Orange Cnty. Water Dist. v. Alcoa Global Fasteners, Inc., D070771

Decision Date01 June 2017
Docket NumberD070771
Citation219 Cal.Rptr.3d 474,12 Cal.App.5th 252
CourtCalifornia Court of Appeals Court of Appeals
Parties ORANGE COUNTY WATER DISTRICT, Plaintiff and Appellant, v. ALCOA GLOBAL FASTENERS, INC.et al., Defendants and Respondents.

Connor, Fletcher & Hedenkamp, Edmond M. Connor, Douglas A. Hedenkamp, Irvine; Miller & Axline, Duane C. Miller, Michael D. Axline, and Justin Massey, Sacramento, for Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, R. Gaylord Smith, Ernest Slome, Thomas Teschner, Brittany H. Bartold, San Diego, and Malissa McKeith, Los Angeles, for Defendant and Respondent Northrop Grumman Systems Corporation.

Tatro Tekosky Sadwick and René P. Tatro, Los Angeles, for Defendant and Respondent Alcoa Global Fasteners, Inc.

Bowman and Brooke and Lawrence Ramsey, Torrance, for Defendant and Respondent CBS Broadcasting, Inc.

Kutak Rock, Jad T. Davis and Tiffany K. Ackley, Irvine, for Defendant and Respondent Crucible Materials Corp.

Musick Peeler & Garrett and Steven J. Elie, Los Angeles, for Defendant and Respondent The Arnold Engineering Company.

HALLER, J.

The Orange County Water District (the District) brought this action to recover costs associated with the North Basin Groundwater Protection Project (NBGPP), a proposed $200 million effort intended to address groundwater contamination in northern Orange County, California caused by volatile organic compounds (VOC's) and other chemicals. Since at least the mid-1980's, the District and other regulatory agencies such as the Regional Water Quality Control Board (RWQCB) have been aware of VOC groundwater contamination in the North Basin area. The District and various private parties under the direction of the RWQCB investigated the sources of contamination. Based on these investigations, the District and others concluded that the groundwater contamination was caused by VOC releases at a number of industrial sites in the North Basin area. Under the supervision of the RWQCB and other regulatory agencies, several of these industrial sites have undergone remediation to remove VOC contamination from the shallow soil and groundwater. Other industrial sites received "no further action" letters from the RWQCB based on their investigations.

Concerned that VOC contamination remained in groundwater notwithstanding these remediation efforts, the District began to develop an overarching solution to groundwater contamination in the North Basin. Beginning in 1999, the District developed and then refined a series of proposals for the NBGPP. The NBGPP is intended to treat VOC contamination in the shallow aquifer, with the goal of preventing contamination of the deeper principal aquifer. The principal aquifer is a source of drinking water for several Orange County municipalities.

An aquifer, at its most basic level, consists of soil or permeable rock saturated with water. In the North Basin area, the shallow aquifer begins approximately 130 feet below ground level and extends to approximately 250 feet ground level. Below the shallow aquifer, separated by a relatively less permeable layer of soil, is the principal aquifer. The principal aquifer begins just below the shallow aquifer and extends to approximately 1,200 to 1,500 feet below ground level in the North Basin area. When used without qualification in this appeal, the term "groundwater" typically refers to water in the shallow aquifer but sometimes the principal aquifer as well.1

In the course of its investigation, the District identified various current and former owners and operators of industrial sites in the North Basin area that it believed were responsible in some way for VOC contamination. The primary VOC's identified included tetrachloroethylene (also known as perchloroethylene or PCE), trichloroethylene (TCE), 1,1-dichloroethylene (1,1-DCE), and 1,1,1-trichloroethane (1,1,1-TCA). The last chemical, 1,1,1-TCA, breaks down into 1,1-DCE and acetic acid. The detection of 1,1-DCE in soil or groundwater can be evidence of past 1,1,1-TCA contamination.

The District filed suit against a number of these owners and operators, including defendants at issue in this appeal: Alcoa Global Fasteners, Inc. (Alcoa), Arnold Engineering Co. (Arnold), CBS Broadcasting, Inc. (CBS), Crucible Materials Corp. (Crucible), and Northrop Grumman Systems Corp. (Northrop). The District sued several other parties, who settled or were otherwise dismissed from the litigation prior to this appeal. In some cases, as we will explain, the District sued parties who had remediated or were remediating their sites under the auspices of the RWQCB, on the theory that such remediation did not affect VOC contamination that had migrated to the shallow aquifer in the past. The District obtained approximately $21 million in settlements during the underlying litigation.

