street) for breach of contract and unjust enrichment in C.A. No. PM 2012-1719;
b. Pine Street's Amended Third Party Complaint against Vinagro for, inter alia, breach of contract in C.A. No. PM 2012-1322 and C.A. No. PC 2012-2141; and[1]
c. Vinagro's Third Party Counterclaim for breach of contract and unjust enrichment also in C.A. No. PM 2012-1322 and C.A. No. PC 2012-2141.

         Both parties were well prepared, the presentations of witnesses was thorough, and the advocacy was vigorous. Over 200 exhibits consisting of a few thousand pages were submitted. The parties filed post-trial memoranda and reply memoranda. The Court heard arguments of counsel on November 20, 2017. The Court asked for and received from counsel proposed findings of fact and conclusions of law. [2]

         After trial, Vinagro moved pursuant to Super. R. Civ. P. 52(c) for judgment as a matter of law on the liquidated damage claim of Pine Street.

         Pursuant to Super. R. Civ. P. 52(a), the Court makes the following findings of fact and conclusions of law.

         II

         Factual Background

         A

         The Contract

         Pine Street owned the property located at 100 Pine Street, Providence, RI and, through a manager, conducted a parking operation in two distinct areas: 1) a six-level parking garage (the Garage); and 2) a blacktop surface parking lot abutting the Garage (the Parking Lot Area). Pine Street received a notice of violation from the City of Providence concerning the structure of the Garage. To abate the violation, the City required Pine Street to demolish the Garage.

         Sometime in early 2011, Pine Street engaged the firm of Robinson Green Beretta (RGB) to prepare plans and specifications for the demolition of the Garage. Russell Ferland (Mr. Ferland), a professional engineer and career RGB employee, supervised the preparation of the drawings and prepared the specifications for the demolition. While Mr. Ferland met with Anastasia Contos (Ms. Contos), a principal of Pine Street, most of his interaction on the project was with Pine Street's attorneys, Joseph DiStefano (Mr. DiStefano) and Robert Stolzman (Mr. Stolzman) of Adler Pollock and Sheehan (APS).

         Previously and not in connection with the demolition project, Pare Engineering Corporation (Pare) prepared a Phase I Investigation Report for Site Evaluation Relative to Hazardous Waste and Materials at the Pine Street Garage dated November 18, 1998 (the Phase I Report). (Pl.'s Ex. 105A.) The Phase I Report was addressed to Mr. DiStefano and was within APS' files. Pare had also prepared an ASTM Phase I Environmental Site Assessment Update for the Pine Street Garage dated September 2002 (the 2002 Update). (Pl.'s Ex. 105D.) The 2002 Update was also addressed to Mr. DiStefano and was within APS' files (collectively, these reports are referred to as the Pare Reports).

         Neither of the Pare Reports were given to Mr. Ferland or Vinagro prior to the commencement of the demolition contract.

         In his research, Mr. Ferland discovered an old plan of the site, which showed a warehouse building on the portion of the site which constituted the Parking Lot Area. Mr. Ferland testified that he was concerned about what happened to the debris from the demolition of the warehouse. He wanted to know whether it was placed in a hole or it was a clean site. He testified that Mr. DiStefano said it was a clean site. Mr. Ferland made no independent inquiry as to whether Mr. DiStefano was correct. Mr. Ferland toured the Garage and found that there was water in the basement, as well as a sump pump and an oil/water separator.

         Pine Street solicited bids for the demolition of the Garage based on Mr. Ferland's specifications. Vinagro was the contractor that Pine Street selected. As of July 7, 2011, Pine Street and Vinagro executed a Demolition Contract with the specifications attached for a fixed price of $297, 000 (Pl.'s Ex. 3.) The scope of work for the Demolition Contract was to demolish the Garage, including the basement slab, and to remove the asphalt covering the Parking Lot Area. Also on July 7, 2011, the parties executed Amendment Number 1 to Demolition Contract which provided for filling the vault area abutting the Garage for a price not to exceed $47, 000 and to resurface, at Pine Street's request, portions of Pine Street for a price not to exceed $25, 650. (Pl.'s Ex. 5.) (The Demolition Contract and Amendment Number 1 are referred to throughout as the Contract.)

