AmeriPride Services, Inc. v. Valley Industrial Services, Inc.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE

         Plaintiff AmeriPride Services, Inc. ("AmeriPride") initiated this action under the Comprehensive Environmental Remediation, Contamination, and Liability Act ("CERCLA") more than sixteen years ago. After a trial, an appeal, and settlements with numerous other parties, only Texas Eastern Overseas, Inc. ("TEO") remains as a defendant. Presently before the Court are the parties' Motions for Summary Judgment. ECF Nos. 1018, 1021, 1026. For the reasons that follow, the Motions are GRANTED in part and DENIED in part.^[1]

         BACKGROUND

         This action arises out of the contamination of soil and groundwater at and around an industrial laundry facility located at 7620 Wilbur Way in Sacramento, California ("the Facility"). AmeriPride owns the Facility, which was previously owned and operated for seventeen years by Valley Industrial Services, Inc. ("VIS") as an industrial dry cleaning and laundry business. VIS used perchloroethylene ("PCE") as a solvent in its dry cleaning operations. During its operations, VIS released PCE into the soil and groundwater.

         For part of the time that VIS operated the Facility, it was a wholly owned subsidiary of Petrolane. VIS eventually merged into Defendant Texas Eastern Overseas ("TEO"), which expressly assumed VIS's liabilities. TEO is a Delaware corporation that dissolved in 1992. It first appeared in this case on July 13, 2000, when it answered and asserted a counterclaim. In November 2009, a receiver was appointed for TEO for "the sole purpose of establishing the capacity of TEO to be sued in [this action] solely to the extent of its insurance assets . . . ." That appointment was confirmed in 2010.

         In 1983, Petrolane sold the Facility, which subsequently changed ownership several times until AmeriPride became the owner. AmeriPride did not conduct dry cleaning operations at the Facility, but, during its ownership, there were additional releases of PCE-contaminated water into the soil and groundwater. The contamination at the Facility migrated onto a neighboring property owned by Huhtamaki Foodservices, Inc. ("Huhtamaki") and contaminated wells owned by California-American Water Company ("Cal-Am").

         In 1997, AmeriPride found evidence of PCE in the soil under the Facility and reported the discovery to regulatory authorities. In 2002, the California Regional Water Quality Control Board took regulatory control over the investigation at the Facility. Since then, AmeriPride has performed investigation and remediation of the PCE in the soil and groundwater at and near the Facility under the direction of the California Regional Water Quality Control Board. The cleanup is ongoing.

         In January 2000, AmeriPride filed this action against VIS, TEO, Petrolane, Chromalloy, and other parties under CERCLA and various state laws to recover costs it incurred responding to the PCE contamination. TEO answered and asserted a counterclaim against AmeriPride.

         On July 9, 2002, Cal-Am filed a separate complaint against AmeriPride and TEO seeking recovery of its response costs, damages, and other relief in connection with the contamination of its wells. AmeriPride paid Cal-Am $2 million to settle those claims. Two years later, on July 29, 2004, Huhtamaki sued AmeriPride; AmeriPride later paid Huhtamaki $8.25 million to settle. In addition, in 2006, AmeriPride entered into settlement agreements with Chromalloy and Petrolane in which AmeriPride received $500, 000 and $2.75 million, respectively.

         Settlement attempts between TEO and AmeriPride in 2007 were ultimately unsuccessful so AmeriPride pursued its cost recovery claims against TEO. In January 2011, AmeriPride filed a motion for summary judgment against TEO seeking an order that TEO was liable to AmeriPride for its response costs, including the settlement amount it paid to Cal-Am and Huhtamaki. AmeriPride also moved to dismiss TEO's counterclaim for contribution.

