# Otay Land Co. v. U.E. Limited

> California Court of Appeal · September 26, 2017

URL: https://www.frixlaw.com/law-library/cases/4206367

## Case

- **Court:** California Court of Appeal
- **Decided:** September 26, 2017
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

Filed 9/26/17

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

OTAY LAND COMPANY, LLC et al., D068347, D069029

Plaintiffs and Appellants, (Super. Ct. Nos. GIC869480;
37-2009-101976-CU-OR-CTL;
v. 37-2012-104941-CU-BT-CTL;
37-2013-048508-CU-BT-CTL)
U.E. LIMITED, L.P., et al.,

Defendants and Appellants.

APPEALS from a judgment and postjudgment orders of the Superior Court of San

Diego County, Richard E. L. Strauss, Judge. Affirmed in part; reversed in part; and

remanded with directions.

Shoecraft Burton, Robert D. Shoecraft and Devin T. Shoecraft for Plaintiffs and

Appellants.

Xavier Becerra, Attorney General, Sally Magnani, Assistant Attorney General,

Susan Fiering and Andrew Wiener, Deputy Attorneys General, for amicus curiae on

behalf of Plaintiffs and Appellants.
Lewis Brisbois Bisgaard & Smith, R. Gaylord Smith, Thomas A. Teschner and

Brittany H. Bartold for Defendants and Appellants U.E., Limited, L.P.,

U.E. Limited, LLC, John T. Knox and Rose Patek.

Gatzke Dillon & Balance, Stephen F. Tee and Stephen A. Sunseri for Defendants

and Appellants Baldwin Builders, The Otay Ranch, L.P. and Sky Vista, Inc.

I.

INTRODUCTION

These consolidated appeals involve a property where a shooting range had been

operated for decades (the Property), its remediation by Plaintiffs Otay Land Company,

LLC (OLC) and Flat Rock Land Company, LLC (FRLC) (collectively, Plaintiffs), and

their efforts to recover remediation costs from former owners under the Carpenter-

Presley-Tanner Hazardous Substances Account Act (HSAA; Health & Saf. Code,

§ 25300 et seq.).1 Defendants are former owner United Enterprises, Inc. (UEI) and its

successors, including United Enterprises, Ltd. (UEL) (together, UE Defendants or UE),

and former owner Baldwin Vista Associates, L.P. (now The Otay Ranch, L.P.) and certain

of its general partners (together, Baldwin Defendants or Baldwin) (collectively,

Defendants). Plaintiffs also asserted common law claims for continuing nuisance and

1 Unless otherwise noted, statutory references are to the Health and Safety Code.

2
continuing trespass, including in subsequent lawsuits that have been consolidated with

this action.2

The case proceeded to a bench trial. The trial court's Statement of Decision

addressed issues regarding whether Plaintiffs had a private right of action, liability,

defenses, the allocation of costs, and cost reductions, each in the alternative, and held

Plaintiffs should take nothing. The court entered judgment for Defendants. Defendants

moved for attorney fees and costs, which the court denied.

Plaintiffs appeal from the judgment. The gravamen of their appeal is that the trial

court erred in its interpretation and application of the HSAA. We agree, and as our

analysis will reflect, several of these issues involve novel questions of law under the

HSAA. We affirm certain rulings, reverse the judgment in all other respects, and remand

with directions.

Defendants appeal from the court's denial of their fee and cost motions. In light of

our reversal of the judgment, these appeals are moot.

2 The other UE Defendants are U.E. Limited, L.P., and U.E. Limited, LLC. The
other Baldwin Defendants are Baldwin Builders, Baldwin Vista, Inc. (now Sky Vista,
Inc.), and Baldwin Communities, Inc. (now Sky Communities, Inc.). Individual
defendants John T. Knox and Rose Patek are also respondents, but Plaintiffs do not
address them specifically. To the extent our conclusions apply generally, they apply to
these respondents, but Plaintiffs forfeit any challenge to rulings particular to Knox or
Patek. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211,
216, fn. 4.) Plaintiffs also had claims for equitable indemnity, unjust enrichment, unfair
competition, and declaratory relief, which the court denied as being moot in light of its
HSAA determination and on other grounds. Plaintiffs do not address these claims on
appeal and forfeit them as well. (Tiernan, at p. 216, fn. 4.)

3
II.

FACTUAL AND PROCEDURAL BACKGROUND

A. Factual overview

Stephen Birch founded the predecessor to UEI, which purchased the Otay Ranch

land encompassing the Property. In 1965, UEI opened a commercial shooting range on

the Property, and the range remained in operation until 1978. In 1970, white fill material

was used to build additional skeet and trap fields. Some, but not all, lead shot was

recovered, and the only efforts to address target debris were to chop and cover it. In

addition, the range was "disked" at various points (i.e., a tool known as a disk was used to

cut through the ground and turn soil over). In 1986, UEI became a limited partnership

(UEL), and the Estate of Mary Marshall Rand Birch Patrick (Stephen Birch's daughter)

was one of the limited partners.

In 1988, UEL sold part of the Otay Ranch land to Baldwin, and the Estate received

a promissory note encompassing the Property. A lessee reopened the range in 1990, and

it remained operational until 1997. Again, some, but not all, lead shot was recovered, and

no target debris was reclaimed. Baldwin also contracted with companies that used the

land for wood chipping operations, the latter of which left a wood pile upon its departure.

The Estate took title to the Property in 1997, after Baldwin defaulted on its

payment obligations and provided deeds in lieu of forfeiture. The Estate contacted

Baldwin about the wood pile, and Baldwin hired a contractor to clean the wood pile to

the surface. In 2003, OLC transferred the Property to FRLC, a wholly owned subsidiary.

OLC and FRLC began the remediation process, during which it was determined the soil

4
contained lead and polynuclear aromatic hydrocarbons (PAH's) attributable to the target

debris, and that perchlorate on the site was from the white material.

FRLC applied pursuant to Health and Safety Code chapter 6.65 (§ 25260 et seq.,

herein the Assembly Bill No. 2061 process) for the San Diego County Department of

Environmental Health (DEH) to be the administering agency for the remediation.3

During this process, DEH requested review by the California Department of Toxic

Substances Control (DTSC). DTSC has oversight for response actions under the HSAA

(§ 25323.3), and is authorized by the HSAA to initiate such actions, order responsible

parties to do so, and recover costs incurred by the state, among other things. (See

§§ 25355, 25358.3, 25360.) FRLC obtained a certificate of completion pursuant to the

Assembly Bill No. 2061 process.

B. Litigation

Plaintiffs initially filed suit in 2003 in federal court, asserting claims against

Defendants under the Resource Conservation and Recovery Act of 1976 (RCRA,

42 U.S.C. § 6901 et seq.); the Comprehensive Environmental Response, Compensation,

and Liability Act of 1980 (CERCLA, 42 U.S.C. § 9601 et seq.); the HSAA; and on other

state law grounds. In 2006, the district court granted summary judgment on the

CERCLA and RCRA claims, and declined to exercise jurisdiction over the state law

3 Assembly Bill No. 2061 added Chapter 6.65 to Division 20 of the Health and
Safety Code. (See Assem. Bill No. 2061 (1993-1994 Reg. Sess.); Stats. 1993, ch. 1184,
§ 1, p. 6771.) The parties and trial court use the term "AB 2061," which use has been
retained within quoted material herein.

5
claims. (Otay Land Co. v. U.E. Ltd. L.P. (S.D. Cal. 2006) 440 F.Supp.2d 1152, 1157-

1158.) In 2009, the Ninth Circuit vacated the judgment on ripeness grounds. (Otay Land

Co. v. United Enterprises Ltd. (9th Cir. 2009) 338 Fed. Appx. 689, 691.)4

In 2006, Plaintiffs sued Defendants in San Diego County Superior Court under the

HSAA and for nuisance and trespass. Defendants filed motions for summary judgment

and/or adjudication, which the trial court denied. In 2013, the case proceeded to trial.

The court severed the nonjury HSAA claim from the jury issues. At the close of the

bench trial, the parties submitted closing briefs. The trial court directed the parties to

prepare proposed statements of decision. The court adopted Defendants' proposal, and

did not proceed to a jury trial.

Relevant here, the court determined: (i) Plaintiffs did not have a right of action to

recover their voluntarily-incurred remediation costs; (ii) Plaintiffs failed to establish

Defendants were liable, because, among other things, the range was excluded under the

" 'consumer product in consumer use' " exception for facilities and they did not establish

disposals, as needed for liability; (iii) Defendants established defenses based on the

HSAA's permitted release and nonretroactivity provisions (with the nonretroactivity

determinations foreclosing the need for a jury phase), the statute of limitations, and a

contractual release; (iv) in an equitable allocation of liability, Plaintiffs would bear

4 Defendants cite the vacated district court opinion. Lower federal court opinions
are not binding on this court, even on federal questions (People v. Crittenden (1994) 9
Cal.4th 83, 120, fn. 3), and this particular opinion is not otherwise persuasive.

6
100 percent of costs; and (v) in addition to costs being unavailable (in the absence of a

right of action), many costs claimed by Plaintiffs were not recoverable for other reasons.5

Plaintiffs filed objections, which the trial court overruled. The court entered

judgment for Defendants. Defendants filed motions for attorney fees and costs, which

the court denied. Plaintiffs appealed the judgment, and Defendants appealed the fee and

cost rulings.

The State of California submitted an amicus brief in the Ninth Circuit in the

federal case, and we invited the Attorney General to submit an amicus brief in this

appeal. The parties were invited to respond. The Attorney General submitted a brief on

behalf of amicus curiae DTSC, and the parties filed briefs in response.

III.

DISCUSSION

A. Overview

1. Standard of review

When we review a statement of decision, "findings on questions of fact are

reviewed under the substantial evidence standard." (Brewer v. Murphy (2008) 161

Cal.App.4th 928, 935.) We "infer any factual findings necessary to support the

judgment," unless a party filed objections. (Ermoian v. Desert Hospital (2007) 152

Cal.App.4th 475, 494, 498.) We still "review[] the implied factual findings under the

5 The court addressed Plaintiffs' ability to proceed in its cost analysis, as grounds for
denying all costs, but we view this as a threshold issue.

7
substantial evidence standard." (Fladeboe v. American Isuzu Motors Inc. (2007)

150 Cal.App.4th 42, 60.) "[C]onclusions of law are subject to independent review . . . ."

(Brewer, at p. 936.) Only prejudicial error is grounds for reversal. (Soule v. Gen. Motors

Corp. (1994) 8 Cal.4th 548, 573-574 (Soule); Cal. Const., art. VI, § 13.) "[T]rial error is

usually deemed harmless in California unless there is a 'reasonabl[e] probab[ility]' that it

affected the verdict. . . . '[P]robability' in this context does not mean more likely than not,

but merely a reasonable chance, more than an abstract possibility." (College Hosp. Inc.

v. Superior Court (1994) 8 Cal. 4th 704, 715, citation omitted (College Hosp.).)

As to the arguments by amicus DTSC, we accord due weight to its views. (See

People v. Snyder (2000) 22 Cal.4th 304, 310 ["In its amicus curiae brief, the FPPC

supports this view, which 'because of the agency's expertise . . . is entitled to great weight

unless clearly erroneous or unauthorized' "]; Cal. State Teachers' Retirement System v.

County of Los Angeles (2013) 216 Cal.App.4th 41, 52, fn. 3 [noting amicus had "special

expertise in [the] area [citation] and therefore its interpretation of the meaning and legal

effect of [the statute] '[was] entitled to consideration and respect by the courts,' " citing

Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7].)6

6 To the extent the parties raised points for the first time in their responses to the
DTSC amicus brief that they could have addressed earlier (as opposed to simply
addressing the DTSC's positions), we will not consider them. (Shade Foods, Inc. v.
Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10
(Shade Foods); County of Sonoma v. Superior Court (2010) 190 Cal.App.4th 1312, 1326,
fn. 10.)

