USA v. Sterling Centrecorp Inc. et al

Filing 152

MEMORANDUM and ORDER signed by Judge Morrison C. England, Jr., on 12/8/11: ORDERING that plaintiffs' 108 Motion for Partial Summary Judgment of Elements of CERCLA liability common to all defendants is GRANTED. (Kastilahn, A)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 UNITED STATES OF AMERICA, and CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, 13 14 15 16 17 No. 2:08-cv–02556-MCE-JFM Plaintiffs, v. MEMORANDUM AND ORDER STERLING CENTRECORP INC., STEPHEN P. ELDER and ELDER DEVELOPMENT, INC., Defendants. 18 ----oo0oo---- 19 20 Both the United States and the California Department of 21 Toxic Substances (hereinafter collectively referred to as 22 “Plaintiffs” or “government” unless otherwise specified) have 23 designated the former Lava Cap Mine, located in Nevada County, 24 California, as a Superfund site polluted by elevated levels of 25 arsenic that were disseminated through tailings and waste 26 materials generated by mine operations. 27 undertaken cleanup efforts designed to remediate that arsenic 28 contamination. 1 Plaintiffs have 1 The present action seeks contribution for the costs of those 2 activities both from former owners of the site and operators 3 responsible for its mining. 4 Plaintiffs’ Motion for partial summary judgment, which seeks a 5 determination that certain prerequisites for the recovery of 6 response costs from Defendants under CERCLA have been established 7 as a matter of law. 8 granted.1 Presently before the Court is As set forth below, that motion will be 9 BACKGROUND 10 11 12 Mining operations at the Lava Cap Mine commenced in 1861. 13 Between 1934 and 1943, mining was conducted at the site by the 14 Lava Cap Gold Mining Corporation (“LCGMC”). 15 period, the Lava Cap Mine was one of the leading gold and silver 16 producers in California, and among the top twenty-five gold 17 producers in the nation. 18 Fact (“SUF”) No. 4. 19 Greenhorn Creek (now known as Lost Lake Dam) to stop mine 20 tailings from polluting the waters of the Bear River. 21 Nos. 9, 10. 22 tailings contained elevated concentrations of naturally occurring 23 arsenic, a hazardous substance pursuant to the Comprehensive 24 Environmental Response, Compensation and Liability Act of 1980, 25 42 U.S.C. §§ 9601, et seq. (“CERCLA”). During that time Plaintiffs’ Statement of Undisputed In 1938, LCGMC built a tailings dam on SUF Waste products included within the mine-generated SUF No. 80-81. 26 27 28 1 Because oral argument was not of material assistance, the Court ordered this matter submitted on the briefs. E.D. Cal. Local Rule 230(h). 2 1 No active mining occurred at Lava Cap after 1943, when its 2 operations were shut down by the United States government during 3 the Second World War. 4 sell, lease, or exchange all the property and assets of the 5 company. 6 transaction between LCGMC and New Goldvue, Mines, Ltd, a Canadian 7 company developing a gold mine in Quebec and looking to upgrade 8 its equipment. 9 executed between the two companies. SUF No. 12. In 1950, LCGMC decided to In 1952, LCGMC’s directors recommended a sales A purchase and sale agreement was subsequently Pursuant to that agreement, 10 New Goldvue, having “been advised as to the . . . assets and 11 liabilities of [LCGMC],” agreed to purchase “all the assets of 12 [LCGMC], subject to the liabilities of [LCGMC], which liabilities 13 [New Goldvue] agreed to assume and cause to be paid promptly.” 14 SUF No. 19. 15 assets would be transferred to Keystone Copper Corporation 16 (“Keystone”), a wholly-owned subsidiary of LCGMC, before Keystone 17 was itself conveyed to New Goldvue. 18 previously operated a copper mine while a LCGMC subsidiary, thus 19 became a wholly-owned subsidiary of New Goldvue.2 20 The sales agreement further specified that LCGMC’s Keystone, which had SUF No. 33. The sales transaction between New Goldvue and LCGMC was 21 financed by a transfer of New Goldvue stock. SUF No. 19. After 22 the LCGMC purchase was consummated, New Goldvue expanded its 23 board from five to seven and appointed two individuals previously 24 associated with LCGMC to the New Goldvue Board of Directors. 25 SUF No. 20. LCGMC was subsequently dissolved. See SUF No. 35. 26 2 27 28 Keystone was a California corporation and remained a Sterling subsidiary until it became inactive after selling the Lava Cap Mine in 1989 (Keystone was ultimately suspended by the California Secretary of State in 1991). 