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Adobe Lumber. Inc. v. Hellman

March 4, 2010

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 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; AND CITY OF WOODLAND, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION FOR PARTIAL SUMMARY JUDGMENT

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 the 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. (Docket No. 422) Ex. L at 2:8-12.)

Suite K of the Woodland Shopping Center is bordered on the west by a public alley called Academy Lane, beneath which a sewer main owned by the City runs north to south. (Id. Ex. G ("City's Resp. Req. Admis.") at No. 3.) A floor drain in Suite K connects to the City's sewer main through a lateral pipe. (Pearlman Decl. Ex. T (Docket No. 423) at 113:2-116:9.) The lateral pipe is comprised of a four-inch cast iron pipe that runs beneath the concrete area of the Woodland Shopping Center that connects to a four-inch vitrified clay pipe ("VCP") under Academy Lane, which in turn connects to the sewer main under Academy Lane (an eight-inch VCP pipe). (Id. Ex. R ("Krasnoff Rebuttal Report") at 9-10; id. Ex. Z ("Larson Expert Report")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. (Docket No. 422) 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 main on 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. 38-39.)

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 ("Adobe I") was subsequently dismissed without prejudice when plaintiff 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.) On September 8, 2009, the court denied the City's motion for partial summary judgment on plaintiff's CERCLA and HSSA claims, determining that the sewer main on Academy Lane was a "facility" within the meaning of CERCLA. (See Docket No. 360.)

Witness discovery in this case closed on September 1, 2009 pursuant to the court's January 22, 2009 Scheduling Order. (Docket No. 330.) On October 13, 2009, parties exchanged expert reports, at which point the City allegedly realized for the first time that plaintiff intended to hold it liable for leaks from the lateral pipe, rather than solely the sewer main. (Whitesides Decl. (Docket No. 410) ¶ 3.) The City now moves for partial summary judgment on its liability for the sewer lateral in 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 non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary judgment 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 non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Alternatively, the moving party can demonstrate that the non-moving party cannot produce evidence to support an essential element upon which it will bear the burden of proof at trial.

Id.

Once the moving party meets its initial burden, the non-moving 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); Celotex Corp., 477 U.S. at 324; Valandingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989). In its inquiry, the court must view any inferences drawn from the underlying facts in the light most favorable to the nonmoving party, but may not engage in credibility determinations or weigh the evidence. Anderson, 477 U.S. at 255; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The City contends that it is entitled to summary adjudication on its liability for the lateral pipe because plaintiff did not plead this theory of liability in its TAC in violation of Federal Rule of Civil Procedure 8(a)(2) and failed to otherwise provide adequate notice of the City's potential liability for leakage from the lateral pipe. Rule 8(a)(2) requires that the allegations in a complaint must "give the defendant fair notice of what the plaintiff's ...


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