“A settling tortfeasor’s section 877.6, 24 subdivision (c) good faith settlement determination discharges indemnity claims by other 25 tortfeasors, whether or not named as parties, so long as the other tortfeasors were given 26 notice and an opportunity to be heard.”
How later courts described this case
- “A settling tortfeasor’s section 877.6, 24 subdivision (c) good faith settlement determination discharges indemnity claims by other 25 tortfeasors, whether or not named as parties, so long as the other tortfeasors were given 26 notice and an opportunity to be heard.”
- “[T]he focus of the statutory scheme is on 2 settlements by a plaintiff with one of several parties alleged to be jointly liable for the same 3 tortious injury.”
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10
11 PACIFIC RESOURCES ASSOCIATES Case No.: 3:20-cv-00234-RBM-DEB
LLC, a Delaware limited liability
12
company, ORDER GRANTING JOINT
13 MOTION FOR DETERMINATION
Plaintiff,
OF GOOD FAITH SETTLEMENT
14
v.
15 [Doc. 146]
SUZY CLEANERS, an organization, et al.,
16
Defendants.
17
18
19 This consolidated action arises from the alleged environmental contamination of the
20 soil beneath the Valley Plaza shopping center in Escondido, California. Plaintiff Pacific
21 Resources Associates LLC (“Plaintiff”), who previously owned a storefront in the
22 shopping center, seeks relief against the former and current owners and operators of two
23 dry-cleaning businesses located in the same shopping center for allegedly contaminating
24 the soil with perchloroethylene (“PCE”), a chlorinated solvent commonly used in the dry-
25 cleaning industry.
26 Defendants Angela Hong, Howard Cho (on behalf of himself and Defendant Angela
27 K. Cho, now deceased), and Jeong-Soon Long (collectively, the “Settling Defendants”)
28 have reached a tentative settlement agreement with Plaintiff and now move this Court to
1 approve the settlement as made in good faith in accordance with California Code of Civil
2 Procedure sections 877 and 877.6 (“Motion”). (Doc. 146.) Additionally, the Settling
3 Defendants seek an order barring all existing and future claims against them for indemnity
4 and/or contribution for the alleged PCE contamination. (Id.) Plaintiff joined the Settling
5 Defendants’ Motion. (Doc. 148.)
6 Defendants Kim Hortman Buhler (as administrator and executor of the Estate of
7 Barbara Hortman) and Kim Hortman Buhler and Norman Alton Hortman III (as trustees
8 of The Norman Alton Hortman and Barbara Hortman Revocable Trust No. 1 Dated July 2,
9 1985) (collectively, the “Hortmans”) do not oppose the good-faith settlement
10 determination but contend that the requested contribution/indemnity bar is overbroad
11 (“Opposition”). (Doc. 151.) The Hortmans request that the Court limit the scope of the
12 requested bar. (Id.)
13 On August 7, 2023, the Settling Defendants filed their Reply in Support of Joint
14 Motion for Determination of Good Faith Settlement (“Reply”). (Doc. 153.)
15 After careful consideration, the Court GRANTS the Settling Defendants’ Motion.
16 I. BACKGROUND
17 A. The Properties
18 1. The 1680 Property
19 Plaintiff owned the property located at 1680 East Valley Parkway, Escondido,
20 California 92027, a storefront in the Valley Plaza shopping center, from February 12, 2001
21 until November 2022 (the “1680 Property”). (Doc. 114, Second Amended Complaint
22 (“SAC”), ¶ 33.)
23 2. The 1654 Property
24 The Settling Defendants are former and current operators of the dry-cleaning
25 business located at 1654 East Valley Parkway, Escondido, CA 92027 (the “1654
26 Property”), another storefront in the Valley Plaza shopping center. (Doc. 146 at 8.) The
27 Settling Defendants have never held an ownership interest in the 1654 Property. (Id.) The
28 1654 Property is positioned west of Plaintiff’s 1680 Property. (Doc. 153 at 4.)
1 3. The 1718 Property
2 The Hortmans owned and operated another dry-cleaning business located at 1718
3 East Valley Parkway, Escondido, CA 92027 (the “1718 Property”), a third storefront in the
4 Valley Plaza shopping center, from 1987 to 1999. (Doc. 146 at 9; SAC ¶ 14.) The 1718
5 Property is positioned east of Plaintiff’s 1680 Property. (Doc. 153 at 4.)
6 B. The Settling Defendants
7 The Settling Defendants are three of many operators of the dry-cleaning business
8 located at the 1654 Property – formerly called “Hoffa Cleaners” and now called “Suzy
9 Cleaners.” (Doc. 146 at 8, 10.) The 1654 Property has been home to a dry-cleaning
10 business since 1972. (Id. at 9)
11 a) Howard and Angela Cho
12 Settling Defendants Howard and Angela Cho operated Hoffa Cleaners from
13 approximately November 1996 to December1 1998—approximately two years or 25
14 months. (Declaration of Howard Cho (“Cho Decl.”) ¶ 2 [Doc. 146-5]; Doc. 146 at 22.)
