Exxonmobil Oil Corp. v. Nicoletti Oil, Inc., et al., No. 1:2009cv01498 - Document 46 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION on Defendant's 36 Motion to Dismiss Second Amended Complaint signed by Judge Oliver W. Wanger on 9/22/2010. Formal Order due within 5 days; Amended Complaint due within 15 days. (Esteves, C)
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Exxonmobil Oil Corp. v. Nicoletti Oil, Inc., et al. Doc. 46 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 EXXONMOBIL OIL CORP., 9 1:09-cv-01498-OWW-DLB MEMORANDUM DECISION ON DEFENDANTS’ MOTION TO DISMISS SECOND AMENDED COMPLAINT (Doc. 36) Plaintiff, 10 v. 11 12 NICOLETTI OIL, INC., et al. 13 Defendants. 14 I. 15 INTRODUCTION 16 Plaintiff Exxonmobil Oil Corp. (“Plaintiff”) is proceeding 17 with an action pursuant to the Resource Conservation and Recovery 18 Act (42 U.S.C. § 6972(a)(1)(B)) against Defendants Nicoletti Oil, 19 Inc., Dino J. Nicoletti, and John A. Nicoletti. 20 asserting federal claims against Defendants, Plaintiff asserts 21 several state law causes of action. 22 In addition to On May 18, 2010, the court issued a memorandum decision 23 explaining 24 Plaintiff’s claims to be dismissed; these claims were dismissed 25 without prejudice on May 27, 2010. 26 pleading deficiencies which required certain of (Docs. 30, 32). Plaintiff filed a second amended complaint (“SAC”) on June 7, 27 2010. (Doc. 34). Defendants filed a motion to dismiss (“motion to 28 dismiss”) the SAC on June 22, 2010. (Doc. 36). Plaintiff filed 1 Dockets.Justia.com 1 opposition (“opposition”) to Defendant’s motion to dismiss on 2 August 30, 2010. (Doc. 40). Defendant’s filed a reply on September 3 7, 2010. (Doc. 43). II. FACTUAL BACKGROUND. 4 5 Plaintiff is a New York corporation in the business of 6 producing, distributing, and selling petroleum products. (SAC at 7 3). 8 purchased 2801 Blossom Street in Dos Palos, California in January 9 1946. 10 Plaintiff’s predecessor, General Petroleum Corporation, (SAC at 4). From 1946 to 1950, Dino J. Nicoletti operated a fuel 11 distribution plant at 2801 Blossom street as a distributor for 12 General Petroleum Corportation. 13 Dino Nicoletti operated 2801 Blossom Street as a cosignee of 14 General Petroleum Corporation and then Mobil Oil Corporation. (SAC 15 at 5). 16 (SAC at 5). 17 wife Floretta Nicoletti purchased 2801 Blossom Street from Mobil 18 Oil Corporation. 19 ownership of 2801 Blossom Street was transferred to Dino Nicoletti 20 and Floretta Nicoletti as Trustees under the Dino J. Nicoletti and 21 Florretta A. Nicoletti Revocable Living Trust. (SAC at 4-5). From 1950 to 1980, Mobil Oil Corporation was also Plainitff’s predecessor. On or about August 25, 1980, Dino Nicoletti and his (SAC at 5). On or about December 5, 1996, (SAC at 5). 22 Defendants have operated and continue to operate a gasoline 23 and diesel sales and distribution facility at 2801 Blossom Street. 24 (SAC at 5). Nicoletti Oil, Inc. (“Nicoletti Oil”) was incorporated 25 in California on or about January 1, 1982. 26 Nicoletti served as an officer of Nicoletti Oil throughout the 27 1980's and currently serves as the company’s Vice President. 28 at 6). (SAC at 6). Dino (SAC John A. Nicoletti currently serves as the President of 2 1 Nicoletti Oil, a position he has held since as early at 1990. 2 (SAC at 6). 3 Nicoletti Oil. 4 capital stock of Nicoletti Oil is owed by John A. Nicoletti and 5 Cindy Nicoletti. Cindy Nicoletti serves as the Secretary-Treasurer of (SAC at 6). The FAC alleges that 100% of the (SAC at 6). 6 In or about 1998, Defendants purchased a lot adjacent to 2801 7 Blossom Street from Suburban Propane and installed new diesel 8 dispensers on the parcel; the SAC alleges that Nicoletti Oil, Inc., 9 is the owner of the former Suburban Propane property. (SAC at 5- 10 6). Together, 2801 Blossom Street and the adjacent lot purchased 11 by Defendants in 1998 form the property at issue in this action 12 (“Property”). 13 the street from a residential area. (SAC at 5). The Property is located directly across (SAC at 6). 14 Following the sale of 2801 Blossom Street in 1980, Plaintiff 15 or its predecessors entered into a series of wholesale distributor 16 contracts (“Contracts”) with Nicoletti Oil, Inc., pursuant to which 17 Nicoletti Oil agreed to purchase a certain quantity of gasoline, 18 diesel fuel, and lubricant products. 