Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-02222/USCOURTS-caed-2_03-cv-02222-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

EXXON MOBIL CORPORATION,

NO. CIV. S-03-2222 WBS PAN

Plaintiff, 

v. MEMORANDUM AND ORDER

RE: RULE 37(B), 37(D) MOTION

FOR SANCTIONS

NEW WEST PETROLEUM L.P., NEW

WEST PETROLEUM, LLC, NEW WEST

PETROLEUM, NEW WEST STATIONS,

INC. and NEW WEST LLC

Defendants.

-----------------------------

AND RELATED THIRD-PARTY

CLAIMS, CROSS-CLAIMS AND

COUNTERCLAIMS

----oo0oo----

This litigation concerns which party is contractually

responsible for paying the costs of cleaning up pollution at 3430

Northgate Boulevard in Sacramento (“the Property”). Federal

jurisdiction is based on diversity of citizenship (28 U.S.C. §

1332). There are two motions before the court. First, New West

Petroleum L.P., New West Petroleum, LLC, New West Petroleum, and

New West Stations, Inc. (collectively, “New West”) move the

Case 2:03-cv-02222-WBS-EFB Document 216 Filed 07/06/05 Page 1 of 14
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1 For a more detailed history, see the June 7, 2005 Order

of this court.

2

court, pursuant to Federal Rules of Civil Procedure 37(b) and

37(d), to deem certain facts established. Second, New West moves

to delay trial from July 26, 2005 to August 15, 2005. 

I. Factual and Procedural History

This case revolves around a series of contracts for the

sale of a gasoline station (the “gas station”) and the assignment

of the lease of the Property on which that gas station is

located. ExxonMobil (“Exxon”) sold the gas station to New West

Petroleum (“NWP”) in 1998. NWP LLC purported to sell the gas

station to cross-defendant, counterdefendant, and

countercomplainant Sartaj Singh Bains in 2000. The Property is

apparently contaminated with petroleum hydrocarbons. Exxon has

been remediating that contamination, and seeks reimbursement from

New West for the costs of remediation Exxon alleges that NWP

contractually agreed to undertake.1

New West alleges discovery abuse by Exxon. On January

28, 2005, New West noticed the deposition of the Exxon

corporation. (Malysiak Decl. in Supp. of Mot. for Order

Establishing Certain Facts Exs. A-1, A-2). The notice requested,

regarding 23 topics of testimony, that Exxon produce a witness or

witnesses familiar with each of those topics. (Id.). A little

over a month later, on March 2, 2005, New West filed a document

entitled “Motion to Extend the Date to Complete Depositions, and

for Sanctions.” Contained in that motion was a section in which

New West argued that Exxon had not produced witnesses to respond

to all the topics New West included in its January 28, 2005

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3

notice. (New West’s Mot. to Extend Date to Complete Depositions

at 9-11). In response, on March 22, 2005, the court ordered

“that the deposition of Exxon noticed by Defendant New West

Petroleum will be conducted at a mutually agreeable date(s) and

time(s), and that the objections to such deposition notice are to

be submitted to Magistrate Judge Peter Nowinski.” (March 22, 2005

Order at 2). 

New West claims that Exxon did not produce a witness

for topics 3, 4, 12, and 22. Topic 3 concerns “[t]he methods

used by Exxon to determine the market value of the station during

the summer of 1998.” Topic 4 concerns “[t]he methods used by

Exxon to determine the market value of retail gasoline stations

during the summer of 1998.” (Malysiak Decl. in Supp. of Mot. for

Sanctions Ex. A-1). Topic 12 concerns “Exxon’s operation of the

station.” Topic 22 concerns “[t]he installation of the

[underground storage tanks (“USTs”)] at the Property, and any

upgrades to the USTs at the Property by Exxon.” (Id. Ex. A-2).

New West’s counsel sent a letter to Exxon’s counsel on

April 5, 2005. (Malysiak Decl. in Supp. of New West’s Mot. for 

Order Establishing Certain Facts Ex. M). That letter made an

offer to resolve the issues regarding topics 3, 4, and 22. New

West offered to withdraw its request for a witness responsive to

topics 3 and 4 if Exxon would abandon the argument that New West

Petroleum paid less than fair market value for the station. New

West further offered to withdraw its request for an Exxon

deponent on issue 22 if Exxon would “simply admit the genuineness

of the documents that it has produced with respect to the

installation and permits to operate the underground storage tank

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4

and lines.” (Id.).

