City of West Sacramento v. R & L Business Management ( 2020 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 ----oo0oo---- 10 11 CITY OF WEST SACRAMENTO, No. 2:18-CV-00900 WBS EFB CALIFORNIA; and PEOPLE OF THE 12 STATE OF CALIFORNIA, 13 Plaintiffs, MEMORANDUM AND ORDER RE: MOTION TO DISMISS R&L 14 v. BUSINESS MANAGEMENT’S THIRD- PARTY COMPLAINT 15 R AND L BUSINESS MANAGEMENT, a California corporation, f/k/a 16 STOCKTON PLATING, INC., d/b/a CAPITOL PLATING, INC., a/k/a 17 CAPITOL PLATING, a/k/a CAPITAL PLATING; CAPITOL PLATING, INC., 18 a dissolved California corporation, 19 Defendants. 20 21 ----oo0oo---- 22 23 The City of West Sacramento, California (“the City”) 24 and the People of the State of California filed suit 25 to address toxic levels of soil and groundwater contamination in 26 the environment within the City. Defendants R&L Business 27 Management and John Clark (collectively referred to as “R&L”) 28 subsequently brought the County of Yolo and Eco Green into the 1 action as a third parties to the City’s lawsuit. R&L seeks 2 contribution after R&L was found liable in the City’s lawsuit on 3 summary judgment. (See Docket No. 125.) Before the court is the 4 County of Yolo’s (“the County”) Motion to Dismiss Defendant R&L’s 5 First Amended Third-Party Complaint. (Docket No. 116.) 6 I. Factual and Procedural Background 7 The City’s lawsuit against R&L involves the 8 contamination at the property located at 319 3rd Street in West 9 Sacramento, California. This court described much of the factual 10 and procedural background to this lawsuit in its prior orders. 11 (See Docket Nos. 18, 33, 44, 63, 115, & 125). Recently, this 12 court granted the City’s motion for partial summary judgment and 13 found defendants liable under the Comprehensive Environmental 14 Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 15 9613(f)(1). (Docket No. 125.) 16 R&L’s claim against the County and Eco Green involves 17 the alleged contamination at 305 3rd Street, previously owned by 18 the County, and 317 3rd Street, currently owned by Eco Green. 19 (Am. Third Party Compl. ¶¶ 10, 20, 44 (Docket No. 116).) The 20 court previously dismissed, and gave leave to amend, R&L’s claims 21 for (1) contribution under CERCLA, 42 U.S.C. § 9613(f)(1); (2) 22 equitable indemnity; (3) equitable contribution; and (4) 23 declaratory relief under the Declaratory Judgment Act, 28 U.S.C. 24 § 2201. (Docket No. 115.) R&L subsequently filed the First 25 Amended Third-Party Complaint (“ATPC”) alleging only a claim for 26 contribution under CERCLA. (Docket No. 116.) The County now 27 moves to dismiss the ATPC, and Eco Green joins in the County’s 28 motion. (Docket Nos. 126, 130.) 1 II. Discussion 2 A. California’s Government Claims Act 3 Pursuant to California’s Government Claims Act (“CGA”), 4 “a party seeking to recover money damages from a public entity or 5 its employees must present a claim to the California Victim 6 Compensation and Government Claims Board before filing suit in 7 court.” Tran v. Young, No. 2:17-CV-1260 DB P, 2018 WL 603814, at 8 *4 (E.D. Cal. Jan. 26, 2018) (citing Cal. Gov’t Code §§ 905.2, 9 910, 911.2, 945.4, 950–950.2). “The filing of a proper claim 10 pursuant to Gov. Code, § 910, describing the contents of such a 11 claim, is a condition precedent to the maintenance of an action 12 against the state for damages caused by tort.” Donohue v. State, 13 178 Cal. App. 3d 795, 797 (2d Dist. 1986). The County argues 14 that R&L did not sufficiently present the claim, and therefore 15 the ATPC must be dismissed. See id. 16 To sufficiently present a claim, complainant must 17 include “[t]he date, place and other circumstances of the 18 occurrence or transaction which gave rise to the claim asserted,” 19 and “[a] general description of the indebtedness, obligation, 20 injury, damage or loss incurred so far as it may be known at the 21 time of the presentation of the claim.” Cal. Gov’t Code § 910. 22 The factual basis for recovery in the complaint must be “fairly 23 reflected in the written claim.” Watson v. State, 21 Cal. App. 24 4th 836, 838 (2d Dist. 1993) (sustaining demurrer where legal 25 theory for recovery in written claim differed from that in the 26 complaint); Donohue, 178 Cal. App. 3d at 797 (same). 27 Here, R&L has sufficiently presented its CERCLA claim. 28 R&L specified that the claim concerns “toxic chemicals,” 1 including “substantial amounts of lead,” and “fill materials” 2 “discharged” “from at least 1938 until at least 1997” on the 3 “Yolo County owned portions of [the Eastern 300 block of Third 4 Street, West Sacramento],” which the County does not dispute 5 includes the 305 property. (Claim for Damages at 1 (Docket No. 6 110-2).) The written claim also states that the discharge 7 occurred “during the County’s ownership” of the property and that 8 “these discharged chemicals and fill materials contributed to the 9 contamination of the soil and groundwater.”1 (Id.) The written 10 claim thus states the date, place, and circumstances that give 11 rise to the claim. Further, given that the ATPC alleges that 12 fill materials, hazardous chemicals, and lead were disposed of at 13 the 305 property and subsequently contaminated nearby properties, 14 the soil, and groundwater, the written claim “fairly reflect[s]” 15 these allegations. (See Watson, 21 Cal. App. 4th at 838; ATPC ¶¶ 16 31, 32.) Accordingly, R&L has sufficiently presented its CERCLA 17 claim. 