Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-01378/USCOURTS-caed-2_13-cv-01378-24/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CAROLINA CASUALTY INSURANCE

COMPANY,

Plaintiff,

v.

OAHU AIR CONDITIONING 

SERVICE, INC. dba OAHU AIR 

CONDITIONING CO., PACIFIC 

COMMERICAL SERVICES, LLC.,

MATSON NAVIGATION COMPANY, 

INC., and DOES 1 through 100,

Defendants.

CIV. NO. 2:13-01378 WBS AC

MEMORANDUM AND ORDER RE: MOTION 

TO DISMISS

OAHU AIR CONDITIONING 

SERVICE, INC., 

 Third-Party 

 Plaintiff,

 v. 

CLEAN HARBORS ENVIRONMENTAL 

SERVICES, INC., SMITH SYSTEMS 

TRANSPORTATION, INC., GOOGLE, 

INC., THE PHYSICIANS MEDICAL 

GROUP, TEST AMERICA

LABORATORIES, INC., & NEKTAR 

THERAPEUTICS,

Third-Party 

Defendants. 

----oo0oo----

Case 2:13-cv-01378-WBS-AC Document 200 Filed 10/23/15 Page 1 of 9
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Defendant Oahu Air Conditioning Service, Inc. (“OAC”) 

filed its third-party complaint in this action against 

TestAmerica Laboratories, Inc. (“TestAmerica”)1, Clean Harbors 

Environmental, Inc. (“Clean Harbors”), Smith Systems 

Transportation, Inc. (“Smith”), The Physicians Medical Group, 

Google Inc., and Nektar Therapeutics seeking contribution, 

declaratory relief, and equitable indemnity for expenses incurred 

by OAC in responding to the release of hazardous substances at 

Elder Creek Yard. Third-party defendant TestAmerica now moves to 

dismiss portions of OAC’s Second Amended Third-Party Complaint 

(“SAC”) for failure to state a claim upon which relief may be 

granted pursuant to Federal Rule of Civil Procedure 12(b)(6). 

(Docket No. 182.) 

I. Factual and Procedural History

In June 2011, Clean Harbors received a drum of waste 

refrigerant oil from OAC at its facility in Oakland, California. 

(SAC ¶¶ 23-24 (Docket No. 178).) On June 29, 2011, Smith 

accepted for transport a trailer from Clean Harbors that included 

the drum from OAC and drums containing various other waste 

substances from third-party defendants. (Id. ¶ 25.) Smith 

delivered the trailer to Elder Creek Yard, a waste disposal site

in Sacramento, California. (Id. ¶¶ 32-33.) After Smith 

delivered the trailer, the Sacramento Police Department was 

called to the disposal site because the trailer was observed 

emitting white smoke. (Id. ¶ 36.) After several hours, an 

 

1 TestAmerica Laboratories Inc. was incorrectly sued as 

“Test America Laboratories, Inc.” and will be referred to as 

TestAmerica in this Order. 

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active fire broke out and completely engulfed the trailer. (Id.

¶¶ 36-37.) A subsequent investigation by the Sacramento Fire 

Department revealed that the trailer contained refrigerator waste 

oil that OAC had shipped to California for disposal and the fire 

resulted in the release of hazardous vapors and contaminated 

water runoff into the environment. (Carolina Casualty’s First 

Am. Compl. (“Carolina Casualty’s FAC”) ¶ 13 (Docket No. 7).) 

As a result of this incident, a number of claimants 

issued Smith notices of violation and demanded that it pay for 

the cleanup of the hazardous waste spill from the trailer. (Id.

¶ 22.) Pursuant to Smith’s insurance policy, which required 

Carolina Casualty Insurance Company (“Carolina Casualty”) to 

provide a defense and indemnify Smith from any claims resulting 

from a hazardous waste spill, Carolina Casualty settled and paid

claims brought against it by several claimants, including the 

City of Sacramento, the County of Sacramento, and Clean Harbors. 

(Id. ¶¶ 23-24.) In addition, Carolina Casualty reimbursed Smith 

for its cleanup expenses and indemnified it against additional 

personal injury damages. (Id. ¶ 25.) Carolina Casualty then 

sued OAC and two other defendants alleging that they were 

involved in the supply, packing, and transportation of the 

refrigerator waste oil that Smith transported to Sacramento. 

(Id. ¶¶ 26-27.) Carolina Casualty sought contribution, 

indemnity, apportionment of fault, and subrogation for the 

payments it incurred as a result of the hazardous waste spill. 

(Id.) 

