United States District Court, E.D. California
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 ...