8
2. Relevant environmental statutes

In addition to the HSAA, two federal statutes are relevant here. RCRA governs

the disposal of solid and hazardous waste. (42 U.S.C. § 6901 et seq.) CERCLA, also

known as "Superfund," provides authority to respond to releases and threatened releases

of hazardous substances. (42 U.S.C. § 9601 et seq; Sierra Club v. Johnson (N.D. Cal.

2008) 614 F.Supp.2d 998, 1000.)7 CERCLA "was designed to promote the ' "timely

cleanup of hazardous waste sites" ' and to ensure that the costs of such cleanup efforts

were borne by those responsible for the contamination." (Burlington Northern and Santa

Fe Ry. (2009) 556 U.S. 599, 602 (Burlington Northern).) In 1981, California enacted the

HSAA as "California's 'superfund' statute and the state's counterpart to CERCLA." (City

of Lodi v. Randtron (2004) 118 Cal.App.4th 337, 351 (City of Lodi); ibid. [HSAA's

purposes include "provid[ing] for response authority for releases of hazardous substances

that pose a threat to the public health or environment"].) The HSAA became inoperative

under a sunset provision in January 1, 1999. (City of Lodi, at p. 345, fn. 4.) In 1999, the

HSAA was reenacted with no sunset date. (Stats. 1999, ch. 23, §§ 2, 3.) The HSAA

utilizes CERCLA definitions except where the HSAA defines them or "the context

requires otherwise." (§ 25310.)

7 RCRA was an amendment to the Solid Waste Disposal Act and some courts refer
to the acts interchangeably. (See Wilshire Westwood Assocs. v. Atlantic Richfield Co.
(9th Cir. 1993) 881 F.2d 801, 807 fn. 7.) "Superfund" refers to the trust fund created by
CERCLA (Chubb Custom Ins. Co. v. Space Systems/Loral Inc. (9th Cir. 2013) 710 F.3d
946, 968 (Chubb)), but also is used to refer to the law generally.

9
These are remedial statutes, and thus are "liberally construe[d] . . . in favor of their

protective purpose." (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524,

532; Safe Air For Everyone v. Meyer (9th Cir. 2004) 373 F.3d 1035, 1049, fn. 5

(Safe Air) [recognizing RCRA as remedial statute]; KN Energy, Inc. v. Rockwell Intern.

Corp. (D. Co. 1993) 840 F.Supp. 95, 98 (KN Energy) [noting CERCLA's

" 'overwhelmingly remedial' statutory scheme"]; City of Lodi, supra, 118 Cal.App.4th at

p. 350 ["We do not disagree with the City's assertion that HSAA is a remedial

statute . . . ."].)

B. Plaintiffs had a right of action to recover voluntarily incurred costs

Plaintiffs contend the court erred in concluding they could not proceed under the

HSAA. We agree. Cost actions under the HSAA are governed by section 25363,

subdivision (e) (hereafter § 25363(e)). At the time of Plaintiffs' suit, this section

provided (and still provides, in substantial part):

"Any person who has incurred removal or remedial action costs in accordance
with this chapter or the federal act may seek contribution or indemnity from any
person who is liable pursuant to this chapter . . . . An action to enforce a claim
may be brought as a cross-complaint by any defendant in an action brought
pursuant to Section 25360 or this section, or in a separate action after the person
seeking contribution or indemnity has paid removal or remedial action costs in
accordance with this chapter or the federal act. . . . In resolving claims for
contribution or indemnity, the court may allocate costs among liable parties using
those equitable factors which are appropriate."8 (§ 25363(e).)

8 Section 25363(e) was amended in 2015, effective January 1, 2016, and relettered
as section 25363, subdivision (d). (Stats. 2015, ch. 458, § 2.) Some of Plaintiffs'
arguments turn on the pre-2016 text, and the parties agree that version applies. Unless
otherwise noted, we also address other HSAA provisions as they existed at the time of
Plaintiffs' state court suit, filed in 2006.

10
Whether a party can seek voluntary costs under the HSAA presents a question of

statutory interpretation, which we analyze de novo. (Molenda v. Dept. of Motor Vehicles

(2009) 172 Cal.App.4th 974, 986 (Molenda).) In interpreting a statute, "our fundamental

task is to ascertain the Legislature's intent so as to effectuate the purpose of the statute."

(Smith v. Superior Court (2006) 39 Cal.4th 77, 83.) Statutes " 'must be given a

reasonable and common sense interpretation consistent with the apparent purpose and

intention of the lawmakers, practical rather than technical in nature.' " (City of Poway v.

City of San Diego (1991) 229 Cal.App.3d 847, 858.) "[W]e look first to the words of the

statute, ' "giving to the language its usual, ordinary import and according significance, if

possible, to every word, phrase and sentence in pursuance of the legislative purpose." '

. . . Although we give effect to a statute according to the usual, ordinary import of its

language . . . , language that permits more than one reasonable interpretation allows us to

consider 'other aids, such as the statute's purpose, legislative history, and public policy.' "

(Cortez v. Abich (2011) 51 Cal.4th 285, 292, citations omitted (Cortez).)

The trial court found the absence of judicial action, and Plaintiffs' voluntary

participation in the Assembly Bill No. 2061 process, precluded a right to contribution

under the HSAA. The text of trial court's ruling is relevant, and we reproduce large

sections of it:

"The Court finds that HSAA contribution actions may not be brought where the
remediation was conducted and approved under Chapter 6.65 ('AB 2061'), as is the
case here. HSAA limits standing to bring a claim under Chapter 6.8 [the HSAA]
to 'any person who has incurred removal or remedial action costs in accordance
with this chapter or the federal act.' The reference to 'this chapter' is to Chapter

11
6.8 . . . . AB 2061 cleanups are not under Chapter 6.8, but are exclusively
prescribed under Chapter 6.65 . . . ." (Fn. omitted.)

"The Court . . . finds that the remedial action at issue was not compulsory. The
Court further finds that the weight of the evidence does not suggest [Plaintiffs]
have been subject to any government judicial action by the DTSC which mandated
the remediation of the shooting range. [¶] . . . [Plaintiffs'] HSAA claim . . . fails
because there has been no qualifying action by the DTSC to invoke the
contribution remedy contained in Chapter 6.8. (Citation.) All of [Plaintiffs']
damages . . . relate to a voluntary remediation conducted under Chapter 6.65 ('AB
2061'). The relief available under an AB 2061 cleanup is a certificate of
completion and not contribution under Chapter 6.8 . . . ."

Plaintiffs contend the court erred because, under the plain meaning of the statute,

no prior DTSC action is needed, and because the Assembly Bill No. 2061 process is no

bar to HSAA recovery. We agree.

We begin with the trial court's rulings, and conclude they do not actually address,

much less resolve, Plaintiffs' ability to proceed under the HSAA. First, the court

addressed only contribution, not indemnity. But the typical contribution scenario

involves a prior judgment, and there is no dispute Plaintiffs incurred their costs

voluntarily. (See U.S. v. Atlantic Research Corp. (2007) 551 U.S. 128, 138 (Atlantic

Research) [contribution traditionally refers to "right to collect from others responsible for

the same tort after the tortfeasor has paid more than his or her proportionate share"];

Coca-Cola Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4th 1372, 1381

[contribution applies after debtor has paid more than pro rata share of judgment].)

Second, the Assembly Bill No. 2061 process simply allows parties to request designation

of an agency to oversee remediation and to receive a certificate of completion limiting

further government action. (See § 25260 et seq.) The court seems to suggest that

12
because this process results in a certificate, not a judgment, it cannot provide a basis for a

contribution claim. This analysis again ignores the existence of indemnity. Further, we

see no conflict in use of both the Assembly Bill No. 2061 process and the HSAA: the

former does not address party cost recovery, and the latter imposes no bar on how a

response action can commence. (Compare § 25260 et seq. with § 25300 et seq.)

We now turn to the issue the trial court left unanswered: whether the HSAA

requires prior government action to seek indemnity.

The HSAA does not define indemnity. Black's Law Dictionary provides that

"indemnity" is "[a] duty to make good any loss, damage, or liability incurred by another";

"[t]he right of an injured party to claim reimbursement for its loss, damage, or liability

from a person who has such a duty"; and "[r]eimbursement or compensation for loss,

damage, or liability in tort." (Black's Law Dict. (10th ed. 2014), p. 886, col. 2.)

Identified types of indemnity include contractual, equitable, and statutory indemnity.

(Ibid.) Contractual indemnity is "expressly provided for in an agreement." (Ibid; Civ.

Code, § 2772.) Equitable indemnity permits "defendants . . . to seek apportionment of

loss between the wrongdoers in proportion to their relative culpability" (GEM Developers

v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d 419, 426), and requires a

joint legal obligation. (Union Pacific Corp. v. Wengert (2000) 79 Cal.App.4th 1444,

1447-1448.) Statutory indemnity is that "conferred by legislation." (Black's Law Dict.,

supra, at p. 886, col. 2.)

We interpret indemnity under section 25363(e) to be a grant of statutory indemnity

for those who incur otherwise recoverable costs. This interpretation is consistent with

13
other California statutory regimes providing an indemnity right, without a contractual

obligation or joint tortfeasor relationship, including employee reimbursement, conversion

damages, and deposit transactions. (See Lab. Code, § 2802 [employer "shall indemnify

his or her employee for all necessary expenditures" due to discharge of work]; Machinists

Auto. Trades Dist. Lodge v. Util. Trailers Sales Co. (1983) 141 Cal.App.3d 80, 81

[addressing whether employee had "statutory right to indemnity" for tool loss]; Civ.

Code, § 3336 [damages for conversion are either value of property, with interest, or

"amount sufficient to indemnify the party injured for the loss"]; Civ. Code, § 1833

["depositor must indemnify the depositary" for damages caused by and expenses incurred

as to the item deposited].) We thus disagree with Defendants that the only types of

indemnity are express and equitable indemnity, equitable indemnity is at issue here, and

Plaintiffs do not qualify. The HSAA neither characterizes the indemnity provision as

equitable, nor imposes requirements that would apply in that context.

None of the other language in section 25363(e) suggests there is any prior

government action requirement. Meanwhile, other sections of the HSAA make clear no

such requirement exists. (See, e.g., § 25356.1.5 [response action criteria; explains "[a]ny

response action taken or approved pursuant to this chapter shall be based upon, and no

less stringent than, all of the following requirements[,]" and does not require government

action]; § 25360, subd. (c) [cost recovery in DTSC actions; costs are recoverable "either

in a separate action or by way of intervention . . . in an action for contribution or

indemnity," implying the possibility of an action initiated by a private party].)

14
We conclude the plain language of the HSAA does not require prior government

action and, to the contrary, permits recovery of voluntarily incurred remediation costs.

This interpretation is consistent with the legislative history, CERCLA, and the remedial

purposes of these statutes. Section 25363(e) was expanded in 1988 to permit "[a]ny

person" to seek contribution or indemnity. (Stats. 1988, ch. 1401, § 1, p. 4734; see, e.g.,

Health & Welf. Agency, Enrolled Bill Rep., Assem. Bill No. 3946 (1987-1988 Reg.

