Lead Opinion
Opinion by Judge MILAN D. SMITH, JR.; Dissent by Judge GOULD.
OPINION
Plaintiff-Appellant Chubb Custom Insurance Company (Chubb) filed a subrogation suit against Defendants-Appellees
FACTS AND PRIOR PROCEEDINGS
Chubb issued an environmental insurance policy to Taube-Koret covering, among other things, remediation costs related to certain pollution incidents on its property. After extended negotiations, and pursuant to the policy, Chubb paid Taube-Koret $2.4 million as reimbursement for Taube-Koret’s cleanup costs of contaminants released on its property. The gravamen of Chubb’s complaint is that Defendants should be held jointly and severally liable for Taube-Koret’s response costs because they released hazardous substances that migrated to Taube-Koret’s property from surrounding land that they owned and operated at various times.
A. The Site
The action involves approximately 47 acres of land, which comprises properties located at 3825, 3963, and 3977 Fabian Way and 901 San Antonio Road in Palo Alto, California (in the aggregate, the Site).
On August 16, 1989, the California Regional Water Quality Control Board (Water Board) issued Order No. 89-137, naming Ford Aerospace a discharger of pollutants and requiring it to clean up certain hazardous substances released on the Site. In August 1990, Space Systems purchased the assets of Ford Aerospace from Ford Motor and continued the operations previously conducted by Ford Aerospace. Chubb alleges that Ford Motor expressly agreed to assume liability for compliance with Order No. 89-137 and successive orders. Space Systems currently owns and occupies buildings located at the three Fabian Way properties.
In 1988, Defendant-Appellee Sun Micro-systems, Inc. (Sun) acquired 901 San Antonio Road, a 12-acre parcel that became part of the Site. The Water Board named Sun a discharger of pollutants in Order Nos. 93-091, 96-023, and 99-043. The Water Board informed Sun in November 2001 that it intended to oversee the investigation and cleanup of contaminants at 901 San Antonio Road and to recover oversight costs. Chubb alleges that Sun failed
In June 2002, Sun sold its 12-acre parcel to Taube-Koret. Chubb alleges that before selling the property, Sun knew about the contaminated soil and groundwater on its property but elected not to take remedial action. The 12-acre parcel on 901 San Antonio Road was later divided into a 4-acre parcel (Parcel 1) and an 8-acre parcel (Parcel 2). Taube-Koret retained Parcel 2 for the purpose of developing an intergen-erational community center with an independent and assisted living facility for seniors.
From 1960 to 1977, Defendant-Appellee Chevron Corporation (Chevron) owned and operated a gas service station on a property adjacent to the Site located at 851 San Antonio Road. Chubb alleges that during Chevron’s operation and demolition of the gas station, hazardous substances contaminated the soil and spread to the property. Chevron also maintained underground storage tanks containing waste oil and petroleum, which allegedly leaked and spilled into the soil at 851 San Antonio Road.
From 1977 to 2007, Defendant Harman Stevenson, Inc. (Stevenson) owned and operated a Kentucky Fried Chicken restaurant at 851 San Antonio Road. Chubb alleges that during the construction and demolition of the restaurant, Stevenson released hazardous substances left by Chevron, which continued to migrate onto the property.
On November 30, 2006, Taube-Koret purchased 851 San Antonio Road, a parcel adjacent to 901 San Antonio Road, for inclusion in its redevelopment project that involved both properties.
B. Site Cleanup Orders and Remediation
Soil and groundwater beneath Taube-Koret’s property were found to be contaminated with hazardous substances, including VOCs and polychlorinated biphenyls (PCBs). On June 16, 1999, the Water Board issued Order No. 99-043, which required named dischargers to clean up and abate the effects of hazardous substances found on certain portions of the Site: namely, 3825, 3963, and 3977 Fabian Way and 901 San Antonio Road. On August 12, 2003, after Taube-Koret had acquired 901 San Antonio Road, the Water Board issued Order No. R2-2003-0071, amending its previous order and naming Taube-Koret a discharger based on Taube-Koret’s June 2002 purchase of the property from Sun. Taube-Koret complied with Order Nos. 99-043 and R2-2003-0071 by performing the requisite environmental investigation, assessment, remedial actions, and removal of hazardous substances on its property. Between January and June 2006, Taube-Koret submitted to the Water Board for approval a Human Health Risk Assessment report, a Site Cleanup Plan (SCP), and a Risk Management Plan (RMP) for the proposed cleanup and development of 901 San Antonio Road. The Water Board approved the SCP and RMP. Taube-Kor-et removed contaminated soil from 901 San Antonio Road in June and July 2006.