15 Mr. Cho cannot remember exactly which chemicals or solvents he used during his
16 operation of Hoffa Cleaners. (Cho Decl. ¶ 3.) During his tenure at Hoffa Cleaners, Mr.
17 Cho used AAD Distribution and Drycleaning Services, Inc. to properly dispose of all
18 chemicals. (Id. ¶ 4.) During Mr. Cho’s tenure at Hoffa Cleaners, no release, leak, or spill
19 of PCE occurred, and neither Mr. Cho nor his wife were identified by the San Diego
20 Regional Water Board as a “responsible party.” (Id. ¶¶ 5–6.) Mr. Cho’s wife, Angela Cho,
21 passed away in 2011. (Id. ¶ 7.) Mr. Cho is retired, and his only source of income is Social
22 Security. (Id. ¶ 9.) Mr. Cho does not have liability insurance. (Id. ¶ 8.)
23
24
25
26
27 1 There is a discrepancy between Mr. Cho’s declaration and the moving brief. Mr. Cho declared that he
ceased operations of Hoffa Cleaners in September 1998, but the moving brief indicates that he ceased
28
1 b) Jeong-Soon Long
2 Settling Defendant Jeong-Soon Long operated Suzy Cleaners from June 1, 1999 to
3 December 24, 2001—approximately two and a half years. (Declaration of Jeong-Soon
4 Long (“Long Decl.”) ¶¶ 1, 4 [Doc. 146-6].) Ms. Long applied for the purchase of a new
5 Bergparma, Model D-335, 35 LB capacity, closed-loop dry-cleaning machine that captures
6 and distills PCE. (Id. ¶ 2–3.) Ms. Long’s application was granted in March of 1999. (Id.)
7 All PCE-related hazardous materials were removed from the store and disposed of by a
8 hazardous waste disposal company. (Id. ¶ 4.) Ms. Long is currently employed as a
9 seamstress at Barona Casino, but she hopes to retire next year. (Id. ¶ 10.) Her seamstress
10 salary is $46,000 per year, and when she retires, she will receive approximately $2,400 per
11 month from social security. (Id. ¶ 11.) Ms. Long attempted to have her insurance company
12 from many years ago defend her, but they declined. (Id. ¶ 12.)
13 c) Angela Hong
14 Settling Defendant Angela Hong is the sole proprietor of Suzy Cleaners.
15 (Declaration of Anegla Hong (“Hong Decl.”) ¶ 2 [Doc. 146-2].) When Ms. Hong acquired
16 the business in 2002, the dry-cleaning system in place was a Bergparma Model D-335
17 closed-loop system, which captures, distills, and filters PCE. (Id. ¶ 3; Long Decl. ¶¶ 2–3.)
18 In 2013, Ms. Hong replaced the Bergparma system with a new InnoClean closed-loop dry
19 cleaning system, which does not use PCE. (Hong Decl. ¶ 4.) The recycling and collection
20 company Safety-Kleen has disposed of all used solvents since Ms. Hong acquired the
21 business. (Id. ¶ 5.) During her tenure, no releases, leaks, or spills of PCE have occurred.
22 (Id. ¶ 6.) Ms. Hong does not receive any wages from Suzy Cleaners, and her only other
23 source of income is social security. (Id. ¶ 11.) Ms. Hong was not able to identify any
24 insurance policy that would provide coverage for Plaintiff’s claims. (Id. ¶ 7.)
25 C. Plaintiff’s Allegations
26 Plaintiff alleges that all former and current operators of the dry-cleaning businesses
27 located at the 1654 Property (including the Settling Defendants) and the 1718 Property
28 (including the Hortmans) released PCE into the soil beneath the properties, which then
1 migrated and contaminated the soil beneath Plaintiff’s 1680 Property. (SAC ¶¶ 36, 39, 41.)
2 Plaintiff alleges that it has incurred substantial response costs and will continue to incur
3 response, removal, and remediation costs in the future. (SAC ¶ 40, 42–46.) Notably,
4 however, Plaintiff no longer owns the 1680 Property. (SAC ¶ 33.)
5 D. Procedural History
6 Plaintiff initially filed this case on February 6, 2020—nearly four years ago. (Doc.
7 1.) Plaintiff amended its complaint on February 3, 2023 (Doc. 83) and on May 1, 2023
8 (Doc. 114). Plaintiff’s SAC asserts three causes of action under the federal Comprehensive
9 Environmental Response, Compensation and Liability Act (“CERCLA”), one cause of
10 action under California’s Hazardous Substances Account Act (“HSAA”), and nine
11 additional tort and equitable causes of action under California state common law. (SAC
12 ¶¶ 47–122.) Each cause of action is premised on the alleged contamination of Plaintiff’s
13 1680 property with PCE. (Id.)
