City of West Sacramento, et al., v. R and L Business Management et al

Filing 33

MEMORANDUM and ORDER re 25 Richard Leland's Motion to Dismiss signed by Senior Judge William B. Shubb on 9/4/2018: IT IS ORDERED that Leland's Motion to Dismiss Plaintiffs' First Amended Complaint be, and the same hereby is, GRANTED. Plaintiffs have twenty days from the date this Order is signed to file a Second Amended Complaint, if they can do so consistent with this Order. (Kirksey Smith, K)

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NITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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CITY OF WEST SACRAMENTO,
CALIFORNIA; and PEOPLE OF THE
STATE OF CALIFORNIA,
Plaintiffs,

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No. 2:18-cv-900 WBS EFB

MEMORANDUM AND ORDER RE:
MOTION TO DISMISS

v.
R AND L BUSINESS MANAGEMENT, a
California corporation, f/k/a
STOCKTON PLATING, INC., d/b/a
CAPITOL PLATING, INC., a/k/a
CAPITOL PLATING, a/k/a CAPITAL
PLATING; CAPITOL PLATING INC., a
dissolved California
corporation; ESTATE OF GUS
MADSACK, DECEASED; ESTATE OF
CHARLES A. SCHOTZ a/k/a SHOTTS,
DECEASED; ESTATE of E. BIRNEY
LELAND, DECEASED; ESTATE OF
FRANK E. ROSEN, DECEASED; ESTATE
OF UNDINE F. ROSEN, DECEASED;
ESTATE of NICK E. SMITH,
DECEASED; RICHARD LELAND, an
individual; ESTATE OF LINDA
SCHNEIDER, DECEASED; JUDY GUESS,
an individual; JEFFREY A. LYON,
an individual; GRACE E. LYON, an
individual; THE URBAN FARMBOX
LLC, a suspended California
limited liability company; and
DOES 1-50, inclusive,
Defendants.

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The City of West Sacramento, California (“the City”)

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and the People of the State of California (collectively

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“plaintiffs”) initiated this action to address toxic levels of

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contamination in the environment within the City.

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before the court is defendant Richard Leland’s Motion to Dismiss

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the First Amended Complaint.

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I.

Presently

(Docket No. 25.)

Factual and Procedural Background

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Plaintiffs’ original Complaint alleged the following

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causes of action against Leland: (1) violation of the Resource

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Conservation and Recovery Act (“RCRA”) § 7002(a), 42 U.S.C. §

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6972(a)(1)(B); (2) violation of the Comprehensive Environmental

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Response, Compensation and Liability Act (“CERCLA”) § 107(a), 42

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U.S.C. § 9607(a); (3) violation of The Gatto Act, California

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Health & Safety Code §§ 25403-25403.8; (4) violation of The

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Porter-Cologne Water Quality Control Act, Cal. Water Code §

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1304(c); (5) public nuisance; (6) trespass; (7) negligence; (8)

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ultrahazardous activity; (9) statutory indemnity; and (10)

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declaratory relief.

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and costs allegedly incurred in response to soil and ground water

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contamination at and around the property.

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Plaintiffs also requested declaratory relief

On May 18, 2018, Leland and his wife, who is no longer

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a party to this case, filed a Motion to Dismiss for failure to

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state a claim pursuant to Federal Rule of Civil Procedure

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12(b)(6).

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the Motion in full and provided plaintiffs with twenty days to

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file an amendment complaint.

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filed the First Amended Complaint, which contains all of the same

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causes of action, save for negligence.

(Docket No. 10.)

On June 27, 2018, the court granted

(Docket No. 18.)

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Plaintiffs then

(First Amended Compl.

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(“FAC”) (Docket No. 19).)

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II.

Discussion

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A.

CERCLA and RCRA Claims

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Plaintiffs assert two theories to hold Leland

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individually liable in this action.

The first is that Leland is

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an owner or operator under CERCLA and RCRA such that he is liable

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for his individual conduct in causing the alleged contamination.

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The second theory is that the court should pierce the corporate

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veil and hold Leland individually liable for the purportedly

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wrongful acts of Stockton Plating, Inc., Capitol Plating, and R

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and L Business Managements, all of which are California

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corporations that are also named defendants in this action.

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1.

Owner or Operator Liability

Leland moves to dismiss plaintiffs’ CERCLA and RCRA

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claims, arguing that plaintiffs have not shown that Leland was an

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“operator” of the facility.

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in its June 27, 2018 Order, CERCLA and RCRA liability may be

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imposed where an officer “actually participated in the operations

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of the facility” or “actually exercised control over, or was

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otherwise intimately involved in the operations of, the

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corporation immediately responsible for the operation of the

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facility.”

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781 F. Supp. 1454, 1456 (N.D. Cal. 1991).

