Cadillac Fairview/California, Inc. v. Dow Chemical Co.

Nos. CV 83-7996 JMI (Bx); 83-8034 JMI (Bx) (C.D. Cal. January 18, 1989)

The court holds that a private plaintiff that alleges that it is an innocent landowner under CERCLA § 101(35) may pursue recovery of cleanup costs without first being held legally liable, and plaintiff's state causes of action are not time barred by the statute of limitations. The court first holds that CERCLA § 101(35) does not prevent an innocent owner from seeking response costs prior to any determination of liability. The court next holds that plaintiff has no private right to injunctive relief against owners and operators. The court holds that plaintiff's state law claims of nuisance, ultrahazardous activity, and negligence, which were filed in 1983, are not barred by California's three-year statute of limitations. CERCLA § 309, added by the Superfund Amendments and Reauthorization Act of 1986, requires use of the federally required commencement date when the commencement date required by state law precedes the federal date. In this case, the federal date of 1981 applies and this action was filed in 1983, well within the three-year period. Finally, the court holds that while plaintiff's allegations sufficiently describe a public nuisance claim, plaintiff's damage claims based on the disturbance of rights in land allege a private nuisance. Therefore, plaintiff may not collect for private nuisance damages under a public nuisance theory. Plaintiff was specially harmed only in the exercise of its private property rights and suffered no particular damage in the exercise of a right common to the general public.

[Previous cases in this litigation are published at 14 ELR 20376 and 20716; and 18 ELR 20470.]

Counsel for Plaintiff
Greg Smith, David Shultz
Irell & Manella
1800 Avenue of the Stars, Ste. 900, Los Angeles CA 90067
(213) 203-7619

Counsel for Defendants
Susan L. Jacobs
9150 Flair Dr., Elmonte CA 91731
(818) 572-6406

[19 ELR 20965]

Ideman, J.:

Order Granting Defendants Shell and Dow's Motion to Dismiss Claims 3 and 6; Order Denying Defendants Shell and Dow's Motion to Dismiss Claims 1, 7, and 8

IT IS HEREBY ORDERED as follows:

1. Defendants Shell Oil Company ("Shell") and Dow Chemical Company's ("Dow") motion to dismiss claims 1, 3, 6, 7, & 8 for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is GRANTED in part and DENIED in part. Defendants' motion as to claims 3 and 6 is GRANTED. Claims 3 and 6 are dismissed with prejudice. Defendants' motion as to claims 1, 7 and 8 is DENIED.

2. In its first claim for relief, plaintiff Cadillac Fairview ("Cadillac") requests declaratory relief requiring Shell and Dow to pay for clean-up costs. Defendants argue that Cadillac cannot state a cause of action for clean-up costs because Cadillac alleges that it is an innocent purchaser pursuant to 42 U.S.C. § 9601(35). Conversely, defendants argue that in order for Cadillac to recover clean-up costs from Shell and Dow, Cadillac must admit liability.

Title 42 U.S.C. § 9607(a) provides that "(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of . . . shall be liable for . . . (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan." Title 42 U.S.C. § 9607(b) titled "Defenses," provides that:

[t]here shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by . . . (3) an act or omission of a third party other . . . than one whose act or omission occurs in connection with a contractual relationship.

Sections 9607(a) and (b) leave open the possibility that a purchaser of real property could be liable under CERCLA for the acts or omissions of the seller, assuming these acts or omissions occurred in connection with the sale, a "contractual relationship." Title 42 U.S.C. § 9601(35) excludes from the category of "contractual relationships" any real property sale in which the purchaser at the time of sale "did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at" the real property.

The Court finds that Section 9601(35) does not bar Cadillac's claim for declaratory relief. Section 9601(35) shields an innocent purchaser from liability, but does not prevent that innocent purchaser from pursuing response costs. In addition, § 9607(a) authorizes a private party to recover response costs, but does not require that the private party must first be legally liable for the response costs incurred. Therefore, defendants' motion to dismiss Cadillac's first claim is denied.

3. In its third claim, Cadillac seeks injunctive relief against Shell, Dow, Cabot Cabot & Forbes Interim Company ("CC & F"), and the federal defendants. Defendants now move to dismiss this claim.

The Ninth Circuit Court of Appeals expressly addressed this question and found that 42 U.S.C. § 9607(a) "does not provide for a private right to injunctive relief against owners and operators." Cadillac Fairview/California v. Dow Chemical Co., 840 F.2d 691, 697 [18 ELR 20470] (9th Cir. 1988). The Court of Appeals specifically affirmed the District Court's dismissal of Cadillac's claim for injunctive relief. Id. Accordingly, the Court dismisses Cadillac's third claim with prejudice.

4. In its sixth, seventh and eighth claims, Cadillac seeks declaratory relief based on California state law of nuisance, ultra-hazardous activity and negligence, respectively. Defendants move to dismiss these claims based on the statute of limitations. Defendants argue that the California statute of limitations for these claims is three years. Since Shell sold the Site in 1972, and Cadillac brought the instant action in 1983, defendants argue that these claims are time-barred.

The Superfund Amendments and Reauthorization Act of 1986 modified the relevant state statute of limitations for state causes of action filed after December 11, 1980 which arose from exposure to or release of hazardous substances. Accordingly, 42 U.S.C. § 9658(a)(1) provides that:

[i]n the case of any action brought under State law for personal injury, or property damages, which are caused or contributed to by exposure to any hazardous substance, or pollutant or contaminant, released into the environment from a facility, if the applicable limitations period for such action (as specified in the State statute of limitations or under common law) provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such State statute.

