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San Diego Unified Port District v. General Dynamics Corporation

United States District Court, Ninth Circuit

October 10, 2013

SAN DIEGO UNIFIED PORT DISTRICT, Plaintiff,
v.
GENERAL DYNAMICS CORPORATION, LOCKHEED MARTIN CORPORATION, Defendants.

ORDER REGARDING PLAINTIFF'S LIABILITY FOR ONE-THIRD OF INVESTIGATION COSTS AT THE TOW BASIN SITE (DOC. NO. 51)

WILLIAM V. GALLO, Magistrate Judge.

On July 12, 2013, the Court ordered Plaintiff San Diego Unified Port District ("Plaintiff" or "Port") and Defendants General Dynamics Corporation and Lockheed Martin Corporation ("Defendants") to file briefs regarding Plaintiff's liability for one-third of the investigation costs at the Tow Basin Site ("Site"). On August 9, 2013, Defendants filed their Opening Brief. On August 16, 2013, Plaintiff filed its Opposition to Defendants' Opening Brief. On August 23, 2013, Defendants filed a Reply to Plaintiff's Opposition. On September 9, 2013, the Court held a hearing regarding this matter.

The Court, having reviewed the Moving, Opposition, and Reply papers, and having heard oral argument, and GOOD CAUSE APPEARING, HEREBY FINDS AND ORDERS as follows:

A. 1998 Cost Allocation Agreement

On January 9, 1998, the California Department of Toxic Substances Control ("DTSC") issued an Imminent Or Substantial Endangerment Determination & Remedial Order ("Order") (Defendant's Opening Brief, Exh. A). The Order required the parties to investigate "the nature and full extent of hazardous substance contamination of air, soil, surface, water, and groundwater at the Site, including offsite areas affected by the Site, as well as to perform any remedial action necessary to address such contamina-tion. (Defendant's Opening Brief, Exh. A, ยงยง 5.1.1, 5.1.2, 5.2).

After the Order was issued, in July 1998, the parties entered into an Interim Settlement & Participation Agreement ("1998 Agreement") (Defendant's Opening Brief, Exh. B). In this Agreement, the parties agreed to cooper-ate in the investigation and cleanup of the hazardous substances at the Site and to split costs associated with the Site investigation in equal one-third shares. (Defen-dant's Opening Brief, Exh. B, para. 2, 3, 6).

The parties agreed that if the Port's portion of costs exceeded $150, 000, then prior approval of the Port Commissioners must be obtained. (Defendant's Opening Brief, Exh. B, paras. 2, 3)

The allocations set forth for cleanup were final and are not subject to appeal, arbitration or any other further action by any party. The parties waived their rights to a jury trial as to any dispute arising from the allocation. (Defendant's Opening Brief, Exh. B, para. 5).

The 1998 Agreement also contains the following clauses:

To facilitate payment of the investiga-tive, removal and remediation costs identified in this Agreement, the Parties agree that the Contractor responsible for conducting the work shall be required to send copies of its in-voices to each party at least 45 days prior to payment being due. Each party shall be respon-sible for the timely payment of its share directly to the Contractor.
Each Party's timely payment to the Con-tractor is an independent obligation. If any Party(ies) fails/fail to pay its/their full share or any portion thereof in a timely manner, the other Party(ies) [the Paying Party(ies)'] shall make such payment in equal share so that the Contractor is paid in full within ninety days of the date of the original invoice.
Any party that fails to pay its full share in a timely manner will be in breach of this agreement. The Paying Party(ies) shall have the right to seek recovery of such payment, interest, cost and attorney fees in a civil action for reimbursement from the non-Paying Party(ies) notwithstanding the provisions set out in Paragraph 2 of Article 1 herein. [1]

(Defendants' Opening Brief, Exh. B, para. 21)(emphasis added).

B. 2006 Interim Cost Sharing Agreement

After the Port filed suit against Defendants, and after mediation, the parties entered into the 2006 Interim Cost Sharing Agreement (Defendant's Opening Brief, Exh. C) wherein the parties agreed to each pay one-third of the groundwater and sediment investigation costs, subject to the Port's seeking an agreement from its insurers that the insurers will pay the Port's one-third share of the costs. If the insurers did not agree to pay the Port's one-third share, any party would have been able to withdraw from making any further payments and the issue would be medi-ated with a named mediator. The Port does not present any evidence or argument that the insurers refused to pay its one-third share.[2]

On November 13, 2009, counsel for Defendant General Dynamics sent a letter to the DTSC, the Regional Water Quality Control Board ("Regional Board"), counsel for Lockheed Martin, and counsel for the Port in anticipation of the transfer of oversight of the Site from the DTSC to the Regional Board. (Defendants' Opening Brief, Exh. E). The purpose of the letter was to ensure that all parties understood that the transfer was "not intended to impact (the July 1998) Agreement in any manner." (Defendants' Opening Brief, Exh. E). Counsel for General Dynamics invited the parties to correct him if his understanding was incorrect. There is no evidence in the record before the Court that any party, particularly the Port, disagreed with this expectation.

C. Port's Refusal to Fund Stressor Identification Analysis ("SIA")

In January 2010, the Regional Board took over as the lead agency overseeing the Site. The transfer of the investigation and remediation of the Site was agreed to by all parties. The Regional Board requested the parties to undertake additional sediment sampling at the Site in accordance with the Water Quality Control Plan, adopted in 2009. Although the Port paid its share of costs of con-ducting additional sampling in accordance with the Water Quality Control Plan, the ...


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