Woodyard, LLC v. Syar Industries Inc ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 WOODYARD, LLC, No. 2:19-CV-02495-KJM-DB 12 Plaintiff, v. 13 ORDER SYAR INDUSTRIES, INC., et al., 14 Defendants. 15 16 17 In this action, plaintiff Woodyard, LLC seeks to recover cleanup costs and 18 damages resulting from alleged environmental contamination of plaintiff’s property. Defendant 19 Syar Industries, Inc. moves under Rule 12(b)(6) to dismiss plaintiff’s complaint in its entirety. In 20 the alternative, defendant asks the court to order plaintiff to provide a more definite statement 21 under Rule 12(e), laying out the bases for its claims and identifying with specificity the hazardous 22 substance it alleges defendant released. For the reasons below, the court GRANTS defendant’s 23 motion to dismiss with leave to amend. 24 I. BACKGROUND 25 In 2016, plaintiff purchased 19389 County Road 102 in Woodland, California (the 26 “property”). Compl. ¶ 1, ECF No. 1. The property was previously owned by Glen A. Barton and 27 Gloria L. Borton, who leased the property to Metro Auto Dismantling and Towing, LLC (“Metro 28 Auto”), to use it as an automotive salvage yard until 2014. Id. ¶ 9. 1 In 2017, plaintiff excavated approximately 6,000 cubic yards of concrete and 2 concrete waste called “washout,” which allegedly contains chromium and “other hazardous 3 substances.” Id. ¶ 10. Plaintiff alleges defendant previously dumped the concrete waste onto the 4 property between January 2008 and April 2010, when Metro Auto operated its salvage yard on 5 the property. Id. In addition to the concrete contamination, the complaint alleges the property 6 also had petroleum hydrocarbon contamination, id. ¶ 10; however, plaintiff clarified during a 7 meet and confer session with defendant that it seeks to recover only the $600,000 it incurred to 8 remediate the defendant’s concrete waste, not the petroleum contamination, see Joint Statement, 9 ECF No. 15; Compl. ¶ 10 (“The total cost to Plaintiff to address the contaminated concrete was in 10 excess of $600,000.”). 11 On January 23, 2020, defendant filed the instant motion to dismiss and the court 12 scheduled it for a hearing on April 24, 2020. Mot., ECF No. 8. Plaintiff filed its opposition 13 eleven days late, on April 21, 2020. Opp’n, ECF No. 16.1 Defendant replied. Reply, ECF No. 14 23. The court ultimately held a hearing on the motion on June 26, 2020, then submitted the 15 matter, and resolves it here. 16 II. MOTION FOR A MORE DEFINITE STATEMENT 17 If the court does not grant the motion to dismiss, defendant Syar asks the court to 18 order plaintiff to amend the complaint to state clearly which hazardous substance it is alleging 19 defendant released. Mot. at 13. The court addresses this issue first, as it is relevant to the 20 discussion of defendant’s motion to dismiss several of plaintiff’s claims. In the parties’ joint 21 statement certifying meet and confer efforts, plaintiff clarifies: “the Complaint does not presently 22 seek to recover any costs associated with the cleanup of hydrocarbon contamination on the site. 23 Rather, Plaintiff’s claims relate to cleanup costs associated with hazardous materials that 24 primarily exist in concrete washout.” Joint Statement at 2. The complaint does create some 25 26 1 Defendant has not objected to the opposition. See Vinding Decl. ¶ 6, ECF No. 18. Plaintiff subsequently filed a declaration from counsel explaining her error in failing to file the 27 opposition on April 10. ECF No. 17. The court accepts counsel’s explanation and considers the opposition, while cautioning counsel it will likely not be so lenient regarding future late filings. 28 1 confusion by failing to clearly distinguish between concrete and concrete “washout,” with this 2 wording: 3 Subsequent investigations indicated that drivers from Defendant Syar, Inc. dumped remnant loads of concrete (and washout which 4 contains chromium and other hazardous substances) from approximately January 2008 through April 2010, during the time the 5 Property was operated by Metro Auto. After waste profiling, the contaminated concrete was transported and disposed of at permitted 6 facilities. The total cost to Plaintiff to address the contaminated concrete was in excess of $600,000. 7 8 Compl. ¶ 10 (emphasis added). It is not clear from this passage whether concrete and “washout” 9 are two separate substances, nor whether the $600,000 clean-up costs are attributed to plaintiff’s 10 remediation of both substances or just the concrete. Because the court is prepared to grant 11 defendant’s motion to dismiss plaintiff’s CERCLA claims with leave to amend, as explained 12 below, defendant’s request for a more definite statement is mooted. Nonetheless, plaintiff would 13 be well-advised to clarify its pleading in this respect, in any amended complaint. 