Otay Land Co. v. U.E. Limited
D068347
Cal. Ct. App.Sep 26, 2017Background
- Property had a commercial shooting range operated intermittently from 1965–1997; spent lead shot, broken clay targets, white fill (containing perchlorate), and a wood pile remained and later revealed lead and PAH contamination.
- Plaintiffs Otay Land Co., LLC and Flat Rock Land Co., LLC remediated the site (using the AB 2061/Ch.6.65 process), obtained a certificate of completion, and sought cost recovery under California's HSAA and common-law nuisance/trespass claims against prior owners (UE defendants and Baldwin defendants).
- Trial court (bench) found Plaintiffs had no private HSAA right to recover voluntary remediation costs, found no HSAA liability (invoking the consumer-product-in-consumer-use exception and finding no disposals), applied HSAA defenses (permitted-release, nonretroactivity, statute of limitations, contract release), allocated all costs to Plaintiffs, and entered judgment for Defendants.
- Court of Appeal addressed multiple novel HSAA questions: whether voluntarily incurred remediation costs are recoverable; whether a shooting range qualifies for the CERCLA/HSAA "consumer product in consumer use" exception; whether spent shot/targets, white fill, disking, or a wood pile constitute "disposal"; and applicability of permitted-release, nonretroactivity, and contractual-release defenses.
- Court of Appeal reversed in large part: held HSAA allows recovery of voluntarily incurred remediation costs (indemnity under §25363(e)); the consumer-product exception does not apply to a commercial shooting range; spent lead and target debris (and white material) can be statutory "solid waste"/disposal when left to accumulate; permitted-release defense did not cover operational permits that do not specifically authorize the releases; several defenses and allocation rulings were erroneous and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Right to recover voluntarily incurred remediation costs under HSAA §25363(e) | HSAA permits any person who has incurred remedial costs to seek contribution/indemnity; AB 2061 cleanup and DEH certificate do not bar HSAA claims | HSAA requires prior government/DTSC action or contribution only; AB 2061 process precludes HSAA recovery | Plaintiffs may seek statutory indemnity under §25363(e); HSAA does not require prior DTSC action and AB 2061 certification does not bar recovery |
| Whether shooting range is a "consumer product in consumer use" (facility exception) | Range is a commercial facility, not a consumer product; exception applies to consumer goods used in household/retail settings, not commercial properties | Defendants: consumer use (public use) and targets/shot are consumer products, so exception applies | Exception construed narrowly; does not apply to commercial shooting range or to treating the facility as a consumer product; trial court misapplied exception |
| Whether spent shot, target debris, white fill, disking, wood pile constitute RCRA/CERCLA "disposal"/statutory "solid waste" | Spent shot and targets left to accumulate become "discarded" and statutory solid waste; white fill containing perchlorate and some fill use are disposals; disking could move contamination; wood pile not proven to be disposed during Baldwin ownership | Defendants: firing/use not a disposal; EPA regulatory waste definition controls; transfers of property not disposals; disking is in-place and not disposal; wood pile testing later doesn't show Baldwin-era disposal | Court: spent shot/target debris and white material can be statutory "solid waste"/disposal when left to accumulate (trial court erred to reject); disking here not shown to be a disposal; wood pile not shown to be disposed during Baldwin ownership (insufficient evidence) |
| Permitted-release exception and operational permits | Permits did not specifically authorize release of lead/PAHs/perchlorate; permitted-release exception applies only when release itself is authorized | Defendants: county permits to operate/construct the range authorized the releases from range operations, so exception applies | Exception is narrow and applies only where a permit specifically authorizes the release at issue; operational permits silent as to releases do not establish a permitted release; trial court erred applying exception to the range permits |
Key Cases Cited
- Atlantic Research Corp. v. United States, 551 U.S. 128 (U.S. 2007) (distinguishes CERCLA cost-recovery and contribution; treats voluntary cleanup cost recovery under §107)
- Key Tronic Corp. v. United States, 511 U.S. 809 (U.S. 1994) (attorney work closely tied to cleanup may be recoverable as necessary response cost)
- Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863 (9th Cir. 2001) (elements of CERCLA/HSAA liability and discussion of permitted-release defense in NPDES/stormwater context)
- 3550 Stevens Creek Associates v. Barclays Bank, 915 F.2d 1355 (9th Cir. 1990) (useful-product doctrine: product used for its intended purpose not discarded)
- Connecticut Coastal Fishermen's Ass'n v. Remington Arms Co., 989 F.2d 1308 (2d Cir. 1993) (spent lead and targets left to accumulate qualify as statutory "solid waste")
- Uniroyal Chemical Co. v. Deltech Corp., 160 F.3d 238 (5th Cir. 1998) (consumer-product-in-consumer-use exception applies to consumer goods, not commercial facilities; interpretive framework)
- Boeing Co. v. Cascade Corp., 207 F.3d 1177 (9th Cir. 2000) (district court discretion in CERCLA equitable allocation and abuse-of-discretion standard)
- Chubb Custom Ins. Co. v. Space Systems/Loral Inc., 710 F.3d 946 (9th Cir. 2013) (limitations/accrual discussion in CERCLA/HSAA-related insurance cost recovery)