19 include, but are not limited to, a Wholesale Distributor Agreement 20 for Motor Fuels, dated May 6, 1985 (“1985 Agreement”) and a 21 Wholesale Distributor Agreement (Lubricants, Distillates and other 22 Non-Motor Fuels) dated March 1, 1989 (“1989 Agreement”). 23 7). 24 Plaintiff (or its predecessors) and Nicoletti Oil. (SAC at 7). Such contracts (SAC at The parties to the Contracts intended the Contracts to bind (SAC at 7). 25 Plaintiff alleges that during Nicoletti Oil’s ownership of the 26 Property and operation of its businesses, releases of petroleum and 27 petroleum 28 (“MTBE”), have occurred on and migrated off of the Property. substances, including 3 methyl tertiary butyl ether (SAC 1 at 7-8). 2 petroleum hydrocarbons at the property in 1988. 3 or about May 17, 1991, in response to the 1988 release, the Merced 4 County Department of Public Health issued a Notice and Order to 5 Nicoletti Oil and Mobil Oil Corporation that required investigation 6 of soil and groundwater contamination at the Property. (SAC at 8). 7 The SAC states that Nicoletti Oil detected a release of On or about August 24, 1992, Mobil (SAC at 7-8). Oil Corporation On and 8 Nicoletti Oil entered into a Cost Sharing Agreement wherein the 9 parties agreed that Nicoletti Oil would contract directly with the 10 contractors performing the investigative work required by the 11 Merced County Department of Public Health. (SAC at 8-9). The Cost 12 Sharing Agreement provided that, unless terminated beforehand, it 13 remained in effect until Nicoletti Oil’s contractor submitted the 14 Site Contamination Workplan (“SCW”), Preliminary Investigation and 15 Evaluation Report (“PIER”) and, if needed, a Problem Assessment 16 Report (“PAR”) in final form to the Merced County Department of 17 Public Health. (SAC at 9). 18 that Mobil Oil Corporation and Nicoletti Oil would each pay 50% of 19 the costs for the preparation of the SCW, the PIER, and, if needed, 20 the PAR. 21 health required submission of a PAR in 1993, however, Nicoletti 22 Oil’s contractors failed to complete or submit a PAR. (SAC at 9). 23 In 2001, Plaintiff learned of Nicoletti Oil’s failure to (SAC at 9). with The Cost Sharing Agreement provided The Merced County Department of Public 24 comply 25 Department of health and began conducting investigation at the 26 Property 27 Plaintiff’s investigation included onsite and offsite borings, soil 28 and as outstanding requested groundwater by analysis, directives overseeing installing 4 from the Merced agencies. monitoring (SAC County at wells, 9). and 1 monitoring analytical data, among other tasks. (SAC at 9). 2 On or about February 3, 2005, the Regional Board issued 3 Cleanup and Abatement Order No. R5-2005-0701, naming both Nicoletti 4 Oil and Plaintiff jointly as the “Discharger,” without attempting 5 to allocate their relative liability for the 6 assigning responsibility for cleanup at or around the Property 7 (“2005 8 development and implementation of an interim remedial action plan, 9 further site assessment of soil vapor migration, and submission of 10 a full corrective action plan, including a human health risk 11 assessment. 12 December 2005. 13 Board, Plaintiff issued precautionary notices to the residents near 14 the Property warning against on-site excavation or the digging of 15 holes greater than a few feet deep on their properties and against 16 the 17 neighborhood. 18 filtration units, free of charge, to those residents who chose to 19 use 20 subsurface plume. 21 CAO”). (SAC (SAC at 10). as 9-10). and (SAC a The CAO required the At the direction of the Regional distribution at 2005 Plaintiff complied with the 2005 CAO in (SAC at 10). consumption them at contamination or 10). precaution of produce Plaintiff against also vapor grown in the distributed air intrusions from the (SAC at 10). The Regional Board rescinded the 2005 CAO and issued a new CAO 22 in July 2006. 23 maintain the remedial system at the Property pursuant to the terms 24 of the 2006 CAO. 25 its 26 maintained by Plaintiff, but does not contribute to or participate 27 in the remedial effort. 28 Nicoletti Oil’s ongoing operation of the plant at the Property has business (SAC at 10-11). (SAC at 11). and benefit Plaintiff continues to operate and Nicoletti Oil continues to operate from the remediation (SAC at 11). 5 operated and Plaintiff alleges that 1 resulted in further unauthorized releases of contaminants, which 2 undermine and threaten to prolong Plaintiff’s remedial efforts 3 under the 2006 CAO. (SAC at 11). 