14 III. MOTION TO DISMISS 15 A. Legal Standard 16 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to 17 dismiss a complaint for “failure to state a claim upon which relief can be granted.” A court may 18 dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts alleged 19 under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 20 1990). 21 Although a complaint need contain only “a short and plain statement of the claim 22 showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), in order to survive a motion 23 to dismiss this short and plain statement “must contain sufficient factual matter . . . to ‘state a 24 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 25 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something 26 more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or “‘labels and 27 conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Id. (quoting 28 Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss 1 for failure to state a claim is a “context-specific task that requires the reviewing court to draw on 2 its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on the 3 interplay between the factual allegations of the complaint and the dispositive issues of law in the 4 action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). 5 In making this context-specific evaluation, this court must construe the complaint 6 in the light most favorable to the plaintiff and accept as true the factual allegations of the 7 complaint. Erickson v. Pardus, 551 U.S. 89, 93–94 (2007). This rule does not apply to “a legal 8 conclusion couched as a factual allegation,” Papasan v. Allain, 478 U.S. 265, 286 (1986) quoted 9 in Twombly, 550 U.S. at 555, nor to “allegations that contradict matters properly subject to 10 judicial notice” or to material attached to or incorporated by reference into the complaint. 11 Sprewell v. Golden State Warriors, 266 F.3d 979, 988–89 (9th Cir. 2001). 12 B. Discussion 13 1. CERCLA § 107(a) Claim (Claim One) 14 Plaintiff brings a CERCLA claim for recovery of costs against defendant under 42 15 U.S.C. § 9607(a) (also known as CERCLA § 107), which states, in relevant part: 16 (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for 17 disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility . . . owned 18 or operated by another party or entity and containing such hazardous substances . . . shall be liable for-- 19 . . . . 20 (B) any other necessary costs of response incurred by any 21 other person consistent with the national contingency plan[.] 22 42 U.S.C. § 9607(a). To establish a prima facie case for cost recovery under CERCLA, a plaintiff 23 ultimately must show: “(1) the site on which the hazardous substances are contained is a ‘facility’ 24 under CERCLA’s definition of that term, . . . (2) a ‘release’ or ‘threatened release’ of any 25 ‘hazardous substance’ from the facility has occurred, . . . (3) such ‘release’ or ‘threatened release’ 26 has caused the plaintiff to incur response costs that were ‘necessary’ and ‘consistent with the 27 national contingency plan,’. . .; and (4) the defendant is within one of four classes of persons 28 1 subject to the liability provisions of Section 107(a).” 3550 Stevens Creek Assocs. v. Barclays 2 Bank of California, 915 F.2d 1355, 1358 (9th Cir. 1990) (citation omitted). 3 Defendant argues plaintiff fails to state a CERCLA claim, because the complaint 4 does not sufficiently plead that defendant released a “hazardous substance” within the meaning of 5 CERCLA. According to defendant, plaintiff alleges only that its response costs were attributed to 6 “hydrocarbon impacted soil intermixed with debris at the property,” and petroleum hydrocarbons 7 are excluded under CERCLA. Mot. at 6 (citing Compl. ¶ 10). According to defendant, the 8 complaint does not attribute plaintiff’s response costs to any non-petroleum substance. Id. 9 Concrete, defendant points out, is not included in CERCLA’s list of hazardous substances. Id. 10 (citing 42 U.S.C. § 9601(14)). 11 Contrary to defendant’s argument, the complaint does allege that defendant 12 dumped “remnant loads of concrete (and washout which contains chromium and other hazardous 13 substances)” onto the property. Compl. ¶ 10. This pleading is sufficient to put defendant on 14 notice that at least part of plaintiff’s CERCLA claim is based on the “chromium and other 15 hazardous substances” contained within the concrete “washout” defendant allegedly dumped on 16 the property. Defendant does not dispute that chromium is a hazardous substance. See Mot. at 6. 17 Defendant’s motion to dismiss on this basis is DENIED. 