The term "federally required commencement date" means the date the plaintiff knew, or reasonably should have known, that the personal injury or property damage were caused or contributed to by the hazardous substance or pollutant or contaminant concerned. 42 U.S.C. § 4658(b)(4)(A). The term "commencement date" means [19 ELR 20966] the date specified in a state statute or under state common law as the beginning of the applicable limitations period. Id.

Cadillac alleges that it learned of the presence of hazardous wastes on the Site on February 24, 1981. Cadillac also alleges that CC & F knew before 1977 of the Site's contamination. Under California law, for the purposes of determining the commencement date of the statute of limitations, CC & F's knowledge is imputed to Cadillac. See Bradler v. Craig, 274 Cal. App. 2d 466, 472 (1969). Therefore, the commencement date under state law is before 1977. The federally required commencement date is February 24, 1981. Since the commencement date is before the federally required commencement date, the federal date applies.

The state statute of limitations for trespass upon or injury to real property is three years. Cal. Civ. Proc. Code § 338(2). The three year statute of limitations expired on February 24, 1984. Since the instant action was filed in 1983, Cadillac's state law claims are not time-barred.

5. Defendants also argue, based on three separate grounds, that Cadillac has failed to state a claim for nuisance. First, defendants argue that nuisance law does not authorize a landowner to sue a previous owner of that law, rather, nuisance applies only to interference with a neighbor's use of land. Second, defendants argue that a nuisance action cannot lie in the instant case because it would impermissibly interfere with the doctrine of caveat emptor as applied to real property. Third, defendants argue that Cadillac has failed to allege special injury as required to state a public nuisance claim.

A nuisance is "[a]nything which is injurious to health, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property . . ." Cal. Civ. Code § 3479. "A public nuisance is one which affects at the same time an entire community or neighborhood, or any considerable number of persons, although the extent of the annoyance or damage inflicted upon individuals may be unequal." Cal. Civ. Code § 3480. A private nuisance is defined by elimination, as any non-public nuisance. Cal. Civ. Code § 3481. In general, "private nuisance is a civil wrong based on disturbance of rights in land while a public nuisance is not dependent upon a disturbance of rights in land but upon an interference with the rights of the community at large." Venuto v. Owens-Corning Fiberglas Corp., 22 Cal. App. 3d 116, 124 (1971). Finally, in order to state a claim for a public nuisance, which is not also a private nuisance, the plaintiff must plead special injury to person or property, and of a character different in kind from that suffered by the general public. Id.; See Cal. Civ. Code § 3493.

Defendants' first and second arguments are correct as applied to a private nuisance, but not to a public nuisance. Courts have held that a purchaser cannot assert a private nuisance claim against the property's seller because there is no unreasonable use of one's property to the detriment of a neighbor's property. Sheehy v. Lipton Industry, Inc., 507 N.E. 781, 783 (Mass. App. Ct. 1987); Pinole Point Properties, Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283, 292 n.5 [15 ELR 20173] (N.D. Cal. 1984). In addition, courts have held that the doctrine of caveat emptor as pertaining to real property prevents a private nuisance claim by a purchaser against the seller. Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303, 315 [15 ELR 20554] (3d Cir. 1985). However, these arguments do not bar a claim for public nuisance, because a public nuisance claim does not concern rights in land. Philadelphia Elec. Co., 762 F.2d at 312-15, 315 n.13; Venuto, 22 Cal. App. 3d at 124.

In its nuisance claim, Cadillac alleges that the hazardous substances deposited on the Site are "migrating into previously uncontaminated soil and may reach and contaminate fresh water aquifiers below the surface of the Site." This contamination allegedly "may cause substantial environmental damage and poses a threat of serious bodily injury and sickness to persons who consume drinking water obtained from this source." The Court finds that these allegations sufficiently describe a public nuisance.

Cadillac, however, does not base its damage claims on the alleged public nuisance. Instead, Cadillac alleges that the Site's contamination reduces or destroys the value of Cadillac's property and exposes Cadillac to liability for clean-up of the Site and for damages to other persons and property. These claims are based on disturbance of rights in land, and therefore allege a private nuisance.

Cadillac argues that a private nuisance claim can serve as an allegation of the special injury authorizing a private suit based on a public nuisance. Wade v. Campbell, 200 Cal. App. 2d 54 (1962). The Court finds that the case cited by plaintiff is distinguishable from the instant action. In Wade, the plaintiff brought a public nuisance claim against the neighboring dairy farm. The general public injury was excessive odors, dust and sounds. The special injury was an excessive mosquito and fly population and pollution of a creek on plaintiff's property. In Wade, the special injury to plaintiff's property was a result of the source of alleged public nuisance — the neighboring dairy farm. However, in the instant action, the condition of plaintiff's land is the cause of the alleged public nuisance.

In an analogous case to the instant action, the plaintiff/landowner in Philadelphia Elec. Co. alleged that the defendant and former owner of the plaintiff's land had created a public nuisance by interfering with the public's "right to pure water." 762 F.2d at 316. The plaintiff based its claim for damages on the expense of cleaning up its land. Id. The Third Circuit held that the plaintiff could not collect for private nuisance damages under a public nuisance theory. Id. The Court explained that if the plaintiff had suffered damage to its land or its operations as a result of the complained of pollution, a claim for public nuisance would be possible. Id. However, the condition of plaintiff's land was not the result of the nuisance, it was the cause. Therefore the Court concluded that the plaintiff had "been specially harmed only in the exercise of its private property rights" and had "suffered no particular damage in the exercise of a right common to the general public." Id.

The Court finds the reasoning of the Philadelphia Elec. Co. court persuasive, and follows its decision. Accordingly, Cadillac's sixth claim for nuisance is dismissed with prejudice.

IT IS SO ORDERED.