Otay Land Co. v. U.E. Limited ( 2017 )

Filed 9/26/17
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
OTAY LAND COMPANY, LLC et al., D068347, D069029
Plaintiffs and Appellants, (Super. Ct. Nos. GIC869480;
37-2009-101976-CU-OR-CTL;
v. 37-2012-104941-CU-BT-CTL;
37-2013-048508-CU-BT-CTL)
U.E. LIMITED, L.P., et al.,
Defendants and Appellants.
APPEALS from a judgment and postjudgment orders of the Superior Court of San
Diego County, Richard E. L. Strauss, Judge. Affirmed in part; reversed in part; and
remanded with directions.
Shoecraft Burton, Robert D. Shoecraft and Devin T. Shoecraft for Plaintiffs and
Appellants.
Xavier Becerra, Attorney General, Sally Magnani, Assistant Attorney General,
Susan Fiering and Andrew Wiener, Deputy Attorneys General, for amicus curiae on
behalf of Plaintiffs and Appellants.
Lewis Brisbois Bisgaard & Smith, R. Gaylord Smith, Thomas A. Teschner and
Brittany H. Bartold for Defendants and Appellants U.E., Limited, L.P.,
U.E. Limited, LLC, John T. Knox and Rose Patek.
Gatzke Dillon & Balance, Stephen F. Tee and Stephen A. Sunseri for Defendants
and Appellants Baldwin Builders, The Otay Ranch, L.P. and Sky Vista, Inc.
I.
INTRODUCTION
These consolidated appeals involve a property where a shooting range had been
operated for decades (the Property), its remediation by Plaintiffs Otay Land Company,
LLC (OLC) and Flat Rock Land Company, LLC (FRLC) (collectively, Plaintiffs), and
their efforts to recover remediation costs from former owners under the Carpenter-
Presley-Tanner Hazardous Substances Account Act (HSAA; Health & Saf. Code,
§ 25300 et seq.).1 Defendants are former owner United Enterprises, Inc. (UEI) and its
successors, including United Enterprises, Ltd. (UEL) (together, UE Defendants or UE),
and former owner Baldwin Vista Associates, L.P. (now The Otay Ranch, L.P.) and certain
of its general partners (together, Baldwin Defendants or Baldwin) (collectively,
Defendants). Plaintiffs also asserted common law claims for continuing nuisance and
1 Unless otherwise noted, statutory references are to the Health and Safety Code.
2
continuing trespass, including in subsequent lawsuits that have been consolidated with
this action.2
The case proceeded to a bench trial. The trial court's Statement of Decision
addressed issues regarding whether Plaintiffs had a private right of action, liability,
defenses, the allocation of costs, and cost reductions, each in the alternative, and held
Plaintiffs should take nothing. The court entered judgment for Defendants. Defendants
moved for attorney fees and costs, which the court denied.
Plaintiffs appeal from the judgment. The gravamen of their appeal is that the trial
court erred in its interpretation and application of the HSAA. We agree, and as our
analysis will reflect, several of these issues involve novel questions of law under the
HSAA. We affirm certain rulings, reverse the judgment in all other respects, and remand
with directions.
Defendants appeal from the court's denial of their fee and cost motions. In light of
our reversal of the judgment, these appeals are moot.
2 The other UE Defendants are U.E. Limited, L.P., and U.E. Limited, LLC. The
other Baldwin Defendants are Baldwin Builders, Baldwin Vista, Inc. (now Sky Vista,
Inc.), and Baldwin Communities, Inc. (now Sky Communities, Inc.). Individual
defendants John T. Knox and Rose Patek are also respondents, but Plaintiffs do not
address them specifically. To the extent our conclusions apply generally, they apply to
these respondents, but Plaintiffs forfeit any challenge to rulings particular to Knox or
Patek. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211,
216, fn. 4.) Plaintiffs also had claims for equitable indemnity, unjust enrichment, unfair
competition, and declaratory relief, which the court denied as being moot in light of its
HSAA determination and on other grounds. Plaintiffs do not address these claims on
appeal and forfeit them as well. (Tiernan, at p. 216, fn. 4.)
3
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual overview
Stephen Birch founded the predecessor to UEI, which purchased the Otay Ranch
land encompassing the Property. In 1965, UEI opened a commercial shooting range on
the Property, and the range remained in operation until 1978. In 1970, white fill material
was used to build additional skeet and trap fields. Some, but not all, lead shot was
recovered, and the only efforts to address target debris were to chop and cover it. In
addition, the range was "disked" at various points (i.e., a tool known as a disk was used to
cut through the ground and turn soil over). In 1986, UEI became a limited partnership
(UEL), and the Estate of Mary Marshall Rand Birch Patrick (Stephen Birch's daughter)
was one of the limited partners.
In 1988, UEL sold part of the Otay Ranch land to Baldwin, and the Estate received
a promissory note encompassing the Property. A lessee reopened the range in 1990, and
it remained operational until 1997. Again, some, but not all, lead shot was recovered, and
no target debris was reclaimed. Baldwin also contracted with companies that used the
land for wood chipping operations, the latter of which left a wood pile upon its departure.
The Estate took title to the Property in 1997, after Baldwin defaulted on its
payment obligations and provided deeds in lieu of forfeiture. The Estate contacted
Baldwin about the wood pile, and Baldwin hired a contractor to clean the wood pile to
the surface. In 2003, OLC transferred the Property to FRLC, a wholly owned subsidiary.
OLC and FRLC began the remediation process, during which it was determined the soil
4
contained lead and polynuclear aromatic hydrocarbons (PAH's) attributable to the target
debris, and that perchlorate on the site was from the white material.
FRLC applied pursuant to Health and Safety Code chapter 6.65 (§ 25260 et seq.,
herein the Assembly Bill No. 2061 process) for the San Diego County Department of
Environmental Health (DEH) to be the administering agency for the remediation.3
During this process, DEH requested review by the California Department of Toxic
Substances Control (DTSC). DTSC has oversight for response actions under the HSAA
(§ 25323.3), and is authorized by the HSAA to initiate such actions, order responsible
parties to do so, and recover costs incurred by the state, among other things. (See
§§ 25355, 25358.3, 25360.) FRLC obtained a certificate of completion pursuant to the
Assembly Bill No. 2061 process.
B. Litigation
Plaintiffs initially filed suit in 2003 in federal court, asserting claims against
Defendants under the Resource Conservation and Recovery Act of 1976 (RCRA,
42 U.S.C. § 6901 et seq.); the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (CERCLA, 42 U.S.C. § 9601 et seq.); the HSAA; and on other
state law grounds. In 2006, the district court granted summary judgment on the
CERCLA and RCRA claims, and declined to exercise jurisdiction over the state law
3 Assembly Bill No. 2061 added Chapter 6.65 to Division 20 of the Health and
Safety Code. (See Assem. Bill No. 2061 (1993-1994 Reg. Sess.); Stats. 1993, ch. 1184,
§ 1, p. 6771.) The parties and trial court use the term "AB 2061," which use has been
retained within quoted material herein.
5
claims. (Otay Land Co. v. U.E. Ltd. L.P. (S.D. Cal. 2006) 440 F.Supp.2d 1152, 1157-
1158.) In 2009, the Ninth Circuit vacated the judgment on ripeness grounds. (Otay Land
Co. v. United Enterprises Ltd. (9th Cir. 2009) 338 Fed. Appx. 689, 691.)4
In 2006, Plaintiffs sued Defendants in San Diego County Superior Court under the
HSAA and for nuisance and trespass. Defendants filed motions for summary judgment
and/or adjudication, which the trial court denied. In 2013, the case proceeded to trial.
The court severed the nonjury HSAA claim from the jury issues. At the close of the
bench trial, the parties submitted closing briefs. The trial court directed the parties to
prepare proposed statements of decision. The court adopted Defendants' proposal, and
did not proceed to a jury trial.
Relevant here, the court determined: (i) Plaintiffs did not have a right of action to
recover their voluntarily-incurred remediation costs; (ii) Plaintiffs failed to establish
Defendants were liable, because, among other things, the range was excluded under the
" 'consumer product in consumer use' " exception for facilities and they did not establish
disposals, as needed for liability; (iii) Defendants established defenses based on the
HSAA's permitted release and nonretroactivity provisions (with the nonretroactivity
determinations foreclosing the need for a jury phase), the statute of limitations, and a
contractual release; (iv) in an equitable allocation of liability, Plaintiffs would bear
4 Defendants cite the vacated district court opinion. Lower federal court opinions
are not binding on this court, even on federal questions (People v. Crittenden (1994) 9
Cal.4th 83, 120, fn. 3), and this particular opinion is not otherwise persuasive.
6
100 percent of costs; and (v) in addition to costs being unavailable (in the absence of a
right of action), many costs claimed by Plaintiffs were not recoverable for other reasons.5
Plaintiffs filed objections, which the trial court overruled. The court entered
judgment for Defendants. Defendants filed motions for attorney fees and costs, which
the court denied. Plaintiffs appealed the judgment, and Defendants appealed the fee and
cost rulings.
The State of California submitted an amicus brief in the Ninth Circuit in the
federal case, and we invited the Attorney General to submit an amicus brief in this
appeal. The parties were invited to respond. The Attorney General submitted a brief on
behalf of amicus curiae DTSC, and the parties filed briefs in response.
III.
DISCUSSION
A. Overview
1. Standard of review
When we review a statement of decision, "findings on questions of fact are
reviewed under the substantial evidence standard." (Brewer v. Murphy (2008) 161
Cal.App.4th 928, 935.) We "infer any factual findings necessary to support the
judgment," unless a party filed objections. (Ermoian v. Desert Hospital (2007) 152
Cal.App.4th 475, 494, 498.) We still "review[] the implied factual findings under the
5 The court addressed Plaintiffs' ability to proceed in its cost analysis, as grounds for
denying all costs, but we view this as a threshold issue.
7
substantial evidence standard." (Fladeboe v. American Isuzu Motors Inc. (2007)
150 Cal.App.4th 42, 60.) "[C]onclusions of law are subject to independent review . . . ."
(Brewer, at p. 936.) Only prejudicial error is grounds for reversal. (Soule v. Gen. Motors
Corp. (1994) 8 Cal.4th 548, 573-574 (Soule); Cal. Const., art. VI, § 13.) "[T]rial error is
usually deemed harmless in California unless there is a 'reasonabl[e] probab[ility]' that it
affected the verdict. . . . '[P]robability' in this context does not mean more likely than not,
but merely a reasonable chance, more than an abstract possibility." (College Hosp. Inc.
v. Superior Court (1994) 8 Cal. 4th 704, 715, citation omitted (College Hosp.).)
As to the arguments by amicus DTSC, we accord due weight to its views. (See
People v. Snyder (2000) 22 Cal.4th 304, 310 ["In its amicus curiae brief, the FPPC
supports this view, which 'because of the agency's expertise . . . is entitled to great weight
unless clearly erroneous or unauthorized' "]; Cal. State Teachers' Retirement System v.
County of Los Angeles (2013) 216 Cal.App.4th 41, 52, fn. 3 [noting amicus had "special
expertise in [the] area [citation] and therefore its interpretation of the meaning and legal
effect of [the statute] '[was] entitled to consideration and respect by the courts,' " citing
Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7].)6
6 To the extent the parties raised points for the first time in their responses to the
DTSC amicus brief that they could have addressed earlier (as opposed to simply
addressing the DTSC's positions), we will not consider them. (Shade Foods, Inc. v.
Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10
(Shade Foods); County of Sonoma v. Superior Court (2010) 190 Cal.App.4th 1312, 1326,
fn. 10.)
8
2. Relevant environmental statutes
In addition to the HSAA, two federal statutes are relevant here. RCRA governs
the disposal of solid and hazardous waste. (42 U.S.C. § 6901 et seq.) CERCLA, also
known as "Superfund," provides authority to respond to releases and threatened releases
of hazardous substances. (42 U.S.C. § 9601 et seq; Sierra Club v. Johnson (N.D. Cal.
2008) 614 F.Supp.2d 998, 1000.)7 CERCLA "was designed to promote the ' "timely
cleanup of hazardous waste sites" ' and to ensure that the costs of such cleanup efforts
were borne by those responsible for the contamination." (Burlington Northern and Santa
Fe Ry. (2009) 556 U.S. 599, 602 (Burlington Northern).) In 1981, California enacted the
HSAA as "California's 'superfund' statute and the state's counterpart to CERCLA." (City
of Lodi v. Randtron (2004) 118 Cal.App.4th 337, 351 (City of Lodi); ibid. [HSAA's
purposes include "provid[ing] for response authority for releases of hazardous substances
that pose a threat to the public health or environment"].) The HSAA became inoperative
under a sunset provision in January 1, 1999. (City of Lodi, at p. 345, fn. 4.) In 1999, the
HSAA was reenacted with no sunset date. (Stats. 1999, ch. 23, §§ 2, 3.) The HSAA
utilizes CERCLA definitions except where the HSAA defines them or "the context
requires otherwise." (§ 25310.)
7 RCRA was an amendment to the Solid Waste Disposal Act and some courts refer
to the acts interchangeably. (See Wilshire Westwood Assocs. v. Atlantic Richfield Co.
(9th Cir. 1993) 881 F.2d 801, 807 fn. 7.) "Superfund" refers to the trust fund created by
CERCLA (Chubb Custom Ins. Co. v. Space Systems/Loral Inc. (9th Cir. 2013) 710 F.3d
946, 968 (Chubb)), but also is used to refer to the law generally.
9
These are remedial statutes, and thus are "liberally construe[d] . . . in favor of their
protective purpose." (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524,
532; Safe Air For Everyone v. Meyer (9th Cir. 2004) 373 F.3d 1035, 1049, fn. 5
(Safe Air) [recognizing RCRA as remedial statute]; KN Energy, Inc. v. Rockwell Intern.
Corp. (D. Co. 1993) 840 F.Supp. 95, 98 (KN Energy) [noting CERCLA's
" 'overwhelmingly remedial' statutory scheme"]; City of Lodi, supra, 118 Cal.App.4th at
p. 350 ["We do not disagree with the City's assertion that HSAA is a remedial
statute . . . ."].)
B. Plaintiffs had a right of action to recover voluntarily incurred costs
Plaintiffs contend the court erred in concluding they could not proceed under the
HSAA. We agree. Cost actions under the HSAA are governed by section 25363,
subdivision (e) (hereafter § 25363(e)). At the time of Plaintiffs' suit, this section
provided (and still provides, in substantial part):
"Any person who has incurred removal or remedial action costs in accordance
with this chapter or the federal act may seek contribution or indemnity from any
person who is liable pursuant to this chapter . . . . An action to enforce a claim
may be brought as a cross-complaint by any defendant in an action brought
pursuant to Section 25360 or this section, or in a separate action after the person
seeking contribution or indemnity has paid removal or remedial action costs in
accordance with this chapter or the federal act. . . . In resolving claims for
contribution or indemnity, the court may allocate costs among liable parties using
those equitable factors which are appropriate."8 (§ 25363(e).)
8 Section 25363(e) was amended in 2015, effective January 1, 2016, and relettered
as section 25363, subdivision (d). (Stats. 2015, ch. 458, § 2.) Some of Plaintiffs'
arguments turn on the pre-2016 text, and the parties agree that version applies. Unless
otherwise noted, we also address other HSAA provisions as they existed at the time of
Plaintiffs' state court suit, filed in 2006.
10
Whether a party can seek voluntary costs under the HSAA presents a question of
statutory interpretation, which we analyze de novo. (Molenda v. Dept. of Motor Vehicles
(2009) 172 Cal.App.4th 974, 986 (Molenda).) In interpreting a statute, "our fundamental
task is to ascertain the Legislature's intent so as to effectuate the purpose of the statute."
(Smith v. Superior Court (2006) 39 Cal.4th 77, 83.) Statutes " 'must be given a
reasonable and common sense interpretation consistent with the apparent purpose and
intention of the lawmakers, practical rather than technical in nature.' " (City of Poway v.
City of San Diego (1991) 229 Cal.App.3d 847, 858.) "[W]e look first to the words of the
statute, ' "giving to the language its usual, ordinary import and according significance, if
possible, to every word, phrase and sentence in pursuance of the legislative purpose." '
. . . Although we give effect to a statute according to the usual, ordinary import of its
language . . . , language that permits more than one reasonable interpretation allows us to
consider 'other aids, such as the statute's purpose, legislative history, and public policy.' "
(Cortez v. Abich (2011) 51 Cal.4th 285, 292, citations omitted (Cortez).)
The trial court found the absence of judicial action, and Plaintiffs' voluntary
participation in the Assembly Bill No. 2061 process, precluded a right to contribution
under the HSAA. The text of trial court's ruling is relevant, and we reproduce large
sections of it:
"The Court finds that HSAA contribution actions may not be brought where the
remediation was conducted and approved under Chapter 6.65 ('AB 2061'), as is the
case here. HSAA limits standing to bring a claim under Chapter 6.8 [the HSAA]
to 'any person who has incurred removal or remedial action costs in accordance
with this chapter or the federal act.' The reference to 'this chapter' is to Chapter
11
6.8 . . . . AB 2061 cleanups are not under Chapter 6.8, but are exclusively
prescribed under Chapter 6.65 . . . ." (Fn. omitted.)
