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Adobe Lumber Inc. v. Hellman

September 4, 2009

ADOBE LUMBER, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
F. WARREN HELLMAN AND WELLS FARGO BANK, N.A., AS TRUSTEES OF TRUST A CREATED BY THE ESTATE OF MARCO HELLMAN; F. WARREN HELLMAN AS TRUSTEE OF TRUST B CREATED BY THE ESTATE OF MARCO HELLMAN; THE ESTATE OF MARCO HELLMAN, DECEASED; WOODLAND SHOPPING CENTER, A LIMITED PARTNERSHIP; JOSEPH MONTALVO, AN INDIVIDUAL; HAROLD TAECKER, AN INDIVIDUAL; GERALDINE TAECKER, AN INDIVIDUAL; HOYT CORPORATION, A MASSACHUSETTS CORPORATION; PPG INDUSTRIES, INC., A PENNSYLVANIA CORPORATION; OCCIDENTAL CHEMICAL CORPORATION, A NEW YORK CORPORATION; CITY OF WOODLAND; AND ECHCO SALES & EQUIPMENT CO., DEFENDANTS,



MEMORANDUM AND ORDER RE: MOTION FOR PARTIAL SUMMARY JUDGMENT / AND RELATED COUNTERCLAIMS, CROSSCLAIMS, AND THIRD-PARTY COMPLAINTS.

Plaintiff Adobe Lumber Inc. brought this action against several defendants for cost recovery, declaratory relief, contribution, indemnity, nuisance, and trespass pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675; the Hazardous Substance Account Act ("HSAA"), Cal. Health & Safety Code §§ 25300-25395; and California common law. Defendant City of Woodland ("City") now moves for partial summary judgment on plaintiff's CERCLA and HSAA claims pursuant to Rule 56 of the Federal Rules of Civil Procedure.

I. Factual and Procedural Background

In 1998, plaintiff purchased four parcels of land in Woodland, California, and on one of these parcels sits a commercial building and parking lot known as the Woodland Shopping Center. (See Riemann Decl. (Docket No. 356) ¶¶ 2-3.) Between 1974 and 2001, Suite K of the Woodland Shopping Center housed a dry cleaning business called "Sunshine Cleaners," which was operated by defendants Harold and Geraldine Taecker. (Pearlman Decl. Ex. H ("Taeckers' Resp. Req. Admis.") No. 2.)

Suite K of the Woodland Shopping Center is bordered on the west by a public alley called Academy Lane, beneath which runs a sewer owned by the City. (Pearlman Decl. Ex. G ("City's Resp. Req. Admis.") No. 3.) A floor drain in Suite K connects to the sewer through a lateral pipe. (Pearlman Decl. Ex. P at 8.) From 1974 until approximately 1991, the Taeckers used the floor drain to dispose of wastewater containing the dry cleaning solvent perchloroethylene ("PCE"), a volatile organic chemical that is considered a "hazardous substance" under CERCLA.

(Pearlman Decl. Ex. M ("Taeckers' Supp. Resp. Req. Admis.") No. 6); see 40 C.F.R. § 302.4.

As alleged in the Third Amended Complaint ("TAC"), plaintiff retained an environmental consultant in August 2001 to conduct a limited subsurface investigation in the area around Suite K and determine whether the Taeckers' activities had affected the soil or groundwater. (TAC ¶ 34.) This investigation revealed the presence of volatile organic compounds, including PCE. (Id.) According to plaintiff, this subsurface contamination resulted from the leakage of PCE from the sewer beneath Academy Lane. (Id. ¶ 33.) Plaintiff contends that the sewer was "especially likely to leak due to . . . its age, the large number of joints, grout (mortared) joints, and defects in the sewer system" and that the City's "management and maintenance of the sewer system was re-active, minimal[,] and inadequate." (Pl.'s Stmt. Disputed Facts Nos. 31-33.)

After several communications with the Taeckers and the California Regional Water Quality Control Board ("RWQCB"), plaintiff brought a lawsuit against the Taeckers in January 2002, and several other parties were later joined as third-party defendants. (See TAC ¶ 37.) That action was subsequently dismissed without prejudice when plaintiffs initiated the instant lawsuit on July 27, 2005. See Adobe Lumber, Inc. v. Hellman, 415 F. Supp. 2d 1070, 1073 (E.D. Cal. 2006).

The defendants in this action include the City, the Taeckers, former owners of the Woodland Shopping Center, and the manufacturers and distributors of the dry cleaning solvent and equipment used at Suite K. (See TAC ¶¶ 3-18.) With respect to the City, plaintiff alleges claims of declaratory relief and cost recovery under CERCLA; declaratory relief, contribution, and indemnity under the HSAA; and nuisance and trespass under California common law. (Id. ¶¶ 53-106.) On October 2, 2008, the court granted the City's motion to dismiss plaintiff's trespass claim. (See Docket No. 186.) The City now moves for partial summary judgment on plaintiff's CERCLA and HSAA claims pursuant to Federal Rule of Civil Procedure 56.

