Kotrous v. Goss-Jewett Co. of Northern Cal.

• Decision Date: 17 April 2008
• Docket Number: No. 06-16019.,No. 06-15162.,06-15162.,06-16019.
• Citation: 523 F.3d 924
• Parties: James KOTROUS, Individually and doing Business as the Mattress Factory, Plaintiff-Appellee, v. GOSS-JEWETT COMPANY OF NORTHERN CALIFORNIA, Inc.; et al., Defendants, and Bayer CropScience, Inc., Defendant-Appellant, Edward Anselmo, Defendant-Appellee. Adobe Lumber, Inc., a California corporation, Plaintiff-Appellee, v. F. Warren Hellman; Wells Fargo Bank NA, as Trustees of Trust A created by the Estate of Marco Hellman, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

523 F.3d 924

James KOTROUS, Individually and doing Business as the Mattress Factory, Plaintiff-Appellee, v. GOSS-JEWETT COMPANY OF NORTHERN CALIFORNIA, Inc.; et al., Defendants, and Bayer CropScience, Inc., Defendant-Appellant, Edward Anselmo, Defendant-Appellee.

Adobe Lumber, Inc., a California corporation, Plaintiff-Appellee, v. F. Warren Hellman; Wells Fargo Bank NA, as Trustees of Trust A created by the Estate of Marco Hellman, Defendants-Appellants.

No. 06-15162.

No. 06-16019.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 18, 2007.

Filed April 17, 2008.

Michael E. Vergara, Jacqueline L. McDonald, Somach, Simmons & Dunn, Sacramento, CA, for plaintiff-appellee James Kotrous.

John D. Edgcomb and William D. Marsh, Edgcomb Law Group, San Francisco, CA, for defendant-appellant Bayer CropScience, Inc.

Jeffory J. Scharff, Sacramento, CA, for defendant-appellee Edward Anselmo.

Howard L. Pearlman, Glenn P. Zwang, Robert L. Wainess, Bartko, Zankel, Tarrant & Miller, San Francisco, CA, for plaintiff-appellee Adobe Lumber, Inc.

Thomas M. Donnelly, Heller Ehrman LLP, San Francisco, CA, for defendants-appellants F. Warren Hellman and Wells Fargo Bank, N.A.

Appeal from the United States District Court for the Eastern District of California; Frank C. Damrell, William B. Shubb, District Judges, Presiding. D.C. Nos. CV 02-1520 FCD, CV 05-1510 WBS.

Before: ALEX KOZINSKI, Chief Judge, A. WALLACE TASHIMA, and M. MARGARET McKEOWN, Circuit Judges.

TASHIMA, Circuit Judge:

We are required to consider the continued viability of Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir.1997), in light of the Supreme Court's most recent precedent addressing the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675 ("CERCLA"). Sections 107 and 113(f) of CERCLA, 42 U.S.C. §§ 9607 and 9613, "allow private parties to recover expenses associated with cleaning up contaminated sites." United States v. Atl. Research Corp., ___ U.S. ___, 127 S.Ct. 2331, 2333, 168 L.Ed.2d 28 (2007). In Atlantic Research, the Supreme Court held that § 107(a) provides "so-called potentially responsible parties (PRPs) . . . with a cause of action to recover costs from other PRPs," id. at 2334, whereas § 113 provides an action for contribution. In so holding, the Court undermined Pinal Creek's holding that § 107 entitles PRPs to seek only contribution, not cost recovery, from other PRPs. To the extent, therefore, that Pinal Creek conflicts with Atlantic Research, we conclude that Pinal Creek has been overruled.

This opinion addresses two separate appeals, in separate actions, seeking recovery of costs associated with the clean-up of hazardous waste sites.¹ In the first appeal, James Kotrous sued numerous defendants, including Bayer CropScience, Inc., seeking contribution under CERCLA for costs he had incurred in cleaning soil and groundwater contamination on land he owned. The district court denied Bayer's motion to dismiss Kotrous' claim under CERCLA § 107 for contribution. It then granted Bayer's motion for certification for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).

In the second appeal, Adobe Lumber, Inc., the owner of contaminated land, sued the owners of a dry cleaning business run on the property, as well as prior landowners, chemical and equipment manufacturers, and the City of Woodland, for contribution for costs Adobe had incurred in dealing with the contamination. The district court denied the defendants' motion to dismiss for failure to state a claim. Adobe Lumber, Inc. v. Hellman, 415 F.Supp.2d 1070 (E.D.Cal.2006). The district court subsequently certified its order for appeal. We agreed to hear both interlocutory appeals pursuant to 28 U.S.C. § 1292(b).

BACKGROUND²

I. Kotrous

Since October 1995, Kotrous has owned land in Sacramento, California, and operated a business called "The Mattress Factory" on the site. Prior to 1995, the land was owned by numerous defendants.

Goss-Jewett Company operated a dry cleaner supply business on the property from approximately 1970 to 1996. During that period, it stored and distributed the solvent perchloroethylene ("PCE") and other hazardous substances. Defendant Stauffer Chemical Company and its successors, which includes Bayer, supplied the PCE. Stauffer accidentally released PCE into the soil and groundwater while making its deliveries, resulting in contamination of the property.

