Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-01378/USCOURTS-caed-2_13-cv-01378-26/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

AND RELATED ACTIONS.

----oo0oo----

Third-party defendant Smith Systems Transportation 

(“Smith”) filed a Third-Party Complaint in this action against 

TestAmerica Laboratories, Inc. (“TestAmerica”),

1 Oahu Air 

Conditioning Service, Inc. (“OAC”), Pacific Commercial Services, 

 

1 TestAmerica Laboratories Inc. was incorrectly sued as 

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

TestAmerica in this Order. 

Case 2:13-cv-01378-WBS-AC Document 210 Filed 12/15/15 Page 1 of 8
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LLC (“PCS”), The Physicians Medical Group, Google Inc., and 

Nektar Therapeutics seeking contribution, declaratory relief, and 

equitable indemnity for expenses incurred by Smith in responding 

to the release of hazardous substances at Elder Creek Yard. 

(Docket No. 181.) Third-party defendant TestAmerica now moves to 

dismiss Smith’s Third-Party Complaint for failure to state a 

claim upon which relief may be granted pursuant to Federal Rule 

of Civil Procedure 12(b)(6). (Docket No. 193.) 

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. Atl. 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. 

Contribution is determined as a percentage of fault. Atl.

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 

Case 2:13-cv-01378-WBS-AC Document 210 Filed 12/15/15 Page 2 of 8
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(“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)). Compliance with the NCP is thus 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 were 

necessary and consistent with the NCP); Carson Harbor Vill., Ltd. 

v. Unocal Corp., 287 F. Supp. 2d 1118, 1153 (C.D. Cal. 2003) 

(“The Ninth Circuit has consistently stated that incurring 

response costs that are necessary and consistent with the NCP is 

an essential element of a private CERCLA action.”). 

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

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

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

CERCLA contribution claim. Smith alleges that “demand and notice 

of violation was made upon Smith Systems for cleanup and payment 

for the cleanup of the hazardous waste and damages that resulted 

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from the” fire. (Smith’s Third-Party Compl. (“Smith Compl.”) ¶ 

30.) It alleges that it “has incurred response costs because of 

the fire and explosion.” (Id. ¶ 31.) However, nowhere does 

Smith allege that its response costs were necessary or consistent 

with the NCP. 

Carolina Casualty’s FAC, which is incorporated by 

reference, alleges that it “has paid for the response to the fire 

and for the hazardous waste clean-up in excess of $75,000.00” but 

also does not allege NCP compliance. (Carolina Casualty FAC 

¶ 23.) Smith and Carolina Casualty do not contest this 

shortcoming in their opposition to the motion to dismiss. (Smith 

Opp’n at 3 (Docket No. 204).) Instead, the parties request leave 

of the court to amend their complaints “based on . . . the issues 

raised in Test America Laboratories, Inc.’s motion to dismiss . . 

. including the absence of allegations regarding CCIC’s and Smith 

System’s compliance with the National Contingency Plan.” (Id.) 

Accordingly, the court will grant TestAmerica’s motion to dismiss 

Smith’s section 113(f) claim. 

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 

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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 Smith did not sufficiently plead NCP 

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

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

declaratory relief on the same grounds must also be granted. 

Claim 3: Contribution or Indemnity under the Hazardous 

Substance Account Act

In its third claim, Smith alleges it is entitled to 

contribution or indemnity pursuant to the Hazardous Substance 

Account Act (“HSAA”). Under HSAA, “[a]ny person who has incurred 

removal or remedial action costs in accordance with this chapter 

or the federal act may seek contribution or indemnity from any 

person who is liable pursuant to this chapter.” Cal. Health & 

Safety Code § 2563(e). “HSAA is interpreted consistent with 

CERCLA.” United Alloys, Inc. v. Baker, 797 F. Supp. 2d 974, 1004

(C.D. Cal. 2011). HSAA “expressly incorporates the liability 

standards and defenses set forth in CERCLA and creates liability 

for the same classes of persons.” Id. at 1004-05. Any response 

actions taken and costs incurred must “be based upon, and no less 

stringent than” the requirements of the NCP. Cal. Health & 

Safety Code § 25356.1.5(a)(1); see also Chubb Custom Ins. Co. v. 