"The Court . . . finds that the remedial action at issue was not compulsory. The
Court further finds that the weight of the evidence does not suggest [Plaintiffs]
have been subject to any government judicial action by the DTSC which mandated
the remediation of the shooting range. [¶] . . . [Plaintiffs'] HSAA claim . . . fails
because there has been no qualifying action by the DTSC to invoke the
contribution remedy contained in Chapter 6.8. (Citation.) All of [Plaintiffs']
damages . . . relate to a voluntary remediation conducted under Chapter 6.65 ('AB
2061'). The relief available under an AB 2061 cleanup is a certificate of
completion and not contribution under Chapter 6.8 . . . ."
Plaintiffs contend the court erred because, under the plain meaning of the statute,
no prior DTSC action is needed, and because the Assembly Bill No. 2061 process is no
bar to HSAA recovery. We agree.
We begin with the trial court's rulings, and conclude they do not actually address,
much less resolve, Plaintiffs' ability to proceed under the HSAA. First, the court
addressed only contribution, not indemnity. But the typical contribution scenario
involves a prior judgment, and there is no dispute Plaintiffs incurred their costs
voluntarily. (See U.S. v. Atlantic Research Corp. (2007) 551 U.S. 128, 138 (Atlantic
Research) [contribution traditionally refers to "right to collect from others responsible for
the same tort after the tortfeasor has paid more than his or her proportionate share"];
Coca-Cola Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4th 1372, 1381
[contribution applies after debtor has paid more than pro rata share of judgment].)
Second, the Assembly Bill No. 2061 process simply allows parties to request designation
of an agency to oversee remediation and to receive a certificate of completion limiting
further government action. (See § 25260 et seq.) The court seems to suggest that
12
because this process results in a certificate, not a judgment, it cannot provide a basis for a
contribution claim. This analysis again ignores the existence of indemnity. Further, we
see no conflict in use of both the Assembly Bill No. 2061 process and the HSAA: the
former does not address party cost recovery, and the latter imposes no bar on how a
response action can commence. (Compare § 25260 et seq. with § 25300 et seq.)
We now turn to the issue the trial court left unanswered: whether the HSAA
requires prior government action to seek indemnity.
The HSAA does not define indemnity. Black's Law Dictionary provides that
"indemnity" is "[a] duty to make good any loss, damage, or liability incurred by another";
"[t]he right of an injured party to claim reimbursement for its loss, damage, or liability
from a person who has such a duty"; and "[r]eimbursement or compensation for loss,
damage, or liability in tort." (Black's Law Dict. (10th ed. 2014), p. 886, col. 2.)
Identified types of indemnity include contractual, equitable, and statutory indemnity.
(Ibid.) Contractual indemnity is "expressly provided for in an agreement." (Ibid; Civ.
Code, § 2772.) Equitable indemnity permits "defendants . . . to seek apportionment of
loss between the wrongdoers in proportion to their relative culpability" (GEM Developers
v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d 419, 426), and requires a
joint legal obligation. (Union Pacific Corp. v. Wengert (2000) 79 Cal.App.4th 1444,
1447-1448.) Statutory indemnity is that "conferred by legislation." (Black's Law Dict.,
supra, at p. 886, col. 2.)
We interpret indemnity under section 25363(e) to be a grant of statutory indemnity
for those who incur otherwise recoverable costs. This interpretation is consistent with
13
other California statutory regimes providing an indemnity right, without a contractual
obligation or joint tortfeasor relationship, including employee reimbursement, conversion
damages, and deposit transactions. (See Lab. Code, § 2802 [employer "shall indemnify
his or her employee for all necessary expenditures" due to discharge of work]; Machinists
Auto. Trades Dist. Lodge v. Util. Trailers Sales Co. (1983) 141 Cal.App.3d 80, 81
[addressing whether employee had "statutory right to indemnity" for tool loss]; Civ.
Code, § 3336 [damages for conversion are either value of property, with interest, or
"amount sufficient to indemnify the party injured for the loss"]; Civ. Code, § 1833
["depositor must indemnify the depositary" for damages caused by and expenses incurred
as to the item deposited].) We thus disagree with Defendants that the only types of
indemnity are express and equitable indemnity, equitable indemnity is at issue here, and
Plaintiffs do not qualify. The HSAA neither characterizes the indemnity provision as
equitable, nor imposes requirements that would apply in that context.
None of the other language in section 25363(e) suggests there is any prior
government action requirement. Meanwhile, other sections of the HSAA make clear no
such requirement exists. (See, e.g., § 25356.1.5 [response action criteria; explains "[a]ny
response action taken or approved pursuant to this chapter shall be based upon, and no
less stringent than, all of the following requirements[,]" and does not require government
action]; § 25360, subd. (c) [cost recovery in DTSC actions; costs are recoverable "either
in a separate action or by way of intervention . . . in an action for contribution or
indemnity," implying the possibility of an action initiated by a private party].)
14
We conclude the plain language of the HSAA does not require prior government
action and, to the contrary, permits recovery of voluntarily incurred remediation costs.
This interpretation is consistent with the legislative history, CERCLA, and the remedial
purposes of these statutes. Section 25363(e) was expanded in 1988 to permit "[a]ny
person" to seek contribution or indemnity. (Stats. 1988, ch. 1401, § 1, p. 4734; see, e.g.,
Health & Welf. Agency, Enrolled Bill Rep., Assem. Bill No. 3946 (1987-1988 Reg.
Sess.) Sept. 8, 1988, p. 2 [bill would "more equitably extend[] the right to seek
contribution and indemnity to all potentially liable parties" (emphasis in original)].)9
Like the HSAA, CERCLA provides for two types of cost actions, cost recovery under
CERCLA section 107 and contribution under CERCLA section 113. (42 U.S.C. §§ 9607,
9613.) A party that voluntarily remediates may seek cost recovery under CERCLA
section 107. (See Atlantic Research, supra, 551 U.S. at p. 139, fn. 6 ["costs incurred
voluntarily are recoverable only by way of [CERCLA ]§ 107(a)(4)(B)"].) Finally, the
DTSC urges that precluding remediation costs for voluntary cleanups using the Assembly
Bill No. 2061 process "could have significant negative consequences for the cleanup of
contaminated sites." We find their explanation persuasive: "Responsible parties would
be discouraged from undertaking voluntary cleanups . . . . This would eliminate
substantial direct environmental benefits resulting from responsible parties expeditiously
and voluntarily undertaking cleanups, rather than waiting for a government agency with
9 On our own motion, we take judicial notice of documents comprising the
legislative history of section 25363(e). (Evid. Code, §§ 452, 459; see In re
Donovan L., Jr. (2016) 244 Cal.App.4th 1075, 1088.)
15
finite resources to either order the same action or to itself clean up the contamination with
taxpayer money."
A property owner who voluntary remediates can seek indemnity for response costs
under the HSAA. Use of the Assembly Bill No. 2061 process does not preclude such
recovery.
C. Plaintiffs established HSAA liability
The trial court concluded Plaintiffs did not establish any HSAA liability.
Plaintiffs assert the court primarily erred in two respects: applying the consumer product
in consumer use exception to find the range was not a facility, and finding they did not
establish a disposal, on various grounds. We conclude the court misapplied the consumer
product exception, and some, but not all, of its disposal rulings were in error.
1. Overview of HSAA liability
We begin by describing the elements of an HSAA claim, which will provide
context for Plaintiffs' facility and disposal arguments.
Under the HSAA, costs can be recovered from a liable person. (§ 25363(e).) A
" 'liable person' " means "those persons described in [CERCLA] section 107(a)."
(§ 25323.5, subd. (a)(1).) To establish liability under CERCLA, and thus the HSAA, the
plaintiff must establish " '(1) the site on which the hazardous substances are contained is a
"facility" under CERCLA's definition of that term . . . 42 U.S.C. § 9601(9); (2) a
"release" or "threatened release" of any "hazardous substance" from the facility has
occurred, 42 U.S.C. § 9607(a)(4); (3) such "release" or "threatened release" has caused
the plaintiff to incur response costs that were "necessary" and "consistent with the
16
national contingency plan," 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B); and (4) the defendant
is within one of four classes of persons subject to the liability provisions of [CERCLA]
section 107(a).' " (Carson Harbor Village, Ltd. v. Unocal Corp. (9th Cir. 2001) 270 F.3d
863, 870-871, citations omitted (Carson Harbor I) [en banc]; Gregory Village Partners,
L.P. v. Chevron U.S.A., Inc. (N.D. Cal. 2011) 805 F.Supp.2d 888, 897 (Gregory Village)
["A claim under the HSAA has the same elements as a claim under CERCLA."].) One
class of liable persons covers "any person who at the time of disposal of any hazardous
substance owned or operated any facility at which such hazardous substances were
disposed of." (42 U.S.C. § 9607(a)(2).)
2. The shooting range was not a consumer product in consumer use
a. Applicable law
CERCLA defines a " 'facility' " as "(A) any building, structure, installation,
equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment
works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor
vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has
been deposited, stored, disposed of, or placed, or otherwise come to be located; but does
not include any consumer product in consumer use or any vessel." (42 U.S.C.
§ 9601(9).)
CERCLA does not define "consumer product in consumer use." However, the
Seventh Circuit and Fifth Circuit have concluded that a facility must be a "consumer
product in consumer use" to qualify for this exception. (Amcast Indus. Corp. v. Detrex
Corp. (7th Cir. 1993) 2 F.3d 746, 750 (Amcast) [discussing tanker trucks: "The
17
exception is for facilities that are consumer products in consumer use, not for consumer
products contained in facilities. Although read as it is written the exception is narrow, it
is not meaningless, for the statute defines 'facility' so broadly that it could be thought to
include a can of lye . . . . A literal interpretation that furthers the statute's purpose is hard
to beat."]; Uniroyal Chem. Co., Inc. v. Deltech Corp. (5th Cir. 1998) 160 F.3d 238, 240,
253-254 (Uniroyal) [addressing tanker truck and trucking terminal; agreeing with
Amcast's literal approach and finding legislative history supported this literal reading];
see Am. Internat. Specialty Lines Ins. Co. v. U.S. (Fed. Cl., Jan. 31, 2008, No. 05-1020 C)
2008 WL 1990859, at p. *30 [addressing claim under law incorporating CERCLA facility
definition]; id. at p. *32 [finding "shared rationale of the Fifth and Seventh Circuits to be
persuasive"].)
The Fifth Circuit also concluded in Uniroyal that a " 'consumer product in
consumer use' means any good normally used for personal, family, or household
purposes, which was being used in that manner when the subject release occurred," and
that neither the truck nor trucking terminal at issue there qualified. (Uniroyal, supra, 160
F.3d at p. 257.) Uniroyal noted, among other things, the legislative history, which
reflected a focus on consumers and retail settings. (See, e.g., id. at p. 256 [Sen. Com. on
the Envrt. and Pub. Works Rep. No. 99–11, 11 (1985) [describing " 'finished consumer
products such as those that might be found in a retail store, where such products do not
present a threat of release from a facility' " as " 'consistent with the definition of a
'facility' contained in . . . CERCLA, and its reference to consumer products' "].) Other
courts have embraced a consistent interpretation. (See, e.g., Emergency Servs. Billing
18
Corp. v. Allstate Ins. Co. (7th Cir. 2012) 668 F.3d 459, 468 (Emergency Servs.) [personal
motor vehicles were consumer products in consumer use]; KN Energy, supra, 840
F.Supp. at p. 99 [exception did not apply to company pipelines, because a "commercial
business [was] involved, not individual consumers]; Reading Co. v. City of Phila. (E.D.
Pa. 1993) 823 F.Supp. 1218, 1233 (Reading Terminal) [exception did not apply to
railcars].)10
Consumer use of a commercial facility does not render it a consumer product.
(See CP Holdings, Inc. v. Goldberg-Zoino & Assoc., Inc. (D.N.H. 1991) 769 F.Supp.
432, 439 (CP Holdings) [hotel was not a consumer product: "If the court were to accept
[this] definition of a facility, any commercial building or property that could be bought or
sold would have to be classified as a consumer product if the property is used by the
general public. This would effectively exclude all private actions against previous
landowners, despite the fact that [CERCLA] clearly provides for such actions."]; Reading
Terminal, supra, 823 F.Supp. at p. 1235 [rejecting argument that consumer use of
terminal rendered the "entire area" a consumer product].)
Finally, like other statutory exceptions, the consumer product exception must be
construed narrowly. (See San Diego Union v. City Council (1983) 146 Cal.App.3d 947,
954 ["express exceptions" are "strictly and narrowly construed"]; In re: Sept. 11 Lit. (2d
Cir. 2014) 751 F.3d 86, 91 (Sept. 11 Lit.) ["[CERCLA's] several exceptions . . . are
10 Uniroyal, supra, 160 F.3d at page 257, and Emergency Servs., supra, 668 F.3d at
page 468, cited EPA comments and rules suggesting the EPA would take a similar
position.
19
generally read narrowly]; Amcast, supra, 2 F.3d at p. 750 [describing consumer product
exception as "narrow"].)
b. Analysis
The trial court found Defendants established "the shooting range at issue was a
'consumer product in consumer use' within the meaning of the HSAA." The trial court
also found the lead pellets, spent ammunition, targets, and fill material were consumer
products in consumer use. The court explained: "The weight of the evidence establishes
that the shooting range was at all times operated as a recreational facility for the
consuming public. . . . Lead ammunition and clay targets were consumer products used
by ordinary consumers for target practice, and those items came to be located at the
shooting range during consumer use. In addition, the range itself was a consumer
product, including [the stations] which were constructed with the white fill material . . . ."
The court noted the shot and targets were for sale at the range, and the same type as those
sold in sporting goods stores. Finally, the court rejected certain contentions by Plaintiffs
below, including that "the exception does not apply to physical locations." According to
the court, this argument was rejected in Kane v. United States (8th Cir. 1994) 15 F.3d 87(Kane).
Plaintiffs contend the trial court erred in applying the consumer product exception,
because the exception applies to consumers using consumer products, not commercial
properties used by consumers. We agree. First, the court erroneously addressed whether
various materials contained in the facility (e.g., targets) were consumer products in
consumer use, when the exception only applies to facilities that are consumer products.
20
(Amcast, supra, 2 F.3d at p. 750; Uniroyal, supra, 160 F.3d at pp. 252-253.)11 Second,
the court focused on consumer use of the range to find the exception applied, an
interpretation rejected by the courts. (See CP Holdings, supra, 769 F.Supp. at p. 439;
Reading Terminal, supra, 823 F.Supp. at p. 1235.) The court thus failed to address
whether the range was a good used for personal, family, or household purposes.
(Uniroyal, at pp. 252-253, 257.) It plainly was not.
We briefly explain why Kane is inapposite. Kane relied on Dayton Independent
School Dist. v. U.S. Mineral Products Co. (5th Cir. 1990) 906 F.2d 1059, 1065-1066, to
conclude a home constructed with asbestos was a consumer product. (Kane, supra, 15
F.3d at pp. 89-90, citing Dayton, at pp. 1065-1066 [asbestos incorporated into school
building was consumer product].) The Fifth Circuit has limited Dayton to its context.
(Uniroyal, supra, 160 F.3d at pp. 250-252 [explaining Dayton involved "a single, narrow
issue: . . . whether CERCLA afforded a remedy in asbestos removal cases," and that its
comments on the consumer exception were unnecessary to the holding, "expressed
without citation to any specific legislative history," and "cannot reasonably be viewed as
a definitive statement on the meaning of that exception"].) Dayton provides no guidance
11 The trial court did not suggest the items at the range are facilities. "Facility within
a facility" cases present a special situation, and there is no indication any party has
alleged it applies here. (See, e.g., Nurad, Inc. v. William E. Hooper & Sons Co. (4th Cir.
1992) 966 F.2d 837 (Nurad) [storage tanks were separate CERCLA facility from land].)
21
here, and neither does Kane — even if it addressed a commercial property, which it does
not.12
Finally, Defendants maintain the cases and legislative history support application
of the exception to business use. Uniroyal distinguished these cases, and we find its
reasoning persuasive. (See Uniroyal, supra, 160 F.3d at pp. 256-257.) As for the
legislative history, Defendants cite CP Holdings. This case discussed both the " 'finished
consumer products' " legislative comments noted in Uniroyal and business concerns that,
absent an exception, companies that use hazardous substances could be liable under
CERCLA. (CP Holdings, supra, 769 F.Supp. at p. 439.) However, on the latter point,
CP Holdings identifies only a report "from . . . business organizations" (id., at fn. 6
[citing 1986 SARA Leg. Hist. 27, at 551]). The broader legislative history reflects
consumers, quite reasonably, were the focus of the consumer product exception.
