CA Dept Toxic Sub v. Brighton Oil Co, et al

Filing 1236

ORDER signed by Judge Garland E. Burrell, Jr. on 07/20/2011 ORDERING that the Sullivan Consent Decree is APPROVED. (Michel, G)

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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE EASTERN DISTRICT OF CALIFORNIA 6 7 CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, 8 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiff, 9 v. 10 CHARLES V. KESTER, ET AL., 11 Defendants. ________________________________ 12 13 14 AND RELATED CROSS-CLAIMS, COUNTERCLAIMS, and THIRD-PARTY ACTIONS ________________________________ 15 16 17 18 19 20 21 22 23 24 25 26 27 2:02-cv-00018-GEB-GGH ORDER APPROVING CONSENT DECREE, BARRING CONTRIBUTION CLAIMS, AND FINDING CONSENT DECREE WAS REACHED IN GOOD FAITH Plaintiff California Department of Toxic Substances Control (the “Department”) moves for approval of the proposed Consent Decree (the “Sullivan Consent Decree”) into which it entered with John L. Sullivan Chevrolet, Inc. (“Sullivan”), Gordon Turner Motors (“Turner”), the California Department of Transportation, the California Department of General Services, the California Department of Fish and Game, the California National Guard, and the California Department of Forestry and Fire Protection (the “State Agencies). (ECF No. 1215.) The Sullivan Consent Decree was filed on May 4, 2011 as Docket Number 1219. Sullivan, Turner, and the State Agencies (collectively, the “settling parties”) also seek a judicial declaration under California Code of Civil Procedure section 877.6 that the Sullivan Consent Decree is made in good faith, and an order issued under 42 U.S.C. § 9613(f) which would bar 28 1 1 contribution or indemnity claims against the settling parties for the 2 “matters addressed” in the Sullivan Consent Decree. (ECF No. 1214.) 3 I. BACKGROUND 4 This is a cost recovery action brought by the Department under 5 the Comprehensive Environmental Response, Compensation and Liability Act 6 (“CERCLA”), prescribed in 42 U.S.C. §§ 9601 et seq.. The Department 7 seeks to recover the response costs it has incurred and will incur 8 monitoring, assessing, and evaluating the alleged release and threatened 9 release of hazardous substances from a tract of land located at the 10 intersection 11 California (the “Site”). The Department also seeks to recover the costs 12 it has incurred and will incur removing, remediating, and overseeing the 13 removal and remediation of hazardous substances at the Site. 14 of White Following a Rock and Kilgore settlement Roads conference in with Rancho United Cordova, States 15 Magistrate Judge Hollows on May 29, 2009, the Department and twenty nine 16 parties reached a settlement and entered into a proposed consent decree 17 which the district court subsequently approved (the “2010 Consent 18 Decree”). (ECF Nos. 1102, 1120.) The Department then filed a Fourth 19 Amended Complaint (the “Complaint”), naming as defendants Sullivan, 20 Turner, and other parties who were not a party to the 2010 Consent 21 Decree. (Complaint ¶¶ 63-67, ECF No. 1145.) Sullivan and Turner each 22 filed a counterclaim against the State Agencies, who are signatories to 23 the Sullivan Consent Decree. (ECF Nos. 1163-64.) This pending litigation 24 was referred to the Voluntary Dispute Resolution Program for mediation 25 on October 27, 2010. (ECF No. 1178.) “On March 3, 2011 the parties to 26 this Consent Decree participated in a mediation through the Court’s 27 Voluntary Dispute Resolution Program, and reached a settlement in 28 2 1 principle.” (Decl. of Fiering ¶ 4, ECF No. 1217.) The Sullivan Consent 2 Decree “memorializes that settlement agreement.” Id. 3 II. MOTION FOR APPROVAL OF SULLIVAN CONSENT DECREE 4 Here, the decision whether the Sullivan Consent Decree is 5 approved requires the “court [to] be satisfied that [the Sullivan 6 Consent 7 reasonable.” U.S. v. State of Oregon, 913 F.2d 576, 580 (9th Cir. 1990). 