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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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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CALIFORNIA DEPARTMENT OF TOXIC
SUBSTANCES CONTROL,

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Plaintiff,

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v.

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CHARLES V. KESTER, ET AL.,

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Defendants.
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AND RELATED CROSS-CLAIMS,
COUNTERCLAIMS, and THIRD-PARTY
ACTIONS
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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

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contribution or indemnity claims against the settling parties for the

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“matters addressed” in the Sullivan Consent Decree. (ECF No. 1214.)

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I. BACKGROUND

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This is a cost recovery action brought by the Department under

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the Comprehensive Environmental Response, Compensation and Liability Act

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(“CERCLA”), prescribed in 42 U.S.C. §§ 9601 et seq.. The Department

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seeks to recover the response costs it has incurred and will incur

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monitoring, assessing, and evaluating the alleged release and threatened

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release of hazardous substances from a tract of land located at the

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intersection

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California (the “Site”). The Department also seeks to recover the costs

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it has incurred and will incur removing, remediating, and overseeing the

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removal and remediation of hazardous substances at the Site.

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of

White

Following

a

Rock

and

Kilgore

settlement

Roads

conference

in

with

Rancho

United

Cordova,

States

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Magistrate Judge Hollows on May 29, 2009, the Department and twenty nine

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parties reached a settlement and entered into a proposed consent decree

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which the district court subsequently approved (the “2010 Consent

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Decree”). (ECF Nos. 1102, 1120.) The Department then filed a Fourth

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Amended Complaint (the “Complaint”), naming as defendants Sullivan,

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Turner, and other parties who were not a party to the 2010 Consent

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Decree. (Complaint ¶¶ 63-67, ECF No. 1145.) Sullivan and Turner each

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filed a counterclaim against the State Agencies, who are signatories to

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the Sullivan Consent Decree. (ECF Nos. 1163-64.) This pending litigation

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was referred to the Voluntary Dispute Resolution Program for mediation

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on October 27, 2010. (ECF No. 1178.) “On March 3, 2011 the parties to

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this Consent Decree participated in a mediation through the Court’s

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Voluntary Dispute Resolution Program, and reached a settlement in

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principle.” (Decl. of Fiering ¶ 4, ECF No. 1217.) The Sullivan Consent

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Decree “memorializes that settlement agreement.” Id.

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II. MOTION FOR APPROVAL OF SULLIVAN CONSENT DECREE

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Here, the decision whether the Sullivan Consent Decree is

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approved requires the “court [to] be satisfied that [the Sullivan

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Consent

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reasonable.” U.S. v. State of Oregon, 913 F.2d 576, 580 (9th Cir. 1990).

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“[F]airness in the CERCLA settlement context has both procedural and

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substantive components. To measure procedural fairness, a court should

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ordinarily look to the negotiation process and attempt to gauge its

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candor, openness, and bargaining balance.” U.S. v. Cannons Eng’g Corp.,

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899 F.2d 79, 86 (1st Cir. 1990) (citation omitted) (relied on by U.S. v.

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Montrose Chem. Corp. of California, 50 F.3d 741, 746-48 (9th Cir.

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1995)). “Substantive fairness introduces into the equation concepts of

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corrective justice and accountability: a party should bear the cost of

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the harm for which it is legally responsible.” Id. at 87. In determining

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whether a settlement is reasonable, courts look to whether the proposed

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settlement will be effective in ensuring a cleanup of the property,

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whether it satisfactorily compensates the public for the costs of

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cleanup, and whether the settlement reflects the relative strengths of

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the parties’ bargaining positions. Id. at 89-90. Finally, determining

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the fairness and reasonableness of the Sullivan Consent Decree requires

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consideration of the extent to which it is consistent with the purposes

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of CERCLA, two of which are: (1) to create a prompt and effective

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response to hazardous waste problems; and (2) to ensure that the cost of

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remedying the hazardous waste problem is paid for by those who caused

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the problem. Id. at 90-91.

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///

Decree]

is

at

least

fundamentally

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fair,

adequate

and

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Here, the parties have made the required showing that the

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Sullivan

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reasonable, and consistent with the purposes of CERCLA. The Sullivan

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Consent Decree provides that “Turner and Sullivan shall each pay Fifty

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Thousand Dollars ($50,000) to the Department, and the State Agencies

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shall collectively pay a total of Ten Thousand Dollars ($10,000) to the

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Department[.]” (Sullivan Consent Decree ¶ 7.1, ECF No. 1219.) “[T]he

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total estimated response costs in the matter are: $2,500,000 future

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remedial action costs, $764,603 past oversight costs and $126,000 future

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oversight costs, which total approximately $3,390,603.” (Mot. 9:16-18,

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ECF No. 1216; Fiering Decl. Exs. B-C, ECF No. 1217.) The Sullivan

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Consent Decree, along with the Maita Consent Decree which was filed on

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July 20, 2011, and the 2010 Consent Decree, “will provide recovery of

