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United States of America, and v. Sterling Centrecorp

June 6, 2011

UNITED STATES OF AMERICA, AND CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, PLAINTIFFS,
v.
STERLING CENTRECORP, INC. STEPHEN P. ELDER, AND ELDER DEVELOPMENT, INC.,
DEFENDANTS.



ORDER AND FINDINGS & RECOMMENDATIONS

On May 26, 2011, the undersigned held a hearing on plaintiffs' joint motion for default judgment against defendant Elder Development, Inc. ("Elder Development"). Patricia Hurst and Karl Fingerhood appeared for plaintiff United States of America. Kirk McInnis appeared for plaintiff California Department of Toxic Substances Control ("CDTSC"). Defendant Stephen Elder appeared in pro per. At the hearing, defendant Stephen Elder submitted a motion for order vacating default judgment. Upon review of the docket, the motion for default judgment and all attached exhibits, discussion of the appearing parties and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:

FACTUAL ALLEGATIONS

Plaintiffs the United States and CDTSC (collectively, "plaintiffs") initiated this action on October 27, 2008 against defendants Sterling Centrecorp, Inc. ("Sterling"), Stephen Elder and Elder Development, pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9607(a) for recovery costs related to the release and threatened release of hazardous substances from the Lava Cap Mine Superfund Site in Nevada County, California ("the Site"); and pursuant to Section 113(g)(2) of CERCLA, 42 U.S.C. § 9613(g)(2), for declaratory judgment that plaintiffs are entitled to recover for future response costs.

The Site is comprised of two mines: the Lava Cap Mine and the Banner Mine. Compl. at 5. In 1932, the Lava Cap Gold Mining Corporation ("LCGMC") acquired both the Lava Cap and Banner Mines and, in 1934, began gold mining operations at both mines. Id. In 1952, defendant Sterling's predecessor, New Goldvue Mines Limited ("NGV"), acquired both mines from LCGMC and continued to operate both as gold mines. Id. at 5, 7.

In 1989, Banner Mountain Properties Limited ("Banner Mountain"), of which Stephen Elder was the general partner, acquired the Lava Cap Mine property. Compl. at 7. In 1992, Banner Mountain deeded the property to another California corporation, Lava Cap Gold Mining Corporation ("LCGMC2"); Stephen Elder was also the general partner of this second corporation. Id. In 1994, LGCMC2 deeded parcels of Lava Cap Mine to Stephen Elder in his individual capacity. Id. In 2003, Stephen Elder transferred title of three of these parcels to Elder Development. Id. In 2005, LCGMC2 dissolved, reverting ownership of the remaining Lava Cap Mine parcels back to Elder in his individual capacity.

Plaintiffs contend that during the ownership of the Site by defendants, and through a series of incidents, contaminants have been released into nearby soil and water. Compl. at 5-7.

In 1979, plaintiffs assert that a log dam built to hold mill tailings,*fn1 a mining waste, in place partially collapsed, resulting in a discharge of contaminants into a nearby creek called Little Cripper Creek. Id. at 6. This discharge was investigated by the Central Valley Regional Water Quality Control Board ("the Board") and the California Department of Fish and Game, finding that the discharge resulted in arsenic-contaminated tailings entering the creek and flowing downstream. Id. at 7. The Board issued a Complaint of Discharge letter, followed by a Cleanup and Abatement Order, to Sterling's predecessor. Id.

On or about January 1, 1997, the log dam completely collapsed, discharging over 10,000 cubic yards of additional tailings into Little Clipper Creek. Compl. at 8. As a result of this collapse, CDTSC and other local agencies inspected and tested soil and water at the Lava Cap Mine and down-gradient areas. Id. In June 1997, CDTSC issued an information sheet warning of potential hazards from contact with sediment at the site. Id. In October 1997, the EPA Region IX Emergency Response Section determined that the Lava Cap Mine conditions associated with the tailings release met the criteria for a removal action. Id. Thus, during 1997 and 1998, the EPA conducted a removal action at the Site to address the tailings release. Id.

Also in 1998, the EPA evaluated the Site and determined that the potential risks to human health and the environment warranted placement on the National Priorities List ("NPL"), pursuant to 42 U.S.C. § 9605(a)(8)(B). Compl. at 8. The Site was added to the NPL in 1999. Id. Through April 30, 2008, plaintiffs estimate that the EPA has incurred $21,365,002.14 in response costs, and through March 31, 2008, estimate that CDTSC has incurred $717,143.16 in response costs. Id. Plaintiffs contend that defendants are jointly and severally liable for the costs incurred. Id. at 10.

RELEVANT PROCEDURAL BACKGROUND

Stephen Elder and Elder Development (collectively, "the Elder defendants") were served on November 11, 2008 by personal service. Doc. No. 9. On March 9, 2009, plaintiffs and the Elder defendants filed a joint motion for an extension of time to file an answer. Therein, the parties represented that the Elder defendants had limited resources, had not yet obtained counsel and that settlement negotiations were in progress. See Doc. No. 21. District Judge Morrison C. England granted the request and ordered that an answer be filed by May 29, 2009. On May 20, 2009, plaintiffs and the Elder defendants filed a second motion for extension of time based upon the same assertions as in the initial motion. See Doc. No. 29. Again, Judge England granted the motion and gave the Elder defendants until September 30, 2009 to file an answer. Doc. No. 31.

On September 29, 2009, Stephen Elder, appearing in propria persona and on behalf of the Elder defendants, filed an answer and asserted counter- and cross-claims. Because Elder Development, a corporation, cannot appear in federal court without a licensed attorney, see Rowland v. Cal. Men's Colony, 506 U.S. 194, 202 (1993) ("It has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel . . . . [T]hat rule applies equally to all artificial entities."), plaintiff United States filed a motion to strike the answer to the extent it purported to answer on behalf of Elder Development. See Doc. No. 56. On February 23, 2010, the motion to strike was granted.

On January 13, 2011, plaintiffs requested entry of default as to Elder Development, which was entered by the Clerk of Court on January 21, 2011. On April 19, 2011, plaintiffs filed a joint motion for default judgment against Elder Development. The United States seeks entry of default judgment in the amount of $20,640,245.70, and CDTSC seeks entry of default judgment in the amount of $1,193,368.54. Neither plaintiff seeks pre-judgment interest or attorneys' fees.

On March 25, 2009, discovery and trial in this matter were bifurcated on questions of liability and damages. See Doc. No. 26.

DISCUSSION

Plaintiffs seek default judgment pursuant to either Federal Rule of Civil ...


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