270 F.3d 863 (9th Cir. 2000), 98-55056, Carson Harbor Villiage v. Unocal Corp.

Docket Nº:98-55056, 98-55107, 98-55210, 98-55213, 98-55215 and 98-55422
Citation:270 F.3d 863
Case Date:September 14, 2000
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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270 F.3d 863 (9th Cir. 2000)




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

United States Court of Appeals, Ninth Circuit

September 14, 2000

Argued and Submitted September 13, 1999

Rehearing En Banc Granted and Opinion Withdrawn February 13, 2001

Argued and Submitted June 19, 2001

Filed October 24, 2001

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Frank Gooch III (argued), Gilchrist & Rutter, Santa Monica, California, and Christopher M. Amantea (argued), McDermott,

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Will & Emery, Los Angeles, California, for plaintiff-appellant Carson Harbor Village, Ltd.

Lisa Bond (argued), Richards, Watson & Gershon, Los Angeles, California, for defendant-appellee City of Carson.

Thomas C. Sites, Gallagher & Gallagher, Los Angeles, California, for defendant-appellee City of Compton.

Charles A. Jordan, Holley & Galen, Los Angeles, California, and Richard C. Jacobs, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, San Francisco, California, for defendant-appellee Unocal Corporation.

Walter J. Lipsman (argued), Douglas J. Collodel, and Richard H. Nakamura, Jr., Morris, Polich & Purdy, LLP, Los Angeles, California, for defendants-appellees Carson Harbor Village Mobile Home Park, Richard G. Braley, and Walker Smith, Jr.

Gary E. Yardumian, Kristin E.D. Dunn, and Jack C. Nick, Prindle, Decker & Amaro, Long Beach, California, for defendant-appellee County of Los Angeles.

Robert H. Oakley (argued), United States Department of Justice, Washington, D.C., for amicus curiae The United States of America.

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

Before: Schroeder, Chief Judge, and Hug, B. Fletcher, Pregerson, Kozinski, T.G. Nelson, Hawkins, McKeown, Paez, Berzon, and Tallman, Circuit Judges.

Opinion by Judge McKeown; Partial Concurrence and Partial Dissent by Judge B. Fletcher

McKEOWN, Circuit Judge:

This appeal stems from the environmental cleanup of a contaminated wetlands site used originally for petroleum production and later as a mobile home park. The current property owner, Carson Harbor Village, Ltd. ("Carson Harbor"), brought suit principally under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. &#167 9601 et seq., for reimbursement of costs associated with the cleanup. We are called upon to determine whether, as a matter of law, those cleanup costs were "necessary" and whether certain of the defendants are "potentially responsible parties" ("PRPs") under CERCLA &#167 107(a), 42 U.S.C. &#167 9607(a).

The touchstone for determining the necessity of response costs is whether there is an actual threat to human health or the environment; that necessity is not obviated when a party also has a business reason for the cleanup. Because the district court erred in focusing on the ulterior business motive for remediation and because there are genuine issues of material fact regarding whether Carson Harbor's response costs were, in fact, "necessary," we cannot uphold summary judgment on this ground.

Even if we assume that those costs were necessary, we still must decide whether defendants Carson Harbor Village Mobile Home Park, Richard G. Braley, and Walker Smith, Jr. (the "Partnership Defendants") are PRPs; if not, summary judgment was nonetheless appropriate. Parsing the meaning of the term "disposal" in &#167 9607(a)(2) lies at the heart of this question. We conclude that the migration of contaminants on the property does not fall within the statutory definition of "disposal." Thus, on the CERCLA claim, we affirm the district court's grant of summary judgment for the Partnership Defendants.

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We must also address the remaining issues. We affirm the district court's grant of summary judgment to defendants City of Carson, County of Los Angeles, and City of Compton on Carson Harbor's state claims. Finally, with respect to Carson Harbor's claim for indemnity against the Partnership Defendants, in view of our holding that there are genuine issues of material fact regarding the necessity of Carson Harbor's response costs, we reverse the grant of summary judgment.