4 Plaintiff alleges that its consultants, who visit the Property 5 on a regular basis in order to maintain the remedial system, have 6 repeatedly observed and documented surface releases of petroleum in 7 the area of Nicoletti Oil’s fuel dispensers. 8 2006, Plaintiff has requested integrity testing of Nicoletti’s fuel 9 system, but Nicoletti refuses to perform such testing or to allow 10 Plaintiff to perform testing. (SAC at 11). Since (SAC at 12). 11 In March 2008, Plaintiff’s consultants detected a new release 12 of diesel fuel at the Property when the on-site remedial system was 13 overwhelmed 14 product; Plaintiff alleges that this new release could have been 15 prevented had Defendants conducted adequate testing to assure the 16 integrity of its fuels system. 17 alleges that Nicoletti’s own personnel and physical leak detection 18 systems failed to detect the release. by a substantial volume of fresh (SAC at 12). red-dye diesel Plaintiff further (SAC at 12). 19 At Plaintiff’s insistence, the Regional Board requested that 20 Plaintiff propose a scope of work for more comprehensive testing of 21 the entire fuel system, and Plaintiff submitted such a scope, which 22 it proposed to be completed (at Plaintiff’s expense) by a third 23 party contractor acceptable to Nicoletti and the Regional Board. 24 (SAC at 13). 25 work. 26 testing of the fuel system proposed by Plainitff and approved by 27 the 28 subsequently submitted its own less complete fuels system testing The Regional Board approved Plaintiff’s scope of (SAC at 13). Regional Board. Nicoletti declined to allow the further (SAC at 13). 6 Instead, Nicoletti Oil 1 scope of work, dated April 24, 2009, which it proposed to conduct 2 using 3 subsequently approved. its own contractors, and which the Regional Board (SAC at 13). 4 Nicoletti’s contractors and/or subcontractors commenced fuel 5 system tightness testing, per Nicoletti Oil’s scope of work, on 6 June 1, 2009. 7 with portions of the system testing because some or all of the 8 components on both the gasoline and diesel systems were in such a 9 state as to be incapable of retaining liquid, and therefore could 10 (SAC at 13). not be tested for tightness. 11 However, Nicoletti could not proceed (SAC at 13). Nicoletti subsequently completed fuel system upgrades and/or 12 replacements and performed fuel system testing. (SAC at 14). The 13 SAC alleges that during the upgrading of Nicoletti Oil’s systems, 14 stained soil was observed on the former Suburban Propane property. 15 (SAC at 14). 16 Plaintiff alleges that the releases of petroleum product from 17 Defendant’s operation are contrary to applicable regulations and 18 industry standards of operation for petroleum facilities, and that 19 there is a continuing risk of new releases of petroleum product 20 from Nicoletti’s operations. (SAC at 14). Plaintiff contends that 21 Nicoletti’s releases from the Property may present an imminent and 22 substantial endangerment to health or the environment, and that the 23 majority, if not all, of the contamination being remediated at or 24 near the Property is of a fuel type and in a location that cannot 25 be attributed to any ownership or conduct of Plaintiff. (SAC at 26 15). 27 /// 28 /// 7 III. LEGAL STANDARD 1 2 Dismissal under Rule 12(b)(6) is appropriate where the 3 complaint lacks sufficient facts to support a cognizable legal 4 theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th 5 Cir.1990). To sufficiently state a claim to relief and survive a 6 12(b) (6) motion, the pleading “does not need detailed factual 7 allegations” but the “[f]actual allegations must be enough to raise 8 a right to relief above the speculative level.” Bell Atl. Corp. v. 9 Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 10 Mere “labels and conclusions” or a “formulaic recitation of the 11 elements of a cause of action will not do.” Id. Rather, there must 12 be “enough facts to state a claim to relief that is plausible on 13 its face.” Id. at 570. In other words, the “complaint must contain 14 sufficient factual matter, accepted as true, to state a claim to 15 relief that is plausible on its face.” Ashcroft v. Iqbal, --- U.S. 16 ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal 17 quotation marks omitted). 