Coppola v. Smith

• Decision Date: 15 January 2015
• Docket Number: CASE NO. 1:11-cv-01257-AWI-BAM
• Court: U.S. District Court — Eastern District of California
• Parties: VIOLA COPPOLA, et al., Plaintiffs v. GREGORY SMITH, et al., Defendants AND RELATED CLAIMS

VIOLA COPPOLA, et al., Plaintiffs v. GREGORY SMITH, et al., DefendantsAND RELATED CLAIMS

CASE NO. 1:11-cv-01257-AWI-BAM

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

January 15, 2015

ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

(Doc. No. 200)

This is an environmental law case that arises from the chemical contamination of property surrounding a dry cleaning business in Visalia, California.Plaintiffs(collectively "Coppola") have brought suit against inter alia Martin and Martin Properties, LLC ("M&M").The Court previously dismissed the Third and Fourth Amended Complaints under Rule 12(b)(6)following motions filed by various defendants.The active complaint is the Fifth Amended Complaint ("FAC"), and there are numerous counterclaims and cross-complaints that have been filed by various defendants.Now before the Court is M&M's motion for summary judgment.For the reasons that follow, the Court will grant summary adjudication on certain issues but otherwise deny M&M's motion.

FACTUAL BACKGROUND¹

Since 1987, Coppola has owned and operated a dry cleaning facility located at 717 W. Main St., Visalia, California ("717 W. Main").See DUMF's 1, 2.Coppola has used tetrachloroethylene (PCE) in their dry cleaning business since at least 1994.DUMF 2.The California Department of Toxic Substances Control("DTSC") and the United States Environmental Protection Agency("EPA") have investigated 717 W. Main.SeeDUMF 3.As a result of the investigation, it was concluded that there was a "release" or a "threatened release" of PCE from 717 W. Main into the soil and groundwater.SeeFAC Ex. A §§ 2.4, 3.3.In June 2011, DTSC issued an order ("2011 Order") for Coppola to investigate and remediate the contamination caused by their dry cleaning business.SeeDUMF 4; FAC Ex. A.

M&M is a local real estate investment company operated by its managing member, William Martin, and by Joshua Martin, the past Vice President of Martin Enterprises, Inc.(the management company of M&M).DUMF 5.In March 2006, Martin and Martin Properties, LP ("Martin LP") filed a Certificate of Conversion with the Delaware Secretary of State in order to convert from an LP to an LLC.SeeHsuDec. ¶ 3 & Ex. A.Following the filing of the Certificate of Conversion, Martin LP became M&M in March 2006.Seeid.

From 1959 to possibly 1971, a dry cleaning business known as Miller's Dry Cleaners operated at 110 N. Willis St., Visalia, California ("110 N. Willis").SeeFAC ¶ 34, Ex. C § 6.0.However, in the early 1970's, a commercial office building was built at 520 W. Main St., Visalia, California.SeeWm. MartinDec. ¶ 13;FAC Ex. C § 6.0.The land parcel for 520 W. Main included 110 N. Willis, and in the construction process, the area that had been known as 110 N. Willis became part of the northern portion of 520 W. Main St. SeeFAC Ex. C § 6.0.

In March 1995, Martin LP purchased 520 W. Main("the Property") for $1.425 million from Benart-Main Street Investors ("Benart").SeeWm. MartinDepo. 19:19-25;Wm. MartinDec. ¶ 4;DUMF 6.Prior to purchasing the Property, Martin LP reviewed an October 1991 Preliminary Site Assessment ("PSA") by The Twining Laboratories, Inc.(a geotechnical andenvironmental consulting company), a November 1991 Subsurface Investigation Report ("SIR") prepared by Environmental Science and Engineering, Inc., and a September 1991 Preliminary Structural Evaluation ("PSE") prepared by Teter Consultants.²SeeWm. MartinDec. ¶ 6.The PSA, the SIR, and the PSE had been obtained by and prepared for Benart.³Seeid. & Exs. B, C. Martin LP also made physical inspections of 520 W. Main and "walked the streets" in the area, had discussions and interviews with Benart, local business owners, and consulted with a financial consultant regarding the past use and history of the Property.⁴Seeid.at ¶ 5;Wm. MartinDepo. 77:24-78:4.Martin LP did not retain an engineer, a geologist, or any type of environmental professional to inspect the Property.SeeWm. MartinDepo. 75:14-25.Martin LP's pre-purchase investigation did not identify any PCE contamination or any past operation of a dry cleaning business at the Property.Seeid.

