ML20062M252

Decision 531,reversing & Remanding for Trial Us District Court,Western District of Ny Decision Ordering NFS to Vacate Facility.Issue of Parties' Intent Re Transfer of Possession on Termination of Lease to Be Tried

ML20062M252
Person / Time
Site:	West Valley Demonstration Project
Issue date:	12/08/1981
From:	Lumbard U.S. COURT OF APPEALS, 2ND CIRCUIT
To:
Shared Package
ML20062M234	List: ML20062M231 ML20062M252
References
81-7736, NUDOCS 8112170124
Download: ML20062M252 (10)

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. No. 531 August Tarmg,98g g pg 39 Decided: Decestber "i - Argued: Novesaber 20, 1981

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.M::e'.E~ NEW YORK, STATE ENERGY RESEARC5 AND g'. .. l. ,

1RVELOPMENT AUTHC$2TY, j& gg B $61 -

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• Defendants-Appellants. ,, ,,

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Befores J,UMBARD and NEWMAN, Circuit Judges, and -

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• ' Defendants appeal from partial sununary judgment

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@II.N w ie entsred in the western District of New York, Elfvin, h, ordering

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4,,Y 4 defendants to vacate's leasthold. Reversed and remanded for ,

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[,,,. trial of the issue of the parties' intent.concerning transfer of

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possession upon ternination of the lease.

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CLARENCE T. KIPPS, JR. , ESQ. , Washington ,

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D.C. (Miller & Chevalier, Chartered, g

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' Washington, D.C. , Alan C. Brown Esq. 3

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Nixon Hargrave Devans & Doyle, Rochestez ,

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- counsel), for Defendant-Appellant Nucicar ruel Services, Inc.

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WILLIAM I. SCHAPIRO, ESQ. , Buf falo, 4 ",bpa .. ,:..y N.Y. (Jaeckle,.Fleineh= ann & Mugel.

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g Buffalo, N.Y., Henry W. Killeen, III, Esq., of counsel), for Dofendant-a W ae- -

Rppellant Getty 011 Cennpany.

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• Eonorable Robert C. Saapano, United States District Court .?

for the District of Connecticut, sitting by designation.

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.7_ PHILIP H. GIYLEN. ESC. , Albany , N.Y.

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(Whitem.2n Osterman & Ranna, Albany, u.Y. ,

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John J. cangilos, Esq., of counsel), for 8

Plaintiff-Appellee New York State l 3 Energy Research and Development Authority.

4 . CARMINE J. CLEMENTE, General Counsel, Albany, N.Y. (New York State Energy

• Research and Development Authority, Albany, N.Y., Howard A. Jack, Deputy General

, Counsel, of counsel), for Plaintiff-Appellce New York State Energy Research

, and Development Authority.

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I t LUMsARD, circuit Judqui a

Since 1963, Nuclear Fuel Services, Inc. DIFSI has 1,een a the tenant of a 3,354 acre tract of land (the center), owned by 4 the New York State Energy Research and Development Authority a (Authority), in West Valley, thirty alles south of Buffalo.

s . On October 20, 1981,- the Western District of New York granted 1 partial summary judgeant to the Authority, and ordered NFS forth-a with to vacate 158.8 acres of the leased land to the United States s Department of Energy (DOE) . Pending decision of NFS's appeal, we

1. have stayed the judgment which is before us by reason of the n district court's Rule 54 (b) declaration that this partial sususary 2/

8 judgment is finaf. We disagree with the district court's finding l 8 that there are no material issues of fact rel'ating to the M Authority's right under the lease to transfer the Center to DOE

" and we reverse and remand for trial of those issues.

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" The rights and obligations of the parties here are governed by a Lease and a Waste Storage Agreement,

" which were executed concurrently on May 15, 1963 (together

" referred to as the ' Agreements")

• Under the Agreeennts, the

" provisions of which total 199 pages, NFS was to construct and

" operate for the Authority facilities fox receiving spent

" nuclear fuel, for storing liquid high level radioactive wastes, s and for burying solid low level radioactive wastes. In addition.-

sa for its own account, NFS was to construct a plant for reprocessing as spent nuclear fuel elements. The Lease was to terminate on

. - .. g, December 31, 1980, unless renewed. It appears that, for some a yetars prior to December,1980, the parties have been in disagree-

.v s mont about numerous mattcrs and their resulting obligations, a

the details of which are irrelevant to this decision. Suffice it m

to say, NFS wishes to terminate its possession, and all m

, responsibilities thereafter, but it insists that the Agreements m .

require lho Authority .to accept its surrender of possession and

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. roeponsibility. on th) cthat htnd, the Authtrity insists thst s

it has ti.e right to compel' NFS to deliver possession of a f a

a Particular portion of the Center, including the high level liquid

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waste and reprocessing facilities, to DOE without any-e E acceptance of NFS's surrender.