After Taube-Koret acquired 851 San Antonio Road, it submitted a ‘Workplan for Phase II Investigation” to the Water Board on December 18, 2006, and an Addendum on February 2, 2007, relating to the San Antonio Road properties. On February 7, 2007, the Water Board approved the Workplan and Addendum. On March 14, 2007, the Water Board issued Order No. R2-2007-0023 with respect to Taube-Koret’s redevelopment project, directing Taube-Koret to implement its
In January 2008, during the excavation and remediation of 851 San Antonio Road, Taube-Koret discovered additional contamination. Taube-Koret submitted a soil removal plan to the Water Board, which approved the plan. Between February and March 2008, Taube-Koret completed the excavation and remediation of contaminated soil on 851 San Antonio Road. Chubb alleges that during subsequent excavation activities, Taube-Koret discovered Chevron’s waste oil. On March 18, 2008, Taube-Koret removed 550 gallons of waste oil from the ground. Soil samples from the excavation revealed the presence of hydrocarbons and other contaminants. Vapor control systems were installed to minimize the risk of vapor intrusion on the property.
On August 28, 2009, Taube-Koret submitted a detailed completion report regarding all removal and remediation activities completed in compliance with the RMPs and Order No. R2-2007-0023. On September 9, 2009, the Water Board issued written confirmation that Taube-Koret had fully complied with all cleanup orders. Chubb alleges that Taube-Koret incurred $2.4 million in response costs through July 2008 for the removal of pollutants from the San Antonio Road properties.
C. Insurance Policy and Payment to Taube-Koret
Chubb issued Taube-Koret an Environmental Site Liability Insurance (Policy) for Taube-Koret’s two properties on 901 and 851 San Antonio Road, effective from June 21, 2002 to June 21, 2012. Taube-Koret paid Chubb an initial policy premium of $153,259 for the 901 San Antonio Road property, with a policy limit of $10 million and a $50,000 deductible for each pollution incident. The premium was later increased by an additional $37,966 for coverage of 851 San Antonio Road. The Policy included a provision for the Transfer of Rights of Recovery: “If the insured has rights to recover all or part of any payment we have made under this insurance, those rights are transferred to us.” The Policy also referenced a “pollution incident” at the 851 San Antonio Road property that was excluded from coverage.
On December 4, 2008, Chubb issued Taube-Koret a check for $2.4 million, which “constituted the necessary cleanup costs for responding to the release of hazardous substances” on its San Antonio Road properties, and represented “payment for all necessary Response Costs claims and incurred” by Taube-Koret, “thereby making [Taube-Koret] whole for its soil remediation costs.”
D. Procedural History
On September 23, 2009, Chubb filed suit against Defendants. In the original complaint, Chubb asserted CERCLA claims for cost recovery under section 107(a), subrogation under section 112(c), and contribution and declaratory relief under sections 113(f)-(g). Chubb also asserted supplemental state law claims, including contractual and equitable subrogation as well as statutory and equitable indemnity. The district court dismissed Chubb’s initial complaint with leave to amend. Chubb subsequently filed two amended complaints, each of which was dismissed by the district court with leave to amend. On January 6, 2011, Chubb filed the operative TAC, renewing CERC-LA claims under sections 107(a) and 112(c). Chubb also asserted subrogated state law claims for statutory indemnity under the California Health and Safety Code, negligence per se, and strict liabili
STANDARD OF REVIEW
We review de novo the district court’s dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Lacey v. Maricopa Cnty.,
DISCUSSION
Congress enacted CERCLA in 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), Pub.L. No. 99-499, 100 Stat. 1613, “in response to the serious environmental and health risks posed by industrial pollution.” Burlington N. & Santa Fe Ry. Co. v. United States,
A. Subrogation Claims under CERC-LA
Subrogation is a common law doctrine based in equity that permits an insurer to take the place of the insured to pursue recovery from third-party tortfeasors responsible for the insured’s loss. See Intri-Plex Techs., Inc. v. Crest Group, Inc.,
Chubb seeks to bring subrogated claims under both sections 107(a) and 112(c) of CERCLA. Specifically, Chubb alleges a section 107(a) claim as the equitable and contractual subrogee of Taube-Koret. Chubb also brings a claim for statutory subrogation under section 112(c). The district court dismissed Chubb’s section 107(a) claim for lack of standing because it determined that an insurance payment is not included within the meaning of “costs of response,” 42 U.S.C. § 9607(a)(4)(B), as required under the statute, and because permitting a subrogation action under that provision would render section 112(c) a nullity. The district court further dismissed Chubb’s section 112(c) claim because Chubb did not allege that Taube-Koret was a “claimant.” 42 U.S.C. § 9612(c)(2). Chubb challenges both rulings, arguing that it may bring a section 107(a) claim in subrogation and that the insured need not be a claimant, as defined by CERCLA, for the insurer to bring a subrogated action under section 112(c). We draw on well-established canons of
1. Principles of Statutory Interpretation
In interpreting statutes, our task is to construe Congress’s intent, and doing so requires us to “begin, as always, with the language of the statute.” Duncan v. Walker,
We first consider whether Chubb may pursue a subrogation action under section 112(c), which expressly provides for subro-gation, and then consider whether it may assert a section 107(a) claim in subrogation.
