AmeriPride Servs. Inc. v. Tex. E. Overseas Inc.

• Citation: 782 F.3d 474
• Decision Date: 02 April 2015
• Docket Number: No. 12–17245.,12–17245.
• Parties: AMERIPRIDE SERVICES INC., a Delaware Corporation, Plaintiff–Appellee, v. TEXAS EASTERN OVERSEAS INC., a Delaware Corporation dissolved, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

782 F.3d 474

AMERIPRIDE SERVICES INC., a Delaware Corporation, Plaintiff–Appellee

v.TEXAS EASTERN OVERSEAS INC., a Delaware Corporation dissolved, Defendant–Appellant.

No. 12–17245.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 20, 2014.

Filed April 2, 2015.

Fred M. Blum (argued) and Erin K. Poppler, Bassi Edlin Huie & Blum LLP, San Francisco, CA; Ronald Bushner, Wilson, Elser, Moskowitz, Edelman, & Dicker LLP, San Francisco, CA, for Defendant–Appellant.

Philip C. Hunsucker (argued), Brian L. Zagon, Maureen B. Hodson, and Marc A. Shapp, Hunsucker Goodstein PC, Lafayette, CA; Lee N. Smith, Weintraub Tobin Chediak Coleman Grodin Law Corporation, Sacramento, CA, for Plaintiff–Appellee.

Appeal from the United States District Court for the Eastern District of California, Lawrence K. Karlton, Senior District Judge, Presiding. D.C. No. 2:00–cv–00113–LKK–JFM.

Before: FERDINAND F. FERNANDEZ and SANDRA S. IKUTA, Circuit Judges, and WILLIAM H. ALBRITTON III, Senior District Judge.^*

OPINION

IKUTA, Circuit Judge:

This appeal requires us to determine whether the district court erred in calculating and allocating liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9607(a) and 9613(f), in AmeriPride Services Inc.'s contribution action against Texas Eastern Overseas, Inc. (TEO). TEO challenges (1) the district court's method of allocating liability among settling and nonsettling parties; (2) its determination that AmeriPride could recover costs that were not “necessary costs of response incurred ... consistent with the national contingency plan,” § 9607(a)(B) ;¹ (3) its selection of the date prejudgment interest started accruing based on equitable factors, rather than on the accrual dates specified in § 9607(a) ; and (4) its assignment of TEO's causes of action against its insurers to AmeriPride. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we vacate the district court's judgment and remand for further proceedings.

I

We begin by reviewing the statutory framework applicable to this appeal. CERCLA, 42 U.S.C. §§ 9601 –9675, is a statutory scheme giving the federal government broad authority to require responsible parties to clean up contaminated soil and groundwater. Key Tronic Corp. v. United States, 511 U.S. 809, 814, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994). Section 9607(a) states that any enumerated responsible party, including any person who is a current owner or operator of contaminated property, is liable for “any ... necessary costs of response incurred by any other person consistent with the national contingency plan.” 42 U.S.C. § 9607(a)(B).² “Response” costs are limited to cleanup, enforcement, and related security costs. 42 U.S.C. § 9601(23) -(25). The national contingency plan (NCP) is a national plan promulgated by the federal government to guide federal and state response actions. 42 U.S.C. § 9605 ; 40 C.F.R. pt. 300 (publishing the NCP). A private person (someone who is not the United States, a state, or a tribe) who has incurred “necessary costs of response” that are consistent with the NCP, 42 U.S.C. § 9607(a)(B), may bring an action to recover such costs, including “interest on the amounts recoverable.” § 9607(a).

In addition to allowing private parties to sue for cost recovery under § 9607(a), CERCLA also authorizes a responsible party who has incurred liability under § 9607(a) to bring an action for contribution under § 9613(f)(1) against any other potentially responsible party.³ “Contribution” is not defined in CERCLA, but is interpreted to mean “the tortfeasor's right to collect from others responsible for the same tort after the tortfeasor has paid more than his or her proportionate share, the shares being determined as a percentage of fault.” United States v. Atl. Research Corp., 551 U.S. 128, 138, 127 S.Ct. 2331, 168 L.Ed.2d 28 (2007) (internal quotation marks omitted). “In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.” § 9613(f)(1). CERCLA does not limit the equitable factors a court may consider.

II

We now turn to the facts of this case. This action arose out of the contamination of the soil and groundwater in an industrial area of Sacramento, California. Valley Industrial Services, Inc. (VIS) operated an industrial dry cleaning and laundry business at that site for seventeen years. VIS used perchloroethylene (PCE) as a solvent in its dry cleaning operations. PCE is designated as a “hazardous substance” under CERCLA. 42 U.S.C. § 9602 ; 40 C.F.R. § 302.4. During its operations, VIS released PCE into the environment. VIS eventually merged into TEO, which expressly assumed VIS's liabilities.

