BKHN, Inc. v. Department of Health Services, H008473

• Decision Date: 06 January 1992
• Docket Number: No. H008473,H008473
• Citation: 4 Cal.Rptr.2d 188,3 Cal.App.4th 301
• Parties: BKHN, INC., Plaintiff and Appellant, v. DEPARTMENT OF HEALTH SERVICES, et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

Page 188

4 Cal.Rptr.2d 188

3 Cal.App.4th 301

BKHN, INC., Plaintiff and Appellant, v. DEPARTMENT OF HEALTH SERVICES, et al., Defendants and Respondents.

No. H008473.

Court of Appeal, Sixth District, California.

Jan. 6, 1992.

Beveridge & Diamond, Robert D. Wyatt, David D. Cooke, and Peter R. Krakaur, San Francisco, for plaintiff and appellant.

Daniel E. Lungren, Atty. Gen., Roderick E. Walston, Chief Asst. Atty. Gen., Theodora Berger, Sr. Asst. Atty. Gen., Ken Alex, Supervising Deputy Atty. Gen., and Susan S. Fiering, Deputy Atty. Gen., for defendants and respondents.

AGLIANO, Presiding Justice.

Plaintiff BKHN, Inc., filed this action for declaratory relief to challenge demands made against it by respondent Department of Health Services (DHS) for payment of environmental cleanup costs related to mercury contamination in Almaden Quicksilver County Park. The trial court entered a judgment of dismissal after sustaining the demurrer of DHS without leave to amend against BKHN's first amended complaint. The court concluded that "a 'declaration or determination is not necessary or proper at the time under all the circumstances.' CCP Section 1061." Plaintiff appeals. We will affirm for the reasons explained below.

FACTUAL AND PROCEDURAL BACKGROUND

The procedural question of whether the demurrer was properly sustained in this case must be assessed in light of the underlying substantive law. Both the national and state governments have enacted legislation providing for remedial action when hazardous substances are discovered in the environment. The federal law, Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, 42 U.S.C. §§ 9601-9675) provides that a party is liable for remedial costs incurred if it owns the contaminated property or owned the property at the time during which the hazardous substances were disposed. (42 U.S.C., § 9607(a).) Liability under CERCLA may be joint and several. (U.S. v. Stringfellow (C.D.Cal.1987) 661 F.Supp. 1053, 1060.) Any person, including a state, may file an action seeking contribution for costs incurred pursuant to the statute from any other person. (42 U.S.C., § 9613.)

The corresponding California law, enacted in 1980, is called the California Carpenter-Presley-Tanner Hazardous Substance Account Act (HSAA, Health & Saf.Code, §§ 25300-25395). It incorporates many of the provisions of CERCLA, including those that provide for liability. (Health & Saf.Code, § 25323.5.) Section 25363 of the Health and Safety Code further provides, however: "(a) ... [A]ny party found liable for any costs or expenditures recoverable under this chapter who establishes by a preponderance of the evidence that only a portion of those costs or expenditures are attributable to that party's actions, shall be required to pay only for that portion. [p] (b) ... [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." DHS is the state agency charged with the responsibility of administering the provisions of the HSAA.

Because this is an appeal from an order sustaining a demurrer, we recite the facts as alleged in the first amended complaint. (Storch v. Silverman (1986) 186 Cal.App.3d 671, 675, 231 Cal.Rptr. 27.) The Almaden Quicksilver County Park in Santa Clara County was found to contain mercury in its soil and surface waters at a level exceeding regulatory standards. From 1845 until approximately 1968, parcels of property located within the current boundaries of the park were owned by numerous persons and/or entities, unrelated to plaintiff. During those years, mercury mining operations were conducted at the site. In 1968, NIMCC, plaintiff's alleged corporate predecessor in interest, acquired some of the land in the site. It conducted intermittent mining activities on a portion of the site from approximately July 1968 until May 1971, at which time it permanently ceased its activities. NIMCC's mercury production constituted no more than 0.3 percent of the total mercury produced from the site since the date of commencement of mining.

Between 1972 and 1975, the County of Santa Clara (the County) purchased the land from NIMCC. The site has been open to the public as a park since 1977.

In October of 1987 DHS issued a Remedial Action Order to BKHN and the County which alleged that the site's soil and surface waters were contaminated with mercury at levels above applicable regulatory standards, and that plaintiffs were responsible for remediation of the site.

