Judge: Stephen P. Pfahler, Case: 21STCV42665, Date: 2024-04-23 Tentative Ruling
Case Number: 21STCV42665 Hearing Date: April 23, 2024 Dept: 68
Dept. 68
Date: 9-12-23 c/f 4-23-24
Case 21STCV42665
Trial Date: Not Set
SUMMARY JUDGMENT
MOVING PARTY: Defendant, Akzo Nobel Coatings, Inc.
RESPONDING PARTY: Plaintiff, Bronze-Way Plating
Corporation, et al.
RELIEF REQUESTED
Motion for Summary Judgment on the Complaint
SUMMARY OF ACTION
Beginning in 1938, with Paramount Paint & Lacquer
Co., continuing with Alfred Santana, et al., in 1973, and transitioning to
Bronze-Way Plating in 1985, until the sale of the premises to 3432 E. 15th St.,
LLC in 2017, 3424 E. 15th Street, Los Angeles, was subjected to
chemical contamination from various occupants, and subsequent groundwater
contamination.
On November 18, 2021, Plaintiff Bronze-Way Plating
Corporation filed its complaint for 1. Contribution Under the Hazardous
Substance Account Act, California Health & Safety Code Section 25300, et
Seq.; 2. Contribution; 3. Equitable Indemnity; 4. Declaratory Relief; 5.
Continuing Trespass; 6. Continuing Nuisance; and, 7. Negligence. On January 31,
2022, Alfred Santana, Al Santana, Trustee of the Administration Trust of the
John A. Martinez Living Trust; Virginia Santana; and 3432 E. 15th St., LLC,
answered the complaint and filed a cross-complaint against Bronze-Way Plating
Corporation; Paramount Paint & Lacquer Co.; Chemcraft International, Inc. A
North Carolina Corporation; and Surface Protection Industries, Inc., A
Suspended California Corporation for Breach of Contract, Express Indemnity,
Equitable Indemnity, Indemnity or Contribution under California Health and
Safety Code section 25363, Continuing Nuisance, Common Law Contribution,
Negligence, and Declaratory Relief.
On April 18, 2022, the clerk entered a default against
Chemcraft International, Inc., a North Carolina Corporation, on the complaint. On
June 17, 2022, Plaintiff dismissed Paramount Paint & Lacquer Co. and
Surface Protection Industries, Inc. without prejudice.
On July 12, 2022, Akzo Nobel Coatings, Inc. answered the
complaint. On July 15, 2022, Akzo Noble Coatings, Inc. filed a cross-complaint
against Bronze-Way Plating Corporation, Alfred Santana, Al Santana, Trustee of
the Administration Trust of the John A. Martinez Living Trust; Virginia
Santana; and 3432 E. 15th St., LLC, Paramount Paint & Liquor Co., Chemcraft
International, Inc., and Surface Protection Industries, for Equitable
Indemnity, Common Law Contribution, Apportionment of Fault, Hazardous Substances
Account Act, and Declaratory Relief. On August 15, 2022, Akzo Nobel Coatings,
Inc. dismissed Paramount Paint & Lacquer Co. and Chemcraft International,
Inc., without prejudice.
On September 13, 2022, the court granted the Santa
parties leave to file a first amended cross-complaint. On September 27, 2022,
Alfred Santana, Al Santana, Trustee of the Administration Trust of the John A.
Martinez Living Trust; Virginia Santana; and 3432 E. 15th St., LLC, filed a
first amended cross-complaint against Bronze-Way Plating Corporation; Paramount
Paint & Lacquer Co.; Chemcraft International, Inc. A North Carolina
Corporation; and Surface Protection Industries, Inc., A Suspended California
Corporation for Breach of Contract, Express Indemnity, Equitable Indemnity,
Indemnity or Contribution under California Health and Safety Code section
25363, Continuing Nuisance, Common Law Contribution, Negligence, and
Declaratory Relief.
On March 1, 2023, Surface Protection Industries answered
the Santana first amended cross-complaint and filed a cross-complaint
Bronze-Way Plating Corporation, and the Santana parties for Equitable
Indemnity, Apportionment of Faut/Comparative Negligence, Hazardous Substances
Account Act, and Declaratory Relief.
On April 28, 2023, the action was transferred from
Department 12 (complex) to Department 68. On June 12, 2023, the court set aside
the dismissal filed by Bronze-Way Plating Corporation as to Surface Protection
Industries, Inc. On April 2, 2024, the Santana parties dismissed Paramount
Paint & Lacquer Co., and Chemcraft International from the first amended
cross-complaint. On April 15, 2024, the
Santana parties dismissed their entire cross-complaint without prejudice.