VIS was a wholly owned subsidiary of Petrolane, Inc. during part of the time it was operating at the Sacramento site. In 1983, Petrolane sold the Sacramento site; the property passed through various hands until AmeriPride became the owner. During AmeriPride's ownership, there were additional releases of PCE-contaminated water into the soil and groundwater. The contamination at the Sacramento site migrated onto a neighboring property owned by Huhtamaki Foodservices, Inc. (Huhtamaki), and contaminated groundwater wells owned by California–American Water Company (Cal–Am). Chromalloy American Corporation, which owned property in the vicinity of the Sacramento site, also released hazardous substances that contributed to the contamination on AmeriPride's property.

AmeriPride's environmental consultant found evidence of PCE in the soil under the Sacramento site during a remodel in 1997. AmeriPride reported its discovery to regulatory authorities, and a state agency directed AmeriPride to conduct additional sampling and install monitor wells. In 2002, after AmeriPride had conducted the additional sampling and monitoring, the state agency took regulatory control over the Sacramento site investigation. Since then, AmeriPride has performed investigation and remediation of the PCE in the soil and groundwater at and near the Sacramento site under the direction of the state agency. The cleanup is ongoing.

In January 2000, AmeriPride filed a complaint in district court against VIS, Petrolane, TEO, and Chromalloy under 42 U.S.C. §§ 9607(a) and 9613, seeking to recover costs it incurred responding to the PCE contamination. TEO asserted a counterclaim for contribution under § 9613(f). AmeriPride subsequently entered into settlement agreements with Chromalloy and Petrolane, for $500,000 and $2.75 million respectively.

Both Cal–Am and Huhtamaki subsequently brought suit against AmeriPride. In July 2002, Cal–Am filed a complaint against AmeriPride seeking recovery of its response costs, damages, and other relief in connection with the contamination of its wells. AmeriPride paid Cal–Am $2 million to settle these claims. In the settlement agreement, Cal–Am agreed to release AmeriPride from all claims arising out of or related to the “interference with, or destruction or loss of use of” either Cal–Am's wells or the parcels of real property on which the wells were located. In July 2004, Huhtamaki filed a complaint against AmeriPride seeking cost recovery under CERCLA and state law, and asserting common law causes of action for nuisance, trespass, and negligence. AmeriPride paid Huhtamaki $8.25 million to settle Huhtamaki's claims. In the settlement agreement, AmeriPride and Huhtamaki mutually agreed to release each other from all charges or damages related to or arising from the claims asserted in Huhtamaki's complaint, “including ... the costs of replacement water claimed by Huhtamaki.”

The district court approved AmeriPride's settlement agreements in July 2007 in an order entering judgment under Federal Rule of Civil Procedure 54(b). In its order, the court noted that federal courts in California approving settlements involving CERCLA have adopted section 6 of the Uniform Comparative Fault Act as federal common law to determine how the settlement of one or more parties will impact the nonsettling parties, and stated that “[t]his Court does the same here.” It then held that “Section 6 of the Uniform Comparative Fault Act (‘UCFA’) ... in pertinent part, is hereby adopted as the federal common law in this case for the purpose of determining the legal effect of the settlement agreements.”

Meanwhile, litigation between AmeriPride and TEO continued. On January 7, 2011, AmeriPride filed a motion for summary judgment against TEO seeking, among other things, an order holding TEO liable to AmeriPride under 42 U.S.C. § 9607(a) for its response costs, including the amounts paid in settlement to Cal–Am and Huhtamaki. AmeriPride also moved to dismiss TEO's counterclaim under 42 U.S.C. § 9613(f) for contribution.

In an order dated May 12, 2011, the court ruled that TEO was liable for AmeriPride's response costs under § 9607(a) as a matter of law. Next, the court held that the amounts AmeriPride paid in settlement to Cal–Am and Huhtamaki were not recoverable under § 9607(a), but permitted AmeriPride to file an amended complaint seeking to recover these amounts under § 9613(f).⁴ In light of this ruling, the court did not address whether those amounts were necessary response costs that had been incurred consistent with the NCP, though it held that AmeriPride's other response costs met that criterion. The district court concluded that triable questions of fact remained regarding a number of other issues, including the equitable allocation of response costs between TEO and AmeriPride under § 9613(f). The district court therefore set a date for a bench trial to resolve these remaining issues.

Before trial, TEO moved the court for an order reasserting its previous ruling that the UCFA proportionate share approach would apply to determine the effect of AmeriPride's settlements with Chromalloy and Petrolane. At the hearing on its motion, TEO explained that under ...