Coppola v. Smith

          ORDER ON CAL WATER’S MOTION TO APPROVE SETTLEMENT (DOC. NO. 390)

         This is an environmental law case that arises from the chemical contamination of property surrounding a dry cleaning business in Visalia, California. Defendant Cal Water has filed a motion to approve settlement and for the Court to hold that the settlement is in “good faith” under California Code of Civil Procedure §§ 877 and 877.6 (hereinafter “§ 877” and “§ 877.6”). See Doc. No. 390. The time to formally oppose Cal Water’s motion has now passed, and no party to this case has filed an opposition to Cal Water’s motion. For the reasons that follow, Cal Water’s motion will be granted.

         BACKGROUND

         As explained in previous orders, ^[1] Plaintiffs own the real property and a dry cleaning business located at 717 West Main Street ("717 W. Main"), Visalia, California. Cal Water owns and operates public drinking water systems throughout California, including the City of Visalia. Cal Water owned and operated Well CWS 02-03 (“the Well”) until 2005, at which time the Well was abandoned. In 2000, however, Cal Water stopped operating the Well because of increasing levels of the hazardous substance tetrachloroethylene, also known as perchloroethylene (“PCE”). The Well is located 20 feet east of 717 W. Main.

         On October 28, 2009, the California Department of Toxic Substances Control (“DTSC”) informed Plaintiffs that it was investigating the occurrence of PCE in the soil and groundwater at 717 W. Main. It was later determined that the soil and groundwater both at and near 717 W. Main was contaminated with PCE.

         In June 2011, Plaintiffs and the DTSC entered into a Consent Order that inter alia required Plaintiffs to conduct studies and clean-up efforts regarding the PCE plume at and near 717 W. Main.

         Plaintiffs brought this lawsuit in 2011, and alleged inter alia that, in addition to PCE being released by two other dry cleaning operations in the area, Cal Water’s operation of the Well led to the release of PCE. Plaintiffs seek damages and contribution and indemnification associated with the PCE soil and groundwater contamination and clean up.

         Through several Rule 12(b)(6) motions to dismiss, the claims against Cal Water have been limited. In addition to declaratory relief, Plaintiffs have claims against Cal Water under 42 U.S.C. §§ 9607(a) and 9613(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). Plaintiffs’ CERCLA § 9607(a) claim against Cal Water is based on PCE-contaminated water entering the Well during pumping, but then somehow exiting (“leaking, ” “discharging, ” etc.) the Well when the Well’s pump was cycled off. See Coppola v. Smith, 19 F.Supp.3d 960, 973 (E.D. Cal. 2014).

         DEFENDANTS’ MOTION

         Defendant’s Argument

         Cal Water states that it and Plaintiffs have agreed to settle all claims between them in exchange for mutual waivers and the payment by Cal Water of $110, 00 (each side to bear their own attorney’s fees and costs), but the settlement is contingent upon the Court making a finding of “good faith” under § 877 and § 877.6. Cal Water argues that several considerations demonstrate that the settlement has been made in “good faith.” First, the claims against it have been limited to PCE contaminated water that actually entered and then exited the Well. However, there is evidence that testing results from 1984 through 2005 show that the Well did not exceed the applicable regulatory limit for PCE. Further, in a state court action, the California Superior Court has found that the amount of PCE in the Well did not constitute a legally cognizable injury. Second, there are multiple defendants in this case who allegedly contributed to the groundwater pollution, and Plaintiffs’ most recent supplemental discovery shows that it has incurred $600, 000 in total damages. Third, there is no collusion in this case. The settlement was reached after extensive negotiations. Fourth, the settlement saves costs and other resources that would otherwise be expended during litigation. Given these considerations, the settlement is clearly within the ballpark of what is reasonable, and thus, is a “good faith” settlement.

         Other Parties’ Positions

         Defendants Martin & Martin Properties, Paragon Cleaners, Inc., and Richard Laster have each filed formal notices of non-opposition. See Doc. Nos. 403, 404, and 405. Plaintiffs have filed a notice of non-opposition and expressly join Cal Water’s request to find that the settlement to be in good faith. See Doc. No. 400. Plaintiffs point out that there are disputed factual issues, including the standards used by Cal Water relating to regulatory PCE levels and whether the Well ever exceeded the applicable regulatory limit, and this dispute supports the fairness of the settlement. See id. Finally, Cal Water represented in its motion that it did not anticipate any other party opposing its motion, and that it received written confirmation from the City of Visalia that the City would not file an opposition. See Doc. No. 390 at 8:13-15, 10:14-17. Consistent with these representations, neither the City of Visalia nor any other defendant has objected to or opposed Cal Water’s motion in any way.

         Relevant Terms of Settlement

         The settlement agreement settles all claims and issues between Cal Water and Plaintiffs, as raised in Plaintiffs’ complaint and Cal Water’s counterclaim. In part, the settlement provides that Cal Water will pay Plaintiffs $110, 000.00, Plaintiffs will dismiss their complaint against Cal Water, and Cal Water will dismiss its counterclaim against Plaintiffs. There is a denial of liability, and Cal Water and Plaintiffs are to bear their own attorneys’ fees and costs. The settlement is contingent upon the Court finding that the settlement is made in good faith under inter alia § 877, ...