(Uniroyal, at pp. 256-257; see also KN Energy, supra, 840 F.Supp. at p. 99; Reading
Terminal, supra, 823 F.Supp. at p. 1233.)
This issue does not present a close question. The "consumer product in consumer
use" exception does not apply to a commercial shooting range.13
12 The trial court also questioned, among other things, Plaintiffs' purported reliance
on military and police ranges, apparently referencing EPA cases cited in their closing trial
brief. The EPA cases appeared to involve at least some private parties. (See, e.g., U.S. v.
Lake Geneva Assocs. (E.D. Wis., Sep. 30, 1998, No. 98-C-0972) 1998 EPA Consent
Lexis 221 [defendants included corporations].) In any event, the case law provides some
insight into the EPA's perspective, and it is consistent with Plaintiffs' position. (Uniroyal,
supra, 160 F.3d at p. 257; Emergency Servs., supra, 668 F.3d at p. 468.)
22
3. Plaintiffs established certain disposals by Defendants
The trial court concluded Plaintiffs did not establish disposals with respect to the
lead shot and target debris on the range (including because the targets fell under the
HSAA's petroleum exclusion), the white material, disking, and the wood pile. Plaintiffs
contend these disposals did occur, because the contaminants were discharged or
otherwise placed onto the land and these materials were solid waste. We conclude they
establish error as to the shooting range, the petroleum exclusion, and the white material.
a. Applicable law
Under CERCLA, "disposal" is defined by reference to RCRA. (Carson Harbor I,
supra, 270 F.3d at p. 875, citing 42 U.S.C. § 9601(29).) Under RCRA, a " 'disposal' " is
"the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid
waste or hazardous waste into or on any land or water so that such solid waste or
hazardous waste or any constituent thereof may enter the environment or be emitted into
the air or discharged into any waters, including ground waters." (42 U.S.C. § 6903(3);
Carson Harbor I, at p. 879 [describing inquiry in CERCLA disposal analysis as
13 Plaintiffs also contend the court failed to address whether the Property was a
facility, before reaching the consumer product exception. We agree the court failed to
meaningfully address whether Plaintiffs established a facility in the first instance. The
court did summarily conclude they failed to prove the "range . . . was a 'facility,' " but its
findings and analysis focused entirely on the consumer product exception. In light of
Plaintiffs' objection below, we will not imply findings to support this conclusion.
However, the court's focus on the range, as opposed to the Property, appears to be
harmless. Plaintiffs do not establish the court's consumer product analysis was impacted
by not focusing on the Property, and that analysis was in error regardless.
23
"examin[ing] each . . . term[]" in RCRA's disposal definition and "determin[ing] whether
the movement of contaminants is, under the plain meaning of the terms, a 'disposal' "].)
" '[S]olid waste' " is defined, in relevant part, as "any . . . discarded material,
including . . . material resulting from industrial, commercial, mining, and agricultural
operations, and from community activities." (42 U.S.C. § 6903(27).) The Ninth Circuit
has applied the following factors to assess whether a material is solid waste: "(1) whether
the material is 'destined for beneficial reuse or recycling in a continuous process by the
generating industry itself,' . . . ; (2) whether the materials are being actively reused, or
whether they merely have the potential of being reused . . . ; (3) whether the materials are
being reused by its original owner, as opposed to use by a salvager or reclaimer . . . ."
(Safe Air, supra, 373 F.3d at p. 1043, citations omitted.)
b. Plaintiffs established a disposal based on Defendants' failure to
reclaim spent lead and target debris that accumulated in the
environment
Plaintiffs contend Defendants left the spent shot and targets to accumulate, the
materials became solid waste at some point, and the changes in ownership, without
removal of the materials, meant the transformation to solid waste occurred by the time of
those changes. This position is consistent with applicable authority and the trial court
erred in rejecting it.14
14 We note Plaintiffs use the term "abandonment" to describe Defendants' conduct.
We gather they use it in the ordinary, rather than technical sense, but we avoid its use in
order to minimize confusion. Abandonment is a concept associated with the RCRA
regulatory definition of solid waste, which, as we shall explain, is inapplicable here.
24
i. Additional facts
We briefly describe the history of range management, which is relevant to our
disposal analysis. UEI employee Thomas Eley managed the range between 1965 and
1968, followed by UEI lessee Phil G. Scott from 1968 to 1978. They recovered some,
but not all, spent lead shot, with Scott last reclaiming lead in 1975 or 1976. Scott
testified he tried to retrieve more lead when he left in 1978, the last time the range was
open during UE ownership, but had to leave it. No efforts were made to recover target
debris, although Eley did attempt to chop and cover the targets. Baldwin's lessee Ray M.
Enniss operated the range from 1990 to 1997, including for several months after Baldwin
transferred the Property to the Estate. Enniss's lease required him to remove the
materials. Again, though, only some lead shot was recovered (with Enniss last
reclaiming lead in 1996), and no target debris. When the Estate terminated his lease in
1997, he could not remove the materials in the time provided by the Estate and the
Estate's attorney, B. Suzanne Farley, declined his request to return.15
ii. Applicable law
Spent lead and target debris on a shooting range can become solid waste if left to
accumulate. In Connecticut Coastal Fishermen's Ass'n. v. Remington Arms Co. (2d Cir.
1993) 989 F.2d 1308 (Connecticut Coastal), a gun club had been in use for 70 years and
15 Based on testimony about the amount of lead shot used, and its typical weight,
Plaintiffs represent hundreds of thousands of pounds of lead went unrecovered, and
Defendants do not dispute this. We need not focus on the amount, as there is no dispute
both sets of Defendants left at least some lead and target debris.
25
no spent shot or target debris had been removed. (Id. at p. 1310.) The court noted RCRA
did not define " 'discarded material' " and "this create[ed] an ambiguity . . . : At what
point after a lead shot is fired at a clay target do the materials become discarded?" (Id. at
p. 1314.) After noting the legislative history did not resolve this ambiguity, the court
looked to the RCRA regulations and the EPA's input as amicus. (Id. at p. 1314.) The
regulations apply a narrower definition of solid waste " 'to wastes that also are hazardous
for purposes of the regulations implementing Subtitle C of RCRA,' " while providing the
statutory definition "applies to 'imminent hazard' lawsuits brought by the United States."
(Ibid.) The court found the broader statutory definition applied to imminent hazard
citizen suits, too. (Id. at p. 1315.) The EPA found the shot and targets did not fit the
regulatory definition, but did come within the statutory definition because they were
discarded. (Id. at pp. 1314-1316; id. at p. 1316 "[T]he EPA states that the materials are
discarded because they have been 'left to accumulate long after they have served their
intended purpose.' "].)
The court agreed: "Without deciding how long materials must accumulate before
they become discarded — that is, when the shot is fired or at some later time — we agree
that the lead shot and clay targets . . . have accumulated long enough to be considered
solid waste." (Connecticut Coastal, supra, 989 F.2d at p. 1316; see also Benjamin v.
Douglas Ridge Rifle Club (D. Or. 2009) 673 F.Supp.2d 1210, 1221-1222 [lead shot
accumulated at a rifle club over 54 years; acknowledging that firing munitions is not
itself a disposal, but "[f]ifty-four years of lead accumulation is more than long enough to
be considered solid waste".)
26
The EPA took a consistent view in its Best Management Practices for Lead at
Outdoor Shooting Ranges, EPA-902-B-01-001, at page I-8 (June 2005) (Best
Management Practices) (as of Sep. 22, 2017).16
Citing Connecticut Coastal, the EPA stated gun clubs are "at risk of legal action under
RCRA if they fail to routinely recover and reclaim lead, do not take steps to minimize
lead release or migration, or if they abandon lead in berms." (Best Management
Practices, at pp. I-6 to I-7.) The EPA explained: "Lead shot is not considered a
hazardous waste subject to RCRA at the time it is discharged from a firearm because it is
used for its intended purpose. As such, shooting lead shot (or bullets) is not regulated nor
is a RCRA permit required to operate a shooting range. However, spent lead shot (or
bullets), left in the environment, is subject to the broader definition of solid waste written
by Congress . . . ." (Id. at p. I-8.)
iii. Analysis
The trial court observed RCRA's disposal definition applied, and determined
Plaintiffs "failed to establish that actionable 'disposals' occurred." The court found there
was no abandonment of either the range or the materials, noting, among other things, that
"lead shot was reclaimed on numerous occasions," and the EPA's position that "ordinary
use of lead shot on a shooting range does not fall within the regulatory definition of solid
16 The guide "was developed by EPA Region 2 in cooperation with a few states as
well as many EPA offices." (Best Management Practices, supra, Notice.)
27
waste." The court also found there was no disposal when Defendants sold the Property,
because the transfer of property is not a disposal. Instead, the court found "the lead shot
and broken targets at issue were historically distributed on the range as a part of
recreational activities, and not as a result of waste disposal." The court explained "the
Ninth Circuit has held that the act of using a product in its intended fashion does not
constitute a disposal of that product as waste, citing 3550 Stevens Creek Assocs. v.
Barclays Bank (9th Cir. 1990) 915 F.2d 1355 (3550 Stevens Creek) and A & W Smelter
and Refiners v. Clinton (9th Cir. 1998) 146 F.3d 1107 (A & W Smelter).
Plaintiffs contend the court erred by focusing on the materials' use at the time of
discharge; the "relevant inquiry [was] whether Defendants . . . allowed the contaminants
to 'accumulat[e] long enough to be considered solid waste,' " and the Property
transactions rendered "inescapable" the conclusion that the transformation to solid waste
had occurred. Plaintiffs also contend the court erred in focusing on whether the products
were useful, because "[t]hese contaminants were not serving any 'use,' and were never
reclaimed and put to another use by Defendants." We find Plaintiffs' arguments
persuasive.
First, the court's analysis failed to address whether the spent shot and target debris
met the statutory definition of solid waste (and, to the extent it did focus on the issue, it
relied on the inapplicable regulatory definition). Plaintiffs objected to this portion of the
Statement of Decision, we will not infer the court made such findings, and the undisputed
facts support Plaintiffs' position, anyway. The critical issue is whether the materials were
destined for reuse, or whether they had been left to accumulate. (Safe Air, supra, 373
28
F.3d at p. 1043; Connecticut Coastal, supra, 989 F.2d at p. 1316.) Here, the record
supports only the latter conclusion: each set of Defendants recovered only some lead, no
target debris, and did not remove remaining materials before selling or transferring the
Property (thus foreclosing, at least presumptively, further reclamation). The issues the
trial court did address are irrelevant. Defendants' intentions toward the range have no
bearing on whether disposals took place, especially as they failed to recover lead and
targets even while the range was operational. There is no dispute some lead was
recovered; the problem is that much was not (and that no targets were, either). Finally,
although the "mere sale of property . . . is not a disposal" (Sycamore Indus. Park Assocs.
v. Ericsson (7th Cir. 2008) 546 F.3d. 847, 851), that is not Plaintiffs' position. Their
point is that the ownership changes make clear that Defendants were not going to reclaim
the materials they had left to accumulate and, thus, that the disposals occurred by the time
of those changes.17
Second, the useful product doctrine is inapposite. In 3550 Stevens Creek, the
Ninth Circuit concluded that asbestos in a commercial building was not discarded
because it was "used to construct the building." (3550 Stevens Creek, supra, 915 F.2d at
p. 1361.) In A & W Smelter, the Ninth Circuit applied this concept to unprocessed ore
17 Plaintiffs suggest Nurad reflects that when a company closes with facilities
containing hazardous waste, this constitutes a disposal. (Nurad, supra, 966 F.2d at p. 847
["[T]here clearly was a disposal . . . when the Company closed down the finishing plant
and abandoned the tanks."].) But Nurad had concluded the tanks were disposed of prior
to sale, and made this observation in the alternative. (Ibid.) Nurad nevertheless
illustrates the relevance of a sale, insofar as it reflects an absence of intent for further use.
29
and determined there was a triable issue as to whether the ore was a useful product.
(A & W Smelter, supra, 146 F.3d at pp. 1112-1113; id. at p. 1113 ["[i]f the ore was mixed
with enough slag so that it was no longer usable . . . , then it was waste"].) Here,
although the lead shot and targets were useful at some point, the materials at issue are the
spent lead and target debris left to accumulate. (See, e.g., Levin Metals Corp. v.
Parr-Richmond Terminal Co. (N.D. Cal. 1991) 781 F.Supp. 1448, 1452 & fn. 3 (Levin)
[explaining the issue was "not the DDT that was put to productive use, but rather the
DDT that was released into the environment," and finding 3550 Stevens Creek
inapposite].)
We address two issues raised by Defendants. First, they suggest Cordiano v.
Metacon Gun Club, Inc. (2nd Cir. 2009) 575 F.3d 199 should guide our analysis.
Cordiano confirms range materials are not regulatory solid waste (which is not in
dispute), but does not reach the statutory solid waste question. (Id. at pp. 205-206, 209
[plaintiffs failed to raise material issue on imminent and substantial endangerment, so
court did not need to reach whether lead had been " 'discarded' within the meaning of the
statutory definition"].) Second, Defendants contend " 'imminent and substantial
endangerment' is required to prove RCRA statutory waste." Setting aside their
mischaracterization of RCRA, we disagree. The use of the broader statutory definition in
30
both RCRA endangerment claims and under CERCLA does not render the elements of
the RCRA claims applicable to CERCLA (or, in turn, the HSAA).18
Although we decline to identify when the spent lead and target debris became
solid waste, we conclude Plaintiffs established this transformation occurred during
Defendants' ownership periods. The trial court erred in finding no disposals.
c. The trial court applied the wrong burden of proof in applying the
petroleum exclusion to the target debris
The court found Plaintiffs failed to establish the HSAA petroleum exclusion did
not apply to the target debris. Plaintiffs contend the court erred by placing the burden of
proof on them, rather than Defendants. We agree.
As noted ante, PAH's on the Property were attributed to the target debris.
Plaintiffs contend PAH's are hazardous substances under the HSAA. (§ 25316,
subd. (d).) Section 25317 provides that " '[h]azardous substance' " does not include
"[p]etroleum, including crude oil or any fraction thereof . . . ." CERCLA has an
analogous exclusion. (42 U.S.C. § 9601(14).) "[H]azardous substances which are
contained in and are indigenous to petroleum or are added as a constituent during the
refining process" fall within the exclusion. (Nixon-Egli Equip. Co. v. John A. Alexander
Co. (C.D. Cal. 1996) 949 F.Supp. 1435, 1442 (Nixon-Egli).)
18 Defendants also cite Catellus Dev. Corp. v. U.S. (9th Cir. 1994) 34 F.3d 748, 750,
for the proposition that disposal refers " 'to an affirmative act of discarding a substance as
waste, and not the productive use of the substance.' " Even assuming their conduct was
not affirmative, the Ninth Circuit has since "reject[ed] the absolute binary 'active/passive'
distinction." (Carson Harbor I, supra, 270 F.3d at p. 879.)
31
The party claiming the exclusion bears the burden of proof. (Nixon-Egli, supra,949 F.Supp. at p. 1443 ["the petroleum exclusion is a statutory exception and, as is the
case with other statutory exceptions, the party seeking to invoke the exception bears the
burden of proof on it[s] applicability"]; Ekotek Site PRP Comm. v. Self (D. Utah 1996)
932 F.Supp. 1319, 1323 [accord].) And, as with other exceptions, it is narrowly
construed. (Sept. 11 Lit., supra, 751 F.3d at p. 91.)
Here, the trial court found the petroleum exclusion "applie[d] to the component of
the target which is petroleum since all the PAH[']s detected at the site were indigenous to
the petroleum pitch component of the target." The court found the evidence established
the targets were made of nonhazardous clay and petroleum pitch, citing various witnesses
and reports. The court concluded that "[s]ince [Plaintiffs] failed to present any evidence
that the PAH[']s came from any other source than the petroleum pitch contained in the
targets, the exclusion contained in . . . section 25317 applies . . . ."
