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Green Valley Corporation v. Caldo Oil Company

August 10, 2011


The opinion of the court was delivered by: Lucy H. Koh United States District Judge


Plaintiff Green Valley Corporation ("Plaintiff") has moved for leave to file a Second Amended Complaint ("SAC"). See Dkt. No. 89 ("Motion to Amend"). Defendants Caldo Oil Company ("Caldo Oil"), Victor J. LoBue, and the Victor J. LoBue Trust (collectively, "Caldo Oil Defendants") oppose Plaintiff's motion. In addition, the Caldo Oil Defendants have moved to 23 strike and dismiss Plaintiff's SAC and a Third Party Complaint (TPC) filed by Plaintiffs. See Dkt. No. 104 ("Motion to Strike"). The Caldo Oil Defendants, along with other defendants named in 25 the TPC, have also moved to quash service of Plaintiff's Third Party Complaint. See Dkt. No. 102 ("Motion to Quash"). After considering the parties' briefs relating to these Motions, the Court 27 finds this matter suitable for decision without oral argument. See Civ. L.R. 7-1(b). Accordingly, 28 the hearings on these Motions, set for August 11, 2011 and September 22, 2011 are hereby VACATED.

The August 11, 2011 Case Management Conference will remain as set at 1:30 p.m. For the reasons set forth below, the Court GRANTS Plaintiff's Motion to Amend, GRANTS-IN-3 Oil Defendants' Motion to Quash as moot.

A. Factual Background

From 1966 until 1997, Caldo Oil owned and operated a bulk fueling and gasoline service 8 station in San Jose, California. Dkt. No. 13 ("FAC"), at ¶ 21. On August 30, 2005, Green Valley 9 allegedly purchased from Caldo Oil, Victor J. LoBue, and The Victor J. LoBue Trust the property 10 where this station was located (the "Property"). Id. at ¶ 24. In 2006, an Olympic gasoline service PART and DENIES-IN-PART the Caldo Oil Defendants' Motion to Strike, and DENIES the Caldo


station owned and operated by Nella Oil Company, LLC was placed adjacent to the Property. Id. ¶ 25. Green Valley claims that in September of 2006, excavation work by a general contractor on 13 the Property revealed the presence of petroleum-impacted soils. Id. ¶ 29. Based on soil and 14 groundwater samples taken from the property, the Santa Clara County Department of Environmental Health (SCCDEH) required Green Valley to implement and administer a 16 groundwater monitoring program. Id. ¶¶ 29, 31. Green Valley claims that defendants caused or 17 contributed to the contamination on the Property. Id. ¶ 46. As a result, Green Valley filed suit 18 claiming fourteen causes of action against defendants in order to recoup costs that it has and will 19 incur in investigating and remediating the contamination present on the Property. Id. ¶ 49. Green

Valley also seeks damages and injunctive relief against defendants for their contribution to the 21 contamination of the Property. 22

Salvadore and Tanie Ann were responsible for the release of petroleum into the soil during their 25 period of ownership. Id. Plaintiff also believes the assets of Salvadore and Tanie Ann LoBue were 26 placed into various trusts of which Victor LoBue is trustee, including the LoBue Living Trust and 27 the LoBue Family Trust. Id. at ¶ 9, 12. Finally, Plaintiff alleges that a judgment against the 28

Case No.: 09-CV-04028-LHK


Salvadore and Tanie Ann LoBue were Victor LoBue's parents. SAC ¶ 10. Salvadore and

Tanie Ann were also the original owners and lessors of the Property. Id. Plaintiff believes 24

LoBues' estates should be satisfied by insurance purchased by the LoBues. Id. at ¶ 11.

B. Procedural Background

Green Valley filed its original complaint on August 31, 2009, Dkt. No. 1, and its First Amended Complaint ("FAC") on December 21, 2009, Dkt. No. 13. On September 10, 2010, the 4 parties stipulated to Nella Oil's dismissal without prejudice from the case. Dkt. No. 47. This left 5 only Caldo Oil, Victor Lobue, and The Victor Lobue Trust, the alleged previous owners of Green 6

Valley's property, as Defendants in the case. With counsel for these parties present, the Court set a 7 case schedule on December 9, 2010. Dkt. No. 62. Under this schedule, fact discovery is set to 8 close on September 9, 2011, and a jury trial is scheduled for January 23, 2012. Id. On March 14, 9 2011, the Caldo Oil Defendants filed a motion for leave to file a counterclaim against Green Valley 10 and a third-party complaint against AEI Consultants and All Environmental, Inc. Dkt. No. 74. The

Court granted this motion and the Caldo Oil Defendants filed their third-party complaint and counterclaim on April 25, 2011. 13

14 intended to file an amended complaint adding the estates of Victor J. LoBue's parents, Salvadore 15 and Tanie Ann LoBue, as defendants. Counsel for the Caldo Oil Defendants stated that they might 16 oppose such an amendment. The Court ordered that the parties either stipulate to filing of the 17 proposed SAC, or that Plaintiff move for leave to file it, by April 28, 2011. See Dkt. No. 88. On 18