18 B. CERCLA 19 A party must be subject to suit under CERCLA Section 20 106 or 107(a) to be able to bring a contribution claim for the 21 contamination that is the subject of the suit. Cooper Indus., 22 Inc. v. Aviall Servs., Inc., 543 U.S. 157, 168 (2004). In its 23 previous order, the court dismissed R&L’s CERCLA contribution 24 claim because R&L sought “contribution for contamination for 25 which it is not being sued.” (Mem. & Order at 6 (Docket No. 26 1 Because “at the time of the presentation of the claim” 27 R&L had not reimbursed the city for clean-up costs and did not know the extent of its liability, R&L did not need to include any 28 monetary figures. See Cal. Gov’t. Code § 910. 1 115).) Specifically, the court found that R&L did not plausibly 2 allege that either the City’s complaint sought to hold R&L 3 responsible for the contamination at the 305 property or that the 4 County’s contamination was the same contamination present at the 5 319 property, for which the City is suing R&L. (Id. at 4-5, 5- 6 6.) 7 The ATPC cures those defects. It alleges that “the 8 site history for the County Property and 317 Third Street 9 indicates that lead and other toxic chemicals”, including “zinc, 10 cadmium, chromium,” “were discharged onto and into the soil at 11 those locations.” (ATPC ¶ 31, 32.) That contamination of the 12 soil “continue[s] to spread.” (ATPC ¶ 31.) The ATPC further 13 alleges that “historic fill material” containing “heavy metals . 14 . . including but not limited to zinc, cadmium, chromium, and 15 lead” was “imported, disposed, dumped, released at and/or spread 16 from the County Property [and] 317 Third Street.” (ATPC ¶ 18.) 17 That material was spread “potentially onto others, including 319 18 Third Street.” (ATPC ¶ 44). Indeed, “the releases of fill 19 material that occurred at the County Property, 317 Third Street, 20 and 319 Third Street contain some of the same contaminants which 21 are commingled.” (ATPC ¶ 38.) 22 Therefore, the ATPC alleges, “R&L has incurred and will 23 continue to incur response costs as a result of the release(s) of 24 heavy metal contaminants . . . disposed of at the County Property 25 and 317 Third Street.” (ATPC ¶ 45.) The allegations in the 26 ATPC, if taken as true, establish that the County has contributed 27 to the release of the hazardous substances that emanate from the 28 319 Property. Because the City has sued R&L for that release of 1 hazardous substances, R&L no longer “seeks contribution for 2 contamination for which it is not being sued.” (See Mem. & Order 3 at 6 (Docket No. 115)). R&L has therefore stated a claim for 4 contribution against the County. See 42 U.S.C. § 9613(f)(1); 5 Atl. Research, 551 U.S. at 138. 6 The County contends that R&L is not subject to an 7 action for the contamination emanating from the County’s property 8 because the City in its complaint alleges only contamination 9 “originating at 319 Third Street.” (See City’s Third Amended 10 Complaint ¶ 4 (Docket No. 45).) Because the contamination 11 allegedly moving from the 305 property to the 319 property by 12 definition did not originate at the 319 property, the County 13 argues that R&L is not subject to suit for the County’s 14 contamination, and thus has no Section 113(f)(1) claim for 15 contribution. 16 The court disagrees with the County’s overreliance on 17 the language in the City’s complaint. First, on a purely 18 practical level, the court cannot infer that the City will clean 19 only the contamination that “originated at 319 Third Street.” 20 This is especially true where it is alleged that the contaminants 21 are “commingled” at the 319 property. (ATPC ¶ 38.) If the City 22 is successful, R&L will undoubtedly have to reimburse the City 23 for the cost of cleaning whatever hazardous contamination is 24 currently at the 319 property, not just that which originated 25 there. 26 Second, the City’s complaint does not necessarily state 27 the extent of contamination for which the city seeks recovery. A 28 complaint need only allege enough facts to plausibly state a 1 claim. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Under 2 CERCLA, plaintiffs must allege there was a release of a hazardous 3 substance from a facility, which caused them to incur response 4 costs. 