Wells Enterprises v. Wells Bloomfield, LLC et al

Filing 68

ORDER granting 53 Motion for Partial Summary Judgment; denying 54 Motion for Partial Summary Judgment. Signed by Chief Judge Robert C. Jones on 3/19/13. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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WELLS ENTERPRISES, a California
corporation,

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Plaintiff,
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v.
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WELLS BLOOMFIELD, LLC, a Delaware
limited liability company; WELLS
MANUFACTURING, a Division of Specialty
Equipment Co., Inc; SPECIALTY
EQUIPMENT COMPANIES, INC.; UNITED
TECHNOLOGIES CORPORATION;
CARRIER COMMERCIAL
REFRIGERATION, INC.; UNITED
TECHNOLOGIES REALTY, INC.; SOLAR
ACQUISITION CORP.; CARRIER
ACQUISITION CORP.; CARRIER
CORPORATION; DOES 1-25; ROES 1-25,
inclusive,

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Defendants.
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3:11-cv-00246-RCJ-VPC

ORDER

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Currently before the Court are Defendants United Technologies Corporation, United
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Technologies Realty, Inc., Carrier Corporation, Carrier Commercial Refrigeration, Inc., and
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Wells Bloomfield, LLC’s Motion for Partial Summary Judgment on Damages (#53) and Plaintiff
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Wells Enterprises’ Motion for Partial Summary Judgment on Causation (#54).
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BACKGROUND
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Plaintiff Wells Enterprises leases commercial real estate. (Beckett Dep. Ex. 2, at 12
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(#53-3).) One of the pieces of commercial real estate Wells Enterprises leases is property
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located at 2 Eric Circle, Verdi, Nevada (the “Property”). (Shannon Dep. Ex. 3, at 8 (#53-4).)
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Plaintiff Wells Enterprises has owned the Property for decades. The Property consists of

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certain industrial buildings–buildings 1 through 4. (Id.)

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On May 1, 1992, Plaintiff Wells Enterprises, as lessor, entered into a “Standard

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Industrial Lease” (the “1992 Lease”) for the Property with Wells Manufacturing as Lessee.

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(1992 Lease, Ex. 4 (#54-4).) Prior to the 1992 Lease, Wells Manufacturing had executed other

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leases for the Property, including a 1987 lease addendum which extended a prior lease

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through June 30, 1992. (Lease Addendum, Ex. 5 (#54-5).) The 1992 Lease included terms

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setting forth obligations of Wells Manufacturing relating to the condition of the Property,

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including sections requiring compliance with laws and prohibition against committing waste and

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nuisance, accepting the Property “as-is,” keeping the Property in good repair, and surrendering

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the Property in good condition. (1992 Lease, Ex. 4 (#54-4).)

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Defendant Carrier Corporation, a wholly-owned subsidiary of Defendant United

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Technologies Corporation, merged with or purchased the Wells Manufacturing business (and

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its leasehold interest in the Property) in 2000. In 2001, the Wells Manufacturing business

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became a division of Defendant Carrier Commercial Refrigeration, Inc. (“CCR”)1, a subsidiary

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of Carrier Corporation, called Wells Bloomfield. CCR executed a First Amendment to the 1992

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Lease in July 2006 that extended the lease term until June 30, 2012. (First Amendment to

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Lease, Ex. 5 (#53-8).)

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Defendant Wells Bloomfield, LLC as tenant and successor in interest to CCR and Wells

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Manufacturing, followings its acquisition of the assets of the Wells Bloomfield division from

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Defendant CCR. (Second Amendment to Lease, Ex. 5 (#53-8).) Defendant Wells Bloomfield,

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LLC is an entity created by Middleby Corporation, an unrelated company that purchased the

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assets of Wells Bloomfield from CCR. (Baron Dep. Ex. 4 at 35-36 (#53-5).)