Exxon’s counsel sent a letter, using the United States

Postal Service, to New West’s counsel in reply to New West’s

offer on April 14, 2005. (Miguel Aff. in Opp’n to New West’s

Mot. for Order Establishing Certain Facts ¶¶ 3, 4). New West’s

counsel did not receive that letter, and saw it for the first

time on June 24, 2005. (Malysiak Decl. in Supp. of Reply to

Opp’n to New West’s Mot. for Order Establishing Certain Facts ¶

2). The April 14, 2005 letter from Exxon’s counsel accepted New

West’s offer as to topics 3 and 4; that is, Exxon would not argue

at trial that New West had paid less than market value for the

gas station. (Miguel Decl. in Opp’n to New West’s Mot. for 

Order Establishing Certain Facts ¶ 6; id. Ex. 1 (April 14, 2005

Miguel letter)). Regarding topic 22, Exxon’s counsel wrote: “if

you identify those documents that you want authenticated, we will

seriously consider your proposal.” (Id. Ex. 1 (April 14, 2005

letter)). 

New West now seeks a sanction against Exxon in the form

of an order that would deem certain facts as established. The

facts that New West seeks to have established are the following:

(A) Exxon took no action to find the cause of the petroleum

hydrocarbon contamination of the Property that was reported

in the Initial Subsurface Investigation Report;

(B) Exxon took no action to fix or repair the cause of the

petroleum hydrocarbon contamination of the Property that was

reported in the Initial Subsurface Investigation Report;

(C) That the petroleum hydrocarbon contamination that

existed on the [P]roperty on September 29, 1998 was from an

“unauthorized release” as defined in California Health &

Safety Code § 25295.5, that occurred while Exxon operated

the gas station[;]

(D) The terms of the Purchase and Sale Agreement between

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2 If a party or an officer, director, or managing agent

of a party or a person designated under rule 30(b)(6)

or 31(a) to testify on behalf of a party fails to obey

an order to provide or permit discovery, including an

order made under subdivision (a) of this rule or Rule

35, or if a party fails to obey an order entered under

Rule 26(f), the court in which the action is pending

may make such orders in regard to the failure as are

just, and among others the following:

(A) An order that the matters regarding which the order

was made or any other designated facts shall be taken

to be established for the purposes of the action in

accordance with the claim of the party obtaining the

order. . . .

Fed. R. Civ. P. 37(b)(2). 

3 If a party or an officer, director, or managing agent

of a party or a person designated under Rule 30(b)(6)

or 31(a) to testify on behalf of a party fails (1) to

appear before the officer who is to take the

deposition, after being served with a proper notice, or

(2) to serve answers or objections to interrogatories

submitted under Rule 33, after proper service of the

5

Exxon and New West was [sic] unconscionable and an adhesion

contract.

(New West’s Mot. for an Order Establishing Certain Facts at 7). 

In a separate motion, New West also seeks to move the trial date

from July 26, 2005 to August 15, 2005. 

II. Discussion

A. Motion to deem certain facts established

Federal Rule of Civil Procedure 37(b) permits a court

to issue an order establishing certain facts as a sanction

against a party which does not obey a court order issued pursuant

to the rules of discovery.2 Federal Rule of Civil Procedure

37(d) permits a court to issue an order with the same effect if a

party representative refuses to attend a properly noticed

deposition.3

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interrogatories . . . the court in which the action is

pending on motion may make such orders in regard to the

failure as are just, and among others it may take any

action authorized under subparagraphs (A), (B), and (C)

of subdivision (b)(2) of this rule. . . .