Plaintiffs contend the court erred by requiring them to demonstrate the targets
were not made of petroleum pitch. They explain that because Defendants did not present
evidence the targets at the range were made of petroleum, they had no need to introduce
evidence the targets were made of coal tar. Plaintiffs also argue there was no substantial
evidence to support the court's finding that the targets were made of petroleum pitch,
32
explaining the evidence showed only that the targets were made of pitch (not petroleum
pitch) or addressed targets generally, not those actually used at the range.19
We agree the trial court erred by placing the burden of proof on Plaintiffs. (See
Nixon-Egli, supra, 949 F.Supp. at p. 1443.) The court should have addressed whether
Defendants established the targets used on the range were made of petroleum pitch, not
whether Plaintiffs proved the PAH's came from elsewhere (or, as Plaintiffs put it, that the
targets were not made of petroleum pitch). We conclude Plaintiffs have a reasonable
chance of prevailing if the burden is properly applied. (College Hosp., supra, 8 Cal.4th at
p. 714.)
d. The trial court erred in finding use of the white material was not a
disposal
Plaintiffs contend use of the perchlorate-containing white material constituted a
disposal. The trial court found Plaintiff failed to establish a disposal based on use of the
white material because it "was emplaced on the range solely as a construction material to
expand the range, and was not deposited there as waste," citing 3550 Stevens Creek,
supra, 915 F.2d 1355. Plaintiffs maintain use of the white material was a disposal, and
their position has merit. Even assuming the white material were a useful product at some
point, 3550 Stevens Creek remains distinguishable. A disposal requires that the material
19 Plaintiffs also suggest evidence cited by the court here was hearsay, but they do
not establish they objected below or offer any argument here. They have forfeited this
argument. (People v. Stanley (1995) 10 Cal.4th 764, 793 (Stanley) [" '[E]very brief
should contain a legal argument with citation of authorities . . . . If none is furnished on a
particular point, the court may treat it as waived . . . .' "].)
33
enter the environment. (42 U.S.C. § 6903(3).) In 3550 Stevens Creek, the court noted
not only that the asbestos at issue was used in construction, but also that "there is no
indication that materials containing asbestos installed as part of the structure of a
building, as here, are such that asbestos fibers 'may enter the environment.' " (3550
Stevens Creek, at p. 1362.) Here, in contrast, the white material already was in the
environment. California v. Blech (9th Cir. 1992) 976 F.2d 525, 527, footnote 1, cited by
Defendants, is distinguishable for the same reasons. (Id. at p. 527, fn. 2 [involving a
release within a structure].)20
e. Plaintiffs do not establish disking resulted in disposal
Plaintiffs contend each instance of disking was a disposal, and the trial court erred
in concluding otherwise. They do not establish error.
Disposal can encompass subsequent movement of contaminants. In Kaiser
Aluminum & Chemical Corp. v. Catellus Dec. Corp. (9th Cir. 1992) 976 F.2d 1338(Kaiser), the Ninth Circuit found allegations that a party "excavated . . . tainted soil,
moved it away from the excavation site, and spread it over uncontaminated portions of
the [P]roperty" sufficient to support disposal. (Id. at p. 1342 [reversing grant of motion
to dismiss CERCLA claim].) The court explained: "[T]he term 'disposal' should not be
limited solely to the initial introduction of hazardous substances onto property. Rather,
20 Defendants also contend Plaintiffs "agreed the white material was 'non-
hazardous,' " citing evidence relating to this issue. We will not infer this evidence
reflects the white material was not hazardous for disposal purposes, given the court did
not reach the issue and Plaintiffs objected to the court's failure to address whether
perchlorate was a hazardous substance (and related cost findings).
34
consistent with the overall remedial purpose of CERCLA, 'disposal' should be read
broadly to include the subsequent 'move[ment], dispers[al], or release[] [of such
substances] during landfill excavations and fillings.' " (Ibid. ["CERCLA's definition of
'disposal' expressly encompasses the 'placing of any . . . hazardous waste . . . on any
land.' "]; see Tanglewood East Homeowners v. Charles-Thomas, Inc. (5th Cir. 1988) 849
F.2d 1568, 1573 [affirming denial of motion to dismiss claim against developer that,
among other things, dispersed contaminated soil throughout subdivision]; Redwing
Carriers, Inc. v. Saraland Apartments (11th Cir. 1996) 94 F.3d 1489, 1510 (Redwing)
[disposal includes "subsequent movement and dispersal"].)
Notwithstanding this broad view of disposal, the Eleventh Circuit concluded that
returning soil to the same place did not constitute a disposal. (Redwing, supra, 94 F.3d at
pp. 1510, 1511 [record lacked evidence that gas line work "resulted in a movement of
contaminated soil"; "[T]he only reasonable inference is that any soil dug up during the
process was returned from whence it came. No matter how broadly the term is defined,
this conduct did not amount to a 'disposal.' "].)
The trial court determined Plaintiffs failed to establish disking constituted a
disposal. The court explained: "Cases discussing the excavation and re-distribution of
contaminated soil are inapt. (E.g., [Kaiser[, supra,] 976 F.2d 1338, 1342.) In this case,
disking did not involve (1) excavation of the soil; (2) movement of soil to other portions
of the range; and (3) spreading contaminated soil over uncontaminated portions of the
[P]roperty." The court found "the mere action of rotating soil and returning it to the same
place" is not a disposal, and the evidence established disking "simply turns over soil and
35
did not expand the area of soil contamination." The court also noted disking was
performed for weed abatement and fire prevention, not disposal. For HSAA
nonretroactivity purposes (which we address post), the court also found the evidence to
be unconvincing as to whether disking occurred after 1982, and alternatively found any
such disking "did not enlarge the area or depth of soil contamination."
Plaintiffs contend the trial court made a legal error in concluding disking was not a
disposal, and that there was no substantial evidence to reflect certain findings as to post
1982 disking. We conclude Plaintiffs do not establish legal error, and need not reach
their substantial evidence argument. The court's references to excavation, movement to
other areas, and spreading contamination track the allegations in Kaiser, reflecting it was
applying the case and finding it distinguishable. (Kaiser, supra, 976 F.2d at p. 1342.)
Plaintiffs disagree, suggesting the disking resulted in soil movement and this was enough,
citing Kaiser. This argument has force, given Kaiser's broad language. (Ibid.) But
Kaiser did not actually find a disposal based on movement in place, and Redwing rejects
this application. (Redwing, supra, 94 F.3d at p. 1511.) We do not hold that disking could
never be a disposal, but simply that the court applied appropriate legal standards in
concluding it was not a disposal here.21
21 We address two other issues raised by Plaintiffs. First, they contend "[t]he effect
of this disking was to bury surface contaminants deep into the soil," citing testimony by
Eley. Assuming they are suggesting disking did spread contamination, they failed to
challenge the court's findings as to disking's impact on substantial evidence grounds and
cannot establish error. They also argue the purpose of the disking was irrelevant. On that
point, we agree. (Coppola v. Smith (E.D. Cal., Apr. 6, 2015,
36
f. Plaintiffs do not establish a disposal as to the wood pile occurred
during the Baldwin Defendants' ownership period
Plaintiffs contended the wood pile resulted in a disposal, and the trial court erred
by erroneously requiring them to prove causation. They do not establish error.
The HSAA only applies to former owners who were owners "at the time of
disposal." (42 U.S.C. § 9607(a)(2).) The trial court found Plaintiffs "failed to present
evidence establishing any connection between the hazardous substances they found in
2005 to any disposal activity that took place during Baldwin's ownership." The court
acknowledged the Plaintiffs "found the presence of various chemicals/metals at the wood
pile," but observed the tests were conducted in 2005, eight years after the Baldwin
Defendants' ownership ended, and that "[n]o evidence was presented that any [materials]
. . . w[ere] ever present at the wood pile during Baldwin's ownership between 1988 and
1997." The court also found, among other things, that the Estate did not document the
wood pile composition when it took ownership and concerns about illegal dumping led to
a fence installation in 2002 or 2003. The court's analysis is sound. Hazardous substances
may have been found in the area of the wood pile in 2005, but that does not establish,
without more, that they were disposed of during the Baldwin Defendants' ownership.
Plaintiffs contend the trial court's reference to a "connect[ion]" meant the court
"erroneously inserted a 'causation' element." We agree CERCLA, and thus the HSAA,
No. 1:11-cv1257-AWI-BAM) 2015 U.S. Dist. Lexis 45164, at p. *17 [owner at time of
disposal can be liable, "regardless of intent"]; Levin, supra, 781 F.Supp. at p. 1451, fn. 1
[accord].)
37
does not require a plaintiff to establish "a direct causal connection between the
defendant's hazardous substances and the release or the plaintiff's incurrence of response
costs." (U.S. v. Alcan (3d Cir. 1992) 964 F.2d 252, 265.) The lack of that causal
connection is an affirmative defense. (42 U.S.C. § 9607(b); Health & Saf. Code,
§ 25323.5, subd. (b).) But the trial court was not requiring Plaintiffs to show Baldwin
caused anything. Rather, it found Plaintiffs did not establish a disposal as to the wood
pile, by anyone, took place during the Baldwin Defendants' ownership.
Plaintiffs rely on cases involving generators or distributors. (See U.S. v. Monsanto
Co. (4th Cir. 1988) 858 F.2d 160; U.S. v. Wade (E.D. Pa. 1983) 577 F.Supp. 1326; and
Cal. ex rel. Dept. of Toxic Substances Control v. Verticare, Inc. (N.D. Cal., Mar. 1, 1993,
No. C-92-1006 MHP) 1993 U.S. Dist. Lexis 3062.) This reliance is misplaced. Unlike
former owner liability, generator liability is based on "arrang[ing] for disposal . . . of
hazardous substances . . . at any facility . . . owned or operated by another party or entity
and containing such hazardous substances." (42 U.S.C. § 9607(a)(3).) It was in this
context that Monsanto held that a plaintiff need not "trace the ownership of each . . .
compound found at a site" and "a showing of chemical similarity between hazardous
substances is sufficient." (Monsanto, at p. 169.) Wade and Verticare involved similar
issues as to generator and distributor defendants and likewise are unavailing. (Wade, at
38
p. 1332; Verticare, at p. *8.) All Plaintiffs needed to show was that a disposal took place
during the Baldwin Defendants' ownership.22
D. The court erred with respect to Defendants' defenses
The trial court concluded Defendants established defenses or other bars to liability
based on the HSAA's permitted release provision, HSAA nonretroactivity (including tort
arguments relating to that issue), the statute of limitations, and a contractual release.
Plaintiffs challenge each ruling, and establish error as to each.
1. The permitted release exception did not apply to Defendants' permits
Plaintiffs rely on Defendants' disposals to establish the releases required for
liability. (42 U.S.C § 9601(22) [release includes "disposing into the environment"];
§ 25320 [accord].) They contend the trial court erred by concluding Defendants' permits
to operate and construct the range rendered these releases "permitted releases" under the
HSAA. We agree.
a. Additional facts
In 1965, San Diego County approved the grant of a permit to UEI "to construct
and operate a skeet and trap club and range on Otay Ranch," as reflected in a letter from
the board of supervisors to the sheriff and other correspondence (1965 Permit). The
22 We recognize a plaintiff could rely on indirect evidence. (See, e.g., Elf Atochem
N. Am. v. United States (E.D. Pa. 1993) 833 F.Supp. 488, 493 [denying summary
judgment, where "record allow[ed] [the court] to reasonably infer that hazardous waste
was disposed on the site during [d]efendant's tenure"].) But Plaintiffs did not challenge
the court's ruling on substantial evidence grounds. For the same reason, we do not
address their contention that there was "no dispute Baldwin did not completely remove
the debris" or that debris was still present during their ownership.
39
permit itself does not appear to be in the record. In 1970, UEI lessee Scott applied for a
special use permit. Although the permit is only somewhat legible, it appears he
"request[ed] permission to build two . . . more trap houses." The County granted a five-
year permit (1970 Permit). In 1983, UEI applied for a major use permit to "operate the
Otay Gun Club." In the application, UEI stated: "Spent lead from the shot will be
regularly mined and recycled . . . ." The County conditionally granted a 15-year use
permit, which did not address lead or target recovery (1983 Permit).
b. Applicable law
Section 25366, subdivision (b) of the HSAA provides: "Nothing in this chapter
shall be construed as authorizing recovery for response costs or damages resulting from
any release authorized or permitted pursuant to state law or a federally permitted release."
In section 25326, the HSAA defines " 'release authorized or permitted pursuant to state
law' " as
"any release into the environment which is authorized by statute, ordinance,
regulation, or rule of any state, regional, or local agency or government or
by any specific permit, license, or similar authorization from such an
agency, including one of the foregoing, that recognizes a standard industry
practice, including variances obtained from the agency which allow
operations for facilities during a period of time when releases from the
facilities do not conform with relevant statutes, ordinances, regulations, or
rules. The term includes a federally permitted release, as defined by section
25325, and releases that are in accordance with any court order or consent
decree."
CERCLA contains a similar exception (42 U.S.C. § 9607(j)), and defines
"federally permitted release" to include various releases in compliance with permits under
specified laws or other government authorization. (Id., § 9601(10); see Barnes ex rel.
40
Estate of Barnes v. Koppers, Inc. (5th Cir. 2008) 534 F.3d 357, 363, fn. 5 [federally
permitted release is a "discharge pursuant to a permit issued under any of a variety of
federal environmental laws"]; § 25325 [incorporating CERCLA definition of federally
permitted release].)
The permitted release provision is an exception to the HSAA and, like its federal
counterpart, must be interpreted narrowly. (Sept. 11 Lit., supra, 751 F.3d at p. 91; U.S. v.
Freter (9th Cir. 1994) 31 F.3d 783, 788 (Freter) [referring to federally permitted release
as "narrow exception"].)23 The burden is on the party seeking the exception, here
Defendants. (See Freter, at p. 788 ["We conclude that the exception for federally
permitted releases states an affirmative defense."]; Nixon-Egli, supra, 949 F.Supp. at
p. 1443 [party seeking exception bears burden of proof].)
c. Analysis
The trial court determined Defendants established the "release of lead and targets
into the environment at the site was authorized by the . . . permits issued in 1965, 1970,
and 1983." The court explained: "The weight of the evidence establishes that
[Defendants] operated the shooting range lawfully pursuant to those permits. Since the
essence and effect of a permit to operate a shooting range is government approval of the
23 See Pakootas v. Teck Cominco Metals, Ltd. (9th Cir. 2016) 830 F.3d 975, 985,
footnote 10 (" 'While the exemptions . . . for federally permitted releases are provided to
give regulated parties clarity in their legal duties and responsibilities, these exemptions
are not to operate to create gaps in actions necessary to protect the public or the
environment.' 126 Cong. Rec. 30,897, 30,932-33 (Nov. 24, 1980) (statement of Sen.
Randolph).").
41
use of firearms to hit and destroy targets, the 'release' of lead and target debris into the
environment was allowed by the County's permits." The court further explained "[t]he
permits were the 'specific permit' . . . that allowed shooting range operations to occur,
during which lead pellets and clay targets were used for target practice, which is the
purported 'release' activity for which [Plaintiffs] complain." The court also determined
Defendants established that "importation of fill dirt (which contained naturally occurring
white carbonate rock) to construct shooting stations . . . was authorized . . . pursuant to
the 1970 [P]ermit."24
Plaintiffs contend the trial court erred in applying the exception, because the
permits did not authorize the disposal of lead, PAH's (attributable to the target debris), or
perchlorate. We agree. We start with the court's ruling, and conclude it failed to focus on
the releases at issue. The court's assertion that Plaintiffs complained about "shooting
range operations" and the use of "lead pellets and clay targets" simply ignores their
position that the releases were Defendants' disposals (i.e., leaving the lead and targets,
and use of perchlorate).
The threshold question is whether the HSAA's permitted release exception even
could apply to permits that do not specifically address releases. We review this statutory
interpretation issue de novo (Molenda, supra, 172 Cal.App.4th at p. 986), and begin with
24 The court also found Scott had an oral extension after 1975. Plaintiffs disagree,
but do not establish the evidence relied upon by the court was inadequate. Any error was
also harmless; as we shall explain, Scott's 1970 Permit did not support a permitted release
in the first place.
42
the text of the statute. The exception applies to "any release into the environment which
is authorized by . . . any specific permit, license, or similar authorization . . . that
recognizes a standard industry practice." (§ 25326.) The plain language of this provision
reflects it is the release that must be authorized, not just the facility or operation with
which the release is associated. None of the remaining language suggests any broader
application and, to the contrary, narrows it further. The use of the word "specific"
suggests the purpose (or, at least, a purpose) of the permit must be to authorize the
release, thus precluding implied authorization. Finally, there must be a "recogn[ition]
[of] standard industry practice." (§ 25326.) Again, the plain language of the statute
makes clear this practice must, at minimum, relate to the release at issue.25
Having concluded the text is clear, we need go no further. (Cortez, supra, 51
Cal.4th at p. 292.) But we observe this interpretation is consistent with application of the
federally permitted release exception and the HSAA's purpose. With respect to federally
permitted releases, Carson Harbor Village, Ltd. v. Unocal Corp. (C.D. Cal. 2003) 287
F.Supp.2d 1118 (Carson Harbor II) is instructive. There, defendants faced CERCLA
claims relating to "lead deposited . . . through storm[ ]water run-off," but had National
Pollution Discharge Elimination System (NPDES) permits required to discharge
storm water. (Id. at pp. 1126, 1138.) The court concluded storm water discharges after
the defendants obtained NPDES permits did not support liability. (Id. at p. 1183.) Thus,
25 Because we conclude post the permits here do not authorize the releases at issue,
we need not address whether the permit must identify the standard industry practice, or
whether the release simply needs to comply with it.
