City of Modesto v. Dow Chem. Co.

19 Cal.App.5th 130

227 Cal.Rptr.3d 764

CITY OF MODESTO et al., Plaintiffs and Appellants,

v.The DOW CHEMICAL COMPANY et al., Defendants and Respondents.

A134419

Court of Appeal, First District, Division 4, California.

Filed January 8, 2018

As Modified on Denial of Rehearing February 6, 2018

Counsel for Plaintiffs and Appellants, City of Modesto et al.: Miller, Axline & Sawyer, Duane C. Miller and Michael D. Axline, Sacramento; Bien & Summers, Elliot L. Bien, San Rafael, and Jocelyn S. Sperling ; Susan Alcala Wood and Adam U. Lindgren, City Attorneys of Modesto; Roland R. Stevens, Special Counsel.

Counsel for Plaintiff and Appellant, City of Modesto Redevelopment Agency: Brown & Winters, William Douglas Brown.

Counsel for Plaintiff and Appellant, City of Modesto Sewer District No. 1: Davidovitz & Bennett and Cooper & Scully, Moris Davidovitz, San Francisco; Davidovitz & Bennett, Charles H. Bolcom, San Francisco, and Coreal Riday-White.

Counsel for Defendant and Respondent, The Dow Chemical Company: King & Spalding, Gennaro A. Filice III, San Francisco, and Paul R. Johnson.

Counsel for Defendant and Respondent, Axiall Corporation, successor in interest to PPG Industries, Inc.: Beveridge & Diamond, Gary J. Smith and Mark A. Turco ; Beveridge & Diamond and Katten Muchin Rosenman, Lily N. Chinn, Oakland.

Counsel for Defendant and Respondent, R.R. Street & Co.: Hicks Thomas, Eric A. Grant and John B. Thomas.

Counsel for Defendant and Respondent, Halford's Cleaners: Schuering Zimmerman & Doyle, Keith D. Chidlaw and Andrew S. Larsen, Sacramento.

Counsel for Defendant and Respondent, Modesto Steam Laundry & Cleaners: Bassi Edlin Huie & Blum, William Noel Edlin, San Francisco, and Antonio P. Garcia, Jr.

Rivera, J.

I. INTRODUCTION

In late 1998, the City of Modesto (the City), the City of Modesto Sewer District No. 1 (the Sewer District) and the Modesto Redevelopment Agency (the RDA) sued various retail dry cleaning businesses (dry cleaners) operating in Modesto together with the manufacturers of dry cleaning equipment used at those dry cleaners, and the manufacturers and distributors of dry cleaning solvent. Plaintiffs alleged that defendants had caused the City's groundwater, sewer system and easements, and the soil of property located within the project area of the RDA, to become contaminated with perchloroethylene (PCE), a "toxic chlorinated solvent[ ]." Plaintiffs sought recovery for the past, present and future costs of investigation and remediation of the contamination at numerous sites under multiple legal theories.

This action has engendered nearly 14 years of litigation, including three detours to this court, and five trial phases. A final judgment was entered in November of 2011, and an amended judgment in May 2012. To the extent it can be summarized in one sentence, the judgment awarded plaintiffs damages with respect to three dry cleaning sites, including an award of punitive damages against three defendants; as to all other claims, judgment was entered in favor of defendants.

An issue that has been central to this litigation from the outset is the interpretation and application of the Polanco Redevelopment Act ( Health & Saf. Code, § 33459 et seq. ) (the Polanco Act),¹ which, in essence, authorized redevelopment agencies to remediate contamination found in property, including private property, located in a redevelopment project area, and to recover from the "responsible parties" the costs of the cleanup. Early in the case, this division issued a decision, on a petition for writ of mandate, providing our construction of that law. Specifically, we reversed the trial court's summary adjudication of the Polanco Act claims, concluding that the trial court erred in finding, as a matter of law, that defendants could not be "responsible parties" under the Act based on the facts put forward by the plaintiffs. ( City of Modesto Redevelopment Agency v. Superior Court (2004) 119 Cal.App.4th 28, 13 Cal.Rptr.3d 865 [ Modesto I ].)

Thereafter, the Polanco Act claims were tried two times, with respect to different contaminated sites, before two different judges, with different results. In the second proceeding, the trial court concluded that Modesto I implied a special causation standard was applicable to the Polanco Act claims. In the published portion of this opinion we hold that no special causation standard applies and we will, accordingly, vacate the trial court's ruling and order on the Phase IV Polanco Act claims.