Space Sys./Loral Inc., Civ. No. 09-4485 JF PVT, 2010 WL 689940, 

at *9 (N.D. Cal. Feb. 23, 2010). “HSAA incorporates the NCP

standard by reference.” Fireman’s Fund Ins. Co. v. City of Lodi, 

302 F.3d 928, 949 (9th Cir. 2002).

As discussed above, Smith failed to allege NCP 

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compliance and, as a result, its HSAA claim must also fail. 

Accordingly, the court must dismiss Smith’s HSAA claim.2

Claim 4: Equitable Indemnification and Contribution under 

State Law

In its fourth claim, Smith alleges it is entitled to 

indemnification and contribution from TestAmerica and the other 

third-party defendants under state law. Smith agreed at the 

hearing to dismiss this claim if it is given leave to amend its 

first three claims. Accordingly, the court need not address 

TestAmerica’s motion to dismiss Smith’s fourth claim.

Leave to Amend

Carolina Casualty joined in Smith’s opposition to 

TestAmerica’s motion to dismiss. (Smith Opp’n.) While 

TestAmerica’s motion to dismiss relates only to Smith’s ThirdParty Complaint, Smith’s Third-Party Complaint incorporates by 

reference Carolina Casualty’s Complaint and both parties are 

represented by the same law firm. (Smith Compl. ¶ 4.) 

In their joint opposition, both Smith and Carolina 

Casualty request leave of the court to amend their complaints

based on newly discovered evidence regarding OAC and PCS’s 

responsibility for overfilling the waste refrigerant drum and the 

 

2 TestAmerica argues that Smith’s HSAA claim must be 

dismissed because Smith “failed to sufficiently allege 

TestAmerica’s status as a [potentially responsible party] with 

regard to a released hazardous substance.” (TestAmerica Mot. to 

Dismiss at 13.) TestAmerica contends that because not all of the 

substances identified on the trailer are CERCLA hazardous 

substances, the Complaint does not sufficiently allege that each 

of the third-party defendants is responsible for each of the 

substances. (Id. at 12.) The court need not address this 

argument given that the claim must be dismissed for failure to 

allege NCP compliance. 

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issues raised by TestAmerica regarding NCP compliance. (Smith 

Opp’n at 3.) The parties contend that their depositions of OAC 

and PCS corporate representatives confirmed that “the Sacramento 

Fire Department was right. Oahu overfilled the Drum with PCS’s 

consent,” causing over-pressurization and an explosion. (Smith 

Opp’n at 3.) The depositions and OAC’s written records allegedly 

reveal that OAC poured 54.125 gallons of refrigeration oil into 

the drum, or 98.4% of its capacity, and PCS did not inspect the 

volume of liquid because it believed the temperatures it would 

encounter in California were irrelevant to its safe transport. 

(Id.) 

“[I]n dismissals for failure to state a claim, a

district court should grant leave to amend . . . unless it 

determines that the pleading could not possibly be cured by the 

allegation of other facts.” Cook, Perkiss & Liehe, Inc. v. N. 

Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990). 

Accordingly, the court grants Smith leave to amend its first 

three claims.

With respect to Carolina Casualty, this court issued a 

scheduling order in Carolina Casualty’s case against the original 

defendants on April 3, 2014. (Docket No. 47.) The scheduling 

order provided that no further amendments to pleadings would be 

permitted except with leave of court, good cause having been 

shown under Federal Rule of Civil Procedure 16(b). See Johnson 

v. Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992). 

Given the new evidence discovered during depositions and the 

related flaws in Smith and Carolina Casualty’s complaints, the 

court finds good cause and also grants Carolina Casualty leave to 

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amend. 

IT IS THEREFORE ORDERED that TestAmerica’s motion to 

dismiss Smith’s Complaint (Docket No. 181) be, and the same 

hereby is, GRANTED.

Smith has thirty days from the date this Order is 

signed to file a First Amended Third-Party Complaint, if it can 

do so consistent with this Order. Carolina Casualty has thirty 

days from the date this Order is signed to file a Second Amended 

Complaint, if it can do so consistent with this Order.

Dated: December 15, 2015

Case 2:13-cv-01378-WBS-AC Document 210 Filed 12/15/15 Page 8 of 8