GP VINCENT II V. THE ESTATE OF EDGAR BEARD, ET AL, No. 21-16555 (9th Cir. 2023)
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Plaintiff, the current owner of environmentally contaminated real property, brought CERCLA cost recovery claims against the Estates of Norma and Edgar Beard and Etch-Tek, Inc. Mayhew Center, LLC, had purchased the property from the Beards. Walnut Creek Manor, LLC, owner and operator of a retirement community adjacent to the property, sued Mayhew. The district court concluded that Mayhew’s property was the source of the tetrachloroethylene, or PCE, found on Walnut Creek Manor’s site and held Mayhew liable under CERCLA and the California Hazardous Substance Account Act for any future response costs. Mayhew sued Norma Beard, asserting cost recovery and contribution claims under CERCLA and other claims seeking to hold her liable for the judgment against it in the Walnut Creek Manor action and the contamination on both properties. The district court consolidated the two actions, and the parties settled. Mayhew defaulted on its mortgage, and the property was placed in a state court receivership. The district court concluded that the claims against the Beard Estates and Etch-Tek were barred by claim preclusion.
The Ninth Circuit reversed the district court’s dismissal, as barred by claim preclusion, of claims brought under the CERCLA and remanded for further proceedings. The panel concluded that the Mayhew/Beard action ended in a final judgment on the merits. As to the identity of claims, however, the panel concluded that claim preclusion did not apply. Mayhew’s CERCLA claim, which sought apportionment of the liability stemming from the Walnut Creek Manor action, was distinct from GP Vincent’s CERCLA claim, which sought reimbursement for costs incurred in connection with the remediation of GP Vincent’s property’s own contamination.
Court Description: Environmental Law. The panel reversed the district court’s dismissal, as barred by claim preclusion, of claims brought under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), and remanded for further proceedings.
GP Vincent II, the current owner of environmentally contaminated real property, brought CERCLA cost recovery claims against the Estates of Norma and Edgar Beard and Etch-Tek, Inc., the once-removed prior owners and tenant of the property, respectively. Mayhew Center, LLC, had purchased the property from the Beards. Walnut Creek Manor, LLC, owner and operator of a retirement community adjacent to the property, sued Mayhew. The district court concluded that Mayhew’s property was the source of the tetrachloroethylene, or PCE, found on Walnut Creek Manor’s site and held Mayhew liable under CERCLA and the California Hazardous Substance Account Act for any future response costs. While post-trial motions were pending in the Walnut Creek Manor action, Mayhew sued Norma Beard, asserting cost recovery and contribution claims under CERCLA and other claims seeking to hold her liable for the judgment against it in the Walnut Creek Manor action and the contamination on both properties. The district court consolidated the two actions, and the parties settled.
Mayhew defaulted on its mortgage, and the property was placed in a state court receivership. GP Vincent took title to the property and began cleaning it up under an agreement it had entered into with the Regional Water Quality Control Board-San Francisco pursuant to the California Land Reuse and Revitalization Act (“CLRRA”). GP Vincent sued the Beard Estates, Etch-Tak, and others for CERCLA cost recovery, CLRRA contribution, and declaratory relief regarding future response costs. The district court concluded that the claims against the Beard Estates and Etch-Tek were barred by claim preclusion.
Reversing, the panel applied the federal law of claim preclusion, which bars litigation of claims that were raised or could have been raised in prior litigation if the prior action (1) reached a final judgment on the merits, (2) involved the same claim or cause of action as the later lawsuit, and (3) involved the same parties or their privies. The panel concluded that the Mayhew/Beard action ended in a final judgment on the merits. As to identity of claims, however, the panel concluded that claim preclusion did not apply because the CERCLA claims asserted in the prior litigation covered costs and obligations distinct from those underlying the claims GP Vincent brought because the Mayhew/Beard action resolved CERCLA liability to remediate the Walnut Creek Manor property, rather than the property owned by GP Vincent. Mayhew’s CERCLA claim, which sought apportionment of the liability stemming from the Walnut Creek Manor action, was distinct from GP Vincent’s CERCLA claim, which sought reimbursement for costs incurred in connection with remediation of GP Vincent’s property’s own contamination.
Concurring in the judgment, Judge Bea wrote that he would reverse the district court’s res judicata ruling on the different grounds that GP Vincent was not, and could not be, in privity with Mayhew, the prior owner. Judge Bea wrote that, in his view, an owner of a polluted plot of land cannot pass on its liability for remediation of pollution on that land under CERCLA to a future owner by mere transfer of title because CERCLA imposes that liability in personam, against the person or persons who owned the land, not in rem, against the property.
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