Carson Harbor owns and operates a mobile home park on seventy acres in the City of Carson, California. From 1977 until 1983, prior to Carson Harbor's ownership, defendant Carson Harbor Village Mobile Home Park, a general partnership controlled by defendants Braley and Smith (the "Partnership Defendants"), owned the property. They, like Carson Harbor, operated a mobile home park on the property. Beginning over thirty years earlier, however, from 1945 until 1983, Unocal Corporation held a leasehold interest in the property and used it for petroleum production, operating a number of oil wells, pipelines, above-ground storage tanks, and production facilities.

An undeveloped open-flow wetlands area covers approximately seventeen acres of the site. Properties located upstream from the property are in the Cities of Carson and Compton and unincorporated areas within the County of Los Angeles (i.e., the "Government Defendants"). Storm water feeds into the wetlands from those properties through storm drains. California Highway 91 (the Artesia Freeway), which is operated by the California Department of Transportation ("Caltrans"), is also located immediately upstream from the property. Runoff from approximately three miles of the highway drains into the wetlands.

While attempting to refinance the property in 1993, Carson Harbor discovered hazardous substances on the site. The prospective lender commissioned an environmental assessment, which revealed tar-like and slag materials in the wetlands area of the property. Subsequent investigation revealed that the materials were a waste or by-product of petroleum production and that they had been on the property for several decades prior to its development as a mobile home park.

Much of the tar-like and slag materials was covered with soil and vegetation. A portion of the tar-like material, however, was visible on the surface in an area measuring approximately twenty feet wide by thirty feet long. The slag material appeared to have been deposited on top of the tar-like material and was visible in an area approximately thirty feet by 170 feet. Subsequently, it was determined that the contaminated area covered an area approximately seventy-five feet wide by 170 feet long and extended from one to five feet below the surface. The material and surrounding soils contained elevated levels of petroleum hydrocarbons (measured in "total petroleum hydrocarbons" or "TPH") and lead; and soil samples upgradient of the materials also contained elevated levels of lead. These levels exceeded state reporting limits.

As required by law, Carson Harbor's environmental consultants reported their findings to the appropriate agencies. The Regional Water Quality Control Board (the "Water Quality Board") and its Site Cleanup Unit Chief, James Ross, assumed the lead in the cleanup effort. Carson Harbor requested a no-further-action letter from the Water Quality Board before proposing cleanup, and submitted a remedial action plan ("RAP"), proposing to remove

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the tar-like and slag materials and impacted soils. Because the highest concentrations of TPH and lead contamination were associated with the tar-like and slag materials, the RAP did not address other areas of elevated TPH and lead contamination. Ross approved the RAP but required Carson Harbor to bring the contamination down to a lower level than that proposed in the RAP.

The tar-like and slag materials were removed from the property in 1995. Over the course of five days, 1,042 tons of material were removed. In all but four of the soil samples taken after the cleanup, TPH and lead levels were within the state-required limits. The Water Quality Board staff conducted a site visit and independent soil testing. Ross then sent a closure letter to Carson Harbor, stating that

the removal is complete to the extent required by this Board . . . . [W]e have concluded that all the requirements established by this Board in our RAP approval letter . . . have been complied with. In addition, the contamination has been successfully removed and the remaining soil in the bottom 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.

In 1997, Carson Harbor brought suit against the Partnership Defendants, the Government Defendants, and Unocal 1 seeking relief under federal environmental statutes, CERCLA, the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq., and the Clean Water Act ("CWA"), 33 U.S.C. § 1251 et seq., and for state common law claims of nuisance, trespass, injury to easement, indemnity, and negligent nondisclosure. Carson Harbor sought to recover the costs of its cleanup (which totaled approximately $285,000) as well as damages arising from its inability to refinance the property. According to Carson Harbor, Unocal is responsible for dumping the tar-like and slag materials on the property; the Partnership Defendants are liable as past owners of the property; and the Government Defendants and Caltrans are liable for lead on the property that resulted from lead-contaminated storm water runoff...

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