43
unlike here, the Carson Harbor II permits authorized the release at issue. As for the
HSAA's remedial purpose, we agree with amicus DTSC that broader application of the
exception to operational permits could have undesirable effects (such as municipalities
inadvertently permitting releases) and thus impede remediation.
Turning to the permits here, Defendants do not contend, and the record does not
reflect, the permits address the release activity about which Plaintiffs complain: leaving
spent lead and target debris and use of perchlorate. Given these undisputed facts, and the
narrow scope of the permitted release exception, there was no basis for the trial court to
conclude that Defendants established permitted releases.26
We address Defendants' contention that no EPA permit is required for shooting
ranges. As noted ante, the EPA has taken the position that no RCRA permit is required
to operate a range. (Best Management Practices, supra, at p. I-8.) But both the EPA and
courts have recognized that spent lead can become solid waste if left to accumulate, thus
resulting in a disposal and release. (Ibid.; Connecticut Coastal, supra, 989 F.2d at
p. 1316.) At that point, a permit would be necessary to avoid liability.
The permitted release exception applies only to permits that authorize releases, not
to operational or construction permits that are silent as to such matters.
26 The 1970 Permit does not appear to address fill material, notwithstanding the
court's finding that it did.
44
2. The trial court erred in applying HSAA's provisions on nonretroactivity
Plaintiffs contend the trial court erred in applying HSAA nonretroactivity with
respect to its HSAA and tort claims, and, in light of the latter determination, erroneously
denied them a jury trial. We agree the court erred and do not reach the jury issue.
a. Applicable law
Section 25366, subdivision (a) of the HSAA provides: "This chapter shall not be
construed as imposing any new liability associated with acts that occurred on or before
January 1, 1982, if the acts were not in violation of existing state or federal laws at the
time they occurred." The existing law provision limits HSAA nonretroactivity. (See
1 Robie et al., Cal. Civ. Prac. Environmental Litigation (2002) § 3:90, p. 113 ["The
HSAA does not impose new liability . . . , if the acts were not in violation of existing . . .
laws or regulations. . . . It is likely, however, that it was never legally permissible to
release hazardous substances to the environment."]; see, e.g., United Alloys, Inc. v. Baker
(C.D. Cal. 2011) 797 F.Supp.2d 974, 1005 [concluding § 25366, subd. (a) did not bar
claim against operator of facility, because "it [was] likely that at least some of the
contamination occurred prior to the passage of the HSAA but after the passage of
[RCRA]."].)27
27 The trial court assumed Plaintiffs bore the burden of proof regarding retroactive
application of the HSAA, while Plaintiffs suggest it is a defense. We need not resolve
this issue to address Plaintiffs' nonretroactivity arguments.
45
b. The trial court erred in focusing on the shooting range closure in
addressing nonretroactivity
The trial court first determined the UE Defendants had no HSAA liability because
their shooting range operations ceased in 1978, citing Pentair Thermal Management,
LLC v. Rowe Industries (N.D. Cal., Mar. 31, 2013, No. 06-cv-07164 NC) 2013 U.S. Dist.
Lexis 47390 (Pentair). As noted ante, the court also found no post-1982 disking
supported HSAA liability.
Plaintiffs contend the court erroneously focused on the shooting range closure,
when the conduct at issue was the UE Defendants' disposal. We agree. The issue is not
when the range closed, but when the lead and target became solid waste. (Safe Air,
supra, 373 F.3d at p. 1043; Connecticut Coastal, supra, 989 F.2d at p. 1316.) Although
we declined to address when this took place (see discussion ante), we agree with
Plaintiffs that it must have happened by the time UEL sold the Property in 1988. Thus,
the disposal could have occurred between 1982 and 1988, in which case nonretroactivity
is not at issue. On remand, the trial court must first determine when the disposal took
place, and only then assess whether nonretroactivity is an issue. Pentair did not involve a
post-1982 disposal and does not suggest a different result. (Pentair, supra, 2013 U.S.
Dist. Lexis 47390, at p. *79 [defendant whose predecessors ceased operations in 1970
could not be liable for PCB (polychlorinated biphenyl) contamination under the HSAA,
46
where PCB's were not regulated until 1976].)28 As for disking, because Plaintiffs did not
establish the court erred in finding the disking did not constitute a disposal (as discussed
ante), we conclude the court did not err in determining post-1982 disking did not support
HSAA liability.
c. The trial court erred in concluding Defendants were not in violation
of existing nuisance and trespass law
Plaintiffs contend that Defendants' acts of leaving lead and target debris, and use
of perchlorate-containing material, violated nuisance and trespass law. The trial court
determined Plaintiffs' nuisance and trespass claims lacked merit because the 1965 Permit
barred them pursuant to Civil Code section 3482; the UE Defendants, as former owners,
consented to any alleged nuisance or trespass; and Plaintiffs consented to the state of the
Property. Plaintiffs argue these determinations were in error, and we agree.
i. Civil Code section 3482 did not bar Plaintiffs' claims
Civil Code section 3482 provides that "[n]othing which is done or maintained
under the express authority of a statute can be deemed a nuisance." A "narrow
construction" applies to section 3482. (Greater Westchester Homeowners Assn. v. City of
Los Angeles (1979) 26 Cal.3d 86, 100 (Greater Westchester).) Specifically, " ' "[a]
statutory sanction cannot be pleaded in justification of acts which by the general rules of
law constitute a nuisance, unless the acts complained of are authorized by the express
28 Plaintiffs contend disposal could not have occurred until after the 1983 Permit
application, because Defendants represented therein that lead would be recycled. We
leave it to the trial court to consider this evidence on remand.
47
terms of the statute under which the justification is made, or by the plainest and most
necessary implication from the powers expressly conferred, so that it can be fairly stated
that the legislature contemplated the doing of the very act which occasions the injury." ' "
(Id. at p. 101.)
The case law reflects this narrow application. (See, e.g., Greater Westchester,
supra, 26 Cal.3d at p. 101 [rejecting argument that "because aviation and noise are
necessarily inseparable, governmental approval . . . of aviation . . . necessarily implies
legislative approval of aviation noise which results in interference with neighboring land
uses"]; Varjabedian v. City of Madera (1977) 20 Cal.3d 285, 292 (Varjabedian) [Civ.
Code, § 3482 did not bar liability as to emission of noxious odors from city's sewage
treatment plant: "None of the . . . statutes under which the city claims to act mentions the
possibility of noxious emanations from such facilities. Nor can we find that such odors
were authorized by the 'plainest and most necessary implication' from the general powers
there conferred."].)29
Here, the trial court found Plaintiffs' nuisance claim was barred under Civil Code
section 3482. The court explained "[t]he word 'statute' in section 3482 is broadly
interpreted to include authority given under government-issued permits," citing Wheeler
29 See also Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123,
157 (electrical company could not rely on Civ. Code, § 3482 when owner sued due to
stray currents entering home); Jacobs Farm/Del Cabo, Inc. v. Western Farm Service, Inc.
(2010) 190 Cal.App.4th 1502, 1532 (pesticides applied pursuant to permits migrated to
plaintiff's farm: "[T]he permits authorized application of the pesticides to [defendant's]
fields . . . ; they did not authorize application of pesticides or the damage to plaintiff's
crop.").
48
v. Gregg (1949) 90 Cal.App.2d 348, 370 (Wheeler) and Carson Harbor I, supra, 270
F.3d at page 888. The court found the 1965 Permit "expressly authorized UE's shooting
operations."30
The trial court erred both in construing Civil Code section 3482, and in applying it
to the 1965 Permit. Section 3482 is interpreted narrowly, and Wheeler and Carson
Harbor I do not suggest otherwise. Unlike here, those cases involved permits authorizing
the nuisance at issue. (See Carson Harbor I, supra, 270 F.3d at p. 888 [under § 3482,
NPDES permits authorizing storm water discharge precluded nuisance liability];
Wheeler, supra, 90 Cal.App.2d at pp. 368-370 [plaintiffs unsuccessfully sued to enjoin
excavation by defendants with permit to conduct the work; court construed claim as one
for anticipated nuisance and affirmed, citing § 3482, among other reasons].) The 1965
Permit did not authorize the nuisance activity at issue, either expressly or by necessary
implication. (Greater Westchester, supra, 26 Cal.3d 86 at p. 101.)
Defendants' arguments are unpersuasive. They suggest the " 'essence and effect' "
of a range permit is to authorize the release of shot and targets. Even assuming they were
properly focused on the alleged nuisance, not range operations, courts reject these types
of effect arguments in the absence of " ' "necessary implication." ' " (Greater
Westchester, supra, 26 Cal.3d 86 at p. 101; see Varjabedian, supra, 20 Cal.3d at p. 292.)
30 The court found Civil Code section 3482 applied to trespass, too. As we conclude
the court erred in applying the section at all, we need not address whether it applies to
trespass.
49
There was nothing necessary about their decision not to retrieve all lead shot and target
debris.
Defendants also contend the cases declining to apply Civil Code section 3482
(such as Varjabedian) are distinguishable because the parties there "exceeded the scope
of the use permits," and we should instead follow Carson Harbor I, as well as Jordan v.
City of Santa Barbara (1996) 46 Cal.App.4th 1245, 1252, and Avedon v. State of
California (2010) 186 Cal.App.4th 1336, 1345. We disagree. The courts declined to
apply section 3482 because the conduct was unrelated to the permits, not because it
exceeded them. (See, e.g., Varjabedian, supra, 20 Cal.3d at p. 292.) As for other cases,
they involved a permit or statute that authorized the nuisance at issue, which does not
exist here. (Carson Harbor I, supra, 270 F.3d at pp. 870, 887; Jordan, at p. 1252
[wastewater discharge permit]; Avedon, at p. 1345 [alleged nuisance was failure to
prevent access to cave where fire started; law provided state with authority to operate
park and decision to allow cave access fell within it].)
ii. The trial court erred in applying prior owner consent
The issue here is whether prior owner consent barred Defendants' liability. A prior
owner's consent can preclude tort liability for its lessee. In Mangini v. Aerojet-General
Corp. (1991) 230 Cal.App.3d 1125 (Mangini), the Court of Appeal addressed tort claims
by an owner against lessees of former owner and held that "where . . . an owner . . . seeks
damages for creation of a nuisance by a prior lessee, the lessee has a defense that his use
of the property was lawful and was authorized by the lease, i.e., his use of the property
50
was undertaken with the consent of the owner." (Id. at p. 1138; id. at p. 1141 [consent
can apply for trespass, but exceeding consent could support liability].)
However, consent does not necessarily limit liability for the prior owner itself.
(Mangini, supra, 230 Cal.App.3d at p. 1134 [rejecting contention that "a successor owner
of property could not sue a prior owner for nuisance"]; Chevron U.S.A. Inc. v. Superior
Court (1994) 44 Cal.App.4th 1009, 1014 ["Recent decisions have confirmed . . . a
subsequent owner's right to sue a prior possessor of property for creating the continuing
nuisance," citing Mangini, inter alia].) In Newhall Land & Farming Co. v. Superior
Court (1993) 19 Cal.App.4th 334 (Newhall), the Court of Appeal determined an owner
was not precluded from stating a nuisance claim against prior owners. (Id. at p. 343.)
The court rejected extension of Mangini 's lessee holding, explaining "it does not make
sense to . . . find an owner can never be liable to a successor in interest for nuisance
because the owner consented to his own use of the property." (Newhall, at p. 345; id. at
p. 347 [applying same reasoning to trespass]; see KFC Western, Inc. v. Meghrig (1994)
23 Cal.App.4th 1167, 1178-1179 [accord].) Beck Development Co. v. Southern Pacific
Transportation Co. (1996) 44 Cal.App.4th 1160 (Beck) did extend Mangini to shield a
former owner based on its own consent, but noted the owner conducted its activities
lawfully and an intermediate purchaser had "full knowledge of the past usage of the
property." (Beck, at p. 1216.)
Here, the trial court determined "the discharge of lead pellets and target debris did
not lack the consent of either the owner or operators of the shooting range before 1982"
and this consent barred the nuisance and trespass claims, citing Mangini and Beck. The
51
court found, among other things, that Baldwin "knowingly accepted the [P]roperty with
the shooting range" and allowed Enniss to operate it.
Plaintiffs contend prior owner consent is not a defense, and courts have not
embraced Beck. We conclude the trial court erred here, and need not decide today
whether to follow or reject Beck. The weight of authority makes clear owners generally
can sue prior owners, notwithstanding their presumptive consent. (See, e.g., Newhall,
supra, 19 Cal.App.4th at p. 343.) Even assuming Beck, supra, 44 Cal.App.4th at p. 1216,
were sound, for its holding to apply, Defendants' conduct must have been pursuant to
their consent and lawful, and Baldwin, as an intermediate owner, must have had "full
knowledge" of the nuisance activity. (Ibid.; see Rev 973 LLC v. Mouren-Laurens (C.D.
Cal., Apr. 22, 2009, No. CV 98 10690 AHM (Ex)) 2009 U.S. Dist. Lexis 38462, at
pp. *24-*30 [rejecting reliance on Beck, where defendants did not address whether use
was lawful and there was dispute over whether purchaser had " 'full knowledge' of the
former owner's activities"].) The trial court failed to meaningfully address these issues.
For example, Baldwin permitted Enniss to operate the range, but only pursuant to a lease
that required reclamation of lead and target debris — evidencing, if anything, a lack of
consent to leaving those materials. The court did not address lawfulness (other than to
suggest in the Civ. Code, § 3482 context that the permits sufficed; they did not). As for
knowledge, the court's findings appear to undermine any conclusion that Baldwin had
"full knowledge." The court found James Baldwin (a member of the Baldwin entities)
was aware of the range when he bought it, but felt it would remain open space and
" 'didn't pay much attention to it.' "
52
On remand, the court should reevaluate the persuasive value of Beck in light of the
other authorities, and if it still concludes Beck applies, apply its holding consistent with
the foregoing analysis.
iii. The trial court erred in finding consent by Plaintiffs
This issue concerns whether an as-is provision in Plaintiffs' purchase agreement
for the Property (Purchase Agreement) and/or their actual knowledge established consent
to nuisance and trespass.
Here, the Purchase Agreement indicated the Property was being acquired " 'as-is' "
from the Estate. The as-is provision included, among other things, "the condition or
suitability of the earth." In addition, the schedule of exceptions from the Estate's
representations and warranties included debris remaining from the range. A contractual
as-is provision can relieve a seller of liability. (See Shapiro v. Hu (1986) 188 Cal.App.3d
324, 333 (Shapiro) ["use of the phrase 'as is' relieves a seller of real property from
liability for defects in that condition"]; ibid. [as-is term "serves as a kind of 'red flag'
warning"].) In Galen v. Mobil Oil Corp. (C.D. Cal. 1996) 922 F.Supp. 318 (Galen), the
district court granted summary judgment on nuisance and trespass claims involving an
allegedly concealed sump, after concluding they were barred by an " 'as-is' " provision in
the sales contract. (Id. at p. 324.) In a separate discussion on a rescission claim, the court
noted certain "pre-purchase 'red flags.' " (Id. at pp. 320-321.)
The trial court determined that "[w]here a buyer such as [Plaintiffs] purchases a
shooting range with substantial knowledge of its environmental condition, any nuisance
or trespass claim against the prior owners is barred as an assumed and accepted risk."
53
The court cited Galen, suggesting it held that nuisance and trespass claims were barred
both by pre-purchase red flags and an as-is provision. The court explained the evidence
established Plaintiffs had "actual knowledge that lead and target debris existed at the
shooting range," and that "[s]uch knowledge is implied consent to acceptance of the
environmental conditions."
Plaintiffs contend the as-is provision is irrelevant, because they are not suing the
Estate, and their knowledge would only be relevant in that context. We agree the as-is
provision with the Estate is irrelevant. Galen, supra, 922 F.Supp. 318, involved an as-is
term between a buyer and seller (id. at p. 319), and is silent as to its effect, if any, on the
liability of third parties. Defendants are third parties here, and Galen is inapplicable. As
for Plaintiffs' knowledge, we need not address its relevance to an as-is analysis, because
there is no as-is provision with Defendants. We note, however, that Galen's nuisance and
trespass analysis does not reflect that plaintiff knowledge bars recovery, and the only red
flag reference in that analysis is a citation to Shapiro's description of an as-is provision as
a red flag. (Galen, at p. 324.) Finally, we are aware of no authority that knowledge by a
purchaser of real property amounts to assumption of risk or implied consent for purposes
of nuisance and trespass. Even if such authority existed, the evidence does not reflect
Plaintiffs had actual knowledge of the alleged tortious conduct.31
31 The court found Plaintiffs had "actual knowledge of the lead and target debris,
either directly or by imputation," citing the Purchase Agreement, an environmental report
prepared before purchase, and testimony by OLC president Paul Borden reflecting he was
aware some kind of remediation probably was needed. But the conduct at issue is
54
We conclude the court erred in each of its determinations as to Plaintiffs' tort
claims, and need not address whether it also erred by declining to proceed to a jury phase.