A Second Amendment executed the following year substituted

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There have been two incidents of contamination on the Property owned by Wells

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Enterprises, both of which pre-date the 1992 Lease and only one of which is at issue in this

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case. In one incident, not at issue in this case, contamination led to a February 12, 1991 order

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from the Nevada Division of Environmental Protection. (Id. at 52-53 (#53-5).) According to the

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Defendants CCR, Carrier Corporation, United Technologies Corporation and United
Technologies Realty, Inc. shall be collectively referred to as the “Carrier Defendants.”
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deposition of John Baron, the February 12, 1991 order discussed employee testimony

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concerning Wells Manufacturing employees washing the floors with solvents, with the run-off

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going into floor drains in the south septic system area. (Id.) This practice was later determined

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to be the source of the contamination discovered in 2007, which is the contamination at issue

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in this case. (Id. at 53.)

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The contamination was discovered during the due diligence efforts conducted prior to

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the sale of the assets of Wells Bloomfield to Middleby Corporation. (Id. at 19.) CCR retained

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responsibility for any environmental losses associated with the Wells Manufacturing facility in

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Verdi. (Wells Bloomfield Asset Purchase Agreement 1.4(k), Ex. 1 to Baron Dep. (#53-5).)

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Following the discovery of contamination, the Carrier Defendants retained URS Group, Inc. as

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an environmental consultant. (Baron Dep. Ex. 4, at 18 (#53-5).) The Carrier Defendants

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secured a Phase I Environmental Site Assessment (“ESA”), which identified floor drains in the

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south septic system area (south of Building 3) as possible sources of the contamination. (URS

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Memorandum, Ex. 3 to Baron Dep. (#53-7).) Any contamination of the area occurred prior to

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the execution of the 1992 Lease; in 1991, the floor drains were capped, a toilet removed, and

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the south septic system area covered. (Id.)

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In June 2007, the Carrier Defendants conducted a Phase II ESA. (Id.) Based on the

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Phase II ESA and two additional investigations, the Carrier Defendants determined that the

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contamination was confined to the south septic system area and its leach field. (Id.) The

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Carrier Defendants prepared a proposal to remediate this localized contamination and the

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Nevada Division of Environmental Protection approved the proposal, and a pilot test and

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remediation efforts are currently ongoing. (Peterson Dep. Ex. 6, at 17 (#53-9).)

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On November 24, 2010, Plaintiff Wells Enterprises filed a contamination action in the

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Second Judicial District Court of the State of Nevada in and for the County of Washoe, Case

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No. CV10-3532. Defendant Carrier Corporation was served on March 7, 2011. On April 6,

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2011, Defendant Carrier Corporation, with the consent and joinder of the other defendants,

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removed the case to federal court on the basis of diversity jurisdiction. The complaint (#1-2)

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contains causes of action for (1) waste; (2) nuisance; (3) trespass; (4) breach of contract; (5)
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anticipatory breach of contract; and (6) injunctive relief. Plaintiff requests actual damages and

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treble damages under Nev. Rev. Stat. § 40.150, attorney’s fees, costs, and interest. Plaintiff

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also requests a permanent injunction mandating that the Defendants continue their

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investigation and remediation of the Property, and to restore the Property to clean condition,

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at Defendants’ expense, by removal of the contaminants and/or pollution.
LEGAL STANDARD

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Summary judgment allows courts to avoid unnecessary trials where no material factual

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dispute exists. N.W. Motorcycle Ass’n v. U.S. Dep’t of Agric., 18 F.3d 1468, 1471 (9th Cir.

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1994). The court must view the evidence and the inferences arising therefrom in the light most

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favorable to the nonmoving party, Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996), and

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should award summary judgment where no genuine issues of material fact remain in dispute

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and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).

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Judgment as a matter of law is appropriate where there is no legally sufficient evidentiary basis

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for a reasonable jury to find for the nonmoving party. FED. R. CIV. P. 50(a). Where reasonable

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minds could differ on the material facts at issue, however, summary judgment should not be

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granted. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert. denied, 516 U.S.

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1171(1996).

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The moving party bears the burden of informing the court of the basis for its motion,

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together with evidence demonstrating the absence of any genuine issue of material fact.

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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden,

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the party opposing the motion may not rest upon mere allegations or denials in the pleadings,

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but must set forth specific facts showing that there exists a genuine issue for trial. Anderson

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v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Although the parties may submit evidence

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in an inadmissible form — namely, depositions, admissions, interrogatory answers, and

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affidavits — only evidence which might be admissible at trial may be considered by a trial court

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in ruling on a motion for summary judgment. FED. R. CIV. P. 56(c); Beyene v. Coleman Sec.