2. Subrogation under CERCLA Section 112(c)
The district court ruled that Chubb could not bring a subrogation cause of action under section 112(c) because Chubb had not alleged that Taube-Koret was a “claimant” under the statute, defined as a person who demands compensation for damages or costs from the Superfund or a liable party resulting from a CERCLA violation.
The issue before us is whether Chubb has alleged that Taube-Koret is a “claimant” under CERCLA. Section 112(c)(2) provides:
Any person, including the Fund, who pays compensation pursuant to this chapter to any claimant for damages or costs resulting from a release of a hazardous substance shall be subrogated to all rights, claims, and causes of action for such damages and costs of removal*959 that the claimant has under this chapter or any other law.
42 U.S.C. § 9612(c)(2). The statute defines “claimant” as “any person who presents a claim for compensation under this chapter.” 42 U.S.C. § 9601(5). A “claim” is “a demand in writing for a sum certain.” 42 U.S.C. § 9601(4). Section 112(b) describes the forms and procedures for making a claim, which include “a sworn verification of the claim.” 42 U.S.C. § 9612(b)(1). Under the statutory definitions, a claimant then is any person who presents a written demand for reimbursement of monetary costs under the statute — ie., for a CERCLA violation. The definitions do not include to whom this demand should be made, but we have held that “a ‘claim’ consistently refers to a demand for reimbursement from the Superfund, except for its first appearance in the second sentence of section 112(a),
Applied to this case, the definition of claimant required Chubb to make a written demand for payment for its response costs from potentially liable parties (alleged to be Defendants). If Chubb reimbursed Taube-Koret for the response costs, it could then bring a subrogation claim under section 1 12(c)(2). Here, however, Chubb has not alleged that Taube-Koret has made such a demand on Defendants, the Superfund, or any other PRP. Chubb only alleges that Taube-Koret has made an insurance claim to Chubb. There is no indication that section 112(c)(2) contemplates this meaning of claimant. In this section of CERCLA, Congress did not simply use the broader term “person,” which the statute also defines; instead, it employed the narrower term “claimant.” Reading section 112(c) to authorize subro-gation claims irrespective of whether Taube-Koret qualifies as a “claimant,” as Chubb urges, “violates the settled rule that a statute must, if possible, be construed in such fashion that every word has
The limit also makes practical and policy sense. Under the provision, subro-gation rights vest once an insured makes a claim to either the Superfund or a potentially liable party. This means that the subrogee assumes the insured’s rights to cost recovery, thereby preventing the insured from obtaining double recovery from the insurance company and any PRPs. Here, there is no such risk because Taube-Koret is not alleged to have made any claim or to have identified any PRP. The requirement that a party first request reimbursement from a liable party, if known, also furthers the overall statutory purpose of identifying PRPs and making actual polluters pay for environmental cleanups. See infra Part A(5) [Statutory Purpose and Public Policy].
Chubb argues that the district court’s interpretation contravenes CERCLA’s statutory scheme and legislative history. But Chubb cites no specific statutory language or related materials in support of its position. Instead, Chubb protests that reliance on Howmet Turbine is misplaced because the court in that case was discussing the definition of a claim in the context of a notice requirement for a civil action. This argument has no relevance here. Our holding in Houmet Turbine that there is no notice requirement for a civil action under section 107(a) bears no relationship to the issue at hand, namely the definition of a “claim” within the context of CERC-LA, which the court clarified. The district court properly dismissed Chubb’s section 112(c) claim.
3. Subrogation under CERCLA Section 107(a)
Chubb asserts a CERCLA section 107(a) claim as the subrogee of Taube-Koret. We know of no controlling authority or persuasive circuit authority on the issue of whether section 107(a) authorizes a subrogated cost-recovery action. Thus, we heed the rule that where a common law principle is well-established, we presume that “Congress has legislated with the expectation that the principle will apply except when a statutory purpose to the contrary is evident.” Astoria Fed. Sav. & Loan Ass’n v. Solimino,
We first turn to the statutory text of section 107(a) to discern congressional intent. Section 107(a) of CERCLA imposes strict liability on four categories of PRPs for the cleanup of environmental hazards, irrespective of whether they directly contributed to the contamination. Team Enters.,
(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan;
(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan....