42 U.S.C. § 9607(a). A complaint may therefore state a 5 CERCLA claim without referencing all hazardous substances on 6 site. Accordingly, “[t]he complaint[] cannot be fairly read as 7 needlessly narrowing this suit to recovery for harm caused solely 8 by . . . pollutants” originating at the 319 property. See 9 Pakootas v. Teck Cominco Metals, Ltd., 905 F.3d 565, 590 (9th 10 Cir. 2018). 11 The Ninth Circuit considered a similar argument in 12 Pakootas, 905 F.3d at 590–91, and concluded that a plaintiff’s 13 complaint does not serve the limiting function the County seeks. 14 In Pakootas, defendants appealed the district court’s finding 15 that the defendant was not entitled to a divisibility defense to 16 CERCLA liability. There, the defendant argued that, as to the 17 divisibility defense, “its burden of production extended only to 18 addressing the harm from the specific pollutants that [defendant] 19 is alleged to have contributed to the Site.” Id. at 590. The 20 Pakootas defendant thus contended that it could “disregard all 21 other types of pollution found with its wastes at the Site.” Id. 22 The Ninth Circuit disagreed and found that the “environmental 23 harm in this case is not so limited.” Id. Because “Section 24 107(a) imposes strict liability on all [potentially responsible 25 parties], even if those persons are in fact not responsible for 26 any pollution at all,” and because the complaint merely complied 27 with “CERCLA’s pleading requirements” –- as opposed to 28 intentionally narrowing recovery to certain pollutants -- 1 defendant “was required to produce evidence showing divisibility 2 of the entire harm –- not just the harm from sources” alleged in 3 the complaint. Id. at 590-91. 4 Here, as in Pakootas, the complaint identifies sources 5 of contamination in order to comply with pleading requirements, 6 not to limit recovery. Accordingly, the court will not read the 7 complaint to limit the harm to just the contamination originating 8 at the 319 property. 9 The County also contends, in reliance on Cooper 10 Industries, 543 U.S. at 166, that incurring response costs is a 11 precondition to alleging a contribution claim under § 113(f). 12 Because R&L has not yet reimbursed the City, the County argues 13 that defendant cannot allege a contribution claim. The court 14 disagrees with the County’s interpretation of the statute. The 15 County is correct that contribution “is available for parties 16 that have reimbursed those response costs to others.” Niagara 17 Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 122 (2d 18 Cir. 2010) (citing U.S. v. Atl. Research Corp., 551 U.S. 128, 19 139). But whether R&L must reimburse the City prior to the court 20 ordering the County to contribute is different from whether R&L 21 must reimburse the City prior to bringing a third party complaint 22 for contribution. The statute states that “[a]ny person may seek 23 contribution” under § 113(f) “during or following” any civil 24 action under sections 106 or 107(a). 42 U.S.C. § 113(f)(1). The 25 Supreme Court in Cooper found that “[t]he natural meaning of this 26 sentence is that contribution may only be sought subject to the 27 specified conditions, namely, ‘during or following’ a specified 28 civil action.” 543 U.S. at 166. “Thus, § 113(f)(1) permits suit 1 before or after the establishment of common liability.” Atl. 2 Research Corp., 551 U.S. at 138-39 (emphasis added). To sue for 3 contribution, R&L need only be “subject to [a Section 106 or 4 107 (a)] action.” Cooper, 543 U.S. at 168; see also Hobart Corp. 5 v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 762 (6th Cir. 2014) 6 (“[A]ny party sued under §$ 106 or 107 .. . may seek 7 contribution from other PRPs under § 113(f)(1).”) (citing Cooper, 8 543 U.S. at 165-66). The statute does not list any other 9 | conditions and plainly allows R&L to ask for contribution before 10 the City’s suit is resolved and any reimbursement has taken 11 place. 12 The County’s other objections to the sufficiency of the 13 allegations in the ATPC challenge the veracity of the allegations 14 and are premature at the motion to dismiss stage. The court must 15 | accept R&L’s well-pled allegations as true. See Iqbal, 556 U.S. 16 at 678. Here, R&L has alleged the necessary elements of a 17 contribution claim, “supported by factual allegations” of the 18 contents of the WKA Report and Dr. Anne Farr’s testimony. (See 19 id. at 679; ATPC 97 14, 35, 36.) Taking the allegations as true, 20 the court finds that there is “more than a sheer possibility that 21 [the County] acted unlawfully.” Seven Arts Filmed Entm’t, Ltd. 22 v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013). 23 Those allegations suffice at this stage. Accordingly, the court 24 will deny defendant’s motion to dismiss. 25 IT IS THEREFORE ORDERED that the County’s Motion to 26 Dismiss (Docket No. 126) be, and the same hereby is, DENIED. 27 Dated: February 19, 2020 Lg □□ ak. 2 28 WILLIAMB.SHUBB □ UNITED STATES DISTRICT JUDGE