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Servs., Inc., 854 F.2d 1179, 1181 (9th Cir. 1988).

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In deciding whether to grant summary judgment, a court must take three necessary
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steps: (1) it must determine whether a fact is material; (2) it must determine whether there

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exists a genuine issue for the trier of fact, as determined by the documents submitted to the

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court; and (3) it must consider that evidence in light of the appropriate standard of proof.

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Anderson, 477 U.S. at 248. Summary judgment is not proper if material factual issues exist

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for trial. B.C. v. Plumas Unified Sch. Dist., 192 F.3d 1260, 1264 (9th Cir. 1999). “As to

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materiality, only disputes over facts that might affect the outcome of the suit under the

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governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at

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248. Disputes over irrelevant or unnecessary facts should not be considered. Id. Where there

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is a complete failure of proof on an essential element of the nonmoving party’s case, all other

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facts become immaterial, and the moving party is entitled to judgment as a matter of law.

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Celotex, 477 U.S. at 323. Summary judgment is not a disfavored procedural shortcut, but

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rather an integral part of the federal rules as a whole. Id.

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DISCUSSION

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A. Motion for Partial Summary Judgment on Damages (#53)

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Defendants request partial summary judgment as to Plaintiff’s claim for damages.

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Defendants argue that Plaintiff’s request for damages in addition to injunctive relief in the form

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of an order directing Defendants to continue their investigation, remediation, and restoration

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of the premises at Defendants’ expense would result in a windfall to Plaintiff, and that a reward

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of damages would be contrary to prevailing law.

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Under Nevada law, when an injury is done to property, the cost of restoring the property

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to its condition before the injury would be the proper measure of damages, unless there is total

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destruction of the property or the cost of restoration exceeds the value of the property. Harvey

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v. Sides Silver Min. Co., 1 Nev. 539, 1865 WL 1089, at *2 (Nev. 1865). An award of damages

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separate from and in addition to remediation costs depends on whether the injury is

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permanent. Spaulding v. Cameron, 239 P.2d 625, 627-28 (Cal. 1952). In Spaulding, the court

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noted that when it is doubtful whether a nuisance is permanent or temporary, a plaintiff may

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elect to treat the nuisance as permanent or not. Id. at 628. The court found that a plaintiff

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cannot have both an injunction requiring corrective measures from a defendant and a finding
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that the damage was permanent, as such a result would lead to a “double recovery if [a

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plaintiff] could recover for the depreciation in value and also have the cause of the depreciation

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removed.” Id. at 628-29. The court remanded the case to the trial court to determine whether

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or not the nuisance is permanent; if permanent, damages were to be awarded in the decrease

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in market value, if not permanent, injunctive relief and any additional damages for a temporary

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decrease in value of the use of the property were to be awarded. Id. at 629.

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Plaintiff argues that it is entitled to damages for the entire value of the Property because

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Plaintiff’s expert testified at a deposition that in his opinion, the value of the Property as of

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November 28, 2007 was zero. (Kilpatrick Dep. Ex. 8, at 48 (#53-11).) Dr. Kilpatrick, an estate

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appraiser and financial economist, further testified that he has no opinion on whether the value

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of zero would continue forever, and that he has no opinion as to what the value of the property

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was on the date of his deposition, June 19, 2012, as he had not been asked to render that

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opinion. (Id.) This valuation is the sum total of the evidence Plaintiff provides as proof of its

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damages. Plaintiff appears to believe that because one or more Defendants have assumed

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responsibility for contamination of the Property in certain contracts and in representations to

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the Court, the burden of showing the amount of damages and proving the claims rests on

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Defendants.

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difference between the market value prior to injury and the market value immediately following

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the injury, but provides no evidence from which the Court or a jury may conclude that the injury

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was in fact permanent. In response to the Motion for Partial Summary Judgment on Damages

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(#53), Plaintiff provides a laundry list of alleged “facts” for which Plaintiff provides no citations,

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and the rather blasé declaration that “Defendants’ failure to fully delineate the contamination

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at the Property” and the uncertainty over when any remedial activity will conclude

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“demonstrates that the harm to the Property is permanent under applicable law.” (Opp. at 10-

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11 (#57).)