In February 2000, the California Regional Water Quality Control Board ("RWQCB") sent Goss-Jewett a letter requesting that it prepare and submit a work plan for assessment of the site. Goss-Jewett refused to do so. In November 2001, the RWQCB issued a Cleanup and Abatement Order requiring Goss-Jewett to investigate and clean the soil and groundwater at the site. Kotrous was directed to conduct the work if Goss-Jewett failed to do so. When Goss-Jewett failed to act, Kotrous incurred costs performing site characterization and investigation, and identification and investigation of PRPs.

Kotrous then commenced this action. His First Amended Complaint ("FAC") included a claim for contribution under § 107(a) of CERCLA for costs "Kotrous has incurred and will incur" in responding to the contamination. He also requested declaratory relief under § 113(g) "on liability for response costs or damages," and alleged various state law causes of action.

Bayer filed a motion for judgment on the pleadings, which the district court denied. After an unsuccessful motion for reconsideration, Bayer filed a motion for certification under 28 U.S.C. § 1292(b) for immediate appeal of the issue of whether Kotrous, as a PRP, could request contribution under § 113(f) without first being sued under § 106 or § 107(a). The district court granted the motion and we granted the petition for interlocutory appeal.

II. Adobe Lumber

Adobe is the owner of the Woodland Shopping Center in Woodland, California (the "Site"). Over the years, the Site has had a succession of owners: Marco Hellman owned the property from 1971 until his death in 1973; his estate (the "Hellman Estate") owned the property from 1973 until 1976. F. Warren Hellman ("Hellman"), Marco's son, was the trustee of two trusts created by the Hellman Estate and owned the property from 1976 until 1979. As co-trustee to one of the trusts, Wells Fargo Bank also owned the site during that period. The shopping center was owned by various other owners until Adobe purchased the property in 1998.

Between 1974 and November 2001, all of the owners leased part of the property to Harold and Geraldine Taecker (the "Taeckers"), who owned and operated a dry cleaning facility on the property. The Taeckers used PCE, produced by several manufacturer-defendants, as a cleaner during that time. Throughout their dry cleaning operations, the Taeckers released and disposed of PCE on the Site. A faulty sewer line also caused discharge of PCE and resultant contamination of the Site.

In August 2001, Adobe voluntarily examined the Site to see whether the Taeckers' long-time dry cleaning business had affected the soil and groundwater. After discovering elevated levels of chemical pollutants, Adobe reported the contamination to the RWQCB and the County Environmental Health Department. The RWQCB began working with the Taeckers and Adobe to create a work plan for the investigation of soil and groundwater contamination at the Site. During this process, Adobe incurred costs investigating the contamination at the Site.³ A variety of legal actions followed, culminating in this lawsuit.

Adobe filed suit in the district court alleging several federal claims, including claims under the Resource Conservation and Recovery Act, 42 U.S.C. § 6972, and §§ 107(a) and 113(g) of CERCLA. Adobe's FAC also asserted state environmental claims and common law property and tort claims. As to the CERCLA claims at issue in this appeal, Adobe sought to recover costs that it had incurred or would incur in complying with the national contingency plan through implied contribution under § 107(a). It also requested "contribution . . . for all or a portion of past, present and future costs incurred in response to the release or threatened release of hazardous substances at the Site[ ]" under § 113(g). The defendants filed a motion to dismiss the complaint for failure to state a claim.

The district court denied the motion to dismiss Adobe's claim for contribution under CERCLA.⁴ Adobe Lumber, 415 F.Supp.2d at 1079. The court noted that the combined effect of the Supreme Court's decision in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004), and existing Ninth Circuit precedent would be to prevent Adobe from recovering under either § 107 or § 113 of CERCLA. 415 F.Supp.2d at 1077. Nevertheless, it had "difficulty imagining that the Ninth Circuit would prevent PRPs from pursuing contribution claims for clean up costs incurred voluntarily." Id. at 1078. Noting that several CERCLA cases sharing the same issue had reached the Ninth Circuit on appeal, the district court denied the motion to dismiss and stayed discovery in the case. Id. at 1079.

STANDARDS OF REVIEW

The district court's interpretation of a statute is reviewed de novo. Pinal Creek, 118 F.3d at 1300. Similarly, the district court's grant of judgment on the pleadings is reviewed de novo. Ventress v. Japan Airlines, 486 F.3d 1111, 1114 (9th Cir.2007). "On review of a judgment on the pleadings, `[t]he appellate court must accept all material allegations in the complaint as true and construe them in the light most favorable to [the non-moving party].'" Deveraturda, 454 F.3d at 1046 (quoting Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir.2004)) (alterations in original). The district court's dismissal for failure to state a claim is reviewed de novo. Pakootas v. Teck Cominco Metals, Ltd., 452 F.3d 1066, 1072 (9th Cir.2006), cert. denied, ___ U.S. ___, 128 S.Ct....