18 Second, defendant argues plaintiff fails to allege a causal link between defendant’s 19 release and plaintiff’s response costs, because the complaint attributes the petroleum hydrocarbon 20 releases to Metro Auto’s activities and not defendant’s. Mot. at 7. Here, defendant overstates its 21 argument; on its face, the CERCLA claim in the complaint is based, at least in part, on 22 defendant’s dumping of concrete and “washout,” as explained above. However, the statement, 23 “[t]he total cost to Plaintiff to address the contaminated concrete was in excess of $600,000,” 24 Compl. ¶ 10, does not expressly link plaintiff’s remediation costs of $600,000 with the allegedly 25 hazardous substance dumped by defendant, “washout.” At best, it links the cost with remediation 26 of “concrete,” see Reply at 4, as discussed above with respect to defendant’s motion for a more 27 definite statement. This pleading is insufficient to support a CERCLA § 107 claim, because the 28 complaint does not allege the requisite causality. See 3550 Stevens Creek Assocs., 915 F.2d at 1 1358. Any amended complaint should also clarify how defendant’s actions caused plaintiff’s 2 response costs. See Reply at 4. 3 Third, defendant argues plaintiff has not pleaded that defendant falls within one of 4 the four classes of persons subject to liability under § 107(a). Mot. at 7–8 (citing 42 U.S.C. 5 § 9607(a)(1)–(4)). In response to plaintiff’s argument that it adequately pleads “arranger” 6 liability, see 42 U.S.C. § 9607(a)(3),2 defendant points out that such liability requires a showing 7 that defendant had the intent to dispose of a hazardous substance. See Reply at 5 (citing 8 Burlington Northern and Santa Fe Railway Co. v. United States, 556 U.S. 599, 611 (2009) (a 9 CERCLA defendant is an arranger when it “takes intentional steps to dispose of a hazardous 10 substance.”)). Though plaintiff may have sufficiently plead the intent requirement as to 11 defendant’s dumping of concrete, it has not pleaded defendant intended to dump concrete 12 “washout,” which contains the hazardous substance at issue. See Heim v. Heim, No. 5:10-CV- 13 03816-EJD, 2014 WL 1340063, at *9 (N.D. Cal. Apr. 2, 2014) (“[T]o satisfy the intent 14 requirement, the Ninth Circuit expressly stated that the plaintiff must prove the manufacturer 15 entered into the relevant transaction with ‘the specific purpose of disposing of a hazardous 16 substance.’” (citation omitted)). 17 For these reasons, plaintiff’s first claim is DISMISSED. 18 2. CERCLA §113(f) (Claim Two) 19 Defendant argues plaintiff is not eligible to bring a CERCLA § 113(f) contribution 20 action, because plaintiff has not established it is liable for response costs under a prior judgment 21 or settlement. Mot. at 9 (citing United States v. Atlantic Research Corp., 551 U.S. 128 at 139 n.6 22 (2004)). The complaint alleges plaintiff initiated the remediation “in the interest of an 23 expeditious cleanup,” apparently voluntarily. Compl. ¶ 14. Section 113 “provides two express 24 avenues for contribution: § 113(f)(1) (‘during or following’ specified civil actions) and 25 2 42 U.S.C. § 9607(a)(3) provides, in pertinent, that the category of proper defendants 26 includes “any person who by contract, agreement or otherwise arranged for disposal . . . . of hazardous substances owned or possessed by such person, by any other party or entity, at any 27 facility ... owned or operated by another party or entity and containing such hazardous substances[.]” 28 1 § 113(f)(3)(B) (after an administrative or judicially approved settlement that resolves liability to 2 the United States or a State).” Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 167 3 (2004). Plaintiff argues that its settlement with the Regional Board, which mandated that it 4 remediate the concrete waste, is sufficient legal ground for a § 113(f) cause of action, “the lack of 5 a formal judgment notwithstanding.” Opp’n at 2. However, plaintiff’s complaint does not allege 6 any such settlement with the Regional Board, only that the agency was giving “supervision and 7 oversight” to the remediation effort; nor does the complaint allege any other civil action such that 8 § 113(f) would apply. See Reply at 7. Plaintiff’s second claim is also DISMISSED. 9 3. California’s Hazardous Substances Account Act (Claim Three) 10 California’s Hazardous Substance Account Act, Cal. Health & Safety Code 11 section 25300 et seq. (“HSAA”), shares the same elements as a CERCLA claim. Gregory Vill. 12 Partners, L.P. v. Chevron U.S.A., Inc., 805 F. Supp. 2d 888, 897 (N.D. Cal. 2011) (citation 13 omitted); see also Opp’n at 9. Accordingly, plaintiff’s third claim is DISMISSED for the same 14 reasons outlined above. 