Chubb Custom Ins. Co. v. Space Systems/Loral, Inc.

Decision Date15 March 2013
Docket NumberNo. 11–16272.,11–16272.
PartiesCHUBB CUSTOM INSURANCE COMPANY, for itself and as subrogee of, and in the name of Taube–Koret Campus for Jewish Life, Plaintiff–Appellant, v. SPACE SYSTEMS/LORAL, INC., a Delaware Corporation Successor Ford Aerospace and Communications Corp.; Ford Motor Company; Sun Microsystems, Inc., a Delaware Corporation; Chevron Corporation; Harman Stevenson Inc., a California corporation doing business as KFC, Defendants–Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

OPINION TEXT STARTS HERE

Kirk C. Chamberlin (argued), Chamberlin Keaster & Brockman LLP, Encino, CA, for PlaintiffAppellant.

Kevin T. Haroff (argued), Daniel K. Kolta, Marten Law, San Francisco, CA, for DefendantAppellee Ford Motor Company.

Brent E. Rychener, Holme Roberts & Owen LLP, San Francisco, CA, for DefendantAppellee Sun Microsystems, Inc.

Robert C. Goodman (argued), D. Kevin Shipp, Rogers Joseph O'Donnell, P.C., San Francisco, CA, for DefendantAppellee Chevron Corporation.

Scott L. Davis (argued), Gardere Wynne Sewell LLP, Dallas, TX, for Amicus Curiae Chartis Specialty Insurance Company; John G. Nevius (argued) and Alexander Hardiman, Anderson Kill & Olick, P.C., New York, NY, for Amicus Curiae United Policyholders.

Appeal from the United States District Court for the Northern District of California, Jeremy D. Fogel, District Judge, Presiding. D.C. No. 5:09–cv–04485–JF.

Before: RONALD M. GOULD, and MILAN D. SMITH, JR., Circuit Judges, and KEVIN THOMAS DUFFY, District Judge.*

Opinion by Judge MILAN D. SMITH, JR.; Dissent by Judge GOULD.

OPINION

M. SMITH, Circuit Judge:

PlaintiffAppellant Chubb Custom Insurance Company (Chubb) filed a subrogation suit against DefendantsAppellees 1 for recovery of insurance payments made to its insured, Taube–Koret Campus for Jewish Life (Taube–Koret), for environmental response costs Taube–Koret incurred in cleaning up pollutants released on its property. In the operative Third Amended Complaint (TAC), Chubb asserted subrogated claims under sections 107(a) and 112(c) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Pub.L. No. 96–510, 94 Stat. 2767 (1980), as amended, 42 U.S.C. §§ 9601– 9675. Chubb also brought subrogated claims under state law. The district court dismissed Chubb's TAC with prejudice under Federal Rule of Civil Procedure 12(b)(6). Chubb appealed the dismissal. We conclude that Chubb has no standing to bring suit under CERCLA section 107(a) because it did not incur any “costs of response” related to the removal or remediation of a polluted site, and because the common law principle of subrogation does not apply to section 107(a); Chubb cannot bring a subrogation claim under section 112(c) because it did not allege that Taube–Koret was a claimant; and Chubb's state law claims are time-barred. Accordingly, we affirm the district court.

FACTS AND PRIOR PROCEEDINGS

Chubb issued an environmental insurance policy to Taube–Koret covering, among other things, remediation costs related to certain pollution incidents on its property. After extended negotiations, and pursuant to the policy, Chubb paid Taube–Koret $2.4 million as reimbursement for Taube–Koret's cleanup costs of contaminants released on its property. The gravamen of Chubb's complaint is that Defendants should be held jointly and severally liable for Taube–Koret's response costs because they released hazardous substances that migrated to Taube–Koret's property from surrounding land that they owned and operated at various times.2

A. The Site

The action involves approximately 47 acres of land, which comprises properties located at 3825, 3963, and 3977 Fabian Way and 901 San Antonio Road in Palo Alto, California (in the aggregate, the Site).3 Chubb alleges that Ford Aerospace & Communications Corporation (Ford Aerospace), now known as DefendantAppellee Space Systems/Loral, Inc. (Space Systems), owned and used the Site from 1959 to 1990 to manufacture and sell communications satellites, satellite equipment, and missile guidance systems. Chubb claims that Ford Aerospace's manufacturing activities resulted in the release of Volatile Organic Compounds (VOCs) in the soil and groundwater. Chubb further alleges that the Site was under the control and supervision of DefendantAppellee Ford Motor Company (Ford Motor), the controlling entity of Ford Aerospace prior to 1990. Ford Motor operated a dewatering system located at 3825 Fabian Way and conducted ineffective remediation activities, which exacerbated the soil and groundwater contamination and caused the migration of hazardous substances onto Taube–Koret's property.