Sess.) Sept. 8, 1988, p. 2 [bill would "more equitably extend[] the right to seek

contribution and indemnity to all potentially liable parties" (emphasis in original)].)9

Like the HSAA, CERCLA provides for two types of cost actions, cost recovery under

CERCLA section 107 and contribution under CERCLA section 113. (42 U.S.C. §§ 9607,

9613.) A party that voluntarily remediates may seek cost recovery under CERCLA

section 107. (See Atlantic Research, supra, 551 U.S. at p. 139, fn. 6 ["costs incurred

voluntarily are recoverable only by way of [CERCLA ]§ 107(a)(4)(B)"].) Finally, the

DTSC urges that precluding remediation costs for voluntary cleanups using the Assembly

Bill No. 2061 process "could have significant negative consequences for the cleanup of

contaminated sites." We find their explanation persuasive: "Responsible parties would

be discouraged from undertaking voluntary cleanups . . . . This would eliminate

substantial direct environmental benefits resulting from responsible parties expeditiously

and voluntarily undertaking cleanups, rather than waiting for a government agency with

9 On our own motion, we take judicial notice of documents comprising the
legislative history of section 25363(e). (Evid. Code, §§ 452, 459; see In re
Donovan L., Jr. (2016) 244 Cal.App.4th 1075, 1088.)

15
finite resources to either order the same action or to itself clean up the contamination with

taxpayer money."

A property owner who voluntary remediates can seek indemnity for response costs

under the HSAA. Use of the Assembly Bill No. 2061 process does not preclude such

recovery.

C. Plaintiffs established HSAA liability

The trial court concluded Plaintiffs did not establish any HSAA liability.

Plaintiffs assert the court primarily erred in two respects: applying the consumer product

in consumer use exception to find the range was not a facility, and finding they did not

establish a disposal, on various grounds. We conclude the court misapplied the consumer

product exception, and some, but not all, of its disposal rulings were in error.

1. Overview of HSAA liability

We begin by describing the elements of an HSAA claim, which will provide

context for Plaintiffs' facility and disposal arguments.

Under the HSAA, costs can be recovered from a liable person. (§ 25363(e).) A

" 'liable person' " means "those persons described in [CERCLA] section 107(a)."

(§ 25323.5, subd. (a)(1).) To establish liability under CERCLA, and thus the HSAA, the

plaintiff must establish " '(1) the site on which the hazardous substances are contained is a

"facility" under CERCLA's definition of that term . . . 42 U.S.C. § 9601(9); (2) a

"release" or "threatened release" of any "hazardous substance" from the facility has

occurred, 42 U.S.C. § 9607(a)(4); (3) such "release" or "threatened release" has caused

the plaintiff to incur response costs that were "necessary" and "consistent with the

16
national contingency plan," 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B); and (4) the defendant

is within one of four classes of persons subject to the liability provisions of [CERCLA]

section 107(a).' " (Carson Harbor Village, Ltd. v. Unocal Corp. (9th Cir. 2001) 270 F.3d

863, 870-871, citations omitted (Carson Harbor I) [en banc]; Gregory Village Partners,

L.P. v. Chevron U.S.A., Inc. (N.D. Cal. 2011) 805 F.Supp.2d 888, 897 (Gregory Village)

["A claim under the HSAA has the same elements as a claim under CERCLA."].) One

class of liable persons covers "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." (42 U.S.C. § 9607(a)(2).)

2. The shooting range was not a consumer product in consumer use

a. Applicable law

CERCLA defines a " 'facility' " as "(A) any building, structure, installation,

equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment

works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor

vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has

been deposited, stored, disposed of, or placed, or otherwise come to be located; but does

not include any consumer product in consumer use or any vessel." (42 U.S.C.

§ 9601(9).)

CERCLA does not define "consumer product in consumer use." However, the

Seventh Circuit and Fifth Circuit have concluded that a facility must be a "consumer

product in consumer use" to qualify for this exception. (Amcast Indus. Corp. v. Detrex

Corp. (7th Cir. 1993) 2 F.3d 746, 750 (Amcast) [discussing tanker trucks: "The

17
exception is for facilities that are consumer products in consumer use, not for consumer

products contained in facilities. Although read as it is written the exception is narrow, it

is not meaningless, for the statute defines 'facility' so broadly that it could be thought to

include a can of lye . . . . A literal interpretation that furthers the statute's purpose is hard

to beat."]; Uniroyal Chem. Co., Inc. v. Deltech Corp. (5th Cir. 1998) 160 F.3d 238, 240,

253-254 (Uniroyal) [addressing tanker truck and trucking terminal; agreeing with

Amcast's literal approach and finding legislative history supported this literal reading];

see Am. Internat. Specialty Lines Ins. Co. v. U.S. (Fed. Cl., Jan. 31, 2008, No. 05-1020 C)

2008 WL 1990859, at p. *30 [addressing claim under law incorporating CERCLA facility

definition]; id. at p. *32 [finding "shared rationale of the Fifth and Seventh Circuits to be

persuasive"].)

The Fifth Circuit also concluded in Uniroyal that a " 'consumer product in

consumer use' means any good normally used for personal, family, or household

purposes, which was being used in that manner when the subject release occurred," and

that neither the truck nor trucking terminal at issue there qualified. (Uniroyal, supra, 160

F.3d at p. 257.) Uniroyal noted, among other things, the legislative history, which

reflected a focus on consumers and retail settings. (See, e.g., id. at p. 256 [Sen. Com. on

the Envrt. and Pub. Works Rep. No. 99–11, 11 (1985) [describing " 'finished consumer

products such as those that might be found in a retail store, where such products do not

present a threat of release from a facility' " as " 'consistent with the definition of a

'facility' contained in . . . CERCLA, and its reference to consumer products' "].) Other

courts have embraced a consistent interpretation. (See, e.g., Emergency Servs. Billing

18
Corp. v. Allstate Ins. Co. (7th Cir. 2012) 668 F.3d 459, 468 (Emergency Servs.) [personal

motor vehicles were consumer products in consumer use]; KN Energy, supra, 840

F.Supp. at p. 99 [exception did not apply to company pipelines, because a "commercial

business [was] involved, not individual consumers]; Reading Co. v. City of Phila. (E.D.

Pa. 1993) 823 F.Supp. 1218, 1233 (Reading Terminal) [exception did not apply to

railcars].)10

Consumer use of a commercial facility does not render it a consumer product.

(See CP Holdings, Inc. v. Goldberg-Zoino & Assoc., Inc. (D.N.H. 1991) 769 F.Supp.

432, 439 (CP Holdings) [hotel was not a consumer product: "If the court were to accept

[this] definition of a facility, any commercial building or property that could be bought or

sold would have to be classified as a consumer product if the property is used by the

general public. This would effectively exclude all private actions against previous

landowners, despite the fact that [CERCLA] clearly provides for such actions."]; Reading

Terminal, supra, 823 F.Supp. at p. 1235 [rejecting argument that consumer use of

terminal rendered the "entire area" a consumer product].)

Finally, like other statutory exceptions, the consumer product exception must be

construed narrowly. (See San Diego Union v. City Council (1983) 146 Cal.App.3d 947,

954 ["express exceptions" are "strictly and narrowly construed"]; In re: Sept. 11 Lit. (2d

Cir. 2014) 751 F.3d 86, 91 (Sept. 11 Lit.) ["[CERCLA's] several exceptions . . . are

10 Uniroyal, supra, 160 F.3d at page 257, and Emergency Servs., supra, 668 F.3d at
page 468, cited EPA comments and rules suggesting the EPA would take a similar
position.

19
generally read narrowly]; Amcast, supra, 2 F.3d at p. 750 [describing consumer product

exception as "narrow"].)

b. Analysis

The trial court found Defendants established "the shooting range at issue was a

'consumer product in consumer use' within the meaning of the HSAA." The trial court

also found the lead pellets, spent ammunition, targets, and fill material were consumer

products in consumer use. The court explained: "The weight of the evidence establishes

that the shooting range was at all times operated as a recreational facility for the

consuming public. . . . Lead ammunition and clay targets were consumer products used

by ordinary consumers for target practice, and those items came to be located at the

shooting range during consumer use. In addition, the range itself was a consumer

product, including [the stations] which were constructed with the white fill material . . . ."

The court noted the shot and targets were for sale at the range, and the same type as those

sold in sporting goods stores. Finally, the court rejected certain contentions by Plaintiffs

below, including that "the exception does not apply to physical locations." According to

the court, this argument was rejected in Kane v. United States (8th Cir. 1994) 15 F.3d 87

(Kane).

Plaintiffs contend the trial court erred in applying the consumer product exception,

because the exception applies to consumers using consumer products, not commercial

properties used by consumers. We agree. First, the court erroneously addressed whether

various materials contained in the facility (e.g., targets) were consumer products in

consumer use, when the exception only applies to facilities that are consumer products.

20
(Amcast, supra, 2 F.3d at p. 750; Uniroyal, supra, 160 F.3d at pp. 252-253.)11 Second,

the court focused on consumer use of the range to find the exception applied, an

interpretation rejected by the courts. (See CP Holdings, supra, 769 F.Supp. at p. 439;

Reading Terminal, supra, 823 F.Supp. at p. 1235.) The court thus failed to address

whether the range was a good used for personal, family, or household purposes.

(Uniroyal, at pp. 252-253, 257.) It plainly was not.

We briefly explain why Kane is inapposite. Kane relied on Dayton Independent

School Dist. v. U.S. Mineral Products Co. (5th Cir. 1990) 906 F.2d 1059, 1065-1066, to

conclude a home constructed with asbestos was a consumer product. (Kane, supra, 15

F.3d at pp. 89-90, citing Dayton, at pp. 1065-1066 [asbestos incorporated into school

building was consumer product].) The Fifth Circuit has limited Dayton to its context.

(Uniroyal, supra, 160 F.3d at pp. 250-252 [explaining Dayton involved "a single, narrow

issue: . . . whether CERCLA afforded a remedy in asbestos removal cases," and that its

comments on the consumer exception were unnecessary to the holding, "expressed

without citation to any specific legislative history," and "cannot reasonably be viewed as

a definitive statement on the meaning of that exception"].) Dayton provides no guidance

11 The trial court did not suggest the items at the range are facilities. "Facility within
a facility" cases present a special situation, and there is no indication any party has
alleged it applies here. (See, e.g., Nurad, Inc. v. William E. Hooper & Sons Co. (4th Cir.
1992) 966 F.2d 837 (Nurad) [storage tanks were separate CERCLA facility from land].)

21
here, and neither does Kane — even if it addressed a commercial property, which it does

not.12

Finally, Defendants maintain the cases and legislative history support application

of the exception to business use. Uniroyal distinguished these cases, and we find its

reasoning persuasive. (See Uniroyal, supra, 160 F.3d at pp. 256-257.) As for the

legislative history, Defendants cite CP Holdings. This case discussed both the " 'finished

consumer products' " legislative comments noted in Uniroyal and business concerns that,

absent an exception, companies that use hazardous substances could be liable under

CERCLA. (CP Holdings, supra, 769 F.Supp. at p. 439.) However, on the latter point,

CP Holdings identifies only a report "from . . . business organizations" (id., at fn. 6

[citing 1986 SARA Leg. Hist. 27, at 551]). The broader legislative history reflects

consumers, quite reasonably, were the focus of the consumer product exception.

(Uniroyal, at pp. 256-257; see also KN Energy, supra, 840 F.Supp. at p. 99; Reading

Terminal, supra, 823 F.Supp. at p. 1233.)