8 “[F]airness in the CERCLA settlement context has both procedural and 9 substantive components. To measure procedural fairness, a court should 10 ordinarily look to the negotiation process and attempt to gauge its 11 candor, openness, and bargaining balance.” U.S. v. Cannons Eng’g Corp., 12 899 F.2d 79, 86 (1st Cir. 1990) (citation omitted) (relied on by U.S. v. 13 Montrose Chem. Corp. of California, 50 F.3d 741, 746-48 (9th Cir. 14 1995)). “Substantive fairness introduces into the equation concepts of 15 corrective justice and accountability: a party should bear the cost of 16 the harm for which it is legally responsible.” Id. at 87. In determining 17 whether a settlement is reasonable, courts look to whether the proposed 18 settlement will be effective in ensuring a cleanup of the property, 19 whether it satisfactorily compensates the public for the costs of 20 cleanup, and whether the settlement reflects the relative strengths of 21 the parties’ bargaining positions. Id. at 89-90. Finally, determining 22 the fairness and reasonableness of the Sullivan Consent Decree requires 23 consideration of the extent to which it is consistent with the purposes 24 of CERCLA, two of which are: (1) to create a prompt and effective 25 response to hazardous waste problems; and (2) to ensure that the cost of 26 remedying the hazardous waste problem is paid for by those who caused 27 the problem. Id. at 90-91. 28 /// Decree] is at least fundamentally 3 fair, adequate and 1 Here, the parties have made the required showing that the 2 Sullivan 3 reasonable, and consistent with the purposes of CERCLA. The Sullivan 4 Consent Decree provides that “Turner and Sullivan shall each pay Fifty 5 Thousand Dollars ($50,000) to the Department, and the State Agencies 6 shall collectively pay a total of Ten Thousand Dollars ($10,000) to the 7 Department[.]” (Sullivan Consent Decree ¶ 7.1, ECF No. 1219.) “[T]he 8 total estimated response costs in the matter are: $2,500,000 future 9 remedial action costs, $764,603 past oversight costs and $126,000 future 10 oversight costs, which total approximately $3,390,603.” (Mot. 9:16-18, 11 ECF No. 1216; Fiering Decl. Exs. B-C, ECF No. 1217.) The Sullivan 12 Consent Decree, along with the Maita Consent Decree which was filed on 13 July 20, 2011, and the 2010 Consent Decree, “will provide recovery of 14 over 84 [percent] of the total estimated response costs.” (Mot. 9:18-20, 15 ECF No. 1216; ECF Nos. 1102, 1208.) Although this payment does not fully 16 compensate the Department for its oversight costs, the Department has 17 the ability to seek these costs from other non-settling parties and to 18 apply any unused funds obtained in the consent decrees to cover these 19 costs. Therefore, the Sullivan Consent Decree reflects a “reasonable 20 method of weighing comparative fault[.]” Id. at 88. Further, since the 21 Sullivan Consent Decree was the result of mediation through the Court’s 22 Voluntary Dispute Resolution Program, it is procedurally fair. The 23 Sullivan Consent Decree also promptly and effectively responds to the 24 hazardous waste problem and ensures that the cost of remedying the 25 hazardous waste problem is paid for by those who caused it. Therefore, 26 the 27 substantively fair, reasonable, and consistent with the purposes of 28 CERCLA. Consent Sullivan Decree Consent is procedurally Decree is 4 and approved substantively as procedurally fair, and 1 III. MOTION FOR ORDER BARRING CONTRIBUTION CLAIMS AND 2 DECLARATION OF GOOD FAITH 3 The settling parties also seek an order barring contribution 4 and indemnity claims for the “matters addressed” in the Sullivan Consent 5 Decree. (Mot. 11:1-17, ECF No. 1214-1.) CERCLA section 113(f) provides: 6 10 A person who has resolved liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. 