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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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 For the Northern District of California United States District Court 9 KFD ENTERPRISES, INC., Plaintiff, 11 v. 12 13 CITY OF EUREKA, et al. 14 Defendants. 15 16 AND RELATED COUNTER- AND CROSSCLAIMS 17 ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 08-04571-SC ORDER GRANTING MOTIONS FOR APROVAL OF REVISED SETTLEMENT 18 19 20 21 I. INTRODUCTION Plaintiff KFD Enterprises, Inc. ("KFD") brings this action 22 against a number of parties seeking contribution for contamination 23 of a property located at 2907 E Street, Eureka, California (the 24 "Property"). 25 Resolutions, Inc. and Cardno USA, Inc. (collectively "ERI"), as 26 well as Union Oil Company of California, Chevron Corporation, and 27 Unocal Corporation (collectively, "Union Oil"). 28 now move for approval of their settlement agreement with KFD. KFD reached a settlement with Environmental ERI and Union Oil ECF 1 No. 655 ("ERI Mot."), 653 ("Union Oil Mot."). Defendant City of 2 Eureka ("Eureka") opposes both motions. 3 This matter is appropriate for resolution without oral argument per 4 Civil Local Rule 7-1(b). 5 motions are GRANTED. ECF Nos. 59 ("Opp'n"). 1 For the reasons set for the below, the 6 7 II. KFD commenced dry cleaning operations on the Property, which 8 9 BACKGROUND included use of PCE, on or about 1980. On or about 1998, petroleum United States District Court For the Northern District of California 10 hydrocarbon and volatile organic compound contamination was 11 discovered on the Property, primarily PCE and TCE. 12 which owned the Property from 1964 through 1979, investigated the 13 contamination and hired ERI to install monitoring wells on the 14 Property. Union Oil, In or around 2008, KFD brought suit against several parties, 15 16 including Eureka and Union Oil, alleging that they had contributed 17 to the contamination on the Property. 18 asserted state law claims and claims under the federal 19 Comprehensive Environmental Response, Compensation, and Liability 20 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, 21 22 and KFD later named ERI as a direct defendant in the case. KFD 23 alleges that ERI's monitoring wells contributed to the 24 contamination on the Property, and that ERI was acting as Union 25 Oil's agent when it installed the monitoring wells. 26 also filed a cross-complaint against Union Oil. Eureka has 27 28 1 The movants have filed replies in support of their motions. Nos. 660 ("Union Oil Reply"), 661 ("ERI Reply"). 2 ECF KFD and ERI reached a settlement agreement on or around June 1 2 6, 2013. The key terms of the settlement were as follows: ERI 3 would pay KFD $450,000 in exchange for a release of all claims by 4 KFD arising out of or related to the action, or related to the 5 monitoring wells installed by ERI at the Property. 6 release of KFD's claims against Union Oil relating to the 7 monitoring wells installed by ERI, but not ERI's other claims 8 against Union Oil. 9 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 10 any third-party claims relating to its claims against ERI in the 11 instant action. 12 claims relating to the monitoring wells installed by ERI. 13 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 14 15 approve the KFD-ERI settlement to the extent that it pertained to 16 Union Oil. 17 parties lacked standing to dismiss Eureka's claims against Union 18 Oil. 19 proposed settlement would not "prejudice Eureka's right to seek 20 indemnification or contribution from Union Oil with respect to one 21 or more of the other claims or cross claims filed against Eureka in 22 this matter." 23 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 24 include Union Oil as a party. As in the original settlement 25 agreement, KFD has agreed to release all claims against ERI 26 "arising out of, involving, or related in any way to any all 27 matters alleged in the Action" in consideration for a payment of 28 $450,000. ECF No. 655-5 Ex. H ("Rev. Agr.") § 3.1. 3 KFD has also 1 agreed to release Union Oil "from all Claims relating to the 2 monitoring well at the Property installed by ERI." 3 agreement further provides: "notwithstanding this release, KFD 4 maintains several claims against Union Oil . . . that are not 5 related in any way to the monitoring wells installed by ERI, and 6 such claims are not part of this release." Id. The Id. Eureka objects to the revised settlement arguing, among other 7 8 things, that settling parties have not addressed the concerns 9 raised in the November 6 Order. United States District Court For the Northern District of California 10 11 III. DISCUSSION Eureka objects to the proposed settlement agreement on a 12 13 number of grounds. 