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Lewis v. Russell

United States District Court, E.D. California

October 16, 2019

CHARLES H. LEWIS and JANE W. LEWIS, Plaintiffs,
v.
ROBERT D. RUSSELL; IRENE RUSSELL; BEN J. NEWITT; the Estate of PHILLIP NEWITT, Deceased; JUNG HANG SUH; SOO JUNG SUH; JUNG K. SEO; THE DAVIS CENTER, LLC; MELVIN R. STOVER, individually and as trustee of the Stover Family Trust; STOVER FAMILY TRUST; RICHARD ALBERT STINCHFIELD, individually and as successor trustee of the Robert S. Stinchfield Separate Property Revocable Trust; ROBERT S. STINCHFIELD SEPARATE PROPERTY REVOCABLE TRUST; THE BARBARA ELLEN STINCHFIELD TESTAMENTARY TRUST; WORKROOM SUPPLY, INC., a California corporation; SAFETY-KLEEN CORPORATION, a California corporation; the CITY OF DAVIS; JENSEN MANUFACTURING COMPANY; VIC MANUFACTURING COMPANY; MARTIN FRANCHISES INC., aka/dba MARTINIZING DRY CLEANING, Defendants.

          MEMORANDUM & ORDER RE: JOINT MOTION FOR GOOD FAITH SETTLEMENT

          WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE

         Plaintiffs Charles and Jane Lewis brought this action under, inter alia, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERLCA”), 42 U.S.C. § 9601 et seq. against the above captioned defendants in 2003. (See Second Amended Compl. (“SAC”) (Docket No. 197).) Before the court is a joint motion for Good Faith Settlement and Order Dismissing and Barring Claims. (Docket No. 551.)

         I. Background

         Defendant Robert D. Russell operated a dry cleaning business at 670 G Street, in Davis, California (“the Site”) from 1964 to 1971. (Id. ¶ 29.) In 1971, defendants Ben and Phillip Newitt (“Newitts”) took over the business and leased the dry cleaning operation to Charles and Jane Lewis in 1975. (Id. ¶¶ 33-34.) The Lewises[1] then purchased the business in 1977 and operated it until August 1996. (Id. ¶ 34.) The Lewises later leased the dry cleaning business to defendants Jung Hang Suh, Soo Jung Suh, and Jung K. Seo (“Suhs”) from August 1996 to May 2005.[2](Id. ¶ 36.)

         In February 1999, the California Regional Water Quality Control Board, Central Valley Region (“Control Board”) advised the Lewises that the chemical tetrachloroethene, also known as perchlorate (“PCE”), had been discovered in the soil and groundwater at and around the Site. (Id. ¶ 29, 40.) The Lewises contend that Russell, the Newitts, and the Suhs permitted the sudden and accidental releases of PCE onto the Site and adjacent properties while they were operating the dry cleaning business. (Id. ¶ 43.) Additionally, the Lewises allege the City of Davis (“City”) caused or contributed to the release of PCE. (Id. ¶ 43-44.)

         In October 2002, the Control Board issued a Cleanup and Abatement Order No. R5-2002-0721 (the “Order”) commanding the current and former owners and operators of the Site to investigate the extent of the contamination and prepare a plan to remedy it. (Id. ¶ 42.) Despite the Order, the Lewises alleged the captioned defendants failed to participate in the decontamination efforts. (Id. ¶ 45.) Consequently, the Lewises brought this action seeking to recover costs and contribution under CERCLA; statutory contribution and indemnity pursuant to Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health and Safety Code § 25363(e); breach of contract; equitable indemnity and contribution; negligence; and declaratory relief. (See SAC at 21-23.)

         After years of investigation, the Control Board approved a Data Gap Investigation Report and Source Area Remediation Plan (“Remediation Plan”) in 2015. (Decl. of Jennifer Hartman King (“King Decl.”) ¶ 25-26 (Docket No. 551-1).) On March 15, 2019, the “Settling Parties”[3] agreed, without admitting liability or wrongdoing, to mutually release, with prejudice, existing and future claims against each other related to the existing contamination at the Site. (Id. at ¶ 15.) In exchange for this mutual release, the Settling Parties agreed to fund The Davis Center Remediation Project Trust (“Trust”) to cover the costs of the Site's decontamination. (Settlement Agreement and Mutual Release (“Settlement Agreement”) at 3 (Docket No. 551-2).) The Lewises, The Davis Center, and Potter-Taylor have collectively agreed to pay a total of $1, 740, 000.00. (Id.) The City will not contribute funds to the Trust. (King Decl. ¶ 34.)

         The settling parties also entered into an Agreement and Covenant Not to Sue (“Covenant”) with the Control Board to memorialize the agency's approval of the decontamination plan, document the mutual release of claims, and serve as an administrative settlement under § 9613(f)(2) of CERCLA. (King Decl. ¶¶ 37-38.)

         The Settlement and Covenant are contingent upon this court finding the terms of the Settlement were reached in good faith. Consequently, the Settling Parties now jointly seek a determination that the settlement was reached in good faith and an order dismissing all claims against them, and barring all future contribution and indemnity claims, with prejudice. (Joint Mot. for Good Faith Settlement at 3 (Docket No. 551).)

         II. Discussion

         A. Applicable Law

         The settling parties have settled claims brought under both state and federal law. Accordingly, the court must evaluate the “good faith” of each settlement pursuant to its applicable law. See Mason & Dixon Intermodal, Inc. v. Lapmaster Int'l LLC, 632 F.3d 1056, 1060 (9th Cir. 2011) (citation omitted) (“When a district court . . . hears state law claims based on supplemental jurisdiction, the court applies state substantive law to the state law claims.”).

         Under federal law, one of CERCLA's “core principles” is to “foster settlement through its system of incentives and without unnecessarily further complicating already complicated litigation.” AmeriPride Servs. v. Tex. E. Overseas, Inc., 782 F.3d 474, 486 (9th Cir. 2015) (quoting Chubb Custom Ins. Co. v. Space Sys./Loral, Inc., 710 F.3d 946, 971 (9th Cir. 2013)). District courts retain discretion to determine the most equitable method of accounting for settlements in private-party contribution actions. Id. at 487 (citing 42 U.S.C. § 9613(f)(1)). Ultimately, the court is must find that the agreement is roughly correlated with some acceptable measure of comparative fault that apportions liability among the settling parties according to a rational estimate of the harm the potentially responsible parties have done. Arizona v. City of Tucson, 761 F.3d 1005, 1012 (9th Cir. 2014) (citations and internal quotation marks omitted). While the courts may consult “model acts” like the Uniform Comparative Fault Act (“UCFA”) and the Uniform Contribution Among Tortfeasors Act (“UCATA”), they are under no obligation to do so.[4] AmeriPride Servs., 782 F.3d at 486.

         An order barring claims is “appropriate to facilitate settlement, particularly in a CERCLA case.” Tyco Thermal Controls LLC v. Redwood Indus., No. C06-07164 JF (PVT), 2010 WL 3211926, at *5 (N.D. Cal. Aug. 12, 2010) (citing AmeriPride Servs. Inc. v. Valley Indus. Servs., Inc., Nos. CIV. S-00-113-LKK JFM, S-04-1494-LKK/JFM, 2007 WL 1946635, at *2 (E.D. Cal. July 2, 2007)). The contribution bar in § 9613(f)(2) applies to parties who have resolved their liability in relation to the government. 42 U.S.C. § 9613(f)(2). “[C]ourts review settlements and generally enter contribution and indemnity bar orders in CERCLA cases ...


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