Us Ecology, Inc. v. State

• Citation: 28 Cal.Rptr.3d 894,129 Cal.App.4th 887
• Decision Date: 25 May 2005
• Docket Number: No. D042426.,D042426.
• Parties: US ECOLOGY, INC., Plaintiff and Appellant, v. STATE of California et. al, Defendants and Respondents.
• Court: California Court of Appeals

28 Cal.Rptr.3d 894

129 Cal.App.4th 887

US ECOLOGY, INC., Plaintiff and Appellant, v. STATE of California et. al, Defendants and Respondents.

No. D042426.

Court of Appeal, Fourth District, Division 1.

May 25, 2005.

Cooley Godward, Stephen C. Neal, John C. Dwyer, Lori R.E. Ploeger and Christopher B. Durbin, Palo Alto, for Plaintiff and Appellant.

Bill Lockyer, Attorney General, James M. Humes, Chief Assistant Attorney General, Thomas R. Yanger, Assistant Attorney General, John H. Sanders, Donald P. Cole and Jennifer A. Chmura, Deputy Attorneys General, for Defendants and Respondents.

Laurens H. Silver for California Environmental Law Project as Amicus Curiae on behalf of Defendants and Respondents.

NARES, J.

On this appeal we are presented with an issue of first impression: whether a plaintiff pursuing a claim for promissory estoppel must prove that the defendant on that claim caused the plaintiff's damages. We conclude that, as in ordinary contract actions, a plaintiff seeking recovery on a promissory estoppel theory must prove that the defendant's breach was a substantial factor in causing the plaintiff's damages. Further, even if we were to conclude that causation is not a necessary element of all promissory estoppel claims, we hold that because promissory estoppel is an equitable remedy, courts have the discretion in an appropriate case to deny relief where the plaintiff cannot demonstrate that the defendant's actions caused the plaintiff's damages. Finally, we conclude that substantial evidence supports the court's decision in this case that defendants' actions were not a substantial factor in causing plaintiff's damages.

In 1985 the State Department of Health Services (the Department) selected plaintiff U.S. Ecology, Inc. (Ecology) to develop and operate California's first low-level radioactive waste (LLRW) storage facility. Ecology and state officials thereafter identified a location for the facility, known as Ward Valley, and completed environmental reviews for that site. However, the facility was never built.

Ecology places the blame on the State of California's (the State's) failure to acquire the Ward Valley site from the federal government. Claiming that it spent millions of dollars in development costs in reliance on the state's promise to use its best efforts to acquire the Ward Valley site, Ecology sued the State; the Department; the Department's director, Diana M. Bonta; and Governor Gray Davis (collectively defendants), alleging breach of contract and promissory estoppel causes of action, and seeking a writ of mandate directing the State to take the necessary steps to acquire the Ward Valley site.

The trial court sustained defendants' demurrer without leave to amend. Ecology appealed, and in a published decision we concluded Ecology had properly alleged a promissory estoppel claim and reversed the judgment as to that cause of action and the related declaratory relief claim. However, we affirmed the judgment in all other respects. (US Ecology, Inc. v. State of California (2001) 92 Cal.App.4th 113, 120, 111 Cal.Rptr.2d 689) (US Ecology).

After remand, this matter proceeded to a bench trial before the Honorable E. Mac Amos, Jr., on the promissory estoppel claim. Following trial, the court ruled in defendants' favor, finding (1) Ecology failed to prove that defendants caused its damages, and (2) the equitable doctrine of unclean hands barred Ecology's recovery.

On this second appeal, Ecology asserts that the court erred in ruling in defendants' favor because (1) it was not required to prove causation on its promissory estoppel claim; (2) the court erroneously used a "but for" test for causation; and (3) the court applied the unclean hands doctrine erroneously because (a) defendants failed to show any evidence that Ecology's actions prejudiced them and (b) Ecology did not commit any misconduct that would support a finding of unclean hands. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

We take much of our factual background section from our previous opinion in this matter (US Ecology, supra, 92 Cal.App.4th at pp. 120-126, 111 Cal.Rptr.2d 689), as well as several federal and state court decisions that have extensively discussed the factual and legal background relating to the present dispute and disposal of low-level waste in general. (Fort Mojave Indian Tribe v. Department of Health Services (1995) 38 Cal.App.4th 1574, 45 Cal.Rptr.2d 822 (Fort Mojave); US Ecology, Inc. v. U.S. Dept. of Interior (D.C.Cir.2000) 231 F.3d 20; California Dept. of Health Services v. Babbitt (D.D.C.1999) 46 F.Supp.2d 13 (Babbitt), judgment vacated in part by US Ecology, Inc. v. U.S. Dept. of Interior, supra, 231 F.3d 20; New York v. United States (1992) 505 U.S. 144, 112 S.Ct. 2408, 120 L.Ed.2d 120.)

