Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-01510/USCOURTS-caed-2_05-cv-01510-14/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 42:9607 Real Property Tort to Land

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

ADOBE LUMBER, INC., a

California corporation,

Plaintiff, NO. CIV. 05-1510 WBS PAN

v.

MEMORANDUM AND ORDER RE: F. WARREN HELLMAN and WELLS DEFENDANTS’ MOTIONS TO

FARGO BANK, N.A., as Trustees DISMISS PLAINTIFF’S NINTH,

of Trust A created by the TENTH, AND ELEVENTH CLAIMS FOR

Estate of Marco Hellman; F. RELIEF

WARREN HELLMAN as Trustee of

Trust B created by the Estate

of Marco Hellman; THE ESTATE

OF MARCO HELLMAN, deceased;

WOODLAND SHOPPING CENTER, a

limited partnership; JOSEPH

MONTALVO, an individual; 

HAROLD TAECKER, an individual; 

GERALDINE TAECKER, an 

individual; HOYT CORPORATION, 

a Massachusetts corporation; 

PPG INDUSTRIES, INC., a 

Pennsylvania corporation; 

OCCIDENTAL CHEMICAL 

CORPORATION, a New York 

corporation; CITY OF WOODLAND;

and ECHCO SALES & EQUIPMENT 

CO., 

Defendants.

_____________________________/

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----oo0oo----

Plaintiff Adobe Lumber, Inc. filed this action in

response to its discovery of contamination in the subsurface soil

and groundwater of a retail property it owns in Woodland,

California. Defendant Hoyt Corporation (“Hoyt”) and defendants

Occidental Chemical Corporation (“Occidental”) and PPG

Industries, Inc. (“PPG”) separately move to dismiss plaintiff’s

ninth, tenth, and eleventh claims for strict product liability,

negligence, and negligence per se, respectively for failure to

state a claim upon which relief can be granted. Fed. R. Civ. P.

12(b)(6).

I. Factual and Procedural Background

To avoid repetition of its January 4, 2006 Order, the

court will limit its discussion to the factual and procedural

events that are relevant to defendants’ pending motions. See

Adobe Lumber, Inc. v. Hellman, 415 F. Supp. 2d 1070, 1072-74

(E.D. Cal. 2006), vacated on other grounds, Kotrous v.

Goss-Jewett Co. of N. Cal., 523 F.3d 924, 934 (9th Cir. 2008). 

The following facts are alleged in the TAC.

Plaintiff is the owner of a shopping center located at

120 Main Street in Woodland, California (“Site”). (Third Am.

Compl. (“TAC”) ¶¶ 3, 23.) When plaintiff purchased the Site in

1998, defendants Harold and Geraldine Taecker operated a dry

cleaning business in Suite K, a location they had leased for that

purpose since 1974. (Id. at ¶¶ 4, 20.) Plaintiff continued to

lease this space to the Taeckers through October 2001. (Id. at ¶

23.) 

In conducting their dry cleaning business, the Taeckers

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used equipment that Hoyt manufactured and the dry cleaning

solvent perchloroethylene (PCE) that PPG and Occidental

manufactured. (Id. at ¶¶ 10-12, 26.) Between 1974 and 1991, the

Taeckers allegedly disposed of wastewater contaminated with PCE

through “the sanitary sewer system and otherwise so it might

enter the environment.” (Id. at ¶ 28.) Several sudden and

accidental discharges of PCE at the Site also occurred between

approximately 1974 and 1994. (Id. at ¶ 29.) The TAC alleges

that defendants Hoyt, Occidental, and PPG designed, manufactured,

marketed, and/or supplied dry cleaning equipment and PCE that,

when used as directed, resulted in the disposal of PCE into the

sewer system and environment. (Id. at ¶ 25.) The Hoytmanufactured dry cleaning equipment was removed from the

Taeckers’ operation “in or around 1998.” (Id. at ¶ 40.)