Plaintiff claims that the measure of damages for permanent injury is the

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The “evidence” provided by Plaintiff is, as we noted, without any citation to the record.

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That much of it is supported by the record is true; however, Plaintiff seems to have a basic

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misunderstanding of how to respond to a motion for partial summary judgment. At this point
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in the proceedings, discovery has closed and it is Plaintiff’s burden to provide evidence, not

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allegations. Furthermore, it is Plaintiff’s burden to prove its amount of damages, not

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Defendants’. Instead of responding to the salient points made in the motion for partial

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summary judgment, Plaintiff chooses to make summary declarations that damages must be

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permanent because remediation activity is ongoing and uncertain. Plaintiff does not appear

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to understand that if it is electing to request damages for a permanent injury, it is Plaintiff’s

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burden to show that there was in fact a permanent injury, and to provide evidence of the

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amount of damages. Plaintiff’s evidence of damages is clearly deficient as it does not take into

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account any subsequent remediation efforts while acknowledging that such efforts are being

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undertaken at no cost to Plaintiff and may in fact prove to be successful. Plaintiff instead

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claims that after remediation efforts began, contamination levels rose, a statement that

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Defendants deftly show is misleading, as contamination levels had been rising at a rapid rate

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prior to the pilot test and actually dropped after the pilot test injections were conducted. (Tarter

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Dep. Ex. 1, at 86 (#60-1).)

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Plaintiff makes further allegations disparaging the pilot test and remediation efforts as

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merely experimental. While it is true that the effectiveness of the pilot test and subsequent

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remediation efforts is yet to be determined, Plaintiff states that if the efforts are unsuccessful,

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the Nevada Department of Environmental Protection will require Defendants to do conduct

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other methods of remediation. In fact, Plaintiff’s environmental expert testified that his opinion

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is not that the site might never be remediated, but only that it has not been demonstrated

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whether the current remediation efforts will be effective. (Imse Dep. Ex. 9, at 50-51 (#53-12).)

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Under Nevada law, a plaintiff must prove the amount as well as the fact of damages by

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substantial evidence. Kelly Broadcasting Co., Inc. v. Sovereign Broadcast, Inc., 606 P.2d

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1089, 1093 (Nev. 1980), superseded by statute on other grounds. Plaintiff has failed to carry

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its burden to prove the fact and amount of damages. Plaintiff’s only evidence of damages is

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a valuation of the land at zero dollars as of November 2007. However, Plaintiff cannot dispute

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and does not claim that it has had zero enjoyment of the land since that date. The land

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continues to be leased out to one or more of the Defendants, and Plaintiff has not complained
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of any loss of rental income as a result of the contamination. Defendants also provide

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evidence that Plaintiff received offers to purchase the Property in amounts of close to or above

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$1,000,000. In short, a reasonable jury could not find that Plaintiff has proven that there was

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a permanent injury to the land, as Plaintiff and its experts acknowledge that remediation efforts

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are ongoing and may or may not be successful, and a reasonable jury could not find damages

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based on any evidence provided by Plaintiff. Plaintiff’s requested damages is not supported

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by the evidence, and discovery is closed in this matter. For these reasons, the Court grants

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Defendants’ motion for partial summary judgment on damages, as awarding Plaintiffs the entire

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value of the Property prior to the contamination, which is the only measure of damages Plaintiff

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provides, would undoubtedly result in a windfall and is contradicted by the evidence showing

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that the Property is not worthless to Plaintiff. Plaintiff has shown no evidence that any other

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amount of damages would be appropriate, or that it has undertaken any investigation to fulfil

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its burden of proving damages. While temporary damages may also be awarded while

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remediation is ongoing, it is clear that Plaintiff has no evidence to show the amount of any

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temporary damages.

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B. Motion for Partial Summary Judgment on Causation (#54)

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Plaintiff requests that we grant partial summary judgment on the element of causation,

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a common element for many of Plaintiff’s causes of action. Plaintiff contends that since Wells

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Manufacturing used certain chemicals in its manufacturing operations and those chemicals

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have contaminated the Property, summary judgment is appropriate to find all Defendants liable

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for causing the contamination.