In its third-party complaint OAC alleges that 

TestAmerica is an arranger for disposal of hazardous wastes 

Case 2:13-cv-01378-WBS-AC Document 200 Filed 10/23/15 Page 3 of 9
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within the meaning of the Comprehensive Environmental Response, 

Compensation, and Liability Act (“CERCLA”) section 107(a)(3), 42 

U.S.C. § 9607(a)(3), and seeks (1) contribution pursuant to 

sections 107(a), 112(c), and 113(f) of CERCLA, 42 U.S.C. §§

9607(a), 9613(f); (2) declaratory relief under CERCLA section 

113(g)(2), 42 U.S.C. § 9613(g)(2); (3) contribution or indemnity 

pursuant to the Hazardous Substance Account Act (“HSAA”), Cal. 

Health & Safety Code § 25363; and (4) equitable indemnification 

and contribution under state law. (SAC ¶¶ 46-67.) 

TestAmerica moves to dismiss OAC’s first, second, and 

fourth claims in their entirety. (TestAmerica’s Mot. (Docket No. 

182-1).) In the alternative, TestAmerica requests the court 

dismiss the first and fourth claims in their entirety and the 

second claim to the extent it seeks a declaration of liability 

for costs of litigation including attorney’s fees. (Id. at 10.) 

II. Discussion

On a motion to dismiss under Rule 12(b)(6), the court 

must accept the allegations in the complaint as true and draw all 

reasonable inferences in favor of the plaintiff. Scheuer v. 

Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by

Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 

319, 322 (1972). To survive a motion to dismiss, a plaintiff 

must plead “only enough facts to state a claim to relief that is 

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 570 (2007). This “plausibility standard,” however, “asks 

for more than a sheer possibility that a defendant has acted 

unlawfully,” and where a complaint pleads facts that are “merely 

consistent with a defendant’s liability,” it “stops short of the 

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line between possibility and plausibility.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). 

“While a complaint attacked by a Rule 12(b)(6) motion 

to dismiss does not need detailed factual allegations, a 

plaintiff’s obligation to provide the ‘grounds’ of his 

entitle[ment] to relief’ requires more than labels and 

conclusions . . . .” Twombly, 550 U.S. at 555 (alteration in 

original) (citations omitted). “Threadbare recitals of the 

elements of a cause of action, supported by mere conclusory 

statements, do not suffice.” Iqbal, 556 U.S. at 678; see also

Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the 

framework of a complaint, they must be supported by factual 

allegations.”).

A. Claim 1: Contribution Pursuant to CERCLA Section 113(f)

“Two provisions of the Comprehensive Environmental 

Response, Compensation, and Liability Act of 1980 (CERCLA)--§§ 

107(a) and 113(f)--allow private parties to recover expenses 

associated with cleaning up contaminated sites.” United States

v. Atlantic Research Corp., 551 U.S. 128, 131 (2007) (citing 42 

U.S.C. §§ 9607(a), 9613(f)). Under section 113(f) of CERCLA,

“[a]ny person may seek contribution” for response costs “from any 

other person who is liable or potentially liable under section 

9607(a) of this title, during or following any civil action under 

section 9606 of this title or under section 9607(a) of this 

title.” 42 U.S.C. § 9613(f)(1). Thus, section 113(f) permits 

suit before or after the establishment of common liability. “The 

court may allocate response costs among liable parties using such 

equitable factors as the court determines are appropriate.” Id. 

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Contribution is, therefore, determined as a percentage of fault. 

Atlantic Research, 551 U.S. at 138-39. 

“[T]he only response costs recoverable from the 

defendant in the contribution action are those that were 

necessary and consistent with the” national contingency plan 

(“NCP”). AmeriPride Servs. Inc. v. Tex. E. Overseas Inc., 782 

F.3d 474, 490 (9th Cir. 2015). The NCP “specifies procedures for 

preparing and responding to contaminations” and “is designed to 

make the party seeking response costs choose a cost-effective 

course of action to protect public health and the environment.” 

City of Colton v. Am. Promotional Events, Inc., 614 F.3d 998, 

1003 (9th Cir. 2010) (citation omitted). “Response costs are 

considered necessary when an actual and real threat to human 

health or the environment exist[s]” and “consistent with the NCP

‘if the action, when evaluated as a whole, is in substantial 

compliance’ with it.” Id. (quoting 40 C.F.R. 

§ 300.700(c)(3)(i)). Thus, compliance with the NCP is an element 

of a prima facie case under CERCLA that must be pled in a party’s 

complaint. See Coppola v. Smith, 935 F. Supp. 2d 993, 1007 (E.D. 

Cal. 2013) (finding plaintiff’s complaint was adequately pled 

when plaintiff alleged the response costs were the result of 

contamination to its property by the defendants and the response 

costs were necessary and consistent with the NCP); Carson Harbor 

Vill., Ltd. V. Unocal Corp., 287 F. Supp. 2d 1118, 1153-54 (C.D. 

Cal. 2003). 

