KFD Enterprises Inc v. City of Eureka
Filing
662
ORDER by Judge Samuel Conti granting 652 Motion for Settlement; granting 655 Motion for Settlement (sclc1, COURT STAFF) (Filed on 2/5/2014)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California
United States District Court
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KFD ENTERPRISES, INC.,
Plaintiff,
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v.
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CITY OF EUREKA, et al.
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Defendants.
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AND RELATED COUNTER- AND CROSSCLAIMS
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Case No. 08-04571-SC
ORDER GRANTING MOTIONS FOR
APROVAL OF REVISED
SETTLEMENT
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I.
INTRODUCTION
Plaintiff KFD Enterprises, Inc. ("KFD") brings this action
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against a number of parties seeking contribution for contamination
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of a property located at 2907 E Street, Eureka, California (the
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"Property").
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Resolutions, Inc. and Cardno USA, Inc. (collectively "ERI"), as
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well as Union Oil Company of California, Chevron Corporation, and
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Unocal Corporation (collectively, "Union Oil").
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now move for approval of their settlement agreement with KFD.
KFD reached a settlement with Environmental
ERI and Union Oil
ECF
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No. 655 ("ERI Mot."), 653 ("Union Oil Mot.").
Defendant City of
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Eureka ("Eureka") opposes both motions.
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This matter is appropriate for resolution without oral argument per
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Civil Local Rule 7-1(b).
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motions are GRANTED.
ECF Nos. 59 ("Opp'n"). 1
For the reasons set for the below, the
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II.
KFD commenced dry cleaning operations on the Property, which
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BACKGROUND
included use of PCE, on or about 1980.
On or about 1998, petroleum
United States District Court
For the Northern District of California
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hydrocarbon and volatile organic compound contamination was
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discovered on the Property, primarily PCE and TCE.
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which owned the Property from 1964 through 1979, investigated the
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contamination and hired ERI to install monitoring wells on the
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Property.
Union Oil,
In or around 2008, KFD brought suit against several parties,
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including Eureka and Union Oil, alleging that they had contributed
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to the contamination on the Property.
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asserted state law claims and claims under the federal
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Comprehensive Environmental Response, Compensation, and Liability
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Act ("CERCLA"), 42 U.S.C. § 9601 et seq.
Among other things, KFD has
ERI was brought into the action via a third-party complaint,
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and KFD later named ERI as a direct defendant in the case.
KFD
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alleges that ERI's monitoring wells contributed to the
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contamination on the Property, and that ERI was acting as Union
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Oil's agent when it installed the monitoring wells.
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also filed a cross-complaint against Union Oil.
Eureka has
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The movants have filed replies in support of their motions.
Nos. 660 ("Union Oil Reply"), 661 ("ERI Reply").
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ECF
KFD and ERI reached a settlement agreement on or around June
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6, 2013.
The key terms of the settlement were as follows: ERI
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would pay KFD $450,000 in exchange for a release of all claims by
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KFD arising out of or related to the action, or related to the
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monitoring wells installed by ERI at the Property.
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release of KFD's claims against Union Oil relating to the
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monitoring wells installed by ERI, but not ERI's other claims
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against Union Oil.
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KFD.
This included a
ERI would execute a mutual release in favor of
KFD would provide indemnity to ERI and hold it harmless from
United States District Court
For the Northern District of California
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any third-party claims relating to its claims against ERI in the
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instant action.
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claims relating to the monitoring wells installed by ERI.
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Oil was not a party to the settlement agreement.
This indemnity extended to Union Oil as to the
Union
In an Order dated November 6, 2013, the Court declined to
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approve the KFD-ERI settlement to the extent that it pertained to
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Union Oil.
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parties lacked standing to dismiss Eureka's claims against Union
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Oil.
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proposed settlement would not "prejudice Eureka's right to seek
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indemnification or contribution from Union Oil with respect to one
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or more of the other claims or cross claims filed against Eureka in
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this matter."
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ECF No. 641 ("Nov. 6 Order").
Id. at 5.
The Court found that the
Further, the Court was not convinced that the
Id. at 6.
KFD and ERI subsequently revised their settlement agreement to
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include Union Oil as a party.
As in the original settlement
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agreement, KFD has agreed to release all claims against ERI
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"arising out of, involving, or related in any way to any all
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matters alleged in the Action" in consideration for a payment of
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$450,000.
ECF No. 655-5 Ex. H ("Rev. Agr.") § 3.1.
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KFD has also
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agreed to release Union Oil "from all Claims relating to the
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monitoring well at the Property installed by ERI."
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agreement further provides: "notwithstanding this release, KFD
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maintains several claims against Union Oil . . . that are not
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related in any way to the monitoring wells installed by ERI, and
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such claims are not part of this release."
