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3000 E. Imperial, LLC v. Robertshaw Controls Co.

December 29, 2010

3000 E. IMPERIAL, LLC, PLAINTIFF,
v.
ROBERTSHAW CONTROLS CO., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Percy Anderson United States District Judge

FINDINGS OF FACT AND CONCLUSIONS OF LAW

A court trial was held on March 25-26, 2010 and March 30, 2010. On April 13, 2010 Plaintiff and Defendant each filed their proposed Post-Trial Findings of Fact and Conclusions of Law, and on April 20, 2010 each party filed responses. After considering the evidence, briefs, and arguments of counsel, the Court makes the following findings of fact and conclusions of law.*fn1

I. PROCEDURAL AND FACTUAL BACKGROUND

Plaintiff 3000 E. Imperial, LLC ("Plaintiff") filed its initial complaint on June 18, 2008. Defendants Whittaker Corporation ("Defendant") and Whittaker Controls, Inc. filed its second amended answer and counterclaims on July 20, 2009.*fn2 Plaintiff filed its answer to Defendant's counterclaims on July 28, 2009. Plaintiff asserts the following causes of action against Defendant: (1) Cost recovery and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq.; (2) Injunctive relief under the Resource Conservation and Recovery Act ("RCRA"),42 U.S.C. § 6972(a); (3) Contribution under California Health & Safety Code § 25395.60, et seq.; (4) Nuisance; and (5) Trespass. Defendant asserts the following causes of action against Plaintiff: (1) Cost recovery, contribution, and declaratory relief under CERCLA; (2) indemnity/contribution under California Health & Safety Code § 25363(e); (3) declaratory relief; and (4) equitable indemnity.

Plaintiff purchased the property located at 3000 E. Imperial Highway in Lynwood, California (the "Property") on November 30, 2006 and is the current owner. Wm. R. Whittaker Co. Ltd., a predecessor-in-interest to Defendant, owned the Property from June 30, 1955 to September 27, 1963. For several years, Defendant operated a plant which manufactured aircraft and missile valves on the Property. Prior to Defendant, the Property was owned by Robertshaw Controls Company ("Robertshaw").*fn3 After Defendant left the Property it was used by various furniture manufacturers.

Prior to purchasing the Property, Plaintiff learned that it was contaminated with various chemicals, although it did not know the nature and extent of the contamination. (Chae Decl. ¶ 5.) Plaintiff hired an environmental consulting firm to conduct an investigation, which included taking soil and water samples. These investigations continued after Plaintiff purchased the Property. The investigations revealed that the soil and groundwater on the Property are contaminated with several substances, including trichloroethylene ("TCE") and benzene, which are the primary chemicals of concern.

The Property is rectangular in shape and is located at the southwest corner of State Street and East Imperial Highway. (Ex. 56.) The Property consists of a vacant concrete lot, as all structures were demolished in 2007. (Ex. 241, § 2.1). Prior to demolition 90% of the Property was occupied by a manufacturing building on the eastern portion of the Property. (Id.) There was also a lumber storage and hazardous materials storage shed on the westernmost portion of the Property, and a maintenance shed located between the manufacturing building and the storage sheds. (Ex. 56.) An underground storage tank ("UST") nest was located under the pavement between the maintenance shed and the storage sheds. (Id.) These structures existed on the Property in 1956 during Defendant's ownership. (Ex. 268.)

In September 2007, Plaintiff's environmental consultant prepared a report which summarized and compiled data from previous investigations of the Property. (Ex. 241.) The report describes two areas of contamination on the Property. One area is located at the southwestern portion of the Property ("Area 1"), and the other is located at the south-central portion of the Property ("Area 2"). (Id. § 3.1.6.2.) Area 2 encompasses the former site of the manufacturing building. Most of the contamination on the Property is located in Area 1, near the former UST nest. (Id. § 5.2.1.1.) Other contamination in Area 1 is located under the maintenance shed and under the hazardous materials storage shed on the westernmost portion of the Property. (Id.) Contamination from Area 1 appears to have spread to neighboring properties to the southwest of the Property, although the exact extent of any offsite contamination is still unknown. (Id., § 7.1.1.)

II. DEFENDANT'S LIABILITY UNDER CERCLA

CERCLA, 42 U.S.C. § 9607(a), allows private parties to recover costs incurred in cleaning up contaminated sites from certain parties enumerated by statute. To establish liability for cost recovery a plaintiff must prove, by a preponderance of the evidence, that (1) the property is a "facility" as defined by 42 U.S.C. § 9601(9); (2) the defendant falls into one of the four categories of persons subject to liability under 42 U.S.C. § 9607(a); (3) that a release or threatened release of a hazardous substance has occurred; and (4) that the release or threatened release has caused the plaintiff to incur necessary response costs consistent with the National Contingency Plan. Carson Harbor Village v. County of Los Angeles, 433 F.3d 1260, 1265 (9th Cir. 2006).