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over 84 [percent] of the total estimated response costs.” (Mot. 9:18-20,

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ECF No. 1216; ECF Nos. 1102, 1208.) Although this payment does not fully

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compensate the Department for its oversight costs, the Department has

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the ability to seek these costs from other non-settling parties and to

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apply any unused funds obtained in the consent decrees to cover these

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costs. Therefore, the Sullivan Consent Decree reflects a “reasonable

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method of weighing comparative fault[.]” Id. at 88. Further, since the

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Sullivan Consent Decree was the result of mediation through the Court’s

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Voluntary Dispute Resolution Program, it is procedurally fair. The

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Sullivan Consent Decree also promptly and effectively responds to the

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hazardous waste problem and ensures that the cost of remedying the

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hazardous waste problem is paid for by those who caused it. Therefore,

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the

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substantively fair, reasonable, and consistent with the purposes of

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CERCLA.

Consent

Sullivan

Decree

Consent

is

procedurally

Decree

is

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and

approved

substantively

as

procedurally

fair,

and

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III. MOTION FOR ORDER BARRING CONTRIBUTION CLAIMS AND

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DECLARATION OF GOOD FAITH

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The settling parties also seek an order barring contribution

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and indemnity claims for the “matters addressed” in the Sullivan Consent

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Decree. (Mot. 11:1-17, ECF No. 1214-1.) CERCLA section 113(f) provides:

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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.

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42 U.S.C. § 9613(f)(2). Under this section, “[c]ontribution protection

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is conferred on the settling parties at the time the settling parties

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enter into the agreement.” U.S. v. Colorado & E. R.R. Co., 50 F.3d 1530,

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1538 (10th Cir. 1995). Therefore, the settling parties’ request for an

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order

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addressed” in the Sullivan Consent Decree is granted.

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barring

contribution

and

indemnity

claims

for

the

“matters

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The settling parties also seek a judicial declaration that the

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Sullivan Consent Decree constitutes a good faith settlement under

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California Code of Civil Procedure section 877.6, which precludes claims

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for contribution and indemnity. (Mot. 6:20-9:3, ECF No. 1214-1.) Section

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877.6 of the California Code of Civil Procedure prescribes:

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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.

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Cal. Code Civ. P. § 877.6(c). Whether a settlement is made in “good

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faith” within the meaning of section 877.6 is determined based on the

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factors identified by the California Supreme Court in Tech-Bilt, Inc. v.

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Woodward-Clyde & Assoc., 38 Cal. 3d 488 (1985), including: (i) a rough

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approximation

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proportionate liability; (ii) the amount paid in settlement; (iii) the

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allocation of settlement proceeds among plaintiffs; (iv) a recognition

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that the settlor should pay less in settlement than he would if he were

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found liable after trial; (v) the financial conditions and insurance

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policy

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collusion, fraud, or tortious conduct aimed to injure the interests of

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non-settling defendants. Id. at 499.

limits

of

of

plaintiff’s

settling

total

defendants;

recovery

and

and

(vi)

the

the

settlor’s

existence

of

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Based on the Tech-Bilt factors, the Sullivan Consent Decree

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qualifies as a good faith settlement within the meaning of section

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877.6. “The first factor, an approximation of recovery and potential

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liability, is the most important.” AmeriPride Serv., Inc. v. Valley

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Indust. Serv., Inc., Nos. CIV. S-00-113-LKK JFM, S-04-1494-LKK/JFM, 2007

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WL 1946635, at *3 (E.D. Cal. July 2, 2007). “The settlement amount need

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only be ‘in the ballpark’ [to satisfy this factor], with any party

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challenging a settlement having the burden of establishing that it is so

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far out of the ballpark that the equitable objectives of section 877 are

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not satisfied.” Id. Here, the Sullivan Consent Decree is within the

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“ballpark” of a “rough approximation” of the Department’s total recovery

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and the settling parties’ proportionate liability. Further, there is no

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evidence that the settling parties engaged in collusion, fraud, or other

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conduct seeking to impose an undue share of liability on the non-

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settling parties. Accordingly, the Sullivan Consent Decree was reached

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in good faith. Therefore, any claim against the settling parties “for

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equitable comparative contribution, or partial or comparative indemnity,

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based on comparative indemnity, based on comparative negligence, or

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comparative fault” is barred by California Code of Civil Procedure

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section 877.6.

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III. CONCLUSION

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For the stated reasons, it is ORDERED:
1.

The

Sullivan

Consent

Decree

is

approved

as

procedurally

and

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substantively fair, reasonable, and consistent with the purposes of

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CERCLA.

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2.

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parties for the “matters addressed” in the Sullivan Consent Decree

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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

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the meaning of California Code of Civil Procedure section 877.6,

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and any claim against the settling parties for contribution or

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indemnity is barred by section 877.6.

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Dated:

July 20, 2011

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GARLAND E. BURRELL, JR.
United States District Judge

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