This issue does not present a close question. The "consumer product in consumer

use" exception does not apply to a commercial shooting range.13

12 The trial court also questioned, among other things, Plaintiffs' purported reliance
on military and police ranges, apparently referencing EPA cases cited in their closing trial
brief. The EPA cases appeared to involve at least some private parties. (See, e.g., U.S. v.
Lake Geneva Assocs. (E.D. Wis., Sep. 30, 1998, No. 98-C-0972) 1998 EPA Consent
Lexis 221 [defendants included corporations].) In any event, the case law provides some
insight into the EPA's perspective, and it is consistent with Plaintiffs' position. (Uniroyal,
supra, 160 F.3d at p. 257; Emergency Servs., supra, 668 F.3d at p. 468.)

22
3. Plaintiffs established certain disposals by Defendants

The trial court concluded Plaintiffs did not establish disposals with respect to the

lead shot and target debris on the range (including because the targets fell under the

HSAA's petroleum exclusion), the white material, disking, and the wood pile. Plaintiffs

contend these disposals did occur, because the contaminants were discharged or

otherwise placed onto the land and these materials were solid waste. We conclude they

establish error as to the shooting range, the petroleum exclusion, and the white material.

a. Applicable law

Under CERCLA, "disposal" is defined by reference to RCRA. (Carson Harbor I,

supra, 270 F.3d at p. 875, citing 42 U.S.C. § 9601(29).) Under RCRA, a " 'disposal' " is

"the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid

waste or hazardous waste into or on any land or water so that such solid waste or

hazardous waste or any constituent thereof may enter the environment or be emitted into

the air or discharged into any waters, including ground waters." (42 U.S.C. § 6903(3);

Carson Harbor I, at p. 879 [describing inquiry in CERCLA disposal analysis as

13 Plaintiffs also contend the court failed to address whether the Property was a
facility, before reaching the consumer product exception. We agree the court failed to
meaningfully address whether Plaintiffs established a facility in the first instance. The
court did summarily conclude they failed to prove the "range . . . was a 'facility,' " but its
findings and analysis focused entirely on the consumer product exception. In light of
Plaintiffs' objection below, we will not imply findings to support this conclusion.
However, the court's focus on the range, as opposed to the Property, appears to be
harmless. Plaintiffs do not establish the court's consumer product analysis was impacted
by not focusing on the Property, and that analysis was in error regardless.

23
"examin[ing] each . . . term[]" in RCRA's disposal definition and "determin[ing] whether

the movement of contaminants is, under the plain meaning of the terms, a 'disposal' "].)

" '[S]olid waste' " is defined, in relevant part, as "any . . . discarded material,

including . . . material resulting from industrial, commercial, mining, and agricultural

operations, and from community activities." (42 U.S.C. § 6903(27).) The Ninth Circuit

has applied the following factors to assess whether a material is solid waste: "(1) whether

the material is 'destined for beneficial reuse or recycling in a continuous process by the

generating industry itself,' . . . ; (2) whether the materials are being actively reused, or

whether they merely have the potential of being reused . . . ; (3) whether the materials are

being reused by its original owner, as opposed to use by a salvager or reclaimer . . . ."

(Safe Air, supra, 373 F.3d at p. 1043, citations omitted.)

b. Plaintiffs established a disposal based on Defendants' failure to
reclaim spent lead and target debris that accumulated in the
environment

Plaintiffs contend Defendants left the spent shot and targets to accumulate, the

materials became solid waste at some point, and the changes in ownership, without

removal of the materials, meant the transformation to solid waste occurred by the time of

those changes. This position is consistent with applicable authority and the trial court

erred in rejecting it.14

14 We note Plaintiffs use the term "abandonment" to describe Defendants' conduct.
We gather they use it in the ordinary, rather than technical sense, but we avoid its use in
order to minimize confusion. Abandonment is a concept associated with the RCRA
regulatory definition of solid waste, which, as we shall explain, is inapplicable here.

24
i. Additional facts

We briefly describe the history of range management, which is relevant to our

disposal analysis. UEI employee Thomas Eley managed the range between 1965 and

1968, followed by UEI lessee Phil G. Scott from 1968 to 1978. They recovered some,

but not all, spent lead shot, with Scott last reclaiming lead in 1975 or 1976. Scott

testified he tried to retrieve more lead when he left in 1978, the last time the range was

open during UE ownership, but had to leave it. No efforts were made to recover target

debris, although Eley did attempt to chop and cover the targets. Baldwin's lessee Ray M.

Enniss operated the range from 1990 to 1997, including for several months after Baldwin

transferred the Property to the Estate. Enniss's lease required him to remove the

materials. Again, though, only some lead shot was recovered (with Enniss last

reclaiming lead in 1996), and no target debris. When the Estate terminated his lease in

1997, he could not remove the materials in the time provided by the Estate and the

Estate's attorney, B. Suzanne Farley, declined his request to return.15

ii. Applicable law

Spent lead and target debris on a shooting range can become solid waste if left to

accumulate. In Connecticut Coastal Fishermen's Ass'n. v. Remington Arms Co. (2d Cir.

1993) 989 F.2d 1308 (Connecticut Coastal), a gun club had been in use for 70 years and

15 Based on testimony about the amount of lead shot used, and its typical weight,
Plaintiffs represent hundreds of thousands of pounds of lead went unrecovered, and
Defendants do not dispute this. We need not focus on the amount, as there is no dispute
both sets of Defendants left at least some lead and target debris.

25
no spent shot or target debris had been removed. (Id. at p. 1310.) The court noted RCRA

did not define " 'discarded material' " and "this create[ed] an ambiguity . . . : At what

point after a lead shot is fired at a clay target do the materials become discarded?" (Id. at

p. 1314.) After noting the legislative history did not resolve this ambiguity, the court

looked to the RCRA regulations and the EPA's input as amicus. (Id. at p. 1314.) The

regulations apply a narrower definition of solid waste " 'to wastes that also are hazardous

for purposes of the regulations implementing Subtitle C of RCRA,' " while providing the

statutory definition "applies to 'imminent hazard' lawsuits brought by the United States."

(Ibid.) The court found the broader statutory definition applied to imminent hazard

citizen suits, too. (Id. at p. 1315.) The EPA found the shot and targets did not fit the

regulatory definition, but did come within the statutory definition because they were

discarded. (Id. at pp. 1314-1316; id. at p. 1316 "[T]he EPA states that the materials are

discarded because they have been 'left to accumulate long after they have served their

intended purpose.' "].)

The court agreed: "Without deciding how long materials must accumulate before

they become discarded — that is, when the shot is fired or at some later time — we agree

that the lead shot and clay targets . . . have accumulated long enough to be considered

solid waste." (Connecticut Coastal, supra, 989 F.2d at p. 1316; see also Benjamin v.

Douglas Ridge Rifle Club (D. Or. 2009) 673 F.Supp.2d 1210, 1221-1222 [lead shot

accumulated at a rifle club over 54 years; acknowledging that firing munitions is not

itself a disposal, but "[f]ifty-four years of lead accumulation is more than long enough to

be considered solid waste".)

26
The EPA took a consistent view in its Best Management Practices for Lead at

Outdoor Shooting Ranges, EPA-902-B-01-001, at page I-8 (June 2005) (Best

Management Practices) (as of Sep. 22, 2017).16

Citing Connecticut Coastal, the EPA stated gun clubs are "at risk of legal action under

RCRA if they fail to routinely recover and reclaim lead, do not take steps to minimize

lead release or migration, or if they abandon lead in berms." (Best Management

Practices, at pp. I-6 to I-7.) The EPA explained: "Lead shot is not considered a

hazardous waste subject to RCRA at the time it is discharged from a firearm because it is

used for its intended purpose. As such, shooting lead shot (or bullets) is not regulated nor

is a RCRA permit required to operate a shooting range. However, spent lead shot (or

bullets), left in the environment, is subject to the broader definition of solid waste written

by Congress . . . ." (Id. at p. I-8.)

iii. Analysis

The trial court observed RCRA's disposal definition applied, and determined

Plaintiffs "failed to establish that actionable 'disposals' occurred." The court found there

was no abandonment of either the range or the materials, noting, among other things, that

"lead shot was reclaimed on numerous occasions," and the EPA's position that "ordinary

use of lead shot on a shooting range does not fall within the regulatory definition of solid

16 The guide "was developed by EPA Region 2 in cooperation with a few states as
well as many EPA offices." (Best Management Practices, supra, Notice.)

27
waste." The court also found there was no disposal when Defendants sold the Property,

because the transfer of property is not a disposal. Instead, the court found "the lead shot

and broken targets at issue were historically distributed on the range as a part of

recreational activities, and not as a result of waste disposal." The court explained "the

Ninth Circuit has held that the act of using a product in its intended fashion does not

constitute a disposal of that product as waste, citing 3550 Stevens Creek Assocs. v.

Barclays Bank (9th Cir. 1990) 915 F.2d 1355 (3550 Stevens Creek) and A & W Smelter

and Refiners v. Clinton (9th Cir. 1998) 146 F.3d 1107 (A & W Smelter).

Plaintiffs contend the court erred by focusing on the materials' use at the time of

discharge; the "relevant inquiry [was] whether Defendants . . . allowed the contaminants

to 'accumulat[e] long enough to be considered solid waste,' " and the Property

transactions rendered "inescapable" the conclusion that the transformation to solid waste

had occurred. Plaintiffs also contend the court erred in focusing on whether the products

were useful, because "[t]hese contaminants were not serving any 'use,' and were never

reclaimed and put to another use by Defendants." We find Plaintiffs' arguments

persuasive.

First, the court's analysis failed to address whether the spent shot and target debris

met the statutory definition of solid waste (and, to the extent it did focus on the issue, it

relied on the inapplicable regulatory definition). Plaintiffs objected to this portion of the

Statement of Decision, we will not infer the court made such findings, and the undisputed

facts support Plaintiffs' position, anyway. The critical issue is whether the materials were

destined for reuse, or whether they had been left to accumulate. (Safe Air, supra, 373

28
F.3d at p. 1043; Connecticut Coastal, supra, 989 F.2d at p. 1316.) Here, the record

supports only the latter conclusion: each set of Defendants recovered only some lead, no

target debris, and did not remove remaining materials before selling or transferring the

Property (thus foreclosing, at least presumptively, further reclamation). The issues the

trial court did address are irrelevant. Defendants' intentions toward the range have no

bearing on whether disposals took place, especially as they failed to recover lead and

targets even while the range was operational. There is no dispute some lead was

recovered; the problem is that much was not (and that no targets were, either). Finally,

although the "mere sale of property . . . is not a disposal" (Sycamore Indus. Park Assocs.

v. Ericsson (7th Cir. 2008) 546 F.3d. 847, 851), that is not Plaintiffs' position. Their

point is that the ownership changes make clear that Defendants were not going to reclaim

the materials they had left to accumulate and, thus, that the disposals occurred by the time

of those changes.17

Second, the useful product doctrine is inapposite. In 3550 Stevens Creek, the

Ninth Circuit concluded that asbestos in a commercial building was not discarded

because it was "used to construct the building." (3550 Stevens Creek, supra, 915 F.2d at

p. 1361.) In A & W Smelter, the Ninth Circuit applied this concept to unprocessed ore

17 Plaintiffs suggest Nurad reflects that when a company closes with facilities
containing hazardous waste, this constitutes a disposal. (Nurad, supra, 966 F.2d at p. 847
["[T]here clearly was a disposal . . . when the Company closed down the finishing plant
and abandoned the tanks."].) But Nurad had concluded the tanks were disposed of prior
to sale, and made this observation in the alternative. (Ibid.) Nurad nevertheless
illustrates the relevance of a sale, insofar as it reflects an absence of intent for further use.

29
and determined there was a triable issue as to whether the ore was a useful product.