“In or around August 2001,” plaintiff learned of the

presence of PCE and other contaminates in the soil and

groundwater beneath the Site through the results of a “limited

subsurface investigation” it voluntarily conducted. (Id. at ¶

34.) Thereafter, plaintiff informed the Yolo County

Environmental Health Department and the California Regional Water

Quality Control Board, Central Valley Region (“Regional Board”)

of the results of its investigation and demanded, in September

2001, that the Taeckers “assume responsibility for and incur the

cost to further investigate, test, assess, study, monitor, and

remediate the contamination at the Site.” (Id. at ¶¶ 35-36.) 

The Taeckers rejected plaintiff’s demand and allegedly refused to

respond to the contamination. (Id. at ¶ 36.)

In October 2001, the Regional Board directed the

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Taeckers to submit a work plan for the investigation of the

contamination at the Site. (Id. at ¶ 37.) When the Taeckers

refused to comply, plaintiff filed a separate action against them

in January 2002 in this court, captioned Adobe Lumber, Inc. v.

Taecker, et al., Case No. CV S-02-0186-GEB-GGH (“Adobe I”), for

“recovery of costs to investigate and remediate the contamination

at the [S]ite, a declaration of liability for future

investigation and cleanup costs, and damages under various statelaw tort theories.” (Id.) In that litigation, plaintiff also

“sought to discover the facts as to the Taeckers’ dry cleaning

operations as another basis for identifying potential source(s)

of contamination and related liability therefor.” (Id. at ¶¶ 37,

40.)

In April 2002, the Regional Board first requested that

plaintiff submit a work plan–-the same plan previously requested

of the Taeckers–-to investigate the nature, extent, and possible

sources of contamination at the Site. (Id. at ¶¶ 38-39.) 

Plaintiff complied with the Regional Board’s request and, after

receiving comments on its work plan, implemented the revised work

plan and reported the results to the Regional Board in November

2002. (Id.) 

Separately, as part of pre-trial discovery in Adobe I,

the Taeckers served their initial disclosures on plaintiff in

July 2002. (Id. at ¶ 40.) In June 2003, in response to

plaintiff’s first discovery requests, the Taeckers disclosed “for

the first time . . . that they had discharged PCE-contaminated

wastewater from their dry cleaning equipment through a floor

drain” between 1974 and 1991. (Id.) During his deposition in

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April 2004, Harold Taecker also testified for the first time that

Hoyt manufactured the dry cleaning equipment that produced the

PCE-contaminated wastewater and that a company named Echco

delivered PCE to the dry cleaning facility during most of its

operation. (Id.) After the April 2004 deposition, and in

preparation of expert testimony in Adobe I, plaintiff “happened

to come upon documents” produced in an unrelated lawsuit that

revealed that “Echco distributed PCE manufactured by PPG and

Occidental, and PPG, Occidental and Hoyt instructed end-users of

their products to dispose of PCE into the sewer system, onto the

ground or otherwise into the environment.” (Id.)

Plaintiff filed its initial Complaint and First Amended

Complaint (FAC) in this action on July 27, 2005 and August 29,

2005, respectively, naming Hoyt, PPG, and Occidental as

defendants. After plaintiff filed its Complaint in the present

action, the court dismissed Adobe I without prejudice. On

October 24, 2005, defendants Hoyt, PPG, and Occidental moved to

dismiss plaintiff’s product liability claims as alleged in the

FAC as time barred. This court granted those motions, finding

that plaintiff had failed to plead sufficiently its diligence in

investigating its claims under the requirements of California’s

discovery rule. See Adobe Lumber, Inc. v. Hellman, 415 F. Supp.

2d 1070, 1081 (E.D. Cal. 2006). 

In response, plaintiff filed its Second Amended

Complaint (SAC) on February 3, 2006. Thirteen days after

plaintiff filed its SAC, however, the court stayed this action

after granting interlocutory appeal of its January 4, 2006 Order

on different grounds. After the Ninth Circuit rendered a

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decision on the appeal, Kotrous v. Goss-Jewett Co. Of N. Cal.,

Inc., 523 F.3d 924 (9th Cir. 2008), the case was reopened on May

15, 2008 and plaintiff filed its Third Amended Complaint (TAC) on

June 27, 2008. 

