Santa Fe Pacific Realty Corp. v. US

• Decision Date: 10 December 1991
• Docket Number: No. Civ. S-90-0361-WBS/JFM.,Civ. S-90-0361-WBS/JFM.
• Court: U.S. District Court — Eastern District of California
• Parties: SANTA FE PACIFIC REALTY CORPORATION, Plaintiff, v. UNITED STATES of America; Richard G. Armor, an individual; Clifford Dana, an individual; and Dora Dana, an individual, Defendants.

780 F. Supp. 687

SANTA FE PACIFIC REALTY CORPORATION, Plaintiff, v. UNITED STATES of America; Richard G. Armor, an individual; Clifford Dana, an individual; and Dora Dana, an individual, Defendants.

No. Civ. S-90-0361-WBS/JFM.

United States District Court, E.D. California.

December 10, 1991.

COPYRIGHT MATERIAL OMITTED

John F. Barg, Brian S. Haughton, Landels, Ripley & Diamond, San Francisco, Cal., for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Trial Atty., Torts Branch, Civ. Div., U.S. Dept. of Justice, Bary M. Hartman, Acting Asst. Atty. Gen., Trial Atty., Environment & Natural Resources Div., Environmental Defense Section, U.S. Dept. of Justice, Washington, D.C., for defendant U.S.

Robert N. Black, Black & Kooper, Davis, Cal., for defendant Robert G. Armor.

Thomas L. Gill, Favaro, Lavezzo, Gill, Carpetti & Heppell, Vallejo, Cal., for defendants Clifford Dana and Dora Dana.

MEMORANDUM AND ORDER

SHUBB, District Judge.

This matter is before the court on defendant United States' motion to dismiss, motion for judgment on the pleadings, motion to strike, and plaintiff's motion for partial summary judgment.

I. Procedural and Factual Background

Plaintiff, formerly Santa Fe Pacific Realty Corporation (hereinafter "Catellus"), initiated this action for damages and declaratory relief on August 18, 1989, against defendants, United States of America, Richard G. Armor, Clifford Dana and Dora Dana. The case arises out of the discovery of a hazardous waste site located on plaintiff's property. The first amended complaint contains twelve claims for relief for: (1) a declaration that all defendants are liable under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"); (2) recovery of costs under CERCLA against all defendants; (3) breach of lease against the Danas; (4) contractual indemnity against the Danas; (5) breach of third party beneficiary contract against Armor; (6) negligence against the United States; (7) negligence against the Danas; (8) negligence against Armor; (9) nuisance against Armor and the Danas; (10) strict liability against Armor and the Danas; (11) waste against Armor and the Danas; and (12) conspiracy against Armor and the United States.

A. The Hazardous Waste Site

The following facts appear undisputed.¹ Plaintiff Catellus owns a barn and adjacent tarmac-covered area (collectively, the "warehouse") in Collinsville, California. Declaration of Brian S. Haughton in support of Plaintiff's motion for summary judgment, exhibit C. Catellus' tenants, defendants Clifford and Dora Dana, subleased the warehouse to defendant Richard G. Armor from 1981 through 1989. Id.

In April 1989, Solano County officials investigated and discovered substantial quantities of hazardous substances stored on the property. Id. at exhibit D. Both Catellus and County experts concluded that there existed a substantial and imminent risk of fire and explosion leading to a poisonous cloud that could affect people a mile or more away. Haughton Decl. at ¶ 13. County officials characterized the scene as "a time-bomb waiting to go off." Id. at ¶ 15.

B. Surplus Sales to Armor

The majority of the chemicals stored on the property were purchased by Armor from defendant United States of America at public auction sales conducted during the 1970's by the Defense Property Disposal Service ("DPDS"), an agency of the Department of Defense ("DOD"), and the United States General Services Administration ("GSA"). See Haughton Decl. in support of Catellus' opposition to United States Motion to Dismiss, exhibit B at 62; Haughton Decl in support of summary judgment at ¶ 19. Armor acquired under his own name and various fictitious names, numerous materials from the United States including chemicals, paints, solvents, insecticides, lubricants, lacquer, varnish, and liquid helium. Haughton Decl. in support of plaintiff's motion at ¶ 24, exhibit R.

C. The Surplus Program

The Federal Property and Administrative Services Act of 1949 ("Act"), 40 U.S.C. §§ 471-544, authorizes the United States to sell or otherwise dispose of surplus government property. With respect to property deemed "surplus," the Act permits the disposing agency to choose the method of disposition:

Any executive agency ... authorized ... to dispose of surplus property may do so by sale, exchange, lease, permit, or transfer, for cash, credit, or other property, with or without warranty, and upon such terms and conditions as the Administrator of GSA deems proper.

