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People v. Kinder Morgan Energy Partners

February 29, 2008


The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge


On September 26, 2007 Defendants Kinder Morgan Energy Partners, L.P., et. al. ("Defendants") removed this action from San Diego Superior Court to the Southern District of California. (Doc. No. 1 (Notice of Removal).) Plaintiffs People of the State of California ("People") and The City of San Diego ("The City") allege nuisance, trespass, negligence, business code, and health and safety violations and seek declaratory relief. (Id. Ex. 1 [hereinafter Compl.].) Pending before the Court are Defendants' motions to dismiss the complaint and to strike Plaintiffs' prayer for attorneys' fees and punitive damages. (Doc. Nos. 6, 10.) The Court hears the matters on the papers submitted and without oral argument. See S.D. Cal. Civ. R. 7.1(d.1). For the following reasons, the Court GRANTS-IN-PART and DENIES-IN-PART Defendants' motion to dismiss, and GRANTS-IN-PART and DENIES-IN-PART Defendants' motion to strike.


Plaintiffs are the People of the State of California ("The People") and The City of San Diego ("The City"). (Compl. ¶ 10.) The People have a primary interest in the conservation, control, and utilization of California's water sources. (Id. ¶ 44.) The City owns 166 acres of land surrounding and underlying Qualcomm Stadium. (Id. ¶ 26.) The City also enjoys "Pueblo water rights" to the groundwater under the land, which are the highest priority water rights in California. (Id. ¶ 45.) The City alleges that it is planning to develop this groundwater as a future source of drinking water. (Id.)

Defendants are a related group of business entities who own land immediately adjacent to the City's Qualcomm Stadium property. (Id. ¶ 27.) Thereon, Defendants operate the Mission Valley Terminal ("MVT"), an industrial facility engaged in the large-scale business of transporting, storing, and distributing petroleum products. (Id.)

Plaintiffs allege that Defendants, commencing at some distant time prior to 1992, have engaged in, and are continuing to engage in, various acts or omissions at the MVT site which have polluted and contaminated the City's property and groundwater. (Id. ¶¶ 32, 33--45.) By 1992, Plaintiffs allege that 300,000 gallons of liquid petroleum had migrated from the MVT site and contaminated the land and groundwater underneath Qualcomm Stadium. (Id. ¶ 36.) Plaintiffs contend that as many as 100,000 gallons remain on the land and in the groundwater today. (Id.)

In 1992, the California Regional Water Quality Control Board, San Diego Region ("Regional Board") issued Defendants a "Cleanup and Abatement Order" ("Order") as a result of petroleum contamination at the MVT site. (Id. ¶¶ 33--34.) The Order included a final cleanup date of January 1, 1996 and instructed Defendants to conduct a site assessment to determine whether contamination had migrated off-site. (Id. ¶ 35.) After concluding that contamination had indeed migrated from the MVT, Defendants and the Regional Board updated and revised the Order several times. (Compl. ¶¶ 37--41.) Plaintiffs allege that Defendants have dragged their feet in complying with the Order's deadlines, and that the Regional Board has been too free in granting generous time and condition extensions to remedy the off-site contamination. (Id.)

Presently, the Regional Board's Order establishes an off-site (e.g. Qualcomm Stadium) cleanup deadline of December 31, 2010 for certain chemicals and December 31, 2013 for others. (Id. ¶ 41.) Plaintiffs believe that Defendants are not fulfilling their obligations and will not meet either of the deadlines, especially in light of some newly discovered contamination. (Id. ¶¶ 42--43.)

On August 14, 2007 Plaintiffs commenced this action in San Diego Superior Court alleging nuisance, trespass, negligence, business code, and health and safety violations and seeking declaratory relief. (See generally Compl.) On September 26, 2007 Defendants properly removed the action to this Court. (Doc. No. 1.) On October 3, 2007 Defendants moved to dismiss Plaintiffs' Complaint for failure to state a claim. (Doc. No. 6.) The same day, Defendants also moved to strike Plaintiffs' prayer for attorneys' fees and punitive damages.*fn1 (Doc. No. 10.) On November 19, 2007 Plaintiffs opposed both motions. (Doc. No. 20, 21.) On November 26, 2007 Defendants filed a combined reply. The Court's Order shall resolve both pending motions.


A. Defendants' Motion to Dismiss Under Rule 12(b)(6)

The Court must dismiss a cause of action if the cause of action fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See North Star Int'l. v. Arizona Corp. Comm'n., 720 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, "even if doubtful in fact," are assumed to be true. Id. The court must assume the truth of all factual allegations and must "construe them in the light most favorable to the nonmoving party." Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also Walleri v. Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996).

