Santa Clara v. Atlantic Richfield Co., No. H026651.

• Court: California Court of Appeals
• Writing for the Court: Mihara
• Citation: 40 Cal.Rptr.3d 313,137 Cal.App.4th 292
• Parties: COUNTY OF SANTA CLARA, et al., Plaintiffs and Appellants, v. ATLANTIC RICHFIELD COMPANY, et al., Defendants and Respondents.
• Decision Date: 03 March 2006
• Docket Number: No. H026651.

40 Cal.Rptr.3d 313 137 Cal.App.4th 292 COUNTY OF SANTA CLARA, et al., Plaintiffs and Appellants,
v.
ATLANTIC RICHFIELD COMPANY, et al., Defendants and Respondents. No. H026651. Court of Appeal of California, Sixth District. March 3, 2006. Rehearing Denied March 24, 2006. Review Denied June 21, 2006.^*

[40 Cal.Rptr.3d 318]

Bruce L. Simon, Robert G. Retana, Elizabeth C. Pritzker, Cotchett, Pitre, Simon & McCarthy, Burlingame, Kathryn J. Zoglin, Ann Miller Ravel, Office of the Santa

[40 Cal.Rptr.3d 319]

Clara County Counsel, for Appellant County of Santa Clara.

Roy Combs, for Oakland Unified School District.

Dennis Jose Herrera, and Owen Clements, Ingrid M. Evans, San Francisco, for City and County of San Francisco, et al.

John Anthony Russo, Randolph W. Hall, Oakland, Andrea Ford Roberts, Christoper Kee, for City of Oakland, et al.

Sean O'Leary Morris, James Frederic Speyer, William H. Voth, Philip H. Curtis, Arnold & Porter, Los Angeles, for Respondent Atlantic Richfield Company.

James McManis, William Faulkner, McManis, Faulkner & Morgan, San Jose, for Respondent NL Industries, Inc.

Anna S. McLean, Heller, Ehrman, White & McAuliffe, San Francisco, Elyse Echtman, Richard W. Mark, Orrick, Herrington & Sutcliffe, for Respondent American Cyanamid Company.

Lawrence A. Wengel, Greve, Clifford, Wengel & Paras, Sacramento, for Respondent ConAgra Grocery Products.

Clement L. Glynn, Glynn & Finley, Walnut Grove, Steven R. Williams, Visalia, Collin J. Hite, William H. King, Jr., McGuire Woods, Los Angeles, for Respondent E.I. DuPont De Nemours & Company.

Michael T. Nilan, David T. Schultz, Halleland, Lewis, Nilan, Sipkins & Johnson, and James C. Hyde, Ropers, Majeski, Kohn & Bentley, San Jose, for Respondent Millennium Inorganic Chemicals Inc.

John W. Edwards II, Elwood Lui, Jones, Day, Reavis & Pogue, Menlo Park, for Respondent Sherwin-Williams Company.

Paul F. Markoff, Thomas Karaba, Crowley, Barrett & Karaba, and Archie S. Robinson, Robinson & Wood, San Jose, for Respondent The O'Brien Corporation.

Jennifer B. Henning, for California State Association of Counties as Amicus Curiae on behalf of Plaintiffs and Appellants.

Sunnie Lee Daniels, for Office of the Los Angeles City Attorney as Amicus Curiae on behalf of Plaintiffs and Appellants.

Jenny Chi-Chin Huang, for Public Advocates, Inc. as Amicus Curiae on behalf of Plaintiffs and Appellants.

MIHARA, J.

137 Cal.App.4th 298

A group of governmental entities acting for themselves, as class representatives, and on behalf of the People of the State of California, filed a class action against a group of lead manufacturers. The governmental entities alleged that the manufacturers were liable on theories of strict product liability, negligence and fraud for damages caused by lead paint, should be required to abate the public nuisance created by lead paint, and should be enjoined and ordered to pay restitution, disgorge profits and pay civil penalties due to their unfair business practices regarding lead paint. The superior court sustained the manufacturers' demurrers to the public nuisance causes of action. The governmental entities sought leave to file an amended complaint adding a cause of action for continuing trespass. The court denied leave on the ground that the proposed allegations did not state a cause of action. The manufacturers moved for summary judgment on statute of limitations grounds on the remaining causes of action, and the court granted the motion and dismissed the action.

On appeal, the governmental entities claim that the superior court erred in (1) sustaining the demurrers to the public nuisance causes of action, (2) denying leave to amend to add the proposed continuing-trespass cause of action and (3) granting

40 Cal.Rptr.3d 320

summary judgment on statute of limitations grounds. We conclude that the superior court's rulings were erroneous as to plaintiffs' public nuisance, strict liability, negligence, and fraud causes of action. We therefore reverse the judgment.

