Coppola v. Smith

          ORDER VACATING JULY 11, 2016 HEARING AND ORDER ON MARTIN AND MARTIN PROPERTIES, LLC’S MOTION TO APPROVE SETTLEMENT (DOC. NO. 414)

         This is an environmental law case that arises from the chemical contamination of property surrounding a dry cleaning business in Visalia, California. Defendant Martin & Martin Properties, LLC (“Martin”) 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. 414. Hearing on this motion is set for July 11, 2016. The time to formally oppose Martin’s motion has now passed, and no party to this case has filed an opposition. The Court will vacate the July 11, 2016 hearing date and instead issue this order, which grants Martin’s motion.

         BACKGROUND

         As explained in previous orders, ^[1] Plaintiffs own the real property and a dry cleaning business located at 717 W. Main Street ("717 W. Main"), Visalia, California. Martin is a real estate investment company that, since 1995, has owned 520 W. Main (“520 W. Main”), Visalia, California. Unbeknownst to Martin, from 1959 to possibly 1971, a dry cleaning business was operated at 110 N. Willis, Visalia, California. In the early 1970’s, 520 W. Main was constructed. In the construction process, the area that had been known as “110 N. Willis” became part of the northwest corner of 520 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 were contaminated with PCE.

         Earlier in 2009, the Environmental Protection Agency (“EPA”) detected low levels of PCE at or near 520 W. Main. However, the EPA determined that no further assessment was needed, it could not determine that PCE was released from 520 W. Main, and that no remedial steps by Martin were necessary.

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

         Plaintiffs brought this lawsuit in 2011. As to Martin, Plaintiffs allege claims under 42 U.S.C. §§ 9607(a) and 9613(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), continuing private nuisance, continuing private trespass, declaratory relief, and common contribution, all based on alleged releases of PCE attributable to the former dry cleaning business (110 N. Willis). Martin has filed counterclaims against Plaintiffs for violation of CERCLA § 9607(b)(3) and § 9613, equitable contribution, equitable indemnity, nuisance, and trespass.

         On January 15, 2015, the Court issued an order on Martin’s motion for summary judgment. The Court granted partial summary adjudication on several issues, but denied summary adjudication on the issue of whether Martin had made appropriate inquiries in accordance with customary standards and practices prior to purchasing 520 W. Main (which is a necessary element of CERCLA’s innocent landowner defense). See Coppola v. Smith, 2015 U.S. Dist. LEXIS 5127, *55-*56 (E.D. Cal. Jan. 15, 2015). The Court also denied summary judgment on Plaintiffs’ claims for nuisance, trespass, contribution, and declaratory judgment. See id. However, the Court granted Martin permission to file a subsequent summary judgment motion in accordance with any scheduling orders that were to issue. See id. at *55.

         DEFENDANTS’ MOTION

         Defendant’s Argument

         Martin states that it and Plaintiffs have agreed to settle all claims between them in exchange for mutual waivers and the payment by Martin of $150, 000, but the settlement is contingent upon the Court making a finding of “good faith” under § 877 and § 877.6. Martin argues that the settlement meets the Tech-Bilt factors, which shows that the settlement is in good faith. First, the amount that Martin agrees to pay is within the reasonable range of its proportional responsibility. Plaintiffs have incurred $600, 000 in clean-up costs to date, there are multiple defendants, and the Court’s prior summary judgment rulings and the actions of the EPA are very favorable towards Martin. Second, Martin is a small family owned business that does not have insurance to cover any alleged liability. Third, there has been no collusion, and the settlement was reached after extensive negotiation and formal mediation. Further, no other party has indicated that they will oppose this motion, and all parties were notified prior to filing this motion. Fourth, it is understood that a party should pay less in settlement than by way of a verdict. 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 Paragon Cleaners, Inc. and Richard Laster have each filed formal notices of non-opposition. See Doc. Nos. 419, 421. Plaintiffs have filed a notice of non-opposition and expressly join Martin’s request to find that the settlement is in good faith. See Doc. No. 417. Plaintiffs point out that there are disputed factual issues, including the conclusions that Martin draws from the Court’s summary judgment order, whether Martin exercised due diligence in the purchase of 520 W. Main, and whether there is evidence of “releases” of PCE from 520 W. Main. No other party has objected to or opposed Martin’s motion in any way.

         Relevant Terms of Settlement

         The settlement agreement settles all claims and issues between Martin and Plaintiffs, as raised in Plaintiffs’ active complaint and Martin’s counterclaims. See Murray Dec. Ex. A. In part, the settlement provides that Martin will pay Plaintiffs $150, 000.00 ($60, 000 to be paid now and the rest to be paid annually in increments of $18, 000.00), Plaintiffs will dismiss their complaint against Martin, and Martin will dismiss its counterclaims against Plaintiffs. See id. at pp. 2-3. There is a denial of liability, and Martin 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 ...