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Plaintiff did not make any arguments in its Motion (#54) as to why the Carrier

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Defendants should be liable for the conduct of Wells Manufacturing. While it is true that the

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Carrier Defendants are variously parent corporations to Wells Manufacturing and/or to each

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other and there may indeed be liability based on those relationships, Plaintiff has failed to

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provide any evidence upon which the Court could find that such liability should be found as a

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matter of law. In the reply (#66), Plaintiff makes the argument that parent corporations can be

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held liable for the acts and omissions of their subsidiaries. However, due to other deficiencies
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in Plaintiff’s Motion (#54), discussed below, the Court finds it unnecessary to consider this

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argument as a basis for granting summary judgment on the element of causation.

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Plaintiff wholly fails at making the case that Wells Bloomfield, LLC should be liable for

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causing the contamination to the Property. Defendant Wells Bloomfield, LLC is an unrelated

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company to the Carrier Defendants, and its only connection to the contamination is through

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an asset purchase agreement with the Carrier Defendants in which it was agreed that Wells

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Bloomfield, LLC would not acquire any liabilities relating to the Verdi environmental losses.

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Plaintiff makes the argument that because “Verdi Environmental Losses” under the purchase

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agreement is defined as chlorinated solvent contamination, Wells Bloomfield, LLC is liable for

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all other environmental issues on the Property. Plaintiff, however, fails to show why Defendant

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Wells Bloomfield, LLC should be found to have caused the contamination, nuisance, or waste.

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While the deficiencies noted above are glaring, Plaintiff’s Motion (#54) for summary

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judgment on causation as an element of breach of contract must be denied for an even more

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essential reason. Plaintiff fails to show that there are no genuine issues of material fact

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concerning causation. For example, Plaintiff claims that contamination of the Property

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breached the 1992 Lease and therefore summary judgment is appropriate on the causation

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element of breach of contract. Plaintiff does not, however, provide the Court with the actual

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contract in force at the suspected time of contamination, which is undisputedly before 1992.

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Plaintiff ignores this rather important point in responding to Defendants’ opposition.

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Plaintiff’s request for summary judgment on causation as an element of its nuisance

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also fails. To establish a claim for nuisance, Plaintiff must show that the alleged contamination

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caused a substantial and unreasonable interference with the use and enjoyment of the land.

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Jezowski v. City of Reno, 286 P.2d 257, 260 (Nev. 1955). Plaintiff argues that the “causation

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element” of a nuisance claim has been shown by as a matter of law but does not actually

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discuss the elements of a nuisance claim or show how the contamination affected its use and

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enjoyment of the land. Indeed, Plaintiff does not argue that it suffered the loss of rental income

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as a result of the contamination, and makes no effort to show what nuisance was caused by

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the contamination other than to claim that the value of the property in 2007 was zero according
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to its expert.

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Finally, a claim of waste is “permanent or lasting injury” done to a plaintiff’s property.

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Price v. Ward, 58 P. 849, 849 (Nev. 1899). Plaintiff is not entitled to summary judgment on

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causation on the waste claim in the absence of any evidence showing permanent or lasting

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injury.

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If Plaintiff’s Motion (#54) is to be read as a simple request for a finding as a matter of

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law that Defendants caused the contamination, the Court finds that the motion must be denied.

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Plaintiff has represented multiple times that “[t]he true source(s) are of [sic] the contamination

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at the Property are unknown” and that there are questions remaining concerning how

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contamination came to be located in certain areas. (Opp. at 7-8 (#57).) As long as such

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questions remain, the Court finds that there are genuine issues of material fact concerning

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causation, and summary judgment shall be denied.
CONCLUSION

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For the foregoing reasons, IT IS ORDERED that the Motion for Partial Summary
Judgment on Damages (#53) is GRANTED.
IT IS FURTHER ORDERED that the Motion for Partial Summary Judgment on
Causation (#54) is DENIED.

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DATED: This _____ day of March, 2013.
19th day of March, 2013.

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_________________________________
United States District Judge

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