Carson Harbor Village v. Unocal Corp.

• Decision Date: 14 September 2000
• Docket Number: 98-55422,98-55213,98-55107,98-55210,98-55215,Nos. 98-55056,s. 98-55056
• Citation: 227 F.3d 1196
• Parties: (9th Cir. 2000) CARSON HARBOR VILLAGE, LTD., a limited partnership dba Carson Harbor Village Mobilhome Park, Plaintiff-counter-defendant-Appellant, v. UNOCAL CORPORATION, a Delaware Corp., Defendant-cross-defendant, and CITY OF CARSON, Defendant-cross-defendant-cross-claimant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1196

227 F.3d 1196 (9th Cir. 2000)

CARSON HARBOR VILLAGE, LTD., a limited partnership dba Carson Harbor Village Mobilhome Park, Plaintiff-counter-defendant-Appellant, v. UNOCAL CORPORATION, a Delaware Corp., Defendant-cross-defendant, and CITY OF CARSON, Defendant-cross-defendant-cross-claimant-Appellee.

Nos. 98-55056, 98-55107, 98-55210, 98-55213, 98-55215, 98-55422

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted September 13, 1999

Filed September 14, 2000

[Copyrighted Material Omitted] Frank Gooch, III; Chris M. Amantea, Santa Monica, California, for the plaintiff-appellant.

Lisa Bond, Los Angeles, California, for defendant-appelleeCity of Carson.

Thomas C. Sites, Los Angeles, California, for defendantappellee City of Compton (did not argue).

Charles Jordan, Los Angeles, California, for defendantappellee Unocal.

Walter L. Lipsman, Douglas J. Collodel, Richard H. Nakamura, Los Angeles, California, for defendant-appellee Carson Harbor Village.

Kristin E.D. Dunn, Long Beach, California, for defendantappellee County of L.A. (did not argue).

Appeal from the United States District Court for the Central District of California. Kim McLane Wardlaw, District Judge. D.C. No. CV-96-03281-KMW

Before: Betty B. Fletcher and Harry Pregerson, Circuit Judges, and Charles R. Weiner, District Judge.¹

B. FLETCHER, Circuit Judge:

The current owner of land contaminated by storm water runoff and oil production filed this action against prior owners and operators of the property, as well as certain local government entities, to recover cleanup costs under, inter alia, the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.S 9607(a), and California common law. The district court dismissed the case on cross motions for summary judgment, reasoning that plaintiff failed to meet its burden on at least one of the CERCLA elements, and that its common law claims were without merit.² We have jurisdiction over plaintiff's appeal pursuant to 18 U.S.C. 1291, and we reverse in part, affirm in part, and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

Carson Harbor Village, Ltd. ("Carson Harbor") owns and operates a mobile home park on 70 acres of land in the City of Carson, California. Carson Harbor Village Mobile Home Park, a general partnership run by Richard G. Braley and Walker Smith, Jr. (collectively, the "Partnership Defendants"), owned the property from 1977 to 1983 and also operated a mobile home park there. Between 1945 and 1983, Unocal Corporation ("Unocal") held a leasehold interest in the property and used it for petroleum production. Specifically, Unocal operated a number of oil wells, pipelines, above-ground storage tanks, and production facilities.³

An undeveloped open flow wetlands area covers approximately 17 acres of the property. The wetlands form a natural drainage course that bisects the trailer park from the northeast to the southwest. At the northeast edge of the wetlands, storm water controlled by the City of Carson, the City of Compton and the County of Los Angeles (collectively, the "Government Defendants"), feeds into the wetlands through two storm drains. The drainage area immediately upstream from plaintiff's property includes California Highway 91, operated by the California Department of Transportation ("Caltrans"), as well as mixed use industrial and residential properties. Runoff from approximately three miles of the freeway drains to the wetlands.

In the course of seeking refinancing for the property in 1993, plaintiff's lender commissioned an environmental assessment which revealed slag and tar like material in the wetlands. Subsequent investigation disclosed (1) that the material had been on the property for several decades prior to its development as a mobile home park; (2) that the material was some form of waste or by-product from petroleum production; (3) that the material was approximately four feet thick and covered roughly a 30 by 160 foot area in the wetlands; (4) the material and surrounding soils contained elevated levels of petroleum hydrocarbons (measured in terms of total petroleum hydrocarbons or "TPH") and lead)⁴; and (5) soil samples upgradient of the material also contained elevated levels of TPH and lead.⁵

