Judge: Mitchell L. Beckloff, Case: 21STCP02927, Date: 2022-08-24 Tentative Ruling

Case Number: 21STCP02927    Hearing Date: August 24, 2022    Dept: 86

ALLENCO ENERGY, INC. v. NTUK, et al.

Case Number: 21STCP02927

Hearing Date: August 24, 2022

[Tentative]       ORDER OVERRULING DEMURRER TO FIRST AMENDED PETITION

[Tentative]       ORDER GRANTING COURT’S MOTION FOR JUDGMENT ON THE PLEADINGS

Respondent, Roman Catholic Archbishop (RCA), demurs to the second cause of action for declaratory relief in the first amended petition. Petitioner, AllenCo Energy, Inc., opposes the demurrer.

RCA’s request for judicial notice is granted.

The court previously stayed Petitioner’s third through tenth causes of action. This court (Department 86) is proceeding on the first cause of action for a traditional writ of mandate and the second cause of action for declaratory relief to the extent the declaratory relief claim is derivative of the first cause of action. To the extent the second cause of action is derivative of claims other than those in the first cause of action, the claim is stayed.

Petitioner’s second cause of action seeks ten judicial declarations. (Pet., ¶ 137.)

RCA demurrers to the second cause of action on three grounds: (1) Petitioner has failed to exhaust its administrative remedies and judicial review is precluded; (2) Petitioner has failed to allege sufficient facts to state a cause of action for declaratory relief; and (3) the second cause of action is uncertain.

RCA’s evidentiary objections (none of which are determinative) are sustained.

RCA’s demurrer is overruled.

The court’s motion for judgment on the pleadings is granted with leave to amend.

ALLEGATIONS IN THE PETITION

Petitioner formerly operated an oil and gas production facility in the University Park community of the City of Los Angeles pursuant to an assignment of leases with the RAC, which owns the property. (Pet., ¶¶ 1-2, 55-56.) The facility is comprised of 21 oil and gas production wells. (Pet., ¶ 1.) Three of the 21 wells extended into property owned by the City (City Wells) and those wells are subjected to a separate lease with the City. The leases for all wells were assigned to Petitioner in 2009. (Pet., ¶ 2.) Two of the three City Wells were considered the highest producing wells. (Pet., ¶ 62.) Petitioner operated the facility for four years until November 2013 when the surrounding community raised odor and health concerns, prompting a response from regulators and public officials. (Pet., ¶¶ 3, 63-64, 69.)

In 2019, the City advised Petitioner the assigned lease expired in 2014 because of Petitioner’s inactivity. (Pet., ¶¶ 5, 80-81.) Consequently, Petitioner claims the City’s lease termination frustrated the purpose of the lease with the RCA by making it impossible and financially infeasible for Petitioner to operate the facility. (Pet., ¶ 6, 83-84.) Petitioner therefore alleges its leases from both the City and RCA were terminated simultaneously. As a result, Petitioner contends it is not the current operator of the subject facility, as defined by Public Resources Code section 3009. (Pet., ¶¶ 7-10, 86-87.) Instead, the RCA and the City are the de facto operators of the facility pursuant to Public Resources Code section 3016. (Pet., ¶¶ 9-10, 23-25, 89-90, 127.) However, Petitioner asserts it became a “captive holdover tenant” because both RCA and the City refuse to comply with their obligations as owners/operators of the facility. (Pet., ¶ 95.)

On April 14, 2021, Petitioner informed RCA of its intent to abandon the facility and cease any further maintenance of it. (Pet., ¶ 12.) The parties dispute which entity is the operator of the facility based on the termination of the subsurface leases. (Pet., ¶¶ 12, 16, 18, 19-21.) To date, California Geologic Energy Management Division (CalGEM) treats Petitioner as the current operator of the facility based on the leases and requires Petitioner to maintain the facility and to abide by inspection demands. (Pet., ¶¶ 20-27. 99.)

ANALYSIS

CalGEM’s Order to Plug and Abandon Wells, Decommission Attendant Facilities, and Restore Well Site, No. 1174 (Order 1174) requires Petitioner to plug and abandon the wells and decommission the facility and restore the well site. Order 1174 is not final, and Petitioner’s administrative appeal is pending. Based on the lack of finality to Order 1174, RCA contends Petitioner has not exhausted its administrative remedies precluding judicial review.

Petitioner argues RCA “mischaracterizes” its declaratory relief claim. (Opposition 11:20.) Petitioner explains Order 1174 addresses its alleged responsibility for plugging and abandoning the wells, and Petitioner does not “disclaim potential proportional liability for that task . . .” in this proceeding. (Opposition 11: 24-25.) Petitioner contends in this action “it is being forced to maintain the Facility and wells on a day-to-day basis and to respond to CalGEM’s repeated inspection demands even though it is no longer the current operator under PRC section 3009.” (Opposition 11:26-28 [emphasis added].)

From the court’s perspective, RCA has insufficiently demonstrated how Order 1174—and the particular findings therein—inform on the ten different judicial declarations sought by Petitioner in its second cause of action. The court has stayed all causes of action except Petitioner’s first cause of action for traditional mandate and the second cause of action for declaratory relief to the extent it is derivative of the first cause of action. RCA makes no analysis of the judicial declarations sought, the first cause of action for traditional mandate and the provisions of Order 1174, if any, that inform on the claim.