         Paragraph 2 of the Contract required Vinagro to obtain all permits. Specifically, it stated:

"As promptly as possible following the execution of this Demolition Contract by both parties, Contractor shall apply for, obtain and pay for the Demolition Permit and all other permits and governmental fees, licenses and applications (the "Approvals") necessary for the proper execution and completion of the Work. The Contractor acknowledges that the cost of obtaining such Approvals is included in the Contract Price (as defined herein). Both parties acknowledge that time is of the essence in the obtaining of such approvals."

         Paragraph 11 provided that time was of the essence and provided for liquidated damages of $2000 per day after the Completion Date which was to be eight weeks following the Commencement Date.

         Sub-Sub-Section D of Subsection 3.1 of Section 315000 of the Contract addressed the issue of dewatering and provided as follows:

"Provide, construct, and maintain, at no additional expense to the Owner, all pumps, piping, drains, well points, or any other facility for the control and collection of ground water or surface water. Provide dewatering operations of such a nature so that all excavations, fillings, and backfills are kept, at all times, free from water, so that all demolition is performed in a dry working area, including soil for a minimum distance of 1'-00" below foundations, existing basement slabs, and footings. Repair any damage resulting from the failure of the dewatering operations and any damage resulting from the failure to maintain the area of all structure and work in a suitably dry condition . . . Perform the pumping and dewatering operations in such a manner, that no loss of ground/soils will result from these operations. Take necessary precautions to protect new and existing work from flooding during storms and from other causes. Provide continuous pumping where required to protect the work and/or to maintain satisfactory progress."

         Sub-Sub-Section D of Subsection 1.7 of Section 024116 of the Contract addressed the issue of hazardous waste and provided as follows:

"D. Hazardous Materials: It is not expected that hazardous materials will be encountered in the Work, except possibly for the oil/water separator liquid and sludge.
"1. If materials suspected of containing hazardous materials are encountered, do not disturb; immediately notify Architect and Owner. Hazardous materials will be removed by Owner under a separate contract."

         Paragraph 6(f) of the Contract provided for an Owner's Representative:

"(f) The Owner may designate an Owner's Representative, who shall have the authority to access the Property at any time in his sole discretion to inspect all work and materials, and to stop any Work on the Project when it appears to the Owner's Representative that the requirements of the Contract are not being met. . . . The Owner's Representative shall have the authority to decide questions and make interpretations in regard to issues which arise under the Contract."

         While there was no writing which designated an Owner's Representative, the Vinagro employees who testified at trial stated that most of their communications concerning the Contract and the work being performed were with Mr. DiStefano or Mr. Stolzman.

         Sub-Sub-Section E. 3 of Subsection 3.5. of Section 024116 required Vinagro to "Cap the connection to the sewer from the oil/water separator. All work to conform to the Narragansett Bay Commission requirements."

         B

         Work from August 5 through September 26, 2011

         Work commenced on the demolition of the Garage no later than August 5, 2011. Pine Street engaged Henry Benn (Mr. Benn) to serve as a field observer. In that capacity, Mr. Benn and his associates drafted daily Field Observation Reports (the Benn Reports) detailing the activity on site from the beginning of demolition. Dana Zewinski (Mr. Zewinski), a senior employee at Vinagro who had responsibility for overseeing the Contract, Mr. DiStefano, Mr. Ferland, and Kerry Anderson, the Providence Building Inspector, were sent copies of his reports.

         On September 2, 2011, six feet of water was observed in the basement of the Garage. (Pl.'s Ex. 107.) Vinagro commenced dewatering operations even though it did not have a dewatering discharge permit. As of September 8, 2011, Vinagro was dewatering the project eight hours a day using its own pumps with the effluent being filtered through a filter bag.