14 invalid because Union Oil has provided no consideration. 15 2-3. 16 $450,000 payment on behalf of both ERI and Union Oil. 17 Eureka contends that the settling parties should be forced to 18 explain why these insurers have agreed to make payments on behalf 19 of Union Oil, a party they do not insure. 20 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 21 agreed to pay KFD $450,000 in consideration for the release of 22 certain claims. 23 standing for the proposition that consideration is invalid unless 24 it comes from a particular party's bank account. 25 California law does require the parties to explain the material 26 terms of the settlement agreement, it does not require the settling 27 parties to explain their relationship with an insurance carrier. 28 The parties have provided the Court with a copy of the revised This is sufficient. 4 Eureka cites no authority Moreover, while 1 settlement, and the Court is satisfied that they have sufficiently 2 described the conditions of the settlement. 3 Next, Eureka argues that it would be prejudiced by the 4 proposed settlement because the settlement releases certain claims 5 that it might have against Union Oil. 6 asserts that it has claims against Union Oil beyond the monitoring 7 well claims released under the settlement agreement. 8 reasons, an approval of the agreement would prejudice Eureka's 9 right to bring valid cross-claims. Opp'n at 6-7. Id. Eureka Thus, Eureka Eureka further argues that United States District Court For the Northern District of California 10 it has direct liability claims against Union Oil relating to the 11 monitoring wells that would be released by the proposed settlement 12 agreement. 13 such claims, and, therefore, it would be improper for KFD to 14 release claims that it did not bring. 15 Id. at 7-8. Eureka contends that KFD did not bring Id. These arguments are also unavailing. To the extent that 16 Eureka does have claims against Union Oil beyond those related to 17 the monitoring wells, those claims are unaffected by the 18 settlement. 19 fourth amended counter-claim and cross-claim, it is entirely 20 unclear what claims Eureka has against Union Oil other than those 21 related to the monitoring wells. 22 Eureka's opposition brief does nothing to clarify the issue. 23 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 24 liability claim against Union Oil is also unpersuasive. 25 initial matter, it is unclear that Eureka does have a unique direct 26 liability claim against Union Oil. 27 of its 4ACC, which states: "Eureka is informed, believes and 28 alleges that [Union Oil] hired and/or directed ERI for certain 5 As an Eureka relies on paragraph 34 1 aspects of the drilling, installation, control, ownership, 2 operation and maintenance of these monitoring wells, and in so 3 doing, ERI was acting as the agent for [Union Oil]." 4 discernible difference between this allegation and KFD's claim that 5 Union Oil should be held vicariously liable for the actions of ERI. 6 More importantly, even if Eureka does have a unique direct claim 7 against Union Oil, dismissal of that claim will not prejudice 8 Eureka. 9 apportionment of damages between Eureka and Union Oil, the issue of There is no While Eureka's putative direct claim might affect the United States District Court For the Northern District of California 10 apportionment is moot since both parties are settling for a lump 11 sum of $450,000. 12 indemnification and contribution for any damages imposed against it 13 for contamination of the Property. 14 approval of the settlement would affect its right to seek 15 indemnification or contribution. Finally, the only relief sought by Eureka is Eureka has not explained how an 16 17 18 IV. CONCLUSION For the foregoing reasons, ERI and Union Oil's motion to 19 approve their settlement with KFD is granted. The provisions of 20 the Uniform Comparative Fault Act will apply with respect to the 21 effect of the settlement as to both federal and state law claims. 22 All claims asserted by KFD against ERI and Union Oil relating to 23 the monitoring wells installed by ERI on the Property are hereby 24 DISMISSED with prejudice. 25 regarding the monitoring wells installed by ERI, including 26 contribution and indemnity claims that have been or could have been 27 asserted by any person or entity, in this action or otherwise, 28 whether such claims are or could be brought pursuant to federal or All claims against ERI and Union Oil 6 1 state law, are hereby BARRED. ERI's counterclaims against KFD are 2 DISMISSED with prejudice. 3 this action are hereby DISMISSED with prejudice. All pending cross-claims against ERI in 4 5 IT IS SO ORDERED. 6 7 February 5, 2014 8 UNITED STATES DISTRICT JUDGE 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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