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Paolino v. JF Realty, LLC

United States Court of Appeals, First Circuit

July 18, 2016

LOUIS PAOLINO; MARIE ISSA, Plaintiffs, Appellants,
JF REALTY, LLC; JOSEPH I. FERREIRA; ROBERT YABROUDY; LKQ ROUTE 16 USED AUTO PARTS, INC., d/b/a/ Advanced Auto Recycling; JOSEPH I. FERREIRA, Trustee of the Joseph I. Ferreira Trust, Defendants, Appellees.


          Ronald L. Bonin, with whom Moretti Perlow & Bonin Law Offices, was on brief, for appellants.

          Robert Clark Corrente, with whom Whelan, Corrente, Kinder & Siket LLP, was on brief, for appellees.

          Before Torruella, Lynch, and Thompson, Circuit Judges.


         This citizen enforcement action under the Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq. ("Clean Water Act" or "CWA"), is the third such suit brought by Plaintiffs-Appellants Louis Paolino and his wife Marie Issa (collectively "Paolino-Issa") against the owner of a neighboring parcel of land and the business operating on it, Defendants-Appellees.[1] It is only the latest in an inventive series of unjustifiable efforts to indict their neighbor's environmental practices. We affirm the district court's judgment for Defendants-Appellees and award of attorneys' fees to the same.

         I. The Facts

         In 1983, Joseph I. Ferreira bought a thirty-nine-acre site (the "Property") in Cumberland, Rhode Island. The Property is currently owned by JF Realty, LLC, ("JF Realty") of which Ferreira is the sole member, and is home to an automobile recycling business: LKQ Route 16 Used Auto Parts, Inc., d/b/a Advanced Auto Recycling ("LKQ"). In December 1985, Paolino bought a six-acre property (the "Paolino-Issa Property") abutting the Property for $40, 000. The two properties were previously part of a larger parcel operated at various points as a pig farm and waste dump.

         In the early 2000s, Paolino sold two half-acre parcels for development. The purchaser subsequently sued Paolino for failing to disclose that the Paolino-Issa Property was contaminated. Paolino then sought a tax abatement in 2003 "because of the contamination found on his property." Paolino was directed to remediate his property, but has not completed that process.

         In March 2005, also as a result of the contamination pervading both properties, the Rhode Island Department of Environmental Management ("RIDEM") issued a Notice of Intent to Enforce ("NIE") to the then-operator of the Property, Advanced Auto Recycling ("Advanced Auto"), requiring it to (1) install controls to prevent stormwater runoff on the Property and (2) apply for a Rhode Island Pollution Discharge Elimination System ("RIPDES") permit for the Property. Ferreira's business manager, Robert Yabroudy, subsequently submitted an application to RIDEM for the permits required by the NIE, naming the operator as Advanced Auto and the owner as the Joseph I. Ferreira Trust ("Ferreira Trust") although it appears[2] that at that point in time the Property was owned by JF Realty and operated by LKQ.[3] RIDEM would go on to issue the RIPDES permit to the Joseph I. Ferreira Trust in July 2007.

         The stormwater management system that was installed on the Property would ultimately consist of two outfall pipes to drain various of the Property's surface areas, with large detention basins underneath to collect water and trap contaminants, set in the headwall facing Curran Road. The pipes drain into an outfall channel that eventually leads to Curran Brook. Construction of the system began in October 2007. During the construction LKQ received a second NIE on April 14, 2008. Defendants contracted a civil engineering firm, Commonwealth Engineers, to bring the Property into compliance and ultimately completed the construction in October 2008.

         RIDEM investigated numerous of Paolino-Issa's repeated complaints and notified them that they found all but one without merit. Paolino-Issa were notified in April 2008 that the discharge point for stormwater had been relocated and was not discharging stormwater onto their property.

         On March 2, 2010, RIDEM issued a Notice of Violation ("NOV") to JF Realty informing them that an inspection on November 20, 2009, showed that pollutants were being discharged from the Property to Curran Brook in violation of the Rhode Island Water Pollution Act and RIDEM Water Quality Regulations. A $2, 500.00 administrative penalty was imposed. RIDEM issued a letter on November 19, 2012, confirming the receipt of a check from JF Realty to pay the penalty and that all issues mentioned in the NOV were resolved, effectively releasing the NOV. Subsequent inspections in April 2014 found no additional violations and resulted in no additional enforcement actions or fines.

         II. Procedural Background

         Paolino-Issa filed the current claim for injunctive relief and civil penalties against JF Realty, Ferreira, Yabroudy, LKQ, Advanced Auto, and Ferreira as trustee of the Ferreira Trust under the citizen suit enforcement provisions of the CWA on January 20, 2012, in the U.S. District Court for the District of Rhode Island, alleging that contaminated stormwater runoff from the Property was being discharged into United States waters, contaminating the Paolino-Issa Property, and that Defendants lacked a valid RIPDES permit. While the claim was originally dismissed on July 26, 2012, due to defective pre-suit notice, this court reversed the dismissal and remanded except as to claims against Ferreira's business manager, Yabroudy. Paolino v. JF Realty, LLC, 710 F.3d 31, 36, 40-42 (1st Cir. 2013). The deadline for Plaintiffs to submit expert disclosures was February 28, 2014. Although Plaintiffs provided disclosures for two expert witnesses on that date, Alvin Snyder and Dr. Robert Roseen, the latter's report was just thirty-two pages, some of which were stamped "DRAFT." Paolino-Issa subsequently submitted a request to supplement Roseen's report on June 13, 2014, which was, noted the district court, "more than three months after the Plaintiffs' expert disclosures were due, two weeks after expert discovery had closed, and after the Defendants had filed their motion for summary judgment, based, in part, on the information disclosed in Dr. Roseen's expert report." The second report was seventy pages. Despite a May deposition, neither Dr. Roseen nor Paolino-Issa had indicated any intention to revise or supplement the February report. The parties proceeded to trial, which took place over seven days in August and September 2014, at which the district court permitted Roseen to testify only to the content of the initial report. The district court issued a memorandum of decision on November 19, 2014, concluding that Plaintiffs failed to meet their burden of proof.

         On December 3, 2014, Defendants filed a motion for attorney's fees claiming: (1) that Plaintiffs went to trial without credible evidence; (2) Paolino conceded that RIDEM had investigated the Property and found his complaints lacked merit; and (3) neither RIDEM nor the EPA chose to intervene. Plaintiffs filed an objection to this motion, arguing that their action was not frivolous or unreasonable, that the lack of action by administrative agencies is not definitive, and that Defendants were seeking fees related to prior suits. On March 26, 2015, the district court ordered that the Plaintiffs pay $111, 784.50, the total amount of fees charged by Defendants' counsel from ...

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