Because the lead concentrations exceeded state reporting limits,⁶ plaintiff's environmental consultants informed the appropriate agencies of their findings. The Regional Water Quality Control Board ("RWQCB") assumed the role of lead agency and plaintiff coordinated its efforts with James Ross, the RWQCB's Site Cleanup Unit Chief. Although the parties dispute whether the RWQCB "ordered" remedial action at the property or merely concurred in plaintiff's "voluntary" decision to clean up the tar and slag contamination, its is undisputed that plaintiff's environmental consultants requested a "no further action" letter from the RWQCB before proposing cleanup and submitting a remedial action plan ("RAP").⁷

In the RAP, plaintiff proposed to remove the tar and slag material and impacted soils without addressing other areas of elevated TPH and lead contamination in the wetlands because the highest concentrations were associated with the tar and slag material. The RAP recommended post-cleanup levels of 1,000 ppm for TPH and 1,000 ppm TTLC/5 ppm STLC for lead. Ross approved the RAP subject to the condition that plaintiff bring TTLC lead values down to 50 ppm, rather 1,000 ppm.⁸

The cleanup went forward in the summer of 1995 and overthe course of five days 1,042 tons of material were removed, varying in depth from one to four feet and covering an area approximately 75 feet by 160 feet. In all but four of the soil samples taken after the excavation, TPH and lead levels were within the established limits.⁹ After a site visit and independent soil testing by RWQCB staff, Ross sent a closure letter stating:

the removal is complete to the extent required by this Board. . . . [W]e have concluded that all the require ments established by this Board in our RAP approval letter dated February 27, 1995, have been complied with. In addition, the contamination has been suc cessfully removed and the remaining soil in the bot tom of the watercourse poses no further threat to surface waters of the State. We, therefore, conclude that no further action is required at this site.

Within a year of the "no further action letter, " plaintiff filed suit against the Partnership Defendants, the Government Defendants, and Unocal, seeking to recover the costs of its remedial action as well as damages arising from its inability to refinance the property.¹⁰ On cross-motions for summary judgment the district court rejected all of plaintiff's theories of recovery. See Carson Harbor Village, Ltd. v. Unocal Corp., 990 F. Supp. 1188 (C.D. Cal. 1997). On the CERCLA claim, the district court held that plaintiff could not show that its remedial action was "necessary" within the meaning of 42 U.S.C. 9607(a)(4)(B) because there was no evidence of an "actual and real threat" to human health or the environment and (implicitly referring to plaintiff's quest for refinancing) "CERCLA . . . was not designed to permit property owners to clean up their property unnecessarily for business reasons, and then to shift the costs to prior owners." 990 F. Supp. at 1193. The district court focused on Ross's deposition testimony that the remediation plan was initiated by plaintiff and that the RWQCB would not have required remedial action but for plaintiff's proposal. Ross's testimony is directly controverted by the testimony and memoranda of others who were at the site meetings when remedial options were discussed, but the district court excluded this evidence as inadmissible hearsay. Id. at n.4. As to the Partnership Defendants, the district court ruled that plaintiff failed to show a "disposal" of hazardous substances during their time of ownership--a prerequisite to prior owner liability under 42 U.S.C. 9607(a)(2). The court held that there was no direct evidence of lead-containing storm water entering the property at any time before 1994 and the court rejected the argument that migration of lead and TPH from the tar and slag into the wetlands soil constituted a "disposal." Id. at 1194-95.

With respect to the common law claims of nuisance, trespass, and injury to easement against the Government Defendants, the district court held that California Civil Code 3482 provides a complete defense since from 1990 forward the storm water runoff systems were covered by National Pollu-tant Discharge Elimination System ("NPDES") permits issued pursuant to the Clean Water Act, and prior to 1990 there was no direct evidence of lead-containing runoff. Id. at 1197. Finally, as to the claim for express indemnity under the purchase agreement with the Partnership Defendants, the court reasoned that since the cleanup was not required by the RWQCB, plaintiff had not discharged an obligation of the Partnership Defendants. The indemnity provision covered only losses resulting from "any liability or obligation of seller which buyer is not specifically required to assume hereunder." Id. at 1198 (quoting indemnity provision).

II. STANDARD OF REVIEW

A grant of summary judgment is reviewed de novo. Robi v. Reed, 173 F.3d 736, 739 (9th Cir. 1999), cert. denied, 120 S. Ct. 375 (1999). Our review is governed by the same standard applied by the trial court under Federal Rule of Civil Procedure 56(c). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Robi, 173 F.3d at 739.

"Whether the district court correctly construed the hearsay rule is a question of law reviewed de novo." United States v. Bao, 189 F.3d 860, 863 (9th Cir. 1999) (citation omitted). However, "[w]e review for abuse of discretion ...