42 U.S.C. § 9607(a)(4).
Section 107(a) states that PRPs are liable for “necessary costs of response incurred,” which are “consistent with the national contingency plan.” 42 U.S.C. § 9607(a)(4)(B). Here, because CERCLA clearly defines the key terms “response” and “national contingency plan,” we apply the statutory definitions. Stenberg,
Applying these definitions, section 107(a) plainly applies to a person who, through his or her own actions, becomes statutorily liable for, or is subject to, the
Our reading of section 107(a) is consistent with our CERCLA jurisprudence. Although there is no controlling authority on the issue of whether an insurer may bring a subrogated cost-recovery claim under section 107(a), we have consistently tracked the express language of section 107(a) in defining the scope of that provision.
The issue before the Supreme Court was whether section 107(a) provides PRPs with a cause of action to recover from other PRPs, separate and distinct from section 113(f)(1), which authorizes one PRP to sue another for contribution (1) during or following a civil action under section 106 or 107(a) and (2) after private parties have settled their liability with the Government, 42 U.S.C. § 9613(f)(3)(B). Id. at 131, 132 n. 1,
Chubb argues that the Court’s reading of “any other person” under section 107(a) supports its position that insurance companies, too, should be included as a party under that provision. However, the Court’s interpretation of “any other person” under 107(a) is limited to “a private party that has itself incurred cleanup costs.” Id. at 139,
While the Supreme Court examined section 107(a) as it specifically intersects with section 113(f), the Court’s distinction between a response cost and reimbursement may be applied to clarify the proper scope of section 107(a) in relation to section 112(c). Under the Court’s ruling, Taube-Koret, as a PRP, may seek contribution against other PRPs under section 107(a) if it voluntarily cleans up the environmental hazard. But the Court’s ruling does not authorize a private party who has only incurred reimbursement costs, such as Chubb, to file suit under that provision. Just as a PRP “has not incurred its own costs of response,” by reimbursing other parties’ response costs, Chubb has not incurred response costs solely by virtue of reimbursing Taube-Koret for Taube-Koret’s response costs under an insurance policy.
In support of their position, Chubb and Chartis also rely on Karras v. Teledyne Industries, Inc.,
(S.D.Cal.2002), and Basic Management, Inc. v. United States,
4. Statutory Scheme
Because we must review the words of a statute “in their context and with a view to their place in the overall statutory scheme,” Davis v. Mich. Dep’t of Treasury,
In interpreting statutes, we observe the “cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews,
Section 112(c) permits an insurer like Chubb to file a subrogation action for reimbursement of costs from PRPs, so long as it complies with the statutory requirements, including the requirement that Taube-Koret be a “claimant.” 42 U.S.C. § 9612(c)(2). Enabling Chubb, as Taube-Koret’s subrogee, to proceed under section 107(a) for reimbursement of its insurance payment is far broader than what is contemplated under section 112(c), and therefore would impermissibly swallow — not complement — the subrogation provision. Such an effect is distinct from merely a minor overlap in statutory provisions. When given a choice, parties would undoubtedly choose to pursue a subrogated action under section 107(a), which does not include the “claimant” requirement, there
Chartis counters that a subrogation claim is expressly contemplated under CERCLA section 107(e)(2). But Chartis’s argument is not supported by the plain language of that provision. Section 107(e)(2) provides that “[n]othing in this subchapter ... shall bar a cause of action that an owner or operator or any other person subject to liability under this section, or a guarantor, has or would have, by reason of subrogation or otherwise against any person.” 42 U.S.C. § 9607(e)(2). A “guarantor” is “any person, other than the owner or operator, who provides evidence of financial responsibility for an owner or operator under this chapter.” 42 U.S.C. § 9601(13). A related statutory provision suggests that a “guarantor” includes insurers. See 42 U.S.C. § 9608(d)(1) (“The total liability of any guarantor in a direct action suit brought under this section shall be limited to the aggregate amount of the monetary limits of the policy of insurance, guarantee, surety bond, letter of credit, or similar instrument obtained from the guarantor by the person subject to liability under section 9607....” (emphasis added)). But irrespective of whether an insurance company qualifies as a “guarantor,” section 107(e)(2) simply clarifies that nothing in CERCLA shall “bar,” i.e., operate as an impediment to the assertion of proper subrogation claims. This is consistent with the district court’s acknowledgment that subrogation claims are not foreclosed to Chubb, as long as they are brought in a manner authorized by the law, such as under section 112(c) and relevant state law claims. Thus, while CERC-LA does not bar subrogation claims under specified conditions or pursuant to state law, this does not mean that section 107(e)(2) creates a separate right to bring a subrogated action under section 107(a).
