Jarose v. County of Humboldt ( 2020 )

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 OAKLAND DIVISION 9 10 PAMELA JAROSE, executor of the Case No: C 18-07383 SBA ESTATE OF JOHN R. BRAUN, 11 ORDER DENYING MOTION TO Plaintiff, MODIFY THE SCHEDULING 12 ORDER AND FOR LEAVE TO vs. AMEND THE PLEADINGS 13 14 COUNTY OF HUMBOLDT, a subdivision Dkt. 31 of the State of California, 15 Defendant. 16 17 Plaintiff and Counter-Defendant Pamela Jarose, executor of the Estate of John R. 18 Braun (the “Estate”), and Defendant and Counter-Plaintiff County of Humboldt (the 19 “County”) sue each other to assign liability and/or recover costs for hazardous waste 20 cleanup at certain real property located in Eureka, California. The parties bring claims 21 under the Comprehensive Environmental Reponse, Compensation, and Liability Act 22 (“CERCLA”), 42 U.S.C. § 9601, et seq., and California’s Hazardous Substances Account 23 Act (“HSAA”), Cal. Health & Safety Code § 25300, et seq., as well as related causes of 24 action. Presently before the Court is the Estate’s Motion to Modify the Scheduling Order 25 and for Leave to Amend the Pleadings. Having read and considered the papers filed in 26 connection with this matter and being fully informed, the Court hereby DENIES the 27 motion, for the reasons stated below. The Court, in its discretion, finds this matter suitable 1 I. BACKGROUND 2 A. FACTUAL BACKGROUND 3 The instant action concerns hazardous waste contamination at and around certain 4 real property located at 411 J Street, Eureka, California (the “Subject Property”). First Am. 5 Compl. (“FAC”) ¶ 1, Dkt. 28. John R. Braun (“Braun”) previously owned the Subject 6 Property. Countercl. & Cross-Cl. (“Countercl.”) ¶ 2, Dkt. 14.1 Upon Braun’s death in 7 January 2018, Pamela Jarose (“Jarose”) became executor of his Estate. Id. ¶ 2; FAC ¶ 6. 8 On or about July 23, 1993, a Judgment on Stipulation for Settlement and Entry of 9 Judgment (“Judgment”) was entered in County of Humboldt v. John R. Braun, Superior 10 Court of California, County of Humboldt, Case No. 93DR0195, approving the County’s 11 condemnation of the Subject Property and full compensation to Braun in the amount of 12 $1,467,190 for the taking. FAC ¶ 9 & Ex. A (Judgment) at 1. The Judgment also sets forth 13 the “mutual rights, duties, and obligations” of the parties. J. ¶ 4 & Ex. A. 14 Among other things, the Judgment holds Braun responsible for “all costs of 15 hazardous waste cleanup originating on [the Subject Property] ….” J., Ex. A ¶ 4. This 16 obligation terminates upon certification by the Northcoast Water Quality Control Board 17 (“Board”) of (a) full compliance with an approved remediation plan and (b) satisfaction of 18 applicable regulations such that additional monitoring and/or cleanup is no longer required. 19 Id. ¶ 5. Braun was to complete the cleanup by January 1, 1994. Id. ¶ 6. If not completed 20 by that date, the County has the right to complete any remaining cleanup and seek 21 reimbursement from Braun for reasonable costs attendant thereto. Id. ¶¶ 10-11. 22 Regarding compensation, the Judgment requires the County to deposit $1,209,690 23 into an escrow account for disbursement to Braun. Id. ¶¶ 1-2. It also requires the County 24 to deposit the remaining $257,500 into an investment account. Id. ¶ 13. Pursuant to certain 25 terms, the Judgment authorizes withdrawals from the investment account to pay expenses 26 associated with the cleanup of the Subject Property. Id. 27 1 Although the County characterizes its pleading as a “Counterclaim and 1 1. The Estate’s Allegations 2 The County courthouse occupies property adjacent to the Subject Property. FAC ¶¶ 3 12-13. At all times relevant to this dispute, the County has “owned, operated, maintained, 4 supervised, and/or controlled” a dewatering sump system in the courthouse basement. Id. 5 ¶ 13. The Estate alleges that operation of the system has transported hazardous substances 6 to previously uncontaminated areas. Id. ¶ 15. Specifically, the sump system has “illegally 7 released, discharged, and/or disposed of contaminated water to and from the storm drain 8 system,” which “flows toward Humboldt Bay without pretreatment.” Id. ¶¶ 19-20. 