A federal judge has cleared the way for a deal by White Plains Hospital to buy a contaminated gas station property on East Post Road.
The proposed sale has been stalled by the White Plains Housing Authority over concerns that a toxic groundwater plume is migrating toward the nearby Winbrook Apartments.
In 2017, the housing authority sued BP oil company in federal court to clean up the contamination before it jeopardized plans to replace Winbrook with the $350 million Brookfield Commons.
In 2020, Marianina Oil Corp., the owner of the 0.26 acre property, filed for Chapter 11 bankruptcy protection, automatically stopping the federal court action.
Now the sale can proceed “on the condition that White Plains Hospital is prepared to step into the shoes of Marianina in all aspects of this matter,” U.S. District Judge Nelson S. Román stated in an July 25 order.
He said that means that the hospital would assume all existing liabilities and rights that Marianina holds and the housing authority would retain its rights in the ongoing federal lawsuit.
The site of the former BP gas station is 34 East Post Road, across the street from the emergency entrance of White Plains Hospital and adjacent to the Winbrook Apartments and the partially built Brookfield Commons.
After Marianina owner Frank Codella bought the property in 1986, contaminated soil and water were discovered. But despite at least two cleanups in the 1980s and 1990s, according to court records, substantial contamination was left behind.
Marianina leased the gas station to other operators for several years and then around 2017 the gas station closed.
The housing authority originally sued BP Products North America. A toxic groundwater plume was migrating toward Winbrook Building 33, the housing authority claimed, and in less than seven years it could reach the building and threaten the health of 350 residents.
The housing authority dropped BP from the lawsuit and named Marianina as the defendant. Then Marianina filed for chapter 11 bankruptcy, declaring $1.6 million in assets and $14.2 million in liabilities.
Codella, the owner, died last year at age 67.
This past March, Marianina agreed to sell the site for $1.6 million to White Plains Hospital, to build a garage. The cost of remediating contamination was estimated at $1.3 million, and the deal required $1.25 million of the purchase price to be put in escrow to be used for the cleanup.
Bankruptcy judge Robert Drain approved the deal in May, according to court records, but the housing authority was still concerned that the hospital might try to re-litigate issues that had already been resolved.
“The source of the difficulties in settling this matter,” housing authority attorney Norman W. Bernstein stated in a July 12 letter to Judge Román, “appear to be Marianina’s and the hospital’s desire to minimize costs of cleanup versus the (authority’s) fiduciary duty to protect its community and ensure its property can be redeveloped for residential, not commercial, purposes.”
The federal and bankruptcy court judges ordered White Plains Hospital and Marianina to negotiate a rider to the sale agreement, binding the hospital to their prior rulings and all remediation obligations.
The housing authority’s opposition to the deal, hospital attorney Lee J. Lefkowitz stated in a July 13 letter, “is inexplicably standing in the way of cleaning this spill rather than aiding in it.”
Judge Román conditioned the sale on the terms outlined in the rider. And if the sale is completed, he ordered, White Plains Hospital will become the defendant in the cleanup lawsuit.