In June of 1990, BKHN's attorney received a letter from DHS which stated, in part: "Your client [BKHN] has been identified as one of the two Responsible Parties (RPs) for remedial or removal action costs incurred during the cleanup of the Almaden Quicksilver County Park site. California Health and Safety Code Section 25360 provides for the recovery of costs from RPs as follows: [language of statute]. [p] The federal Comprehensive Environmental Response, Compensation, and Liability Action (CERCLA) of 1980, Section 107 also authorizes cost recovery from RPs. [p] RPs may be held jointly and severally liable for site cleanup costs under CERCLA. This means that the [DHS] may collect the entire amount due for the costs incurred at the site from any one RP. The invoice is for all cleanup costs incurred at this site. Enclosed with this letter is a list of all RPs for this site. You may wish to negotiate with the other RPs to allocate the site cleanup costs among yourselves." The letter went on to state that the amount owing was $112,734.30. It then provided: "This invoice is due and payable within thirty (30) days of the date of this letter. By mailing this payment to the above address with a copy of the invoice within thirty (30) days you will ensure that it is credited to the proper account and forestall any additional collection action by DHS. [p] Although the entire balance of this invoice is currently due, any partial payments will terminate future interest charges on the amount paid. Interest will continue to accrue on any portion of the outstanding balance not paid within thirty (30) days." The County received the same letter.

BKHN advised DHS by letter that under Health and Safety Code section 25363 it was required to pay only that portion of costs for cleanup which were attributable to its mercury production, and therefore declined to make the payment demanded.

In October 1990, DHS sent another letter to BKHN demanding payment of $133,233.07. ¹ This letter was designated a "FINAL NOTICE" and stated, in part: "Failure to pay this debt may result in offset of your State income tax refund or any other payment made by the State Controller's Office pursuant to Section 12419.5 of the Government Code." BKHN reiterated its position and refused to make the requested payment.

The parties note that the costs for which DHS seeks reimbursement are only for the initial phases of the cleanup. There is still work to be done and the amount which will be needed to complete remediation is not yet known. Likewise, there has been no final determination of liability with respect to either BKHN or the County, nor has BKHN admitted any liability.

In November 1990, BKHN and the County filed a complaint for declaratory relief against the DHS, Hazardous Substance Account, and Hazardous Cleanup Fund. ² Plaintiffs' complaint sought a declaration that "liability under the Act [HSAA] for costs incurred pursuant to the Act is not joint and several; that liability under the Act for costs incurred pursuant to the Act is to be apportioned according to equitable principles among parties found liable under that Act pursuant to Health & Safety Code § 25363; that plaintiffs BKHN and County are obligated to pay only the portion of removal or remedial costs or expenditures at the Site, if any, that are attributable to each party's acts; that the Account or the Fund shall pay any 'State shares' associated with the removal and remedial activities at the ... Park; and that to the extent that the state seeks reimbursements for money expended from the Fund, such reimbursement must come from the Account and not the plaintiffs."

Defendants demurred to the complaint, arguing that declaratory relief should not be granted because the matter was not yet ripe for adjudication, that there was no actual controversy between the parties and that there was no immediate threat of harm. During the hearing on the demurrer, DHS waived the right to offset the amounts it demanded from the plaintiffs against any tax refund they might be due or any other payment made by the Controller's office. The trial court then sustained the demurrer, "with leave to amend in 10 days, on the grounds that the controversy is not ripe, in view of the stipulation made in open court that Defendants would waive any right to offset the amount due against any tax refund pursuant to Government Code Section 12419.5. It thus appears that a 'declaration or determination is not necessary or proper at the time under all the circumstances.' CCP Section 1061."

Plaintiffs filed an amended complaint for declaratory relief in February 1991. It contained essentially the same allegations of the original except that it included additional allegations regarding the harm they were exposed to and the nature of the controversy. Defendants filed another demurrer which the court sustained, this time without leave to amend. The court ruled: "Despite the amendments plaintiffs have made, it still appears to the court in the exercise of its discretion that a 'declaration or determination is not necessary or proper at the time under all the circumstances.' CCP Section 1061."

BKHN has appealed from the judgment of dismissal entered pursuant to the court's order. The County has not appealed.

DISCUSSION

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