Golden Gate Way, LLC v. Enercon Servs., Inc.

• Decision Date: 18 November 2021
• Docket Number: Case No. 20-cv-03077-EMC
• Citation: 572 F.Supp.3d 797
• Parties: GOLDEN GATE WAY, LLC, Plaintiff, v. ENERCON SERVICES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of California

572 F.Supp.3d 797

GOLDEN GATE WAY, LLC, Plaintiff,

v.ENERCON SERVICES, INC., et al., Defendants.

Case No. 20-cv-03077-EMC

United States District Court, N.D. California.

Signed November 18, 2021

Jan Adam Greben, Christine Marie Monroe, Greben Monroe, a Professional Law Corporation, Santa Barbara, CA, for Plaintiff.

Brian Lee Zagon, Allison Elaine McAdam, Van Ness Feldman, LLP, Lafayette, CA, Ani M. Esenyan, Pro Hac Vice, Van Ness Feldman LLP, Washington, DC, Terry M. Kollmorgen, Moyers Martin, LLP, Tulsa, OK, for Defendant Enercon Services, Inc.

Jason Moberly Caruso, John Edward VanVlear, Newmeyer and Dillion LLP, Newport Beach, CA, for Defendant ERM-West, Inc.

ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

Docket No. 78

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiff and Counter-Defendant Golden Gate Way, LLC ("GGW") has brought this action against Defendant and Counter-Claimant Enercon Services, Inc. ("Enercon") based on Enercon's alleged contamination of GGW's property while conducting environmental consulting work in 2008. See Docket No. 59 ("FAC"). GGW asserts claims under CERCLA, 42 U.S.C. § 9601 et seq. , and California's Hazardous Substance Account Act ("HSAA"), Cal. Health & Safety Code § 25300 et seq. , as well as for various common-law torts. See FAC. Pending before the Court is Enercon's motion for partial summary judgment based on a limitation of liability provision in the parties’ contract for the consulting work. See Docket No. 78 ("Mot."). Enercon argues that the provision "applies to the claims asserted by GGW against Enercon," that it is enforceable, and that it limits GGW's total recovery in this matter to $14,939.80. Id. at 4. GGW opposes the motion, arguing that that the provision is unenforceable because, during contractual negotiations, Enercon failed to disclose to GGW (1) the environmental risks involved in Enercon's consulting work and (2) the scope of Enercon's insurance coverage for the project. See Docket No. 84 ("Opp'n") at 1.

For the following reasons, the Court GRANTS Enercon's motion for summary judgment on the five related issues that it raises and holds that GGW's potential recovery in this case is limited to $14,939.80.

II. BACKGROUND

A. Factual Background

"This case arises out of the environmental contamination at and around [certain] real property" in Lafayette, California, which GGW has owned since 1987. Docket No. 77 ("Stipulated Facts") ¶ 5. From approximately 1956 until 1999, a dry-cleaning business operated at the property and used the chemical agent perchloroethylene ("PCE"). See id.

In 2008, GGW attempted to refinance its loan on the property with Union Bank.¹ See Mot. at 5, Opp'n at 2. As part of the loan-refinancing process, Union Bank required GGW to conduct a Phase I environmental investigation on the property, which was completed in August 2008. Opp'n at 2. Union Bank then further "required GGW to retain a bank-approved consultant to perform a Limited Phase II subsurface investigation," id. , "to determine whether dry cleaning contamination was present" at the property, Mot. at 6. Per its policy, the bank solicited bids for the Phase II investigation and presented GGW with two proposals, one from Enercon (dated September 4, 2008) and another from a firm called Geologica. See Opp'n at 2-3, Mot. at 6. The proposals were received by William Peacock, GGW's "managing partner" and "sole decision maker," on September 9, 2008. See Opp'n at 3, Mot. at 5-6. Mr. Peacock informed Union Bank "that he was going to call both consultants with questions and then make a decision" about which to hire by September 12, 2008. Mot. at 6.

In addition to running GGW, Mr. Peacock was the president of Peacock Construction Inc., a company that he founded in 1982 and had grown into a successful business by the time he retired in 2013. See id. at 5, Opp'n at 10. "Mr. Peacock graduated from San Diego State University with a degree in business administration in 1969," and later worked as a real estate broker and property manager at multiple large companies before starting his own business. See Mot. at 5. At each of his jobs, Mr. Peacock was responsible for contracting with other parties; he estimates that "he signed over a thousand contracts while President of Peacock Construction." See id. Prior to his agreement with Enercon in 2008, however, "Mr. Peacock had never been part of any type of environmental matter or contract" and was used to the purported custom in the construction industry of each (insured) party bearing financial responsibility for any risks that it created. See Opp'n at 10. Enercon, meanwhile, is a nationwide firm that performs "site assessment work," "environmental investigation[s]," and "remediation services," and has extensive "experience relating to environmental matters and contracts." See id. at 2.