In the unpublished portion of the opinion we address the remaining issues on appeal. We will vacate the trial court's pretrial ruling with respect to plaintiffs' nuisance claims; the punitive damages award against defendant, the Dow Chemical Company (Dow) in Phase I; and the trial court's directed verdict on grounds of no present injury as to various sites in Phase III. Our determinations with respect to the statute of limitations, the denial of equitable relief, the amended judgment, the prevailing parties and the allocation of settlement credits will be described in the course of the opinion.

II. GENERAL BACKGROUND

We begin by providing some general technical information about the characteristics of PCE, how it can contaminate groundwater, how it is used and reused in dry cleaning equipment, and how it was released into the environment. This is not a comprehensive discussion of the evidence but is intended only to supply context for our discussion of the issues on this appeal.

A. Characteristics of Perchloroethylene

Perchloroethylene, also known as tetrachloroethylene, is a molecule containing chlorine atoms and carbon atoms. It is also characterized as a "volatile halogenated organic compound," a "halogenated hydrocarbon", a "chlorinated solvent" or a "chlorinated hydrocarbon". As shorthand, it is referred to as "perc" or PCE. All chlorinated hydrocarbons, like all solvents other than water, are "toxic." In 1978, the National Institute for Occupational Safety Hazards (NIOSH) recommended that PCE be handled as if it were a human carcinogen. In 1980 the State of California began regulating PCE as a hazardous waste. In 1984, when the Resource Conservation Recovery Administration (RCRA) was reauthorized, its regulations brought "small dry cleaners" under the same requirements as major hazardous waste sources, with respect to PCE.

The California Department of Health Services has set the maximum contamination level (MCL) for PCE in drinking water at 5 parts per billion based on its finding that PCE potentially causes cancer in humans. Applying this standard, if one cup of PCE were completely dissolved in water, it could contaminate 24 million gallons of groundwater. There are also regulations to prevent migration of PCE vapors in concentrations that could cause cancer. All parties agree that the applicable regulatory standards are not arbitrary and address genuine public health risks.

PCE is a colorless liquid, and is therefore difficult to see once released into soil. It is a cleaning solvent used by dry cleaners and also in degreasing operations. Because in its pure form it is a dense non-aqueous phase liquid (DNAPL), it is heavier than water and so when placed in water it will sink and sit below the water. This is distinguished from a light non-aqueous phase liquid (LNAPL), such as gasoline, that is lighter than water and will therefore float on top. PCE also has lower viscosity (internal friction) than water and so it is very mobile and can move quickly to penetrate, for example, small cracks or joints in concrete. PCE does not readily dissolve in water—thus, "non-aqueous"—although it will dissolve very slowly over time. PCE is also quite volatile, meaning it will quickly become a gas when it is heated or released into soil where it mixes with the soil gas.

As is explained below, PCE is particularly "persistent" and "long lived" compared to other contaminants, making it extremely difficult to accomplish complete remediation.

B. The Flow and Transport of PCE in a Groundwater System

The City of Modesto uses groundwater as a primary source of its drinking water supply. The hydrologic cycle for groundwater is fairly straightforward. The rain falls and sinks into the "soil zone" which is the layer near the surface where plants and trees take it up with their roots. The rest of the water continues to move downward through the soil into the "vadose zone," in which there are various types of soils—fine grain such as clay or silt and coarse grain such as sand or gravel. Some of the water may "perch" on the fine grain materials but other water will flow through the coarser soil media and recharge the water table, which is at the top of the "saturated zone" from which ground water is pumped by wells. Between the vadose and saturated zones is a "capillary fringe." This space can hold "quite a bit of liquid," and the porous media can pull water up from the water table.

As we have noted, when PCE is released into the ground it can volatilize and mix with the soil gases. Where there is a very high concentration of PCE in the soil the PCE gas, which is denser than air, will tend to sink. If it reaches all the way to the capillary fringe it can then recondense on the water table and begin to dissolve into the groundwater.

When released into the ground, PCE can also remain in liquid form and will sink through the subsurface to the water table. Unlike gasoline—which is a LNAPL and will tend to float on top of the water table—PCE is a DNAPL and so will continue to move past the water table and through the saturated zone. Because it dissolves into water only very slowly, it creates a long-term continuing source of contamination to any groundwater that comes in contact with it.

Small releases of pure PCE will tend to penetrate only into the vadose zone because it gets "pulled apart" as both a gas and a liquid and will eventually get trapped in the soil pores—much like a small amount of coffee will be absorbed into and trapped in a sugar cube. When more...