40 U.S.C. § 484(c). As to property that the disposing agency decides to dispose of by public sale, the legislation requires that:

Award shall be made with reasonable promptness by notice to the responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, price and other factors considered: Provided, that all bids may be rejected when its in the public interest to do so.

Id. at § 484(e)(2)(C).

The administrator of GSA has delegated to DOD the authority to dispose of surplus personal property. 41 C.F.R. § 101-45.103. Within DOD, the authority to dispose of surplus property is delegated to the Defense Logistics Agency ("DLA"), whose mission is to provide logistics support to the individual military services and to assigned federal civilian agencies and foreign governments. Declaration of Susanne Metzger at ¶ 2 (attached as United States' exhibit A.). During the relevant period, roughly 1974-1980, a component of the DLA, the Defense Property Disposal Service ("DPDS"), was responsible for the utilization and marketing of DOD personal property worldwide. Id. at ¶ 3.

Between 1974 and 1980, DOD's property disposition system essentially comprised a series of successive steps to screen property for reuse within DOD, transfer to other federal agencies, and donate to non-governmental organizations. Id. at ¶ 5. What remained after this screening process was eligible for sale to the public. Id. at ¶ 9. The disposition of surplus property was governed by the Defense Disposal Manual ("Manual"), DOD 4160.21-M. See at ¶ 5. The Manual vested the appropriate DOD authorities with authority in determining how to dispose of excess and surplus property: "Personal property (including scrap) will be disposed of in a manner which will assure maximum Federal utilization through withdrawal or transfer; permit authorized donation to satisfy valid requirements; obtain optimum monetary return to the Government for property sold; and minimize the need for abandonment or destruction." Id. at I-1. Under the Manual, Defense Property Disposal Offices during the 1970's were responsible for disposal of all DOD surplus property except refuse, trash, material prohibited from sale by U.S. law or regulation, and material having no utilization or sales potential.

II. Defendant's Motions

A. Motion To Dismiss

1. Sixth Claim-Negligence

The United States contends the court lacks jurisdiction over plaintiff's sixth claim for relief based on negligence because the sale of surplus government property is protected by the discretionary function exception to the Federal Tort Claims Act ("FTCA"). The FTCA constitutes a limited waiver of sovereign immunity. United States v. Orleans, 425 U.S. 807, 813, 96 S.Ct. 1971, 1975, 48 L.Ed.2d 390 (1976). Because the government "can be sued only to the extent that it has waived its immunity, due regard must be given to the FTCA's exceptions." Id. at 814, 96 S.Ct. at 1976.

Section 2680(a) of the FTCA provides that the United States does not waive its sovereign immunity for:

any claim ... based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.

Whether an action is a discretionary function, and therefore not actionable under the FTCA, depends on: (1) whether a choice or judgment is involved and is not circumscribed by a "statute, regulation or policy specifically prescribing a course of action for the employee to follow and (2) whether the decision or activity is "grounded in social, economic or political policy." Berkovitz v. United States, 486 U.S. 531, 536-37, 108 S.Ct. 1954, 1958-59, 100 L.Ed.2d 531 (1988). A purpose of the exception is to prevent judicial `second guessing' of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort. United States v. S.A. Empresa De Viacao Aerea Rio Grandense, 467 U.S. 797, 814, 104 S.Ct. 2755, 2764-65, 81 L.Ed.2d 660 (1984). Recently, in United States v. Gaubert, ___ U.S. ___, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991), the Court elaborated on the discretionary function exception:

When established governmental policy, as expressed or implied by statute, regulation, or agency guidelines, allows a Government agent to exercise discretion, it must be presumed that the agent's acts are grounded in policy when exercising that discretion. For a complaint to survive a motion to dismiss, it must allege facts which would support a finding that the challenged actions are not the kind of conduct that can be said to be grounded in the policy of the regulatory regime. The focus of the inquiry is ... on the nature of the actions taken and on whether they are susceptible to policy analysis.

Id. 111 S.Ct. at 1274-75.

The decision of the United States to sell hazardous materials in this case, rather than dispose of them by some other method, falls within the exclusion of § 2680(a). See Myslakowski v. United States, 806 F.2d 94 (6th Cir.1986), cert. denied, 480 U.S. 948, 107 S.Ct. 1608, 94 L.Ed.2d 793 (1987) (decision to sell surplus jeeps concededly fell within statutory exception). Congress also left to the agency the discretion to define the terms and conditions of the sale of surplus property. "Any executive agency ... authorized ... to dispose of surplus property may do...