Defendants Hoyt PPG and Occidental now move to dismiss

the product liability and negligence claims in plaintiff’s TAC

pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure

to state a claim upon which relief can be granted.

II. Discussion

On a motion to dismiss, 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 needs to

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

plausible on its face.” Bell Atl. Corp. v. Twombly, 127 S. Ct.

1955, 1974 (2007). Dismissal is appropriate, however, where the

plaintiff fails to state a claim supportable by a cognizable

legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696,

699 (9th Cir. 1990); see also Conley v. Gibson, 355 U.S. 41, 47

(1957), abrogated on other grounds by Twombly, 127 S. Ct. at 1968

(complaint must “give the defendant fair notice of what the

plaintiff’s claim is and the grounds upon which it rests”). 

When examining a plaintiff’s complaint, “the court is not

required to accept legal conclusions cast in the form of factual

allegations if those conclusions cannot reasonably be drawn from

the facts alleged.” Clegg v. Cult Awareness Network, 18 F.3d

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752, 754-55 (9th Cir. 1994).

Defendants argue that plaintiff’s strict liability,

negligence and negligence per se claims are time barred. 

Generally, a cause of action accrues, and thus the statute of

limitations begins to run, “‘when the claim is complete with all

of its elements.’” Platt Elec. Supply, Inc. v. Eoff Elec., Inc.,

522 F.3d 1049, 1054 (9th Cir. 2008) (citations omitted); Fox v.

Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 806 (2005)

(citations omitted). The discovery rule, however, postpones

accrual of the claim “‘until the plaintiff either discovers or

has reason to discover the existence of a claim, i.e., at least

has reason to suspect a factual basis for its elements.’” Platt,

522 F.3d at 1054 (citations omitted); Norgart v. Upjohn Co., 21

Cal. 4th 383, 397 (1999). The question is not whether a

plaintiff suspects “facts supporting each specific legal element

of a particular cause of action[,]” but rather “whether the

[plaintiff has] reason to at least suspect that a type of

wrongdoing has injured [it].” Fox, 35 Cal. 4th at 807.

The discovery rule allows claims based on distinct

types of wrongdoing to accrue at different times, even though the

claims arise out the same injury to a plaintiff. Fox, 35 Cal.

4th at 813 (holding that a plaintiff’s product liability claim

regarding a faulty medical device used in a procedure accrued

after the accrual of plaintiff’s medical malpractice claim

related to the same procedure). To delay accrual for a distinct

claim, a plaintiff must plead and prove that a “reasonable

investigation” at the time plaintiff had reason to suspect an

injury and some wrongful cause “would not have revealed a factual

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basis for that particular cause of action.” Fox, 35 Cal. 4th at

803 (emphasis added). The discovery rule thus delays the start

of the statutory period “until such time as a reasonable

investigation would have revealed [the] factual basis [for that

claim.]” Id.

In the present action, the parties agree that

California Code of Civil Procedure section 338(b), which provides

a three-year statute of limitations, governs plaintiff’s ninth,

tenth, and eleventh claims. Adobe Lumber, Inc. v. Hellman, 415

F. Supp. 2d 1070, 1079 (E.D. Cal. 2006), vacated on other

grounds, Kotrous v. Goss-Jewett Co. of N. Cal., 523 F.3d 924, 934

(9th Cir. 2008). Plaintiff first filed its Complaint asserting

product liability claims against defendants Hoyt, PPG, and

Occidental on July 27, 2005. Because of the three-year statute

of limitations, as long as plaintiff’s claims accrued no earlier

than July 28, 2002, they will survive defendants’ motions to

dismiss.

