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City of West Sacramento v. R and L Business Management

United States District Court, E.D. California

October 22, 2019

CITY OF WEST SACRAMENTO, CALIFORNIA; and PEOPLE OF THE STATE OF CALIFORNIA, Plaintiffs,
v.
R AND L BUSINESS MANAGEMENT, a California corporation, f/k/a STOCKTON PLATING, INC., d/b/a CAPITOL PLATING, INC., a/k/a CAPITOL PLATING, a/k/a CAPITAL PLATING; CAPITOL PLATING, INC., a dissolved California corporation; ESTATE OF GUS MADSACK, DECEASED; ESTATE OF CHARLES A. SCHOTZ a/k/a SHOTTS, DECEASED; ESTATE OF E. BIRNEY LELAND, DECEASED; ESTATE OF FRANK E. ROSEN, DECEASED; ESTATE OF UNDINE F. ROSEN, DECEASED; ESTATE OF NICK E. SMITH, DECEASED; RICHARD LELAND, an individual; SHARON LELAND, an individual; ESTATE OF LINDA SCHNEIDER, DECEASED; JUDY GUESS, an individual; JEFFREY A. LYON, an individual; GRACE E. LYON, an individual; THE URBAN FARMBOX LLC, a suspended California limited liability company; and DOES 1-50, inclusive, Defendants.

          ORDER RE: JOINT MOTION FOR GOOD FAITH SETTLEMENT

          WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE.

         Before the court is a joint motion for a good faith settlement determination filed on October 7, 2019 by the City of West Sacramento and the People of the State of California (“plaintiffs”), and defendant Judy Guess. (Docket No. 98.)

         I. Background

         This court described much of the factual and procedural background to this lawsuit in its prior orders. (See Docket Nos. 18, 33, 44 & 63.) On August 21, 2019, plaintiffs and defendant Judy Guess reached an agreement for the settlement of all claims and disputes between them in this matter. (Decl. of Kenneth Stone (“Stone Decl.”) ¶ 3 (Docket No. 98-1); see also Stone Decl. Ex. 1 (“Settlement Agreement”) (written agreement setting forth the terms of the settlement) (Docket No. 98-4).) Plaintiffs have alleged the following claims against Judy Guess: (1) violation of the Resource Conservation and Recovery Act (“RCRA”) § 7002(a), 42 U.S.C. § 6972(a)(1)(B); (2) violation of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) § 107(a), 42 U.S.C. § 9607(a); (3) violation of The Gatto Act, California Health & Safety Code §§ 25403-25403.8; (4) violation of The Porter-Cologne Water Quality Control Act, California Water Code § 13304(c); (5) public nuisance; (6) trespass; (7) statutory indemnity; and (8) declaratory relief. (See Third Am. Compl. (“TAC”) (Docket No. 45).) The TAC alleges that Guess owned the property during the time that contaminants were disposed of at the property. (Id. ¶ 94.)

         The settling parties now move for a good faith settlement determination and an order barring all claims against them for contribution and indemnity. Pursuant to the settlement agreement, Guess will pay $50, 000.00 to the City. (See Settlement Agreement § 3.1.) The settling parties also request that the court dismiss all claims between them with prejudice. Defendants John Clark and R&L Business Management filed a statement of non-opposition to defendant Guess' motion for a good faith settlement determination. (See Docket Nos. 98 & 108.)

         II. Discussion

         A. Applicable Law

         1. State Law Claims

         The settling parties have settled claims brought under both state and federal law. “When a district court . . . hears state law claims based on supplemental jurisdiction, the court applies state substantive law to the state law claims.” Mason & Dixon Intermodal, Inc. v. Lapmaster Int'l LLC, 632 F.3d 1056, 1060 (9th Cir. 2011) (citation omitted). California state settlement law, here codified in California Code of Civil Procedure Section 877, constitutes substantive law. See Id. Section 877.6 “is the procedural mechanism for implementing [Section] 877” and making the determination of a good faith settlement. See Coppola v. Smith, No. 1:11-CV-1257 AWI BAM, 2017 WL 4574091, at *2 (E.D. Cal. Oct. 13, 2017). Therefore, the court will apply California settlement law to the state law claims at issue between the settling parties. See Mason & Dixon, 632 F.3d at 1060.

         2. CERCLA Claim

         For plaintiffs' CERCLA claim, courts review settlements and generally enter contribution and indemnity bars if the settlement is “procedurally and substantively fair, reasonable, and consistent with CERCLA's objectives.” Arizona v. City of Tucson, 761 F.3d 1005, 1012 (9th Cir. 2014) (citation and internal quotation marks omitted). This court has an independent obligation to scrutinize the terms of the agreement. Id. The court 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 potentially responsible parties have done. Id.

         3. Gatto Claim

         Liability under the Gatto Act turns on liability under CERCLA. The Gatto Act provides that “if a local agency undertakes action to investigate property or clean up . . . a release of hazardous material, the responsible party shall be liable to the local agency for the costs incurred in the action.” Cal. Health & Safety Code § 25403.5. A responsible party includes “those described in Section 107(a) of CERCLA.” Id. Because good-faith settlement determinations turn on the ...


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