(A & W Smelter, supra, 146 F.3d at pp. 1112-1113; id. at p. 1113 ["[i]f the ore was mixed

with enough slag so that it was no longer usable . . . , then it was waste"].) Here,

although the lead shot and targets were useful at some point, the materials at issue are the

spent lead and target debris left to accumulate. (See, e.g., Levin Metals Corp. v.

Parr-Richmond Terminal Co. (N.D. Cal. 1991) 781 F.Supp. 1448, 1452 & fn. 3 (Levin)

[explaining the issue was "not the DDT that was put to productive use, but rather the

DDT that was released into the environment," and finding 3550 Stevens Creek

inapposite].)

We address two issues raised by Defendants. First, they suggest Cordiano v.

Metacon Gun Club, Inc. (2nd Cir. 2009) 575 F.3d 199 should guide our analysis.

Cordiano confirms range materials are not regulatory solid waste (which is not in

dispute), but does not reach the statutory solid waste question. (Id. at pp. 205-206, 209

[plaintiffs failed to raise material issue on imminent and substantial endangerment, so

court did not need to reach whether lead had been " 'discarded' within the meaning of the

statutory definition"].) Second, Defendants contend " 'imminent and substantial

endangerment' is required to prove RCRA statutory waste." Setting aside their

mischaracterization of RCRA, we disagree. The use of the broader statutory definition in

30
both RCRA endangerment claims and under CERCLA does not render the elements of

the RCRA claims applicable to CERCLA (or, in turn, the HSAA).18

Although we decline to identify when the spent lead and target debris became

solid waste, we conclude Plaintiffs established this transformation occurred during

Defendants' ownership periods. The trial court erred in finding no disposals.

c. The trial court applied the wrong burden of proof in applying the
petroleum exclusion to the target debris

The court found Plaintiffs failed to establish the HSAA petroleum exclusion did

not apply to the target debris. Plaintiffs contend the court erred by placing the burden of

proof on them, rather than Defendants. We agree.

As noted ante, PAH's on the Property were attributed to the target debris.

Plaintiffs contend PAH's are hazardous substances under the HSAA. (§ 25316,

subd. (d).) Section 25317 provides that " '[h]azardous substance' " does not include

"[p]etroleum, including crude oil or any fraction thereof . . . ." CERCLA has an

analogous exclusion. (42 U.S.C. § 9601(14).) "[H]azardous substances which are

contained in and are indigenous to petroleum or are added as a constituent during the

refining process" fall within the exclusion. (Nixon-Egli Equip. Co. v. John A. Alexander

Co. (C.D. Cal. 1996) 949 F.Supp. 1435, 1442 (Nixon-Egli).)

18 Defendants also cite Catellus Dev. Corp. v. U.S. (9th Cir. 1994) 34 F.3d 748, 750,
for the proposition that disposal refers " 'to an affirmative act of discarding a substance as
waste, and not the productive use of the substance.' " Even assuming their conduct was
not affirmative, the Ninth Circuit has since "reject[ed] the absolute binary 'active/passive'
distinction." (Carson Harbor I, supra, 270 F.3d at p. 879.)

31
The party claiming the exclusion bears the burden of proof. (Nixon-Egli, supra,

949 F.Supp. at p. 1443 ["the petroleum exclusion is a statutory exception and, as is the

case with other statutory exceptions, the party seeking to invoke the exception bears the

burden of proof on it[s] applicability"]; Ekotek Site PRP Comm. v. Self (D. Utah 1996)

932 F.Supp. 1319, 1323 [accord].) And, as with other exceptions, it is narrowly

construed. (Sept. 11 Lit., supra, 751 F.3d at p. 91.)

Here, the trial court found the petroleum exclusion "applie[d] to the component of

the target which is petroleum since all the PAH[']s detected at the site were indigenous to

the petroleum pitch component of the target." The court found the evidence established

the targets were made of nonhazardous clay and petroleum pitch, citing various witnesses

and reports. The court concluded that "[s]ince [Plaintiffs] failed to present any evidence

that the PAH[']s came from any other source than the petroleum pitch contained in the

targets, the exclusion contained in . . . section 25317 applies . . . ."

Plaintiffs contend the court erred by requiring them to demonstrate the targets

were not made of petroleum pitch. They explain that because Defendants did not present

evidence the targets at the range were made of petroleum, they had no need to introduce

evidence the targets were made of coal tar. Plaintiffs also argue there was no substantial

evidence to support the court's finding that the targets were made of petroleum pitch,

32
explaining the evidence showed only that the targets were made of pitch (not petroleum

pitch) or addressed targets generally, not those actually used at the range.19

We agree the trial court erred by placing the burden of proof on Plaintiffs. (See

Nixon-Egli, supra, 949 F.Supp. at p. 1443.) The court should have addressed whether

Defendants established the targets used on the range were made of petroleum pitch, not

whether Plaintiffs proved the PAH's came from elsewhere (or, as Plaintiffs put it, that the

targets were not made of petroleum pitch). We conclude Plaintiffs have a reasonable

chance of prevailing if the burden is properly applied. (College Hosp., supra, 8 Cal.4th at

p. 714.)

d. The trial court erred in finding use of the white material was not a
disposal

Plaintiffs contend use of the perchlorate-containing white material constituted a

disposal. The trial court found Plaintiff failed to establish a disposal based on use of the

white material because it "was emplaced on the range solely as a construction material to

expand the range, and was not deposited there as waste," citing 3550 Stevens Creek,

supra, 915 F.2d 1355. Plaintiffs maintain use of the white material was a disposal, and

their position has merit. Even assuming the white material were a useful product at some

point, 3550 Stevens Creek remains distinguishable. A disposal requires that the material

19 Plaintiffs also suggest evidence cited by the court here was hearsay, but they do
not establish they objected below or offer any argument here. They have forfeited this
argument. (People v. Stanley (1995) 10 Cal.4th 764, 793 (Stanley) [" '[E]very brief
should contain a legal argument with citation of authorities . . . . If none is furnished on a
particular point, the court may treat it as waived . . . .' "].)

33
enter the environment. (42 U.S.C. § 6903(3).) In 3550 Stevens Creek, the court noted

not only that the asbestos at issue was used in construction, but also that "there is no

indication that materials containing asbestos installed as part of the structure of a

building, as here, are such that asbestos fibers 'may enter the environment.' " (3550

Stevens Creek, at p. 1362.) Here, in contrast, the white material already was in the

environment. California v. Blech (9th Cir. 1992) 976 F.2d 525, 527, footnote 1, cited by

Defendants, is distinguishable for the same reasons. (Id. at p. 527, fn. 2 [involving a

release within a structure].)20

e. Plaintiffs do not establish disking resulted in disposal

Plaintiffs contend each instance of disking was a disposal, and the trial court erred

in concluding otherwise. They do not establish error.

Disposal can encompass subsequent movement of contaminants. In Kaiser

Aluminum & Chemical Corp. v. Catellus Dec. Corp. (9th Cir. 1992) 976 F.2d 1338

(Kaiser), the Ninth Circuit found allegations that a party "excavated . . . tainted soil,

moved it away from the excavation site, and spread it over uncontaminated portions of

the [P]roperty" sufficient to support disposal. (Id. at p. 1342 [reversing grant of motion

to dismiss CERCLA claim].) The court explained: "[T]he term 'disposal' should not be

limited solely to the initial introduction of hazardous substances onto property. Rather,

20 Defendants also contend Plaintiffs "agreed the white material was 'non-
hazardous,' " citing evidence relating to this issue. We will not infer this evidence
reflects the white material was not hazardous for disposal purposes, given the court did
not reach the issue and Plaintiffs objected to the court's failure to address whether
perchlorate was a hazardous substance (and related cost findings).

34
consistent with the overall remedial purpose of CERCLA, 'disposal' should be read

broadly to include the subsequent 'move[ment], dispers[al], or release[] [of such

substances] during landfill excavations and fillings.' " (Ibid. ["CERCLA's definition of

'disposal' expressly encompasses the 'placing of any . . . hazardous waste . . . on any

land.' "]; see Tanglewood East Homeowners v. Charles-Thomas, Inc. (5th Cir. 1988) 849

F.2d 1568, 1573 [affirming denial of motion to dismiss claim against developer that,

among other things, dispersed contaminated soil throughout subdivision]; Redwing

Carriers, Inc. v. Saraland Apartments (11th Cir. 1996) 94 F.3d 1489, 1510 (Redwing)

[disposal includes "subsequent movement and dispersal"].)

Notwithstanding this broad view of disposal, the Eleventh Circuit concluded that

returning soil to the same place did not constitute a disposal. (Redwing, supra, 94 F.3d at

pp. 1510, 1511 [record lacked evidence that gas line work "resulted in a movement of

contaminated soil"; "[T]he only reasonable inference is that any soil dug up during the

process was returned from whence it came. No matter how broadly the term is defined,

this conduct did not amount to a 'disposal.' "].)

The trial court determined Plaintiffs failed to establish disking constituted a

disposal. The court explained: "Cases discussing the excavation and re-distribution of

contaminated soil are inapt. (E.g., [Kaiser[, supra,] 976 F.2d 1338, 1342.) In this case,

disking did not involve (1) excavation of the soil; (2) movement of soil to other portions

of the range; and (3) spreading contaminated soil over uncontaminated portions of the

[P]roperty." The court found "the mere action of rotating soil and returning it to the same

place" is not a disposal, and the evidence established disking "simply turns over soil and

35
did not expand the area of soil contamination." The court also noted disking was

performed for weed abatement and fire prevention, not disposal. For HSAA

nonretroactivity purposes (which we address post), the court also found the evidence to

be unconvincing as to whether disking occurred after 1982, and alternatively found any

such disking "did not enlarge the area or depth of soil contamination."

Plaintiffs contend the trial court made a legal error in concluding disking was not a

disposal, and that there was no substantial evidence to reflect certain findings as to post

1982 disking. We conclude Plaintiffs do not establish legal error, and need not reach

their substantial evidence argument. The court's references to excavation, movement to

other areas, and spreading contamination track the allegations in Kaiser, reflecting it was

applying the case and finding it distinguishable. (Kaiser, supra, 976 F.2d at p. 1342.)

Plaintiffs disagree, suggesting the disking resulted in soil movement and this was enough,

citing Kaiser. This argument has force, given Kaiser's broad language. (Ibid.) But

Kaiser did not actually find a disposal based on movement in place, and Redwing rejects

this application. (Redwing, supra, 94 F.3d at p. 1511.) We do not hold that disking could

never be a disposal, but simply that the court applied appropriate legal standards in

concluding it was not a disposal here.21

21 We address two other issues raised by Plaintiffs. First, they contend "[t]he effect
of this disking was to bury surface contaminants deep into the soil," citing testimony by
Eley. Assuming they are suggesting disking did spread contamination, they failed to
challenge the court's findings as to disking's impact on substantial evidence grounds and
cannot establish error. They also argue the purpose of the disking was irrelevant. On that
point, we agree. (Coppola v. Smith (E.D. Cal., Apr. 6, 2015,

36
f. Plaintiffs do not establish a disposal as to the wood pile occurred
during the Baldwin Defendants' ownership period

Plaintiffs contended the wood pile resulted in a disposal, and the trial court erred

by erroneously requiring them to prove causation. They do not establish error.