As alleged in the TAC, plaintiff was aware of its

injury (the PCE contamination) in August 2001 when it received

the results of the subsurface study. The presence of a dry

cleaning solvent in the subsurface soil and groundwater of the

Site also provided plaintiff with reason to suspect a wrongful

cause at that point. Plaintiff’s claims based upon strict

liability, negligence and negligence per se are thus potentially

barred under the three-year statute of limitations unless

plaintiff satisfies the pleading requirements of the discovery

rule and shows that a reasonable investigation between August

2001 and July 28, 2002 would not have revealed a factual basis

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1 Although the TAC contains language, highlighted by

defendants (PPG and Occidental’s Mem. in Supp. of Mot. to Dismiss

5:5-8), suggesting that plaintiff’s product liability claims, at

least in part, rest on a theory of inherently defective product

design, plaintiff stated at oral argument and in its opposition

brief that those claims are based only on liability for

inadequate warnings and instructions, not defective design. 

(Pl.’s Opp’n to Solvent Mfr. Defs.’ Mot. to Dismiss 11:17-20.) 

See also Adobe Lumber, Inc., 415 F. Supp. 2d at 1081 n.10

(recognizing same).

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for its product liability claims.

First, a plaintiff whose claim on the face of the

complaint would otherwise be barred by the statute of limitations

“must plead facts” showing “the time and manner of discovery.”

Hopkins v. Dow Corning Corp., 33 F.3d 1116, 1120 (9th Cir. 1994); 

Servantez v. County of Sacramento, No. 07-0661, 2008 WL 686616,

at *2 (E.D. Cal. Mar. 12, 2008) (quoting Fox, 35 Cal. 4th at

808). This requirement ensures that at the point of the alleged

discovery, “plaintiffs actually learned something they did not

know before.” E-Fab, Inc. v. Account, Inc. Servs., 153 Cal. App.

4th 1308, 1325 (2007) (quoting Bennett v. Hibernia Bank, 47 Cal.

2d 540, 563 (1956)). 

Here, the TAC sufficiently pleads that plaintiff did

not discover its product liability claims until after April 2004. 

Plaintiff asserts broadly that, “despite diligent investigation,”

it “did not discover . . . a factual basis for all of the

elements of its claims against [Hoyt, PPG, and Occidental] until

on or after” July 28, 2002.1 (TAC ¶ 39.) In support of this

allegation, the TAC describes the series of disclosures during

the course of discovery in Adobe I that ultimately led to the

discovery of documents indicating that the defendants’ products

had defective warnings and instructions. Harold Taecker first

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revealed, in June 2003, that the Taeckers had discharged PCEcontaminated wastewater into the floor drain. (TAC ¶ 40.) Then,

during Harold Taecker’s April 2004 deposition, he disclosed that

Hoyt had manufactured the dry cleaning equipment used by the

Taeckers until 1998 and that Echco delivered PCE to the Taeckers

during most of its operation. (Id.) The TAC then alleges that,

while preparing expert testimony following that deposition,

plaintiff discovered documents from an unrelated case linking

Echco to PCE manufactured by PPG and Occidental and indicating

that defendants had instructed users of their products to dispose

of PCE into the sewer system and surrounding environment. (Id.) 

These facts are sufficient at least to satisfy

plaintiff’s burden of alleging the time and manner of discovery

of its claims. Although the TAC phrases most of its factual

allegations in terms of when the Taeckers first disclosed

information to plaintiff, a reasonable inference can be made that

such revelations constitute the first awareness by plaintiff of

such facts, especially in light of plaintiff’s alleged lack of

knowledge about dry cleaning processes and environmental

contamination. (TAC ¶ 23.) Moreover, the Taeckers’ disclosures

that revealed the factual basis of the claims, including

information concerning the practice of discharging wastewater

into the floor drain and the identities of the equipment

manufacturer and PCE delivery company, concern information that a

landlord in the plaintiff’s position would not ordinarily possess

absent some disclosure by another.

Mere ignorance of the identity of the wrongdoer, the

manufacturers here, is insufficient to delay accrual of a claim. 

