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United States of America, and California Department of Toxic v. Sterling Centrecorp Inc.

December 8, 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.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Both the United States and the California Department of Toxic Substances (hereinafter collectively referred to as "Plaintiffs" or "government" unless otherwise specified) have designated the former Lava Cap Mine, located in Nevada County, California, as a superfund site polluted by elevated levels of arsenic that were disseminated through tailings and waste materials generated by mine operations. Plaintiffs have undertaken cleanup efforts designed to remediate that arsenic contamination.

The present action seeks contribution for the costs of those activities both from former owners of the site and operators responsible for its mining. Presently before the Court is the motion of Defendant Sterling Centrecorp, Inc. ("Sterling") for summary judgment on grounds that this Court lacks personal jurisdiction over Sterling, and that Sterling is accordingly entitled to judgment as a matter of law. As set forth below, that motion will be denied.*fn1

BACKGROUND

Mining operations at the Lava Cap Mine commenced in 1861. Between 1933 and 1943, mining was conducted at the site by the Lava Cap Gold Mining Corporation ("LCGMC"). Sterling's Statement of Undisputed Fact ("SUF") No. 17. Mining and milling operations conducted prior to 1943 created two piles of mine waste at the site, a waste rock pile and a mill tailings pile. In 1938, LCGMC built a tailings dam on Greenhorn Creek (now known as Lost Lake Dam) "to stop tailings from polluting the waters of the Bear River." Pls.' Supp. SUF No. 138. Waste products included within the mine-generated tailings contained elevated concentrations of naturally occurring arsenic, a hazardous substance pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq. ("CERCLA"). SUF No. 24.

No active mining occurred at Lava Cap after 1943, when its operations were shut down by the United States government during the Second World War. SUF No. 18. In June of 1950, LCGMC decided to "sell, lease, or exchange all the property and assets of the company," preferably to another mining company that could employ LGCMC's existing plant, machinery and equipment. In 1952, LCGMC's directors recommended a sales transaction between LCGMC and New Goldvue, Mines, Ltd, a Canadian company developing a gold mine in Quebec and looking to upgrade its equipment. A purchase and sale agreement was subsequently executed between the two companies. Pursuant to that agreement, New Goldvue, having "been advised as to the . . . assets and liabilities of [LCGMC]," agreed to purchase "all the assets of [LCGMC], subject to the liabilities of [LCGMC], which liabilities [New Goldvue] agreed to assume and cause to be paid promptly." SUF No. 43. The sales agreement further specified that LCGMC's assets would be transferred to Keystone Copper Corporation ("Keystone"), a wholly owned subsidiary of LCGMC, before Keystone was itself conveyed to New Goldvue. SUF Nos. 27-29 Keystone, which had previously operated a copper mine while a LCGMC subsidiary, thus became a wholly-owned subsidiary of New Goldvue.*fn2 Id.

The sales transaction between New Goldvue and LCGMC was financed by transfer of Sterling stock valued at $245,175.60. This represented a 10.2 percent interest in New Goldvue. SUF No. 44.

After the LCGMC purchase was consummated, New Goldvue expanded its board from five to seven and appointed two individuals previously associated with LCGMC to the New Goldvue Board of Directors. SUF No. 47.

New Goldvue, which was originally incorporated in Ontario, Canada, as Goldvue Mines Ltd in 1944, changed its name several times over the years before becoming Sterling in 2001.*fn3 Until 1985, the company now known as Sterling was primarily a natural resources company with investments in mining and oil and gas production. Sterling, through its subsidiary Keystone, owned the Lava Cap Mine for some 37 years (aside from a brief, ultimately unsuccessful attempt to transfer ownership to another company). No mining occurred during that period.

In 1979, however, a partial log dam collapse led to a release of mine tailings which, in turn, caused downstream neighbors to complain about pollution from the resulting silt. In response to those complaints, the California Regional Water Quality Control Board issued a Cleanup and Abatement Order to Keystone On October 25, 1979. See SUF Nos. 32-33.

Following an ultimately unsuccessful attempt to sell the Lava Cap Mine to another company, Keystone sold, in 1989, the property to Banner Mountain Properties, Ltd., an entity controlled by Defendant Stephen Elder, who currently owns four of the seven parcels comprising the former mine site. SUF No. 23.

The remaining three parcels are owned by another Elder business interest, Defendant Elder Development, Inc.

Heavy rainstorms occurring in 1997, after Banner Mountain's purchase on the mine site, washed mine wastes downstream into Little Clipper Creek and a former mine tailings pond now known as Lost Lake. SUF No. 25. EPA began cleanup operations in late 1997 and the site was officially designed a Superfund site in January of 1999. SUF No. 26.

Through the present motion, Sterling asks this Court to determine as a matter of law that because it never directly conducted business in the United States, was never directly authorized to do business in any State, and has never directly owned property in the United States, there are insufficient contacts on ...


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