RULING: Granted.
Evidentiary Objections: Overruled.
Defendant Akzo Nobel Coatings, Inc. (Akzo) moves for
summary judgment to the complaint of Bronze-Way Plating Corporation and the
first amended cross-complaint of Alfred Santana; Al Santana, Trustee of the
Administration Trust of the John A. Martinez Living Trust; Virginia Santana;
and, 3432 E. 15th St., LLC. Because of the dismissal of the cross-complaint,
the court only considers the motion as to Bronze-Way Plating Corporation.
Defendant moves for relief on grounds of denial of any
corporate successor interest by Akzo from Paramount Paint & Lacquer Co. Akzo
acquired its interest from Defendant Surface Protection Industries, Inc., a
Suspended California Corporation, and only acquired certain assets with a
denial of any liabilities. Defendant Bronze-Way Plating Corporation
(Bronze-Way) in opposition first challenges any shift of the burden of proof,
then contends triable issues of material fact exist regarding the scope of the
acquisition of assets and liabilities from Paramount. Defendant in reply
reiterates the acquisition of only limited assets and denial of any
liabilities.
The pleadings
frame the issues for motions, “since it is those allegations to which
the motion must respond. (Citation.)”
(Scolinos v. Kolts (1995) 37
Cal. App. 4th 635, 640-641; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382-383; Jordan-Lyon Prods., LTD. v. Cineplex Odeon Corp. (1994) 29
Cal.App.4th 1459, 1472.) The purpose of a motion for summary judgment or
summary adjudication “is to provide courts with a mechanism to cut through the
parties’ pleadings in order to determine whether, despite their allegations,
trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c,
subdivision (c), requires the trial judge to grant summary judgment if all the
evidence submitted, and ‘all inferences reasonably deducible from the evidence’
and uncontradicted by other inferences or evidence, show that there is no
triable issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.)
“On a motion for summary judgment, the initial burden is
always on the moving party to make a prima facie showing that there are no
triable issues of material fact.” (Scalf
v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant
moving for summary judgment “has met his or her burden of showing that a cause
of action has no merit if the party has shown that one or more elements of the
cause of action . . . cannot be established.”
(Code Civ. Proc., § 437c, subd. (p)(2).) “Once the defendant . . . has
met that burden, the burden shifts to the plaintiff . . . to show that a
triable issue of one or more material facts exists as to the cause of action or
a defense thereto.” (Ibid.)
“When deciding whether to grant summary judgment, the court
must consider all of the evidence set forth in the papers (except evidence to
which the court has sustained an objection), as well as all reasonable
inference that may be drawn form that evidence, in the light most favorable to
the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159
Cal.App.4th 463, 467; see also Code Civ. Proc., § 437c, subd. (c).) “An
issue of fact can only be created by a conflict in the evidence. It is not created by speculation, conjecture,
imagination or guesswork.” (Lyons v. Security Pacific National Bank
(1995) 40 Cal.App.4th 1001, 1041 (citation omitted).)
It remains
undisputed that Paramount Paint & Lacquer Co. operated a business on
the subject premises from 1938 to 1973. In 1957, Paramount Paint & Lacquer
Co. changed its name to Zolatone Process Inc. Bronze-Way subsequently began
operating its business operations on the site beginning in 1973. In 1978,
Zolatone left the site entirely. The assets of Zolatone were acquired by Shanti
Industries, Inc. In 1982, Shanti Industries, Inc. changed its name to Surface
Protection Industries, Inc. While Surface Protection Industries, Inc. existed
in name, no actual business was conducted on the premises. [Declaration of
Timothy Coughlin.]
On January 14, 2004, Chemcraft California, LLC, later known
as Chemcraft California, Inc., and SPI Surfact Protection Industries de Mexico
S.A. de C.V. and Surfact and Protection Industries International entered into
an asset purchase agreement, whereby Chemcraft purchased certain assets in the
form of employment contracts and assets associated with Industrial Wood
Coatings. No real estate interest was acquired. The agreement also includes an
indemnity clause. [Coughlin Decl.]
On May 21, 2007, Akzo acquired Chemcraft and Chemcraft
International. Akzo denies ever holding any interest in the site and only
acquired the assets of Chemcraft. [Coughlin Decl.]
While the history of the parties acquisitions remains
undisputed, Bronze-Way challenges the relied upon assertions regarding the description
of certain assets. Hundreds of pages of exhibits are included with the motion
describing the various assets, but the parties’ dispute boils to certain Request
for Admissions propounded by Akzo to Bronze-Way, rather than citation to the
Asset Purchase Agreement reference itself.