15 4. Waste (Claim Four) 16 Defendant argues plaintiff’s fourth claim must be dismissed because it is time- 17 barred under California’s three-year statute of limitations for waste claims, which commences on 18 “the occurrence of the last element essential to the cause of action.” Mot. at 11 (citing Cal. Code 19 Civ. P. § 338(b) (statute of limitations for injury to real property); Camsi IV v. Hunter Technology 20 Corp., 230 Cal. App. 3d 1525, 1533 (1991), modified on denial of reh’g (July 2, 1991)). Plaintiff 21 filed the complaint here on December 13, 2019, and alleges defendant committed waste by 22 depositing on the property from January 2008 to April 2010. Compl. ¶ 10. The claim is time- 23 barred unless some exception applies, because “the statute of limitations is tied to the real 24 property and is not renewed when a new owner acquires the land and discovers the injury.” 25 Gregory Vill. Partners, L.P. v. Chevron U.S.A., Inc., 805 F. Supp. 2d 888, 902 (N.D. Cal. 2011) 26 (citation omitted). 27 The statute of limitations can be tolled by operation of the delayed discovery rule, 28 see id., if plaintiff can allege “facts showing that he was not negligent in failing to make the 1 discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put 2 him on inquiry,” Hobart v. Hobart Estate Co., 26 Cal. 2d 412, 437 (1945). The knowledge of a 3 previous owner of the property is imputed to subsequent owners for the purpose of the delayed 4 discovery rule. See Camsi IV, 230 Cal. App. 3d at 1537 (citing Bradler v. Craig, 274 Cal. App. 5 2d 466, 472 (Ct. App. 1969)). 6 In support of its argument that the delayed discovery rule should apply, plaintiff 7 points only to the allegation that it discovered the concrete waste when it was “excavated” in 8 2017, implying the waste was buried until then. Compl. ¶ 10. However, given the allegation that 9 the former operator of the property authorized the dumping of concrete, id. ¶ 1, and that no other 10 allegations explain why plaintiff did not discover the waste despite reasonable inquiry, the 11 allegations are insufficient to show plaintiff “was not negligent in failing to make the discovery 12 sooner and that [it] had no actual or presumptive knowledge of facts sufficient to put him on 13 inquiry,” even drawing all reasonable inferences in plaintiff’s favor. See Hobart, 26 Cal. 2d at 14 437. Accordingly plaintiff’s fourth claim is DISMISSED as time-barred. 15 5. Declaratory Relief Claim (Claim Five) 16 Defendant argues the court should dismiss plaintiff’s fifth claim because no other 17 viable claims are presented. For the reasons explained above, plaintiff’s claims are not 18 sufficiently pleaded, and therefore plaintiff’s fifth claim for declaratory relief is also 19 DISMISSED. 20 6. Equitable Indemnity Claim (Claim Six) 21 Finally, defendant argues plaintiff’s claim for equitable indemnity should be 22 dismissed because plaintiff has not alleged that it is a tortfeasor jointly liable with defendant, and 23 actions for equitable indemnity are only available between joint tortfeasors. Mot. at 13 (citing 24 Munoz v. Davis, 141 Cal. App. 3d 420, 425 (1983) (“[U]nless the prospective indemnitor and 25 indemnitee are jointly and severally liable to the plaintiff there is no basis for indemnity.”). 26 Plaintiff explains that “[a]s plaintiff is liable for the concrete waste due to its role 27 as owner, and defendant is liable for the same concrete waste as the actual entity who deposited it 28 on the land, the parties are jointly and severally liable under CERCLA and HSAA.” Opp’n at 10– 1 11. However, this statement contradicts plaintiff’s complaint, which repeatedly states, “Plaintiff 2 did not cause or contribute to the environmental contamination on the Property and denies that it 3 is liable for costs incurred as the result of the alleged release or threatened release of hazardous 4 substances on the Property.” Compl. ¶¶ 14, 15, 18, 19, 27. Furthermore, as defendant argues, 5 plaintiff does not allege plaintiff has paid a judgment or settlement or that plaintiff is currently a 6 defendant in any relevant action, which is necessary for an equitable indemnity claim. See Reply 7 at 10 (citing, inter alia, Coppola v. Smith, 935 F. Supp. 2d 993, 1020–21 (E.D. Cal. 2013) (“[A] 8 fundamental prerequisite to an action for partial or total equitable indemnity is an actual monetary 9 loss through payment of a judgment or settlement.”). Plaintiff’s equitable indemnity claim is 10 DISMISSED. 11 IV. CONCLUSION 12 All of plaintiff’s claims are DISMISSED. Given the liberal standard for granting 13 leave to amend in this circuit, Bowles v. Reade, 198 F.3d 752, 757 (9th Cir. 1999), and that 14 plaintiff has yet to amend its complaint in this case, plaintiff is GRANTED leave to amend all 15 dismissed claims. Any first amended complaint SHALL be filed within 21 days of the date of 16 this order. Defendant’s motion for a more definitive statement is DENIED as MOOT. 17 This order resolves ECF No. 8. 18 IT IS SO ORDERED. 19 DATED: August 19, 2020. 20 21 22 23 24 25 26 27 28