Plaintiff seeks leave to file the SAC to add a fifteenth cause of action of "nondisclosure," and to 20 add the Lobue Living Trust, the LoBue Fmaily Trust, and the estates of Salvadore R. LoBue and 21

Defendants timely filed their Opposition ("Opposition to Amend") on May 23, 2011. Dkt. No. 96. 23

Without leave of Court, Plaintiff filed the SAC itself on May 16, 2011, despite the fact that no 25 party stipulation had been reached approving this filing. Plaintiff now concedes this filing was in 26 error, and stated in its Reply to Amend that it would withdraw the SAC filed on May 16, 2011. 27

However, several months later, it has not done so. 28

Case No.: 09-CV-04028-LHK


At a case management conference on April 21, 2011, Plaintiff discussed the fact that it April 28, 2011, Plaintiff filed the Motion to Amend that is under consideration here. Dkt. No. 89.

Tanie Ann LoBue as defendants for most of the asserted causes of action. The Caldo Oil Plaintiff filed its Reply ("Reply to Amend") to the Opposition on June 1, 2011. Dkt. No. 100.

2 naming a subset of defendants identified in the SAC (Victor LoBue, the estates of Salvadore R. Marijo LoBue, wife of Victor LoBue. See Dkt. No. 99. The TPC asserts fourteen of the fifteen 5 causes of action asserted in the SAC, generally in identical language that appears to have been 6 copied from the SAC. The Caldo Oil Defendants and some of the other defendants, appearing 7 specially, moved to quash service ("Motion to Quash") of the TPC on June 16, 2011. See Dkt. No. 8

("Opposition to Quash") on July 7, 2011. See Dkt. No. 110. The Caldo Oil Defendants also 10 moved to strike and dismiss ("Motion to Strike") Plaintiff's SAC and TPC on June 16, 2011. See TPC") on July 7, 2011. See Dkt. Nos. 109, 110. The oppositions should have been filed by June 30, 2011. See Civ. L.R. 7-3(a). The Caldo Oil Defendants failed to file a reply brief in support of 15 either motion within the time provided by the Civil Local Rules. See Civ. L.R. 7-3(c). 16

A. Legal Standard

Under Federal Rule of Civil Procedure 15(a), a party may amend its pleading once as a matter of course within 21 days of serving it. Fed. R. Civ. Pro. 15(a)(1). After that initial period 20 has passed, amendment is permitted only with the opposing party's written consent or leave of the 21 court. Id. at 15(a)(2). Rule 15 instructs that "[t]he court should freely give leave when justice so 22 requires." Id. Although this rule "should be interpreted with extreme liberality, leave to amend is 23 not to be granted automatically." Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) 24

(internal citation and quotation marks omitted). Courts commonly consider four factors when 25 determining whether to grant leave to amend: (1) bad faith on the part of the movant; (2) undue 26 delay; (3) prejudice to the opposing party; and (4) futility of the proposed amendment. Foman v. 27

986 (9th Cir. 1999). "[I]t is the consideration of prejudice to the opposing party that carries the Plaintiff also filed a pleading it titled a Third Party Complaint ("TPC") on May 27, 2011, LoBue and Tanie Ann LoBue, the LoBue Family Trust, and the LoBue Living Trust) and adding 102. Plaintiff filed its Opposition to the Caldo Oil Defendants' Motion to quash service Dkt. No. 104. Plaintiff filed its Opposition to the Motion to strike the SAC ("Opposition Strike SAC") on July 6, 2011, and its Opposition to the Motion to strike the TPC ("Opposition Strike 13


Davis, 371 U.S. 178, 182 (1962); Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, greatest weight." Eminence Capital, 316 F.3d at 1052 (citing DCD Programs, 833 F.2d at 185).

"Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a 3 presumption under Rule 15(a) in favor of granting leave to amend." Id. (citation omitted). "The 4 party opposing leave to amend bears the burden of showing prejudice." Serpa v. SBC Telecomms., Plaintiff has moved for leave to file a Second Amended Complaint so that it may add a fifteenth cause of action of nondisclosure. Plaintiff also seeks to add the Estates of Salvadore and . Futility of Plaintiff's Addition of the Estates of Salvadore and Tanie Ann LoBue

The Caldo Oil Defendants assert that allowing Plaintiff to file a Second Amended Complaint would be futile. Defs.' Opp'n at 4-5. "[A] proposed amendment is futile only if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and 13 sufficient claim or defense." Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). The 14

Caldo Oil Defendants argue that granting leave to amend would be futile because, they believe, 15 claims two through fourteen are time-barred. Defs.' Opp'n at 4-5. Where an amended claim is 16 time-barred, the claim is futile, and amendment should be denied. See Platt Elec. Supply, Inc. v. 17

EOFF Elec., Inc., 522 F.3d 1049, 1060 (9th Cir. 2008). However, "a complaint cannot be 18 dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would 19 establish the timeliness of the claim." Supermail Cargo v. United States, 68 F.3d 1204, 1207 (9th 20

"'An action to establish the decedent's liability for which the decedent was protected by

