The opinion of the court was delivered by: Barry Ted Moskowitz, U.S. District Judge.
ORDER DENYING MOTION FOR SUMMARY JUDGMENT
Defendants Teledyne Industries and Teledyne Holdings, LLC
(collectively, "TDY") filed this motion for summary judgment on August
23, 2001. For the reasons discussed below, TDY's motion is DENIED.
This is an action for recovery of clean up costs under the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. § 9601, et seq. Plaintiffs are Stath Karras, as
Trustee of the Chatham Site PRP Group Trust Fund and Stath Karras, as
Trustee of the Chatham Site PRP Group RAP Trust Fund ("Plaintiffs" or
"Plaintiff trusts"). Plaintiffs initiated suit against various defendants
seeking contribution for costs plaintiffs allegedly incurred while
investigating and cleaning up contamination at the Chatham Brothers
Barrel Yard in Escondido, California.
The material facts are undisputed.*fn1 In late 1991, the California
Department of Toxic Substances Control ("DTSC") issued a demand to
potentially responsible parties ("PRPs") to reimburse DTSC for almost
$8,000,000 in past response costs incurred at the Chatham Site. In 1992,
a group of the PRPs ("PRP Group") entered into an Imminent and
Substantial Endangerment Order ("Consent Order") with DTSC, which
required the PRP Group to perform work on the Site and develop a Remedial
Action Plan ("RAP"). The PRP Group executed the Chatham Site PRP Group
Trust Agreement ("Trust Agreement") on October 27, 1992 to perform the
work outlined in the Consent Order. Following a lawsuit brought by DTSC
on November 18, 1998, the PRP Group entered into a Consent Decree with
DTSC, approved by the Court in 1999, to implement remedies at the Site.
The PRP Group executed the Chatham Site PRP Group RAP Trust Agreement
("RAP Trust Agreement") on December 8, 1998 to perform the work outlined
in the Consent Decree. Grantors of the Trust Agreement and RAP Trust
Agreement are parties to the Consent Order and Consent Decree with DTSC.
The Trust Agreements contain similar language relating to the purpose
of the trust, grantor contributions to the fund, termination of the
fund, and express powers of the trustee. The Grantors have not assigned
their CERCLA claims or obligations to the Trusts. However, the stated
purpose of the RAP Trust Agreement is:
to obtain, hold, invest, and disburse funds, in
trust, for the benefit of the Grantors in such a
manner as to satisfy the obligations of Grantors
pursuant to the RAP Consent Order and RAP Site
Participation Agreement with respect to removal and
remediation of alleged environmental contamination at
the Site and resolution, in part, of the Grantors'
alleged liability for remediation of environmental
contamination at the Site and, further, to enter into
contracts and agreements as directed by the Executive
Committee. To fulfill this purpose, the Trustee shall
thoroughly familiarize himself with the terms of the
RAP Consent Order and the RAP Site Participation
The Grantors are obligated to make payments into the Trust funds pursuant
to the Site Participation Agreement, which sets forth the manner in which
the Grantors will comply with the Consent Order and Consent Decree. The
Trusts are funded by payments from the grantors, escrow accounts and
settling third parties. Upon termination of the Consent Order and Consent
Decree, the Trustee must liquidate the assets of the Fund and distribute
the remaining trust property to the grantors, subject to limitations set
forth in paragraphs 4.4 and 6.11 of the Trust Agreements.
The Trustee has sole power to perform certain functions, such as to
hold, invest and manage the Trust assets, pay administrative costs of the
Trusts, retain the services and pay compensation to an accountant,
attorney or investment advisor. In addition, the Trustee is required by
law to perform his fiduciary obligations pursuant to Cal. Prob. Code
§§ 16000-07, 16045-54. To date, the Trustee has used assets of the
Trusts to pay DTSC for response costs, as well as contractors and
environmental consultants for assessment and removal/remediation of
hazardous substances. (Karras Decl., Exh. 3-8.)
With respect to some of his functions, the Trustee takes direction from
the Executive Committee, which is elected by the PRP Group. For example,
the Executive Committee directs the Trustee to "institute and defend
litigation on behalf of or in the name of the Grantors." Furthermore, the
Executive Committee directs the Trustee to execute contracts and
In an Order dated December 3, 1999, this Court dismissed plaintiffs'
common law claim for equitable indemnity and upheld Plaintiffs' claim for
contribution and declaratory judgment under section 113 of CERCLA,
42 U.S.C. § 9613. The Order also clarified that plaintiffs cannot
maintain an independent CERCLA section 107 claim for cost recovery
because section 107 claims are limited to innocent parties, stating
that, here, plaintiffs are "undeniably PRPs." The Order did not dismiss
plaintiffs section 107 claims even though plaintiffs were found to be
PRPs, not innocent parties, since a CERCLA section 113 claim for
equitable contribution is grounded on the imposition of liability
identified in section 107(a).
TDY argues that it is entitled to summary judgment because plaintiffs
have not incurred response costs as required by CERCLA sections 107 and
113, are not the real parties in interest pursuant to Fed.R.Civ.P. 17
(a), and lack standing.
A. Cost recovery actions under CERCLA
(A) all costs of removal or remedial action incurred
by the United States Government or a State or an
Indian tribe not inconsistent with the national
(B) any other necessary costs of response incurred by
any other person consistent with the ...