3. The trial court erred in identifying when Plaintiffs' claim accrued
The trial court found Plaintiffs' HSAA claim accrued when they purchased the
Property. Plaintiffs contend this was erroneous, and we agree.
The HSAA does not contain a statute of limitations for contribution or indemnity
actions under section 25363(e). "Traditionally at common law, a 'cause of action accrues
"when [it] is complete with all of its elements" . . . .' This is the 'last element' accrual
rule[.]' . . . [¶] . . . [T]he courts and the Legislature have over time developed a handful
of equitable exceptions to and modifications of the usual rules governing limitations
periods. . . . The ' "most important" ' of these doctrines, the discovery rule, where
applicable, 'postpones accrual of a cause of action until the plaintiff discovers, or has
reason to discover, the cause of action.' " (Aryeh v. Canon Business Solutions, Inc.
(2013) 55 Cal.4th 1185, 1191-1192, citations omitted (Aryeh).)32 When a statute is
silent as to when a claim accrues, this silence "triggers a presumption in favor of
permitting settled common law accrual rules to apply." (Aryeh, at p. 1193.)
Defendants' failure to reclaim lead and target debris. At most, this evidence reflects
Plaintiffs' awareness that some lead and debris remained.
32 One of these doctrines is "continuous accrual." (Aryeh, supra, 55 Cal.4th at
p. 1199.) We decline to address Plaintiffs' argument, raised for the first time on reply,
that this rule applies to cost actions under the HSAA. (Shade Foods, supra, 78
Cal.App.4th at p. 894, fn. 10.)
55
Here, the court determined the three-year statute of limitations under Code of Civil
Procedure section 338, subdivision (b), for "action[s] for trespass upon or injury to real
property" applied to Plaintiffs' HSAA claim. Plaintiffs do not challenge this aspect of the
court's ruling, and we do not address it. The court then found the statutory period
"commenced when [Plaintiffs] knew or should have known of the facts giving rise to the
claim, which is no later than October 15, 1998," and cited Chubb, supra, 710 F.3d at
page 972. October 15, 1998, was the date OLC purchased the Property.
Plaintiffs contend their claim did not accrue until they paid remedial action costs.
We agree. Because the HSAA is silent as to when a contribution or indemnity action
accrues, common law accrual rules apply. (Aryeh, supra, 55 Cal.4th at p. 1193.) As
discussed ante, the HSAA permits "[a]ny person who has incurred removal or remedial
action costs in accordance with this chapter or the federal act [to] seek contribution or
indemnity from any person who is liable pursuant to this chapter . . . ." (§ 25363(e).)
Plaintiffs could not establish all elements of their HSAA claim, and that claim could not
accrue, at least until they incurred removal or remedial action costs.33
33 We do not find Chubb instructive. There, an insurer filed a CERCLA action for
cleanup costs paid on behalf of an insured, which included "state law claims for statutory
indemnity under the California Health and Safety Code, negligence per se, and strict
liability." (Chubb, supra, 710 F.3d at p. 955.) The court concluded Code of Civil
Procedure section 338, subdivision (b) applied, the claims accrued when the "injury to the
property occur[red]," and this occurred when the insured knew or should have known
about the release of hazardous substances. (Chubb, at p. 972.) Even assuming section
338, subdivision (b) applied to the HSAA, the injury under the HSAA is not the release
of contamination, but rather the incurrence of recoverable costs.
56
This outcome is consistent with the limitations periods for DTSC-initiated HSAA
claims and CERCLA actions, where accrual likewise relates to the response action. (See
§ 25360.4, subd. (a); Stats. 2006, ch. 77, § 34 ["An action under Section 25360 for the
recovery of the costs of removal or remedial action incurred by the [DTSC] . . . shall be
commenced within three years after completion of the removal or remedial action has
been certified by the [DTSC]."]; 42 U.S.C. § 9613(g)(2)(A), (B) [cost recovery action
generally "must be commenced . . . for a removal action, within 3 years after completion"
and "for a remedial action, within 6 years after initiation of physical on-site construction
of the remedial action"].)34
Defendants argue that even assuming accrual was based on incurrence of costs,
substantial evidence reflects Plaintiffs began incurring costs sufficiently early that their
claim would still be time-barred. Plaintiffs disagree, and suggest the trial court did not
actually make any findings in this regard (given it found no costs were recoverable,
between the right of action issue and cost reductions). We agree. Although the court
concluded various categories of costs were not recoverable (as we discuss post), it never
addressed when Plaintiffs began to incur response costs. Plaintiffs objected below to the
court's failure to resolve issues relating to when it first paid response costs, and we will
34 See also 42 United States Code section 9613(g)(3) ("No action for contribution for
any response costs or damages may be commenced more than 3 years" after "judgment
. . . for recovery of such costs or damages," applicable administrative order, or "judicially
approved settlement with respect to such costs or damages").
57
not infer the court made those findings. We remand so the court can determine when the
claim accrued.
4. The trial court erred in finding Defendants were beneficiaries of the
Estate's release
The trial court erred in determining Defendants were affiliates, assigns, and/or
successors of the Estate and, thus, third party beneficiaries of the release provision in the
Purchase Agreement. Plaintiffs contend these conclusions were in error. We agree.
a. Additional facts
Several factual matters are relevant to the release issue: the release provision, the
will for the Estate, background on UEL and the Estate's assignment of its UEL interest
back to UEL, certain pleadings and discovery requests, and trial testimony. Starting with
the release provision, the Purchase Agreement identified OLC as the Offeror and City
National Bank (CNB), an Estate co-executor, as the "Designated Co-Executor." Section
18 of the Purchase Agreement contains the release, which provides:
"The Offeror agrees that none of the Designated Co-Executor, the Estate and all of
their respective officers, directors, co-fiduciaries, shareholders, employees,
representatives, beneficiaries, affiliates, attorneys and agents (including without
limitation Douglas Wilson Companies), and their successors and assigns (together,
'Offering Parties') shall be responsible or liable for, and the Offeror hereby waives,
any and all claims for damages against the Offering Parties arising from or relating
to the Offeror's reliance on any representation, inducement, promise or agreement
made by any Offering Party, except for the representations and warranties
expressly set forth in this Agreement. The Offeror further agrees that the Estate
Co-Executors hold the Property solely as fiduciary agents, and that neither the
Designated Co-Executor nor any other person or entity included within the scope
of Offering Parties shall be personally liable in any respect whatsoever for any
cause of action which the Offeror may have arising out of or relating to the
Property. The Offeror further agrees that its rights and claims in such case shall be
limited exclusively to such, if any, as the Offeror may have against the assets of
the Estate itself."
58
The Will and Testament of Mary Marshall Rand Birch Patrick (Patrick Will)
provides that Rose Patek is a co-executor of the Estate, along with a bank co-executor
(which was CNB by the time of the Purchase Agreement). The beneficiaries do not
include Defendants.
UEL was a limited partnership, with John Knox as the general partner. As set
forth in its partnership agreement (the UEL Partnership Agreement), the initial limited
partners were the Estate, the Stephen and Mary Birch Foundation, Inc. (the Foundation),
Rose Patek, and her husband Patrick Patek. By the time Plaintiffs purchased the
Property, Rose Patek was not a limited partner. In March 1998, the Estate and UEL
entered a transaction, pursuant to which UEL received 920 acres in Proctor Valley and an
assignment of the Estate's remaining UEL interest. The Estate executed the assignment
of partnership interest in July 1998. It defined the Estate as Assignor and UEL as
Assignee, and stated in part:
"Assignor hereby assigns to Assignee and Assignee hereby acquires from
Assignor the Assignor's entire partnership interest in UE, Ltd., including but not
limited to, Assignor's capital account as well as the right, title and interest of
Assignor in and to the properties (real and personal), capital, cash flow
distributions, and profits and losses of UE, Ltd. allocable to Assignor. Assignee
hereby agrees to assume (but only to the extent that Assignor may have any
personal liability thereon, and only as between the parties hereto and solely for the
benefit of Assignor) all liabilities, obligations and responsibilities of Assignor
under the UE, Ltd. partnership agreement, as amended."
Turning to the litigation materials, Plaintiffs served interrogatories in the federal
case defining UE Defendants' affiliates as including the Estate. In this case, OLC, OLC
president Borden, and others filed a cross-complaint, which stated they believed cross-
defendants (including Defendants and the Estate) "were agents, representatives, affiliates,
59
members, partners and/or employees of each of the [cross-]defendants." Finally,
Plaintiffs' closing trial brief took the position that prior to the assignment, the Estate was
a UEL affiliate (by virtue of its limited partner status).
With respect to the trial testimony, the Estate's attorney, Farley, testified about the
release. Her testimony reflected the Estate added the release provision to the draft
Purchase Agreement and she was "aware of that language or part of the team that drafted
or approved" it. Farley stated "affiliates" meant "whoever touched this property,"
including "any prior owners of the property," and explained the reasons for including it.
She testified she told Borden "he was waiving all rights against anybody by virtue of
purchasing this," but she did not tell him what she meant by "anybody," or that she
intended "affiliate" to include UEL and Baldwin. She indicated he did not ask questions
about the release. As for assigns, Farley testified UEL was an assign of the Estate
"[b]ecause we sold to [UEL] the 920 acres and we assigned our . . . interest in [UEL]
back to it back in March of 1998."
Borden also testified about the release. When asked what affiliate meant, Borden
stated "it's an entity that's controlled . . . by or controlling another entity, like a subsidiary
company." He testified nobody told him "before [he] signed the document" that the word
included Defendants or prior owners. Borden testified he assumed "assigns" meant
"somebody that was a legal beneficiary of whatever terms were incorporated in this
agreement." Plaintiffs' counsel asked "[o]f the Estate?" and Borden agreed.
Farley and Rose Patek also testified about entities over which Patek had control
and her recusal from marketing of the Property. Farley indicated, among other things,
60
that Rose and Patrick Patek were Foundation trustees and controlled the Foundation and
the Jewels of Charity (a nonprofit spun off from the Foundation). Patek confirmed she
and her husband were officers of the Foundation and stated the Foundation controlled
three of seven director seats in the Jewels of Charity (held by her and her family). Farley
also indicated that after an initial effort to sell the Property, to which Estate beneficiaries
objected, the court authorized CNB to be the sole co-executor to market the Property.
Patek explained the court "asked [her] to recuse [her]self . . . on the land side of the deal"
and that CNB "would be in charge of . . . remarketing the land at that time."
b. Applicable law
A release agreement is governed under general principles of contract law.
(General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, 439.) "The goal of
contractual interpretation is to determine and give effect to the mutual intention of the
parties." (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 763.) "Although the intent
of the parties determines the meaning of the contract . . . , the relevant intent is
'objective'—that is, the objective intent as evidenced by the words of the instrument, not a
party's subjective intent." (Shaw v. Regents of Univ. of Cal. (1997) 58 Cal.App.4th 44,
54-55, citation & fn. omitted.)
"A contract, made expressly for the benefit of a third person, may be enforced by
him at any time before the parties thereto rescind it." (Civ. Code, § 1559.) "The third
party need not be identified by name. It is sufficient if the [third party] claimant belongs
to a class of persons for whose benefit it was made." (Principal Mutual Life Ins. Co. v.
Vars, Pave, McCord & Freedman (1998) 65 Cal.App.4th 1469, 1485.)
61
The standard of review here turns on the role of extrinsic evidence. " 'An
appellate court is not bound by a construction of the contract based solely on the terms of
the written instrument without the aid of evidence . . . , where there is no conflict in the
evidence . . . , or a determination has been made upon incompetent evidence . . . .' "
(Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, citations omitted; City of
Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [accord].)
This remains the case "[e]ven where uncontroverted evidence allows for conflicting
inferences to be drawn . . . ." (Scheenstra v. California Dairies, Inc. (2013) 213
Cal.App.4th 370, 390.)
c. Analysis
i. The Estate attorney's testimony as to her intent is incompetent
and we apply independent review
Plaintiffs contend our review is independent, because the court's interpretation
rests largely on undisputed facts, and the only conflicting testimony — from Farley —
was improper extrinsic evidence. We agree.
Extrinsic evidence may be introduced " 'to explain the meaning of a written
contract . . . [if] the meaning urged is one to which the written contract terms are
reasonably susceptible,' " but cannot be used to " 'add to, detract from, or vary the terms
of' " an integrated agreement. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336,
343, 345.) Here, the court's analysis (described post) reflects the relevant release terms
are clear and consistent with their accepted meanings, and we agree. The court
considered extrinsic evidence in interpreting these provisions. Most evidence was
62
relevant to the affiliate, assign, or successor issues implicated by the release terms, and
was thus admissible — but not in conflict. Farley's testimony reflected different
meanings for affiliate and assign than those set forth in the contract — and thus was not
competent. (Casa Herrera, at p. 345; see Morrow v. Los Angeles Unified School Dist.
(2007) 149 Cal.App.4th 1424, 1444 [witness's "opinion as to the meaning and legal effect
of a contract" was inadmissible as to interpretation of contract].)35
We recognize party intent can be relevant in third party beneficiary cases. (See,
e.g., Hess v. Ford Motor Co. (2002) 27 Cal.4th 516 [considering uncontroverted extrinsic
evidence in assessing claim that release had a mutual mistake]; Cline v. Homuth (2015)
235 Cal.App.4th 699, 705-706 [noting parties in third party beneficiary cases generally
" ' "should be allowed to testify as to their actual intention," ' " while confirming
admissible evidence is that " ' "relevant to prove a meaning to which the language is
'reasonably susceptible' " ' "].) But such evidence is not always relevant, including where
it contradicts contract terms. (See, e.g., Rodriguez v. Oto (2013) 212 Cal.App.4th 1020,
1035 [testimony as to intent did not raise triable issue where "intention was fully and
accurately expressed by the language of the release"]; Cline, at p. 712 ["evidence of
35 Farley's statement that she told Borden he was "waiving all rights against
anybody" does not render her testimony relevant, given it was contrary to the contract,
she never told him what she meant by "anybody," and there is no evidence he shared her
view. (See PV Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210
Cal.App.4th 132, 157 ["subjective statements of 'understanding' are irrelevant . . . ,
particularly where there is no evidence that [the other party] had the same
understanding"].)
63
undisclosed subjective intent of Cline and his attorney is insufficient to establish that the
parties intended that Homuth be excluded from the release."].)
Given the clear language of the release, Farley's contradictory trial testimony was
not relevant and we are not bound by the trial court's interpretation.
ii. Defendants are not affiliates of the Estate
Plaintiffs contend the court erred in concluding UEL was an affiliate of the Estate
based on common control, focusing on the fact that Rose Patek did not control the Estate.
The court's interpretation was erroneous, including for this reason.
Common control is a basis for an affiliate relationship. (See, e.g., Corp. Code,
§ 150 ["A corporation is an 'affiliate' of . . . another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is controlled by or is under
common control with the other specified corporation."]; Black's Law Dict., supra, at
p. 69, col. 2 ["affiliate" is a "corporation that is related to another corporation by
shareholdings or other means of control"].) Control typically involves authority to direct
the management of an entity. (See, e.g., Corp. Code, § 160, subd. (a) [generally,
" 'control' " means "possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a corporation."].) Assessing whether
someone controls an entity implicates corporate formalities. (See, e.g., Liberty Prop.
Trust v. Republic Prop. Corp. (D.C. Cir. 2009) 577 F.3d 335, 340-341 ["[A]ppellees
argue Kramer and Grigg controlled the trust, which was the general partner of the limited
partnership, and so controlled the limited partnership as well. . . . [¶] . . . Even assuming
64
it were proper to disregard the corporate form, [they] did not exercise sufficient control of
the limited partnership . . . ."].)36
The trial court determined: "California law is clear that common control of
entities directly or indirectly through intermediaries makes them 'affiliates' of each other."
With respect to the UE Defendants, the court found "[t]he Pateks were . . . in common
control of the Estate . . . and [UEL] with the power to direct or cause the direction of
each," noting, among other things, Rose's role as coexecutor of the Estate and the Pateks'
control of UEL via their control of the charities (including the Foundation, which the
court found owned nearly 100 percent of UEL after the assignment). The court also
made findings unrelated to control. The court found the evidence "establishe[d] that the
intertwining and long-standing relationship between UE, the Pateks, the Patrick family,
and later the Patrick Estate" was known to Plaintiffs' parent company, HomeFed, before
the sale. The court also found evidentiary admissions by Plaintiffs, citing the federal
interrogatories, cross-complaint, and closing trial brief. Finally, the court cited Farley's
testimony that the release extended to all prior owners (and described her testimony at
length), while noting elsewhere that Borden did not ask her about its scope. We address
the court's findings as to the Baldwin Defendants, post.