         As of September 7, 2011, Vinagro was approximately seventy or eighty percent complete with its base Contract scope of work at the Garage. At that time, the remaining work to be completed by Vinagro included the removal of the remaining slab foundations of the Garage, backfilling the Garage area, the removal of the oil/water separator, and the removal of the asphalt on the Parking Lot Area of the site. Those activities were expected to take approximately two to three weeks to complete.

         On September 8, 2011, as Vinagro's foreman was excavating the foundation slabs in the center of the Garage along the foundation wall that was adjacent to the Parking Lot Area, he encountered petroleum in the groundwater that appeared to be coming from the Parking Lot Area. (Pl.'s Ex. 107, JRV01587.) Mr. Benn viewed the black liquid encountered by Vinagro on September 8, 2011 and testified that it was obviously oil-it looked and smelled like oil. Ms. Tracy Loftus (Ms. Loftus), Vinagro's project manager at the time, observed and smelled the petroleum and contacted Mr. Zewinski and Mr. Stolzman.

         Mr. Zewinski contacted Vinagro's environmental consultant, Marshall Environmental (Marshall). Marshall came to the site on September 8, 2011 and worked with Vinagro to create an earthen berm and used booms, oil socks and absorbent pads to contain the petroleum. Mr. Stolzman also came to the site on September 8, 2011 and directed Ms. Loftus to contact the Department of Environmental Management (DEM). While at the site, Mr. Stolzman recommended that Vinagro contact Clean Harbors because of Clean Harbors' relationship with DEM. Ms. Loftus then contacted DEM. A DEM official came to the site and advised Vinagro to find the source of the petroleum contamination.

         After receiving a phone call from Mr. Benn, Mr. Ferland also went to the site on September 8, 2011 and observed that oil was leaking from an old bulkhead and from below the foundation. Mr. Ferland confirmed that the oil appeared to be moving from the direction of the Parking Lot Area of the site where a building/warehouse had previously been demolished.

         On September 9, 2011, Vinagro drilled three exploratory holes along the foundation wall of the Garage and outside of the earthen berm area to try to determine the source of the oil. However, these exploratory holes did not reveal the source. On September 12, 2011, Ms. Loftus, Mr. Stolzman, and Ms. Kristen Sherman (Ms. Sherman), an environmental attorney at APS, met with Kenneth McDermott (Mr. McDermott), a Senior Project Manager for Clean Harbors, at the site to discuss the petroleum contamination. At that September 12, 2011 meeting, Mr. McDermott smelled oil in the excavation and observed that the oil was coming from the Parking Lot Area.

         On September 13, 2011, Mr. McDermott provided Ms. Loftus with a Clean Harbors' proposal that included those items discussed at their September 12, 2011 meeting, including, but not limited to, performing historic research and test borings to determine the source of the contamination, obtaining a DEM RIPDES dewatering permit, a frac tank to treat the petroleum impacted water "to allow for impacted soil, floor and footing removal, " and the services of an environmental specialist at the site. Ms. Loftus provided a copy of Clean Harbors' September 13, 2011 proposal to Mr. Stolzman when he was at the site. (Pl.'s Ex. 17.) The items included in Clean Harbors' proposal, and the associated costs to address the petroleum impacted water at the site, greatly differed from Vinagro's original work plan-one that included the use of filter bags and silt sacks at a minimal total cost of $2000.

         In addition, in or around September 13, 2011, in order to keep the work moving forward as much as possible, Vinagro began demolishing the foundation wall along Pine Street-the only area within the Garage that Vinagro could continue to perform its work under the Contract as a result of the petroleum encountered.

