Carolina Cas. Ins. Co. v. Oahu Air Conditioning Serv., Inc.

• Decision Date: 28 January 2014
• Docket Number: Civ. No. 2:13–1378 WBS AC.
• Citation: 994 F.Supp.2d 1082
• Court: U.S. District Court — Eastern District of California
• Parties: CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff, v. OAHU AIR CONDITIONING SERVICE, INC., dba Oahu Air Conditioning Co.; Pacific Commercial Services, LLC; Matson Navigation Company, Inc.; and Does 1 through 100, Defendants.

994 F.Supp.2d 1082

CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff,

v.OAHU AIR CONDITIONING SERVICE, INC., dba Oahu Air Conditioning Co.; Pacific Commercial Services, LLC; Matson Navigation Company, Inc.; and Does 1 through 100, Defendants.

Civ. No. 2:13–1378 WBS AC.

United States District Court, E.D. California.

Signed Jan. 28, 2014.

Kevin Kay Cholakian, Cholakian & Associates, South San Francisco, CA, for Plaintiff.

Christopher T. Johnson, Dongell Lawrence Finney LLP, Washington, DC, Marilyn Raia, Bullivant Houser Bailey PC, San Francisco, CA, for Defendants.

MEMORANDUM AND ORDER RE: MOTION TO DISMISS; MOTION TO STRIKE

WILLIAM B. SHUBB, District Judge.

Plaintiff Carolina Casualty Insurance Company brought this action against Oahu Air Conditioning Service, Inc., doing business as Oahu Air Conditioning Co. (“Oahu”), Pacific Commercial Services, LLC (“Pacific”), and Matson Navigation Company, Inc. (“Matson”) arising out of a hazardous waste spill by plaintiff's insured, Smith Transportation Systems, Inc. (“Smith”). Oahu and Pacific (“moving defendants”) now move to dismiss plaintiff's First Amended Complaint (“FAC”) for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), and to strike various other allegations in the First Amended Complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(f). (Docket No. 16.)

I. Factual & Procedural History

In October 2010, plaintiff issued an insurance policy to Smith, a transportation company that specializes in transporting hazardous waste to disposal sites. (FAC ¶ 9.) In July 2011, Smith transported a trailer loaded with hazardous material from San Jose, California to a waste disposal site in Sacramento, California. ( Id. ¶ 11.) After Smith delivered the trailer, the Sacramento Police Department was called to the disposal site because the trailer was observed emitting white smoke. ( Id. ¶ 12.) After several hours, an active fire broke out and completely engulfed the trailer. ( Id.) A subsequent investigation revealed that the trailer contained refrigerator waste oil that Oahu had shipped to California for disposal, and that the fire resulted in the release of hazardous vapors and contaminated water runoff into the environment. ( Id. ¶ 13.)

As a result of this incident, a number of claimants issued Smith notices of violation and demanded that it pay for the cleanup of the hazardous waste spill from the trailer. ( Id. ¶ 22.) Pursuant to Smith's insurance policy, which required plaintiff to provide a defense and indemnify Smith from any claims resulting from a hazardous waste spill, plaintiff settled and paid upon numerous claims brought against plaintiff by several claimants, including the City of Sacramento, the County of Sacramento, and Clean Harbor Environmental Services. ( Id. ¶¶ 23–24.) In addition, plaintiff reimbursed Smith for its cleanup expenses and indemnified it against additional personal injury damages. ( Id. ¶ 25.)

Plaintiff alleges that defendants were involved in the supply, packing, and transportation of the refrigerator waste oil that Smith transported to Sacramento. ( Id. ¶¶ 17–21.) As a result, plaintiff and Smith issued a claim and demand to defendants for reimbursement of the payments plaintiff incurred as a result of the hazardous waste spill. ( Id. ¶ 26.) Defendants did not pay. ( Id.)

Plaintiff then brought this action seeking: (1) subrogation pursuant to Section 112(c) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9612(c); (2) contribution pursuant to Section 113(f) of CERCLA, 42 U.S.C. § 9613(f); (3) contribution and/or indemnity pursuant to the Hazardous Substance Account Act (“HSAA”), Cal. Health & Safety Code § 25363; (4) equitable indemnity under California common law; (5) allocation and apportionment of fault under California common law; (6) contribution under California common law; and (7) subrogation under California common law. (Docket No. 7.) Moving defendants now move to dismiss each of these claims for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), to strike plaintiff's references to the “tort of another” doctrine pursuant to Rule 12(f), and to strike allegations related to personal injury or toxic tort claims pursuant to Rule 12(f). (Docket No. 16.)