36 See also, e.g., Seroctin Research & Techs., Inc. v. Unigen Pharms., Inc. (D. Utah
2008) 541 F.Supp.2d 1238, 1243 (finding unpersuasive argument that "members of the
same family of companies" were affiliates, where strongest evidence was they were
owned by same person); In re Blinds to Go Share Purchase Lit. (1st Cir. 2006) 443 F.3d
1, 7 (rejecting claim that word "indirect" expanded voting control to "include practical
control of any kind"; "[i]n context, the word refers only to corporate structure").
65
The trial court erred in interpreting affiliate to include the UE Defendants. While
the court recognized the term affiliate was clear and that affiliate status can be based on
common control, it failed to analyze whether the Pateks actually had control over the
Estate (or UEL, for that matter). Its other findings were irrelevant.
First, Plaintiffs contend Rose Patek did not control the Estate as a co-executor,
because the probate court retains ultimate control. Although we decline to find an
executor could never exercise control sufficient to establish common control, we
conclude the probate court's authority, including over property sales, limited Patek's
control here. A personal representative does have direction over an estate, and can take
some actions without authorization. (Prob. Code, § 9600, subd. (a) [personal
representative has "management and control of the estate"]; see, e.g., id., §§ 9650,
subds. (a)-(b) [take possession of property, collect debts, receive profits, and pay taxes],
9760 [continue operation of decedent's business for up to six months].) But the
representative generally must file accounts with the court (id., §§ 10950-10951), and
various powers require court authorization (id., § 9610), including real property sales.
(See, e.g., id., §§ 10300 et seq. [governing real property sales], 10310, subd. (a) [court
"shall examine" necessity of sale and benefit to beneficiaries (unless will provides for
sale), and representative's efforts to obtain best price], 10313, subd. (a) [court "shall make
an order confirming" sale if it appears, among other things, good reason existed and the
66
sale was legal and fairly conducted].)37 Courts have long recognized these limitations.
(See, e.g., Estate of Palm (1945) 68 Cal.App.2d 204, 212 [affirming removal of
administrator; executor's "possession and handling of the property are subject to the
control of the probate court"]; Estate of Beach (1975) 15 Cal.3d 623, 643 (Estate of
Beach) ["The executor . . . derives his power to act as such from the will, or order of the
court; but in his conduct of the affairs of the estate, he is subjected largely to the
discretion and control of the court."]; Shannon v. Superior Court (1990) 217 Cal.App.3d
986, 993 [executor is "an officer of the court . . . , subject to the continuing control of the
court"].)38
We address two issues raised by Defendants. First, they argue Rose Patek's
recusal reflects common control. If anything, the recusal reflects a lack of control on her
part. If a joint representative is unable to act, the court may "authorize the remaining . . .
representative[] to act as to all matters embraced within its order." (Prob. Code, § 9630,
subd. (c).) After the court asked Patek to recuse herself, and she did so, the remaining
coexecutor — CNB — had sole authority to market the Property, subject to probate court
37 Authority is further limited where there are joint co-executors. (Prob. Code,
§ 9630, subd. (a)(1) ["Where there are two personal representatives, both must concur to
exercise a power."].)
38 We reject Defendants' contention that the cases are factually distinguishable
(which is not relevant to our analysis), or that courts draw a distinction between control
and supervision (which the cases do not reflect). (Cf. Estate of Beach, supra, 15 Cal.3d
at p. 643 [executor mismanagement claim is "based on conduct that is subject to the
independent control and supervision of the . . . court"].)
67
approval of the sale. Second, Defendants note the trial court cited testimony that Rose
Patek was an Estate trustee, and contend a trustee has " 'the power to acquire or dispose
of property' " under Probate Code section 16226. Even assuming Patek were an Estate
"trustee" (and the Patrick Will does not reflect this), that provision applies to trusts, not
decedent estates, and is inapposite. (Prob. Code, § 16226; cf. County of Los Angeles v.
Morrison (1940) 15 Cal.2d 368, 371 ["[A]lthough a . . . representative of an estate, in a
broad sense, does act in the capacity of a trustee . . . , nevertheless he is not a trustee in
the general acceptation of the term."].)
Although Plaintiffs do not focus on the UEL control findings, we note the court's
analysis is even less convincing in that context. The court focused on the Pateks' alleged
control of the charities, including the Foundation, which owned the largest share of UEL
after the assignment. Control of a limited partnership generally rests with its general
partner, not whatever limited partner owns the largest share — or any limited partner, for
that matter. (See Corp. Code, §§ 15904.02-15904.03, 15903.02-15903.03.) The UEL
Partnership Agreement is consistent with these principles, and provides management
authority solely to the general partner, John Knox, not to the Foundation or any other
limited partner.39 We recognize Plaintiffs represented the Estate had control over UEL
39 See, e.g., UEL Partnership Agreement sections 8.1 ("Except to the extent
otherwise provided herein, the General Partner shall have the sole and exclusive right to
manage the business of the Partnership"), and 8.4 ("[n]o Limited Partner shall have any
right to take part in the management of the Partnership or to transact any business on its
behalf," subject to the ability to work for and/or advise the general partner and to vote on
certain matters).
68
as a limited partner prior to the assignment, but absent facts supporting this treatment,
that characterization lacks merit.40
The court's remaining findings also do not establish the UE Defendants were
affiliates of the Estate. These findings focus on Plaintiffs' purported awareness of the
Pateks' role, their characterization of the entities in discovery and pleadings, and Farley's
input. As we concluded ante, the meaning of affiliate is clear, and implicates the issue of
control. Plaintiffs' awareness and litigation papers do not relate to that issue, and Farley's
testimony is irrelevant for other reasons.
Finally, we turn to the Baldwin Defendants. The court found they were affiliates
based entirely on Farley's testimony; this was erroneous, for the reasons discussed ante.
Further, the Baldwin Defendants neither allege, nor establish, common control with the
Estate.
iii. Defendants are not assigns of the Estate
Plaintiffs contend the court erroneously relied on the assignment of partnership
interest to conclude UEL was as an assign of the Estate.
Under California law, to " 'assign' ordinarily means to transfer title or ownership
of property." (McCown v. Spencer (1970) 8 Cal.App.3d 216, 225.) Dictionary
definitions are consistent with this usage. (See, e.g., Black's Law Dict., supra, at p. 142,
40 The court's assessment of the Foundation and Jewels of Charity is also dubious.
Farley's testimony that the Pateks controlled the Foundation is questionable, given she
also testified she did not "know the structure of the [F]oundation." It also is not evident
the Pateks controlled the Jewels of Charity, as they had only three of seven director seats,
and the relationship of Jewels of Charity to UEL remains unclear.
69
col. 2 [defining "assignee," in relevant part, as "[o]ne to whom property rights or powers
are transferred by another"].) The trial court found the UE Defendants qualified as
assigns of the Estate based on the assignment of partnership interest, citing its definition
of the Estate as Assignor and UEL as Assignee. The court explained the "only
qualification of 'assigns' . . . is that one must be an assign of the Estate," and the UE
Defendants satisfied that definition. The court also cited Farley's testimony.
This interpretation was erroneous. The release provision limits liability in
connection with the Property (and released party representations, which are not at issue).
A reasonable construction of the term "assign" in this release encompasses assigns with
respect to the Property and, arguably, future assigns of the Estate as seller. The
assignment of partnership interest provides no basis for a broader interpretation. The
Property was not part of the assignment (or the transaction that included the assignment),
and UEL gained no rights with respect to the Property. Absent express language in the
release encompassing all prior assigns, we conclude a buyer of real property would not
intend to release any prior assign of the seller, at any point in time and regarding any
matter. Farley's testimony remains irrelevant.41
41 We reject Defendants' contention that "[a] release in favor of an 'assignee' is
effective as to all assignees existing as of the time the release is executed[,]" for which
they cite Manzella v. Paul Revere Life Ins. Co. (E.D. Pa., Apr. 19, 1994, No. 93-5455)
1994 U.S. Dist. Lexis 4912, at pp. *3-*7. Manzella, unlike here, involved an assignment
that related to the subject of the later litigation and a release covering any claims
whatsoever. (Id. at pp. *1-*2.)
70
iv. Defendants are not successors of the Estate
Finally, Plaintiffs argue the court erred in determining UEL was a successor, based
on its reasoning that UEL " 'came after' " the Estate and " 'took its place.' "
A "successor," in general, is " '[o]ne that succeeds or follows; one who takes the
place that another has left, and sustains the like part or character . . . .' " (Perez v. 222
Sutter St. Partners (1990) 222 Cal.App.3d 938, 948, fn. 8; Black's Law Dict., supra,
p. 1660, col. 2 ["Someone who succeeds to the office, rights, responsibilities, or place of
another; one who replaces or follows a predecessor."].) "Successor in interest" is defined
similarly to successor. (Black's Law Dict., supra, p. 1660, col. 2 ["Someone who follows
another in ownership or control of property."].)
The trial court found the UE Defendants qualified as successors of the Estate,
because that term has been "consistently interpreted to mean a party that comes after and
takes the place of another," citing Code of Civil Procedure section 377.11 and California
Uniform Commercial Code section 5102, subdivision (a)(15). The court explained: "The
remaining limited partners of UE . . . 'took the place' of [the Estate] by assuming [its]
outstanding partnership interest pursuant to the July 1998 assignment and as such, all UE
[Defendants] were already successors of the Estate at the time [OLC] executed the
release."
The trial court's interpretation was erroneous. The only reasonable construction of
"successor" in the release, as applied to the Estate, is an Estate beneficiary — a status the
UE Defendants do not hold. Successor could, of course, have broader application for
other released parties. (E.g., CNB.) Code of Civil Procedure section 377.11 is consistent
71
with this interpretation (ibid. [provisions for deceased parties; " 'decedent's successor in
interest' " is the "beneficiary of the decedent's estate or other successor in interest who
succeeds to a cause of action or to a particular item of the property that is the subject of a
cause of action"]), and the California Uniform Commercial Code section is inapposite.42
The court erred by focusing on the assignment of partnership interest, as the only interest
at issue there was the UEL partnership interest. As in the assign context, absent express
language encompassing all prior successors, we cannot envision a buyer of real property
would intend to release prior successors of the seller, as to unrelated interests.
E. The trial court's equitable allocation was an abuse of discretion
Plaintiffs contend the court abused its discretion in making its allocation and,
specifically, by allocating all costs to them. We agree the court abused its discretion, but
decline to find any particular allocation is beyond judicial discretion.
1. Applicable law
At the relevant time, section 25363(e) provided in part that "[i]n resolving claims
for contribution or indemnity, the court may allocate costs among liable parties using
42 That section provides that a " '[s]uccessor of a beneficiary' " means "a person who
succeeds to substantially all of the rights of a beneficiary by operation of law." (Cal. U.
Com. Code, § 5102, subd. (a)(15).) The issue is not whether UEL was a "successor to a
beneficiary," but whether it was a beneficiary of the release as a successor. We further
note that while the Probate Code does not appear to define the successor of an estate, the
provisions for small estates without administration are consistent with Code of Civil
Procedure section 377.11 and our interpretation. (Prob. Code, § 13006 [if decedent left
will, " '[s]uccessor of the decedent' " is "the sole beneficiary or all of the beneficiaries
who succeeded to a particular item of property of the decedent under the decedent's
will"].)
72
those equitable factors which are appropriate." The current version similarly refers to
"using appropriate equitable factors." (§ 25363, subd. (d); Stats. 2015, ch. 458, § 2.)
For contribution actions under CERCLA section 113, courts apply a similar, but
not identical, equitable allocation: "In resolving contribution claims, the court may
allocate response costs among liable parties using such equitable factors as the court
determines are appropriate." (42 U.S.C. § 9613(f)(1); Boeing Co. v. Cascade Corp.
(2000) 207 F.3d 1177, 1187 (Boeing) ["CERCLA provides that 'the court may allocate
response costs among liable parties using such equitable factors as the court determines
are appropriate.' This language gives district courts discretion to decide what factors
ought to be considered, as well as the duty to allocate costs according to those factors."
(Fn. omitted.)]; Boeing, at p. 1187 [CERCLA allocation can be reversed only for "abuse
of the discretion to select factors" or "for clear error in the allocation"].)
One set of factors applied by courts in CERCLA allocations, known as the " 'Gore
factors,' " includes:
"(i) the ability of the parties to demonstrate that their contribution to a discharge[,]
release or disposal of a hazardous waste can be distinguished; [¶] (ii) the amount
of the hazardous waste involved; [¶] (iii) the degree of toxicity of the hazardous
waste involved; [¶] (iv) the degree of involvement by the parties in the
generation, transportation, treatment, storage, or disposal of the hazardous waste;
[¶] (v) the degree of care exercised by the parties with respect to the hazardous
waste concerned, taking into account the characteristics of such hazardous waste;
and [¶] (vi) the degree of cooperation by the parties with Federal, State, or local
officials to prevent any harm to the public health or the environment."
(In re Bell Petroleum Servs. (5th Cir. 1993) 3 F.3d 889, 899-900 (Bell Petroleum).)
"[M]any courts look to the 'Gore Factors'[.]" (United States v. Colorado & Eastern R.R.
Co. (10th Cir. 1995) 50 F.3d 1530, 1536, fn. 5.)
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Courts have considered other factors as well. (See, e.g., Environmental Transp.
Systems, Inc. v. ENSCO, Inc. (7th Cir. 1992) 969 F.2d 503, 509 [noting, in addition to
Gore factors, factors including "financial resources of the parties," "benefits received by
the parties from contaminating activities," and "knowledge and/or acquiescence of the
parties in the contaminating activities"]; United States v. R.W. Meyer, Inc. (6th Cir. 1991)
932 F.2d 568, 572-573 [district court's use of Gore factors was appropriate, but not
necessary; court could consider "state of mind," "economic status," "contracts between
them bearing on the subject," and "traditional equitable defenses"].) In United States v.
Davis (D. R.I. 1998) 31 F.Supp.2d 45, the court concluded the critical factors were:
"1. The extent to which cleanup costs are attributable to wastes for which a party is
responsible. 2. The party's level of culpability. 3. The degree to which the party
benefited from disposal of the waste. 4. The party's ability to pay its share of the cost."
(Id. at p. 63.)
We review the court's equitable allocation for abuse of discretion. (Scottsdale Ins.
Co. v. Century Surety Co. (2010) 182 Cal.App.4th 1023, 1033 [equitable apportionment
of insurer defense costs; "We review a trial court's choice of a method of allocation for an
abuse of discretion."]; Litgo N.J., Inc. v. Comm'r N.J. Dept. of Envtl. Prot. (3rd Cir. 2013)
725 F.3d 369, 385-388 [applying abuse of discretion to CERCLA allocation].) "The
abuse of discretion standard . . . measures whether . . . the act of the lower tribunal falls
within the permissible range of options set by the legal criteria." (Department of Parks &
Recreation v. State Personnel Bd. (1991) 233 Cal.App.3d 813, 831.) "[I]n the case of a
statutory grant of discretion," judicial discretion must be measured "against the specific
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law that grants the discretion." (Horsford v. Board of Trustees of California State
University (2005) 132 Cal.App.4th 359, 393 (Horsford).)
2. Analysis
The trial court determined there was "insufficient equitable basis to apportion any
response costs onto any Defendant," citing section 25363(e) and 42 United States Code
section 9613(f)(1) (CERCLA Section 113).
We begin by addressing a threshold issue. In a footnote in their opening brief,
Plaintiffs suggested the HSAA "provides for equitable allocation of costs only 'among the
defendants,' " citing section 25363, subdivision (b).43 Defendants offered arguments
why section 25363, subdivision (b) is inapplicable here, including its interaction with
other subdivisions. Plaintiffs did not respond. Whether, and how, section 25363's
subdivisions interact raises important questions. But they are not ones we reach today.
The trial court made its allocation under section 25363(e), which encompasses all liable
parties (including Plaintiffs, as they concede) and Plaintiffs do not contend that was error.
To the extent they suggest failure to consider section 25363, subdivision (b) in making
the allocation was erroneous, their cursory discussion does not suffice. (Stanley, supra,
10 Cal.4th at p. 793.)
43 Section 25363, subdivision (b) provides: "[I]f the trier of fact finds the evidence
insufficient to establish each party's portion of costs or expenditures under subdivision
(a), the court shall apportion those costs or expenditures, to the extent practicable,
according to equitable principles, among the defendants."
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We now turn to the trial court's allocation under section 25363(e). The court
focused on the following factors: (i) Plaintiffs' knowledge and acceptance of potential
environmental liabilities; (ii) Plaintiffs' benefits from the remediation; (iii) Plaintiffs'
unclean hands; and (iv) Defendants' lawful operation of the range and lack of bad acts.
Because our analysis focuses on a factor the court failed to address — party responsibility
for contributing to the contamination — we do not address the court's findings in detail.