3 1 New Goldvue, which was originally incorporated in Ontario, 2 Canada, as Goldvue Mines Ltd in 1944, changed its name several 3 times over the years before becoming Sterling in 2001.3 4 1985, the company now known as Sterling was primarily a natural 5 resources company with investments in mining and oil and gas 6 production. 7 Lava Cap Mine for some 37 years (aside from a brief, ultimately 8 unsuccessful attempt to transfer ownership to another company). 9 No mining occurred during that period. 10 Until Sterling, through its subsidiary Keystone, owned the In 1979, a partial log dam collapse led to a release of mine 11 tailings which, in turn, caused downstream neighbors to complain 12 about pollution from the resulting silt. 13 complaints, the California Regional Water Quality Control Board 14 issued a Cleanup and Abatement Order to Keystone on October 25, 15 1979. In response to those See SUF No. 82. 16 Following an ultimately unsuccessful attempt to sell the 17 Lava Cap Mine to another company, Keystone sold, in 1989, the 18 property to Banner Mountain Properties, Ltd., an entity 19 controlled by Defendant Stephen Elder, who currently owns four of 20 the seven parcels comprising the former mine site. 21 120-23. 22 business interest, Defendant Elder Development, Inc. 23 /// 24 /// SUF Nos. 77, The remaining three parcels are owned by another Elder 25 26 27 28 3 New Goldvue changed its names several times over the years before becoming Sterling Centrecorp Inc. in 2001. New Goldvue and the subsequent names by which the corporation was known will be simply referred to as “Sterling” throughout the remainder of this Memorandum and Order unless otherwise noted. 4 1 Elder had an engineering firm prepare a Preacquisition Site 2 Assessment before his purchase of the mine site that revealed 3 hazardous substance contamination, primarily arsenic. 4 No. 127. 5 SUF The United States Environmental Protection Agency (“EPA”) 6 completed a Preliminary Assessment on the mine site in April of 7 1993, after Banner Mountain’s purchase of the mine site. 8 86. 9 of both arsenic and lead. 10 See SUF Sediment and soil samples revealed elevated concentrations Heavy rainstorms in 1993 washed mine wastes downstream into 11 Little Clipper Creek and a former mine tailings pond now known as 12 Lost Lake. 13 1997 and the site was officially designed a Superfund site in 14 January of 1999. 15 removal and relocation of tailings, reinforcement of the log dam, 16 and diversion of Little Clipper Creek around the tailings pile. 17 Id. 18 will include actions to address the polluted groundwater. 19 EPA estimates that it spent at least $20 million in response 20 costs at the site as of April 30, 2008. 21 of California Department of Toxic Substances alleges that its own 22 response costs as of December 2010 are another $1,000,000. 23 is no dispute that the release of hazardous substances at the 24 mine site is responsible for the response costs that have been 25 incurred by Plaintiffs. 26 /// 27 /// 28 /// SUF No. 88. The EPA began cleanup operations in late SUF Nos. 89-90. Those operations included the Future remedial work contemplated by the EPA for the site See SUF No. 102. SUF No. 100. 5 The The State There 1 As indicated above, Plaintiffs now seek partial summary 2 judgment to establish, as a matter of law, that certain 3 prerequisites for the recovery of response costs against all 4 Defendants in this matter have been satisfied. 5 Plaintiffs’ Motion has been made. No opposition to 6 STANDARD 7 8 9 The Federal Rules of Civil Procedure provide for summary 10 judgment when “the pleadings, depositions, answers to 11 interrogatories, and admissions on file, together with 12 affidavits, if any, show that there is no genuine issue as to any 13 material fact and that the moving party is entitled to a judgment 14 as a matter of law.” 15 Catrett, 477 U.S. 317, 322 (1986). 16 of Rule 56 is to dispose of factually unsupported claims or 17 defenses. 18 Fed. R. Civ. P. 56(c); Celotex Corp. v. One of the principal purposes Celotex Corp. v. Catrett, 477 U.S. at 325. Rule 56 also allows a court to grant summary adjudication on 19 part of a claim or defense. 20 may move for summary judgment, identifying . . . the part of each 21 claim or defense . . . on which summary judgment is sought.”); 22 see, also, Allstate Ins. Co. v. Madan, 889 F. Supp. 374, 378-79 23 (C.D. Cal. 1995); France Stone Co., Inc. v. Charter Twp. of 24 Monroe, 790 F. Supp. 707, 710 (E.D. Mich. 1992). 