The Dissent nevertheless maintains that equitable subrogation should be permitted under section 107(a) because there is no showing that Congress intended statutory subrogation under section 112(c) to be exclusive, and because there is no showing that Congress intended to eliminate consideration of equitable subrogation. But while CERCLA does not expressly proscribe equitable subrogation under section
5. Statutory Purpose and Public Policy
Because Chubb did not allege that Taube-Koret was a claimant, as expressly defined by CERCLA, it is precluded from bringing a subrogation action under section 112(c). Further, both the plain statutory language and overall scheme of CERCLA indicate that an insurer cannot bring a subrogation action under section 107(a) when it has not itself incurred response costs. As the Supreme Court has observed, “[g]iven the clear meaning of the text, there is no need ... to consult the purpose of CERCLA at all,” as “‘it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.’ ” Cooper Industries,
“Our court construes CERCLA liberally to effectuate the statute’s two primary goals: (1) to ensure the prompt and effective cleanup of waste disposal sites, and (2) to assure that parties responsible for hazardous substances [bear] the cost of remedying the conditions they created.” City of Los Angeles v. San Pedro Boat Works,
First, Chubb and Chartis argue that affirming the district court’s decision would make it more difficult for insurers to access remedies under CERCLA. This would risk the winnowing of insurance products offered, leaving some markets unserved or underserved. The net result, they argue, would be a decrease in the overall insurance money available to cover remediation costs under CERCLA. This, in turn, undermines the purpose of CERC-LA to facilitate prompt cleanup of hazardous sites.
We find this argument unpersuasive. As a preliminary matter, we emphasize that subrogation actions are not foreclosed to insurers like Chubb. Insurers may still avail themselves of statutory subrogation pursuant to section 112(c) and under relevant state law, as long as they comply with specified requirements. Moreover, there is no evidence — and Chubb and Chartis have furnished none — that Congress contemplated funding of environmental cleanups through insurance money. CERCLA establishes a trust fund, commonly known as “Superfund,” which is financed through taxes on certain chemicals and by general revenues. Exxon Corp. v. Hunt,
Furthermore, there is no evidence that insurance companies rely on the availability of CERCLA remedies in issuing environmental policies. Nor is there evidence that insurers depend on CERCLA recoveries to stay in business. An insurer’s
Here, Chubb assumed the risk that it would have to pay on the Policy and received premium payments (totaling nearly $200,000) to compensate it for assuming that risk.
Second, Chubb and Chartis argue that conditioning a section 112(c) claim on whether the insured has made a claim to either the Superfund or other PRPs places further unnecessary roadblocks that prevent an insurer from perfecting its right to pursue other PRPs for response costs. This not only slows down the remediation process, but also enables actual polluters to receive an undeserved free pass, simply because the remediation costs were paid by the insurance company.
This argument fares no better than the first. It could be argued, as does the Dissent, that placing limits on a broad subrogation right under CERCLA would encourage insurance companies to rewrite their policy and explicitly condition insurance payments on whether the insured brings suit or makes a claim. According
While Chubb and Chartis contend that the condition precedent under section 112(c) would thwart CERCLA’s purpose, the opposite is true. Requiring PRPs to first seek claims from the Superfund or other PRPs, instead of resorting to insurance money, ensures that PRPs are identified and held accountable for cleanups. PRPs are in a better position to locate and identify other PRPs because they are more knowledgeable about the polluting site and engage in the cleanups themselves, rather than insurance companies who are detached from the property and are not involved in the remediation activities. This furthers CERCLA’s goal of making polluters pay for cleanup costs. Making polluters pay, in turn, frees up, not reduces, the available insurance money for remediation. Additionally, requiring the insured to pursue a claim before a subro-gation right vests under section 112(c) would not be unduly burdensome or have a slowing effect on cleanups of polluted sites. Insurance companies may write their policies in a way as to require reasonable cooperation from their insureds. In the Policy at issue, for example, Taube-Koret already had a duty “to cooperate and otherwise offer [Chubb] reasonable assistance in the defense, investigation or settlement of a claim.”
Moreover, not permitting an equitable subrogation action under section 107(a) and requiring the insured to make a claim before an insurer can pursue a section 112(c) claim does not give a “free pass” to actual polluters. The issue here is not whether liable parties or actual polluters are given a free pass, but whether insurers may pursue a CERCLA claim under 107(a) and 112(c) without having incurred response costs and without its insured first making a claim. Defendants’ liability has
There are further countervailing policy arguments that counsel against an expansive reading of sections 107(a) and 112(c). Aside from the timely cleanup of polluted sites and imposing liability on responsible parties, “[o]ne of the core purposes of CERCLA is to foster settlement through its system of incentives and without unnecessarily further complicating already complicated litigation.” City of Chico,
Moreover, enabling insurance companies to sue in subrogation under section 107(a) or section 112(e), irrespective of whether the insurer has incurred response costs or the insured has made a claim, creates perverse incentives. It would encourage insurance companies to sue third parties who may or may not be liable for the release of contaminants in the hopes of getting a settlement from those who would rather settle than engage in expensive litigation. It could also create a windfall for insurance companies, since they would not only receive premium payments, but also potentially lucrative recoveries from CERCLA actions.
