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Alexander v. Exxon Mobil

California Court of Appeals, Second District, Seventh Division

September 24, 2013

DORIS ALEXANDER, et al., Plaintiffs and Appellants,
v.
EXXON MOBIL, et al., Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC435640 Anthony Mohr, Judge.

David P. Bender, Jr., Caroline R. Hurtado and Michael J. Stoner, for Plaintiffs and Appellants.

Kaye Scholer, Larry Feldman, Peter Haviland and Robert Estrin, for Defendant and Respondent Exxon Mobil Corporation.

Parker, Milliken, Clark, O’Hara & Samuelian, Gary A. Meyer, Pedram F. Mazgani and Isaac B. Simon, for Defendants and Respondents the County of Los Angeles, Housing Authority of the County of Los Angeles and the Community Development Commission of the County of Los Angeles.

ZELON, J.

INTRODUCTION

In April of 2010, over 700 plaintiffs filed a toxic tort action alleging injury from exposure to environmental contamination at a low-income housing complex constructed on a former oil storage facility. Defendants filed a demurrer arguing that the action was time-barred because the allegations in the complaint demonstrated plaintiffs knew, or should have known, of the environmental contamination several years before filing suit. The trial court sustained the demurrer without leave to amend against a subset of approximately 100 plaintiffs who admitted receiving notice of the contamination in 2007. The court concluded that although the notices suggested the contamination was not harmful, they were nonetheless sufficient to cause a reasonably prudent person to suspect that it might be so.

Fifty-eight of the dismissed plaintiffs join in this appeal, arguing that whether their causes of action accrued at the time they received notice of the environmental contamination raises a question of fact that is not amendable to resolution on demurrer. We agree and reverse the trial court’s order of dismissal.

FACTUAL AND PROCEDURAL BACKGROUND

1. Background Facts[1]

Between 1924-1962, Exxon Mobil and its predecessors in interest (collectively Exxon) owned and operated the “Athens Tank Farm” (ATF), which was used to store gasoline and petroleum products. The ATF site contained “twenty-two 80, 000 barrel steel above-ground storage tanks, two crude oil reservoir/sumps with a capacity of 1.8 million barrels, a pipeline pumping station and an absorption plant.” During the course of operations, Exxon allowed millions of pounds of crude oil, gasoline and other petroleum products to contaminate the soil and the groundwater in and around the ATF site. In 1962, Exxon ceased its operations at ATF and began to “decommission the facility to prepare it for sale.”

Exxon eventually sold the ATF, which was then subdivided for residential use. In 1972, the Ujima Housing Corporation (Ujima Corporation) and several related entities constructed a low-income housing complex known as “Ujima Village Apartments” (Ujima) on a 16-acre parcel of the former ATF site. During construction, Ujima Corporation and its entities discovered two crude oil reservoir/sumps, oil saturated soils and petroleum-related debris, which they buried on the site.

The Ujima Corporation and its successors in interest owned and operated Ujima until the United States Department of Housing and Urban Development (HUD) foreclosed on the property in 1990. Before the foreclosure became final, HUD developed a plan to rehabilitate the property and sell it to a private entity. However, the purchaser withdrew from the sale negotiations after its environmental consultant reported that methane gas and hydrocarbons in the subsurface presented “‘high potential for significant environmental impairment.’”

Between 1990 and 1995, HUD and its agents conducted several environmental investigations at the Ujima site. In 1991, HUD hired an environmental consultant to prepare a study “estimat[ing the] liability” associated with the “presence, past use or release of environmentally regulated materials.” The study reported that the site was contaminated with “volatile organic compounds” (VOCS) in concentrations that “significantly exceeded the highest suggested action levels...” and recommended that additional investigations be performed to determine the extent of the contamination.

After initially rejecting those recommendations, HUD retained Earth Technology in 1993 to test the site for contaminants. Although the resulting report identified elevated concentrations of lead, mercury and other potentially harmful chemicals, it concluded that the contamination did not present a significant threat to the health or safety of Ujima residents. The Community Development Commission of the County of Los Angeles (CDC), however, hired a consultant to review Earth Technology’s study. In December of 1993, the consultant issued a report that was highly critical of Earth Technology’s methodologies and conclusions.

In or around 1994, the CDC and the Los Angeles County Housing Authority (collectively the County authorities) entered into negotiations with HUD to purchase Ujima. After reviewing the prior environmental investigations, the County authorities expressed concerns about potential “third party civil actions” and demanded that HUD provide indemnification coverage. HUD agreed to the proposal and sold Ujima to the Housing Authority for $1.00. The Housing Authority owned and operated Ujima from 1995 until its closure in 2009.

In May of 2005, the County authorities hired Rincon Consultants to conduct sampling of soil contamination, which revealed high concentrations of hydrocarbon vapors and VOCs that were consistent with a gasoline release. Rincon’s report also revealed that “residents were at significant risk of exposure and cancer.” Shortly thereafter, a private developer prepared a “Phase I Environmental Site Assessment Report” that confirmed contamination related to the release of petroleum hydrocarbons. Based on this report, two different developers decided not to purchase Ujima.

In October of 2006, the County authorities retained Rincon to conduct an overall evaluation of the site, which concluded that “‘the possibility of a chronic health risk concern at th[e] site warrant[ed] additional study’” and that “‘remediation [wa]s likely warranted... as a preventative measure to reduce possible exposure of VOC to residents [and] mitigate existing groundwater contamination underlying th[e] property.’” After the report was issued, the County authorities requested that the California Regional Water Quality Control Board (the Water Board) oversee all further investigations at Ujima.