14 Plaintiff and the Settling Defendants have reached a tentative settlement agreement.
15 (Declaration of Grant R. Olsson (“Olsson Decl.”), ¶ 4, Ex. 1 (“Settlement Agreement”)
16 [Doc. 146-1].) The proposed settlement agreement includes the following material terms:
17 • The Settling Defendants shall deliver to Plaintiff’s counsel the sum of
18 $18,000. Angela Hong shall contribute $5,000, Howard Cho shall contribute
19 $6,500, and Jeong-Soon Long shall contribute $6,500. (Settlement
20 Agreement at 2.)
21 • “[The Settlement] Agreement is subject to, and expressly contingent upon, a
22 determination that the settlement contemplated by this Agreement is a good
23 faith settlement pursuant to California Code of Civil Procedure § 877.6 and
24 various 9th Circuit case law as they pertain to CERCLA liability or, in the
25 alternative, entry of an order dismissing all of Pacific’s claims in the action
26 with prejudice (either before or within 60 days of a Court’s denial of a good
27 faith motion).” (Id. (emphasis added).)
28 Plaintiff and the Settling Defendants executed the settlement agreement on July 7, 2023.
1 (Id. at 7.)
2 E. The Settling Defendants’ Motion
3 In accordance with the material terms outlined above, on July 13, 2023, the Settling
4 Defendants filed the present Motion. In their Motion, the Settling Defendants request a
5 “determination and order that the settlement entered into with [Plaintiff] has been made in
6 good faith within the meaning of Code of Civil Procedure Section 877.6 and that such
7 settlement will bar all such existing or future claims against [the Settling Defendants] for
8 indemnity and/or contribution, equitable, partial or total.” (Doc. 146 at 2.) The Settling
9 Defendants’ Motion is made on the grounds that the agreed-to settlement meets the test for
10 good faith set forth in Tech-Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal.3d 488
11 (1985). (Id. at 3.) Additionally, the Settling Defendants assert that the agreed-to settlement
12 is fair, reasonable, and consistent with the objectives and policy underlying CERCLA,
13 which also permits contribution protection for the Settling Defendants. (Id. at 10.) On July
14 25, 2023, Plaintiff joined the Settling Defendants’ Motion. (Doc. 148.) On August 1,
15 2023, Defendants and Third-Party Claimants Guhn Y. Kim, Yun Soon Kim, and the Kim
16 Family Trust of 2017 (collectively, the “Kims”)—the owners of the 1654 Property—filed
17 notice of their non-opposition to the Settling Defendants’ Motion. (Doc. 152.)
18 F. The Hortmans’ Opposition
19 On July 31, 2023, the Hortmans filed their Opposition. (Doc. 151.) The Hortmans
20 indicate they do not oppose the request for a good faith determination but contend that the
21 settlement agreement’s contribution and indemnity bar is “overly-broad” and “inconsistent
22 with the terms of settlement.” (Id. at 1.) The Hortmans request that this Court limit any
23 bar to claims for contribution and indemnity to claims related to Plaintiff’s past
24 investigation costs for the 1680 Property only. (Id. at 1–2.)
25 II. LEGAL STANDARD
26 A. Supplement Jurisdiction and Choice of Law
27 This Court has subject matter jurisdiction over Plaintiff’s CERCLA claims pursuant
28 to 28 U.S.C. § 1331 because the causes of action alleged herein arise under the
1 Constitution, laws, or treaties of the United States, or are supplemental thereto. State of
2 Cal. on Behalf of California Dep’t of Health Servs. v. B & R Davis Fertilizers, Inc., 29
3 F.3d 634 (9th Cir. 1994). This Court has supplemental jurisdiction over Plaintiff’s state
4 law claims pursuant to 28 U.S.C. § 1367 because these claims arise out of the same nucleus
5 of operative facts as Plaintiff’s federal CERCLA claims. (Id.)
6 “When a district court sits in diversity, or hears state law claims based on
7 supplemental jurisdiction, the court applies state substantive law to the state law claims.”
8 Mason & Dixon Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 1056, 1060 (9th Cir.
9 2011). The Ninth Circuit has held that California Code of Civil Procedure section 877
10 constitutes substantive law and, therefore, that federal courts look to California law to
11 decide whether a settlement was made in good faith with respect to the state law tort claims.
12 Id. (citing Fed. Savings & Loan Ins. Corp. v. Butler, 904 F.2d 505, 511 (9th Cir.1990)).
13 Although California Code of Civil Procedure section 877.6 is the procedural mechanism
14 for section 877, “the case law is clear that state settlement provisions amount to substantive,
15 rather than purely procedural, law.” Slaven v. BP Am., Inc., 958 F. Supp. 1472, 1477–78
16 (C.D. Cal. 1997).
17 B. California Code of Civil Procedure Sections 877 and 877.7
18 Plaintiff and the Settling Defendants seek a determination that the proposed
19 settlement has been made in good faith pursuant to California Code of Civil Procedure
20 sections 877 and 877.6. These provisions apply to Plaintiff’s state law claims. Mason &
21 Dixon Intermodal, Inc., 632 F.3d at 1060; Slaven, 958 F. Supp. at 1477–78.
22 Section 877 governs the effect of a release of claims given “in good faith before
23 verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the
24 same tort, or to one or more other co-obligors mutually subject to contribution rights.” Cal.