Fed. R. Civ. P. 37(d) 

6

1. New West has not been prejudiced

New West argues that Exxon’s alleged discovery

misconduct meant they were not able to adequately present their

argument, in their recent motion for partial summary judgment,

that Exxon breached its warranty contained in the lease

assignment from Exxon to New West Petroleum, L.P. (See New

West’s Mot. for Order Establishing Certain Facts at 9; see also

June 7, 2005 Order). In the part of the June 7, 2005 Order

addressing New West’s breach of warranty argument, the court

noted that “New West presents no evidence that Exxon did not

maintain underground storage tanks with secondary containment and

a continuous monitoring system.” (June 7, 2005 Order at 22). 

Defendants argue that the reason they were not able to provide

the court with that evidence was Exxon’s refusal to comply with

its discovery requests, and that therefore they were prejudiced.

This argument fails. New West’s partial summary

judgment argument was that Exxon breached a warranty and that

therefore New West was entitled to summary judgment holding that

any release of petroleum hydrocarbons by New West was excused. 

The court denied this motion on two separate grounds: (1) the

lack of evidence presented by New West that Exxon had breached

the warranty; (2) even if New West had shown that Exxon had

breached the warranty Exxon made in the lease assignment to New

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4 Malysiak also states that Miguel did not send the

letter. (Malysiak Decl. in Reply to Exxon’s Opp’n to New West’s

Mot. for Order Establishing Certain Facts ¶ 3). As this is

beyond Malysiak’s personal knowledge, he is not competent to

testify to this fact. See Fed. R. Evid. 602. 

7

West, that would not have excused New West’s performance under

the purchase and sale agreement. (Id. at 21-22). Therefore,

because there were entirely separate and sufficient grounds upon

which to deny New West’s motion, Exxon’s alleged refusal to

provide the requested information did not prejudice New West.

2. Topics 3 and 4

Exxon’s counsel Miguel states in his affidavit that he

sent a letter, via United States Postal Service first class mail,

accepting Malysiak’s conditions with regard to topics 3 and 4. 

(Miguel Aff. in Opp’n to New West’s Mot. for Establishing Certain

Facts ¶ 4, Ex. 1 (letter)). Malysiak states that he never

received the letter. (Malysiak Decl. in Reply to Exxon’s Opp’n

to New West’s Mot. for Order Establishing Certain Facts ¶ 2).4

Because this situation involves New West’s counsel’s

offer to resolve some discovery disputes, and Exxon’s counsel’s

purported acceptance, the court draws upon contract law to

determine whether Miguel’s acceptance was effective.

California Civil Code § 1583 provides that “Consent [to

an offer] is deemed to be fully communicated between the parties

as soon as the party accepting a proposal has put his acceptance

in the course of transmission to the proposer [offeror].” That

the offeror did not receive the acceptance is not relevant to the

inquiry whether a contract was formed. Palo Alto Town & Country

Vill., Inc. v. BBTC Co., 11 Cal. 3d 494, 497, 501 (1974).

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8

Therefore, there was an agreement between Exxon’s

counsel Miguel and New West’s counsel Malysiak. Exxon’s counsel

agreed that he will not argue at trial that New West paid less

than fair market value for the gas station. (Miguel Decl. in

Opp’n to New West’s Mot. for Establishing Certain Facts ¶ 6, Ex.

1 (April 14, 2005 Miguel letter)). Therefore, New West’s

argument that Exxon did not produce any witnesses for topics 3 or

4 is moot; at the time the witnesses were to be produced, the

parties already had an agreement that New West would not require

Exxon to produce witnesses with knowledge in those two areas.

3. Topic 22

Miguel’s letter of April 14, 2005 did not operate as an

acceptance of New West’s offer regarding topic 22. New West’s

counsel indicated that New West would not require Exxon’s

deposition testimony on topic 22 if Exxon would “admit the

genuineness of the documents that it has produced with respect to

the installation and permits to operate the underground storage

tank and lines.” (Malysiak Decl. in Supp. of New West’s Mot. for

Order Establishing Certain Facts Ex. M (April 5, 2005 Malysiak

letter)). Exxon’s counsel Miguel answered that “if you identify

those documents that you want authenticated, we will seriously

consider your proposal.” (Miguel Decl. in Opp’n to New West’s

Mot. for Order Establishing Certain Facts Ex. 1 (April 14, 2005

letter)).