Finally, allowing insurers the benefit of a broad subrogation right under section 107(a) or 112(c) would be fundamentally unfair because while CERCLA does not bar an insurer from recouping insurance payments through subrogation, it prohibits a contractual assignment of liability. See 42 U.S.C. § 9607(e)(1) (“No indemnification ... shall be effective to transfer from the [PRP] ... to any other person the liability imposed under this section.”). Chubb thus would reap the benefits of Taube-Koret’s rights without remaining liable under CERCLA for any future violation or continuing remediation. This scheme facilitates the business of insurance companies, rather than ensuring that responsible parties pay for environmental cleanups.
In sum, after reviewing the statutory language, remedial scheme, and purpose of CERCLA, along with relevant case law, we hold that an insured must first make a claim to either the Superfund or a potentially liable party before an insurer can bring a subrogation action under section 112(c). We further hold that section 107(a) of CERCLA does not authorize an insurer to assert a subrogation claim under that provision to recover insurance payments when it did not directly incur environmental response costs. The plain statutory language of section 107(a) and its
B. Chubb’s State Law Claims
Chubb asserts subrogated state law claims under the California Health and Safety Code and under negligence per se and strict liability tort theories. The district court dismissed Chubb’s state law claims as time-barred under section 338(b) of the California Code of Civil Procedure, which provides for a three-year limitations period for “[a]n action for trespass upon or injury to real property.” The statute of limitations for injury to property begins to run when the injury to the property occurs. CAMSI IV v. Hunter Tech. Corp.,
1. The Accrual Period under Section 338(b) .
Chubb challenges the district court’s determination that the limitations period under section 338(b) “commences to run when the plaintiff knows, or should have known, of the wrongful conduct at issue.” Angeles Chem. Co. v. Spencer & Jones,
Chubb contends that the statute of limitations under section 338(b) is measured from the date that an insurer pays an indemnity claim, alleged in this case to be December 4, 2008. In support of this proposition, Chubb relies on Smith v. Parks Manor,
In contrast to both these cases, Chubb does not assert a claim for equitable indemnity arising from a payment it made to a third party on Taube-Koret’s behalf.
Nevertheless, Chubb insists that its suit is a third-party subrogation action, and that it issued Taube-Koret a third-party liability policy, rather than a first-party loss policy. While Chubb is correct that the Policy includes third-party liability coverage, it also provides for first-party loss, which is the provision at issue in this case. (See Policy, Sect. 1.1 (“We will also pay remediation costs resulting from discovery of a pollution incident ... on or under the insured site....”).) As alleged in the TAC, Chubb reimbursed Taube-Koret for expenses it incurred in cleaning up the contaminated soil on its property, not a settlement to a third-party for Chubb’s tortious conduct. Nor did the
2. San Antonio Road Properties
Dismissal of Chubb’s state law claims on the ground that it is barred by section 338(b) is proper only when “the running of the statute is apparent on the face of the complaint.” Huynh v. Chase Manhattan Bank,
Chubb alleges in the TAC that, on August 12, 2003, the Water Board issued Order No. R2-2003-0071, naming Taube-Koret as a discharger of hazardous substances found on 901 San Antonio Road, and that Taube-Koret removed contaminated soil from that site in June and July 2006. Construing these facts in the light most favorable to Chubb, it is reasonable to infer that Taube-Koret knew or should have known of hazardous substances on its property as early as August 2003 and as late as July 2006, when it removed the contaminated soil. There are no allegations that any other environmental response actions occurred. Since Chubb did not file suit until September 23, 2009, more than three years after the removal date, its state law claims are time-barred as to 901 San Antonio Road.
With respect to 851 San Antonio Road, Chubb alleges that it acquired the property in November 2006 for inclusion in its redevelopment project. While it may be inferred from this purchase date that Chubb did not know about the contamination until November 2006 (thus within the limitations period), the Policy suggests otherwise. Under the Policy, which was incorporated in the TAC and all prior complaints, there is an endorsement, dated December 28, 2004, which expressly identifies a “pollution incident” at the 851 San Antonio Road property that was excluded from coverage. The description of the pollution incident references underground storage tanks and product lines at the property, as stated in an environmental site assessment dated September 13, 2004. It is reasonable to infer that Taube-Koret knew or should have known of at least some of the contamination on 851 San Antonio Road in late 2004. Thus, Chubb’s claims as to this property are also time-barred.