25 Civ. Proc. Code § 877. The good faith settlement “shall not discharge any other such party
26 from liability unless its terms so provide, but it shall reduce the claims against the others
27 in the amount stipulated by the release….” § 877(a). Further, “[i]t shall discharge the party
28 to whom it is given from all liability for any contribution to any other parties.” § 877(b).
1 “[A] settling party may give notice of settlement to all parties and to the court,
2 together with an application for determination of good faith settlement and a proposed
3 order. The application shall indicate the settling parties, and the basis, terms, and amount
4 of the settlement.” § 877.6(a). “A determination by the court that the settlement was made
5 in good faith shall bar any other joint tortfeasor or co-obligor from any further claims
6 against the settling tortfeasor or co-obligor for equitable comparative contribution, or
7 partial or comparative indemnity, based on comparative negligence or comparative fault.”
8 § 877.6(c).
9 In other words, “[s]ection 877 establishes that a good faith settlement bars other
10 defendants from seeking contribution from the settling defendant, but at the same time
11 provides that the plaintiff’s claims against the other defendants are to be reduced by the
12 amount of consideration paid for the settlement. Thus, while a good faith settlement cuts
13 off the right of other defendants to seek contribution or comparative indemnity from the
14 settling defendant, the non-settling defendants obtain in return a reduction in their ultimate
15 liability to the plaintiff.” Abbott Ford, Inc. v. Superior Ct., 43 Cal. 3d 858, 871–73 (1987)
16 (citations and quotations omitted). “[T]he provisions of sections 877 and 877.6—
17 governing the effect that a settlement agreement has on a settling defendant’s potential
18 liability to other defendants for contribution or comparative indemnity—have two major
19 goals: the equitable sharing of costs among the parties at fault and the encouragement of
20 settlements.” Id. at 871–72.
21 “The issue of the good faith of a settlement may be determined by the court on the
22 basis of affidavits served with the notice of hearing, and any counteraffidavits filed in
23 response….” Id. at § 877.6(b). To determine whether a settlement had been made in good
24 faith, and therefore bars all future claims by any tortfeasor for contribution or indemnity,
25 California courts consider the factors identified by the California Supreme Court in Tech-
26 Bilt, Inc.:
27 [T]he intent and policies underlying section 877.6 require that a number of
factors be taken into account including [1] a rough approximation of
28
1 plaintiffs’ total recovery and the settlor’s proportionate liability, [2] the
amount paid in settlement, [3] the allocation of settlement proceeds among
2
plaintiffs, and [4] a recognition that a settlor should pay less in settlement than
3 he would if he were found liable after a trial. Other relevant considerations
include [5] the financial conditions and insurance policy limits of settling
4
defendants, as well as [6] the existence of collusion, fraud, or tortious conduct
5 aimed to injure the interests of nonsettling defendants.
6
Tech-Bilt, Inc. v. Woodward-Clyde & Assocs., 38 Cal. 3d 488, 499–500 (1985).
7
“[P]ractical considerations obviously require that the evaluation be made on the basis of
8
information available at the time of settlement.” Id.
9
Further, “[t]he party asserting the lack of good faith shall have the burden of proof
10
on that issue.” § 877.6(d). The non-settling party is “permitted to demonstrate, if he can,
11
that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be
12
inconsistent with the equitable objectives of the statute.” Tech-Bilt, Inc., 38 Cal. 3d at 499–
13
500 (citations omitted). “If contested, declarations by the non-settlor should be filed which
14
in many cases could require the moving party to file responsive counter declarations to
15
negate the lack of good faith asserted by the non-settling contesting party.” City of Grand
16
Terrace v. Superior Ct., 192 Cal. App. 3d 1251, 1261–62 (Ct. App. 1987) (emphasis
17
added).
18
Should a court grant an application for a good faith settlement determination under
19
California Code of Civil Procedure sections 877 and 877.6, “only those non-parties with
20
constitutionally sufficient prior notice will be bound by a ‘good faith settlement’
21
determination[.]” City of Emeryville v. Robinson, 621 F.3d 1251, 1266 (9th Cir. 2010); see
22
also Singer Co. v. Superior Court, 179 Cal. App. 3d 875, 890–91 (1986); Gackstetter v.
23
Frawley, 135 Cal. App. 4th 1257, 1273 (2006) (“A settling tortfeasor’s section 877.6,
24
subdivision (c) good faith settlement determination discharges indemnity claims by other
25
tortfeasors, whether or not named as parties, so long as the other tortfeasors were given
26
notice and an opportunity to be heard.”). In other words, the scope of the
27
contribution/indemnity bar is not unlimited. Hartford Accident & Indem. Co. v. Superior
28
1 Ct., 29 Cal. App. 4th 435, 441 (1994) (“[T]he focus of the statutory scheme is on
2 settlements by a plaintiff with one of several parties alleged to be jointly liable for the same
3 tortious injury.”); see also Arizona Pipeline Co. v. Superior Ct., 22 Cal. App. 4th 33, 42
4 (1994); West v. Superior Ct., 27 Cal. App. 4th 1625, 1636–37 (1994); C. L. Peck
5 Contractors v. Superior Ct., 159 Cal. App. 3d 828, 831 (Ct. App. 1984).
6 Determinations of good faith made under California Code of Civil Procedure
7 sections 877 and 877.6 apply to claims asserted under the HSAA in addition to California
8 state common law claims. Fullerton Redevelopment Agency v. S. Cal. Gas Co., 183 Cal.