II. Discussion

Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."

Fed. R. Civ. P. 56(c). A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Id. at 256. On issues for which the ultimate burden of persuasion at trial lies with the nonmoving party, the moving party bears the initial burden of establishing the absence of a genuine issue of material fact and can satisfy this burden by presenting evidence that negates an essential element of the nonmoving party's case or by demonstrating that the nonmoving party cannot produce evidence to support an essential element of its claim or defense. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000).

Once the moving party carries its initial burden, the nonmoving party "may not rely merely on allegations or denials in its own pleading," but must go beyond the pleadings and, "by affidavits or as otherwise provided in [Rule 56,] set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e); accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Valandingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989). On those issues for which it will bear the ultimate burden of persuasion at trial, the nonmoving party "must produce evidence to support its claim or defense." Nissan Fire, 210 F.3d at 1103.

In its inquiry, the court must view any inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The court also may not engage in credibility determinations or weigh the evidence, for these are jury functions. Anderson, 477 U.S. at 255.

A. CERCLA and the HSAA

CERCLA was enacted in 1980 as a broad remedial measure aimed at assuring "the prompt and effective cleanup of waste disposal sites" and ensuring that "parties responsible for hazardous substances bore the cost of remedying the conditions they created." Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1455 (9th Cir. 1986); see S. Rep. No. 96-848, at 13 (1980). The statute "generally imposes strict liability on owners and operators of facilities at which hazardous substances were disposed," 3550 Stevens Creek Assocs. v. Barclays Bank of Cal., 915 F.2d 1355, 1357 (9th Cir. 1990), and where the environmental harm is indivisible, liability is joint and several, B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992) (citing O'Neil v. Picillo, 883 F.2d 176, 178-79 (1st Cir. 1989)).

To further its purposes, CERCLA "'authorizes private parties to institute civil actions to recover the costs involved in the cleanup of hazardous wastes from those responsible for their creation.'" Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 870 (9th Cir. 2001) (en banc) (quoting 3550 Stevens, 915 F.2d at 1357). To establish a prima facie case in a private cost recovery action under CERCLA, a plaintiff must demonstrate that (1) the site on which the hazardous substances are contained is a "facility" under CERCLA's definition of that term, . . . (2) a "release" or "threatened release" of any "hazardous substance" from the facility has occurred, . . . (3) such "release" or "threatened release" has caused the plaintiff to incur response costs that were "necessary" and "consistent with the national contingency plan," . . . and (4) the defendant is within one of four classes of persons subject to the liability provisions of [42 U.S.C. § 9607(a)].

Id. at 870-71 (quoting 3550 Stevens, 915 F.2d at 1358).

Even if a plaintiff establishes a prima facie case, however, a defendant can avoid liability through one of the affirmative defenses provided in 42 U.S.C. § 9607(b). These defenses refer to situations in which the release of hazardous substances "was caused solely by an act of God, an act of war, or certain acts or omissions of third parties other than those with whom a defendant has a contractual relationship." Murtha, 958 F.2d at 1198 (citing 42 U.S.C. § 9607(b)). The latter is variously referred to as the "innocent landowner," "third-party," or "innocent-party" defense. See Carson Harbor, 270 F.3d at 871; United States v. Honeywell Int'l, Inc., 542 F. Supp. 2d 1188, 1199 (E.D. Cal. 2008) (England, J.).

Here, the City contends that plaintiff cannot satisfy either the first or fourth elements of its prima facie case. Specifically, the City argues that the sewer beneath Academy Lane is not a "facility" under CERCLA and that the City is not "within one of four classes of persons" subject to CERCLA liability. The City alternatively asserts that it is absolved from liability pursuant to CERCLA's innocent-party defense.

Similar to CERCLA, California's HSAA provides for civil actions for indemnity and contribution and expressly incorporates CERCLA's liability standards and defenses. See Castaic Lake Water Agency v. Whittaker Corp., 272 F. Supp. 2d 1053, 1084 (C.D. Cal. 2003) ("HSAA 'create[s] a scheme that is identical to CERCLA with respect to who is liable.'" (quoting City of Emeryville v. Elementis Pigments, Inc., No. 99-3719, 2001 WL 964230, at *11 (N.D. Cal. Mar. 6, 2001)) (alteration in original)); Goe Eng'g Co., Inc. v. Physicians Formula Cosmetics, Inc., No. 94-3576, 1997 WL 889278, at *23 (C.D. Cal. June 4, 1997) ("California's [HSAA] imposes essentially the same standards of liability as CERCLA.").