25 See Fed. R. Civ. P. 56(a) (“A party The standard that applies to a motion for summary 26 adjudication is the same as that which applies to a motion for 27 summary judgment. 28 ChemTronics, 16 F. Supp. 2d. 1192, 1200 (S.D. Cal. 1998). See Fed. R. Civ. P. 56(a), 56(c); Mora v. 6 1 Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact. 2 3 4 5 6 Celotex Corp., 477 U.S. at 323 (quoting Fed. R. Civ. P. 56(c)). 7 If the moving party meets its initial responsibility, the 8 burden then shifts to the opposing party to establish that a 9 genuine issue as to any material fact actually does exist. 10 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 11 585-87 (1986); First Nat’l Bank v. Cities Serv. Co., 391 U.S. 12 253, 288-89 (1968). 13 In attempting to establish the existence of this factual 14 dispute, the opposing party must tender evidence of specific 15 facts in the form of affidavits, and/or admissible discovery 16 material, in support of its contention that the dispute exists. 17 Fed. R. Civ. P. 56(e). 18 the fact in contention is material, i.e., a fact that might 19 affect the outcome of the suit under the governing law, and that 20 the dispute is genuine, i.e., the evidence is such that a 21 reasonable jury could return a verdict for the nonmoving party. 22 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52 23 (1986); Owens v. Local No. 169, Assoc. of W. Pulp and Paper 24 Workers, 971 F.2d 347, 355 (9th Cir. 1987). 25 /// 26 /// 27 /// 28 /// The opposing party must demonstrate that 7 1 Stated another way, “before the evidence is left to the jury, 2 there is a preliminary question for the judge, not whether there 3 is literally no evidence, but whether there is any upon which a 4 jury could properly proceed to find a verdict for the party 5 producing it, upon whom the onus of proof is imposed.” 6 477 U.S. at 251 (quoting Improvement Co. v. Munson, 81 U.S. 442, 7 448 (1871)). 8 party has carried its burden under Rule 56(c), its opponent must 9 do more than simply show that there is some metaphysical doubt as Anderson, As the Supreme Court explained, “[w]hen the moving 10 to the material facts . . . . Where the record taken as a whole 11 could not lead a rational trier of fact to find for the nonmoving 12 party, there is no ‘genuine issue for trial.’” 13 475 U.S. at 586-87. 14 Matsushita, In resolving a summary judgment motion, the evidence of the 15 opposing party is to be believed, and all reasonable inferences 16 that may be drawn from the facts placed before the court must be 17 drawn in favor of the opposing party. 18 Nevertheless, inferences are not drawn out of the air, and it is 19 the opposing party’s obligation to produce a factual predicate 20 from which the inference may be drawn. 21 Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), 22 aff’d, 810 F.2d 898 (9th Cir. 1987). Anderson, 477 U.S. at 255. Richards v. Nielsen 23 24 ANALYSIS 25 26 In order to establish Defendants’ liability for response 27 costs under Section 107(a) of CERCLA, 42 U.S.C. § 9607(a), 28 Plaintiffs must make a four-part showing. 8 1 First, Plaintiffs must prove that the Lava Cap Mine Superfund 2 Site is a “facility” as defined by CERCLA. 3 show that a “release” or “threatened release” of a hazardous 4 substance from the facility has occurred. 5 required to establish that the release or threatened release 6 caused Plaintiffs to incur response costs. 7 in order to incur liability Defendants must fall within one of 8 the four classes of covered persons described in Section 9607(a). 9 Cose v. Getty Oil, 4 F.3d 700, 703-04 (9th Cir. 1993); 3550 Second, they must Third, Plaintiffs are Fourth and finally, 10 Stevens Creek Assocs. v. Barclays Bank of California, 915 F.2d 11 1355, 1358 (9th Cir. 1990). 12 establishing these four elements of liability, they are entitled 13 to summary judgment unless Defendants are able to invoke one of 14 the limited statutorily-permitted defenses to CERCLA liability. 15 Courts to routinely grant summary judgment as to CERCLA liability 16 provided the requisite showing has been made. 17 States v. Shell Oil Co., 841 F. Supp. 962, 968 (C.D. Cal. 1993). 18 If Plaintiffs are successful in See, e.g., United The present motion seeks to summarily adjudicate three out 19 of the four requirements to establishing CERCLA liability. In 20 response to Plaintiffs’ Motion, Defendant Sterling states plainly 21 that it “does not dispute that Plaintiffs have established that 22 the Lava Cap Mine Site is a facility; that arsenic, a CERCLA 23 hazardous substance, was released into the environment at the 24 Site; and that Plaintiffs have incurred certain costs responding 25 to the release of arsenic from the facility.” 