Id.
The
Id.
Eureka objects to the revised settlement arguing, among other
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things, that settling parties have not addressed the concerns
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raised in the November 6 Order.
United States District Court
For the Northern District of California
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III. DISCUSSION
Eureka objects to the proposed settlement agreement on a
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number of grounds.
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invalid because Union Oil has provided no consideration.
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2-3.
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$450,000 payment on behalf of both ERI and Union Oil.
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Eureka contends that the settling parties should be forced to
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explain why these insurers have agreed to make payments on behalf
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of Union Oil, a party they do not insure.
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First, Eureka argues that that the agreement is
Opp'n at
As Eureka points out, ERI's insurers have offered to make a
These objections are unavailing.
Id. at 4.
Id.
Union Oil and ERI have
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agreed to pay KFD $450,000 in consideration for the release of
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certain claims.
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standing for the proposition that consideration is invalid unless
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it comes from a particular party's bank account.
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California law does require the parties to explain the material
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terms of the settlement agreement, it does not require the settling
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parties to explain their relationship with an insurance carrier.
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The parties have provided the Court with a copy of the revised
This is sufficient.
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Eureka cites no authority
Moreover, while
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settlement, and the Court is satisfied that they have sufficiently
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described the conditions of the settlement.
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Next, Eureka argues that it would be prejudiced by the
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proposed settlement because the settlement releases certain claims
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that it might have against Union Oil.
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asserts that it has claims against Union Oil beyond the monitoring
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well claims released under the settlement agreement.
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reasons, an approval of the agreement would prejudice Eureka's
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right to bring valid cross-claims.
Opp'n at 6-7.
Id.
Eureka
Thus, Eureka
Eureka further argues that
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For the Northern District of California
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it has direct liability claims against Union Oil relating to the
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monitoring wells that would be released by the proposed settlement
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agreement.
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such claims, and, therefore, it would be improper for KFD to
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release claims that it did not bring.
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Id. at 7-8.
Eureka contends that KFD did not bring
Id.
These arguments are also unavailing.
To the extent that
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Eureka does have claims against Union Oil beyond those related to
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the monitoring wells, those claims are unaffected by the
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settlement.
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fourth amended counter-claim and cross-claim, it is entirely
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unclear what claims Eureka has against Union Oil other than those
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related to the monitoring wells.
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Eureka's opposition brief does nothing to clarify the issue.
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See Rev. Agr. § 3.1.
In any event, based on Eureka's
See ECF No. 355 ("4ACC").
Eureka's argument that the Court should not dismiss its direct
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liability claim against Union Oil is also unpersuasive.
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initial matter, it is unclear that Eureka does have a unique direct
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liability claim against Union Oil.
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of its 4ACC, which states: "Eureka is informed, believes and
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alleges that [Union Oil] hired and/or directed ERI for certain
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As an
Eureka relies on paragraph 34
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aspects of the drilling, installation, control, ownership,
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operation and maintenance of these monitoring wells, and in so
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doing, ERI was acting as the agent for [Union Oil]."
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discernible difference between this allegation and KFD's claim that
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Union Oil should be held vicariously liable for the actions of ERI.
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More importantly, even if Eureka does have a unique direct claim
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against Union Oil, dismissal of that claim will not prejudice
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Eureka.
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apportionment of damages between Eureka and Union Oil, the issue of
There is no
While Eureka's putative direct claim might affect the
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For the Northern District of California
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apportionment is moot since both parties are settling for a lump
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sum of $450,000.
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indemnification and contribution for any damages imposed against it
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for contamination of the Property.
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approval of the settlement would affect its right to seek
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indemnification or contribution.
Finally, the only relief sought by Eureka is
Eureka has not explained how an
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IV.
CONCLUSION
For the foregoing reasons, ERI and Union Oil's motion to
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approve their settlement with KFD is granted.
The provisions of
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the Uniform Comparative Fault Act will apply with respect to the
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effect of the settlement as to both federal and state law claims.
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All claims asserted by KFD against ERI and Union Oil relating to
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the monitoring wells installed by ERI on the Property are hereby
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DISMISSED with prejudice.
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regarding the monitoring wells installed by ERI, including
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contribution and indemnity claims that have been or could have been
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asserted by any person or entity, in this action or otherwise,
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whether such claims are or could be brought pursuant to federal or
All claims against ERI and Union Oil
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state law, are hereby BARRED.
ERI's counterclaims against KFD are
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DISMISSED with prejudice.
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this action are hereby DISMISSED with prejudice.
All pending cross-claims against ERI in
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IT IS SO ORDERED.
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February 5, 2014
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UNITED STATES DISTRICT JUDGE
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United States District Court
For the Northern District of California
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