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City of San Diego v. Company

October 27, 2011

CITY OF SAN DIEGO,
PLAINTIFF,
v.
COMPANY, ALSO KNOWN AS NATIONAL
STEEL & SHIPBUILDING COMPANY, ET
DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER DENYING MOTION FOR SUMMARY JUDGMENT NATIONAL STEEL AND SHIPBUILDING [Doc. No. 134]

Defendant, Star & Crescent Boat Company (hereinafter "S&C Boat"), filed a motion, [Doc. No. 134], seeking summary judgment on the following grounds: 1) there is no evidence that S&C Boat contributed to any of the environmental contamination at the Shipyard Site, 2) there is no evidence that S&C Boat is the successor-in-interest to San Diego Marine Construction Company (hereinafter "SDMCC")/Star & Crescent Investment Co. (hereinafter "Investment Co.), and 3) the District has no reasonable probability of locating evidence proving that S&C Boat is the successor-in-interest to SDMCC/Investment Co.*fn1 SDMCC is one of the parties potentially responsible for contamination of the Shipyard Sediment Site in the San Diego Bay. Plaintiff, the City of San Diego, and Defendants Cross/Counter-Claimants San Diego Unified Port District (hereinafter "SD Port") and Campbell Industries (collectively hereinafter "Opponents") filed oppositions, [Doc. Nos. 141,142 and144 respectively],*fn2 and S&C Boat filed a reply, [Doc. No. 145].*fn3 The hearing set for October 28, 2011 at 1:30 p.m. before Judge Battaglia in Courtroom 12 is hereby vacated as this motion is appropriate for submission on the papers without oral argument pursuant to Civil Local Rule 7.1.d.1. Based upon the parties moving papers and for the reasons set forth herein, S&C Boat's motion for summary judgment is hereby DENIED.

Relevant Background

Plaintiff, the City of San Diego, and Defendants National Steel and Shipbuilding Company ("NASSCO"), BAE Systems San Diego Ship Repair, Inc. (BAE Systems), Campbell Industries, San Diego Marine Construction Company ("SDMCC"), Star and Crescent Boat Company ("S&C Boat"), San Diego Gas & Electric ("SDG&E") and the United States Navy ("US Navy") were all named as "Dischargers" or "Persons Responsible" for alleged environmental contamination at the property known as the "Shipyard Sediment Site" by the California Regional Water Control Board, San Diego Region ("the Regional Board"), in Tentative Clean Up & Abatement Order No. R9-2005-0126 (the "Tentative Order") on September 15, 2010. The Shipyard Sediment Site is a portion of the San Diego Bay along the eastern shore of the Bay in an area extending from approximately the Sampson Street Extension to the north and Chollas Creek to the south, and from the NASSCO shipyard facility and BAE Systems shipyard facility shoreline out to the San Diego main shipping channel to the west.

The Regional Board contends that Plaintiff and Defendants are jointly and severally responsible for alleged property damage, including, but not limited to, alleged damages to aquatic life, at and beyond leaseholds at the Shipyard Sediment Site once and/or currently occupied by Defendants and other entities. Since 1991, the Regional Board has been working with various private and governmental entities to address discharges of metals and other pollutant wastes to San Diego Bay marine sediment and waters located within and adjacent to the area collectively called the Shipyard Sediment Site.

SDMCC, owned and operated by the Hall family, operated a shipyard from approximately 1915 until 1972 on a leased portion of the Shipyard Sediment Site for shipbuilding purposes.*fn4 SDMCC's shipyard site was located in San Diego Bay south of the Coronado Bridge, generally between the Sampson Street extension and the mouth of Chollas Creek in the City of San Diego. Other than its shipyard operations, SDMCC had other businesses, including real property holdings and a boat division, Star & Crescent Boat Company (hereinafter "S&C Boat Company"), which operated the harbor excursion business. S&C Boat Company, along with a number of other ship owners, operated the only shore boat/water taxi operations throughout the San Diego Bay beginning in 1925 through an exclusive City of San Diego franchise issued to United Water Taxi Company.*fn5 As an operator under the franchise, S&C Boat Company was permitted to use the five authorized shore boat landings in the bay, two of which were located with the Shipyard Sediment Site, for a number of years (Exhibits "I", "J", "K", "L"; UF No.8).*fn6