9 The Estate claims that the County’s operation of the courthouse sump system has 10 “exacerbated the contamination that was not foreseeable to Plaintiff, and any alleged 11 responsibility for such conduct was not intended to be included in the scope of the 12 Judgment.” Id. ¶ 23. According to the Estate, “the County’s negligence has interfered with 13 the terms of the Judgment and the cost to delineate and remediate the contamination at 14 issue has increased.” Id. 15 2. The County’s Allegations 16 The County alleges Braun partially performed or made promises to perform his 17 obligations under the Judgment but never fully satisfied the same. Countercl. ¶¶ 10, 13. 18 Although the Judgment contemplates completion of the cleanup by 1994, the County 19 permitted Braun “to extend the cleanup period in a manner that was cost efficient for [him] 20 as long as there was not any threat of action from the Board.” Id. ¶ 10. In May 2018, the 21 Board issued a directive to resume monitoring and corrective action at the Subject Property. 22 Id. ¶ 12. In July 2018, the County issued a formal written demand to the Estate for cleanup 23 of the Subject Property. Id. ¶ 14. The Estate has not accepted the demand. Id. 24 In addition to contaminating the Subject Property, “the hazardous waste from the 25 Subject Property has been, and is, migrating towards Humboldt Bay.” Id. ¶ 18. This 26 “groundwater plume” has contaminated adjacent property, including the courthouse. Id. 27 The County acknowledges that it operates a “passive” sump system at the courthouse and 1 claims its sump system “does not actively extract contaminated groundwater, alter or 2 exacerbate migration of the plume, or contribute to groundwater or soil contamination in 3 surrounding properties.” Id. ¶ 20. The County “has been forced to incur the expense for 4 design, permitting, and installation of a treatment system for sump discharge.” Id. 5 B. PROCEDURAL BACKGROUND 6 On December 7, 2018, the Estate filed a Complaint against the County, alleging 7 causes of action for: (1) cost recovery under CERCLA; (2) contribution under CERCLA; 8 and (3) declaratory relief. Dkt. 1. The County answered on December 21, 2018. Dkt. 13. 9 It also filed a Counterclaim, alleging causes of action for: (1) breach of written contract; 10 (2) implied contractual indemnity; (3) contribution under HSAA; (4) declaratory relief 11 under HSAA; (5) declaratory relief; (6) public nuisance; (7) private nuisance; (8) cost 12 recovery under CERCLA; and (9) contribution under CERCLA. Dkt. 14. The Estate 13 answered the Counterclaim on January 10, 2019. Dk. 15. 14 In the meantime, on December 17, 2018, the Estate submitted a tort claim to the 15 County regarding this dispute. The County denied the claim on January 8, 2019. On 16 February 6, 2019, the Estate filed a Motion for Leave to File a First Amended Complaint, 17 wherein it sought to add causes of action for: (1) Contribution and Indemnity Pursuant to 18 HSAA; (2) Continuing Public Nuisance; (3) Dangerous Condition of Public Property; and 19 (4) Equitable Indemnity and Contribution. Dkt. 16. The Court granted the Estate’s motion. 20 Dkt. 27. On June 5, 2019, the Estate filed the operative First Amended Complaint. 21 Dkt. 28. The County answered the First Amended Complaint on June 17, 2019. Dkt. 30. 22 On May 29, 2019, the Court entered an Order for Pretrial Preparation, setting a 23 deadline of June 28, 2019, for the joinder of parties and to amend the pleadings. Dkt. 26. 24 On August 22, 2019, the Estate deposed the County’s Rule 30(b)(6) witness, Hank 25 Seemann (“Seemann”). Monroe Decl. ¶ 5, Dkt. 31-2. At the deposition, Seemann testified 26 that: (1) to his knowledge, the County has not obtained a permit to discharge water from the 27 courthouse sump system; and (2) the County released to Braun the funds set aside under the 1 day notice of intent to commence litigation under the Clean Water Act (“CWA”), 33 U.S.C. 2 § 1311, as required by 42 U.S.C. § 1365. Id. ¶ 6. 