• On December 24, 1980, NFS sued the Authority in the District Court for the Northern District of New York for enforce-

" ment of its right to have the Authority accept its surrender of a

possession. Six days later, on December 30, the Authority sued

" .NFS in. the Cattaraugus County Supreme Court to enjoin NFS from

" abandoning the low level storage facilities at the Center and R On

.tirecting it to continue to maintain those facilities. -

m that same day, the state court issued a temporary restraining M order granting the Authority the relief sought. NFS promptly as removed the state action to the westein District on January *1, 38 1981, on the gro'sd of diversity jurisdiction. Sometime there-n af ter NFS's Northern District suit was transferred 4/ to the Western

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'the Authority's claim, as set out in a lengthy amended complaint . listing 32 causes of action, seeks damages x .'

and specific performance to require NFS.to remain at the Center as and perform its alleged obligations under the Agreement.

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on Septamber 30, 1981, the Authority shifted ground and moved a

for partial summary judgment to require HTS to vacate a portion as 5/

of the center to doe.'" The district court granted the mocloa, as

- holding that the Authority had the right under the New York law sr of property to repossess the Center upon the termination of" 35 the Lease on Deccaber 31, 1980, and that no reasonable later-

.. m pretation of the Agreements supported NFS's claim that the

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Authority was required to accept NFS's surrender of possession.

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We disagree, d Provision is made for transfer of possession 6

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- . . . . . . . i s ~ of the Center in ' Articles 26 and 27 of the Lease. Article 26

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s Lessee, upon any expiration or earlier termina-

, tion or cancellation of this Lease, will peaceably vacate, yield up and surrender to the a Authority the Leased Premises, the Leased Fscilities, and Lessee's Improvements.,...

Article 27 states that no surrender shall be valid or 'ef tective unless required by the provisions of the Lease or ag to and accepted by the Authority in writing. The parties provided for transfer of responsibility for the radioactive wastes stored st a

the Center in the Waste Storage Agreement, section 3.04, which

.'s states that:

Es upon any cancellation or termination of the 14ase, a and in any event at the end of the Jnitial teras...

, NFS will Aurrender, and the Authority will assume, w full responsibility for perpetual operation, surveillance, maintenance, replacement and insurance of the the'n existing Eigh Level Storage Facilities....

as The district court reasoned that as the Authority had as a the right to receive physical possession from NFS upon t==4a=-

a tion of the Lease,. and that as there was no reason to believe m that the Authority's right to receive possession could not be an exercised by directing that it be passed to another entity, the a Autnority had the right to require NFS to give possessica of the a 158.8 acres of the Center to DOE. Judge Elfvin wrote:

an Except for the bare language of these ,

~ provisions, defendants have indicated as nothing in either the words or underlying -

.,. '8 intention of the parties' agreements which invites the conclusion that this possessory 85

. ight of NYSEP.DA cannot be exercised by directing that possession be passed to another entity otherwise legally authorized to

1. physically possess the Center, such as the DOE.

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, The standard for summary judgment is that there be no material issue of fact and that the novant be entitled to judgment  ;

as a matter of law. .The matarial issue of fact alleged here is l

, the intent of the parties concerning transfer of the Center upon G O 4

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- - a- - . . _. J 3 termination of the Lease. NFS asserts that the intent of the parties was that possession of and responsibility for the Center s

and the radioactive wastes stored there would remain united, and I a that upon termination, the Authority would accept NTS's surrender .

s and assume respon.sibility for the perpetual care of the wastes.W s on this motion for summary 'udgment, the burden lay with the 2 7 novant Authority to show that this was not a reasonable inter-a pretation of the Agreensats and that the Agreements unambiguously l 8 entitled the Authcrity to transfer possession to DOE. g as nevakn v. Coenerce and Industry Insurance Co. , 524 T.~.d 1317 11 - (2d Cir. 1975). If NFS's interpretation of the Ayreements 38 is not unreasonable, then susanary judgment udst be denied. See ,

1. :Mne Insurance Co. v. Casualty & Surety Co. , 528 F.2d 1360 (2d

" cir. 1976). As ve cannot say that NFS's interpretation of the 1 8 parties' intent is unreasonable, we reverse.