A. Facility

CERCLA defines a facility as "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located . . . ." 42 U.S.C. § 9601(9)(B). TCE and benzene are considered "hazardous substances" under CERCLA. See 42 U.S.C. §§ 9601(14), 9602(a); 40 C.F.R. §302.4. It is undisputed that hazardous substances are located at the Property, and that it thus qualifies as a facility under CERCLA. (Proposed Pretrial Conference Order ("PPTCO"), Admitted Fact (a); Pl.'s Proposed Findings of Fact and Conclusions of Law ("PFOFCOL") 36:4-5; Def.'s Response 36:4-5.)

B. Persons Liable Under CERCLA

CERCLA imposes strict liability on four categories of persons, typically referred to as "potentially responsible parties" or "PRPs." See Burlington N. & Santa Fe Ry. Co. v. United States, __ U.S. __, 129 S. Ct. 1870, 1878, 173 L. Ed. 2d 812 (2009). One of those categories is former owners or operators of a facility, defined as "any person who at the time of disposal of any hazardous substance owned or operated any facility at which hazardous substances were disposed of." 42 U.S.C. § 9607(a)(2). For purposes of CERCLA, a corporation such as Defendant qualifies as a "person." 42 U.S.C. § 9601(21). TCE and benzene are considered "hazardous substances" under CERCLA. See 42 U.S.C. §§ 9601(14), 9602(a); 40 C.F.R. §302.4. "Disposal" is defined as the "discharge, deposit, injection, dumping, spilling, leaking or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment . . . ." 42 U.S.C. §§ 9601(29); 6903(3). A plaintiff does not have to show that the defendant participated in the disposal, only that a disposal occurred during ownership. See Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 840 (4th Cir. 1992); Servco Pacific Inc. v. Dods, 193 F. Supp. 2d 1183, 1197 (D. Hawai'i 2002)(noting that the Ninth Circuit has "concluded (or strongly implied) that passive gradual 'leaking' such as that from an underground storage tank with a hole in it or from an abandoned barrel would constitute a 'disposal'" for purposes of finding past owner liability).

In order for Defendant to be a PRP Plaintiff must show that a disposal occurred on the Property during Defendant's ownership between 1955 and 1963. As discussed below, the evidence presented at trial shows that disposals from various sources occurred during this time period.

1. Disposal from the USTs

The USTs were installed in 1942 by Robertshaw. (PPTCO, Stipulated Fact (d); Pl.'s PFOFCOL 5:1; Def.'s Response 5:1.). Plaintiff arranged to have the contents of the USTs removed in 2007, and the USTs themselves were removed in 2009. (Crews Decl. ¶ 4, 10.) The parties agree that TCE was released from the USTs into the soil and groundwater. (PPTCO, Admitted Fact (l); Pl.'s PFOFCOL 5:10-12; Def.'s Response PFOFCOL 5:10-12.) The parties dispute when the USTs first began to leak. In order for Defendant to be a PRP Plaintiff must show that the USTs were leaking sometime during the 13 to 21 years after their installation (from 1955 to 1963).

Testimony of Plaintiff's Expert James Bushman Plaintiff's expert James Bushman opined that it is highly likely that leaks began between 1952 and 1957 and that leaking likely occurred between 1955 and 1963. (Bushman Decl. ¶ 19.) Defendant argues that Bushman's testimony does not meet the requirements for an expert opinion under Federal Rule of Evidence 702, and moves to exclude the opinion.

Rule 702 states that expert testimony is admissible if "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case." Fed. R. Evid. 702. "This entails a[n] assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592-93, 113 S. Ct. 2786, 2796, 125 L. Ed. 2d 469 (1993). Factors which may bear on the reliability of the expert's methods include: (1) whether the theory or technique can be, or has been, tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) the known or potential rate of error; (4) the existence of standards and controls for application of the technique; and (5) general acceptance in the community. Id. at 593-95, 113 S. Ct. at 2797. These are not the only factors that a court may consider, and some factors may not apply in every case. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141-42, 119 S. Ct. 1167, 1171, 143 L. Ed. 2d 238 (1999). "[T]he trial judge must have considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable." Id. at 152, 119 S. Ct. at 1176.

To reach his opinion Bushman reviewed the facts discussed further below, and then relied on his 47 years of experience evaluating UST corrosion. (Bushman Decl. ΒΆ 15.) During cross-examination Defendant's counsel pointed out that there is no known error rate for evaluations based on this method, nor has it ever been included on the list of testing programs for determining the life of a UST published by the Environmental Protection Agency. (Trial Transcript ("TT") 149:3-11). Expert testimony based on experience alone or in conjunction with other knowledge or training can be admissible. See Fed. R. Evid. 702, Advisory Committee Notes 2000. However, "[i]f the witness is relying solely or primarily on experience, then the witness ...


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