On May 1, 2007, the Housing Authority sent a letter advising all Ujima residents that it was “considering the possibility” of closing the complex “due to the age and obsolescence of the property, the substantial economic cost of rehabilitation, and the significant disruption to the daily lives of residents to remediate environmental concerns.” The letter stated that if the complex was closed, displaced residents might be eligible to receive federal relocation assistance payments. The letter emphasized, however, that residents should not move out of the complex and urged them to “continue to pay [their] monthly rent.” The letter further explained that residents would forfeit their right relocation assistance if they moved or were evicted before “receiving formal notice of... eligibility....” The letter did not provide any further information about the “environmental concerns” at the property.

In June of 2007, the Housing Authority sent Exxon a letter requesting compensation for all costs associated with contamination at the site, including “third-party claims related thereto.” The letter explained that testing had “identified gasoline and crude oil contamination in the soil and groundwater, ” which was “the direct result of the past use of the Premises as an oil storage tank farm.” The Housing Authority informed Exxon that it would be “amenable to... having [Exxon]... undertake all appropriate assessment, monitoring, removal and remediation work” under the “purview and... approval of the [Water Board].” The letter also stated that it had received correspondence from a current Ujima resident that referenced “possible impacts of ‘conditions of soil and water’” and requested that her family “be relocated as soon as possible for ‘medical reasons....’” The Housing Authority advised Exxon that “[b]ased, in part, on mitigating [this resident’s] and other prospective third party claims, [it was] planning for the permanent relocation of all residents of [Ujima].”

In October of 2007, the Water Board met with the Ujima property manager and Rincon to discuss environmental remediation at Ujima. During the meeting, the Water Board emphasized the “urgent” need for an investigation that was sufficient to properly “evaluate the extent of contamination and potential risk to human health.” The property manager encouraged the Water Board to “establish contact with [Exxon]” and indicated that it had “conducted a meeting with the tenants and informed them of the current status and the potential for near future evacuation.”

On November 14, 2007, the Water Board issued a letter ordering Exxon to “complete environmental investigation, assessment, monitoring and cleanup at [Ujima.]” The letter explained that, since 1992, only “limited soil, soil vapor, indoor air and groundwater sampling ha[d] been conducted at the... site.” Although the results of this “limited sampling” had confirmed contamination “from the historical operations that occurred at ATF, ” the Water Board believed a more “complete environmental assessment of the contaminants... [wa]s required on an expedited basis.” The letter ordered Exxon to conduct a “thorough investigation of the industrial operations conducted... at [Ujima]” and to prepare a “site-specific human health risk assessment....” After receiving the order, Exxon retained one of its “prime [environmental] consultant[s], ” Kleinfelder West, to conduct an investigation.

In April of 2008, the County authorities held community meetings for Ujima residents regarding the future closure of the site, relocation and the pending environmental remediation. During these meetings, which were attended by representatives of the County authorities, Exxon and the Water Board, fliers were distributed reporting that although contamination had been found at the site, the environmental conditions did not “pose adverse health and safety risks to the occupants.”

On June 9, 2008, the Water Board sent an email to the County authorities and Exxon indicating that “review of preliminary shallow soil data” suggested that “‘there does not appear to be immediate health concern....’” Several days later, the County authorities and Exxon held another “relocation informational meeting” with Ujima residents and reported that “environmental investigation confirmed that there was no adverse risk to the health of the tenants.”

In August of 2008, Kleinfelder issued a report concluding that “there was no adverse risk to human health from the contaminated subsurface soils and groundwater at or around [Ujima].” The report failed, however, to “properly evaluate, test address, raise and/or consider the actual health risk posed to [residents and neighbors of Ujima residents] as a result of the exposure to chemicals....”

In December of 2008, the County Supervisors approved a motion to close Ujima as soon as possible; on April 14, 2009, the Supervisors issued a “declaration of blight” regarding the complex and directed the Housing Authority to evict remaining tenants.

B. Prior Versions of Plaintiffs’ Complaints and Trial Court’s “Cottle” Order

In April of 2010, hundreds of former Ujima residents filed Alexander v. Exxon Mobil (Superior Court Case No. BC435640), which alleged numerous claims predicated on exposure to contamination at the housing complex. In April of 2011, a second set of plaintiffs, which was comprised of other former Ujima residents and individuals residing in nearby residential neighborhoods, filed a similar suit captioned Davis v. Exxon Mobil (Case No. BC460123). The trial court consolidated the matters and, on August 8, 2011, plaintiffs filed a “Consolidated Third Amended Complaint” (TAC). Over 700 plaintiffs joined in the TAC, which named 15 defendants including, Exxon, the County of Los Angeles, the CDC, the Housing Authority, Earth Technology, Ujima Corporation and numerous other private entities (we refer collectively to the government defendants as “County defendants” and the private defendants as “non-government defendants”). The TAC asserted a wide range of claims seeking compensation for injuries to both person and property.

The TAC included a subsection describing when plaintiffs allegedly discovered their claims. According to the complaint, plaintiffs had no reason to suspect the contamination at Ujima was harmful to their health until the Housing Authority issued its declaration of blight in May of 2009. Plaintiffs alleged that, prior to that time, respondents had repeatedly told Ujima residents that the contamination was not harmful. After seeing the declaration of blight, however, several individuals retained attorney Thomas Wire to investigate the matter further. Wire conducted an analysis of the “true condition of the contamination” and discovered that the “soil and groundwater... ha[d] continually posed a significant risk to human health and safety.” The complaint further asserted that other groups of plaintiffs did not learn of the declaration of blight or the true dangers of the environmental contamination until October of 2009 and April of 2011.

Defendants filed a demurrer to the TAC arguing, in part, that plaintiffs’ claims were untimely because the allegations in the complaint demonstrated, as a matter of law, that Ujima residents should have suspected that the contamination was capable of harming them many years before they filed suit. The County defendants separately argued that a demurrer should be sustained in their favor because plaintiffs had ...


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