The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
MEMORANDUM DECISION ON DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT (Doc. 24)
Plaintiff Exxonmobil Oil Corp. ("Plainitff") is proceeding with an action pursuant to the Resource Conservation and Recovery Act (42 U.S.C. § 6972(a)(1)(B)) against Defendants Nicoletti Oil, Inc., Dino J. Nicoletti, and John A. Nicoletti. In addition to asserting federal claims against Defendants, Plaintiff asserts several state law causes of action.
Plaintiff filed an original complaint against Defendants on August 24, 2009. (Doc. 1). Defendants filed a motion to dismiss the original complaint on October 7, 2009. (Doc. 13). Plaintiff filed a first amended complaint ("FAC") on December 31, 2009. (Doc. 20).
On February 4, 2010 Defendants filed a motion to dismiss ("motion to dismiss") the FAC. (Doc. 24). Plaintiff filed opposition ("opposition") to the motion to dismiss the FAC on April 26, 2010. (Doc. 27). Defendants filed a reply ("reply") to Plaintiff's opposition on May 3, 2010. (Doc 28).
Plaintiff is a New York corporation in the business of producing, distributing, and selling petroleum products. (FAC at 3). Plaintiff's predecessor, General Petroleum Corporation, purchased 2801 Blossom Street in Dos Palos, California in January 1946. (FAC at 4).
From 1946 to 1950, Dino J. Nicoletti operated a fuel distribution plant at 2801 Blossom street as a distributor for General Petroleum Corporation. (FAC at 5). From 1950 to 1980, Dino Nicoletti operated 2801 Blossom Street as a cosignee of General Petroleum Corporation and then Mobil Oil Corporation. (FAC at 5). Mobil Oil Corporation was also Plainitff's predecessor. (FAC at 5). On or about August 25, 1980, Dino Nicoletti and his wife Floretta Nicoletti purchased 2801 Blossom Street from Mobil Oil Corporation. (FAC at 5). On or about December 5, 1996, ownership of 2801 Blossom Street was transferred to Dino Nicoletti and Floretta Nicoletti as Trustees under the Dino J. Nicoletti and Florretta A. Nicoletti Revocable Living Trust. (FAC at 5).
Defendants have operated and continue to operate a gasoline and diesel sales and distribution facility at 2801 Blossom Street. (FAC at 5). Nicoletti Oil, Inc. ("Nicoletti Oil") was incorporated in California on or about January 1, 1982. (FAC at 6). Dino Nicoletti served as an officer of Nicoletti Oil throughout the 1980's and currently serves as the company's Vice President. (FAC at 6). John A. Nicoletti currently serves as the President of Nicoletti Oil, a position he has held since as early at 1990. FAC at 6. Cindy Nicoletti serves as the Secretary-Treasurer of Nicoletti Oil. (FAC at 6). The FAC alleges that 100% of the capital stock of Nicoletti Oil is owed by John A. Nicoletti and Cindy Nicoletti. (FAC at 6).
In or about 1998, Defendants purchased a lot adjacent to 2801 Blossom Street and installed new diesel dispensers on the parcel. (FAC at 6). Together, 2801 Blossom Street and the adjacent lot purchased by Defendants in 1998 form the property at issue in this action ("Property"). (FAC at 5). The Property is located directly across the street from a residential area. (FAC at 6).
Following the sale of 2801 Blossom Street in 1980, Plaintiff or its predecessors entered into a series of wholesale distributor contracts ("Contracts") with Dino Nicoletti, pursuant to which Dino Nicoletti agreed to purchase a certain quantity of gasoline, diesel fuel, and lubricant products. (FAC at 7). Such contracts include, but are not limited to, a Wholesale Distributor Agreement for Motor Fuels, dated May 6, 1985 ("1985 Agreement") and a Wholesale Distributor Agreement (Lubricants, Distillates and other Non-Motor Fuels) dated March 1, 1989 ("1989 Agreement"). (FAC at 7). According to the FAC, the parties to the Contracts intended the Contracts to bind Plaintiff (or its predecessors) and Nicoletti Oil. (FAC at 7).
Plaintiff alleges that during Dino Nicoletti's and Nicoletti Oil's ownership of the Property and operation of its businesses, releases of petroleum and petroleum substances, including methyl tertiary butyl ether ("MTBE"), have occurred on and migrated off of the Property. (FAC at 7). The FAC states that Nicoletti Oil detected a release of petroleum hydrocarbons at the property in 1988, prompting the Merced County Department of Public Health to issue a Notice and Order to Nicoletti Oil and Mobil Oil Corporation that required investigation of soil and groundwater contamination at the Property. (FAC at 8).