18 The Ninth Circuit has summarized the governing standard, in 19 light of Twombly and Iqbal, as follows: “In sum, for a complaint to 20 survive a motion to dismiss, the nonconclusory factual content, and 21 reasonable 22 suggestive of a claim entitling the plaintiff to relief.” Moss v. 23 U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal 24 quotation marks omitted). Apart from factual insufficiency, a 25 complaint is also subject to dismissal under Rule 12(b)(6) where it 26 lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or 27 where the allegations on their face “show that relief is barred” 28 for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. inferences from that 8 content, must be plausibly 1 910, 166 L.Ed.2d 798 (2007). 2 /// 3 In deciding whether to grant a motion to dismiss, the court 4 must accept as true all “well-pleaded factual allegations” in the 5 pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, 6 however, “required to accept as true allegations that are merely 7 conclusory, 8 inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 9 (9th Cir.2001). “When ruling on a Rule 12(b)(6) motion to dismiss, 10 if a district court considers evidence outside the pleadings, it 11 must normally convert the 12(b)(6) motion into a Rule 56 motion for 12 summary 13 opportunity to respond.” United States v. Ritchie, 342 F.3d 903, 14 907 court 15 materials-documents 16 incorporated by reference in the complaint, or matters of judicial 17 notice-without converting the motion to dismiss into a motion for 18 summary judgment.” Id. at 908. (9th unwarranted judgment, and Cir.2003). deductions it “A must attached of give may, to fact, the unreasonable nonmoving however, the or party consider complaint, 19 IV. 20 A. Plaintiff’s Claim for Express Contractual Indemnity an certain documents DISCUSSION 21 To state a cause of action for breach of contract, a party 22 must plead the existence of a contract, his or her performance of 23 the contract or excuse for nonperformance, the defendant's breach, 24 and resulting damage. 25 Cal. App. 4th 299, 307 (Cal. Ct. App. 1999). 26 federal pleading standards, 27 28 E.g. Harris v. Rudin, Richman & Appel, 74 In order to satisfy a plaintiff must describe the alleged terms of the contract in a sufficiently specific manner to give the defendant notice of the nature of the claim. For example, 9 1 2 a claim on a written contract must either (1) quote relevant contractual language; (2) include a copy of the contract as an attachment; or (3) summarize the contract's purported legal effect. 3 Kirbyson v. Tesoro Ref. & Mktg. Co., 2010 U.S. Dist. LEXIS 18174 * 4 26 (N.D. Cal. 2010) (citing Am. Realty Trust, Inc. v. Travelers 5 Cas. & Sur. Co. of Am., 362 F. Supp. 2d 744 (N.D. Tex. 2005)). 6 The SAC is sufficient to plead breach of contract claims 7 regarding the indemnity provisions of the Wholesale Distributor 8 Agreement for Motor Fuels dated May 6, 1985 and the Wholesale 9 Distributor Agreement for Lubricants, Distillates, and other Non10 Motor Fuels dated March 1, 1989. Although the SAC also contains 11 sufficient factual information to state a claim for breach of the 12 cost-sharing agreement entered into on or about August 24, 1992, 13 this agreement is not mentioned in the section setting forth 14 Plaintiff’s breach of contract cause of action. (SAC at 21-24). 15 Accordingly, the SAC fails to give Defendants fair notice of 16 whether Plaintiff seeks to assert a breach of the 1992 cost-sharing 17 agreement. To the extent Plaintiffs seek to assert claims for 18 breach of contracts other than the May 6, 1985 and March 1, 1989 19 agreements, the SAC fails to give Defendants fair notice of such 20 claims. Defendants’ motion to dismiss Plaintiff’s breach of 21 contract claims is DENIED as to the May 6, 1985 and March 1, 1989 22 agreements and is GRANTED to any other contractual claims. 23 Plaintiff will be given one more opportunity to properly plead 24 additional claims. 25 B. Plaintiff’s Negligence Claim 26 Generally, there is no duty to prevent economic loss to third 27 parties in negligence actions at common law. Greystone Homes, Inc. 28 10 1 v. Midtec, Inc., 168 Cal. App. 4th 1194 , 1216 (Cal. Ct. App. 2008) 2 (citing Ratcliff Architects v. Vanir Construction Management, Inc., 3 88 Cal. App. 4th 595, 605 (Cal. Ct. App. 2001)). 4 special relationship between two parties may impose on each a duty 5 to exercise ordinary care in the avoidance of economic injury to 6 the other. See, e.g., Ott v. Alfa-Laval Agri, Inc., 31 Cal. App. 7 4th 1439, 1448-49 (Cal. Ct. App. 1995). 