9 App. 4th 428, 432 (2010).
10 C. CERCLA
11 Plaintiff and the Settling Defendants also seek approval of their settlement
12 agreement and an order providing it with contribution protection under CERCLA. 42
13 U.S.C. § 9613(f). In considering this request, the Court first reviews CERCLA’s statutory
14 framework.
15 Congress enacted CERCLA “in response to the serious environmental and health
16 risks posed by industrial pollution.” Burlington N. & Santa Fe Ry. Co. v. United States,
17 556 U.S. 599, 602 (2009). CERCLA “imposes strict liability on four categories of
18 potentially responsible parties (PRPs) for the cleanup costs of an environmental hazard,
19 even if the person did not contribute to the contamination.” Chubb Custom Ins. Co. v.
20 Space Sys./Loral, Inc., 710 F.3d 946, 956 (9th Cir. 2013) (emphasis added). “CERCLA
21 liability is joint and several, meaning that a responsible party may be held liable for the
22 entire cost of cleanup even where other parties contributed to the contamination. The party
23 saddled with the cleanup costs may, in turn, sue other potentially responsible parties for
24 contribution.” California Dep’t of Toxic Substances Control v. Hearthside Residential
25 Corp., 613 F.3d 910, 912 (9th Cir. 2010); see also AmeriPride Servs. Inc. v. Tex. E.
26 Overseas Inc., 782 F.3d 474, 480 (9th Cir. 2015); 42 U.S.C. § 9607(a); 42 U.S.C.
27 9613(f)(1).
28 There are four categories of potentially responsible parties (“PRPs”):
1 …(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
2
at which such hazardous substances were disposed of, (3) any person who by
3 contract, agreement, or otherwise arranged for disposal or treatment … of
hazardous substances … , and (4) any person who accepts or accepted any
4
hazardous substances for transport to disposal or treatment facilities … from
5 which there is a release, or a threatened release which causes the incurrence
of response costs, of a hazardous substance…
6
7 42 U.S.C. § 9607. PRPs are responsible for “(A) all costs of removal or remedial action
8 incurred by the United States Government or a State or an Indian tribe...; (B) any other
9 necessary costs of response incurred by any other person…; (C) damages for injury to,
10 destruction of, or loss of natural resources, including the reasonable costs of assessing such
11 injury, destruction, or loss resulting from such a release; and (D) the costs of any health
12 assessment or health effects study….” 42 U.S.C. § 9607(a)(4)(A)–(D).
13 CERCLA’s otherwise harsh, strict-liability scheme encourages settlement by
14 providing so-called “contribution protection” to “[a] person who has resolved its liability
15 to the United States or a State in an administrative or judicially approved settlement[.]” 42
16 U.S.C. § 9613(f)(2). In other words, CERCLA prevents parties settling with the United
17 States or a State from later being sued for contribution by non-settling parties. Id. “Such
18 settlement does not discharge any of the other potentially liable persons unless its terms so
19 provide, but it reduces the potential liability of the others by the amount of the settlement.”
20 Id. CERCLA is silent as to whether contribution protection and the reduction of the
21 remaining liability applies to settlement agreements between private parties.
22 In the absence of express authority, the Ninth Circuit looks to another CERCLA
23 provision for the authority to allocate costs and afford contribution protection in
24 settlements between private parties: “In resolving contribution claims, the court may
25
26
27 2 “The term ‘facility’ means … any site or area where a hazardous substance has been
deposited, stored, disposed of, or placed, or otherwise come to be located… .” 42 U.S.C.
28
1 allocate response costs among liable parties using such equitable factors as the court
2 determines are appropriate.” 42 U.S.C. § 9613(f)(1) (emphasis added). In AmeriPride
3 Services, Inc., the Ninth Circuit held that “a district court has discretion under [this
4 provision] to determine the most equitable method of accounting for settlements between
5 private parties in a contribution action.” 782 F.3d at 487. However, district courts must
6 exercise their discretion in a manner that is consistent with the principles and purposes of
7 CERCLA. Id. at 488. “Choosing a method that would discourage settlement or produce
8 plainly inequitable results could constitute an abuse of discretion.” Id.