Request for Admission number 9: Admit that Chemcraft
California, LLC did not, as part of or pursuant to the ASSET PURCHASE
TRANSACTION, assume any of the liabilities of Surface Protection Industries,
Inc. regarding the SITE.
RESPONSE TO REQUEST FOR ADMISSION NO. 9 ...
SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 9:
Subject to and without waiving the general objections and
the foregoing objections in its prior response, Responding Party responds as
follows: This Request seeks a legal conclusion about the legal impact of the
January 14, 2004 Asset Purchase Agreement between Chemcraft California, LLC and
Surface Protection; Surface Protection Industries, Inc.; and Surface Protection
Industries International. That document speaks for itself and was attached to
Propounding Party’s Requests for Admission to Surface Protection Industries,
Inc. That agreement purports to set forth the terms of that transaction, what
assets were sold, and how and if liabilities were transferred. Responding Party
is in the process of analyzing that document, which speaks for itself, and will
need to conduct additional discovery on Surface Protection Industries, Inc. to
determine the validity and impact of that document. At this time, Responding
Party admits this request. Discovery and investigation remain ongoing, and
Responding Party reserves it right to supplement, amend, modify, or change this
response based on newly discovered facts or evidence.
Number 10: Admit that Chemcraft International, Inc. did not,
as part of or pursuant to the ASSET PURCHASE TRANSACTION, assume any of the
liabilities of Surface Protection Industries, Inc. regarding the SITE.
RESPONSE TO REQUEST FOR ADMISSION NO. 10 ...
SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 10:
Subject to and without waiving the general objections and the foregoing
objections in its prior response, Responding Party responds as follows: This
Request seeks a legal conclusion about the legal impact of the January 14, 2004
Asset Purchase Agreement between Chemcraft California, LLC and Surface
Protection Industries de Mexico, S.A., DE C.V.; Surface Protection Industries,
Inc.; and Surface Protection Industries International. That document speaks for
itself and was attached to Propounding Party’s Requests for Admission to
Surface Protection Industries, Inc. That agreement purports to set forth the
terms of that transaction, what assets were sold, and how and if liabilities
were transferred. Responding Party is in the process of analyzing that
document, which speaks for itself, and will need to conduct additional
discovery on Surface Protection Industries, Inc. to determine the validity and
impact of that document. At this time, Responding Party admits this request.
Discovery and investigation remain ongoing, and Responding Party reserves it
right to supplement, amend, modify, or change this response based on newly
discovered facts or evidence
Number 11: Admit that Chemcraft California, LLC never agreed
to assume any of Surface Protection Industries, Inc.’s liability for the
conditions of the SITE as part of the ASSET PURCHASE TRANSACTION ...
SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 11: At this time, Responding
Party admits this request.
Number 12: Admit that Chemcraft International, Inc. never
agreed to assume any of Surface Protection Industries, Inc.’s liability for the
conditions of the SITE as part of the ASSET PURCHASE TRANSACTION. ...
SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 12: At this time, Responding
Party admits this request.
Number 13: Admit that Chemcraft California, LLC did not
purchase any real property as part of or pursuant to the ASSET PURCHASE
TRANSACTION ... SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 13: At this
time, Responding Party admits this request.
Number 14: Admit that Chemcraft International, Inc. did not
purchase any real property as part of or pursuant to the ASSET PURCHASE
TRANSACTION... SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 14: At this
time, Responding Party admits this request.
Admitted
matters or items deemed admitted through RFA discovery devices are
conclusively established in the litigation and are not subject to being
contested through contradictory evidence. (St.
Mary v. Superior Court (2014) 223
Cal.App.4th 762, 775 accord Murillo v. Superior Court
(2006) 143 Cal.App.4th 730, 736.) The response contains an admission to the
contention regarding any site liability. Moving party therefore shifts the
burden of proof of proof for purposes of the motion. The court therefore rejects
the argument challenging the sufficiency of the motion itself.