In its claim for contribution under section 113(f) OAC

has failed to plead that the cleanup costs it seeks to recover 

are consistent with the NCP, a necessary element of a CERCLA 

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contribution claim. Simply alluding to plaintiff Carolina 

Casualty’s underlying burden to assert a valid claim under CERCLA 

(See SAC ¶ 55) does not amount to an allegation of NCP 

compliance. Accordingly, the court will grant TestAmerica’s 

motion to dismiss OAC’s section 113(f) claim with leave to amend. 

B. Claim 2: Declaratory Relief under CERCLA Section 113(f)

CERCLA section 113(g)(2) also contains a provision for 

declaratory relief: “In any such action described in this 

subsection, the court shall enter a declaratory judgment on 

liability for response costs or damages that will be binding on 

any subsequent action or actions to recover further response 

costs or damages.” 42 U.S.C. § 9613(g)(2). “Therefore, if a 

plaintiff successfully establishes liability for the response 

costs sought in the initial cost-recovery action, it is entitled 

to declaratory judgment on present liability that will be binding 

on future cost-recovery actions.” Am. Promotional Events, Inc., 

614 F.3d at 1007. “[D]eclaratory relief is available only if 

liability for past costs has been established.” Id. at 1008.

Given that OAC did not sufficiently plead NCP 

compliance in its section 113(f) claim for contribution for past 

costs, TestAmerica’s motion to dismiss OAC’s claim for 

declaratory relief on the same grounds must also be granted. 

C. Claim 4: Equitable Indemnification and Contribution under 

State Law

In its fourth claim, OAC alleges it is entitled to 

indemnification and contribution from TestAmerica and the other 

third-party defendants under state law. Under California Code of 

Civil Procedure section 875, there is a “right of contribution” 

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among defendants “[w]here a money judgment has been rendered 

jointly against two or more defendants in a tort action.” Cal. 

Civ. Proc. Code § 875(a); see e.g. United States v. Lyon, Civ. 

No. 07-0491 LJO GSA, 2007 WL 4374167, at *8 (E.D. Cal. 2007) 

(allowing a state law contribution claim under California Code of 

Civil Procedure section 875 in a CERCLA case to survive a motion 

to dismiss). There is also an “equitable indemnity rule to 

permit a concurrent tortfeasor to obtain partial indemnity from 

other cotortfeasors on a comparative fault basis.” Prince v. 

Pac. Gas & Elec. Co., 45 Cal. 4th 1151, 1164 (Cal. 2009). Thus, 

to maintain a state law claim for equitable indemnification or 

contribution, a third-party plaintiff must establish that the 

third-party defendants are joint tortfeasors. 

OAC alleges that TestAmerica and the other third-party 

defendants “negligently hired, retained or supervised others to 

package and transport and ultimate[ly] dispose of their hazardous 

waste materials.” (SAC ¶ 31.) The transporters, Smith and Clean 

Harbors, allegedly did not properly package the waste substances 

to prevent spilling, tipping, or accidental discharge; take into 

account that the trailer would be stored for over a week in 

temperatures of 95 to 100 degrees Fahrenheit; or keep proper 

records of the hazardous substances transported. (Id. ¶¶ 32, 35,

39.) However, OAC failed to allege a causal relationship between 

TestAmerica’s allegedly negligent hiring and the negligent acts

of the transporters that ultimately resulted in the hazardous 

waste spill and damages. The Complaint contains only a 

conclusory statement that “[a]s a direct and proximate result of 

Third-Party Defendants’ acts or omissions, OAC has been required 

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to act in the protection of its own interests by defending 

against the Complaint filed in this action.” (SAC ¶ 65.) This 

allegation of negligent hiring, unsupported by any facts, is 

insufficient to survive the plausibility standard of Iqbal and 

Twombly. 

OAC also alleges that the third-party defendants are 

joint tortfeasors because “[t]he hazardous waste generated by 

Third-Party Defendants The Physicians Medical Group, Google, 

Inc., Test America Laboratories, Inc., and Nektar Therapeutics 

may have contributed to or caused the trailer fire.” (Id. ¶ 43.) 

Once again, OAC failed to provide any facts to establish a 

negligence claim under tort law--OAC did not allege how

TestAmerica breached a duty of care or how that breach was a 

legal cause of the trailer fire. 

As a result, OAC has failed to allege sufficient facts 

to establish that TestAmerica is a joint tortfeasor who could 

plausibly be held liable for contribution or equitable 

indemnification under state law. Accordingly, the court will 

grant TestAmerica’s motion to dismiss the fourth claim. 

IT IS THEREFORE ORDERED that TestAmerica’s motion to 

dismiss OAC’s Second Amended Complaint (Docket No. 178) be, and 

the same hereby is, GRANTED.

OAC has twenty days from the date this Order is signed 

to file a Third Amended Complaint, if it can do so consistent 

with this Order.

Dated: October 23, 2015

Case 2:13-cv-01378-WBS-AC Document 200 Filed 10/23/15 Page 9 of 9