9 When considering the equitable allocation of costs, courts weigh the so-called “Gore
10 Factors.” They are “(1) the ability of the parties to demonstrate that their contribution to a
11 discharge, release or disposal of a hazardous waste can be distinguished; (2) the amount of
12 the hazardous waste involved; (3) the degree of toxicity of the hazardous waste involved;
13 (4) the degree of involvement by the parties in the generation, transportation, treatment,
14 storage, or disposal of the hazardous waste; (5) the degree of care exercised by the parties
15 with respect to the hazardous waste concerned, taking into account the characteristics of
16 such hazardous waste; and (6) the degree of cooperation by the parties with Federal, State,
17 or local officials to prevent any harm to the public health or the environment.” TDY
18 Holdings, LLC v. United States, 885 F.3d 1142, 1146, n. 1 (9th Cir. 2018) (internal
19 quotation omitted).
20 While districts courts are free to grant settling parties contribution protection, the
21 scope of permissible contribution protection is limited. “CERCLA’s policy of encouraging
22 settlements by authorizing contribution protection to settling parties should not be
23 construed in a manner that ambushes persons…who had no connection with, and no
24 responsibility for, the pollution on the site at issue in the settlement….” City of Emeryville
25 v. Robinson, 621 F.3d 1251, 1264 (9th Cir. 2010). “[T]he overwhelming majority of courts
26 that have imposed or enforced a CERCLA contribution bar in a private-party settlement
27 have done so only where the persons subject to the bar were either parties to the action,
28 PRPs who were involved in or aware of settlement discussions, or non-parties who
1 otherwise had at least constructive notice that their contribution claims stood to be
2 extinguished.” Id. at 1265. A contribution bar should not extend beyond “matter expressly
3 contemplated by the parties in entering into the [] [s]ettlement.” Id. at 1264.
4 III. DISCUSSION
5 A. The Proposed Settlement Agreement is a Good Faith Settlement Agreement
6 Pursuant to California Code of Civil Procedure Sections 877 and 877.6, Barring
7 Certain Claims for Indemnity and/or Contribution Against the Settling Defendants
8 1. The Tech-Bilt, Inc. Factors
9 The first four Tech-Bilt, Inc. factors are the most important. They are “[1] a rough
10 approximation of plaintiffs’ total recovery and the settlor’s proportionate liability, [2] the
11 amount paid in settlement, [3] the allocation of settlement proceeds among plaintiffs, and
12 [4] a recognition that a settlor should pay less in settlement than he would if he were found
13 liable after a trial.” Tech-Bilt, Inc., 38 Cal. 3d at 499–500.
14 Here, a rough approximation of Plaintiff’s total recovery is $185,000 in
15 investigation/response costs because Plaintiff no longer owns the 1680 Property and,
16 therefore, will not continue to incur costs. (Doc. 138 at 2; SAC ¶ 33.) Thus, the Settling
17 Defendants’ collectively have agreed to pay approximately ten percent of Plaintiff’s total
18 recovery. As set forth below, the Court is persuaded that this allocation is fair based on
19 the evidence presented by each of the Settling Defendants, especially given the black letter
20 law that a settlor should pay less in settlement than he would after trial and that the Court’s
21 evaluation is to be made based on information available at the time of settlement (now).
22 See Tech-Bilt, Inc., 38 Cal. 3d 488 at 499–500.
23 “Other relevant considerations include [5] the financial conditions and insurance
24 policy limits of settling defendants, as well as [6] the existence of collusion, fraud, or
25 tortious conduct aimed to injure the interests of nonsettling defendants.” Tech-Bilt, Inc.,
26 38 Cal. 3d at 499–500. As set forth below, the Court is also persuaded that these equitable
27 factors require the Court to render issue a food-faith settlement determination and shield
28
1 each of the Settling Defendants from claims for contribution/indemnity to the extent
2 permissible by law. Id.
3 a) Howard and Angela Cho
4 Settling Defendants Howard and Angela Cho operated the dry-cleaning business
5 located at the 1654 Property for only two of more than 50 years of operation (approximately
6 four percent of the time). (Cho Decl. ¶ 2.) Further, Mr. Cho declared under penalty of
7 perjury that AAD Distribution and Drycleaning Services, Inc. properly disposed of all
8 chemicals during his tenure operating Hoffa Cleaners, that there were no spills or leaks
9 during his operation, and that the San Diego Regional Water Board did not identify him or
10 his wife as a “responsible party.” (Cho Decl. ⁋⁋ 4–6.) Therefore, any alleged PCE
11 contamination caused by the Chos, if any, was likely de minimus. Mr. Cho also declared
12 that his wife has passed away, that he is retired, that his only source of income is social
13 security, and that he does not have insurance coverage for this matter. (Id. ¶¶ 7-9.) Thus,
14 applying the equitable factors set forth in Tech-Bilt, Inc., the Court finds that the Plaintiff’s
15 settlement with the Chos was made in good faith and bars future claims for indemnity
16 and/or contribution against the Chos to the extent permitted by law.