The bare words of Articles 26 and 27 of the Lease would

" seem to indicate that the surrender of possersion must be only to

" the Authority, that surrender must be of the whole Center, and

" that the Authority punt accept surrender.. Article 26 says that as NFS "upon any expiration" shall "surrende r to the Authority" the

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" Leased Premises, the Leased Facilitics, and Lestee's Improvements ,'

ar Article 27 says that no surrcr.dcr "shall be valid or effective...

'E unless agreed to and accepted 'in writing by the Authority."

M Tbs Wasta Storago Aefreement para]1els th6se provisions, providing as that upon expiration of the Lease, the Authority will accept as NFS's surrender of responsibility for the radioactive wastes at 3r .

. the Center. A reasonable.intepretation of this language, suggest e as NFS, is thac the parties intended to have the party in possession

' as bear the responsibility for maintenance, cperation, and safety.

as NFS urges 4that to turn possession over to DOE as ordeted would

• a leave NFS with contractual responsibility for the operation and i

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a maintenance of the Center while it had no access to the Center Y s Mt the very least, we find there is a serious ambiguity regarding a the surrender of possession. The burden was on the F.uthority to 4 show that it had a clear right to the transfer of possession to E 'a third party, inistead c' itself accepting surrender of and a responsibility for the Center, This burden the Authority has 7 not carried. W'e therefore reverse and remand for a trial of a the issue of the parties' intent regarding transfer of possession 8 of the Center at the termination of the Lease.

8 The record shows the concern of all the parties for the .

E prompt disposal of the large quantity of high level liquid -

28 radioactive wastes and low level solid radioactive wastes which $

8 are stor'ed at the Center. We trust that the Sistrict court will M give preferred early attention to the decision of the issues .

m raised by the parties so that responsibility for the Center and -

" the nuclear wastes thereon may be determined and possession taken 8

" accordingly. The transcerdent need for maximum safety to the

" public in dealing with nuc1 car wastes should move the parties to

" cooperate toward an early resolution of their disputes.

- " Reversed and remanded.

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s 1/ In 1969, Getty 011 Co. acquired all the stock of a

Nuclear Fuel Services, Inc. Cetty was named a codefendant in 4

this action on a theory of derivative liability.

8 2/ We need not decide whether the issue resolved by ,

the partial sumsary judgment is sufficiently independent of other  ;

1 matters raised by the Authority's complaint to be a separite clain,

.s appropriate for Rule 54 (b) certif2 cation, since the district l court's judgment, even if not certifiable as a final judgment, {

m contains an injunction appealable under 28 U.S.C. S 1292(a)(1).

l Is 3/ The Depart nent of Energy has agreed with the l m Authority to solidify the 600,000 gallons of high level M radioactive wastes stored at the West Valley site and transport a the solidified wastes to a permanent disposal site. Work on a the solidification was scheduled to begin on October 1, 1981, but

- D has been delayed by the prcrent dispute between NFS and the as Authority. The Agreement with DOE does not cover the low level

. m waste burial site.

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• 1/ No judgment has yet been rendered in the Suit n

brought by NFS, which is still pending. l m

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1 88 5/ Tho Authority sought to evict 878 from the 154.8 l I

__ t. 8 acres on which the high level liquid wastes and reprocessing

'8 f acilities are located:' the Authority apparently wants NFS to 8 retain possession of and rosponsibility for the low level waste )

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f/ HFS agrecs that if it has defaulted un.ler tho Agreements, and is found not to have left the Center in the conditici promised, then it would be liable to the Auttusritt for damages, not' withstanding the Authority's acceptanco of Hr6's surrender.

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1 2/ even if another provir. ion of tae Letate, i 2 section 31.01, permits the Authority to transf er the center to a i 3 third party, who shall thereaf ter be substituted "witta the same 4 force and effect as the Authority," that provision does not  ;

4 s provide an unambiguous answer to NFS's claim tt.at its possession ,

j e cannot be ended without a concurrent termination of its

' . continuing responsibility other than damages. Nor do the Agree- I s monts unambiguous'y make the issue of NFS's responsibility after 8 termination of the Lease " entirely severable" from its right of as possession, as the district court ruled in granting partial u sussnary judgment. NFS is entiticd to plenary consideration of 8 its claim inat it may not be required to give up possession n- while subject to further litigation concerning any continuing ,

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. f New Ydrk Stato Energy New York State Energy Research v. Nuclear Fuel Services, Inc.

Research v. Nuclear Fuci Services, Inc.

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