Notwithstanding the admissions regarding
the acquisition, Bronze-Way asserts liability on grounds of successor
liability. [See Comp., ¶¶ 10, 11, 30-76; Akzo Cross-Comp., ¶ 12; see dismissed
Santana, et al. First Amended Cross-Compl., 5-8.] Successor liability is
summarized as follows: “Our discussion of the law starts with the rule
ordinarily applied to the determination of whether a corporation purchasing the
principal assets of another corporation assumes the other's liabilities. As
typically formulated the rule states that the purchaser does not assume the
seller's liabilities unless (1) there is an express or implied agreement of
assumption, (2) the transaction amounts to a consolidation or merger of the two
corporations, (3) the purchasing corporation is a mere continuation of the
seller, or (4) the transfer of assets to the purchaser is for the fraudulent
purpose of escaping liability for the seller's debts.” (Ray v. Alad Corp. (1977) 19
Cal.3d 22, 28.)
Again, neither party cites to a
single page, appendix and schedule(s) within the Asset Purchase Agreement, and
the court declines to undertake the work on behalf of the parties. The court
instead relies on the requests for admissions regarding admitting to the lack
of any proof of acceptance of real estate site liability. Bronze-Way offers no
dispute to the rule, and instead seeks to establish triable issues of material
fact under the successor exception, whereby present entities may remain liable
under strict liability principles. (Id., at pp. 29-30.) Bronze-Way
analogizes the underlying water contamination claim and clean up
responsibilities as enveloping Akzo due to its presence.
The court considers the argument. “To
prevail in an action for contribution under CERCLA, a plaintiff must show,
among other things, that the defendant falls within one of four classes of
persons subject to liability under 42 U.S.C. § 9607(a).” (Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp. (9th Cir. 1992) 976 F.2d 1338, 1340–1341.)
42 U.S.C.
9607(a) renders a party liable for contribution as to:
(1) the
owner and operator of a vessel or a facility,
(2) any
person who at the time of disposal of any hazardous substance owned or operated
any facility at which such hazardous substances were disposed of,
(3) any
person who by contract, agreement, or otherwise arranged for disposal or
treatment ... of hazardous substances owned or possessed by such person, by any
other party or entity, at any facility ... owned or operated by another ...
entity and containing such hazardous substances, and
(4) any
person who ... accepted any hazardous substances for transport to disposal or
treatment facilities, incineration vessels or sites selected by such person,
from which there is a release, or a threatened release which causes the
incurrence of response costs, of a hazardous substance....”
Bronze-Way
cites to the standard, but offers no evidence regarding the conduct of Akzo as
in any way contributing toward the CERCLA liability claim. On the other hand,
Akzo disregards this argument for an exception to liability, and solely focuses
on the denied acquisition of site liability issues and reiterates the basis of
the successor liability relief argument.
The
request for admissions from Bronze-Way by Akzo in fact specifically address
releases of chemical emissions into the environment.
Request for Admission number 3: Admit that Akzo Nobel
Coatings Inc. never conducted or engaged in any activities at the SITE.
Response: Admit. Responding Party does not allege that
Propounding Party itself operated at the Site or released contaminants there.
...
Number 4: Admit that Akzo Nobel Coatings Inc. never RELEASED
CONTAMINANTS, including, without limitation, PFAS and/or HAZARDOUS SUBSTANCES,
at the SITE.
Response: Admit. Responding Party does not allege that
Propounding Party itself operated at the Site or released contaminants there.
Number 7:
Admit that Chemcraft California, LLC is not liable or responsible for any
RELEASE at the SITE under or pursuant to the ASSET PURCHASE TRANSACTION.
Number 8: Admit that Chemcraft International, Inc. is not
liable or responsible for any RELEASE at the SITE under or pursuant to the
ASSET PURCHASE TRANSACTION.
Bronze-Way admitted to both in
supplemental responses. It therefore remains undisputed that Akzo in fact never
operated at the site following the acquisition, and therefore could not have
discharged any contaminating substances into the soil. The admissions
consistently link and conform with the successor liability arguments relied
upon by Akzo. The admissions therefore establish no factual basis of
liability under CERCLA contributing party standards. The
court otherwise finds no evidence of continuing business operations, thereby
supporting a finding of triable issues of material fact under any exception to
the business succession rule. (Franklin
v. USX Corp. (2001) 87 Cal.App.4th 615, 625-627.)
As
addressed in the standard for summary judgment, an opposing party may not rely
on the allegations of the operative pleadings. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849 [“The plaintiff ... may not rely upon the
mere allegations
or denials” of his ‘pleadings to show that a triable issue of material fact exists but, instead,’ must ‘set
forth the specific facts
showing that a triable
issue of material fact exists as
to that cause of action or a defense thereto.’”]
The court therefore accepts the legal
argument, but finds no basis for a finding of triable issues of material facts.
The motion for summary judgment is
therefore GRANTED.
Trial currently set for March 17,
2025.
Akzo to give notice to parties.