City ParkwayV, Inc. et al v. Union Pacific Railroad Company, No. 2:2009cv01299 - Document 104 (D. Nev. 2012)
Court Description: ORDER Granting in part and Denying in part 74 , 77 , and 86 Motions for Partial Summary Judgment. Signed by Judge Philip M. Pro on 12/3/2012. (Copies have been distributed pursuant to the NEF - SLR)
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City ParkwayV, Inc. et al v. Union Pacific Railroad Company Doc. 104 1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 6 CITY PARKWAY V, INC., et al., 7 Plaintiffs/Counterdefendants, 8 v. 9 10 11 UNION PACIFIC RAILROAD COMPANY, Defendant/Counterclaimant. *** ) ) ) ) ) ) ) ) ) ) ) ) 2:09-CV-01299-PMP-GWF ORDER 12 13 Presently before the Court is Defendant Union Pacific Railroad Company’s 14 Motion for Partial Summary Judgment (Doc. #74), filed on September 19, 2011. Plaintiffs 15 filed an Opposition (Doc. #84) on October 27, 2011. Defendant filed a Reply (Doc. #87) on 16 November 14, 2011. 17 Also before the Court is Plaintiffs City Parkway IV A, Inc.; City Parkway V, Inc.; 18 and Office District Parking I, Inc.’s Motion for Partial Summary Judgment (Doc. #77), filed 19 on September 22, 2011. Defendant filed an Opposition (Doc. #85) on October 31, 2011. 20 Plaintiffs filed a Reply (Doc. #88) on November 17, 2011. 21 Also before the Court is Defendant Union Pacific Railroad Company’s Motion 22 for Partial Summary Judgment (Doc. #86), filed on October 31, 2011. Plaintiffs filed an 23 Opposition (Doc. #89) on November 28, 2011. Defendant filed a Reply (Doc. #90) on 24 December 12, 2011. 25 26 The parties stipulated to staying the Court’s consideration of these motions for nearly a year as the parties attempted to settle the matter. At the August 22, 2012 hearing, Dockets.Justia.com 1 the parties requested the Court set the motions for hearing. (Mins. of Proceedings (Doc. 2 #101).) The Court held a hearing on the motions on November 5, 2012. (Mins. of 3 Proceedings (Doc. #102); Tr. (Doc. #103).) 4 I. BACKGROUND Defendant Union Pacific Railroad Company (“Union Pacific”) owned a 320 acre 5 6 tract of land located near downtown Las Vegas, Nevada (the “Property”), which Union 7 Pacific operated as a rail yard. (Def.’s Opp’n to Pls.’ Mot. Partial Summ. J. (Doc. #85) 8 [“Def.’s Opp’n”], Ex. A at 2.) In May 1987, the Nevada Division of Environmental 9 Protection (“NDEP”) issued a Finding of Alleged Violation and Order which found Union 10 Pacific violated Nevada environmental laws by unlawfully discharging pollutants on the 11 Property without a permit. (Pls.’ Mot. for Partial Summ. J. (Doc. #77) [“Pls.’ MPSJ”], Ex. 12 3.) Most relevant to this case, NDEP determined that Union Pacific had discharged 13 petroleum hydrocarbon contamination. (Id.) NDEP ordered Union Pacific to complete an 14 investigation into the extent of soil and water contamination and to submit to NDEP a site 15 map showing the locations of said contamination. (Id.) To determine total petroleum 16 hydrocarbon contamination (“TPH”), Union Pacific was to use EPA method 8015 modified 17 or EPA method 418.1. (Id.) Union Pacific also had to submit a recovery and mitigation 18 plan based on the results of its investigation. (Id.) Union Pacific thereafter conducted a site investigation and produced a Site 19 20 Characterization Report which identified various areas of contamination at the site, mostly 21 consisting of petroleum hydrocarbons, including Bunker C fuel. (Pls.’ Opp’n to Def.’s Mot. 22 Partial Summ. J. (Doc. #84) [“Pls.’ Opp’n #1”], Ex. 10 at 4-1.) Bunker C is “a heavier, 23 more viscus hydrocarbon sometimes referred to as diesel No. 6,” and was used as train fuel 24 prior to diesel. (Pls.’ Opp’n #1, Ex. 9 at 21.) Union Pacific used Bunker C until 25 approximately 1950, and it stored Bunker C in a tank on the Property. (Id. at 22, 97.) 26 /// 2 1 Following its site investigation, Union Pacific proposed a remediation plan to 2 remove all visibly stained soil in the first 2.5 feet and to remove all visibly contaminated 3 soil below 2.5 feet encountered during any future development on the site. (Pls.’ MPSJ, Ex. 4 4 at UPCH24.) Despite the remediation of the first 2.5 feet of soil, “significant surface soil 5 contamination will remain, along with large volumes of high concentrations of TPH in the 6 soil below the 2.5 feet excavation zone.” (Id.) 7 8 9 10 11 12 13 NDEP rejected this proposal. Instead, in a September 1991 letter to Union Pacific, NDEP required Union Pacific to: - Remediate all soils with TPH values in excess of 100 mg/kg from ground level to 2 1/2 feet. . . .; - remediate all soil with TPH values in excess of 10,000 mg/kg, irregardless of the depth, and; - remediate all soil excavated during the remediation of soils greater than 10,000 mg/kg, to a TPH value of less than 100 mg/kg, and; - provide as per the March 13, 1991 meeting, a guarantee to be approved by NDEP, that soils excavated during future construction which have TPH levels in excess of 100 mg/kg (TPH) attributable to Union Pacific’s past occupancy, will be disposed of by the railroad. 14 15 (Pls.’ MPSJ, Ex. 6 (emphasis omitted).) In an October 10, 1991 letter, Union Pacific 16 accepted NDEP’s criteria. (Pls.’ MPSJ, Ex. 7.) With respect to the guarantee, Union 17 Pacific indicated it would “ensure that deed restrictions are placed on all affected parcels. 18 The deed restriction will require that all soils excavated in future development which are in 19 excess of 100 mg/kg will be disposed of properly in accordance with law, and Union Pacific 20 hereby guarantees that such disposal will be properly accomplished.” (Id.) Union Pacific 21 also “reaffirmed” that it was the responsible party for environmental contamination of soils 22 and water arising from its past activities at the Property. (Id.) 23 In June 1992, Union Pacific recommended a Remedial Action Plan for 24 contaminated soil and groundwater on the Property. (Def.’s Opp’n, Ex. A at 2, Ex. D.) 25 Pursuant to the Remedial Action Plan, Union Pacific would remove certain contaminated 26 soils from the Property, including soils contaminated with Bunker C. (Def.’s Opp’n, Ex. D 3 1 at ii, 2-4.) Union Pacific also would treat on-site, using a mobile thermal treatment unit, the 2 top 2.5 feet of soil which tested above the action level identified by NDEP for TPH 3 contamination. (See, e.g., id. at ii, 2-4–2-9, 4-1, 4-26.) Thermally treated soil would be 4 returned to the site of excavation. (Pls.’ Opp’n #1, Ex. 9 at 116.) Union Pacific proposed 5 use of EPA method 8015 modified to confirm NDEP action levels on TPH were achieved. 6 (Def.’s Opp’n, Ex. D at 4-1.) Only certain areas of the Property were targeted for 7 remediation. (Pls.’ Opp’n #1, Ex. 12.) On October 2, 1992, NDEP approved the proposed 8 Remedial Action Plan. (Def.’s Opp’n, Ex. A at 2, Ex. E.) 9 During remediation, Union Pacific’s testing at the Property indicated that its 10 thermal treatment was not fully treating heavy hydrocarbons, such as Bunker C, and Union 11 Pacific had to re-treat on some occasions. (Pls.’ Opp’n #1, Ex. 9 at 214, Ex. 16.) As called 12 for in the Remedial Action Plan approved by NDEP, Union Pacific was using method 8015 13 modified to test for TPH concentrations. (Pls.’ Opp’n #1, Ex. 16.) Union Pacific knew that 14 “[h]eavier petroleum hydrocarbons, such as Bunker C . . . are specifically not addressed in 15 the method.” (Id. at UPCH00386-87.) Union Pacific noted some discrepancies in method 16 8015 modified, and Union Pacific was aware that some laboratories would increase the 17 range of hydrocarbons to be detected under the method to address the heavier hydrocarbons. 18 (Id. at UPCH00388-89.) 