3 On November 6, 2019, the Estate filed the instant Motion to Modify the Scheduling 4 Order and for Leave to Amend the Pleadings. Dkt. 31-1. It seeks leave to file a Second 5 Amended Complaint to add: (1) Jarose as a plaintiff in her individual capacity; and (2) a 6 claim against the County for violation of the CWA. The Estate also seeks leave to file an 7 Amended Answer to the Counterclaim to add an affirmative defense of accord and 8 satisfaction. The County filed separate opposition briefs regarding the filing of an 9 Amended Answer to the Counterclaim (“Opp’n to Am. Answer”), Dkt. 35, and a Second 10 Amended Complaint (“Opp’n to Second Am. Compl.”), Dkt. 36. The Estate filed a single 11 Reply. Dkt. 40. The motion is fully briefed and ripe for adjudication. 12 II. LEGAL STANDARD 13 A motion for leave to amend the pleadings generally is governed by Federal Rule of 14 Civil Procedure 15(a)(2), which provides that a court should “freely give leave when justice 15 so requires.”2 However, where, as here, a court has entered a pretrial scheduling order that 16 establishes a deadline for amending the pleadings and that deadline has passed, a party’s 17 ability to amend the pleadings is governed by Rule 16(b). Coleman v. Quaker Oats Co., 18 232 F.3d 1271, 1294 (9th Cir. 2000) (citing Johnson v. Mammoth Recreations, Inc., 975 19 F.2d 604, 607-08 (9th Cir. 1992)). 20 Pursuant to Federal Rule of Civil Procedure 16(b)(3)(A), a court must enter a pretrial 21 scheduling order that limits the time to join other parties, amend the pleadings, complete 22 discovery, and file motions. “A scheduling order is not a frivolous piece of paper, idly 23 entered, which can be cavalierly disregarded by counsel without peril.” Johnson, 975 F.2d 24 2 Five factors govern the Court’s determination as to whether leave to amend is 25 warranted under Rule 15(a): (1) undue delay; (2) bad faith or dilatory motive; (3) prejudice to the opposing party; (4) futility of amendment; and (5) repeated failure to cure 26 deficiencies by amendments previously allowed. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). 27 Of these factors, prejudice “carries the greatest weight.” Id. “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption . . . in favor of 1 at 610 (quotations and citation omitted). Once entered, a scheduling order “may be 2 modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). 3 “Good cause” may be shown where pretrial deadlines “‘cannot reasonably be met 4 despite the diligence of the party seeking the extension.’” Zivkovic v. S. Cal. Edison Co., 5 302 F.3d 1080, 1087 (9th Cir. 2002) (quoting Johnson, 975 F.2d at 609). Although a court 6 may consider any prejudice to the party opposing modification of the scheduling order, the 7 “good cause” standard focuses on the diligence of the moving party. In re W. States 8 Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 737 (9th Cir. 2013) (citing Johnson, 975 9 F.2d at 609). If the party seeking to modify the scheduling order has not been diligent, the 10 court’s inquiry should end and the motion should be denied. Zivkovic, 302 F.3d at 1087 11 (citing Johnson, 975 F.2d at 609). 12 III. DISCUSSION 13 The Estate moves for leave to file a Second Amended Complaint as well as an 14 Amended Answer to the County’s Counterclaim. 15 A. PROPOSED SECOND AMENDED COMPLAINT 16 The Estate seeks to add Jarose as a plaintiff in her individual capacity and to add a 17 claim against the County for violation of the CWA. The request is based on information 18 purportedly “discovered for the first time” at Seemann’s deposition, i.e., that the County 19 has not obtained a permit to discharge water from the courthouse sump system. Mot. at 6. 20 The Estate asserts that the discharge of water into Humboldt Bay without a National 21 Pollution Discharge Elimination System (“NPDES”) permit violates the CWA, thus giving 22 rise to a cause of action thereunder. Although not discussed in the motion, the Estate seeks 23 to add Jarose as a plaintiff in her individual capacity to avoid any challenge to its standing 24 to bring a citizen suit to enforce the CWA. See Reply at 6. According to the Estate, it 25 could not have sought leave to add the proposed claim for violation of the CWA prior to the 26 deadline to amend the pleadings “because [the fact that the County operates its sump 27 system without an NPDES permit] was unknown to [it] at that time.” Mot. at 6. 