Chubb, however, argues that dismissal was improper because the running date of the statute of limitations period depends on whether the injury was permanent or continuous, which the district court failed to evaluate. Chubb insists that the TAC included allegations of “continuous physical injury” that was finally remediated in 2008, and under California law, the statute of limitations on continuous physical injury does not begin to run until abatement of the injury. Chubb is mistaken. California does not recognize a claim for continuing negligence per se or continuing strict liability. See Mangini v. Aerojet-Gen. Corp.,
CONCLUSION
Our decision here does not mean that insurers cannot bring subrogation claims in environmental matters. On the contrary, insurers’ subrogation rights remain intact under CERCLA section 112(c) and relevant state law provisions. The right to subrogation under CERCLA section 112(c), however, is not an unbridled right. It may be circumscribed by Congress through certain requirements, including the assertion of a claim by the subrogor-insured. Moreover, the common law principle of subrogation does not apply to seetion 107(a) because there is clear congressional intent to the contrary, as evinced by the language of section 107(a), its statutory scheme in relation to section 112(c), and CERCLA’s overall purpose. Although CERCLA should be liberally construed to effectuate the purpose of the statute, it may not be extended so far as to fashion a new right under CERCLA that Congress did not intend. Nor, a fortiori, should a right be created by application of a common law principle that not only contravenes the express language and scheme of CERCLA, but also does not further its aims. CERCLA was not enacted to benefit insurance companies; rather, it was enacted to promote the timely cleanup of contaminated waste sites, impose liability on those responsible for polluting the environment, and to encourage settlement through a complex statutory scheme. An expansive application of subrogation to sections 107(a) and 112(c) is inconsonant with those overall goals. If Congress wishes to change CERCLA’s statutory scheme, it may certainly do so. But it is not the province of the courts to rewrite the statute. CERCLA sets limits and provides express guidance by which a party must abide. The statute of limitations under state law also required Chubb to file suit in a timely manner if it desired relief under state law. Chubb failed to do so here. We thus affirm the district court.
AFFIRMED.
Notes
. Defendants-Appellees are Space Systems/Loral, Inc., Ford Motor Company, Sun Microsystems, Inc., Chevron Corporation, and Harman Stevenson, Inc. (collectively, Defendants).
. The factual background is based on the allegations in Chubb’s TAC. We emphasize that these are only alleged facts, which have not yet been proven to be true.
. The Site later incorporated 851 San Antonio Road in Palo Alto.
. CERCLA vests this authority in the President, who, in turn, has delegated most of his functions and responsibilities to the Environmental Protection Agency (EPA). See 42 U.S.C. §§ 9606(c), 9615; 40 C.F.R. § 300.100.
. "These categories include: (1) the current owners and operators of a vessel or facility,
. Under section 112(a), "[n]o claim may be asserted against the Fund ... unless such claim is presented in the first instance to the owner, operator, or guarantor of the vessel or facility from which a hazardous substance has been released, if known to the claimant, and to any other person known to the claimant who may be liable under section 9607 of this title.” 42 U.S.C. § 9612(a). In other words, before a claim can be made to the Superfund, a party must first make such a claim against a liable party, if known to the claimant. If the claim to a known PRP has not been satisfied within 60 days of the presentation of the claim in the prescribed manner, the claimant may present the claim to the Superfund for payment. Id. But "[n]o claim against the Fund may be approved or certified during the pendency of an action by the claimant in court to recover costs which are the subject of the claim.” Id.
. Because a successful claim to the Superfund requires a claim to a liable party, if known, a claimant may have made a claim to both entities.
. See, e.g., Carson Harbor II,
. Chubb additionally argues, without support, that prohibiting a subrogation claim under section 107(a) impairs its right to private contract under the Due Process Clause of the Fifth Amendment by nullifying its contractual subrogation rights. Chubb is mistaken. CERCLA expressly provides for subrogation under section 112(c), and does not foreclose subrogation claims under state law. See 42 U.S.C. §§ 9672(a), 9607(e).
. Additionally, the fact that City of Chico was decided before Atlantic Research and Kotrous does not affect its structural analysis, which remains sound.
. As we have done previously, we primarily look to the overall statutory scheme and the purposes animating CERCLA to determine congressional intent, rather than the legislative history materials. Hearthside Residential,
. The Dissent argues, however, that “in the long run,” insurers cannot be expected to indemnify companies for environmental cleanups without charging a premium reflecting the risk of monetary loss, and that "risk will necessarily increase if the insurer cannot seek contribution from prior polluters and property owners.” This will, in turn, discourage or delay cleanups, and thus undermine CERCLA's purpose. But the Dissent’s argument assumes that section 107(a) is the only means by which insurance companies can recover its insurance payments. That is clearly not the case, as we repeatedly emphasize in this opinion. Insurers may assert both section 112(c) and state law subrogation claims under certain conditions. Moreover, the Dissent acknowledges that insurers need not increase insurance premiums, but have the alternative option of conditioning payment on a prior claim by the insured against other contributors of the pollution. As we discuss in this section, that is exactly what CERCLA section 112(c) calls for, and for good reasons.