19 Union Pacific’s contractor, USPCI, recommended reviewing samples, and if 20 “significant concentration of heavier hydrocarbons are being missed by Method 21 8015-Modified (Diesel), consider extending the method to C30,” i.e., increasing the range 22 of hydrocarbons to test for so as to capture the presence of heavier hydrocarbons in the soil. 23 (Id. at UPCH003391.) USPCI advised Union Pacific that “using the 8015-Modified 24 method, the concentration of these hydrocarbons are not being quantified or reported to the 25 State. USPCI feels this issue should be discussed with the NDEP to insure that no 26 misunderstanding exists as to the cleanup criteria applied to the site.” (Pls.’ Opp’n #1, Ex. 4 1 17 at UPCH003395.) USPCI requested Union Pacific’s input. (Id. at UPCH003396.) 2 Union Pacific decided to continue to use method 8015 modified without extending the 3 hydrocarbon range, and without reporting the continued presence of heavier hydrocarbons 4 in the soil to NDEP. (Pls.’ Opp’n #1, Ex. 15, 17.) Union Pacific completed remediation 5 under the Remedial Action Plan in 1994. (Def.’s Opp’n, Ex. A at 2.) 6 On October 21, 1996, Union Pacific entered into a Purchase and Sale Agreement 7 (“PSA”) with PLY Stadium Partners, Inc. for the Property. (Def.’s Mot. for Partial Summ. 8 J. (Doc. #74) [“Def.’s MPSJ #1”], Ex. A, Attach. A.) Under Section 2.3(a)(iii) of the PSA, 9 part of the purchase price included Union Pacific’s entitlement to reimbursement for 10 expenses related to future soil remediation under certain circumstances. Specifically, Union 11 Pacific is entitled to “Excess Remediation Costs” for: 12 13 14 15 16 17 18 19 20 21 22 (1) all soil excavated from the Property in order to construct subsurface parking for the general public or patrons of any sports/entertainment stadium, or other major entertainment complex of the nature of a Disney World, Universal Studios, Sea World, Church Street Station or MGM Grand, constructed on the Property (expressly excluding subsurface parking incident to the management and operation of the stadium or entertainment complex); and (2) all soil excavated more than 7 1/2 feet below the now current grade level of the Property within the “bowl” or area of the stadium on which sporting and other entertainment events will take place (the “Sports/Entertainment Area”), except to the extent NDEP (as defined in section 3.2(a)) or other governmental authorities having jurisdiction require excavation to continue below 7 1/2 feet by reason of contamination uncovered above that level; and (3) all soil excavated within that portion of the Sports/Entertainment Area (regardless of the depth or purpose of excavation) that is located within 500 feet of the current right-of-way of Bonneville Avenue, except to the extent NDEP or other governmental authorities having jurisdiction require excavation in such area by reason of contamination uncovered outside of such portion of the Sports/Entertainment Area. 23 (Id. at 4-5.) According to the PSA, the “obligation to pay to [Union Pacific] the Excess 24 Remediation Costs shall run with the land . . . .” (Id. at 6.) 25 Section 3.1 of the PSA provides that the Buyer had the opportunity to inspect the 26 Property and the Buyer accepted the Property “in an ‘as is’ condition with all faults, except 5 1 as otherwise provided in Section 3.2 below.” (Id. at 7.) Section 3.2 sets forth Union 2 Pacific’s environmental obligations in relation to the Property. (Id. at 8.) Specifically, 3 Section 3.2 provides that Union Pacific-- 4 5 6 7 covenants and agrees to comply with the Plan with respect to the remediation of the Subject Contamination, as amended or modified pursuant to the terms, standards and acceptable levels of clean-up of the Subject Contamination as required by NDEP or agreed to by NDEP and [Union Pacific] in the future, including without limitation, any clean-up work, monitoring and recovery work and offsite work required by NDEP to be performed with respect to the Subject Contamination. 8 9 (Id.) The PSA defines the Plan as the September 1991 letter in which NDEP set the target 10 levels for Union Pacific’s remediation of the Property. (Id.) The Modified Plan means the 11 Plan of remediation “as amended or modified pursuant to the terms, standards and 12 acceptable levels of clean-up of the Subject Contamination as required by NDEP or agreed 13 to by NDEP and [Union Pacific] in the future, including without limitation, any clean-up 14 work, monitoring and recovery work and offsite work required by NDEP to be performed 15 with respect to the Subject Contamination.” (Id.) The Subject Contamination means the 16 contamination identified in the March 1989 Site Characterization Report. (Id.) 17 Additionally, the parties to the PSA acknowledged that some remediation of the 18 Property would not be required until excavation for development commenced, and Union 19 Pacific agreed to fulfill its environmental obligations during the course of the Buyer’s 20 development operations and in coordination with the Buyer’s development schedule to the 21 extent possible. (Id. at 9-10.) Union Pacific also agreed that it would dispose of soils 22 excavated during construction which have TPH contamination in excess of one hundred 23 (100) mg/kg “to the extent such contamination was present on the Property on the date of 24 Closing.” (Id.) The Buyer in turn agreed that Union Pacific “shall not be required to 25 perform any excavation-related or other development activities which otherwise would be 26 performed in connection with the development of the Property in the absence of the 6 1 remediation requirements of the Plan or Modified Plan . . ., i.e., any activities which are not 2 directly and solely attributable to the remediation of the Subject Contamination in 3 accordance with the Plan or Modified Plan . . . .” (Id. at 9.) In exchange, the Buyer 4 released Union Pacific from any future claims related to the environmental condition of the 5 Property “[e]xcept for [Union Pacific’s] environmental obligations under Section 3.2.” (Id. 6 at 11.) 7 Upon consummation of the sale, Union Pacific deeded the Property to PLY 8 Stadium Partners, Inc.’s assignee, Nevada Stadium Partners Limited Partnership. (Pls.’ 9 MPSJ, Ex. 9; Def.’s MPSJ #1, Ex. A, Attach. D.) The deed contained environmental 10 provisions by which Union Pacific gave notice that portions of the Property were affected 11 by contaminated soil and groundwater. (Pls.’ MPSJ, Ex. 9.) The deed also contained 12 certain environmental covenants: 13 14 15 16 17 18 19 20 21 22 23 (b) Grantor (for itself and its successors and assigns) hereby covenants and agrees, for the benefit of the Property and each successive owner of the Property or any portion thereof, that with respect to petroleum hydrocarbon contamination existing as of the date of this deed, Grantor shall (i) replace with clean soil and dispose of in accordance with law all soils on the Property excavated in the course of construction activity which contain total petroleum hydrocarbon levels in excess of one hundred (100) milligrams per kilogram, and (ii) remove and/or remediate in accordance with law any petroleum product in free or liquid phase that is present on or in the groundwater under the Property in an amount of excess of one-half inch (1/2”) in depth. (c) Grantor (for itself and its successors and assigns) hereby covenants and agrees for the benefit of the Property and each successive owner of the Property or any portion thereof, that with respect to heavy metals contamination existing as of the date of this deed, Grantor shall clean up, correct, or otherwise remediate all soils and waters located on or emanating from the Property from any contamination by heavy metals, including lead to a level of no more than 1400 milligrams per kilogram, to standards and in accordance with procedures now or in the future set by the governmental agency or agencies having jurisdiction over the establishment of such standards. 