         On May 12, 2011, the Court granted in part AmeriPride's motion for summary judgment and determined as a matter of law that: (1) TEO is a potentially responsible party liable for AmeriPride's response costs under CERCLA; (2) AmeriPride paid for investigation and remediation costs of $7, 750, 921 through August 2010, and regulatory oversight costs of $474, 730 through September 2010; and (3) AmeriPride's investigation and remediation costs are necessary and consistent with the National Contingency Plan, 40 C.F.R. pt. 300 ("NCP"). With respect to AmeriPride's claims under CERCLA section 107 for amounts it paid in settlement to Cal-Am and Huhtamaki, the Court denied summary judgment. Specifically, the Court found that the settlement funds were not response costs recoverable under section 107 but that AmeriPride could seek to recover them under section 113(f)(1). The Court also granted leave for AmeriPride to file an amended complaint (which it did on May 24, 2011). In light of this ruling, the Court did not address whether those settlement amounts were paid to reimburse Cal-Am and Huhtamaki for necessary response costs incurred consistent with the NCP.

         The Court also denied several of AmeriPride's other summary judgment claims. Because the Court determined that triable issues of fact remained about whether AmeriPride released or disposed of PCE and regarding the equitable allocation of costs between the parties, the Court: (1) denied AmeriPride's summary judgment to the extent it pertains to allocation of liability on AmeriPride's CERCLA claims; and (2) denied AmeriPride's summary judgment of TEO's counterclaim.

         The case proceeded to trial. The main issue remaining at trial was the equitable allocation of responsibility under AmeriPride's and TEO's respective CERCLA claims. The parties presented their evidence to the Court over the course of a twelve-day bench trial. On April 4, 2012, the Court entered an order finding, in part, that:

[T]he total amount subject to equitable apportionment is $18, 295, 651.00, less $3, 250, 000 for a total of $15, 045, 651.00. After including consultant fees and other costs of $446, 656.84 paid for investigation and remediation at the AmeriPride site since August 2010, and the $16, 604.52 paid for regulatory oversight of the AmeriPride site since January 2011, the total amount subject to equitable apportionment is $15, 508, 912.36.

         The Court calculated the total amount subject to equitable apportionment by combining AmeriPride's investigation, remediation, and regulatory oversight costs, then adding the $10.25 million AmeriPride paid in settlement to Huhtamaki and Cal-Am. From this total the Court then deducted the $3.25 million AmeriPride received from settling its claims against Chromalloy and Petrolane, in effect applying the Uniform Contribution Among Tortfeasors Act's ("UCATA") pro tanto approach to equitably account for these settlements.

         Next, the Court apportioned the total liability fifty-fifty between TEO and AmeriPride, concluding that "given the facts as the Court has found them . . . the fairest apportionment is to divide responsibility equally." ECF No. 915, at 14. The Court also issued a declaratory judgment that TEO is responsible for one-half of all future cleanup costs. To "roughly address" the fact that AmeriPride had "borne all of [the] costs for the many years since the first cleanup order, " the Court also ordered TEO to pay prejudgment interest to AmeriPride "in amounts calculated in accordance with 42 U.S.C. § 9607." Because the Court found that the interest accrual date was a matter of equity rather than statutory dictate, it ordered the parties to submit a stipulation as to the amount of interest. The parties filed the interest stipulation on April 18, 2012, agreeing on the methodology for the calculation except as to when interest should start to accrue. In that regard, the parties proposed interest amounts based on their own views as to when interest should commence. The Court then determined interest accrued from the date the costs were first incurred by AmeriPride, rejecting TEO's argument that such interest did not begin to accrue until the date AmeriPride demanded payment of a specific amount in writing.

         On April 20, 2012, the Court issued its Order determining the issues raised at trial, which included the Court's award of interest. The Court adopted all of the undisputed facts contained in its Pretrial Order, and entered judgment in accordance with the Court's order on the same day. The Court ordered TEO to pay AmeriPride $9, 974, 421.95 and issued a declaratory judgment that TEO is responsible for one-half of all future cleanup costs.