This problem too can be resolved without the drastic

sanction of deeming facts established. By this order, New West

will designate the documents that it wishes Exxon to

authenticate. Exxon will authenticate those that it can. If

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9

Exxon is unable to authenticate any documents, Exxon will explain

to New West and the court the reasons for this inability.

4. Topic 12

The only remaining topic for which Exxon did not

produce a witness is topic 12, New West’s request that Exxon

designate a person familiar with “Exxon’s operation of the

station.” Exxon concedes that it has not produced a witness for

this topic. (Exxon’s Mem. in Opp’n to New West’s Mot. for Order

Establishing Certain Facts at 3).

“Exxon’s operation of the station” is an extremely

broad area of inquiry. The term could refer to Exxon’s staffing

decisions, financial decisions, product delivery schedules,

convenience store hours, the products it sells in the convenience

store, tax payments, or any number of other areas of possible

inquiry. However, this case does not revolve around any other

issue than the petroleum hydrocarbons in the ground, which party

put them there, and which party is obligated under the relevant

contracts to remediate that condition. 

To the extent that New West’s request into the

“operation of the station,” is not duplicative of other topics,

it seeks irrelevant information. New West’s topic 5 seeks an

Exxon deponent with “knowledge of any and all releases at the

Property prior to the closing date.” (Malysiak Decl. in Supp. of

Mot. for Order Establishing Certain Facts Ex. A-1). Topic 6

requests an Exxon deponent with knowledge of “communications

between Exxon and governmental agencies regarding releases at the

Property prior to the closing date.” Topic 9 requests an Exxon

deponent with knowledge of “investigation, monitoring, and/or

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10

remediation of releases on or at the Property from 1998 to

through the present.” Topic 10 seeks the same information as

topic 9 for “hydrocarbon or other materials, compounds or

substances deposited” on the Property. Topic 11 seeks

information about any disclosures Exxon made regarding its

knowledge of any releases. (Id.). Topic 18 requests a deponent

with knowledge of “[a]ny and all communications between Exxon and

its environmental consultants referring or relating to the

environmental condition of the Property prior to the closing

date.” Topic 19 requests a deponent with knowledge of “[a]ll

actions taken by Exxon to determine the cause of releases, and to

fix or repair the cause of releases, that occurred while Exxon

operated the station.” Topic 20 requests a deponent with

knowledge of “[a]ny and all communications between Exxon and its

environmental consultants referring or relating to the

environmental condition of the Property after the closing date.” 

Topic 21 requests a deponent with knowledge of “[t]he filing of

the notifications of releases with government agencies by or on

behalf of Exxon from 1996 to the present.” (Id. Ex. A-2). 

These topics all concern Exxon’s operation of the

station insofar as it is relevant to this action. If who New

West wanted to depose was the “manager” of the station, New West

could have so stated. New West has not informed the court that

Exxon has withheld a witness on any of these topics. New West

has also not informed the court of any relevant information it

sought through the “operation of the station” inquiry that was

not covered by another topic of inquiry. Therefore, to the

extent that Exxon did not produce a witness for topic 12, the

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5 In addition, New West pointed to the motion regarding

whether certain facts should be established as justification for

moving the trial date. One remedy New West was seeking under

that motion (discussed in the previous section) was an additional

opportunity to depose Exxon witnesses. As the court does not

grant that relief, New West cannot rely on those grounds in its

motion to move the trial date.

11

error is harmless. No sanctions will issue against Exxon on this

matter. See Fed. R. Civ. P 37(d)(issuance of sanctions

discretionary).

B. Motion to move trial date

New West moves the court to change the date of the

first day of the trial from July 26, 2005 to Monday, August 15,

2005. Exxon opposes the motion.

New West makes its motion on three grounds: (1) to

facilitate settlement; (2) Gilbert Moore, who controls the four

New West entities, has booked a trip to Europe, and is scheduled

to leave on July 31, 2005; (3) New West’s inability to reach Hans

Herb, an expert in environmental law retained by New West.5

Third party defendant, counterclaimaint, and cross-claimant

Sartaj Singh Bains, does not object to moving the trial date. 

(New West’s Mot. to Continue Trial Date ¶ 12).