24 25 (Id.) The parties also recorded a Memorandum of Rights which sets forth, among other 26 things, Union Pacific’s right to Excess Remediation Costs pursuant to Section 2.3(a)(iii) of 7 1 the PSA. (Def.’s MPSJ #1, Ex. A, Attach. C.) In 1997, Union Pacific requested from NDEP a final closure of soil obligations 2 3 on the Property. (Def.’s Opp’n, Ex. A at 2.) In March 1998, NDEP permitted Union 4 Pacific to conclude its remedial actions on the Property despite the presence of impacted 5 soil above limits specified in the Remedial Action Plan due to non-feasibility of treatment 6 and/or the limited potential for human contact with the impacted soil. (Pls.’ MPSJ, Ex. 8.) 7 NDEP issued a “no further action” letter indicating it would take no further action against 8 Union Pacific for remediation of the Property, subject to Union Pacific’s obligations in 9 relation to future development activities at the Property. (Id.) NDEP thus would take no 10 enforcement action against Union Pacific for contamination at the Property if no further 11 excavation occurred on site, despite areas of contamination remaining on the Property. 12 (Def.’s Opp’n, Ex. I at 2; Pls.’ Opp’n #1, Ex. 13.) 13 In 1998, the Property was foreclosed on and a trustee’s deed was issued to PAMI 14 Las Vegas, Inc. (Def.’s MPSJ #1, Ex. A, Attach. E.) PAMI Las Vegas, Inc. thereafter sold 15 the Property to Plaintiff City Parkway V, Inc. (“City Parkway”).1 (Def.’s MPSJ #1, Ex. A, 16 Attach. F.) 17 In 2006, City Parkway informed Union Pacific of planned excavation at the 18 Property, provided pre-excavation test results showing TPH impacted soil above Plan 19 levels, and provided an outline of how City Parkway intended to address the contamination. 20 (Pls.’ Opp’n #1, Ex. 24 at 2-3, Ex. 25.) In addition to the TPH impacted soils, debris and 21 soils with arsenic levels above regulatory goals were located. (Pls.’ Opp’n #1, Ex. 24 at 4, 22 Ex. 32.) 23 /// 24 25 26 City Parkway subdivided the Property and sold parcels to Plaintiff Office District Parking I and City Parkway IV A, Inc. (Notice of Removal (Doc. #1), Ex. A at 5.) Because Plaintiffs’ interests are aligned, the Court will refer to Plaintiffs and City Parkway interchangeably. 1 8 1 In 2007, excavation began for the Lou Ruvo Brain Center (“Ruvo Center”) on a 2 portion of the Property. (Pls.’ Opp’n #1, Ex. 24 at 2-3.) In a June 2007 letter, City Parkway 3 notified Union Pacific of TPH and arsenic impacted soil, and requested Union Pacific fulfill 4 its environmental obligations under the deed. (Pls.’ Opp’n #1, Ex. 30.) In the absence of a 5 response from Union Pacific, City Parkway stockpiled the contaminated soil at the site, and 6 incurred associated remedation, removal, sampling, testing, and stockpiling costs. (Pls.’ 7 Opp’n #1, Ex. 24 at 3.) 8 In 2007, City Parkway also excavated part of the Property in relation to the Bus 9 Rapid Transit Project (“BRT Project”). (Def.’s Mot. Partial Summ. J. (Doc. #86) [“Def.’s 10 MPSJ #2”], Decl. of Jim Levy at 2.) Union Pacific paid in full for the handling and 11 disposal of all TPH impacted soil excavated in relation to the BRT Project. (Id.) 12 Beginning in April 2008 and continuing through March 2009, City Parkway 13 excavated soil on the Property in connection with Phase I infrastructure projects, including 14 roadway and utilities construction, and temporary surface parking in relation to the Ruvo 15 Center and the Smith Center for Performing Arts (“Smith Center”). (Pls.’ MPSJ, Ex. 10 at 16 2-3, Exs. 11-23.) As part of these activities, City Parkway engaged in stockpile 17 management and testing of the excavated soil. (Pls.’ MPSJ, Ex. 10 at 2-3.) Some of the 18 stockpiles contained soil which tested over 100 mg/kg of TPH contamination. (Pls.’ MPSJ, 19 Exs. 11-23.) Union Pacific removed some of the contaminated stockpiles between May and 20 November 2008. (Pls.’ MPSJ, Ex. 10 at 3.) Union Pacific incurred over $1 million in costs 21 in relation to Phase I contaminated soils removal. (Def.’s MPSJ #2, Decl. of Jim Levy at 22 2.) City Parkway did not pay for any of these costs. (Id.) However, Union Pacific refused 23 to remove remaining stockpiles despite City Parkway’s request that Union Pacific do so. 24 (Pls.’ MPSJ, Ex. 10 at 3.) 25 26 In May 2009, City Parkway and Union Pacific entered into a Soils Removal Agreement to allow development of the Property to continue while the parties attempted to 9 1 resolve their disputes over which entity was responsible for what costs at the Property. 2 (Pls.’ MPSJ, Ex. 24.) Pursuant to the Soils Removal Agreement, each side contributed $5 3 million to pay for costs to remove and remediate contaminated soils on the Property. (Id.) 4 Each party also agreed to be responsible for half the disposal costs incurred under the Soils 5 Removal Agreement, regardless of which party incurred the costs. (Id.) However, the 6 parties reserved their rights to be reimbursed for all of their costs incurred under the Soils 7 Removal Agreement based on the parties’ dispute over who should pay for removal of 8 contaminated soils at the Property. (Id.) 9 City Parkway thereafter removed and thermally treated the remaining 10 contaminated stockpiles. (Pls.’ MPSJ, Ex. 10 at 3-4.) City Parkway billed Union Pacific 11 for one half the costs of removal and remediation for the Phase I contaminated soils, and 12 Union Pacific paid its one half share in the amount of $449,433.36 pursuant to the Soils 13 Removal Agreement. (Pls.’ MPSJ, Ex. 10 at 4, Ex. 25, Ex. 29; Def.’s Opp’n, Ex. J at 2.) 14 However, City Parkway did not bill Union Pacific for over $500,000 related to stockpiling, 15 testing, reporting, and Certified Environmental Manager (“CEM”) oversight of the Phase I 16 contaminated soils. (Pls.’ MPSJ, Ex. 10 at 4, Ex. 29.) 17 Union Pacific, for its part, incurred substantial soil handling costs under the Soils 18 Removal Agreement. (Def.’s MPSJ #2, Decl. of Jim Levy at 3.) Union Pacific calculated 19 the amount of soil remediated in relation to the BRT Project, Phase I infrastructure, and the 20 Smith Center that Union Pacific handled for which Union Pacific would be entitled to 21 Excess Remediation Costs. (Def.’s MPSJ #2, Ex. I.) According to Union Pacific’s 22 calculations, Excess Remediation Costs amounted to $381,141 for the BRT Project, 23 $740,224 for Phase I, and $1,274,388 for the Smith Center, for a total of $2,395,753 in 24 Excess Remediation Costs. (Id. at 4-5.) 25 26 The parties’ disputes over costs in relation to the Property ultimately culminated in this litigation. City Parkway brought suit in state court asserting claims for breach of the 10 1 deed covenants and breach of the duty of good faith and fair dealing. (Notice of Removal 2 (Doc. #1), Ex. A.) Union Pacific removed the action to this Court and asserted 3 counterclaims for breach of contract and breach of the covenant of good faith and fair 4 dealing related to the deed, PSA, Memorandum of Rights, and Soils Removal Agreement. 5 (Countercl. (Doc. #24).) Both parties also seek declaratory relief as to their respective 6 rights and duties under the various agreements. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Union Pacific previously moved for summary judgment in this action, resulting in the Court making various findings of fact, including: (1) The PSA (Exhibit A), the UPRC Deed (Exhibit B), and the Memorandum of Rights (Exhibit C) are the operative documents by which UPRC sold the Property in 1996. ... (4) The UPRC Deed (Exhibit B), which was dated November 12, 1996, and recorded on November 18, 1996, transferred title to the Property from UPRC to Nevada Stadium Partners, and specifically incorporated the terms and conditions of the PSA. ... (6) The PSA (Exhibit A), UPRC Deed (Exhibit B), Memorandum of Rights (Exhibit C), and Assignment (Exhibit D) establish the terms and conditions which apply to UPRC, PLY Stadium Partners, Nevada Stadium Partners, and all successive owners of the Property, including City Parkway V, Inc., City Parkway IV A, Inc., and Office District Parking I, Inc. (collectively referred to herein as the “City Parkway Parties”). (7) The terms and conditions of the UPRC sale of the Property evidenced by Exhibits A, B, C, and D are clear and unambiguous and may be construed, based on the clear meaning of the terms, by the Court as a matter of law. (8) UPRC’s environmental responsibilities for the Property are limited to the terms of the NDEP order of remediation, including those referenced in PSA. (9) UPRC’s “Environmental Obligations” set out in Article III, Section 3.2 of the PSA are covenants which run with the land and benefit all successive owners of the Property, including the City Parkway Parties. (10) The right of UPRC to receive “Excess Remediation Costs” as described in Article II, Section 2.3(a)(iii) of the PSA is a covenant which runs with the land and obligates all successive owners of the Property, including the City Parkway Parties. (11) The “Buyer’s Release” as described in Article III, Section 3.3 of the PSA is a covenant which runs with the land and binds all successive owners of the Property, including the City Parkway Parties. (12) Pursuant to the “Buyer’s Release,” UPRC has been 11 released from any environmental obligation not contained in the PSA, and/or beyond the scope of the NDEP order of remediation referenced in the PSA, and that release is binding on all successive owners of the Property, including the City Parkway Parties. (13) The “As Is” provision set forth in Article III, Section 3.1 of the PSA is a covenant which runs with the land and binds all successive owners of the Property, including the City Parkway Parties. (14) The City Parkway Parties knew of the relevant covenants before Plaintiff City Parkway V, Inc. (“City Parkway V”) acquired the Property. (15) The City Parkway Parties have acknowledged that the relevant covenants run with the Property. (16) The City Parkway Parties, City Parkway V, Inc., City Parkway IV A, Inc., and Office District Parking I, Inc. are all successor owners of the Property (Lot 5). 1 2 3 4 5 6 7 8 9 (Order (Doc. #56).) The Court also made similar conclusions of law regarding the 10 unambiguous nature of the various documents, which covenants run with the land, that 11 Union Pacific’s environmental responsibilities for the Property are limited to the terms of 12 the NDEP order of remediation, and that the City Parkway Parties are bound by the PSA, 13 UPRC Deed, and Memorandum of Rights, including the obligation to pay Excess 14 Remediation Costs. (Id.) The Court made the additional following legal conclusions: (7) In determining the intent of the original parties to the sale of the Property with respect to UPRC’s entitlement to Excess Remediation Costs, all of the transaction documents by which the Property was sold (i.e., Exhibits A, B, C, and D) must be viewed in their entirety. (8) An examination of the transaction documents in their entirety, as opposed to focusing on one word or phrase, establishes that UPRC is entitled to Excess Remediation Costs for a broad range of potential development projects based on the areas of development, not the specific type of development. (9) UPRC is entitled to Excess Remediation Costs under Article II, Section 2.3(a)(iii) of the PSA even if the development project is not a sports stadium where sports will be played. 15 16 17 18 19 20 21 22 23 (Id.) Based on Plaintiffs’ request to reconsider, the Court deleted its finding of fact in 24 paragraph 15 that the City Parkway Parties acknowledged the relevant covenants run with 25 the land. (Order (Doc. #66).) The Court also clarified that the NDEP order of remediation 26 “refers to communications between UPRC and NDEP regarding a plan for remediation of 12 1 the Property. Such communications include, but are not limited to, the letter dated 2 September 10, 1991 from NDEP to UPRC.” (Id. at 6.) The Court further clarified its prior 3 Order by amending paragraphs 14 and 16 of the findings of fact as follows: 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (14) The City Parkway Parties had knowledge of and/or were on constructive notice of the covenants relating to the Property contained in the Purchase and Sale Agreement (“PSA”), the Grant, Bargain, and Sale Deed from UPRC to Nevada Stadium Partners Limited Partnership (“UPRC Deed”), and the Memorandum of Rights between UPRC and Nevada Stadium Partners Limited Partnership (“Memorandum”) before Plaintiff City Parkway V, Inc. (“City Parkway V”) acquired the Property. (16) The City Parkway Parties, City Parkway V, Inc., City Parkway IV A, Inc., and Office District Parking I, Inc. are all successor owners of the Property. (Id.) The Court altered paragraphs 7 through 9 of the conclusions of law as follows: (7) In determining the intent of the original parties to the sale of the Property with respect to UPRC’s entitlement to Excess Remediation Costs, all of the transaction documents by which the Property was sold must be viewed in their entirety. (8) An examination of the transaction documents and specifically Article II, Section 2.3(a)(iii) of the PSA establishes that UPRC is entitled to Excess Remediation Costs for a broad range of potential development projects based on the areas and/or locations of the Property to be developed as well as the uses of such development (i.e. subsurface parking for the general public) in accordance with those areas, locations, and uses listed in Article II, Section 2.3(a)(iii) of the PSA. (9) References to developments mentioned in Article II, Section 2.3(a)(iii) of the PSA serve only as examples of the type of development projects for which UPRC would be entitled to Excess Remediation Costs and are not meant to be an exhaustive list of development projects for which UPRC is entitled to Excess Remediation Costs. 20 21 (Id. at 6-7.) Finally, the Court clarified that “whether the proposed development of the 22 Property falls within the categories for which UPRC is entitled to Excess Remediation 23 Costs has not been decided by this Court.” (Id. at 7.) 24 The parties are now before the Court on cross motions for summary judgment. In 25 its first motion for partial summary judgment (Doc. #74), Union Pacific argues there is no 26 evidence it breached its environmental obligations by failing to remediate soils associated 13 1 with the Ruvo Center, there is no evidence Union Pacific failed to remediate TPH impacted 2 soil prior to closing on the sale of the Property, and there is no evidence Union Pacific’s 3 environmental obligations include handling arsenic or heavier hydrocarbons such as Bunker 4 C. Union Pacific thus argues it is entitled to summary judgment on City Parkway’s claims 5 against it on these bases. In its second motion (Doc. #86), Union Pacific moves for 6 recovery of Excess Remediation Costs for the BRT Project and Phase I. In Plaintiffs’ 7 motion for partial summary judgment (Doc. #77), Plaintiffs argue Union Pacific is liable for 8 costs associated with Phase I infrastructure remediation which Union Pacific has refused to 9 pay, and that these costs are not Excess Remediation Costs. 10 11 II. LEGAL STANDARDS Summary judgment is appropriate if the pleadings, the discovery and disclosure 12 materials on file, and any affidavits show that “there is no genuine dispute as to any 13 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 14 56(a), (c). A fact is “material” if it might affect the outcome of a suit, as determined by the 15 governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An 16 issue is “genuine” if sufficient evidence exists such that a reasonable fact finder could find 17 for the non-moving party. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th 18 Cir. 2002). Initially, the moving party bears the burden of proving there is no genuine issue 19 of material fact. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). After the 20 moving party meets its burden, the burden shifts to the non-moving party to produce 21 evidence that a genuine issue of material fact remains for trial. Id. The Court views all 22 evidence in the light most favorable to the non-moving party. Id. 23 Under Nevada law, when the facts are not in dispute, contract interpretation is a 24 question of law. Lehrer McGovern Bovis, Inc. v. Bullock Insulation, Inc., 197 P.3d 1032, 25 1041 (Nev. 2008). The Court construes unambiguous contracts according to their plain 26 language. Sheehan & Sheehan v. Nelson Malley & Co., 117 P.3d 219, 223-24 (Nev. 2005). 14 1 A contract is ambiguous if it is subject to more than one reasonable interpretation. Anvui, 2 LLC v. G.L. Dragon, LLC, 163 P.3d 405, 407 (Nev. 2007). When interpreting a contract, 3 “the court shall effectuate the intent of the parties, which may be determined in light of the 4 surrounding circumstances if not clear from the contract itself.” Sheehan, 117 P.3d at 224 5 (quotation omitted). “The parties’ intentions regarding a contractual provision present a 6 question of fact.” Anvui, LLC, 163 P.3d at 407. 7 III. UNION PACIFIC’S FIRST MOTION FOR PARTIAL SUMMARY JUDGMENT 8 (Doc. #74) 9 In Union Pacific’s first Motion for Partial Summary Judgment, Union Pacific 10 moves for summary judgment on City Parkway’s claims to the extent those claims are based 11 on Union Pacific failing to remove and/or remediate soil and debris from the Ruvo Center 12 site and failing to fully remediate TPH impacted soil before the Property was sold. 13 Additionally, Union Pacific moves for summary judgment on City Parkway’s claims to the 14 extent they are based on Union Pacific failing to remove and/or remediate soils and debris 15 impacted by arsenic or heavy petroleum hydrocarbons such as Bunker C. Plaintiffs oppose. 16 A. Pleading 17 Union Pacific argues Plaintiffs cannot pursue a claim that Union Pacific failed to 18 fulfill its environmental obligations by not removing debris from the Ruvo Center site 19 because Plaintiffs did not allege this in the Complaint. Paragraphs 39-40 of the Complaint 20 allege that Union Pacific failed to respond to City Parkway’s demands with respect to the 21 Ruvo Center remediation effort, City Parkway incurred costs to dispose of contaminated 22 soil and obtain clean replacement fill, and Union Pacific failed to reimburse City Parkway 23 for these costs. The Complaint alleges Union Pacific has failed to fulfill its environmental 24 obligations with respect to impacted soils and groundwater. Under notice pleading, City 25 Parkway did not need to specify in the Complaint that Union Pacific failed to remediate the 26 Property at the time of sale, nor did City Parkway need to identify every contaminant for 15 1 impacted soils, such as arsenic. Fed. R. Civ. P. 8(a). However, the Complaint does not 2 allege Union Pacific failed to fulfill its environmental obligations with respect to hazardous 3 waste debris, and contains no factual allegations related to hazardous waste debris. The 4 Court therefore will grant Union Pacific’s Motion on this basis to the extent it relates to 5 debris removal. See Ideal Elec. Co. v. Flowserve Corp., 357 F. Supp. 2d 1248, 1253 (D. 6 Nev. 2005); Fed. R. Civ. P. 8(a). 7 B. TPH Impacted Soil 8 Union Pacific contends City Parkway cannot show that any soil was TPH 9 impacted due to Union Pacific’s past use of the Property. Union Pacific also argues City 10 Parkway cannot show that the costs incurred by City Parkway do not include costs for 11 handling non-TPH impacted soil for which Union Pacific has no responsibility, and do not 12 include costs for consultants or other costs outside the actual costs of handling the impacted 13 soil. Finally, Union Pacific argues City Parkway cannot show the costs incurred were 14 reasonable and necessary. 15 City Parkway responds that NDEP allowed Union Pacific to close its remediation 16 program even though significant contamination remained on the Property, subject to Union 17 Pacific’s future environmental obligations should development of the Property result in 18 excavation of impacted soils. City Parkway thus contends Union Pacific has environmental 19 obligations to remediate any soil that is TPH impacted above 100 mg/kg excavated during 20 future construction. City Parkway argues it has presented evidence that it uncovered TPH 21 impacted soil during excavation at the Ruvo Center, that it incurred costs because Union 22 Pacific did not fulfill its environmental obligations, and Union Pacific has refused to 23 reimburse City Parkway for these expenses. 24 25 26 1. Bunker C from Past Use by Union Pacific Viewing the evidence in the light most favorable to City Parkway, genuine issues of fact remain. City Parkway has presented evidence raising issues of fact as to whether 16 1 TPH impacted soil resulted from Union Pacific’s past use of the Property. Union Pacific’s 2 site characterization report identified numerous areas of petroleum hydrocarbon 3 contamination, including Bunker C contamination. Union Pacific obtained NDEP’s 4 permission to conclude environmental remediation without removing or remediating all 5 contamination on the Property, subject to future obligations. Consequently, City Parkway 6 has presented evidence that TPH contamination existed on the Property at the time of sale. 7 Additionally, City Parkway has presented evidence that Union Pacific’s thermal 8 treatment of the soil did not remove heavier hydrocarbons such as Bunker C from treated 9 soil. As Union Pacific’s internal documents show, when Union Pacific was remediating the 10 Property, Union Pacific was aware that its thermal treatment likely was leaving heavier 11 hydrocarbons in the soil, but Union Pacific chose not to increase the treatment temperature. 12 Additionally, City Parkway presents evidence that the pattern of TPH contamination in the 13 soil is consistent with thermal treatment which eradicated petroleum hydrocarbons in the 14 lower and mid range, but not heavier hydrocarbons such as Bunker C. City Parkway also 15 presents evidence that none of its activities would have caused or contributed to the TPH 16 contamination on the Property. 17 2. Union Pacific’s Obligations Regarding Bunker C 18 In its Reply, Union Pacific contends that NDEP chose method 8015 modified, 19 which does not test for heavier hydrocarbons, and thus Union Pacific had no remediation 20 obligation for heavier hydrocarbons such as Bunker C. However, Union Pacific’s 21 environmental obligations refer to total petroleum hydrocarbons, not just certain 22 hydrocarbons. The Remedial Action Plan contemplated Bunker C remediation. Moreover, 23 Union Pacific’s internal documents from the time note that some laboratories would 24 increase the range on method 8015 modified to capture higher range hydrocarbons. Union 25 Pacific could have clarified with NDEP its obligations as USPCI suggested, but Union 26 Pacific chose not to. Thus, viewing the evidence in the light most favorable to City 17 1 Parkway, issues of fact remain as to whether Union Pacific had an obligation to remediate 2 Bunker C. 3. Objection to Goebel Report 3 4 Union Pacific argues in its Reply that the report of Plaintiffs’ expert, Kurt Goebel 5 (“Goebel”), is inadmissible hearsay because it is based on a reported finding of soil in the 6 area that exceeded the TPH level and not based on Goebel’s own on-site investigation. An 7 expert may rely on hearsay or other inadmissible evidence so long as his opinion is based on 8 facts or data upon which experts in the field reasonably rely. Fed. R. Evid. 703. Union 9 Pacific does not suggest or explain why it would be unreasonable for Goebel to rely on the 10 soil testing done by City Parkway’s contractor or based on a review of site-related 11 documents at NDEP. Union Pacific does not, and so far as the record reveals never has, 12 challenged the actual results of any of the soil testing which showed TPH levels exceeding 13 100 mg/kg in some of the excavated soil. Union Pacific does not point to a Rule of 14 Evidence or case law requires an expert to personally conduct all testing upon which he 15 bases his opinion. Consequently, the Court will overrule Union Pacific’s objection to 16 Goebel’s report. 