Bank v. Renz

795 F.Supp.2d 898

WELLS FARGO BANK, N.A., as Trustee for the Clara Poppic Trust, Plaintiff,

v.Kenneth G. RENZ, et al., Defendants.and Related Actions.

Case No. C 08–02561 SBA

United States District Court, N.D. California, Oakland Division.

June 9, 2011.

Jan Adam Greben, Jenna L. Motola, Greben & Associates, Santa Barbara, CA, for Plaintiff.Peter Henry Liederman, Attorney at Law, Berkeley, CA, Karl R. Morthole, Law Office of Karl R. Morthole, San Francisco, CA, for Defendants.

ORDER

SAUNDRA BROWN ARMSTRONG, District Judge.

The Clara Poppic Trust (“the Trust”) is owner of commercial property located at 2531 Telegraph Ave., Berkeley, California (“Property”), the site of a dry cleaning business known as Cal Cleaners. In 2006, the Trust allegedly discovered that the Property was contaminated with perchloroethylene (“PCE”), a chemical used in dry cleaning operations. To defray the cost of remediating the contamination, Plaintiff Wells Fargo Bank N.A., in its capacity as Trustee for the Trust, filed the instant cost recovery and contribution action, principally under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601, et seq., against former lessees of the Property, including Kenneth Renz, the Estate of Jackson R. Dennison and Kazuko Umstead, among others, who allegedly operated Cal Cleaners from 1975 to 2008. In turn, Defendants have filed counterclaims against Plaintiff, crossclaims against each other and third-party complaints against manufacturers of the dry cleaning equipment, including Hoyt Manufacturing and Vic Manufacturing Company and its alleged successor, Bowe Permac, Inc.

The parties are now before the Court on the following motions, which are styled as follows:

1. Defendant Estate of Jackson R. Dennison's Motion for Summary Judgment or in the Alternative Summary Adjudication, Dkt. 313;

2. Defendant Kenneth G. Renz's Motion for Summary Judgment or in the Alternative Summary Adjudication, Dkt. 314;

3. Defendant Kazuko Umstead's Motion for Summary Judgment of All Plaintiff's Claims, or in the Alternative, Partial Summary Judgment of Plaintiff's Individual Claims for Relief, Dkt. 308;

4. Defendant Hoyt Corporation's Motion to Dismiss Pursuant to FRCP 12(b)(6), Dkt. 284;

5. Defendant Hoyt Corporation's Motion to Dismiss Renz's Cross–Claims Pursuant to FRCP 12(b)(6), Dkt. 333;

6. Defendant Hoyt Corporation's Motion for Partial Summary Judgment, Dkt. 306;

7. Third Party Defendants Bowe Permac, Inc. and Vic Manufacturing Company's Motion for Judgment on the Pleadings Pursuant to FRCP 12(c), Dkt. 311; and,

8. Third Party Defendants Bowe Permac, Inc. and Vic Manufacturing Company's Motion for Summary Judgment or, Alternatively, for Partial Summary Judgment, Dkt. 312.

Having read and considered the papers filed in connection with this matter and being fully informed, the Court enters the following memorandum and order. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); Civ. L.R. 7–1(b).

I. BACKGROUNDA. Factual Background

1. 1974–1977

On August 19, 1974, Henry Poppic, as Executor for the Estate of Clara Poppic, entered into a lease agreement (“Lease” or “1974 Lease”) with Kenneth G. Renz (“Renz”) and his uncle Jackson R. Dennison (“Dennison”), “for the purpose of conducting therein a coin-operated launderette and dry cleaning establishment.” Fourth Am. Compl. (“FAC”) Ex. A at 1 (copy of 1974 Lease), Dkt. 283–1. The term of the Lease ran from November 1, 1974 to October 31, 1984. Id. The Lease granted lessees Renz and Dennison access to the Property beginning on October 1, 1974, for the purpose of remodeling the premises. Id. ¶ 30. Renz and Dennison operated Cal Cleaners from about February 1975 until about May 1977. Renz Mot. at 7, Dkt. 314.

In January 1975, prior to opening Cal Cleaners, Renz and Dennison purchased a new Hoyt Sniff–O–Miser (“Sniff–O–Miser”) from Steam Equipment Sales Company (“Steam Equipment”) in Oakland, California. FAC ¶ 16, Dkt. 283. The purpose of the Sniff–O–Miser was to treat and reclaim PCE from gaseous fumes vented by the dryer/reclaimer or otherwise present in the ambient air from other dry cleaning plant operations. Id. The pure PCE reclaimed by the Sniff–O–Miser could be reused in the dry cleaning machines. Id. However, some amount of PCE remained in the wastewater resulting from the reclamation process. Id. An individual named “Pete” (whose affiliation is not indicated) provided instructions on how to operate the Sniff–O–Miser, which included dumping the wastewater into the toilet. Id. Plaintiff also claims that a manual from 1979 instructs that wastewater “should be piped to an open sewer system....” Id.