26 Sterling’s Response, 1:22-25. 27 filed no opposition to Plaintiffs’ Motion. 28 /// Defendant Defendant Stephen P. Elder has 9 1 Default judgment as to the liability of the remaining Defendant, 2 Elder Development, Inc., has already been granted by Order filed 3 September 20, 2011. 4 the instant motion is unopposed. Consequently, for all intents and purposes, 5 That lack of opposition is not surprising given the 6 straightforward nature of the three liability elements as to 7 which Plaintiffs request summary adjudication. 8 the first question of whether the Lava Cap Mine Superfund Site is 9 a “facility” for purposes of CERCLA, the statute defines With respect to 10 “facility” as including “any building, structure, installation, 11 equipment . . . well, pit pond, lagoon, impoundment, ditch 12 landfill, storage container, . . . . or any site or area where a 13 hazardous substance has been deposited, stored, disposed of, or 14 place, or otherwise come to be located.” 15 Given this expansive definition, a “facility” includes virtually 16 every conceivable place where hazardous substances can be found, 17 criteria which certainly would encompass the Lava Cap site. 18 Moreover, it is undisputed that arsenic was found at the site, 19 and arsenic qualifies as a “hazardous substance” as a matter of 20 law because it is listed in 40 C.F.R. § 302.4, which delineates a 21 consolidated list of hazardous substances under CERCLA. 22 Consequently Plaintiffs are entitled to summary adjudication as 23 to the “facility” component for CERCLA liability. 42 U.S.C. § 9601(9). 24 The second element required to establish liability, the 25 requirement that there have been releases or threatened releases 26 of a hazardous substance from the Lava Cap facility, is equally 27 plain. 28 /// 10 1 CERCLA Section 101(22), 46 U.S.C. § 9601(22), defines “release” 2 broad as including “any spilling, leaking, pumping, pouring, 3 emitting, emptying, discharging, injecting, escaping, leaching, 4 dumping, or disposing into the environment.” 5 is liberally construed, any the amount of a hazardous substance 6 released into the environment is irrelevant to liability. 7 e.g., Stewman v. Mid-South Wood Products of Mena, Inc., 993 F.2d 8 646, 649 (8th Cir. 1993). 9 responsibility for such releases may well be at issue, it is 10 clear that mine tailings placed directly onto the soil at the 11 Lava Cap site contained arsenic and that surface water drainage 12 at the site has also produced arsenic contamination. 13 that a “release” has occurred for purposes of CERCLA liability 14 cannot be reasonably controverted, and Plaintiffs are entitled to 15 summary adjudication as to that liability prerequisite as well. 16 Finally, with respect to the third and last liability 17 component Plaintiffs seek to establish through this motion, it 18 has been unequivocally established that both the EPA and the 19 California Department of Toxic Substances Control has incurred 20 response costs in remediating pollutants present at the Lava Cap 21 site. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// The term “release” See, Here, while the ultimate 11 The fact CONCLUSION 1 2 3 As demonstrated above, Plaintiffs are entitled to summary 4 adjudication as to the first three components of CERCLA 5 liability; namely, that the Lava Cap mine site is a “facility” 6 for purposes of the statute, that releases of a hazardous 7 substance have occurred from that facility, and finally that 8 Plaintiffs have incurred response costs as a result of said 9 release. Plaintiffs’ Motion for Partial Summary Judgment of 10 Elements of CERCLA liability common to all Defendants (ECF 11 No. 108) is accordingly GRANTED. 12 establish the fourth and final element that would establish 13 Defendants’ liability as a matter of law (to wit, whether either 14 Defendant Sterling or Defendant Stephen Elder qualifies as a 15 “covered person” for purposes of the statute), as well as whether 16 either remaining Defendant may properly assert any affirmative 17 defenses to CERCLA liability, will be assessed by three other 18 motions concurrently filed by Plaintiffs as to those issues. 19 20 Whether Plaintiffs can IT IS SO ORDERED. Dated: December 8, 2011 21 22 23 _____________________________ MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE 24 25 26 27 28 12

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