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Here, however, it was the revelation of the defendants’

identities that led to the discovery of a factual basis of

defendants’ alleged wrongdoing, i.e., not only that PCE

contaminated water was disposed of through the floor drain, but

that defendants actually instructed users to dispose of PCE into

the sewer system, onto the ground or into the environment. See

Fox, 35 Cal. 4th at 813 (“Although the identity of the

manufacturer-wrongdoer is not an essential element of a products

liability cause of action . . . a plaintiff’s ignorance of

wrongdoing involving a product’s defect will usually delay

accrual because such wrongdoing is essential to that cause of

action.”) (citations omitted). 

Therefore, the TAC pleads sufficient facts to show

that, when the Taeckers’ disclosures led plaintiff to information

suggesting that defendants had allegedly given faulty warnings

and instructions with their products, plaintiff “actually learned

something [it] did not know before.” E-Fab, Inc., 153 Cal. App.

4th at 1325.

Second, a plaintiff seeking to invoke the discovery

rule “must plead facts to show . . . the inability to have made

earlier discovery despite reasonable diligence.” Hopkins, 33

F.3d at 1120; Servantez, 2008 WL 686616, at *2 (quoting Fox, 35

Cal. 4th at 808). The obligation to act with “reasonable

diligence” relates to plaintiff’s duty to investigate all

potential causes of an injury. Fox, 35 Cal. 4th at 808-09. 

The court finds that plaintiff has satisfied this

standard by pleading facts in support of its allegations of

reasonable diligence. Plaintiff alleges that, following the

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August 2001 study, it “promptly reported the discovery of the

contamination” to state regulatory authorities. (TAC ¶ 35.) 

Plaintiff then pursued the Taeckers, the apparent wrongdoers and

those most likely to hold information about the possible causes

of the contamination. When the Taeckers proved uncooperative and

non-responsive, plaintiff pleads that it filed an action against

them in January 2002, at least in part as a means of acquiring

information about the possible sources of the PCE contamination. 

(TAC ¶¶ 37, 40.) As pled, the mere delay of five months between

the awareness of the injury and the filing of an action to

explore possible causes of that injury is not enough to

eviscerate plaintiff’s allegations of diligence. 

In addition, none of the allegations in the TAC

concerning Adobe I suggest that plaintiff’s investigation should

have given it “reason at least to suspect a factual basis for

[the] elements” of its strict liability and negligence claims

before July 28, 2002. Norgart v. Upjohn Co., 21 Cal. 4th 383,

397 (1999). The alleged series of disclosures that led to

discovery of plaintiff’s claims did not begin until June 2003. 

There is no indication in the TAC that these disclosures could

have been induced before July 28, 2002. Defendants argue that

plaintiff’s failure to depose Harold Taecker until April 2004

demonstrates a lack of diligence (Hoyt’s Reply in Supp. of Mot.

to Dismiss 4:19-20; PPG and Occidental’s Reply in Supp. of Mot.

to Dismiss 5:12-15), however, the only relevant inquiry is

whether diligent investigation would have disclosed a factual

basis for the product liability claims before July 28, 2002,

three years prior to the filing of this action. The failure to

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depose Harold Taecker before July 28, 2002 alone does not

constitute a lack of diligence. Plaintiff has pled more than

mere conclusions in support of its diligence and has therefore

sufficiently pled the inability to have made earlier discovery of

its ninth, tenth, and eleventh claims for strict liability,

negligence and negligence per se despite reasonable diligence. 

Accordingly, the court finds plaintiff’s TAC alleges

enough facts to satisfy the pleading requirements of the

discovery rule and, therefore, to survive a motion to dismiss.

IT IS THEREFORE ORDERED that defendants Hoyt, PPG, and

Occidental’s motions to dismiss plaintiff’s strict product

liability, negligence, and negligence per se claims be, and the

same hereby are, DENIED.

DATED: October 16, 2008

 

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