11 42 U.S.C. § 9613(f)(2). Under this section, “[c]ontribution protection 12 is conferred on the settling parties at the time the settling parties 13 enter into the agreement.” U.S. v. Colorado & E. R.R. Co., 50 F.3d 1530, 14 1538 (10th Cir. 1995). Therefore, the settling parties’ request for an 15 order 16 addressed” in the Sullivan Consent Decree is granted. 7 8 9 barring contribution and indemnity claims for the “matters 17 The settling parties also seek a judicial declaration that the 18 Sullivan Consent Decree constitutes a good faith settlement under 19 California Code of Civil Procedure section 877.6, which precludes claims 20 for contribution and indemnity. (Mot. 6:20-9:3, ECF No. 1214-1.) Section 21 877.6 of the California Code of Civil Procedure prescribes: 22 25 A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault. 26 Cal. Code Civ. P. § 877.6(c). Whether a settlement is made in “good 27 faith” within the meaning of section 877.6 is determined based on the 28 factors identified by the California Supreme Court in Tech-Bilt, Inc. v. 23 24 5 1 Woodward-Clyde & Assoc., 38 Cal. 3d 488 (1985), including: (i) a rough 2 approximation 3 proportionate liability; (ii) the amount paid in settlement; (iii) the 4 allocation of settlement proceeds among plaintiffs; (iv) a recognition 5 that the settlor should pay less in settlement than he would if he were 6 found liable after trial; (v) the financial conditions and insurance 7 policy 8 collusion, fraud, or tortious conduct aimed to injure the interests of 9 non-settling defendants. Id. at 499. limits of of plaintiff’s settling total defendants; recovery and and (vi) the the settlor’s existence of 10 Based on the Tech-Bilt factors, the Sullivan Consent Decree 11 qualifies as a good faith settlement within the meaning of section 12 877.6. “The first factor, an approximation of recovery and potential 13 liability, is the most important.” AmeriPride Serv., Inc. v. Valley 14 Indust. Serv., Inc., Nos. CIV. S-00-113-LKK JFM, S-04-1494-LKK/JFM, 2007 15 WL 1946635, at *3 (E.D. Cal. July 2, 2007). “The settlement amount need 16 only be ‘in the ballpark’ [to satisfy this factor], with any party 17 challenging a settlement having the burden of establishing that it is so 18 far out of the ballpark that the equitable objectives of section 877 are 19 not satisfied.” Id. Here, the Sullivan Consent Decree is within the 20 “ballpark” of a “rough approximation” of the Department’s total recovery 21 and the settling parties’ proportionate liability. Further, there is no 22 evidence that the settling parties engaged in collusion, fraud, or other 23 conduct seeking to impose an undue share of liability on the non- 24 settling parties. Accordingly, the Sullivan Consent Decree was reached 25 in good faith. Therefore, any claim against the settling parties “for 26 equitable comparative contribution, or partial or comparative indemnity, 27 based on comparative indemnity, based on comparative negligence, or 28 6 1 comparative fault” is barred by California Code of Civil Procedure 2 section 877.6. 3 III. CONCLUSION 4 5 For the stated reasons, it is ORDERED: 1. The Sullivan Consent Decree is approved as procedurally and 6 substantively fair, reasonable, and consistent with the purposes of 7 CERCLA. 8 2. 9 parties for the “matters addressed” in the Sullivan Consent Decree 10 11 Any claim for contribution or indemnity against the settling is barred by 42 U.S.C. § 9613(f). 3. The Sullivan Consent Decree was entered into in good faith within 12 the meaning of California Code of Civil Procedure section 877.6, 13 and any claim against the settling parties for contribution or 14 indemnity is barred by section 877.6. 15 Dated: July 20, 2011 16 17 18 GARLAND E. BURRELL, JR. United States District Judge 19 20 21 22 23 24 25 26 27 28 7

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