Moreover, RCA does not address how the administrative proceeding involving Order 1174 relates to Petitioner’s traditional mandate claim. Petitioner contends it cannot be deemed the operator of the facility today. Petitioner argues it is being forced to maintain the facility even though it cannot be considered the current operator under Public Resources Code section 3009.

As that portion of the second cause of action before the court (and not stayed) is derivative of the first cause of action, any consideration of the second cause of action is necessarily tied to the first cause of action. RCA’s claim based on exhaustion requires an analysis of the first cause of action, what Petitioner seeks and how, if at all, the administrative appeal may impact the relief available through traditional mandate.

Petitioner’s failure to administratively exhaust its remedies as to Order 1174 requires some analysis of the first cause of action. RCA’s broad approach on its demurrer is unpersuasive. It is RCA’s obligation to tie the judicial declarations to Petitioner’s claims and then to Order 1174.

The court finds, however, Petitioner’s first cause of action for traditional mandate—as currently stated—fails to state a claim. The court will grant its own motion for judgment on the pleadings as to the first cause of action with leave to amend.

Petitioner has attempted to state a cause of action for traditional mandate in its first cause of action. Code of Civil Procedure section 1085, subdivision (a) provides in relevant part:

“A writ of mandate may be issued by any court to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station, or to compel the admission of a party to the use and enjoyment of a right or office to which the party is entitled, and from which the party is unlawfully precluded by that inferior tribunal, corporation, board, or person.”

“There are two essential requirements to the issuance of a traditional writ of mandate: (1) a clear, present and usually ministerial duty on the part of the respondent, and (2) a clear, present and beneficial right on the part of the petitioner to the performance of that duty. (California Ass’n for Health Services at Home v. Department of Health Services (2007) 148 Cal.App.4th 696, 704.) “Generally, a writ will lie when there is no plain, speedy, and adequate alternative remedy . . . .” (Pomona Police Officers’ Ass’n v. City of Pomona (1997) 58 Cal.App.4th 578, 583-584.)

“When there is review of an administrative decision pursuant to Code of Civil Procedure section 1085, courts apply the following standard of review: ‘[J]udicial review is limited to an examination of the proceedings before the [agency] to determine whether [its] action has been arbitrary, capricious, or entirely lacking in evidentiary support, or whether [it] has failed to follow the procedure and give the notices required by law.’ [Citations.]” (Id. at 584.)

Petitioner’s first cause of action is brought against CalGEM only. Petitioner seeks the following relief based on its first cause of action:

“Under the First Cause of Action, issue a peremptory writ of mandate commanding Mr. Ntuk, in his official capacity as State Oil and Gas Supervisor in charge of CalGEM, to acknowledge in writing pursuant to Public Resources Code section 3201(a) that the Company is not the current operator of the Facility and on-site wells and to otherwise refrain from regulating the Company as if it were the current operator of the Facility and wells and from relying on the Company to provide it access to the site for purposes of conducting inspections and/or performing remedial work.” (Pet., ¶ 222.)

Whether CalGEM has a mandatory, ministerial and non-discretionary duty based solely on Public Resources Code section 3201, subdivision (a) as alleged is not entirely clear. Nonetheless, it is clear that any duty arising from Public Resources Code section 3201, subdivision (a)—based on Petitioner’s allegations—has not been breached or ignored. That is, CalGEM has no “present” duty based on the facts as alleged. (See California Ass’n for Health Services at Home v. Department of Health Services, supra, 148 Cal.App.4th at 704.) Assuming Public Resources Code section 3201, subdivision (a) can serve as the basis of a duty for CalGEM, such duty has not arisen here because—as alleged by Petitioner—neither RCA nor the City have complied with Public Resources Code section 3202. (Pet., ¶¶ 18, 133.)

Public Resources Code section 3201, subdivision (a) provides in part Petitioner is not relieved of responsibility for the facility until CalGEM “acknowledges the sale, assignment, transfer, conveyance, exchange or other disposition in writing, and the person acquiring the well or production facility is in compliance with Section 3202.” (Emphasis added.) Any obligation CalGEM might have to relieve Petitioner of responsibility for the facility does not arise until after the acquiring entity notifies CalGEM “of the person’s operation.” (Pub. Resources Code § 3202, subd. (a).) CalGEM cannot relieve Petitioner of responsibility (assuming such a duty exists) until CalGEM has been notified by the new operator of its operation of the facility.

As CalGEM has no present duty (again assuming for purposes of this motion Public Resources Code section 3201 could be the basis for a duty) based on the facts as alleged by Petitioner, the first cause of action fails to state a claim for traditional mandate.

The court therefore grants its own motion for judgment on the pleadings pursuant to Code of Civil Procedure section 438, subdivisions (b)(2) and (c)(3)(B)(ii)

Based on the foregoing, RCA’s demurrer is overruled. The court’s motion for judgment on the pleadings is granted with 21 days leave to amend.

IT IS SO ORDERED.

August 24, 2022                                                                     ________________________________

                                                                                                                   Hon. Mitchell Beckloff

                                                                                                                   Judge of the Superior Court