On August 16, 1989, the California Regional Water Quality Control Board (Water Board) issued Order No. 89–137, naming Ford Aerospace a discharger of pollutants and requiring it to clean up certain hazardous substances released on the Site. In August 1990, Space Systems purchased the assets of Ford Aerospace from Ford Motor and continued the operations previously conducted by Ford Aerospace. Chubb alleges that Ford Motor expressly agreed to assume liability for compliance with Order No. 89–137 and successive orders. Space Systems currently owns and occupies buildings located at the three Fabian Way properties.

In 1988, DefendantAppellee Sun Microsystems, Inc. (Sun) acquired 901 San Antonio Road, a 12–acre parcel that became part of the Site. The Water Board named Sun a discharger of pollutants in Order Nos. 93–091, 96–023, and 99–043. The Water Board informed Sun in November 2001 that it intended to oversee the investigation and cleanup of contaminants at 901 San Antonio Road and to recover oversight costs. Chubb alleges that Sun failed to take adequate measures to remediate or abate further contamination caused by Sun's demolition of a vehicle maintenance building previously constructed by Ford Aerospace and known to contain hazardous substances.

In June 2002, Sun sold its 12–acre parcel to Taube–Koret. Chubb alleges that before selling the property, Sun knew about the contaminated soil and groundwater on its property but elected not to take remedial action. The 12–acre parcel on 901 San Antonio Road was later divided into a 4–acre parcel (Parcel 1) and an 8–acre parcel (Parcel 2). Taube–Koret retained Parcel 2 for the purpose of developing an intergenerational community center with an independent and assisted living facility for seniors.

From 1960 to 1977, DefendantAppellee Chevron Corporation (Chevron) owned and operated a gas service station on a property adjacent to the Site located at 851 San Antonio Road. Chubb alleges that during Chevron's operation and demolition of the gas station, hazardous substances contaminated the soil and spread to the property. Chevron also maintained underground storage tanks containing waste oil and petroleum, which allegedly leaked and spilled into the soil at 851 San Antonio Road.

From 1977 to 2007, Defendant Harman Stevenson, Inc. (Stevenson) owned and operated a Kentucky Fried Chicken restaurant at 851 San Antonio Road. Chubb alleges that during the construction and demolition of the restaurant, Stevenson released hazardous substances left by Chevron, which continued to migrate onto the property.

On November 30, 2006, Taube–Koret purchased 851 San Antonio Road, a parcel adjacent to 901 San Antonio Road, for inclusion in its redevelopment project that involved both properties.

B. Site Cleanup Orders and Remediation

Soil and groundwater beneath Taube–Koret's property were found to be contaminated with hazardous substances, including VOCs and polychlorinated biphenyls (PCBs). On June 16, 1999, the Water Board issued Order No. 99–043, which required named dischargers to clean up and abate the effects of hazardous substances found on certain portions of the Site: namely, 3825, 3963, and 3977 Fabian Way and 901 San Antonio Road. On August 12, 2003, after Taube–Koret had acquired 901 San Antonio Road, the Water Board issued Order No. R2–2003–0071, amending its previous order and naming Taube–Koret a discharger based on Taube–Koret's June 2002 purchase of the property from Sun. Taube–Koret complied with Order Nos. 99–043 and R2–2003–0071 by performing the requisite environmental investigation, assessment, remedial actions, and removal of hazardous substances on its property. Between January and June 2006, Taube–Koret submitted to the Water Board for approval a Human Health Risk Assessment report, a Site Cleanup Plan (SCP), and a Risk Management Plan (RMP) for the proposed cleanup and development of 901 San Antonio Road. The Water Board approved the SCP and RMP. Taube–Koret removed contaminated soil from 901 San Antonio Road in June and July 2006.

After Taube–Koret acquired 851 San Antonio Road, it submitted a “Workplan for Phase II Investigation” to the Water Board on December 18, 2006, and an Addendum on February 2, 2007, relating to the San Antonio Road properties. On February 7, 2007, the Water Board approved the Workplan and Addendum. On March 14, 2007, the Water Board issued Order No. R2–2007–0023 with respect to Taube–Koret's redevelopment project, directing Taube–Koret to implement its RMP under a time schedule. Chubb alleges that 851 San Antonio Road, purchased in November 2006 and incorporated into Taube–Koret's redevelopment project, thus became subject to Order No. R2–2007–0023.

In January 2008, during the excavation and remediation of 851 San Antonio Road, Taube–Koret discovered additional contamination. Taube–Koret submitted a soil removal plan to the Water Board, which approved the plan. Between February and March 2008, Taube–Koret completed the excavation and remediation of contaminated soil on 851 San Antonio Road. Chubb alleges that during subsequent excavation activities, Taube–Koret discovered Chevron's waste oil. On March 18, 2008, Taube–Koret removed 550 gallons of waste oil from the ground. Soil samples from the excavation revealed the presence of hydrocarbons and...

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