As the Supreme Court recently explained, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007). Instead, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id. at 1964--65. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

Generally, the court may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, the court may consider any documents specifically identified in the complaint whose authenticity is not questioned by the parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995). Moreover, the court may consider the full text of those documents, even when the complaint quotes only selected portions. Id. The court may also consider material properly subject to judicial notice without converting the motion into a motion for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986) abrogated on other grounds by Astoria Federal Savings and Loan Ass'n v. Solimino, 501 U.S. 104 (1991)). For these reasons, and because Plaintiffs also rely on certain documents Defendants request to be judicially noticed, the Court GRANTS Defendants' request for judicial notice in support of their motions to dismiss and to strike. (Doc. No. 9.)

B. Defendants' Motion to Strike Under Rule 12(f)

Rule 12(f) provides that a federal court may strike from the pleadings any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. Fed. R. Civ. P. 12(f). The function of a motion to strike is to avoid the unnecessary expenditures that arise throughout litigation by dispensing of any spurious issues prior to trial. Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983); Chong v. State Farm Mut. Auto. Ins. Co., 428 F. Supp. 2d 1136, 1139 (S.D. Cal. 2006). Rule 12(f) motions "are generally regarded with disfavor because of the limited importance of pleading in federal practice, and because they are often used as a delaying tactic." Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1152 (C.D. Cal. 2003). Thus, courts generally grant a motion to strike only where "it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation." LeDuc v. Kentucky Cent. Life Ins. Co., 814 F. Supp. 820, 830 (N.D. Cal. 1992).


A. Plaintiffs' Claims Are Not Barred By Any Failure to Exhaust Administrative Remedies

Defendants' first argument broadly asserts that all of Plaintiffs' claims are barred because Plaintiffs have not yet exhausted their administrative remedies. (Defs.' Mot. to Dismiss 3--14.) In reaching this conclusion, Defendants' reasoning proceeds as follows: because (A) the City has prior experience working with the Regional Board in developing a MVT clean-up plan, and (B) the City's Complaint contains several allegations attacking and second-guessing the Regional Board's Order(s), therefore (C)

"[t]he City's disagreement with the dates set by the Regional Board is at the heart of this litigation." (Defs.' Mot. to Dismiss 3--5.) Because, Defendants conclude, the City has not first petitioned the State Water Resources Control Board ("State Board") to review the Regional Board's Order, California water law and public policy preclude judicial review of the City's claims. (Id. 5--14.)

Plaintiffs argue that their suit involves much more than simply challenging the Regional Board's dates and deadlines. (Pls.' Opp'n to Mot. to Dismiss 4--5.) Regardless of how long the MVT clean-up is expected to take, Plaintiffs contend that the harm to their own property is substantial, ongoing, and appropriate for judicial remediation. (Id. 5--9.)

The Court agrees with Plaintiffs

California's Regional and State Water Boards are the principal state agencies with primary responsibility for the coordination and control of water quality. Cal. Water Code § 13001 (Deering 2007). Among other things, the Boards' policies and procedures govern the investigation, oversight, and remediation of contaminated water for public use. See, e.g., State Water Resources Control Board Resolution 92-49, Policies and Procedures for Investigation and Cleanup and Abatement of Discharges Under Water Code Section 13304, 1994 WL 1892115 (Cal.St.Wat.Res.Bd. 1992) (amended April 21, 1994 and October 2, 1996). An aggrieved party seeking relief from a Regional Board order must first appeal to the State Board, and judicial review is inappropriate unless and until the party complies with the relevant administrative exhaustion requirements. See Cal. Water Code § 13330.

Notably, however, the Water Boards have neither authority nor jurisdiction to award damages to injured parties, and prior State Board Orders emphasize the distinctions between Water Board proceedings and civil actions. See In the Matter of Order WR 85-06, 1985 WL 20031 at *2 (Cal.St.Wat.Res.Bd. October 17, 1985) (stating that the Boards are not equivalent to courts of general jurisdiction with authority to award damages). Courts have long held that the Water Boards' administrative authority, while extensive, does not displace the court's own substantial jurisdiction to declare nuisances and grant damages to injured property owners. People v. City of Los Angeles, 325 P.2d 639, 642 (Cal. Ct. App. 1958). Indeed, the California Water Code itself has long reinforced the power of cities to declare, prohibit, and abate nuisances. Cal. Water Code § 13002(b). Moreover, neither the Water Code nor the State or Regional Water Boards have the power to limit the right of any person to maintain an appropriate action against a private nuisance or for relief against any contamination or pollution. Cal. Water Code § 13002(e).