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As the court previously recognized

Levin Metals, Corp. v. Parr-Richmond Terminal Co.,

In the original Complaint, plaintiffs alleged that

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Leland was liable because he “used, handled, stored, treated,

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transported, and/or disposed of, or arranged for others to do so,

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or exercised substantial influence and control over the use,

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handling, storage, transport, and/or disposal of the Contaminants
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at the property.”

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Amended Complaint, plaintiffs have added that Leland also

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“ordered, directed and arranged for the removal and disposal of

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plating equipment and chemicals.”

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(Compl. (Docket No. 1) ¶ 73.)

In the First

(FAC ¶ 43.)

These new allegations remain too general to withstand a

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Motion to Dismiss.

Plaintiffs have again failed to allege

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specific facts demonstrating that Leland “direct[ed] the workings

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of, manage[d], or conduct[ed] the affairs of a facility,” which

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is necessary to establish that Leland was an “operator” of the

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facility under CERCLA.

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51, 66 (1998) (holding that for purposes of CERCLA, “an operator

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must manage, direct, or conduct operations specifically related

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to pollution, that is, operations having to do with the leakage

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or disposal of hazardous waste, or decisions about compliance

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with environmental regulations).

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facts indicating this was the case.

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See United States v. Bestfoods, 524 U.S.

Plaintiffs have alleged no

Plaintiffs do allege for the first time that Leland

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personally signed a lease for the property where the

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contamination occurred.

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demonstrate that Leland actually participated in the disposal of

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hazardous wastes or that he “had the authority to control the

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cause of contamination at the time the hazardous substances were

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released into the environment.”

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v. Catellus Development Corp., 976 F.2d 1338, 1341 (9th Cir.

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1992).

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Amended Complaint slightly stronger, the CERCLA and RCRA claims

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must again be dismissed to the extent they rely upon a theory of

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“owner or operator” liability because the facts remain

However, this new allegation does not

Kaiser Aluminum & Chemical Corp.

Thus, while plaintiffs’ new allegations may make their

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insufficient to impose this type of liability on Leland.

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2.

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Piercing the Corporate Veil

Leland asserts, as he did in the prior Motion to

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Dismiss, that plaintiffs’ First Amended Complaint contains only a

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conclusory recitation of the elements required in order to pierce

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the corporate veil, and thus plaintiffs’ claims that rely on this

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theory should be dismissed.

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In support of their veil piercing argument, plaintiffs

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allege that each defendant, including Leland, “was the alter ego

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of the corporate entity that operated during their relevant time

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period at the Property because, inter alia, of their controlling

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interests in the corporation, their complete dominance and

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control over the corporation, such that no separateness or

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individuality between them and the corporation existed.”

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49.)

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Complaint, which the court determined was “no more than a

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recitation of the elements, and ‘[c]onclusory allegations of

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‘alter ego’ status are insufficient to state a claim.’”

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No. 18 (citing Gerritsen v. Warner Bros. Entertainment Inc., 116

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F. Supp. 3d 1104, 1136 (C.D. Cal. 2015).)

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to allege any specific facts supporting their allegation that

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there was no separateness between Leland and R and L Business

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Management.

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and L Business Management is a closely held corporation.

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However, the court is unaware of any authority suggesting that

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Leland would be subject to veil piercing solely because he is a

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shareholder of a closely held corporation.

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court will again grant Leland’s Motion to Dismiss plaintiffs’

(FAC ¶

These allegations are identical to those in the original

(Docket

Again, plaintiffs fail

Indeed, the only fact that has been added is that R

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Accordingly, the

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claims that are premised on the application of the corporate veil

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piercing doctrine.

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B.

State Law Claims

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Plaintiffs’ third through eighth causes of action are

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all state law claims that, as the court stated in its June 27

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Order, require plaintiffs to allege facts indicating that Leland

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owned or operated the facility, or that he created the alleged

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contamination.

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allege such facts, and as such all state law claims must be

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As explained above, plaintiffs have failed to

dismissed.

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C.

Declaratory Relief

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Plaintiffs also request declaratory relief, contending

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that because they have adequately alleged a CERCLA claim they are

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entitled to declaratory relief under 42 U.S.C. § 9613(g)(2).

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However, as discussed above, plaintiffs have not adequately

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alleged a CERCLA claim, and thus declaratory relief is

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unavailable.

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(E.D. Cal. 2013) (Ishii, J.).

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See Coppola v. Smith, 935 F. Supp. 2d 993, 1005

IT IS THEREFORE ORDERED that Leland’s Motion to Dismiss

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Plaintiffs’ First Amended Complaint (Docket No. 25) be, and the

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same hereby is, GRANTED.

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Plaintiffs have twenty days from the date this Order is

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signed to file a Second Amended Complaint, if they can do so

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consistent with this Order.

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Dated:

September 4, 2018

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