8 relationship depends on “(1) the extent to which the transaction 9 was intended to affect the plaintiff, (2) the foreseeability of 10 harm to the plaintiff, (3) the degree of certainty that the 11 plaintiff suffered injury, (4) the closeness of the connection 12 between the defendant's conduct and the injury suffered, (5) the 13 moral blame attached to the defendant's conduct and (6) the policy 14 of preventing future harm.” 15 3d 799, 804 (Cal. 1979). 16 imposed a special relationship between Plaintiff and Defendants. 17 The intent factor entailed by the J’Aire test does not require However, a Existence of a special E.g. J'Aire Corp. v. Gregory, 24 Cal. Plaintiff contends that the CAO orders 18 an intent to injure. 19 Co., 164 Cal. App. 3d 277, 289-290 (Cal. Ct. App. 1985). 20 Peratis Foods, the Court of Appeal reasoned: 21 22 23 24 25 26 27 28 See Ales-Peratis Foods Internat. v. Am. Can In Ales- The contract between Gencan and American Can was for supplying cans necessary to the execution of Ales-Peratis contract. The performance of the contract directly affected appellant's ability to fully and timely perform its contract with its customer, and AP alleged both Gencan and American knew this. The record of the conversation between the agents for Gencan and American Can shows they both knew AP needed and had requested a specific type of can suitable for packing a certain type of seafood. Furthermore, American Can's practice of supplying dealers should have alerted it to the fact any breach on its part could foreseeably lead to a lost business opportunity and thereby lost profits on the part of AP. Thus American Can's performance was intended to, and did directly affect Ales-Peratis. 11 1 2 Id. Here, Defendants were aware that past operations on the 3 Property 4 operations could result in more contamination absent appropriate 5 measures. Defendants were also aware that Plaintiff and Defendants 6 shared an obligation under the CAO’s to remediate contamination at 7 the Property, and that further contamination of the Property would 8 impede compliance with the CAO’s. 9 alleged conduct directly affected Plaintiff’s ability to perform had resulted and 11 allegations 12 forseeability elements under the J’Aire test. contained third Defendants in factor the under that continued As in Ales-Peratis, Defendants’ legal The that contamination, 10 13 obligations in were SAC the fully satisfy J’Aire aware the test– of. The intent and the degree of 14 certainty that Plaintiff has suffered injury– is sufficiently pled 15 in the SAC. 16 contamination of the Property, Plaintiff has been injured, because 17 the CAO’s obligate Plaintiff to remediate contamination at the 18 Property. The moral blame factor under J’Aire also weighs in favor 19 of imposing a special relationship between the parties. 20 to 21 negligently allowed contamination to occur with knowledge that such 22 contamination 23 surrounding the property. Finally, it is axiomatic that the policy 24 of preventing future harm also weighs in favor of imposing a 25 special relationship under the circumstances. the facts To the extent Defendants have caused additional alleged would in harm the SAC, both at a Plaintiff minimum, and the According Defendants community 26 The SAC is sufficient to allege the existence of a special 27 relationship between Plaintiff and Defendants under the J’Aire 28 test. The SAC also sufficiently alleges that Defendants breached 12 1 the duty entailed by their special relationship with Plaintiff, and 2 that Plaintiff was injured as a result of Defendants’ breach of 3 duty. 4 is DENIED. Defendants’ motion to dismiss Plaintiff’s negligence claim V. CONCLUSION 5 6 For the reasons stated, IT IS ORDERED: 7 1) Defendants’ motion to dismiss Plaintiff’s breach of 8 contract claim is DENIED as to the Wholesale Distributor 9 Agreement for Motor Fuels dated May 6, 1985 and the 10 Wholesale 11 Distillates, and other Non-Motor Fuels dated March 1, 12 1989, and is GRANTED without prejudice as to all other 13 contract claims; 14 2) 15 Distributor Agreement for Lubricants, Defendants’ motion to dismiss Plaintiff’s negligence claim is DENIED; and 16 3) Plaintiff shall lodge a formal order consistent with this 17 decision within five (5) days following electronic 18 service of this decision by the clerk. 19 file an amended complaint within fifteen (15) days of the 20 filing of the order. 21 within fifteen (15) days of receipt of the amended 22 complaint. Plaintiff shall Defendant shall file a response 23 24 IT IS SO ORDERED. 25 Dated: hkh80h September 22, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 26 27 28 13
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