The PSA states that it reports the results of a preliminary site assessment of the environmental condition of the Property.SeeDUMF 16; Wm. Martin Dec. Ex. B.The purpose of the PSA was to evaluate the environmental condition of the Property and adjacent properties based on past and current activities, identify reported soil and groundwater contamination sites and incidents up to 1 mile from the Property, and recommend additional studies as deemed appropriate.Seeid. at p.2.The PSA states that it was prepared in accordance with current standards of professional practice and in accordance with the duties of environmental engineers in 1991.SeeWm. Martin Dec. Ex. Bat 27;DUMF 17.The PSA considered regional geologic andhydrological factors including soil type and groundwater characteristics.SeeWm. Martin Dec. Ex. Bat pp. 2-12;DUMF 18.The PSA reviewed a preliminary title report for existing environmental liens, conducted a visual reconnaissance of the Property, conducted a reconnaissance of the area within a quarter mile radius, reviewed aerial photographs to evaluate past history and use, searched and reviewed regulatory agency records to identify environmental issues, and interviewed governmental agency personnel and others who may have knowledge of the Property's condition and past use.Seeid.The PSA indicated that from the 1930's to the 1950's, the Property was used as a service station, and after 1973 as a commercial office building.SeeWm. Martin Dec. Ex. Bat p.13;DUMF 19.The PSA indicated that from 1958 to 1972, no listing for 520 W. Main St. was recorded.Seeid.The PSA contained no finding of any usage relating to dry cleaning or similar operations.See Wm. Martin Dec. Ex. B;DUMF 20.The PSA stated that the presence of water wells, surface impoundments, soil staining, or evidence of underground or aboveground storage tanks were neither discovered nor observed on the Property, and that a review of the area surrounding the Property indicates that no known or suspected hazardous waste properties are located within 2,000 feet.SeeWm. Martin Dec. Ex. Bat pp.14, 23-24;DUMF 21.The PSA noted that two wells, Well 06-02 and Well 06-03, contained 0.8 parts per billion and 1.8 parts per billion, respectively, of PCE but that both numbers did not exceed Maximum Concentration Levels ("MCL").SeeWm. Martin Dec. Ex. Bat p.21.The PSA concluded that there were some asbestos issues with the building, but mitigation of the asbestos was made a condition of the purchase, and the asbestos was removed prior to closing the purchase.SeeWm. Martin Dec. Ex. Bat pp.14-16, 23-24;DUMF 22.However, the PSA also stated that based on information from three sources, "environmental concerns to soil and groundwater at the Property from on-site sources cannot be evaluated with information made available to Twining . . . ."Wm. Martin Dec. Ex. Bat 23.Further, environmental concerns to soil and groundwater from 3 of 14 off-site sources within one-half mile of the Property could not be evaluated.Seeid. at p.26.The PSA limited its findings to the conditions that existed at the time, noted that soil and groundwater samples at the Property for chemical analysis were not included, and explained that changes in existing conditions at the subject property due to time lapse, natural causes, oroperations adjacent to the Property may render the PSA's conclusions invalid unless the changes are reviewed and the conclusions approved.Seeid.The PSA stated that the applicable standard of care is time sensitive.Seeid. at p. 27.The PSA warned that the work was performed for the sole use of Benart, and others who may rely on the findings have a duty to determine the adequacy of the report for their intended use.Seeid.

The PSA was the first report of its kind that M&M had ever reviewed.SeeWm. MartinDepo. 96:22-97:1.Although Martin LP owned other real estate, those properties were all farmland.Seeid. at 41:20-42:11.Martin LP's financial consultant advised Martin LP that if a property has a structure on it, a Phase I environmental report was necessary.Seeid.at 42:12-24.

The SIR was designed to investigate the past existence of a fuel service station and possible underground storage tanks, and to identify any contamination of the soil or subsurface.SeeWm. Martin Dec. Ex. Dat pp.172-173.The SIR indicated that two soil borings on the Property were taken for analysis.⁵Seeid.No stressed vegetation or petroleum staining was purportedly observed.Seeid.Based on the soil samples, the SIR purportedly concluded that the boring contained no detectable petroleum hydrocarbons.Seeid.

Following the purchase of the Property, and in connection with obtaining a real-estate loan, an appraisal was prepared for Martin LP in December 1995.SeeDUMF 9.The appraisal report valued the Property at $1.425 million, and did not identify any PCE contamination, any prior use of the Property as a dry-cleaner, or any reason to suspect PCE contamination.Seeid.; Wm. Martin Dec. Ex. D.The $1.425 million evaluation matched Martin L.P.'s purchase price.SeeDUMF 22.The appraisal included various assessments, inspections, and reviews, including reviewing the PSA and the SIR.See Wm. Martin Dec. Ex. D;see alsoDUMF 25.The appraisal indicated that there were no signs of possible or known toxic or hazardous waste problems, except for the asbestos which had been removed.Seeid.

In August 2006, DTSC issued a Site Screening Assessment ("2006 Assessment") for the EPA.See Boon Dec. Ex. G. This Assessment identified the site at issue as "Former Miller Dry Cleaners," located at "110 N. Willis Street, Visalia, Tulare, CA."Id.The 2006 Assessment statesin part, "No site visit was performed as part of this site screening.A site visit previously was...