The District asserted statutory claims for damages under the Carpenter-Presley-Tanner Hazardous Substances Account Act (HSAA; Health & Saf. Code, § 25300 et seq. ) and the Orange County Water District Act (OCWD Act; West's Ann. Wat. Code App. (2016 ed.) ch. 40) and for declaratory relief (Code Civ. Proc., § 1060 ). The District also asserted common law claims for negligence, nuisance, and trespass.

By the time of trial, the design of the NBGPP had not been finalized and the vast bulk of the project had not been constructed. The District claimed it had spent approximately $3.7 million in development and construction costs, out of the estimated $200 million total. The District sought to recover its past costs and obtain a declaration holding defendants liable for future costs associated with the NBGPP.

Following an initial bench trial on the District's statutory claims, the trial court determined that the District should take nothing. The court found, among other things, that the NBGPP was neither a reasonable nor a necessary response to the identified groundwater contamination and that defendants did not cause the District to undertake the NBGPP. The court concluded that defendants were entitled to a declaration that they were not responsible for past or future costs related to the NBGPP.

In light of the court's findings, defendants argued that a trial on the District's remaining common law claims for negligence, nuisance, and trespass was unnecessary because those findings would apply in any jury trial on the remaining claims. The court agreed and entered judgment in favor of defendants.

The District appeals. It challenges the judgment on numerous grounds, including (1) the trial court misinterpreted the legal requirements of the District's claims under the HSAA and the OCWD Act; (2) the court erred under Code of Civil Procedure, section 1048, subdivision (b) by scheduling a bench trial on the District's statutory (equitable) claims before a jury trial on the District's common law (legal) claims, thereby depriving the District of its right to trial by jury; (3) the court erred by applying its factual findings on the District's equitable claims to defeat the District's common law claims; (4) the court misapplied Evidence Code section 412 and made other erroneous evidentiary rulings; and (5) the court erred by granting declaratory relief in favor of defendants. In response, among other arguments, defendants contend the District cannot assert a claim under the HSAA because it is not seeking "contribution" or "indemnity" as those terms are used in the statute.

We conclude the District may assert a claim under the HSAA. On the merits, however, as we shall explain, we find the trial court misinterpreted some elements of this claim, including its causation standard. Based on our review of the evidence and the court's factual findings, we conclude the court's causation error did not prejudice the District, except as to Northrop. However, because the District's HSAA has other essential elements, one of which was not satisfied as to any defendant, the District's HSAA claim against all defendants including Northrop fails. Even though the latter issue is dispositive of the District's HSAA claim, we address the former issues because they present important and novel legal questions and because they affect our consideration of the District's declaratory relief claim.

We further conclude the trial court misinterpreted elements of the District's claim under the OCWD Act, which are similar but not identical to the elements of an HSAA claim. We conclude these errors prejudiced the District as to Northrop (but not the other defendants). We will therefore reverse the judgment on the District's OCWD Act claim as to Northrop and otherwise affirm.

Based on these conclusions, we will reverse the court's declaration of no liability in favor of Northrop but affirm court's declaration of no liability in favor of the remaining defendants. We find no merit in the District's assignments of error concerning trial sequencing and its common law claims, and although the court misapplied Evidence Code section 412, it was not prejudicial. The remainder of the judgment will therefore be affirmed as well.

FACTUAL AND PROCEDURAL BACKGROUND
The District and Its Allegations

The District is a public entity established by the California Legislature and empowered to manage, replenish, regulate, and protect groundwater supplies within its boundaries. (OCWD Act, §§ 1, 2.) The District has the power to "[t]ransport, reclaim, purify, treat, inject, extract, or otherwise manage and control water for the beneficial use of persons or property within the district and protect the quality of groundwater supplies within the district." (Id. , § 2, subd. (6)(j).) In furtherance of these goals, the District may "commence, maintain, intervene in, defend, and compromise...any and all actions and proceedings...to prevent...diminution of the quantity or pollution or contamination of the water supply of the district...." (Id. , § 2, subd. (9).)

In 2004, the District filed this lawsuit against a number of defe...

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