Seattle Times Co. v. LeatherCare, Inc.

SEATTLE TIMES COMPANY, Plaintiff-Appellant, v. LEATHERCARE, INC.; STEVEN RITT, an individual,

and the marital community composed of Steven Ritt and Laurie Rosen-Ritt;

LAURIE ROSEN-RITT, Defendants-Appellees, v. TB TS/RELP LLC; TOUCHSTONE SLU, INC., Third-party-defendants-Appellees.

SEATTLE TIMES COMPANY, Plaintiff-Appellee, v. LEATHERCARE, INC.; STEVEN RITT,

an individual, and the marital community composed of Steven Ritt and Laurie Rosen-Ritt;

LAURIE ROSEN-RITT, Defendants-Appellees, v. TB TS/RELP LLC; TOUCHSTONE SLU, INC., Third-party-defendants-Appellants.

SEATTLE TIMES COMPANY, Plaintiff-Appellee, v. LEATHERCARE, INC.; STEVEN RITT, an individual,

and the marital community composed of Steven Ritt and Laurie Rosen-Ritt;

LAURIE ROSEN-RITT, Defendants-Appellants, v. TB TS/RELP LLC; TOUCHSTONE SLU, INC., Third-party-defendants.

SEATTLE TIMES COMPANY, Plaintiff-Appellant, v. LEATHERCARE, INC.; STEVEN RITT, an individual,

and the marital community composed of Steven Ritt and Laurie Rosen-Ritt;

LAURIE ROSEN-RITT, Defendants-Appellees, v. TB TS/RELP LLC; TOUCHSTONE SLU, INC., Third-party-defendants.

No. 18-35773

No. 19-35056

No. 19-35252

No. 18-35966

No. 19-35068

No. 19-35433

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted: May 8, 2020

September 25, 2020

NOT FOR PUBLICATION

D.C. No. 2:15-cv-01901-TSZ

MEMORANDUM^*

Appeal from the United States District Court for the Western District of Washington

Thomas S. Zilly, District Judge, Presiding

Argued and Submitted May 8, 2020 Seattle, Washington

Before: KLEINFELD, W. FLETCHER, and RAWLINSON, Circuit Judges.

These consolidated appeals stem from protracted litigation involving the extensive contamination of commercial property previously used for dry-cleaning operations. Appellant Seattle Times Company (Seattle Times) appeals the district court's dismissal of its claims brought under the Comprehensive EnvironmentalResponse, Compensation, and Liability Act (CERCLA) against Appellees LeatherCare, Inc. (LeatherCare) and Steven Ritt (Ritt), and its claim pursuant to Washington's Model Toxics Control Act (MTCA) against Ritt. Additionally, Seattle Times appeals the district court's award of costs to Appellees Touchstone SLU LLC and TB TS/RELP LLC (Touchstone) pursuant to an Environmental Remediation and Indemnity Agreement (ERIA).

In separate appeals, Seattle Times challenges the district court's award of attorneys' fees and its determination of prevailing party status, which LeatherCare contests in a conditional cross-appeal. Touchstone also appeals the district court's denial of its request for prejudgment interest on the amounts owed by Seattle Times under the ERIA.

1. The district court properly denied Seattle Times' motion for partial summary judgment on its CERCLA § 107(a) claim. Although Seattle Times and LeatherCare stipulated to certain elements of liability under CERCLA § 107(a), there was a material factual dispute concerning the geographic scope of the contamination on the property, and the parties' responsibilities for the associated remedial costs. In any event, the district court ultimately dismissed Seattle Times' claim because the interim action plan for remediation of the property failed to substantially comply with the National Contingency Plan, a requisite element ofCERCLA § 107(a) liability to which Seattle Times and LeatherCare did not stipulate. See Seattle Times Co. v. LeatherCare, Inc., 337 F. Supp. 3d 999, 1048-49 (W.D. Wash. 2018); AmeriPride Servs. Inc. v. Texas E. Overseas Inc., 782 F.3d 474, 489 (9th Cir. 2015) (stating that "[t]o prevail in a private cost recovery action under [CERCLA § 107(a)], a plaintiff must establish, among other things, that the release of a hazardous substance caused the plaintiff to incur response costs that were necessary and consistent with the national contingency plan") (citation and internal quotation marks omitted).

