MEMORANDUM AND ORDER RE: MOTION FOR LEAVE TO AMEND AND RELATED COUNTER, CROSS, AND THIRD PARTY CLAIMS.
Charles H. Lewis and Jane W. Lewis (the "Lewises") brought this action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675, for recovery of costs incurred to remove hazardous substances from a piece of real property located in Davis, California ("Property"). Presently before the court is the cross-claimant City of Davis's ("City") motion for leave to file a second amended cross-complaint ("SACC") pursuant to Rule 15(a)(2).
I. Factual and Procedural Background
This multi-party litigation concerns the contamination of the Property with tetrachloroethene ("PCE"), a chemical allegedly released through the operation of a dry cleaning facility on the Property. (Second Am. Compl. ("SAC") ¶ 40 (Docket No. 197).) The parties include the alleged owners and managers of the Property during the relevant time period; the City, which allegedly contributed to the PCE contamination; the operators of the dry cleaning facility; the entities that supplied and removed the PCE; and the manufacturers of the equipment used in dry cleaning operations at the Property. (Id. ¶¶ 7-25, 44; First Am. Third Party Compl. ("FATPC") ¶¶ 1-2
(Docket No. 198).) Since the filing of the original complaint in 2003, the parties have filed numerous counterclaims, cross-claims, and third-party claims for contribution pursuant to 42 U.S.C. § 9613(f).
In 2001, the City provided the California Regional
Water Quality Control Board, Central Valley Region ("RWQCB") with information that a pipe emerging from Lewis Cleaners was discharging water into a broken pipe on the ground and that water samples revealed elevated levels of PCE. (Martin's Req. for Judicial Notice ("Martin") Ex. 1 (Docket No. 409).)
The RWQCB then issued a Cleanup and Abatement Order ("Abatement Order") on October 2, 2002, instructing the current and past owners and operators of the Property to investigate the extent of the PCE contamination and to prepare work plans to address the contamination. (SAC ¶ 42.) The Abatement Order stated that "[t]wo municipal wells are located within the vicinity of the site," but also reported that "VOCs [volatile organic compounds] have not been detected in any City municipal wells." (Martin Ex. 2.) The City received a copy of the Abatement Order. (See Resp. to Martin's Stmt. of Undisputed Facts ¶ 11 (Docket No. 419).)
On November 1, 2002, defendant Robert Russell, who operated a dry cleaning business on the property from 1964 to 1971, petitioned his designation as a discharger in the Abatement Order. (Martin Ex. 4.) In his petition and accompanying declaration, Russell admitted that he installed the dry cleaning equipment used in his business and that, during his "Russell's One Hour Martinizing" operations, he discharged the wastewater that the equipment generated into the City sewer system. (Id.)
The RWQCB dismissed Russell's petition on January 15, 2003. (Id. Ex. 5.) On January 17, 2003, the RWQCB called for further investigation to determine if several City wells might be contaminated with PCE. (Id. Ex. 6.) It reported that PCE had been found below a bend in the City's sewer line on July 2, 2003. (Id. Ex. 7.) The City received copies of all these documents. (See Resp. to Martin's Statement of Undisputed Facts ¶¶ 15, 17, 19.)
The Lewises filed the Complaint in this action on
December 9, 2003, naming the City as a defendant. (See Compl. (Docket No. 1).) In their original Complaint, plaintiffs alleged that "gaps and cracks" in the City's sewer system permitted the release of PCE into the Property and adjacent properties. (Id. ¶ 26.) They also alleged that defendant dry cleaner operators Robert Russell and the Newitts were responsible, in part, for the leakage of PCE, identifying their respective businesses as "Russell's One Hour Martinizing" and "Newitt's One Hour Martinizing." (Id. ¶¶ 7-9, 19-21.)
On May 24, 2004, the parties indicated in a Joint Status Report that they were agreeable to participating in a voluntary mediation process. (See J. Status Report (Docket No. 21); King Decl. to Opp'n to Mot. Summ. J. ("King Decl.") ¶ 4 (Docket No. 420).) Until September 2, 2004, no party propounded written discovery. (King Decl. ¶ 5.) The court ordered a stay of litigation on April 13, 2005, to facilitate an agreed-upon settlement process. (See Order of Settlement Process 1:23-2:2, 12:6-7 (Docket No. 124).) In November 2005, the City made two payments of $20,000 each toward the parties' joint investigation of the alleged contamination as part of the mediation process. (King ...