1 The County opposes the motion on several grounds. As an initial matter, it argues 2 that the Estate has not demonstrated due diligence in pursuing the CWA claim, and thus, 3 has failed to establish good cause to modify the scheduling order. The Court agrees.3 4 The Estate has not shown that the deadline to amend the pleadings could not 5 reasonably have been met despite its diligence. At this stage of the proceedings—where 6 the Estate has already been granted leave to file a first amended complaint and a pretrial 7 schedule has been entered—it is incumbent upon the Estate to develop whatever facts may 8 be necessary to pursue potential claims of which it has notice. A party cannot simply wait 9 for facts to present themselves in due course. Here, the Estate has always alleged that the 10 County illegally discharges water from the sump system into the storm drains and 11 Humboldt Bay. Comp. ¶¶ 16-17 (“Plaintiff is informed and believes, and on that basis 12 alleges that the County illegally released, discharged, and/or disposed of contaminated 13 water to and from the storm drain system[,]” and that “the storm drain system flows toward 14 Humboldt Bay without pretreatment.”); FAC ¶¶ 19-20 (same). The Estate was therefore on 15 inquiry notice of the newly proposed CWA claim since at least December 2018. 16 The Estate argues it was under no obligation to “prove a negative” by verifying— 17 prior to taking Seemann’s deposition—that the County has no NPDES permit. Reply at 4. 18 If such information is available, however, that is indeed the Estate’s obligation. See 19 Johnson, 975 F.2d at 610 (“The burden was upon [Plaintiff] to prosecute his case 20 properly.”). As to the availability of the information testified to by Seemann, the County 21 asserts that “[its] permit status would be a matter of public record.” Opp’n to Second Am. 22 Compl. at 4. The Estate claims otherwise, asserting that “[t]here is no database listing of 23 permit-holders relating to point source discharges[.]” Reply at 4. The Estate is incorrect. 24 The Court takes judicial notice of the fact that NPDES permit data is publicly available on 25 26 3 The County further argues that, even if good cause were shown, leave to amend should be denied because the proposed amendment is futile and would prejudice the 27 County. Given that the Court finds no showing of good cause, it does not reach the County’s other arguments. Consequently, the County’s request for judicial notice—which 1 the websites of both the EPA and the California Water Board.4 Thus, the Court finds that 2 the Estate’s ignorance as to the County’s permit status was attributable “entirely to [the 3 Estate’s] own lack of diligence.” Opp’n to Second Am. Compl. at 4.5 4 Because the Estate has not demonstrated due diligence, the Court does not address 5 the County’s arguments regarding futility and prejudice. The Court notes, however, that a 6 citizen suit for violations of the CWA differs in nature from the instant action and that the 7 proposed CWA claim is not essential to the resolution of the instant dispute. In other 8 words, whether the County is violating or has violated the CWA does not help to assign or 9 apportion liability between the County and the Estate as to the cleanup of the Subject 10 Property and any plume originating therefrom. 11 In view of the foregoing, leave to file a Second Amended Complaint is DENIED. 12 B. PROPOSED AMENDED ANSWER 13 The Estate seeks to add an affirmative defense of accord and satisfaction. The 14 request is based on information purportedly “discovered for the first time” at Seemann’s 15 deposition, i.e., that the County released to Braun the funds set aside under the Judgment 16 for cleanup costs. Mot. at 8. The Estate asserts that the defense is “appropriately raised 17 under these recently discovered facts.” Id. According to the Estate, “Jarose . . . has limited 18 knowledge of the transactions between the County and Mr. Braun during his life,” and thus, 19 20 4 The EPA’s website states that users can utilize the Enforcement and Compliance 21 History Online (“ECHO”) site to “search by your location to find NPDES permitted facilities near you.” See https://www.epa.gov/npdes/npdes-permit-basics. An embedded 22 link directs users to https://echo.epa.gov/. The California Water Boards’ website states that users can “[s]earch for NPDES permits” using its Interactive Regulated Facilities Report. 