17 18 4. Actually Incurred Costs As to whether City Parkway actually incurred remediation costs, City Parkway 19 includes an affidavit from Scott Carter (“Carter”), who works for the Economic and Urban 20 Development Department. Carter avers to costs City Parkway incurred for “importing and 21 replacing tph and arsenic contaminated soil with clean fill” and “disposing of the tph 22 impacted soil.” (Pls.’ Opp’n #1, Ex. 24 at 4.) Viewing this evidence in the light most 23 favorable to City Parkway, City Parkway has incurred costs for remediation and removal of 24 TPH impacted soils. Whether those costs also include other non-allowable costs or 25 unreasonably or unnecessarily high costs may affect the amount of a final judgment, but at 26 this stage of the proceedings, City Parkway has presented evidence raising an issue of fact 18 1 that it incurred costs related to removal of TPH impacted soils. The Court therefore will 2 deny this portion of Union Pacific’s motion. 3 4 5. Union Pacific’s Financial Obligations In its Reply, Union Pacific argues that City Parkway ignores the “as is,” buyer’s 5 release, and Excess Remediation Costs provisions of the PSA, which Union Pacific 6 contends shifted financial responsibility for future remediation from Union Pacific to future 7 developers. Union Pacific argues it did not guarantee to NDEP that it would do the 8 remediation work itself, just that it would guarantee that the work was done properly under 9 the law, and Union Pacific therefore could transfer financial responsibility for remediation 10 11 to the buyer of the Property. The PSA unambiguously provides that both the “as is” and buyer’s release 12 clauses are subject to section 3.2 of the PSA, which contains Union Pacific’s environmental 13 obligations. Under Section 3.2, Union Pacific covenants and agrees to comply with the 14 Plan with respect to the remediation of the Subject Contamination pursuant to the terms, 15 standards, and acceptable levels of clean-up required by NDEP. Under the Plan, Union 16 Pacific bore responsibility for remediation in relation to future development. Thus, as 17 between NDEP and Union Pacific, Union Pacific agreed it would remain the responsible 18 party for future cleanup. As between Union Pacific and the subsequent owners of the 19 Property, the deed by which Union Pacific transferred the Property covenants that Union 20 Pacific would be responsible for future remediation. Additionally, under the PSA, Excess 21 Remediation Costs are a subset of remediation costs, and the Buyer would reimburse Union 22 Pacific for Excess Remediation Costs only under specified circumstances. Consequently, 23 any other applicable remediation costs were to be born by Union Pacific, as the subsequent 24 owner was liable to Union Pacific only for Excess Remediation Costs. To the extent Union 25 Pacific or City Parkway incurred remediation costs that are not Excess Remediation Costs, 26 Union Pacific is the financially responsible party under the Plan, the deed, and the PSA. 19 1 2 6. Sale of the Ruvo Site In its Reply, Union Pacific argues there is no evidence City Parkway incurred 3 costs because development of the Ruvo site occurred after City Parkway sold that portion of 4 the Property to Keep Memory Alive. Union Pacific cites no evidence to support this 5 argument. Additionally, Union Pacific raises this argument for the first time in reply, and it 6 is not an arguably fair response to the issues raised in City Parkway’s Opposition. 7 Carstarphen v. Milsner, 594 F. Supp. 2d 1201, 1204 n.1 (D. Nev. 2009). The Court 8 therefore will not consider it. In any event, City Parkway presented an affidavit that it 9 incurred these costs, and Union Pacific presents no contrary evidence. 10 C. Arsenic 11 Union Pacific argues City Parkway did not plead that Union Pacific breached its 12 environmental obligations by failing to remediate and/or remove arsenic impacted soils, and 13 City Parkway there should not be able to pursue relief based on remediation of arsenic 14 impacted soils. Union Pacific further contends City Parkway cannot show Union Pacific 15 was required to handle soil impacted by arsenic. Union Pacific also argues City Parkway 16 will be unable to show arsenic levels exceeded normal background levels for the Las Vegas 17 area. Finally, Union Pacific argues City Parkway cannot show the arsenic resulted from 18 Union Pacific’s activities on the Property. 19 City Parkway responds that it pled arsenic contamination because arsenic is 20 included within the category of contaminants Union Pacific was required to handle under 21 the NDEP order of remediation and deed covenants, which required Union Pacific to 22 remediate any heavy metal that exceeded the regulatory standard. City Parkway contends it 23 has presented evidence that it encountered arsenic impacted soils above the then-applicable 24 regulatory guideline. City Parkway argues that because Union Pacific did not respond to 25 City Parkway’s request to handle the soils, Union Pacific cannot now contend that City 26 Parkway should have handled the arsenic soils differently, or at least there is a genuine 20 1 2 issue of fact as to whether City Parkway acted appropriately. The deed covenant states that “with respect to heavy metals contamination 3 existing as of the date of this deed,” Union Pacific shall remediate “all soils and waters 4 located on or emanating from the Property from any contamination by heavy metals . . . to 5 standards and in accordance with procedures now or in the future set by the governmental 6 agency or agencies having jurisdiction over the establishment of such standards.” However, 7 the PSA unambiguously limits Union Pacific’s financial responsibility for environmental 8 obligations to the “Subject Contamination,” which the PSA defines as the contamination 9 documented in the Site Characterization Report. City Parkway does not point to any 10 evidence in the record that arsenic was identified as a contaminant in the Site 11 Characterization Report, or that NDEP set any remediation level for arsenic on the Property. 12 Given the “as is” and buyer’s release provisions, and the lack of arsenic as part of the 13 “Subject Contamination” as defined in the PSA, City Parkway has failed to present 14 evidence raising an issue of fact that arsenic falls within Union Pacific’s environmental 15 obligations under the PSA. The Court therefore will grant the Union Pacific’s Motion to 16 the extent it relates to Union Pacific’s environmental obligations to remediate arsenic 17 impacted soils. 18 D. Conclusion 19 The Court will grant in part and deny in part Union Pacific’s first Motion for 20 Partial Summary Judgment. The Court will grant the Motion to the extent City Parkway’s 21 claims are based on debris or arsenic remediation. The Court will deny the Motion in all 22 other respects. 23 IV. UNION PACIFIC’S SECOND MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. #86)/PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. #77) 24 25 Union Pacific’s second Motion for Partial Summary Judgment and Plaintiffs’ 26 Motion for Partial Summary Judgment both revolve around the issue of what constitutes 21 1 Excess Remediation Costs. In its Motion, Union Pacific argues the Court’s prior Orders 2 establish its right to collect Excess Remediation Costs related to the BRT Project, Phase I 3 infrastructure, and the Smith Center. Union Pacific argues the projects are within the broad 4 range of potential development projects identified in the PSA and were essential to 5 development of the BRT Project and the Smith Center. 