Under the HSAA, the term "site" has the same meaning as "facility" defined in 42 U.S.C. § 9601(9); the terms "responsible party" or "liable person" refer to the four classes of persons defined in 42 U.S.C. § 9607(a); and the "defenses available to a responsible party or liable person" are those defenses specified in 42 U.S.C. § 9607(b), which include the innocent-party defense. Cal. Health & Safety Code §§ 25323.9, 25323.5. Thus, as the parties acknowledge, the City's arguments as to plaintiff's CERCLA claims apply with equal force to plaintiff's claims under the HSAA. (City's Mem. Supp. Mot. Summ. J. 7 n.4; Pl.'s Mem. Supp. Opp'n Summ. J. 1:5-2:1.)

B. "Facility"

CERCLA defines the term "facility" as follows:

The term "facility" means (A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel.

42 U.S.C. § 9601(9). The conjunction "or" between subparts (A) and (B) establishes "two distinct definitions of what might constitute a facility." Sierra Club v. Seaboard Farms Inc., 387 F.3d 1167, 1171 (10th Cir. 2004). Thus, "[a]n area fulfilling the requirements of [subpart (A)] need not also meet the requirements of [subpart (B)] to be considered a 'facility,' and vice versa." Id. (quoting United States v. Twp. of Brighton, 153 F.3d 307, 322 (6th Cir. 1998) (Moore, J., concurring)) (internal quotation marks omitted).

In light of the general language and disjunctive structure of § 9601(9), the Supreme Court and others have remarked that "the term 'facility' enjoys a broad and detailed definition." United States v. Bestfoods, 524 U.S. 51, 56 (1998); see, e.g., Seaboard Farms, 387 F.3d at 1174 ("[C]circuits that have applied the defined term "facility" have done so with a broad brush."); Uniroyal Chem. Co., Inc. v. Deltech Corp., 160 F.3d 238, 245 (5th Cir. 1998) ("[I]t is apparent that facility is defined in the broadest possible terms . . . ."); 3550 Stevens, 915 F.2d at 1358 n.10 ("[T]he term 'facility' has been broadly construed by the courts, such that 'in order to show that an area is a "facility," the plaintiff need only show that a hazardous substance under CERCLA is placed there or has otherwise come to be located there.'" (quoting United States v. Metate Asbestos Corp., 584 F. Supp. 1143, 1148 (D. Ariz. 1984))). Indeed, one annotation recently noted that "it does not appear that any court has ever held that one or more of the defining terms in [42 U.S.C. § 9601(9)] was inapplicable in a particular case." William B. Johnson, Annotation, What Constitutes "Facility" Within the Meaning of Section 101(9) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601(9)), 147 A.L.R. Fed. 469 § 2(a) (1998 & Supp. 2009) [hereinafter Johnson, What Constitutes "Facility"].

Despite CERCLA's expansive definition of "facility," the City contends that CERCLA's "express terms" exempt its sewer from this classification. (City's Mem. Supp. Mot. Summ. J. 8:5.) To support its argument, the City ascribes great significance to the parenthetical in subpart (A): "The term 'facility' means (A) any . . . pipe or pipeline (including any pipe into a sewer or publicly owned treatment works) . . . ." 42 U.S.C. § 9601(9)(A) (emphasis added). The City suggests that by specifically mentioning "sewer" in this parenthetical and neglecting to include it in the preceding enumerated facilities, Congress "had sewers in mind" but deliberately kept them off the list. (City's Mem. Supp. Mot. Summ. J. 8:16-17.) Similarly, the City argues that the plain meaning of "pipe or pipeline" includes sewers; therefore, the parenthetical in subpart (A) explaining that pipes connected to sewers are facilities is redundant. (City's Mem. Supp. Summ. J. 8:22-9:10.) The only way to make this parenthetical functional, the City asserts, is to conceive of sewers as non-facilities; under this interpretation, the parenthetical clarifies that pipes remain facilities even if they are connected to non-facilities. (Id.)

As the City acknowledges, several other courts have considered this argument and have rejected it. See Westfarm Assocs. Ltd. P'ship v. Wash. Suburban Sanitary Comm'n, 66 F.3d 669, 678-80 (4th Cir. 1995); United States v. Union Corp., 277 F. Supp. 2d 478, 486-87 (E.D. Pa. 2003); see also United States v. Meyer, 120 F. Supp. 2d 635, 639 (W.D. Mich. 1999); City of Bangor v. Citizens Commc'ns Co., No. 02-183, 2004 WL 483201, at *11 (D. Me. Mar. 11, 2004) (Kravchuk, Mag. J.), aff'd, 2004 WL 2201217, at *1 (D. Me. May 5, 2004). Nonetheless, the City correctly notes that these decisions rely almost exclusively on the reasoning provided by the Fourth Circuit in Westfarm, and because ...


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