In 1980 the United States Congress responded to a crisis involving a dearth of LLRW storage facilities in the country by enacting the Low-Level Radioactive Waste Policy Act, authorizing states to enter into regional compacts that may restrict their disposal facilities to waste generated within member states. (Pub.L. No. 96-573, § 2 (Dec. 22, 1980) 94 Stat. 3347; 42 U.S.C. § 2021b et seq.; New York v. United States, supra, 505 U.S. at pp. 150-151, 112 S.Ct. 2408.) By 1985 only three approved regional compacts had operational disposal facilities, leaving the 31 states that had not entered into one of these compacts with no assured outlet for their LLRW. (New York v. United States, supra, 505 U.S. at p. 151, 112 S.Ct. 2408.) To deal with this problem, Congress enacted supplemental legislation requiring the three existing disposal sites to continue accepting out-of-state LLRW through 1992, but permitting approved regional compacts to exclude the waste generated outside each region after 1992. (Ibid.)

In 1982 the State Legislature responded to the federal mandate by enacting urgency legislation directing the Department to develop an LLRW management plan that would include plans for short-term storage, the establishment of siting criteria, and the reduction of the amount and toxicity of waste produced. (Stats.1982, ch. 95, § 3, pp. 307-309; see Health & Saf.Code § 115005.)¹ The legislation authorized the Department to establish and operate, or contract for the establishment and operation of, interim LLRW storage facilities. (Stats.1982, ch. 95, § 3, pp. 307-309.)

The next year the Legislature added to the statutory scheme by addressing longterm storage needs. This new legislation required the Department to first promulgate regulations for the selection of a private company that would serve as a licensed LLRW operator. (§ 115010.) Within three months of the adoption of those regulations, interested parties were required to file a "statement of capabilities and notice of intention to file an application for a license to receive radioactive materials . . . ." (§ 115020, subd. (a).) Within 45 days, the Department's director was required to select one of the applicants to serve as a license-designee. (§ 115020, subd. (b).) By enacting this legislation, the Legislature sought to assure the safe management of LLRW and "permit and encourage the expeditious establishment and operation by the private sector of a [LLRW disposal facility]. . . ." (Stats.1983, ch. 1177, § 1, p. 4471.)

In April 1984 the Department promulgated the required regulations. (Cal.Code Regs., tit. 17, § 30470 et seq.) In 1985 the Department selected Ecology as the license-designee. Ecology formally accepted the designation in December 1985 and agreed to be responsible for developing the LLRW facility under the Department's oversight. (Babbitt, supra, 46 F.Supp.2d at p. 16.)

In 1987 the State entered into the Southwestern Low-Level Radioactive Waste Compact (Compact) with Arizona, North Dakota, and South Dakota for the construction and operation of an LLRW disposal facility. (Fort Mojave, supra, 38 Cal.App.4th at pp. 1582-1583, 45 Cal. Rptr.2d 822; § 115250 et seq., § 115255, art. 2, subd. (M) & art. 7.) The Compact obligated the "host state" to "[c]ause a regional disposal facility to be developed on a timely basis [and][¶][e]nsure . . . the protection and preservation of public health and safety in the siting, design, development, licensing, . . . and long-term care" of the facility. (§ 115255, art. 4, subd. (E)(1) & (2).) The State agreed to be the host state for the first 30 years of the Compact's existence. (§ 115255, art. 4, subd. (C)(1).)

In 1988 a parcel of land in Ward Valley, California, was selected by the Department as the preferred site for the facility. However, because the site was owned by the federal government and managed by the Bureau of Land Management (BLM), transfer of title to the State would have to be accomplished for construction of the LLRW to proceed. (Fort Mojave, supra, 38 Cal.App.4th at p. 1583, 45 Cal.Rptr.2d 822.) The State and Ecology sought to accomplish this through an "indemnity selection" process, whereby the State would transfer certain lands to the federal government in exchange for the federal government's transfer of the Ward Valley site to the State.

In August 1988 in order to assist Ecology in obtaining financing for the project, the Department and Ecology executed a memorandum of understanding (MOU). The MOU provided that "the State will use its best efforts to assure the timely transfer of the relevant site from the federal government to the State. . . ." (Italics added.) Consistent with applicable regulations, the Department also agreed Ecology would be entitled to recover all of its development costs through the rates charged to customers when the facility was in operation. (See Cal.Code Regs., tit. 17, § 30495.)

In 1989 Ecology submitted its project license application. Thereafter, in April 1991, after extensive environmental review, the Department and BLM issued a final joint environmental impact study/report (EIS/R). (See Babbitt, supra, 46 F.Supp.2d at p. 16; Fort Mojave, supra, 38 Cal.App.4th...