17 b) Jeong-Soon Long
18 Settling Defendant Jeong-Soon Long operated the dry-cleaning business located at
19 the 1654 Property for only two and a half years of more than 50 years of operation. (Long
20 Decl. ⁋⁋ 1, 4–5.) Ms. Long purchased a Bergparma, Model D-335 closed-loop dry-
21 cleaning machine which captured, distilled, and filtered PCE, and a hazardous waste
22 disposal company disposed of all chemicals during her tenure. (Id. ¶¶ 2, 4.) Therefore,
23 any alleged PCE contamination caused by Ms. Long was likely de minimus. Ms. Long
24 also declared that she earns only $46,000 per year as a seamstress and that she hopes to
25 retire next year. (Id. ¶ 10.) Upon retirement, she will receive only $2,400 per month in
26 social security. (Id. ¶ 11.) Further, she does not have insurance that covers this matter.
27 (Id. ¶ 12.) Thus, applying the equitable factors set forth in Tech-Bilt, Inc., the Court finds
28
1 that the Plaintiff’s settlement with Ms. Long was made in good faith and bars any future
2 claims for indemnity/contribution against Ms. Long to the extent permitted by law.
3 c) Angela Hong
4 Settling Defendant Angela Hong acquired the business in 2002 and used the
5 Bergparma Model D-335 closed-loop dry-cleaning system, which captures, distills, and
6 filters PCE. (Hong Decl. ¶ 3; Long Decl. ¶ 2.) Ms. Hong then replaced this system with
7 one that does not use PCE. (Hong Decl. ¶ 4.) Ms. Hong also uses the company Safety-
8 Kleen to properly dispose of chemicals. (Id. ¶ 5.) Therefore, any alleged PCE
9 contamination caused by Ms. Hong is likely de minimus. Ms. Hong also declared that she
10 does not receive any wages from Suzy Cleaners, her only other source of income is social
11 security, and she does not have an insurance policy that will provide coverage for Plaintiff’s
12 claims. (Id. ¶¶ 7–11.) Thus, the Court finds that the Plaintiff’s settlement with Ms. Hong
13 was made in good faith and bars future claims for contribution/indemnity against Ms. Hong
14 to the extent permitted by law.
15 2. The Permissible Scope of the Requested Contribution/Indemnity Bar
16 Under California Code of Civil Procedure Sections 877 and 877.6
17 In their Opposition, the Hortmans assert that the proposed settlement agreement is
18 unfair because it bars them from seeking indemnity or contribution for Plaintiff’s future
19 costs. (Doc. 151 at 1:20-22, 2:6-3:2.) First, the Court notes that the Hortmans’ concern is
20 unfounded because Plaintiff sold the 1680 Property in 2022 and likely will not accumulate
21 additional response costs. Nevertheless, the Court finds that California Code of Civil
22 Procedure Sections 877 and 877.6 bars future HSAA and state common law claims by
23 Plaintiff for any additional investigation and/or cleanup costs because Plaintiff has been
24 provided sufficient notice that it will be bound by the Court’s good-faith settlement
25 determination. City of Emeryville, 621 F.3d at 1266.
26 The Hortmans also assert that the proposed contribution/indemnity bar is unfair
27 because it bars claims for indemnity and/or contribution against the Settling Defendants
28 for the Hortmans’ potential liability to Defendant M&E Brothers, LLC (“M&E”), the
1 current owners of the 1718 Property, for the investigation and cleanup of the 1718
2 Property.3 (Doc. 151 at 3:4-15, 4:8-15.) First, the Court is not convinced that the bar
3 requested by the Settling Defendants is as broad sweeping as the Hortmans suggest. The
4 terms of the executed settlement agreement suggest that the moving parties only intended
5 the contribution/indemnity bar to apply to Plaintiff’s cost-recovery claims for the 1680
6 Property. The settlement agreement provides for an alternative remedy: “entry of an order
7 dismissing all of Pacific’s claims in the action with prejudice against all Defendants.”
8 (Settlement Agreement at 2.) Had the Settling Defendants intended the
9 indemnity/contribution bar to extend beyond Plaintiff’s cost-recovery claims for the 1680
10 Property, this alternative remedy would not be sufficient. Second, the Court finds that the
11 proposed settlement agreement only contemplates costs associated with the investigation
12 of Plaintiff’s 1680 Property and, therefore, that claims related to the investigation and/or
13 cleanup of the 1718 Property (like those asserted in Case No. 22-cv-01892-RBM-DEB)
14 survive this good faith settlement determination. This result is consistent with the Ninth
15 Circuit’s ruling in City of Emeryville, which involved the cleanup of two separate sites.
16 621 F.3d at 1266. There, the Ninth Circuit determined that the parties had no belief or
17 expectation that it was resolving “site B” liability when it executed the “site A” settlement
18 agreement. Id. Therefore, any claims related to site B were not barred by the district
19 court’s good faith settlement determination. Id. The same is true here. The proposed
20 settlement agreement only contemplates liability for the investigation of the 1680 Property.
21 Claims regarding the investigation and cleanup of the 1718 Property (like those asserted in
22 Case No. 22-cv-01892-RBM-DEB) are not barred.
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27 3 In a separate action, M&E alleged that the Hortmans are responsible for the contamination
of the soil beneath the 1718 Property with PCE. (Case No. 22-cv-01892-RBM-DEB, Doc.