         By email dated September 15, 2011, Mr. Stolzman advised Ms. Loftus that Mr. DiStefano and he "were looking for any old environmental reports, . . . we did locate an excerpt from a document that indicates there was a boiler room with a tank on the northeast corner [the Parking Lot Area] of the 'warehouse.'" (Pl.'s Ex. 20.) Prior to the receipt of Mr. Stolzman's email, Vinagro had no knowledge that there was a boiler room with an underground storage tank on the Parking Lot Area of the site.

         On September 16, 2011, Mr. Stolzman, after receiving unit costs for extra work, questioned the proposed dewatering charges. (Pl.'s Ex. 23.) Ms. Loftus further explained to Mr. Stolzman by a reply email how the planned dewatering activities were impacted by the petroleum:

"We had basic dewatering for the project: one pump which ran during the course of the day. Because of the oil found, we have to run an additional pump and both are running 24 hrs to keep the water levels as low as possible to keep the material from being contaminated. Also, because we can't backfill the hole as per our work plan, we have to keep the pumps running for longer than expected. . . . [W]e have had to monitor and replace the booms and pads around the sump to absorb the oil . . .
"Once we start to remove contaminated material, we may need to increase the dewatering plan beyond the approved scope to include environmental devices (such as a defrac tank) and a potential permit to DEM." Id.

         In an email dated September 19, 2011, Mr. Stolzman provided Ms. Loftus with Pare Site Plans dated November 1998 from the Phase I Report that Mr. DiStefano found in his office that "indicate the location of the abandoned in place UST adjacent (immediately northeast) to the demolished warehouse boiler room." (Pl.'s Ex. 24.) The Pare Site Plans indicated the presence of a 25, 000 gallon UST abandoned in place, a pipe chase, drums, abandoned boilers, a hot water tank, monitoring wells, and a previously demolished one-story "warehouse concrete block" on the Parking Lot Area of the site. (Pl.'s Ex. 24, JRV00126-00127.) On September 23, 2011, Clean Harbors provided Ms. Loftus with a revised proposal which tasked Clean Harbors with performing the following scopes of work:

a. Determining the source and extent of oil encountered on the site. (Pl.'s Ex. 31.)
b. Determining what governmental agency had jurisdiction over the discharge of the water that needed to be pumped from the site and obtaining the requisite permit for the discharge.
c. Observation and testing of excavated material from the Parking Lot Area of the site to determine the necessary extent of excavation to remediate to residential standards. (Pl.'s Ex. 31.)

         Vinagro began excavating the underground storage tank on September 21, 2011. (Pl.'s Ex. 106, JRV01599; Pl.'s Ex. 30, JRV00142.) Per instructions from DEM, work on site stopped on September 26, 2011 due to the lack of a dewatering discharge permit.

         C

         Obtaining the Dewatering Permit

         After work stopped on September 26, 2011, Vinagro asked Clean Harbors to obtain a dewatering permit. Clean Harbors struggled with determining from what jurisdiction it should obtain the permit. In downtown Providence, the City Department of Public Works (DPW), DEM, and the Narragansett Bay Commission (NBC) have ownership and/or jurisdiction over different pipes.

         Mr. McDermott, the site supervisor for Clean Harbors, believed that DEM had jurisdiction based on his experience with the Route 195 relocation project that involved multiple treatment systems. "Some fell under NBC but the majority of those were under DEM jurisdiction." (Tr. 64:11-12, Aug. 10, 2017.) Consequently, Mr. McDermott focused his efforts on DEM and, in accordance with his September 13 proposal, prepared and then submitted the RIPDES application to DEM on October 18, 2011. Simultaneously, Mr. McDermott was inquiring of DPW if they had jurisdiction over the lines, and, since DPW maps had conflicting information, he was referred to NBC. Eventually, Mr. McDermott approached NBC where he discovered the NBC lines are on a GIS platform. On October 14, 2011, NBC "indicated that there were lines in the streets that terminate at their facility, however[, ] the catch basins were not on their maps." (Pl.'s Ex. 41, JRV00270.) Mr. McDermott asked NBC to double check all lines and on October 20, 2011 NBC reconfirmed ...


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