22 insurance may be commenced . . . without first filing a claim'" in probate. Van Ort v. Estate of 23

Stanewich, 92 F.3d 831, 841 (9th Cir. 1996) (citing Cal. Probate Code § 9390(a)). Here, Plaintiff 24 states the amendments in the SAC are made to "establish their [Salvadore and Tanie Ann LoBue's] 25 Inc., 318 F. Supp. 2d 865, 870 (N.D. Cal. 2004) (citing DCD Programs, 833 F.2d at 187). 6

Tanie Ann LoBue as defendants for twelve causes of action. 9 Cir. 1995).*fn1

liability for which they were protected by insurance." Pl.'s Mot. at 3. California Probate Code § 2 550, et. seq., therefore applies to this case, and Plaintiff was not required to file a probate claim 3 prior to adding the decedents as defendants to this suit. California Probate Code § 551 states that, "if the limitations period otherwise applicable to the action has not expired at the time of the 5 decedent's death, an action under this chapter may be commenced within one year after the 6 expiration of the limitations period otherwise applicable." In other words, if Plaintiff had a cause 7 of action against Salvadore or Tanie Ann LoBue during their lifetime, Plaintiff may sue on that 8 cause of action within one year of the action's normal statute of limitations. Therefore, Plaintiff's 9 claims against these estates are not necessarily time-barred. The Court must examine each cause of 10 action to see whether a claim may be brought against the decedents under § 551. Where a cause of action appears to be time-barred, the Court must evaluate whether that cause of action relates back to the filing of the original complaint.

14 relation back. "Under California law, a plaintiff who names a Doe defendant in his complaint and 15 alleges that the defendant's true name is unknown has three years from the commencement of the 16 action in which to discover the identity of the Doe defendant, to amend the complaint accordingly, 17 and to effect service of the complaint." Lindley v. General Electric Co., 780 F.2d 797, 799 (9th 18 Cir. 1986) (citing Cal. Civ. Proc. Code § 474). The Ninth Circuit has applied § 474 to state claims 19 filed in federal court pursuant to diversity jurisdiction. See generally id. The Ninth Circuit has 20 also applied this statute to claims brought under 42 U.S.C. § 1983 and to Bivens suits, as the statute 21 of limitations for those actions is governed by California law. See Kreines v. United States, 959 22

F.2d 834, 836-37 (9th Cir. 1992) (applying Cal. Civ. Proc. Code §§ 474 to a Bivens suit); Cabrales 23

v. County of Los Angeles, 864 F.2d 1454, 1462-64 (9th Cir. 1988) (applying the statute to a § 1983 24 suit). California's law governing relation-back of claims therefore applies to state law claims over 25 which a federal court has supplemental jurisdiction, as California law determines the statute of 26 limitations to be applied to such claims. Accordingly, the Court will apply § 474 here in its 27 examination of whether each claim may be related back. 28

As a preliminary matter, the Court notes that California law applies to the question of Plaintiff filed its original complaint on August 31, 2009. See Dkt. No. 1. The Motion for Leave was filed on April 28, 2011 (Dkt. No. 89), well within the three years California law allows 3 for relation back. Where a state-law claim would be time barred if it were considered to have been 4 brought for the first time in Plaintiff's SAC, but would be timely if raised in the initial complaint, 5 the Court must treat the claim as though it were filed at the time of the original complaint, on 6

August 31, 2009. The Court must decide whether each of the applicable twelve claims could have 7 been brought against the decedents on August 31, 2009. 8

Plaintiff has not amended its first cause of action for abatement of an imminent and

substantial endangerment brought under 42 U.S.C. § 6972(a)(1)(B). In the First Amended

LoBue, the Victor LoBue Trust, and Nella Oil Company. FAC at 1, 7. In the SAC, this cause of 13 action is brought against defendants Caldo Oil, Victor LoBue, and the Victor LoBue Trust. SAC at 14

8.*fn2 Because this claim is asserted against the same defendants in both complaints, the Court need 15 not examine this claim, as it has not changed. Accordingly, Plaintiff's Motion to Amend is 16

2. Second Through Fifth Causes of Action: Nuisance

Four of Plaintiff's causes of action against the Caldo Oil Defendants involve nuisance:

19 abatement of a public nuisance, abatement of a public nuisance per se, abatement of a continuing 20 private nuisance, and abatement of a continuing private nuisance per se. Neither a public nuisance 21 nor a public nuisance per se is subject to a statute of limitations. Cal. Civ. Code § 3490 ("No lapse 22 of time can legalize a public nuisance, amounting to an actual obstruction of public right."). 23

Similarly, a continuing private nuisance effectively has no statute of limitations, as "every 24 continuation of the nuisance gives rise to a separate claim for damages caused by the nuisance." 25

Mangini v. Aerojet-General Corp., 12 Cal. 4th 1087, 1093 (Cal. 1996) (internal citations and 26 quotation marks omitted). The continuing nature of the alleged wrong prevents a statute of 27

No. 47.

1. First Cause of Action: Imminent and ...

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