2. In allocating orphan shares for contamination caused by the property's former owner, Troy Laundry Co. (Troy), the district court did not clearly err in determining that Troy utilized hazardous materials in its dry-cleaning operations, and was no longer subject to liability due to its dissolution in 1986. See Seattle Times Co., 337 F. Supp. 3d 999 at 1020, 1024-25; see also Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., 801 F.3d 1079, 1088 (9th Cir. 2015) (articulating that "[w]e review the district court's findings of fact after a bench trial for clear error") (citation omitted); RCW § 23B.14.340 (requiring commencement of suit within two years of the dissolution of a corporation). The district court also did not clearly err in determining that Troy's corporate successor did not assume Troy's liabilities, and there was noevidence that Troy's corporate formalities were disregarded after it became a subsidiary of the acquiring corporation. See Seattle Times, 337 F. Supp. 3d at 1025 n.19; see also Minton v. Ralston Purina Co., 47 P.3d 556, 562 (Wash. 2002) (en banc) (explaining that, absent piercing of the corporate veil, a parent corporation is not liable for acts of its subsidiaries).

3. The district court properly dismissed Seattle Times' CERCLA claims against LeatherCare and Ritt because the interim action plan for remediation of the property did not substantially comply with the National Contingency Plan. See Seattle Times, 337 F. Supp. 3d at 1048-49. The district court correctly concluded that the underlying feasibility study failed to provide the requisite detailed analysis in screening out potential remedial alternatives to excavation and disposal of contaminated soil from the property. See Carson Harbor Village v. Cty. of Los Angeles, 433 F.3d 1260, 1268 (9th Cir. 2006) (explaining that "the feasibility study must include a detailed analysis on the limited number of alternatives that represent viable approaches to remedial action after evaluation in the screening stage") (citation, alteration, and internal quotation marks omitted).

4. The district court did not clearly err in determining that Ritt was not personally liable as an operator of a facility under the MTCA. See Seattle Times, 337 F. Supp. 3d at 1051; see also Resilient Floor Covering Pension Trust Fund Bd.of Trustees, 801 F.3d at 1088 (reviewing for clear error). Ritt did not "possess the requisite level of control to support operator liability," because he did not "manage, direct, or conduct operations specifically related to pollution." Pope Res., LP v. Wash. State Dept. of Nat. Res., 418 P.3d 90, 98-99 (Wash. 2018) (citation omitted). Notably, Seattle Times and LeatherCare stipulated that LeatherCare was the former operator of the property under CERCLA, with no mention of Ritt's personal involvement in any contamination.

5. The district court did not err in awarding costs in favor of Touchstone pursuant to the ERIA. See Seattle Times, 337 F. Supp. 3d at 1068-69. The district court reasonably concluded that the ERIA's definition of incremental costs did not preclude Touchstone from utilizing trucks to directly transport contaminated soil to a landfill, id. at 1054-55, and requiring Touchstone to wait for available rail transport would have "unreasonably interfere[d] with" Touchstone's "ongoing development project work." See Estate of Carter v. Carden, 455 P.3d 197, 202 (Wash. Ct. App. 2019) (explaining that "[w]hen considering the language of a written agreement, we impute an intention corresponding to the reasonable meaning of the words used in the writing") (citation and internal quotation marks omitted). Although the ERIA afforded Seattle Times the right to select the disposal site, it did not expressly provide a corresponding contractual right to selectthe mode of transportation.

Additionally, the district court properly awarded costs for sales tax, markups for services associated with the removal of contaminated soil, and pre-disposal soil sampling and analysis based on its interpretation of the contractual provisions, Washington law, and evidence presented at trial. See Seattle Times, 337 F. Supp. 3d at 1054-55, 1057-62, 1064 n.57, 1067-68.

6. The district court properly denied Touchstone's request for prejudgment interest because the damages were not liquidated as required under Washington law. See McLelland v. Paxton, 453 P.3d 1, 22 (Wash. Ct. App. 2019) (explaining that "[a] liquidated claim arises from the availability of data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion") (citation omitted). In awarding costs in favor of Touchstone, the district court was required to determine whether Seattle Times breached the ERIA in the context of the CERCLA and MTCA remedial actions, as well as the reasonableness of Touchstone's request for costs based on trucking contaminated soil, sales tax, markups, and pre-disposal soil sampling and analysis. The district court also opined that Touchstone was not entitled to certain costs that it requested. See Seattle Times, 337 F. Supp. 3d at 1056-57, 1061-62, 1064, 1066. As a result, the district court necessarily had to rely on "opinion or discretion" inresolving the extensive litigation related to Seattle Times' contractual obligations. McLelland, 453 P.3d at 22 (citation omitted).

7. The district court correctly held that Seattle Times was not a prevailing party over LeatherCare. Notably, the district court held that Seattle Times was partly responsible for contamination of the property as its owner for twenty-five years because it "took few corrective actions, and [contamination was] allowed to travel farther and deeper in the subsurface soil, reaching the adjacent right-of-way and the groundwater," Seattle Times failed to conduct "any meaningful investigation" prior to its purchase of the property, and engaged in insufficient remediation actions after contamination was discovered on the property. Seattle Times, 337 F. Supp....