23 See https://www.waterboards.ca.gov/water_issues/programs/npdes/permit_serach.html. Pursuant to Federal Rule of Evidence 201, information made publicly available on the 24 website of a government agency is subject to judicial notice. See Daniels-Hall v. National Educ. Ass’n, 629 F.3d 992, 999 (9th Cir. 2010) (taking judicial notice of information made 25 publicly available on the websites of two school districts); U.S. ex rel. Modglin v. DJO Glob. Inc., 48 F. Supp. 3d 1362, 1381 (C.D. Cal. 2014), aff’d sub nom. United States v. 26 DJO Glob., Inc., 678 F. App’x 594 (9th Cir. 2017) (taking judicial notice of documents made available on the websites of the FDA, CMS, SEC, and Medi-Cal). 27 5 The Court notes that Plaintiff could have also propounded written discovery 1 it could not have sought leave to add the defense prior to the deadline to amend the 2 pleadings “because the information was unknown to Plaintiff at that time.” Id. 3 The County opposes the motion, arguing that Plaintiff has not shown good cause. 4 The County notes that the motion is “entirely lacking in evidence about what, if anything, 5 Ms. Jarose knew about retained funds, release of retained funds and/or whether she 6 possesses any records of John R. Braun on the subject.” Opp’n to Am. Answer at 3. The 7 County avers that “[e]xtensive correspondence exists over the period 1993-2018 between 8 John R. Braun and the County and others including on the subject of retained funds, release 9 of funds and substituting various forms of security.” Horan Decl. ¶ 11, Dkt. 35-1. The 10 County avers, “[o]n information and belief,” that this correspondence “would be in the 11 records of John R. Braun.” Id. According to the County, without information as to what 12 the Estate knew or had access to in Braun’s records, the Court cannot evaluate whether it 13 exercised due diligence in discovering the proposed defense. Opp’n to Am. Answer at 3. 14 The Estate counters that the transaction in question was between the County and 15 Braun, who is now deceased. Reply at 3. The Estate asserts that the issue “came up” at 16 Seemann’s deposition, and that, according to his testimony, not even the County could 17 confirm with certainty the circumstances under which the funds had been released. Id. The 18 Estate notes that it conducted significant third-party discovery “to obtain the historical 19 records, invoices and other documents relating to the claims and defenses in this case.” Id. 20 at 3 n.1. It contends, however, that “[e]ven if [this information] were part of the 21 voluminous historical records, there was no reason for Plaintiff to suspect the defense until 22 it was raised and confirmed at deposition.” Id. at 3. 23 The Court finds that the Estate has not demonstrated due diligence in raising the 24 defense of accord and satisfaction. The Estate notes that it conducted discovery to obtain 25 historical records and summarily asserts that those records are “voluminous.” However, the 26 Estate provides no detail as to: (a) the approximate number of documents; (b) its efforts, if 27 any, to review and search the records; or (c) whether information regarding the released 1}! opposition, the Estate provides no information whatsoever about the information known or 2|| available to it prior to Seemann’s deposition. The Estate relies entirely on its purported diligence in moving to add the defense once information came to light, but it makes no 4|| showing as to its efforts to pursue available defenses, including the defense of accord and 5|| satisfaction, prior to the deposition. 6 In view of the foregoing, leave to file an Amended Answer is DENIED. 7}|IV. CONCLUSION 8 For the reasons stated above, IT IS HEREBY ORDERED THAT the Motion to 9|| Modify the Scheduling Order and for Leave to Amend the Pleadings is DENIED. This Order terminates Docket 31.° 11 IT IS SO ORDERED. 12|| Dated: 3/2/2020 Heswtin 3 Geathing B AUNDRA BROWN ARMSTR Senior United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 6 The Estate notes that the County has raised the issue of staying the action. Reply at 5. To date, no motion has been made seeking a stay. In the event that the pretrial schedule is later vacated because of a stay, the matter of amending the pleadings may be revisited. -10-