2. 1977–1986

In or about May 13, 1977, Renz and Dennison sold Cal Cleaners to Wiley Umstead (“Mr. Umstead”).¹ Adam Decl. Ex. D at 19:1–5, 67:3–11, Dkt. 308–3. The sale was memorialized in a Notice of Bulk Transfer and a Receipt and Agreement. Adam Decl. Ex. D (Exs. 8 and 9 to Renz Depo.), Dkt. 308–3. The Notice of Bulk Transfer (which is intended to give notice to creditors, see Cal. Comm. Code § 6102), indicates that Renz and Dennison were transferring the Cal Cleaners business to Mr. Umstead, who is the only signatory to the document. Id. Likewise, the Notice and Receipt specified that the “Name, Lease, Equipment, Fixtures, Business & Goodwill” of Cal Cleaners were being sold to Mr. Umstead. Id. at 145:10–146:11. Mr. Umstead signed the purchase agreement as the “PURCHASER.” Id. Wiley Umstead's wife, Kazuko Umstead (“Mrs. Umstead”), did not sign the purchase agreement nor is she mentioned in the document. In connection with the sale, Renz and Dennison assigned the 1974 Lease to Mr. and Mrs. Umstead, pursuant to an Assumption of Assignment (“1977 Assignment”). FAC Ex. B, Dkt. 283. However, the assignment is undated and the “Consent to Assignment,” which was to be signed by the Estate of Clara Poppic, was left blank. Id.

On July 13, 1983, Mr. Umstead and Coldwell National Bank and Henry Poppic, in their capacities as co-trustees of the Trust, executed a new ten-year lease (“1983 Lease”) for the Property. FAC Ex. C, Dkt. 283–1. The lease term ran from July 31, 1983, to July 31, 1993. Id. Mrs. Umstead did not sign the 1983 Lease, and only Mr. Umstead's name and signature appear on the document. Id. at 9.

At some point during his ownership of Cal Cleaners, Mr. Umstead purchased a Kamero Model 405 dry cleaning machine manufactured by Vic Manufacturing Company (“Vic”), a Minnesota corporation. See Weyand Decl. Ex. C, Dkt. 316. Bowe Permac, Inc. (“Bowe”) acquired Vic pursuant to a stock acquisition agreement, dated November 10, 1992. Id. Ex. A. Vic was dissolved under the laws of Minnesota on February 25, 2002. Id. Ex. B.

Mrs. Umstead occasionally worked at Cal Cleaners, though her involvement was limited to sewing, sorting and hanging clothes, and keeping the premises tidy. Adam Decl. Ex. D at 48:16–17, 164:24–165:15; Ex. E at 41:4–2–11, Dkt. 308–3; Culver Decl. Ex. C at 6:24–7:5, Dkt. 324. Mrs. Umstead does not recall observing any chemical leaks coming from the equipment. Culver Decl. Ex. C at 6:24–7:5, Dkt. 324.

3. 1986–2008

In August 1986, Mr. Umstead sold Cal Cleaners to Won Jae Yi (“Yi”). Adams Decl. Ex. F at 13:14–16, 89:14–90:8, Dkt. 308–3. As part of the sale, Mr. Umstead assigned the 1983 Lease to Yi. FAC Ex. D. Dkt. 283. The assignment was countersigned by Wells Fargo Bank (the successor to Crocker National Bank) and Henry Poppic, as co-trustees of the Trust. Id. Yi allegedly operated the dry cleaners until November 1999. Id. ¶ 18.

After Yi, Cal Cleaners was operated by the following persons: Nan Y. Park (“Park”)—November 1999 to April 2004; and Guan Huang (“Huang”), Ying Zhang (“Zhang”) and Sui Song (“Song”)—April 2004 to February 2008. Id. ¶¶ 19–20. The Trust has owned the Property during all relevant time periods. Id. ¶ 21. In September 2006, PCE was discovered in the ground at the Property when the Trust was attempting to sell the Property. Id. ¶ 23.

B. Procedural History

On May 21, 2008, Plaintiff, in its capacity as Trustee, filed the instant action in this Court, principally under CERCLA. As Defendants, the Complaint named: Renz; Dennison; Mr. Umstead; Yi; Park; Huang; Zhang; and Song. Compl. ¶ 11, Dkt. 1. The Complaint alleged fourteen claims for: (1) cost recovery under CERCLA § 107(a), 42 U.S.C. § 9607(a); (2) contribution under the Carpenter–Presley–Tanner Hazardous Substance Account Act (“HSAA”), Cal. Health & Saf.Code, § 25300, et seq; (3) equitable indemnity; (4) declaratory relief; (5) contribution under the California Porter–Cologne Water Quality Control Act (“Porter–Cologne Act”), Cal. Water Code § 13000, et seq.; (6) continuing private nuisance; (7) continuing public nuisance; (8) public nuisance per se; (9) negligence; (10) negligence per se; (11) breach of lease; (12) express contractual indemnity (13) waste; and (14) continuing trespass.

Plaintiff has amended the pleadings on four separate occasions. Specifically, Plaintiff filed a First Amended Complaint on June 24, 2008, Dkt. 11; a Second Amended Complaint on November 4, 2008, Dkt. 102; and Third Amended Complaint on November 20, 2009, Dkt. 204. The Third Amended Complaint joined Mrs. Umstead as a party-defendant, and substituted the Estate of Wiley Umstead and the Estate of Jackson Dennison in place of Mr. Umstead and Dennison, respectively, who are deceased. Dkt. 204.² In addition, Plaintiff added a fifteenth claim for injunctive relief under the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6972(a)(1)(B), and a sixteenth claim for contribution under CERCLA § 113(f), 42 U.S.C. § 9613(f). In the latter claim, Plaintiff seeks contribution from the other Defendants to the extent Plaintiff is found liable on Huang's claim against Plaintiff under CERCLA § 107(a). See Third Am. Compl. ¶ 111, Dkt. 204.

In response to Plaintiff's claims, Defendants filed...