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1 B. CERCLA
2 1. The Equitable Allocation of Costs
3 As stated above, the Ninth Circuit has held that “a district court has discretion under
4 § 9613(f)(1) to determine the most equitable method of accounting for settlements between
5 private parties in a contribution action.” AmeriPride Servs. Inc., 782 F.3d 474 at 487.
6 However, district courts must exercise their discretion in a manner that is consistent with
7 the principles and purposes of CERCLA. Id. at 488. “Choosing a method that would
8 discourage settlement or produce plainly inequitable results could constitute an abuse of
9 discretion.” Id.
10 District courts also weigh the “Gore Factors” when considering the equitable
11 allocation of costs. The “Gore Factors” applicable to the present case are the parties’
12 contribution and involvement in the generation, treatment, storage, or disposal of the
13 hazardous waste and the degree of care exercised by the parties with respect to the
14 hazardous waste concerned. TDY Holdings, LLC, 885 F.3d 1142 at 1146, n. 1.
15 For the same reasons discussed at length above (see III.A.1), the Court determines
16 that the proposed settlement agreement is an equitable allocation of costs under CERCLA.
17 Applying the Gore Factors, the Settling Defendants’ contribution and involvement in the
18 generation, treatment, storage, or disposal of the hazardous waste is minimal, and it is
19 therefore within the Court’s discretion to approve the Settling Defendants’ respective
20 settlement figures.
21 2. The Scope of the Requested Contribution/Indemnity Bar Under
22 CERCLA
23 In their Opposition, the Hortmans assert that the proposed settlement agreement is
24 unfair because it bars them from seeking indemnity or contribution for Plaintiff’s future
25 costs. (Doc. 151 at 1:20-22, 2:6-3:2.) The Hortmans also assert that the proposed
26 contribution/indemnity bar is unfair because it bars indemnity and/or contribution from the
27 Settling Defendants for the Hortmans’ liability to M&E for the investigation and cleanup
28 of the 1718 Property. (Doc. 151 at 3:4-15, 4:8-15.) Once again, the Court notes that
1 Plaintiff sold the 1680 Property in 2022 and likely will not accumulate additional costs.
2 Further, the Ninth Circuit has also made clear that a CERCLA contribution bar should not
3 extend beyond “matter[s] expressly contemplated by the parties in entering into the []
4 [s]ettlement.” City of Emeryville, 621 F.3d at 1264. Here, Plaintiff’s SAC expressly
5 contemplated the possibility additional investigation and/or cleanup costs associated with
6 the 1680 Property accumulated after the filing of the SAC. Thus, applying the Ninth
7 Circuit’s ruling in City of Emeryville, the Court finds that any future CERCLA claims by
8 Plaintiff against the Settlings Defendants for additional response costs related to the
9 contamination of the 1680 Property are barred because the possibility of additional costs
10 was specifically contemplated in Plaintiff’s SAC. On the other hand, the proposed
11 settlement agreement did not contemplate the Hortmans’ potential CERCLA liability to
12 M&E for the investigation and cleanup of the 1718 Property. Thus, any CERCLA claims
13 for contribution/indemnity related to the investigation/cleanup of the 1718 Property (like
14 those asserted in Case No. 22-cv-01892-RBM-DEB) are not barred.
15 IV. CONCLUSION
16 Based on the foregoing, the Court GRANTS the Settling Defendants’ Motion but
17 clarifies the scope of the requested contribution/indemnity bar. Each of Plaintiff’s claims
18 against Defendants Angela Hong, Howard Cho (on behalf of himself and Defendant
19 Angela K. Cho, now deceased), and Jeong-Soon Long are dismissed:
20 1. Strict Liability Under CERCLA § 107—Recovery of Response Costs (SAC
21 ¶¶ 47–56)
22 2. Right of Contribution Under CERCLA § 113 (SAC ¶¶ 57–61)
23 3. Declaratory Relief Under CERCLA (SAC ¶¶ 62–65)
24 4. Contribution Under California Health & Safety Code § 25363(e) (SAC ¶¶ 66–
25 72)
26 5. Declaratory Relief Under CCP § 1060 (SAC ¶¶ 73–77)
27 6. Public Nuisance (SAC ¶¶ 78–86)
28 7. Private Nuisance (SAC ¶¶ 87–91)
1 8. Negligence (SAC [¥ 92-96)
2 9. Negligence Per Se (SAC ff 97-104)
3 10. Waste (SAC 44 105-109)
4 11. Trespass (SAC 9§ 110-114)
5 12. Equitable Indemnity (SAC □ 115-118)
6 13. Restitution (SAC 4¥ 119-122)
7
8 IT IS SO ORDERED.
9 DATE: November 16, 2023
10 Ft Baemides □□ orttayys D_
ll ON. RUTH BERMUDEZ'MONTENEGRO
UNITED STATES DISTRICT JUDGE
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