II. Motion to Dismiss

On a motion to dismiss under Rule 12(b)(6), the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984); Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). To survive a motion to dismiss, a plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This “plausibility standard,” however, “asks for more than a sheer possibility that a defendant has acted unlawfully,” and where a complaint pleads facts that are “merely consistent with a defendant's liability,” it “stops short of the line between possibility and plausibility.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his entitle[ment] to relief’ requires more than labels and conclusions....” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (alteration in original) (citations omitted). “Threadbare recitals of the elements of a cause of action,supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937; see also Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”).

A. CERCLA Section 112(c)

Section 112(c) of CERCLA provides that “[a]ny person ... who pays compensation pursuant to this chapter to any claimant for damages or costs resulting from the release of a hazardous substance ¹ shall be subrogated to all rights, claims, and causes of action for such damages and costs of removal that the claimant has under this chapter or any other law.” 42 U.S.C. § 9612(c)(2). The Ninth Circuit has construed CERCLA to require that an “insured must first make a claim to ... a potentially liable party before an insurer can bring a subrogation action under [S]ection 112(c).” Chubb Custom Ins. Co. v. Space Systems/Loral Inc., 710 F.3d 946, 971 (9th Cir.2013).

In Chubb, the plaintiff brought a subrogation claim under Section 112(c) after its insured incurred environmental cleanup costs and submitted an insurance claim. Id. at 957. The district court held, and the Ninth Circuit agreed, that plaintiff's insured was not a “claimant” under the statute because it had not submitted any claim for reimbursement to the defendants, who plaintiff alleged were potentially responsible parties (“PRPs”). Id. at 965–66. The Ninth Circuit reasoned that requiring a plaintiff's insured to submit a claim to other PRPs for reimbursement prior to pursuing a subrogation action furthered two of CERCLA's major policy goals: preventing the insured from obtaining double recovery from the insurance company and any PRPs; and identifying PRPs so that they, rather than insurance companies, would shoulder the cost of environmental cleanup. Id. at 968–70.

Unlike the plaintiff in Chubb, whose insured made no claim for reimbursement from the defendants whatsoever, plaintiff alleges that Smith “made demand and claim upon and against Defendants ... for payment and reimbursement” of the expenses Smith incurred. (FAC ¶ 26.) Although moving defendants maintain that this allegation is insufficient to show that Smith made a “formal claim,” neither Chubb nor the statute supports this conclusion. While Chubb held that the term “claimant” refers to “any person who presents a written demand for reimbursement of monetary costs ... for a CERCLA violation” to a PRP, it did not specify the precise form that a written claim for reimbursement must take. See 710 F.3d at 959.

Nor does 40 C.F.R. § 307.30(a), which governs requests for payment from a PRP, require dismissal. Although that regulation outlines eight specific criteria that a written claim must satisfy, it is inapplicable here because it applies only to written requests to PRPs for reimbursement “before filing a claim against the Fund,” rather than written requests for reimbursement before filing a civil action for subrogation pursuant to Section 112(c). 40 C.F.R. § 307.30(a). Even if it were applicableto Smith's demands for reimbursement, it does not follow that plaintiff's complaint must specify in exact terms how Smith's demand letter complied with these requirements. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (noting that a complaint “does not need detailed factual allegations” to survive a motion to dismiss). At this stage in the litigation and in the absence of controlling authority showing otherwise, plaintiff's allegation that Smith sent a written demand for reimbursement to defendants suffices to show that Smith is a “claimant” and that plaintiff may therefore seek subrogation under Section 112(c). Accordingly, the court must deny moving defendants' motion to dismiss this claim.

B. CERCLA Section 113(f)

Section 113(f) of CERCLA provides that “[a]ny person may seek contribution from any other person who is liable or potentially liable under Section 9607(a) of this title, during or following any civil action under section 9606 ... or under section 9607(a) of this title.” 42 U.S.C. § 9613(f)(1). In addition, the statute provides that a “person who has resolved its liability to the United States or a...