The HSAA only applies to former owners who were owners "at the time of

disposal." (42 U.S.C. § 9607(a)(2).) The trial court found Plaintiffs "failed to present

evidence establishing any connection between the hazardous substances they found in

2005 to any disposal activity that took place during Baldwin's ownership." The court

acknowledged the Plaintiffs "found the presence of various chemicals/metals at the wood

pile," but observed the tests were conducted in 2005, eight years after the Baldwin

Defendants' ownership ended, and that "[n]o evidence was presented that any [materials]

. . . w[ere] ever present at the wood pile during Baldwin's ownership between 1988 and

1997." The court also found, among other things, that the Estate did not document the

wood pile composition when it took ownership and concerns about illegal dumping led to

a fence installation in 2002 or 2003. The court's analysis is sound. Hazardous substances

may have been found in the area of the wood pile in 2005, but that does not establish,

without more, that they were disposed of during the Baldwin Defendants' ownership.

Plaintiffs contend the trial court's reference to a "connect[ion]" meant the court

"erroneously inserted a 'causation' element." We agree CERCLA, and thus the HSAA,

No. 1:11-cv1257-AWI-BAM) 2015 U.S. Dist. Lexis 45164, at p. *17 [owner at time of
disposal can be liable, "regardless of intent"]; Levin, supra, 781 F.Supp. at p. 1451, fn. 1
[accord].)

37
does not require a plaintiff to establish "a direct causal connection between the

defendant's hazardous substances and the release or the plaintiff's incurrence of response

costs." (U.S. v. Alcan (3d Cir. 1992) 964 F.2d 252, 265.) The lack of that causal

connection is an affirmative defense. (42 U.S.C. § 9607(b); Health & Saf. Code,

§ 25323.5, subd. (b).) But the trial court was not requiring Plaintiffs to show Baldwin

caused anything. Rather, it found Plaintiffs did not establish a disposal as to the wood

pile, by anyone, took place during the Baldwin Defendants' ownership.

Plaintiffs rely on cases involving generators or distributors. (See U.S. v. Monsanto

Co. (4th Cir. 1988) 858 F.2d 160; U.S. v. Wade (E.D. Pa. 1983) 577 F.Supp. 1326; and

Cal. ex rel. Dept. of Toxic Substances Control v. Verticare, Inc. (N.D. Cal., Mar. 1, 1993,

No. C-92-1006 MHP) 1993 U.S. Dist. Lexis 3062.) This reliance is misplaced. Unlike

former owner liability, generator liability is based on "arrang[ing] for disposal . . . of

hazardous substances . . . at any facility . . . owned or operated by another party or entity

and containing such hazardous substances." (42 U.S.C. § 9607(a)(3).) It was in this

context that Monsanto held that a plaintiff need not "trace the ownership of each . . .

compound found at a site" and "a showing of chemical similarity between hazardous

substances is sufficient." (Monsanto, at p. 169.) Wade and Verticare involved similar

issues as to generator and distributor defendants and likewise are unavailing. (Wade, at

38
p. 1332; Verticare, at p. *8.) All Plaintiffs needed to show was that a disposal took place

during the Baldwin Defendants' ownership.22

D. The court erred with respect to Defendants' defenses

The trial court concluded Defendants established defenses or other bars to liability

based on the HSAA's permitted release provision, HSAA nonretroactivity (including tort

arguments relating to that issue), the statute of limitations, and a contractual release.

Plaintiffs challenge each ruling, and establish error as to each.

1. The permitted release exception did not apply to Defendants' permits

Plaintiffs rely on Defendants' disposals to establish the releases required for

liability. (42 U.S.C § 9601(22) [release includes "disposing into the environment"];

§ 25320 [accord].) They contend the trial court erred by concluding Defendants' permits

to operate and construct the range rendered these releases "permitted releases" under the

HSAA. We agree.

a. Additional facts

In 1965, San Diego County approved the grant of a permit to UEI "to construct

and operate a skeet and trap club and range on Otay Ranch," as reflected in a letter from

the board of supervisors to the sheriff and other correspondence (1965 Permit). The

22 We recognize a plaintiff could rely on indirect evidence. (See, e.g., Elf Atochem
N. Am. v. United States (E.D. Pa. 1993) 833 F.Supp. 488, 493 [denying summary
judgment, where "record allow[ed] [the court] to reasonably infer that hazardous waste
was disposed on the site during [d]efendant's tenure"].) But Plaintiffs did not challenge
the court's ruling on substantial evidence grounds. For the same reason, we do not
address their contention that there was "no dispute Baldwin did not completely remove
the debris" or that debris was still present during their ownership.

39
permit itself does not appear to be in the record. In 1970, UEI lessee Scott applied for a

special use permit. Although the permit is only somewhat legible, it appears he

"request[ed] permission to build two . . . more trap houses." The County granted a five-

year permit (1970 Permit). In 1983, UEI applied for a major use permit to "operate the

Otay Gun Club." In the application, UEI stated: "Spent lead from the shot will be

regularly mined and recycled . . . ." The County conditionally granted a 15-year use

permit, which did not address lead or target recovery (1983 Permit).

b. Applicable law

Section 25366, subdivision (b) of the HSAA provides: "Nothing in this chapter

shall be construed as authorizing recovery for response costs or damages resulting from

any release authorized or permitted pursuant to state law or a federally permitted release."

In section 25326, the HSAA defines " 'release authorized or permitted pursuant to state

law' " as

"any release into the environment which is authorized by statute, ordinance,
regulation, or rule of any state, regional, or local agency or government or
by any specific permit, license, or similar authorization from such an
agency, including one of the foregoing, that recognizes a standard industry
practice, including variances obtained from the agency which allow
operations for facilities during a period of time when releases from the
facilities do not conform with relevant statutes, ordinances, regulations, or
rules. The term includes a federally permitted release, as defined by section
25325, and releases that are in accordance with any court order or consent
decree."

CERCLA contains a similar exception (42 U.S.C. § 9607(j)), and defines

"federally permitted release" to include various releases in compliance with permits under

specified laws or other government authorization. (Id., § 9601(10); see Barnes ex rel.

40
Estate of Barnes v. Koppers, Inc. (5th Cir. 2008) 534 F.3d 357, 363, fn. 5 [federally

permitted release is a "discharge pursuant to a permit issued under any of a variety of

federal environmental laws"]; § 25325 [incorporating CERCLA definition of federally

permitted release].)

The permitted release provision is an exception to the HSAA and, like its federal

counterpart, must be interpreted narrowly. (Sept. 11 Lit., supra, 751 F.3d at p. 91; U.S. v.

Freter (9th Cir. 1994) 31 F.3d 783, 788 (Freter) [referring to federally permitted release

as "narrow exception"].)23 The burden is on the party seeking the exception, here

Defendants. (See Freter, at p. 788 ["We conclude that the exception for federally

permitted releases states an affirmative defense."]; Nixon-Egli, supra, 949 F.Supp. at

p. 1443 [party seeking exception bears burden of proof].)

c. Analysis

The trial court determined Defendants established the "release of lead and targets

into the environment at the site was authorized by the . . . permits issued in 1965, 1970,

and 1983." The court explained: "The weight of the evidence establishes that

[Defendants] operated the shooting range lawfully pursuant to those permits. Since the

essence and effect of a permit to operate a shooting range is government approval of the

23 See Pakootas v. Teck Cominco Metals, Ltd. (9th Cir. 2016) 830 F.3d 975, 985,
footnote 10 (" 'While the exemptions . . . for federally permitted releases are provided to
give regulated parties clarity in their legal duties and responsibilities, these exemptions
are not to operate to create gaps in actions necessary to protect the public or the
environment.' 126 Cong. Rec. 30,897, 30,932-33 (Nov. 24, 1980) (statement of Sen.
Randolph).").

41
use of firearms to hit and destroy targets, the 'release' of lead and target debris into the

environment was allowed by the County's permits." The court further explained "[t]he

permits were the 'specific permit' . . . that allowed shooting range operations to occur,

during which lead pellets and clay targets were used for target practice, which is the

purported 'release' activity for which [Plaintiffs] complain." The court also determined

Defendants established that "importation of fill dirt (which contained naturally occurring

white carbonate rock) to construct shooting stations . . . was authorized . . . pursuant to

the 1970 [P]ermit."24

Plaintiffs contend the trial court erred in applying the exception, because the

permits did not authorize the disposal of lead, PAH's (attributable to the target debris), or

perchlorate. We agree. We start with the court's ruling, and conclude it failed to focus on

the releases at issue. The court's assertion that Plaintiffs complained about "shooting

range operations" and the use of "lead pellets and clay targets" simply ignores their

position that the releases were Defendants' disposals (i.e., leaving the lead and targets,

and use of perchlorate).

The threshold question is whether the HSAA's permitted release exception even

could apply to permits that do not specifically address releases. We review this statutory

interpretation issue de novo (Molenda, supra, 172 Cal.App.4th at p. 986), and begin with

24 The court also found Scott had an oral extension after 1975. Plaintiffs disagree,
but do not establish the evidence relied upon by the court was inadequate. Any error was
also harmless; as we shall explain, Scott's 1970 Permit did not support a permitted release
in the first place.

42
the text of the statute. The exception applies to "any release into the environment which

is authorized by . . . any specific permit, license, or similar authorization . . . that

recognizes a standard industry practice." (§ 25326.) The plain language of this provision

reflects it is the release that must be authorized, not just the facility or operation with

which the release is associated. None of the remaining language suggests any broader

application and, to the contrary, narrows it further. The use of the word "specific"

suggests the purpose (or, at least, a purpose) of the permit must be to authorize the

release, thus precluding implied authorization. Finally, there must be a "recogn[ition]

[of] standard industry practice." (§ 25326.) Again, the plain language of the statute

makes clear this practice must, at minimum, relate to the release at issue.25

Having concluded the text is clear, we need go no further. (Cortez, supra, 51

Cal.4th at p. 292.) But we observe this interpretation is consistent with application of the

federally permitted release exception and the HSAA's purpose. With respect to federally

permitted releases, Carson Harbor Village, Ltd. v. Unocal Corp. (C.D. Cal. 2003) 287

F.Supp.2d 1118 (Carson Harbor II) is instructive. There, defendants faced CERCLA

claims relating to "lead deposited . . . through storm[ ]water run-off," but had National

Pollution Discharge Elimination System (NPDES) permits required to discharge

storm water. (Id. at pp. 1126, 1138.) The court concluded storm water discharges after

the defendants obtained NPDES permits did not support liability. (Id. at p. 1183.) Thus,

25 Because we conclude post the permits here do not authorize the releases at issue,
we need not address whether the permit must identify the standard industry practice, or
whether the release simply needs to comply with it.

43
unlike here, the Carson Harbor II permits authorized the release at issue. As for the

HSAA's remedial purpose, we agree with amicus DTSC that broader application of the

exception to operational permits could have undesirable effects (such as municipalities

inadvertently permitting releases) and thus impede remediation.

Turning to the permits here, Defendants do not contend, and the record does not

reflect, the permits address the release activity about which Plaintiffs complain: leaving

spent lead and target debris and use of perchlorate. Given these undisputed facts, and the

narrow scope of the permitted release exception, there was no basis for the trial court to

conclude that Defendants established permitted releases.26

We address Defendants' contention that no EPA permit is required for shooting

ranges. As noted ante, the EPA has taken the position that no RCRA permit is required

to operate a range. (Best Management Practices, supra, at p. I-8.) But both the EPA and

courts have recognized that spent lead can become solid waste if left to accumulate, thus

resulting in a disposal and release. (Ibid.; Connecticut Coastal, supra, 989 F.2d at

p. 1316.) At that point, a permit would be necessary to avoid liability.

The permitted release exception applies only to permits that authorize releases, not

to operational or construction permits that are silent as to such matters.