. As a preliminary matter, Chubb’s argument that the district court applied an incorrect legal standard in dismissing its state law claims is without merit. Chubb does not take issue with the Rule 12(b)(6) standard articulated under Twombly and Iqbal, which the district court applied in dismissing the TAC and Chubb cites in its brief. The district court concluded that Chubb’s state law claims were time-barred under the alleged facts in the TAC. This decision was based on a proper application of Rule 12(b)(6), and did not involve impermissible findings of fact.
. Chubb originally brought a claim for equitable indemnity, which the district court dismissed with leave to amend. Because Chubb did not voluntarily renew these claims, however, it effectively abandoned them. See Lacey,
. Ford acknowledges that for certain common law torts, such as nuisance and trespass,
. Because we conclude that Chubb's state law claims were properly dismissed, we decline to reach the remaining issues raised by Chubb, of whether it sufficiently alleged that Ford Motor is an "owner” or "operator” of the Ford Aerospace "facility” under section 107(a), and whether it pleaded sufficient allegations that Chevron or Stevenson is responsible for a "release” of a hazardous substance.
Dissenting Opinion
dissenting:
I respectfully dissent. The majority provides a reasoned explication of why statutory subrogation under section 112(c), 42 U.S.C. § 9612(c), does not apply. But the majority’s analysis of section 107(a), 42 U.S.C. § 9607(a), does not honor Chubb’s right to equitable subrogation, which allows Chubb to stand in the shoes of Taube-Koret.
“Equitable subrogation is a broad equitable remedy,” Mort v. United States,
Subrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person’s rights against the defendant. Factually, the case arises because, for some justifiable reason, the subrogation plaintiff has paid a debt owed by the defendant. Having paid the defendant’s creditor, the plaintiff stands in the creditor’s shoes, becomes the real party in interest, and is entitled to exercise all the remedies which the creditor possessed against the defendant.
1 Dan B. Dobbs, Law of Remedies: Damages-Equity-Restitution § 4.3(4), at 604 (West Publishing 2d ed. 1993) (quotations and footnotes omitted). Applying this “well-settled rule” of equitable subrogation, I would hold that we should recognize the right of an insurer to equitable subrogation once it has reimbursed a landowner for remediation expenses that in fairness should have been borne in part by others. See United States v. Bestfoods,
Taube-Koret paid cleanup expenses that should have been borne in part by Ford, Chevron, Sun Microsystems, Inc., and others who polluted and contaminated the property. The majority reasons that because Chubb reimbursed Taube-Koret’s cleanup expenses and did not directly incur those costs, it does not meet the definition of “any person” under section 107(a). 42 U.S.C. § 9607(a). But the regime of law mandated by the majority is contrary to CERCLA’s intent to make polluters pay. See Burlington N. & Santa Fe Ry. Co. v. United States,
It should not matter that the statutory subrogation remedy elements are not satisfied under section 112(c). There is no showing that Congress intended this type of subrogation to be exclusive — no showing that Congress intended to eliminate consideration of equitable subrogation. See Bestfoods,
The district court and the majority give credence to the argument that permitting a subrogation claim under section 107(a) renders section 112(c) a nullity, but I disagree. In United States v. Atlantic Research Corporation, the Supreme Court recognized that CERCLA allows for complementary remedies that provide causes of action “to persons in different procedural circumstances.”
The scheme of law adopted by the majority may be able to decide this particular ease by characterizing the actions of the insurer’s legal counsel as too little and too late. This view is inaccurate and reflects the majority’s failure to implement a fair procedure of subrogation in a way that is called for under section 107(a). Also, in the long run, one cannot expect insurers to indemnify companies for pollution cleanup costs without charging an insurance premium reflecting the risk of monetary loss and that risk will necessarily increase if the insurer cannot seek contribution from prior polluters and property owners. Either insurance premiums for an organization like Taube-Koret will go up dramatically, raising questions on feasibility of insurance, or the policies will condition payment on a prior claim by the insured against other contributors to the pollution. This
. It is true, as the majority notes, that Bestfoods and Atchison adopted well-settled common law in areas where CERCLA was silent on the issue. See Bestfoods,
. Congress can rectify this result for future cases by modifying their statutory language in a way that would satisfy the majority. But for practical reasons, we cannot assume that corrective legislative action will promptly arrive. As Sir Frederick Pollock explained long ago, though in a different context, "legislative methods and procedure being what they are and must be, it is for the most part idle to count on legislation for this [corrective] purpose.” Sir Frederick Pollock, A First Book of Jurisprudence: For Students of the Common Law 310 (Burt Franklin 1970). If the statutory language really commanded the position taken by the majority, I would of course abide it. But in my view, the ambiguous statutory language permits a more sensible result than that taken by the majority.