Shortly after receiving and reviewing Enercon's proposal for the Phase II investigation, Mr. Peacock spoke with John Wharff, a Senior Project Manager at Enercon, via phone. See Mot. at 6, Opp'n at 4. The proposal was a three-page, typed document that included the scope of services for the investigation, a site safety plan, a disclaimer of consequential damages, and a suggested schedule. Docket No. 78-1 ("Zagon Decl."), Ex. C at MUB000004-MUB000006. The proposal also contained, on its second page, a section entitled "Limitations."

Id. at MUB000005. It stated, in full:

Golden Gate Associates, LLC, herein referred to as the client; and ENERCON, herein referred to as the consultant, have discussed the risks and rewards associated with this project , as well as consultant's fee for services. Client and consultant agree to allocate certain of the risks so that , to the fullest extent permitted by law, consultants [sic] total aggregate liability to the client and all contractors and subcontractors is limited to our fee for any and all injuries, damages, claims, losses, expenses or claim expenses (including attorney's fees) arising out of this agreement from any cause or causes , [sic ] such causes include, but are not limited to, consultant's negligence, errors, omissions, strict liability, or breach of warranty. Client further agrees to notify all contractors and subcontractors of this limitation of consultant's liability to them and require them to abide by this limitation of damages suffered by any contractor or subcontractor arising from consultant's actions or inactions. Neither the contractor nor any subcontractor assumes any liability for damages to others which may arise on account of consultant's actions or inactions. As used in this paragraph, "consultant" includes consultant, consultant's sub-consultants and contractors, and their respective partners, officers, directors, shareholders, and employees.

Id. (emphasis added). The "Limitations Provision" thus specifies that Enercon's "total aggregate liability" to Golden Gate Way "for any and all injuries, damages, claims, losses, expenses or claim expenses ... arising out of this agreement" would be "limited to [Enercon's] fee" for the Phase II investigation, which GGW does not dispute ultimately amounted to $14,939.80. See id. , Opp'n, Mot. at 10.

In his conversation with Mr. Wharff, Mr. Peacock focused on Enercon's experience and its availability to begin the investigation quickly. See Mot. at 6, Opp'n at 4. Mr. Peacock also asked whether he could add a new term to the proposal, which would require Enercon to name GGW as an additional insured on its commercial general liability ("CGL") insurance policy. See Mot. at 6, Opp'n at 4. Mr. Wharff answered in the affirmative. Mot. at 6. At his deposition, Mr. Peacock averred that the only aspect of Enercon's proposal that he addressed during their conversation was the additional insured term:

Q. Okay. Did you ask Mr. Wharf [sic ] about any of [the] provisions in the proposal which you had read?

A. Yes.

Q. On your phone call?

A. Yes.

Q. What did you ask him?

A. Told him if we decided to go ahead, that I wanted to add the additional insurer term that I wrote in there to the—to the proposal.

...

Q. Okay. What else did you tell Mr. Wharf [sic ], if anything, about the terms in the contract?

A. I didn't tell him anything.

Q. Okay. What was Mr. Wharf's [sic ] response to you telling him you wanted to write in some insurance requirements?

A. No problem, go ahead and do it.

Q. So Mr. Wharf [sic ] didn't tell you this was a take it or leave it contract ... and we don't take changes from customers?

A. No, I never heard that.

Zagon Decl., Ex. A at 104:12-105:10. Mr. Peacock further clarified that he did not discuss the Limitations Provision with Mr. Wharff:

Q. Now, unlike the insurance provision you wrote into the contract, Mr. Peacock, you made no changes to the limitation section in [the proposal], correct?

A. That is correct.

Q. Other than asking to add[,] if you could have the insurance provision, to which Mr. Wharf [sic ] said yes, did you ask Mr. Wharf [sic ] any questions about the contract or the proposal?

A. No.

Id. at 117:16-24. Elsewhere in his deposition, "Mr. Peacock confirmed that he had the opportunity to read the proposal in detail and that Mr. Wharff did not say anything to dissuade him from doing so." Mot. at 8 (referring to Zagon Decl., Ex. A at 104:12-105:19, 106:23-25).

According to GGW, Mr. Wharff did not address any risks associated with the Phase II investigation, such as the possibility that Enercon's work could result in contamination at GGW's property and create "substantial remediation cost[s]," during his conversation with Mr. Peacock. Opp'n at 4. This was in spite of the fact that the Limitations Provision in Enercon's proposal states that the parties "discussed the risks and rewards associated with th[e] project." See id. , Zagon Decl. at MUB000005. In his deposition, Steven Walker, Enercon's designated deponent in this matter, see Fed. R. Civ. P. 30(b)(6), acknowledged that he did not have any records or other information "show[ing] specifically...