6 Plaintiffs respond that Union Pacific is responsible for TPH impacted soil, some 7 of the soil excavated for each of these projects was TPH impacted, and Union Pacific 8 therefore cannot charge for Excess Remediation Costs for those soils. Additionally, 9 Plaintiffs argue that Excess Remediation Costs are contractually limited to soils excavated 10 for subsurface parking or excavated from the area on which sports or other entertainment 11 will take place. Plaintiffs contend the BRT Project and Phase I infrastructure do not meet 12 these criteria, and only a small portion of the Smith Center would fit this criteria. 13 Additionally, Plaintiffs contend that Union Pacific’s expert, Ted Petranoff 14 (“Petranoff”), calculated Excess Remediation Costs in a manner that is inconsistent with 15 Union Pacific’s other positions in this case. Plaintiffs argue Petranoff claims City Parkway 16 added two feet of soil to the Property, yet Petranoff calculated Union Pacific’s liability from 17 0 to 7.5 feet, instead of from 2 feet to 9.5 feet. Plaintiffs also dispute that Union Pacific 18 fully treated the soil, and thus Petranoff improperly includes within the Excess Remediation 19 Costs soils which Union Pacific is obligated to remediate. Plaintiffs further contend Union 20 Pacific is improperly charging Plaintiffs for Petranoff’s time. 21 In Plaintiffs’ Motion, Plaintiffs contend they paid for Phase I infrastructure soil 22 remediation and removal that is Union Pacific’s responsibility because it was over 100 23 mg/kg TPH contaminated, and Union Pacific has failed to pay. Specifically, Plaintiffs 24 contend that although Union Pacific removed some contaminated Phase I soil, Union 25 Pacific did not remove all of it, and Plaintiffs therefore incurred costs for removal, 26 stockpiling, stockpile maintenance, and CEM oversight for these TPH contaminated soils. 22 1 Although City Parkway billed Union Pacific for half of these costs under the Soils Removal 2 Agreement, which Union Pacific paid, City Parkway contends Union Pacific is liable for the 3 other half of the costs as well, as the soils were entirely Union Pacific’s responsibility. City 4 Parkway contends these costs are not Excess Remediation Costs because the work was done 5 for roadways, utility trenches, and temporary surface parking. Union Pacific responds that its environmental obligations are set forth in the 6 7 NDEP order and the PSA, and City Parkway fails to acknowledge its own environmental 8 obligations for the Property. Specifically, Union Pacific contends that the “as is,” buyer’s 9 release, and development costs clauses limit Union Pacific’s financial obligations. Union 10 Pacific further contends that City Parkway is not entitled to reimbursement for stockpiling, 11 testing, reporting, and CEM oversight, because the PSA transferred the financial 12 responsibility for handling TPH impacted soils to the developer. Union Pacific further 13 argues no document requires Union Pacific to pay for stockpiling, stockpile management, 14 testing, reporting, or CEM oversight. Union Pacific also contends the costs incurred were 15 Excess Remediation Costs for which Union Pacific would be entitled to payment because 16 the roadways and utilities were essential to any project on the Property.2 In the Court’s first Order on summary judgment, the Court held that the 17 18 transaction documents must be read together, and “[a]n examination of the transaction 19 documents in their entirety, as opposed to focusing on one word or phrase, establishes that 20 [Union Pacific] is entitled to Excess Remediation Costs for a broad range of potential 21 development projects based on the areas of development, not the specific type of 22 Union Pacific contends Plaintiffs did not plead a claim for these costs in the Complaint. However, in the Complaint, City Parkway alleges Union Pacific is liable for “any and all Disposal Costs paid for by Plaintiffs pursuant to the Soils Removal Agreement.” (Compl. at ¶ 41.) Plaintiffs also alleged that due to Union Pacific’s breach, Plaintiffs had to stockpile and dispose of the soil. (Id. at ¶¶ 42, 47.) The Soils Removal Agreement provides that the parties agreed to share in the costs for Disposal Costs, which included costs incurred in characterizing and stockpiling soils. (Pls.’ MPSJ, Ex. 24 at UPR0001777.) 2 23 24 25 26 23 1 development.” (Order (Doc. #56) at 6.) Further, the Court held that Union Pacific is 2 entitled to Excess Remediation Costs “even if the development project is not a sports 3 stadium where sports will be played.” (Id.) 4 In the Court’s second Order, the Court clarified that “[a]n examination of the 5 transaction documents . . . establishes that [Union Pacific] is entitled to Excess Remediation 6 Costs for a broad range of potential development projects based on the areas and/or 7 locations of the Property to be developed as well as the uses of such development (i.e. 8 subsurface parking for the general public) in accordance with those areas, locations, and 9 uses listed in Article II, Section 2.3(a)(iii) of the PSA.” (Order (Doc. #66) at 6.) 10 Additionally, the Court stated that “[r]eferences to developments mentioned in Article II, 11 Section 2.3(a)(iii) of the PSA serve only as examples of the type of development projects 12 for which [Union Pacific] would be entitled to Excess Remediation Costs and are not meant 13 to be an exhaustive list of development projects for which [Union Pacific] is entitled to 14 Excess Remediation Costs.” (Id.) Finally, the Court clarified that “whether the proposed 15 development of the Property falls within the categories for which [Union Pacific] is entitled 16 to Excess Remediation Costs has not been decided by this Court.” (Id.) The parties’ cross- 17 motions now seek to have the Court decide whether the BRT Project, the Phase I 18 infrastructure, and the Smith Center fall within the categories which entitle Union Pacific to 19 Excess Remediation Costs under the PSA. 20 The parties to the PSA unambiguously agreed that for TPH impacted soils 21 uncovered during future development, Union Pacific would bear financial responsibility for 22 soil remediation for the top 7 1/2 feet of soil. But if the new owner got overly adventurous 23 in its development, for example by excavating a large, deep area of the Property for the 24 bowl of a sports stadium or some other entertainment complex such as an aquarium for a 25 Sea World type park, or an underground parking garage for customers of a stadium or an 26 amusement park, then Union Pacific would not bear financial responsibility for remediating 24 1 such a large volume of potentially contaminated soils. This is set forth in the PSA’s Excess 2 Remediation Costs provision, which transfers from Union Pacific to the new owner 3 financial responsibility for soil remediation below 7 1/2 feet for such extensive projects. 4 The Court’s prior Orders indicated that the parties to the PSA contemplated a 5 broad range of projects for which Union Pacific would be entitled to Excess Remediation 6 Costs. That does not mean, however, that Union Pacific is entitled to Excess Remediation 7 Costs for any development on the Property. The fact that Article X of the PSA 8 contemplates other types of development weighs against interpreting the Excess 9 Remediation Costs provision too broadly. In the face of knowing the Property could be 10 developed in a number of different ways, the parties specifically limited Union Pacific’s 11 right to Excess Remediation Costs to three particularly enumerated and described 12 categories. An expansion of the covered categories to virtually any development of the 13 Property would not hew to the contractual language, and would leave the Court and the 14 parties without a manageable standard for determining what falls within the Excess 15 Remediation Costs provision. Moreover, had the parties intended the provision to have 16 such a broad scope, they could and would have said so. 17 Likewise, Union Pacific’s proposed interpretation that anything “essential to” 18 development on the Property qualifies as Excess Remediation Costs is not tied to any 19 