26 The 1970 Permit does not appear to address fill material, notwithstanding the
court's finding that it did.

44
2. The trial court erred in applying HSAA's provisions on nonretroactivity

Plaintiffs contend the trial court erred in applying HSAA nonretroactivity with

respect to its HSAA and tort claims, and, in light of the latter determination, erroneously

denied them a jury trial. We agree the court erred and do not reach the jury issue.

a. Applicable law

Section 25366, subdivision (a) of the HSAA provides: "This chapter shall not be

construed as imposing any new liability associated with acts that occurred on or before

January 1, 1982, if the acts were not in violation of existing state or federal laws at the

time they occurred." The existing law provision limits HSAA nonretroactivity. (See

1 Robie et al., Cal. Civ. Prac. Environmental Litigation (2002) § 3:90, p. 113 ["The

HSAA does not impose new liability . . . , if the acts were not in violation of existing . . .

laws or regulations. . . . It is likely, however, that it was never legally permissible to

release hazardous substances to the environment."]; see, e.g., United Alloys, Inc. v. Baker

(C.D. Cal. 2011) 797 F.Supp.2d 974, 1005 [concluding § 25366, subd. (a) did not bar

claim against operator of facility, because "it [was] likely that at least some of the

contamination occurred prior to the passage of the HSAA but after the passage of

[RCRA]."].)27

27 The trial court assumed Plaintiffs bore the burden of proof regarding retroactive
application of the HSAA, while Plaintiffs suggest it is a defense. We need not resolve
this issue to address Plaintiffs' nonretroactivity arguments.

45
b. The trial court erred in focusing on the shooting range closure in
addressing nonretroactivity

The trial court first determined the UE Defendants had no HSAA liability because

their shooting range operations ceased in 1978, citing Pentair Thermal Management,

LLC v. Rowe Industries (N.D. Cal., Mar. 31, 2013, No. 06-cv-07164 NC) 2013 U.S. Dist.

Lexis 47390 (Pentair). As noted ante, the court also found no post-1982 disking

supported HSAA liability.

Plaintiffs contend the court erroneously focused on the shooting range closure,

when the conduct at issue was the UE Defendants' disposal. We agree. The issue is not

when the range closed, but when the lead and target became solid waste. (Safe Air,

supra, 373 F.3d at p. 1043; Connecticut Coastal, supra, 989 F.2d at p. 1316.) Although

we declined to address when this took place (see discussion ante), we agree with

Plaintiffs that it must have happened by the time UEL sold the Property in 1988. Thus,

the disposal could have occurred between 1982 and 1988, in which case nonretroactivity

is not at issue. On remand, the trial court must first determine when the disposal took

place, and only then assess whether nonretroactivity is an issue. Pentair did not involve a

post-1982 disposal and does not suggest a different result. (Pentair, supra, 2013 U.S.

Dist. Lexis 47390, at p. *79 [defendant whose predecessors ceased operations in 1970

could not be liable for PCB (polychlorinated biphenyl) contamination under the HSAA,

46
where PCB's were not regulated until 1976].)28 As for disking, because Plaintiffs did not

establish the court erred in finding the disking did not constitute a disposal (as discussed

ante), we conclude the court did not err in determining post-1982 disking did not support

HSAA liability.

c. The trial court erred in concluding Defendants were not in violation
of existing nuisance and trespass law

Plaintiffs contend that Defendants' acts of leaving lead and target debris, and use

of perchlorate-containing material, violated nuisance and trespass law. The trial court

determined Plaintiffs' nuisance and trespass claims lacked merit because the 1965 Permit

barred them pursuant to Civil Code section 3482; the UE Defendants, as former owners,

consented to any alleged nuisance or trespass; and Plaintiffs consented to the state of the

Property. Plaintiffs argue these determinations were in error, and we agree.

i. Civil Code section 3482 did not bar Plaintiffs' claims

Civil Code section 3482 provides that "[n]othing which is done or maintained

under the express authority of a statute can be deemed a nuisance." A "narrow

construction" applies to section 3482. (Greater Westchester Homeowners Assn. v. City of

Los Angeles (1979) 26 Cal.3d 86, 100 (Greater Westchester).) Specifically, " ' "[a]

statutory sanction cannot be pleaded in justification of acts which by the general rules of

law constitute a nuisance, unless the acts complained of are authorized by the express

28 Plaintiffs contend disposal could not have occurred until after the 1983 Permit
application, because Defendants represented therein that lead would be recycled. We
leave it to the trial court to consider this evidence on remand.

47
terms of the statute under which the justification is made, or by the plainest and most

necessary implication from the powers expressly conferred, so that it can be fairly stated

that the legislature contemplated the doing of the very act which occasions the injury." ' "

(Id. at p. 101.)

The case law reflects this narrow application. (See, e.g., Greater Westchester,

supra, 26 Cal.3d at p. 101 [rejecting argument that "because aviation and noise are

necessarily inseparable, governmental approval . . . of aviation . . . necessarily implies

legislative approval of aviation noise which results in interference with neighboring land

uses"]; Varjabedian v. City of Madera (1977) 20 Cal.3d 285, 292 (Varjabedian) [Civ.

Code, § 3482 did not bar liability as to emission of noxious odors from city's sewage

treatment plant: "None of the . . . statutes under which the city claims to act mentions the

possibility of noxious emanations from such facilities. Nor can we find that such odors

were authorized by the 'plainest and most necessary implication' from the general powers

there conferred."].)29

Here, the trial court found Plaintiffs' nuisance claim was barred under Civil Code

section 3482. The court explained "[t]he word 'statute' in section 3482 is broadly

interpreted to include authority given under government-issued permits," citing Wheeler

29 See also Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123,
157 (electrical company could not rely on Civ. Code, § 3482 when owner sued due to
stray currents entering home); Jacobs Farm/Del Cabo, Inc. v. Western Farm Service, Inc.
(2010) 190 Cal.App.4th 1502, 1532 (pesticides applied pursuant to permits migrated to
plaintiff's farm: "[T]he permits authorized application of the pesticides to [defendant's]
fields . . . ; they did not authorize application of pesticides or the damage to plaintiff's
crop.").

48
v. Gregg (1949) 90 Cal.App.2d 348, 370 (Wheeler) and Carson Harbor I, supra, 270

F.3d at page 888. The court found the 1965 Permit "expressly authorized UE's shooting

operations."30

The trial court erred both in construing Civil Code section 3482, and in applying it

to the 1965 Permit. Section 3482 is interpreted narrowly, and Wheeler and Carson

Harbor I do not suggest otherwise. Unlike here, those cases involved permits authorizing

the nuisance at issue. (See Carson Harbor I, supra, 270 F.3d at p. 888 [under § 3482,

NPDES permits authorizing storm water discharge precluded nuisance liability];

Wheeler, supra, 90 Cal.App.2d at pp. 368-370 [plaintiffs unsuccessfully sued to enjoin

excavation by defendants with permit to conduct the work; court construed claim as one

for anticipated nuisance and affirmed, citing § 3482, among other reasons].) The 1965

Permit did not authorize the nuisance activity at issue, either expressly or by necessary

implication. (Greater Westchester, supra, 26 Cal.3d 86 at p. 101.)

Defendants' arguments are unpersuasive. They suggest the " 'essence and effect' "

of a range permit is to authorize the release of shot and targets. Even assuming they were

properly focused on the alleged nuisance, not range operations, courts reject these types

of effect arguments in the absence of " ' "necessary implication." ' " (Greater

Westchester, supra, 26 Cal.3d 86 at p. 101; see Varjabedian, supra, 20 Cal.3d at p. 292.)

30 The court found Civil Code section 3482 applied to trespass, too. As we conclude
the court erred in applying the section at all, we need not address whether it applies to
trespass.

49
There was nothing necessary about their decision not to retrieve all lead shot and target

debris.

Defendants also contend the cases declining to apply Civil Code section 3482

(such as Varjabedian) are distinguishable because the parties there "exceeded the scope

of the use permits," and we should instead follow Carson Harbor I, as well as Jordan v.

City of Santa Barbara (1996) 46 Cal.App.4th 1245, 1252, and Avedon v. State of

California (2010) 186 Cal.App.4th 1336, 1345. We disagree. The courts declined to

apply section 3482 because the conduct was unrelated to the permits, not because it

exceeded them. (See, e.g., Varjabedian, supra, 20 Cal.3d at p. 292.) As for other cases,

they involved a permit or statute that authorized the nuisance at issue, which does not

exist here. (Carson Harbor I, supra, 270 F.3d at pp. 870, 887; Jordan, at p. 1252

[wastewater discharge permit]; Avedon, at p. 1345 [alleged nuisance was failure to

prevent access to cave where fire started; law provided state with authority to operate

park and decision to allow cave access fell within it].)

ii. The trial court erred in applying prior owner consent

The issue here is whether prior owner consent barred Defendants' liability. A prior

owner's consent can preclude tort liability for its lessee. In Mangini v. Aerojet-General

Corp. (1991) 230 Cal.App.3d 1125 (Mangini), the Court of Appeal addressed tort claims

by an owner against lessees of former owner and held that "where . . . an owner . . . seeks

damages for creation of a nuisance by a prior lessee, the lessee has a defense that his use

of the property was lawful and was authorized by the lease, i.e., his use of the property

50
was undertaken with the consent of the owner." (Id. at p. 1138; id. at p. 1141 [consent

can apply for trespass, but exceeding consent could support liability].)

However, consent does not necessarily limit liability for the prior owner itself.

(Mangini, supra, 230 Cal.App.3d at p. 1134 [rejecting contention that "a successor owner

of property could not sue a prior owner for nuisance"]; Chevron U.S.A. Inc. v. Superior

Court (1994) 44 Cal.App.4th 1009, 1014 ["Recent decisions have confirmed . . . a

subsequent owner's right to sue a prior possessor of property for creating the continuing

nuisance," citing Mangini, inter alia].) In Newhall Land & Farming Co. v. Superior

Court (1993) 19 Cal.App.4th 334 (Newhall), the Court of Appeal determined an owner

was not precluded from stating a nuisance claim against prior owners. (Id. at p. 343.)

The court rejected extension of Mangini 's lessee holding, explaining "it does not make

sense to . . . find an owner can never be liable to a successor in interest for nuisance

because the owner consented to his own use of the property." (Newhall, at p. 345; id. at

p. 347 [applying same reasoning to trespass]; see KFC Western, Inc. v. Meghrig (1994)

23 Cal.App.4th 1167, 1178-1179 [accord].) Beck Development Co. v. Southern Pacific

Transportation Co. (1996) 44 Cal.App.4th 1160 (Beck) did extend Mangini to shield a

former owner based on its own consent, but noted the owner conducted its activities

lawfully and an intermediate purchaser had "full knowledge of the past usage of the

property." (Beck, at p. 1216.)

Here, the trial court determined "the discharge of lead pellets and target debris did

not lack the consent of either the owner or operators of the shooting range before 1982"

and this consent barred the nuisance and trespass claims, citing Mangini and Beck. The

51
court found, among other things, that Baldwin "knowingly accepted the [P]roperty with

the shooting range" and allowed Enniss to operate it.

Plaintiffs contend prior owner consent is not a defense, and courts have not

embraced Beck. We conclude the trial court erred here, and need not decide today

whether to follow or reject Beck. The weight of authority makes clear owners generally

can sue prior owners, notwithstanding their presumptive consent. (See, e.g., Newhall,

supra, 19 Cal.App.4th at p. 343.) Even assuming Beck, supra, 44 Cal.App.4th at p. 1216,

were sound, for its holding to apply, Defendants' conduct must have been pursuant to

their consent and lawful, and Baldwin, as an intermediate owner, must have had "full

knowledge" of the nuisance activity. (Ibid.; see Rev 973 LLC v. Mouren-Laurens (C.D.