It suffices to note the court found Defendants "operated the shooting range . . . in a lawful
manner as far as applicable local agencies were concerned at the time, and in accordance
with prevailing standards of care at the time," and Plaintiffs presented no evidence they
were " 'bad actors' with respect to the historical operation of the shooting range," citing an
absence of accidental spills, waste mishandling, and intentional dumping. The court
found the "individual UE [Defendants] faultless" (referencing Knox and Patek) and
concluded "it would be inequitable to shift [Plaintiffs'] costs to any individual UE
[Defendant] since none of them contributed to the contamination." This was the only
finding regarding Defendants' contribution to the contamination.
We conclude the trial court's equitable allocation was an abuse of discretion.
Under the HSAA, the court may allocate costs using "equitable factors which are
appropriate," but may not, as in CERCLA, "us[e] such equitable factors as the court
determines are appropriate." (Compare § 25363(e) with 42 U.S.C. § 9613(f)(1), italics
added; see Boeing, supra, 207 F.3d at p. 1187 [confirming discretion under CERCLA to
decide on factors].) Discretion under the HSAA is limited to application of appropriate
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equitable factors, and the trial court failed to exercise its discretion consistent with this
principle. (Horsford, supra, 132 Cal.App.4th at p. 393.)44
We need not assess whether the factors considered by the trial court were
appropriate, because the court failed to consider party responsibility for contributing to
the contamination here (other than to find Plaintiffs had unclean hands and with respect
to the individual defendants, who are not at issue). Although CERCLA's discretion
standard differs, the cases are instructive as to which factors might be appropriate under
the HSAA. Party responsibility is a consistent theme, including as part of the widely
used Gore factors. (See, e.g., Bell Petroleum, supra, 3 F.3d at pp. 899-900.) This focus
is consistent with the goals of these statutes. (See Burlington Northern, supra, 556 U.S.
at p. 602 [one purpose of CERCLA was to ensure cleanup costs "were borne by those
responsible for the contamination"].) Whatever factors are appropriate in making an
equitable allocation under the HSAA, party responsibility for contributing to the
contamination must be part of the analysis. The court's consideration of the corporate
Defendants' purportedly lawful operation of the shooting range, and lack of bad acts, does
44 We recognize Plaintiffs described the HSAA and CERCLA allocation provisions
as "substantively identical," but the issue here is whether the court abused its discretion in
applying the HSAA provision, both parties have briefed it, and we are not bound by
Plaintiffs' interpretation. Further, the focus of Plaintiffs' position (the court erred by
failing to focus on responsible parties) is consistent with our analysis, post.
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not suffice. However, to the extent Plaintiffs suggest it would never be within a court's
discretion to allocate all costs to plaintiffs, we see no such limitation in the HSAA.45
F. Plaintiffs do not establish the court erred in making cost reductions
The court denied or reduced Plaintiffs' remedial action costs for internal
management time, attorney fees, white material removal, soil removal, and investigative
costs.46 Plaintiffs do not establish these rulings were in error.
1. Additional facts
During the Assembly Bill No. 2061 process, DEH found Plaintiffs' remedial action
plan (RAP) met the "requirements of section 25356.1." Section 25356.1 of the HSAA
requires, among other things, that plans be based on the National Oil and Hazardous
Substances Pollution Contingency Plan (NCP). (§ 25356.1, subd. (d); see also
§ 25356.1.5, subd. (a)(1) [requiring NCP compliance for HSAA response actions
generally].) At the outset of trial, the court ruled issue preclusion should apply to issues
"which were necessarily decided by DEH in approving the RAP" (except for sufficiency
of documentation, for NCP purposes) and that the court "ha[d] no jurisdiction to consider
45 Our conclusions here are limited in scope and not an endorsement of the court's
application of the factors it did use. Without limitation, we have serious doubts about the
court's benefits analysis (which failed to consider benefits to Defendants in electing not to
remediate, and misconstrued the concept of double recovery), and its focus on unclean
hands (which appeared to be based on Plaintiffs' lead mining that expanded the
remediation area and conduct after a water main break, not any increase to the waste).
46 There were other cost rulings, but we either already addressed them (right to
proceed under the HSAA), concluded Plaintiffs did not establish liability (the wood pile)
or Plaintiffs do not challenge them (prejudgment interest; future costs).
78
or determine" various related matters (Preclusion Order). These included the
"appropriateness of the remedial action alternative selected and approved." The
Preclusion Order also preserved issues for trial, including whether the costs sought by
Plaintiffs "constitute[d] 'remedial action' costs as defined by the HSAA.
2. Applicable law
Section 25363(e), at the relevant time, allowed for recovery of "removal or
remedial action costs." The HSAA defines remedial actions as "actions that are
consistent with a permanent remedy . . . in the event of a release or threatened
release . . . , as further defined by [CERCLA]"; "actions that are necessary to monitor,
assess, and evaluate a release or a threatened release"; and "[s]ite operation and
maintenance." (§ 25322, subds. (a)-(c).)
At the same time, the HSAA permits recovery of costs only from "person[s] . . .
liable pursuant to this chapter," and the HSAA defines " 'liable person[s]' " as "those
persons described in [CERCLA] section 107(a)." (§§ 25363, 25323.5, subd. (a)(1).)
CERCLA section 107(a) imposes liability on classes of liable persons for "necessary
costs . . . consistent with the [NCP]." (42 U.S.C. § 9607(a)(4)(B); Carson Harbor I,
supra, 270 F.3d at pp. 870-871.) As noted ante, the HSAA also requires NCP
compliance. (§ 25356.1.5, subd. (a)(1).) With respect to necessity, courts focus, in part,
"on whether there is a threat to human health or the environment." (Carson Harbor I, at
p. 872.) A response action is NCP compliant if the action is, among other things, "in
substantial compliance with the applicable requirements." (40 C.F.R. § 300.700(c)(3)(i).)
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These requirements include "documentation . . . sufficient to provide . . . [an] accurate
accounting of . . . costs." (40 C.F.R. § 300.160(a)(1).)
3. Analysis
Plaintiffs challenge both the court's general approach and specific cost rulings.
Starting with the court's approach, the court denied many costs for being unnecessary
(noting, for example, that some were duplicative), and also concluded certain costs were
unrecoverable based on NCP noncompliance. Plaintiffs contend the court should have
evaluated whether their costs were incurred for remedial actions, that necessity is not
required under the HSAA, and that the court's findings were contrary to the Preclusion
Order and in excess of its jurisdiction.
First, an HSAA plaintiff must establish not only that the costs were incurred for
removal or remedial actions, but also that they were necessary and NCP compliant. Any
failure to focus on whether the costs were for remedial actions would not be dispositive,
because Plaintiffs must also demonstrate necessity and establish no error in that regard.
Second, necessity is required. Plaintiffs suggest the only CERCLA liability
provisions that apply under the HSAA are those identifying the classes of liable persons
(e.g., prior owners). But the HSAA defines liable persons as "those persons described in
section 107(a) of the federal act," without limiting CERCLA section 107(a)'s application
to the liable person classes. (§ 25323.5, subd. (a)(1).) Plaintiffs also note CERCLA
definitions are not used in the HSAA when the context requires otherwise. (§ 25310.)
Necessity is an element of the claim, not a definition, and regardless, Plaintiffs do not
explain why the HSAA would permit recovery of potentially unnecessary costs, where
80
CERCLA would not. In turn, the considerations noted by the court can be relevant to a
necessity analysis. (See, e.g., U.S. v. Iron Mountain Mines, Inc. (E.D. Cal. 1997) 987
F.Supp. 1263, 1272 (Iron Mountain) [duplicative investigative costs generally not
necessary].)
Third, Plaintiffs' arguments as to the Preclusion Order lack merit. The order was
based on DEH's determination that Plaintiffs' RAP complied with section 25356.1 —
which reflects NCP compliance, not necessity under CERCLA liability standards. Thus,
the court's necessity findings did not conflict with the order. As for the court's decision to
address NCP compliance, Plaintiffs do not establish error. They rely primarily on the
court's determination in the Preclusion Order that it lacked jurisdiction to consider the
appropriateness of the remedial action approved by the DEH. But the court evidently
changed its mind, and while that change in course is concerning, Plaintiffs provide no
authority that doing so was improper. Plaintiffs forfeit any error in this regard. (Stanley,
supra, 10 Cal.4th at p. 793.)
Plaintiffs also suggest, more generally, that DEH approval actually did deprive the
court of jurisdiction to address whether their costs were recoverable, effectively entitling
them to all claimed costs. Again, they offer no authority for their position. Instead, they
cite DEH's "sole jurisdiction over all activities . . . necessary to respond to the . . .
release" in the Assembly Bill No. 2061 process (§ 25264, subd. (a)), and Defendants'
ability to challenge the DEH-approved plan at the time. The Assembly Bill No. 2061
process is distinct from HSAA cost recovery, as discussed ante. We do assume, without
deciding, that DEH approval pursuant to the Assembly Bill No. 2061 process can serve as
81
evidence that a cleanup was necessary and NCP compliant, to the extent the process
implicated those issues. But Plaintiffs did not challenge the cost rulings on substantial
evidence grounds (except as to sufficiency of their records, which we do not reach, and
certain arguments raised on reply, which we will not address.)47
We now turn to the specific costs. First, Plaintiffs sought internal management
time for remediation work performed by employees of their parent company, HomeFed.
The trial court denied these costs, because, among other reasons, Plaintiffs had not paid
for work by HomeFed employees, and because the work was not documented in
compliance with the NCP. Plaintiffs contend the court disregarded two cost sharing
agreements between FRLC and HomeFed, and that substantial evidence did not support
the court's documentation ruling. The agreements do not establish Plaintiffs incurred
costs for HomeFed employee time. Indeed, they do not address remediation of the
Property at all, much less reflect that Plaintiffs actually paid for HomeFed employee
work on the remediation.48 We do not reach Plaintiffs' contention that their records were
sufficient.
47 Necessity is reviewed for substantial evidence, and NCP compliance is viewed as
a mixed question of law and fact. (Orange County Water District v. Alcoa Global
Fasteners, Inc. (2017) 12 Cal.App.5th 252, 327, 331.) Plaintiffs also contend the court
abused its discretion in excluding a document related to the final RAP, but do not
establish they were prejudiced by this exclusion. (Soule, supra, 18 Cal.4th at pp. 573-
574.)
48 The agreements do not refer to specific property. The only references to property
or environmental matters are in the preamble: "[OLC] . . . has or will transfer title to
certain real property to FRLC and FRLC will undertake the process of entitling the real
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Second, Plaintiffs sought costs for what they call remedial attorney fees; i.e.,
nonlitigation remediation work by counsel. Neither the HSAA, nor CERCLA's cost
recovery or contribution provisions, provide for attorney fees. (§ 25300 et seq.; 42
U.S.C. §§ 9607, 9613.) However, in Key Tronic Corp. v. United States (1994) 511 U.S.
809 (Key Tronic) the United States Supreme Court held that while "CERCLA § 107 does
not provide for . . . private litigants' attorney's fees," some "lawyers' work that is closely
tied to the actual cleanup may constitute a necessary cost of response in and of itself
under the terms of [CERCLA] § 107(a)(4)(B)." (Id. at pp. 819, 820.) The court
determined "work performed in identifying other PRP's [potentially responsible parties]
falls in this category," and the plaintiff could claim such efforts "significantly benefited
the entire cleanup effort and served a statutory purpose apart from the reallocation of
costs." (Id. at p. 820.) The court contrasted this with work on an EPA consent decree,
which it viewed as "primarily protecting Key Tronic's interests as a defendant in the
proceedings that established the extent of its liability" and thus unrecoverable. (Id. at
pp. 820, 821.)
Here, the trial court denied costs for remedial attorney fees because the HSAA
lacks an attorney fee provision, the fees were not necessary, and the documentation was
insufficient. For necessity, the court found the work was "primarily incurred to secure a
direct benefit to [Plaintiffs] — a certificate of completion," citing Key Tronic and its EPA
property, processing lot line adjustments, enforcing legal claims and rights under the
environmental laws, and selling or transferring some or all of the real property."
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holding. The court had noted statements from Plaintiffs' closing trial brief in its
discussion of the Assembly Bill No. 2061 process, reflecting counsel was retained, at
least in part, to guide that process and secure the certificate of completion.
Plaintiffs contend the fees are recoverable under the HSAA, the court applied the
wrong standard in finding them unrecoverable, and the time was sufficiently documented.
We agree remedial attorney fees are recoverable under the HSAA as a response cost,
consistent with CERCLA. (Key Tronic, supra, 511 U.S. at p. 817; see BNSF Ry. Co. v.
California (E.D. Cal., Jan. 7, 2009, No. 2:08-CV-JAM-JFM) 2009 U.S. Dist. Lexis 2802,
at p. *9 [interpreting "HSAA 'response costs' consistent with CERCLA response costs"].)
But we find unpersuasive Plaintiffs' argument that the court erroneously focused on
whether fees were expended " 'primarily incurred to secure a direct benefit,' " rather than
whether the work was " 'closely tied to' " or " 'significantly benefited' " the cleanup (i.e.,
the Key Tronic holdings related to finding "PRP's"). The court was relying on the
holding that fees in connection with an EPA consent decree were not recoverable, which
Plaintiffs make no effort to distinguish. Regardless, they cannot prevail because they do
not demonstrate prejudice. They cite Calabrese v. McHugh (D. Conn. 2001) 170
F.Supp.2d 243 to contend recoverable fees include " 'designing a removal action, drafting
contracts with environmental professionals . . . , and monitoring the work progress.' " (Id.
at p. 268.) But they do not explain how their counsel's work was consistent with Key
Tronic or Calabrese. To the contrary, they represent counsel was "hired by [Plaintiffs] to
liaison with the local and state regulatory agencies to shepherd the project through the
84
AB 2061 process," which aligns with the trial court's findings and supports its application
of Key Tronic. We do not reach whether the records for these costs were sufficient.
Third, the court found white material costs were not recoverable because the
removal was unnecessary (as the material was not a risk to health or the environment)
and because Plaintiffs "inadequately assessed the substance and failed to consider
alternatives to removal in violation of the NCP." The court did not address the
Preclusion Order. Plaintiffs argue, among other things, that "disallowing costs relating to
. . . the 'white material' because the removal was not necessary or called for under the
NCP . . . was directly contrary to [the court's] own prior order." As noted ante, Plaintiffs
do not establish it was error for the court to later elect to address these issues.
Regardless, they cannot establish reversible error, as they do not contest the necessity
findings on substantial evidence grounds.49
Fourth, Plaintiffs sought $2,554,287 for soil removal. The court concluded they
could not recover $761,944, because they "unnecessarily over-remediated the site." The
court noted the RAP called for removal of 65,000 cubic yards, and Plaintiffs removed
over 90,000. Plaintiffs contend the court disregarded an RAP statement that the " 'actual
volume' " of soil would depend on other factors, and that the remediation was performed
in accordance with the RAP — meaning the costs were NCP compliant. But the court's
49 Plaintiffs do argue the white material necessity findings were "contrary to the
determination of DEH." Even assuming the DEH approval were evidence of necessity,
this does not establish there was no substantial evidence for the court's finding that
removal was unnecessary.
85
findings were based on necessity, not the NCP. Further, even if the " 'actual volume' "
reference in the RAP provided evidence of necessity for some volume of soil removal
beyond 65,000 cubic yards, plaintiffs would still need to prove necessity for the amount
ultimately removed.
Finally, Plaintiffs sought $2,781,413 in investigation costs. The court determined
they could not recover $2,312,746 of these costs, because they were "duplicative of other
costs, not cost-effective, not fiscally reasonable or necessarily incurred." Plaintiffs
contend that neither duration nor repetition "sheds light on whether a particular action is a
'remedial action' consistent with the NCP." But, as noted ante, they may be relevant to
necessity. (See, e.g., Iron Mountain, supra, 987 F.Supp at p. 1272; see also § 25322,
subd. (b) [HSAA remedial actions include those "necessary to monitor, assess, and
evaluate" releases (italics added)].)
G. Defendants' appeals as to attorney fees and costs are moot
Defendants contend the trial court erred in denying them fees and costs as
prevailing parties. Because we reverse the judgment, Defendants are no longer prevailing
parties and their appeals are moot. (Venturi & Co. LLC v. Pacific Malibu Development
Corp. (2009) 172 Cal.App.4th 1417, 1424.)
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IV.
DISPOSITION
The judgment is affirmed as to the trial court's rulings on disking, the wood pile,
and cost reductions (except with respect to costs denied in connection with the absence of
a DTSC action and Plaintiffs' use of the Assembly Bill No. 2061 process). In all other
respects, the judgment is reversed and remanded for further proceedings consistent with
this opinion. The trial court shall receive such additional evidence as it deems necessary
and appropriate, and, in the event jury proceedings are warranted, shall hold such
proceedings. Defendants' appeals regarding attorney fees and costs are moot. Plaintiffs
shall recover their costs on appeal.
O'ROURKE, J.
WE CONCUR:
HUFFMAN, Acting P. J.
DATO, J.
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