On or about August 24, 1992, Mobil Oil Corporation and Nicoletti Oil entered into a Cost Sharing Agreement wherein the parties agreed that Nicoletti Oil would contract directly with the contractors performing the investigative work required by the Merced County Department of Public Health. (FAC at 8-9). The Cost Sharing Agreement provided that, unless terminated beforehand, it remained in effect until Nicoletti Oil's contractor submitted the Site Contamination Workplan ("SCW"), Preliminary Investigation and Evaluation Report ("PIER") and, if needed, a Problem Assessment Report ("PAR") in final form to the Merced County Department of Public Health. (FAC at 9). The Cost Sharing Agreement provided that Mobil Oil Corporation and Nicoletti Oil would each pay 50% of the costs for the preparation of the SCW, the PIER, and, if needed, the PAR. (FAC at 9). The Merced County Department of Public health required submission of a PAR in 1993, however, Nicoletti Oil's contractors failed to complete or submit a PAR. (FAC at 9).
In 2001, Plainitff learned of Nicoletti Oil's failure to comply with outstanding directives from the Merced County Department of health and began conducting investigation at the Property as requested by overseeing agencies. (FAC at 9). Plaintiff's investigation included onsite and offsite borings, soil and groundwater analysis, installing monitoring wells, and monitoring analytical data, among other tasks. (FAC at 9).
On or about February 3, 2005, the Regional Board issued Cleanup and Abatement Order No. R5-2005-0701, naming both Nicoletti Oil and Plaintiff jointly as the "Discharger," without attempting to allocate their relative liability for the contamination or assigning responsibility for cleanup at or around the Property ("2005 CAO"). (FAC at 9-10). The 2005 CAO required the development and implementation of an interim remedial action plan, further site assessment of soil vapor migration, and submission of a full corrective action plan, including a human health risk assessment. (FAC at 10). Plaintiff complied with the 2005 CAO in December 2005. (FAC at 10). At the direction of the Regional Board, Plaintiff issued precautionary notices to the residents near the Property warning against on-site excavation or the digging of holes greater than a few feet deep on their properties and against the consumption and distribution of produce grown in the neighborhood. (FAC at 10). Plaintiff also distributed air filtration units, free of charge, to those residents who chose to use them as a precaution against vapor intrusions from the subsurface plume. (FAC at 10).
The Regional Board issued a new CAO in July 2006. (FAC at 10-11). Plaintiff continues to operate and maintain the remedial system at the Property pursuant to the terms of the 2006 CAO. (FAC at 11). Nicoletti Oil continues to operate its business and benefit from the remediation operated and maintained by Plaintiff, but does not contribute to or participate in the remedial effort. (FAC at 11). Plaintiff alleges that Nicoletti Oil's ongoing operation of the plant at the Property has resulted in further unauthorized releases of contaminants, which undermine and threaten to prolong Plaintiff's remedial efforts under the 2006 CAO. (FAC at 11). Since 2006, Plaintiff has requested integrity testing of Nicoletti's fuel system, but Nicoletti refuses to perform such testing or to allow Plaintiff to perform testing.*fn1 (FAC at 12).
In March 2008, Plaintiff's consultants detected a new release of diesel fuel at the Property when the on-site remedial system was overwhelmed by a substantial volume of fresh red-dye diesel product; Plaintiff alleges that this new release could have been prevented had Defendants conducted adequate testing to assure the integrity of its fuels system. (FAC at 12). Plaintiff further alleges that Nicoletti's own personnel and physical leak detection systems failed to detect the release. (FAC at 12).
At Plaintiff's insistence, the Regional Board requested that Plaintiff propose a scope of work for more comprehensive testing of the entire fuel system, and Plaintiff submitted such a scope, which it proposed to be completed (at Plaintiff's expense) by a third party contractor acceptable to Nicoletti and the Regional Board. (FAC at 13). The Regional Board approved Plaintiff's scope of work. (FAC at 13). Nicoletti declined to allow the further testing of the fuel system proposed by Plainitff and approved by the Regional Board. (FAC at 13). Instead, Nicoletti Oil subsequently submitted its own less complete fuels system ...