The record indicates that from 1959 until 1972, S&C Boat Company used SDMCC's Shipyard Sediment Site to install and store diesel fuel storage tanks and pumping equipment to provide fuel to the boat division's equipment including the division's tug boats, barges, and ferries.(Exhibits "A", "B", "C", "D", "E", "F"; UF No. 10). S&C Boat Company also utilized SDMCC's Shipyard Sediment Site facilities for the construction, repair, and fueling of its marine vessels during this period. Id. S&C Boat Company's use of SDMCC shipyard leasehold ceased when SDMCC sold the marine division assets to Campbell Industries/MCCSD on July 14, 1972. After the sale of its shipyard assets to Campbell Industries in 1972, SDMCC, which still consisted of the investment division and boat division, changed its name to Star & Crescent Investment Co. ("Investment Co.").

On March 19,1976, Star & Crescent Boat Company (S&C Boat) was incorporated in California, signed by six original directors. On April 7, 1976, Investment Co. transferred its harbor excursion *fn7 and liabilities*fn8 to the newly-incorporated S&C Boat, the moving party in this motion, which operates the same harbor excursion business today. On April 9, 1976, the Board of Directors of the S&C Boat held a meeting and the six original directors resigned and were replaced by members of the Hall family.*fn9 At that meeting, Mr. Hall Jr. and the other directors created stock in S&C Boat*fn10 . Also at the April 9th meeting, Mr. Hall Jr. reported that he had received a written offer from his Investment Company to transfer all the Investment Co.'s "right title and interest of every kind and description in and to its business and assets pertaining to its harbor excursion business," in exchange for the S&C Boat's assumption "of the debts and liabilities of said harbor excursion business as set forth in Exhibit "A," and one thousand five hundred (1,500) shares of the S&C's Boat's stock.*fn11 As a result, the Investment Co. held all 1,500 shares of S&C Boat's stock and S&C Boat received all of Investment Co.'s harbor excursion business assets and liabilities before March 31, 1976.*fn12 On October 26, 1976, Investment Co.'s transferred its 1,500 shares of S&C Boat stock back to Mr. Hall, Jr.'s children: Stephen P. Carlstrom, Judy Hall, and Janet Miles, who each received 500 shares.*fn13 Doc. No. 134-2, SUF No. 20. Under the terms of the stock sale agreement, these three individuals paid $765,400 to Investment Co. to purchase this stock,*fn14 and the payments were made from S&C Boat dividends until paid in full in 1981.*fn15 The Investment Co. continued to operate its own separate businesses, including the Lake Mead Ferry Service, Las Vegas Baggage Service, and Lasco Truck Rental & Equipment Co., until it dissolved more than 15 years after selling its harbor excursion business to S&C Boat.

Legal Standard

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A Hall are all Mr. Hall, Jr.'s children. genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Miller v. Glenn Miller Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the nonmoving party's claim, or to a defense on which the nonmoving party will bear the burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos. Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). When the nonmoving party would bear the burden of proof at trial, the moving party may satisfy its burden on summary judgment by simply pointing out to the Court an absence of evidence from the nonmoving party. Miller, 454 F.3d at 987. "The moving party need not disprove the other party's case." Id.

Once the movant has made that showing, the burden shifts to the opposing party to produce "evidence that is significantly probative or more than 'merely colorable' that a genuine issue of material fact exists for trial." LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009) (citing FTC v. , 265 F.3d 944, 954 (9th Cir. 2001)); see also Miller, 454 F.3d at 988 ("[T]he nonmoving party must come forward with more than 'the mere existence of a scintilla of evidence.'") (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

The Court must review the record as a whole and draw all reasonable inferences in favor of the nonmoving party. Hernandez v. Spacelabs Med. Inc., 343 F.3d 736, 738 (9th Cir. 2000). However, unsupported conjecture or conclusory statements are insufficient to defeat summary judgment. Id.; Surrell v. Cal. Water Serv. Co., 518 F.3d 1097, 1103 (9th Cir. 2008). "Thus, '[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine ...


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