All parties participated in a settlement conference, as

mandated by Local Rule 16-270, before the assigned magistrate in

March 2004. (Exxon’s Opp’n to New West’s Mot. to Continue Trial

Date at 2). Exxon has offered to hold settlement talks if New

West starts its offer to Exxon at $100,000 or greater. (New

West’s Mot. to Continue Trial ¶ 5). New West is presently

unwilling to make such a commitment. (Id. ¶ 6). There is no

indication that continuing the trial date by twenty days will

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6 The movement of the trial date from July 6, 2005 to

June 28, 2005 was stipulated to by all parties. However, before

the stipulation, New West had a motion pending before the court

to move the trial date to June 28, 2005 because New West’s

counsel had a family vacation planned between July 10 and July

17, 2005 of which Malysiak had failed to inform the court at the

hearing on January 28, 2005. (See New West’s February 8, 2005

Motion to Modify Trial Date at 3).

7 New West’s counsel does not inform the court when Moore

returned from the Galapagos Islands.

12

force, or even encourage, the parties to negotiate, especially

since New West represents that, should the court grant the

motion, Moore will be out of the country for most, if not all, of

that period.

The next question is whether Moore’s planned vacation

to Europe is sufficient grounds to delay this trial. The trial

date has already been changed three times. (See January 24, 2005

Order(moving trial date from June 1, 2005 to July 6, 2005

pursuant to defendant’s motion); February 28, 2005 Order(moving

trial date from July 6, 2005 to June 28, 2005);6 April 26, 2005

Order and April 27, 2005 Order(moving trial date from June 28,

2005 to July 26, 2005). New West’s counsel contends that when

the parties moved the trial date the last time, in April 2005,

the apparently well-traveled Moore was in the Galapagos Islands

and was thus unable to consult with New West’s counsel on the

movement of the trial date. (New West’s Mot. to Continue Trial ¶

10). Nowhere in the papers does New West’s counsel explain why

New West waited until June 17, 2005 to move to continue the trial

date.7 

Exxon argues that it will be prejudiced by a change in

trial date. Exxon claims that the availability of its witnesses

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8 Not including Gilbert Moore. (See Exxon Pretrial

Statement at 10).

9 Exxon, as the plaintiff in this case, will present its

witnesses first.

13

in mid-August is uncertain. (Exxon’s Opp’n to New West’s Mot. to

Continue Trial at 5-6). Exxon also argues that it would be

prejudiced because Exxon alone is currently paying all

remediation costs. (Id. at 5).

Exxon is entitled to rely on the trial date as

scheduled. Presumably all parties have informed their witnesses

that July 26, 2005 is the first day of trial. Exxon should not

have to tell its eight witnesses,8 less than a month before the

trial is scheduled to begin, that they must reschedule any plans

they have made for the latter half of August because one man,

Gilbert Moore, neglected in April to tell the court through

counsel that he had a vacation scheduled for the last days of

July.9 The fact that Moore and the counsel representing the

entities that Moore controls had not set up a way to communicate

while Moore was away in the Galapagos Islands does not justify

requiring Exxon’s witnesses to change their summer plans on such

short notice.

The next question is whether New West’s inability to

contact the expert Hans Herb is sufficient to delay trial. It is

not. New West was able to reach Herb after filing the motion to

move the trial date, and New West filed its offer of proof

regarding Herb’s testimony on June 20, 2005. This allows

sufficient time before trial for Herb’s proposed testimony to be

challenged, if necessary, by Exxon, and also allows sufficient

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time for the court to rule on any challenges. Therefore this

reason too is insufficient to move the trial date. 

IT IS THEREFORE ORDERED that:

(1) Exxon be, and hereby is, precluded from arguing at

trial that any of the New West entities paid less than market

value for the gas station;

(2) New West identify the documents it wishes Exxon to

authenticate within five days of the file stamp of this order,

and submit that request to the court;

(3) Exxon authenticate the documents requested for

authentication by New West, or file a written explanation of why

it is unable to do so for any given document, within five days of

the filing of New West’s request for authentication;

(4) New West’s motion to continue the trial date be,

and the same hereby is, DENIED.

DATED: July 5, 2005

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