contractual language. If the parties to the PSA had intended Union Pacific to be entitled to 20 Excess Remediation Costs for any remediation done for work “essential to” development on 21 the Property, they could and would have said so. 22 As to the clause in the PSA which states that Union Pacific is not responsible for 23 any excavation expenses for development of the Property, the clause at issue states that 24 Union Pacific shall not be required to perform any excavation or development activities 25 which would be performed in connection with the development of the Property even in the 26 absence of the Plan’s remediation requirements. There is no evidence that City Parkway is 25 1 charging for any excavation costs. Rather, because Union Pacific would not remove or 2 remediate the soil, City Parkway incurred consequential damages of having to stockpile, 3 maintain, test, report, and engage in environmental oversight over the soils. Section 3.2(f) 4 of the PSA provides that if Union Pacific fails to fulfill its environmental obligations, the 5 new owner would be entitled to “all reasonable testing, removal, clean-up, disposal and 6 remediation costs or expenses.” (Def.’s MPSJ #1, Ex. A, Attach. A at 10-11.) 7 With these principles in mind, even viewing the facts in the light most favorable 8 to Union Pacific on City Parkway’s Motion, no genuine issue of fact remains that the BRT 9 Project and Phase I infrastructure do not fall within any of the areas, locations, or uses set 10 forth in Section 2.3(a)(iii) of the PSA. The BRT Project involved widening a street to allow 11 for construction of a dedicated lane of traffic for bus travel. (Pls.’ Opp’n #2, Ex. 7 at 3.) 12 While the street was removed, oversized utilities were installed to provide future services 13 for neighboring projects such as Symphony Park and the World Market Center. (Id.) The 14 Phase I infrastructure likewise involved roadways, utility trenches, and some temporary 15 surface parking. (Id.) Union Pacific’s only evidence on the point is the conclusory 16 statement of its expert, Petranoff, that the BRT Project and Phase I infrastructure fall within 17 the areas, locations, or uses set forth in the PSA. However, Petranoff does not tie his 18 conclusion to any particular area, location, or use in the contractual language of Section 19 2.3(a)(iii). Soils excavated for roads, utility trenches, and temporary surface parking do not 20 fall within Section 2.3(a)(iii)(1) because they do not involve subsurface parking for the 21 general public for a sports stadium or other major entertainment complex. They do not fall 22 within Section 2.3(a)(iii)(2) or (3) because there is no evidence the roads, utility trenches, or 23 temporary surface parking were below 7 1/2 feet and within the bowl or area of the stadium 24 or other entertainment complex on which sporting or other entertainment events will take 25 place. 26 /// 26 1 The Smith Center project, however, is an entertainment complex at which 2 entertainment events are performed. The Smith Center project thus fits within the range of 3 areas, locations, and uses of Section 2.3(a)(iii)(2) for which Union Pacific is entitled to 4 Excess Remediation Costs. City Parkway seeks to limit Excess Remediation Costs to 8.2% 5 of the Smith Center’s footprint because only the orchestra pit and the theater stage are areas 6 where entertainment events are performed. City Parkway’s proposed interpretation of the 7 PSA is too narrow. Sports and entertainment events “take place” not just on the playing 8 surface or the stage where the performance occurs, but also where the audience perceives 9 the events and, at times, interacts with the performance and becomes part of the events 10 taking place. Thus, the bowl or area of a stadium on which sporting and other events take 11 place includes not only the playing surface, but the stands from which the audience views 12 the sporting or entertainment event, cheers, boos, and otherwise takes part in the 13 performance. Similarly, entertainment events at a theater such as the Smith Center “take 14 place” not only on the stage and orchestra pit, but the area of the theater in which the 15 audience views the performance and interacts with the performers, such as by applauding, 16 laughing, crying, singing along, or calling for an encore. The audience is part of the sport 17 or entertainment event taking place, and the area of the stadium or entertainment complex 18 on which sports or entertainment takes place therefore must include the area where the 19 audience views it. 20 However, genuine issues of fact remain as to the amount of remediation and 21 removal costs Union Pacific owes to City Parkway, and the amount of Excess Remediation 22 Costs that City Parkway owes to Union Pacific. Viewing the facts in the light most 23 favorable to City Parkway on Union Pacific’s Motion, genuine issues of fact remain as to 24 Petranoff’s Excess Remediation Costs calculation. Although Petranoff denies his 25 calculation charges City Parkway for the top 2 feet of soil, Petranoff’s calculations state in 26 more than one place that “City of Las Vegas holds responsibility for the top 2 feet of the 27 1 excavation, UPRR holds responsibility for the excavation between 2 feet and 7.5 feet.” 2 (See Def.’s MPSJ #2, Ex. G at UPR0004522, UPCH001862.) A reasonable jury thus could 3 find Petranoff improperly added the top 2 feet in his calculation of City Parkway’s liability 4 for Excess Remediation Costs because issues of fact remain as to whether City Parkway 5 added any fill to the Property. Additionally, a reasonable jury could conclude that although 6 Petranoff assumed 2 feet of fill, Petranoff did not extend Union Pacific’s liability to 9.5 feet 7 to account for the fill because he terminates Union Pacific’s liability at 7.5 feet. On the 8 other hand, viewing the facts in the light most favorable to Union Pacific on City Parkway’s 9 Motion, a reasonable jury could accept Petranoff’s criticisms of City Parkway’s calculation 10 of the amount of costs incurred for remediation and removal of soils, and a reasonable jury 11 could accept Petranoff’s method as the proper means to determine the amount of Excess 12 Remediation Costs. The Court therefore will grant in part and deny in part the parties’ 13 cross-motions regarding Excess Remediation Costs. 14 V. CONCLUSION 15 IT IS THEREFORE ORDERED that Defendant Union Pacific Railroad 16 Company’s Motion for Partial Summary Judgment (Doc. #74) is hereby GRANTED in part 17 and DENIED in part. The Motion is granted with respect to Plaintiffs’ claims to the extent 18 they are based on removal of debris and arsenic impacted soil. The Motion is denied in all 19 other respects. 20 IT IS FURTHER ORDERED that Plaintiffs City Parkway IV A, Inc.; City 21 Parkway V, Inc.; and Office District Parking I, Inc.’s Motion for Partial Summary Judgment 22 (Doc. #77) is hereby GRANTED in part and DENIED in part. The Motion is granted to the 23 extent that Plaintiffs are entitled to recover for soil remediation and removal costs in 24 relation to the BRT Project, the Phase I infrastructure, and the Smith Center, less Excess 25 Remediation Costs for those portions of the Smith Center encompassing the stage, orchestra 26 pit, and audience viewing area. 28 1 IT IS FURTHER ORDERED that Defendant Union Pacific Railroad Company’s 2 Motion for Partial Summary Judgment (Doc. #86) is hereby GRANTED in part and 3 DENIED in part. The Motion is granted to the extent that Defendant Union Pacific 4 Railroad Company is entitled to Excess Remediation Costs for those portions of the Smith 5 Center encompassing the stage, orchestra pit, and audience viewing area. The Motion is 6 denied in all other respects. 7 8 9 10 DATED: December 3, 2012 _______________________________ PHILIP M. PRO United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 29
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