         That decision was appealed, and, on April 2, 2015, the Court of Appeals vacated the judgment and remanded with instructions to:

1. Explain which equitable factors the Court considered in allocating the $3.25 million in settlement payments from Chromalloy and Petrolane to AmeriPride, or select those factors and allocate the settlement payments in accordance with those factors in the first instance; 2. Determine the extent to which AmeriPride reimbursed Huhtamaki and Cal-Am for necessary response costs incurred consistent with the NCP; and 3. Apply the interest provisions in CERCLA section 107(a) to determine when interest began to accrue on the costs paid by AmeriPride.

         On September 28, 2015, the Court took its first step towards responding to the Ninth Circuit opinion's first directive by holding that the Uniform Comparative Fault Act's pro rata approach would govern the allocation of liability to the Settling Parties. ECF No. 1001. Under the pro rata approach, the Court will determine the Settling Parties' proportionate share of the liability for response costs and deduct that share from the total amount of liability to be allocated between AmeriPride and TEO, regardless of the dollar amounts of the settlements obtained by AmeriPride.

         Now pending before the Court are TEO and AmeriPride's cross-motions for summary judgment. TEO's motion seeks a ruling that Petrolane, Chromalloy, and Huhtamaki are liable in part for the clean-up costs incurred by AmeriPride, that prejudgment interest could not begin to accrue until August 2010, that AmeriPride cannot show that its settlements with Huhtamaki and Cal-Am reimbursed them for necessary response costs incurred consistent with the NCP, and that AmeriPride cannot recover approximately $780, 000 in response costs that were not presented to Judge Karlton in the first trial in this case. AmeriPride's motion seeks opposite rulings on the same issues.

         STANDARD

         The Federal Rules of Civil Procedure provide for summary judgment when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). One of the principal purposes of Rule 56 is to dispose of factually unsupported claims or defenses. Celotex, 477 U.S. at 325.

         Rule 56 also allows a court to grant summary judgment on part of a claim or defense, known as partial summary judgment. See Fed.R.Civ.P. 56(a) ("A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought."); see also Allstate Ins. Co. v. Madan, 889 F.Supp. 374, 378-79 (C.D. Cal. 1995). The standard that applies to a motion for partial summary judgment is the same as that which applies to a motion for summary judgment. See Fed.R.Civ.P. 56(a); State of Cal. ex rel. Cal. Dep't of Toxic Substances Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998) (applying summary judgment standard to motion for summary adjudication).

         In a summary judgment motion, the moving party always bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968).

         In attempting to establish the existence or non-existence of a genuine factual dispute, the party must support its assertion by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits[, ] or declarations . . . or other materials; or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52 (1986); Owens v. Local No. 169, Assoc. of W. Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1987). The opposing party must also demonstrate that the dispute about a material fact "is ‘genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. In other words, the judge needs to answer the preliminary question before the evidence is left to the jury of "not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed." Anderson, 477 U.S. at 251 (quoting Improvement Co. v. Munson, 81 U.S. 442, 448 (1871)) (emphasis in original). As the Supreme Court explained, "[w]hen the moving party has carried its burden under Rule [56(a)], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Therefore, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.'" Id. 87.

         In resolving a summary judgment motion, the evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. Anderson, 477 U.S. at 255. Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898 (9th Cir. 1987).

         ANALYSIS

         A. Liability of Petrolane, Huhtamaki, Cal-Am, and Chromalloy

         One of the central issues remaining in this litigation is the liability of Petrolane, Huhtamaki, Chromalloy, and Cal-Am (the "Settlors") for contamination at the Facility. The extent of the Settlors' liability as determined by this Court is important because TEO's liability to AmeriPride will be reduced by the amount of the Settlors' liability for contamination at the facility. This places AmeriPride in a peculiar position: although it sued the Settlors under CERCLA, and extracted sizable settlements from Chromalloy and Petrolane, AmeriPride now argues that the Court cannot find that they did anything to cause contamination at the Facility. AmeriPride further argues that even if the Settlors are PRPs, the Court must allocate a zero percent share of liability to them. TEO, on the other hand, seeks a ruling that while the Settlors are ...