It is then clear that when a plaintiff's claims and a Regional Board's order involve the same common events or facts, the Regional Board's right to govern remediation is not inconsistent with a plaintiff's right to prosecute their damage claims. See City of Los Angeles, 325 P.2d at 643 (holding that, despite Regional Board's action, plaintiff cities were able to maintain a nuisance action under California Civil Code section 3479). Simply, the Regional Board does not entertain exclusive jurisdiction to determine whether a nuisance exists and how best to abate it. Id. at 642. The fact that the Regional Board has the power to order a defendant to do something does not deprive a court the power to enjoin the same acts. Id. at 644. It follows that if a court's original jurisdiction is otherwise proper, the question of exhausting administrative remedies and appeals becomes irrelevant. Id. at 645. That is, the existence of an unexhausted administrative process, by itself, does not bar a civil action proceeding on the same common facts.

In this case, Defendants paint Plaintiffs as litigants improperly using this Court to second-guess and override the Regional Board's expert authority on remediating the MVT and off-site contamination. (Defs.' Reply to Opp'n to Mot. to Dismiss 1--2.) Defendants' papers then explore-at great length-the administrative review process, while characterizing Plaintiffs' suit as an "end run" around the requirements to challenge a Regional Water Board order. (Defs.' Mot. to Dismiss 5--14.) However, Defendants spend little time defending their main assumption: that Plaintiffs' only goal is to collaterally attack the Regional Board's "Cleanup and Abatement Order." To the contrary, Plaintiffs press public and private nuisance, trespass, and negligence causes of action-all valid tort claims for recovering property damage.

Defendants' arguments overlook the Court's power, not enjoyed by the Regional Board, to award damages and issue injunctions. Although Plaintiffs' Complaint quibbles about the Board's oft-amended Order and Defendants' lackluster clean-up, Plaintiffs' allegations merely provide context for their civil claims, which are properly before this Court. Cal. Water Code §§ 13002(b), (e); City of Los Angeles, 325 P.2d at 643. Merely voicing displeasure with the pace of abatement does not forfeit Plaintiffs' legal right to recover damages.

Because Plaintiffs' damage claims are not preempted by the simple presence of the Regional Board's Order, whether Plaintiffs first exhausted their administrative remedies is irrelevant. See City of Los Angeles, 325 P.2d at 645 (holding that where jurisdiction is proper, the question of exhaustion is irrelevant). Because a Regional Board abatement order and a civil action for damages can indeed coexist, not exhausting administrative remedies is not fatal to Plaintiffs' Complaint.*fn2 Accordingly, the Court DENIES Defendants' motion to dismiss all of Plaintiffs' claims on administrative exhaustion grounds.

B. The Primary Jurisdiction Doctrine Does Not Bar Plaintiffs' Claims

Defendants next ask the Court to apply the primary jurisdiction doctrine to dismiss or stay all of Plaintiffs' claims. (Defs.' Mot. to Dismiss 14--17.) Because, Defendants contend, the expert Regional Board has primary responsibility for remediating contaminated groundwater, the Court should restrain itself from overseeing a clumsy resolution through adversarial litigation. (Id.)

Plaintiffs, on the other hand, stress the primary jurisdiction doctrine's discretionary application and point out that the Water Boards lack authority to award damages or levy penalties. (Pls.' Opp'n to Mot. to Dismiss 10--12.) Plaintiffs argue that continuing the litigation will not unduly intrude upon the Boards' turf, and that the issues are not so complicated as to be beyond the Court's expertise. (Id. 12--16.)

The Court agrees with Plaintiffs

A court may have discretion to stay proceedings under the primary jurisdiction doctrine when a claim is originally cognizable in the courts, but is also subject to a regulatory scheme that is enforced by an administrative body of special competence. Chabner v. United of Omaha Life Ins., 225 F.3d 1042, 1051 (9th Cir. 2000). In federal and California state courts, no rigid formula exists for applying the primary jurisdiction doctrine. Id. (citing Farmers Ins. Exch. v. Superior Court, 826 P.2d 730, 739 (Cal. 1992)). Rather, whether to apply the doctrine hinges on two underlying policies: (1) whether application will enhance court decision-making and ...

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