137 Cal.App.4th 299

I. Background A. Early Versions of the Complaint

Plaintiff County of Santa Clara (Santa Clara) filed a class action complaint against a number of lead manufacturers (defendants) in March 2000 alleging causes of action for strict liability, negligence, fraud and concealment, unjust enrichment, indemnity, and unfair business practices. Defendants demurred to the complaint.

Santa Clara, joined by County of Santa Cruz, County of Solano, and County of Alameda, filed an amended complaint that deleted the unfair business practices cause of action and added causes of action for civil conspiracy and nuisance. Defendants again demurred. The superior court overruled the demurrer as to the fraud and concealment cause of action. It sustained the demurrer without leave to amend as to the conspiracy cause of action and with leave to amend as to the remaining causes of action.

In January 2001, these plaintiff counties, joined by County of Kern, City and County of San Francisco, San Francisco Housing Authority, San Francisco Unified School District, City of Oakland, Oakland Housing Authority, Oakland Redevelopment Agency and Oakland Unified School District (hereafter plaintiffs) as class representatives and on behalf of the People of the State of California (the People), filed a second amended complaint. This complaint continued to allege fraud and concealment, strict liability, and negligence. The other causes of action were replaced by causes of action for negligent breach of special duty, public nuisance, private nuisance, unfair business practices, and false advertising. Two separate public nuisance causes of action were alleged in the second amended complaint. One was brought on behalf of the People and sought abatement. The other public nuisance cause of action was brought by the class plaintiffs, rather than on behalf of the People. It alleged that the class members (local government entities) had suffered a "special injury" due to the "continuing public nuisance" created by defendants. The unfair business practices cause of action was brought solely by City and County of San Francisco (SF) on behalf of the People, and the false advertising cause of action was brought by the class plaintiffs.¹

137 Cal.App.4th 300

Defendants demurred to the public and private nuisance, negligent breach of special duty, and false advertising causes of action. The court overruled the demurrer as to the cause of action for negligent breach of special duty. It sustained the demurrer with leave to amend as to the nuisance causes of action on the ground that "these causes of action sound in products liability rather than nuisance." It partially sustained the demurrer to the false advertising cause of action with leave to amend.

B. The Third Amended Complaint

In June 2001, plaintiffs filed a third amended complaint that continued to allege the fraud and concealment, strict liability, negligence, negligent breach of special

40 Cal.Rptr.3d 321

duty,² and unfair business practices (UCL) causes of action³ and replaced the three nuisance causes of action with a single cause of action for public nuisance.

The third amended complaint alleged that defendants were "engaged in the business of, or [were] the successor[s]-in-interest to entities engaged in the business of, researching, formulating, testing, manufacturing, producing, distributing, marketing, promoting, advertising for sale, and/or selling Lead." Defendants allegedly had "engaged in a pattern of deceit and misinformation" intended to minimize the dangers of lead and attribute lead poisoning to other sources rather than "acknowledging their own culpability."

Defendants had known about the dangers of lead for nearly a century but had engaged in "a concerted effort to hide the dangers of Lead" from the government and the public. For many years, defendants promoted lead paint for interior use and claimed that it was safe. Defendants tried to stop the government from regulating lead and to prevent the government from requiring warnings about lead's hazards. Defendants opposed government efforts to combat lead poisoning. Scientific studies had only recently demonstrated that even very low levels of lead exposure could cause serious damage to fetuses, children, and adults.

Plaintiffs identified their damages generally to include: (1) costs that had been incurred to educate the public about the hazards of lead and the steps to take to minimize the risk; (2) costs incurred to inspect and test property and

137 Cal.App.4th 301

the environment for the presence of lead; (3) costs incurred to train and fund staff to investigate and respond to lead-contaminated properties and lead-exposed children; and (4) costs incurred for "Property Damage," which was identified as "abatement, removal, replacement, and/or remediation of Lead in private, county, and city owned, managed, leased, controlled, and/or maintained properties." Plaintiffs alleged that they had been required to expend money to remediate and abate lead on their properties.

C. Demurrer to Public Nuisance Cause of Action

Defendants filed a demurrer to the public nuisance cause of action in the third amended complaint. The court viewed the issue as "novel as to whether or not public nuisance is going to be extended to this kind of conduct...." Plaintiffs argued that "the products liability claim and public nuisance claims are extremely, extremely different types of claims; and there's very, very significant differences in the remedies that you're able to seek under a products liability claim versus a public nuisance claim." The court sustained the demurrer without leave to amend.

D. Proposed Fourth Amended Complaint

In November 2002, plaintiffs sought leave to file a fourth amended complaint adding a cause of action for continuing trespass to real property and amending the UCL cause of action to include Santa Clara (in addition to SF).

The court denied plaintiffs'...