Cal., Apr. 22, 2009, No. CV 98 10690 AHM (Ex)) 2009 U.S. Dist. Lexis 38462, at

pp. *24-*30 [rejecting reliance on Beck, where defendants did not address whether use

was lawful and there was dispute over whether purchaser had " 'full knowledge' of the

former owner's activities"].) The trial court failed to meaningfully address these issues.

For example, Baldwin permitted Enniss to operate the range, but only pursuant to a lease

that required reclamation of lead and target debris — evidencing, if anything, a lack of

consent to leaving those materials. The court did not address lawfulness (other than to

suggest in the Civ. Code, § 3482 context that the permits sufficed; they did not). As for

knowledge, the court's findings appear to undermine any conclusion that Baldwin had

"full knowledge." The court found James Baldwin (a member of the Baldwin entities)

was aware of the range when he bought it, but felt it would remain open space and

" 'didn't pay much attention to it.' "

52
On remand, the court should reevaluate the persuasive value of Beck in light of the

other authorities, and if it still concludes Beck applies, apply its holding consistent with

the foregoing analysis.

iii. The trial court erred in finding consent by Plaintiffs

This issue concerns whether an as-is provision in Plaintiffs' purchase agreement

for the Property (Purchase Agreement) and/or their actual knowledge established consent

to nuisance and trespass.

Here, the Purchase Agreement indicated the Property was being acquired " 'as-is' "

from the Estate. The as-is provision included, among other things, "the condition or

suitability of the earth." In addition, the schedule of exceptions from the Estate's

representations and warranties included debris remaining from the range. A contractual

as-is provision can relieve a seller of liability. (See Shapiro v. Hu (1986) 188 Cal.App.3d

324, 333 (Shapiro) ["use of the phrase 'as is' relieves a seller of real property from

liability for defects in that condition"]; ibid. [as-is term "serves as a kind of 'red flag'

warning"].) In Galen v. Mobil Oil Corp. (C.D. Cal. 1996) 922 F.Supp. 318 (Galen), the

district court granted summary judgment on nuisance and trespass claims involving an

allegedly concealed sump, after concluding they were barred by an " 'as-is' " provision in

the sales contract. (Id. at p. 324.) In a separate discussion on a rescission claim, the court

noted certain "pre-purchase 'red flags.' " (Id. at pp. 320-321.)

The trial court determined that "[w]here a buyer such as [Plaintiffs] purchases a

shooting range with substantial knowledge of its environmental condition, any nuisance

or trespass claim against the prior owners is barred as an assumed and accepted risk."

53
The court cited Galen, suggesting it held that nuisance and trespass claims were barred

both by pre-purchase red flags and an as-is provision. The court explained the evidence

established Plaintiffs had "actual knowledge that lead and target debris existed at the

shooting range," and that "[s]uch knowledge is implied consent to acceptance of the

environmental conditions."

Plaintiffs contend the as-is provision is irrelevant, because they are not suing the

Estate, and their knowledge would only be relevant in that context. We agree the as-is

provision with the Estate is irrelevant. Galen, supra, 922 F.Supp. 318, involved an as-is

term between a buyer and seller (id. at p. 319), and is silent as to its effect, if any, on the

liability of third parties. Defendants are third parties here, and Galen is inapplicable. As

for Plaintiffs' knowledge, we need not address its relevance to an as-is analysis, because

there is no as-is provision with Defendants. We note, however, that Galen's nuisance and

trespass analysis does not reflect that plaintiff knowledge bars recovery, and the only red

flag reference in that analysis is a citation to Shapiro's description of an as-is provision as

a red flag. (Galen, at p. 324.) Finally, we are aware of no authority that knowledge by a

purchaser of real property amounts to assumption of risk or implied consent for purposes

of nuisance and trespass. Even if such authority existed, the evidence does not reflect

Plaintiffs had actual knowledge of the alleged tortious conduct.31

31 The court found Plaintiffs had "actual knowledge of the lead and target debris,
either directly or by imputation," citing the Purchase Agreement, an environmental report
prepared before purchase, and testimony by OLC president Paul Borden reflecting he was
aware some kind of remediation probably was needed. But the conduct at issue is

54
We conclude the court erred in each of its determinations as to Plaintiffs' tort

claims, and need not address whether it also erred by declining to proceed to a jury phase.

3. The trial court erred in identifying when Plaintiffs' claim accrued

The trial court found Plaintiffs' HSAA claim accrued when they purchased the

Property. Plaintiffs contend this was erroneous, and we agree.

The HSAA does not contain a statute of limitations for contribution or indemnity

actions under section 25363(e). "Traditionally at common law, a 'cause of action accrues

"when [it] is complete with all of its elements" . . . .' This is the 'last element' accrual

rule[.]' . . . [¶] . . . [T]he courts and the Legislature have over time developed a handful

of equitable exceptions to and modifications of the usual rules governing limitations

periods. . . . The ' "most important" ' of these doctrines, the discovery rule, where

applicable, 'postpones accrual of a cause of action until the plaintiff discovers, or has

reason to discover, the cause of action.' " (Aryeh v. Canon Business Solutions, Inc.

(2013) 55 Cal.4th 1185, 1191-1192, citations omitted (Aryeh).)32 When a statute is

silent as to when a claim accrues, this silence "triggers a presumption in favor of

permitting settled common law accrual rules to apply." (Aryeh, at p. 1193.)

Defendants' failure to reclaim lead and target debris. At most, this evidence reflects
Plaintiffs' awareness that some lead and debris remained.

32 One of these doctrines is "continuous accrual." (Aryeh, supra, 55 Cal.4th at
p. 1199.) We decline to address Plaintiffs' argument, raised for the first time on reply,
that this rule applies to cost actions under the HSAA. (Shade Foods, supra, 78
Cal.App.4th at p. 894, fn. 10.)

55
Here, the court determined the three-year statute of limitations under Code of Civil

Procedure section 338, subdivision (b), for "action[s] for trespass upon or injury to real

property" applied to Plaintiffs' HSAA claim. Plaintiffs do not challenge this aspect of the

court's ruling, and we do not address it. The court then found the statutory period

"commenced when [Plaintiffs] knew or should have known of the facts giving rise to the

claim, which is no later than October 15, 1998," and cited Chubb, supra, 710 F.3d at

page 972. October 15, 1998, was the date OLC purchased the Property.

Plaintiffs contend their claim did not accrue until they paid remedial action costs.

We agree. Because the HSAA is silent as to when a contribution or indemnity action

accrues, common law accrual rules apply. (Aryeh, supra, 55 Cal.4th at p. 1193.) As

discussed ante, the HSAA permits "[a]ny person who has incurred removal or remedial

action costs in accordance with this chapter or the federal act [to] seek contribution or

indemnity from any person who is liable pursuant to this chapter . . . ." (§ 25363(e).)

Plaintiffs could not establish all elements of their HSAA claim, and that claim could not

accrue, at least until they incurred removal or remedial action costs.33

33 We do not find Chubb instructive. There, an insurer filed a CERCLA action for
cleanup costs paid on behalf of an insured, which included "state law claims for statutory
indemnity under the California Health and Safety Code, negligence per se, and strict
liability." (Chubb, supra, 710 F.3d at p. 955.) The court concluded Code of Civil
Procedure section 338, subdivision (b) applied, the claims accrued when the "injury to the
property occur[red]," and this occurred when the insured knew or should have known
about the release of hazardous substances. (Chubb, at p. 972.) Even assuming section
338, subdivision (b) applied to the HSAA, the injury under the HSAA is not the release
of contamination, but rather the incurrence of recoverable costs.

56
This outcome is consistent with the limitations periods for DTSC-initiated HSAA

claims and CERCLA actions, where accrual likewise relates to the response action. (See

§ 25360.4, subd. (a); Stats. 2006, ch. 77, § 34 ["An action under Section 25360 for the

recovery of the costs of removal or remedial action incurred by the [DTSC] . . . shall be

commenced within three years after completion of the removal or remedial action has

been certified by the [DTSC]."]; 42 U.S.C. § 9613(g)(2)(A), (B) [cost recovery action

generally "must be commenced . . . for a removal action, within 3 years after completion"

and "for a remedial action, within 6 years after initiation of physical on-site construction

of the remedial action"].)34

Defendants argue that even assuming accrual was based on incurrence of costs,

substantial evidence reflects Plaintiffs began incurring costs sufficiently early that their

claim would still be time-barred. Plaintiffs disagree, and suggest the trial court did not

actually make any findings in this regard (given it found no costs were recoverable,

between the right of action issue and cost reductions). We agree. Although the court

concluded various categories of costs were not recoverable (as we discuss post), it never

addressed when Plaintiffs began to incur response costs. Plaintiffs objected below to the

court's failure to resolve issues relating to when it first paid response costs, and we will

34 See also 42 United States Code section 9613(g)(3) ("No action for contribution for
any response costs or damages may be commenced more than 3 years" after "judgment
. . . for recovery of such costs or damages," applicable administrative order, or "judicially
approved settlement with respect to such costs or damages").

57
not infer the court made those findings. We remand so the court can determine when the

claim accrued.

4. The trial court erred in finding Defendants were beneficiaries of the
Estate's release

The trial court erred in determining Defendants were affiliates, assigns, and/or

successors of the Estate and, thus, third party beneficiaries of the release provision in the

Purchase Agreement. Plaintiffs contend these conclusions were in error. We agree.

a. Additional facts

Several factual matters are relevant to the release issue: the release provision, the

will for the Estate, background on UEL and the Estate's assignment of its UEL interest

back to UEL, certain pleadings and discovery requests, and trial testimony. Starting with

the release provision, the Purchase Agreement identified OLC as the Offeror and City

National Bank (CNB), an Estate co-executor, as the "Designated Co-Executor." Section

18 of the Purchase Agreement contains the release, which provides:

"The Offeror agrees that none of the Designated Co-Executor, the Estate and all of
their respective officers, directors, co-fiduciaries, shareholders, employees,
representatives, beneficiaries, affiliates, attorneys and agents (including without
limitation Douglas Wilson Companies), and their successors and assigns (together,
'Offering Parties') shall be responsible or liable for, and the Offeror hereby waives,
any and all claims for damages against the Offering Parties arising from or relating
to the Offeror's reliance on any representation, inducement, promise or agreement
made by any Offering Party, except for the representations and warranties
expressly set forth in this Agreement. The Offeror further agrees that the Estate
Co-Executors hold the Property solely as fiduciary agents, and that neither the
Designated Co-Executor nor any other person or entity included within the scope
of Offering Parties shall be personally liable in any respect whatsoever for any
cause of action which the Offeror may have arising out of or relating to the
Property. The Offeror further agrees that its rights and claims in such case shall be
limited exclusively to such, if any, as the Offeror may have against the assets of
the Estate itself."

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The Will and Testament of Mary Marshall Rand Birch Patrick (Patrick Will)

provides that Rose Patek is a co-executor of the Estate, along with a bank co-executor

(which was CNB by the time of the Purchase Agreement). The beneficiaries do not

include Defendants.

UEL was a limited partnership, with John Knox as the general partner. As set

forth in its partnership agreement (the UEL Partnership Agreement), the initial limited

partners were the Estate, the Stephen and Mary Birch Foundation, Inc. (the Foundation),

Rose Patek, and her husband Patrick Patek. By the time Plaintiffs purchased the

Property, Rose Patek was not a limited partner. In March 1998, the Estate and UEL

entered a transaction, pursuant to which UEL received 920 acres in Proctor Valley and an

assignment of the Estate's remaining UEL interest. The Estate executed the assignment

of partnership interest in July 1998. It defined the Estate as Assignor and UEL as

Assignee, and stated in part:

"Assignor hereby assigns to Assignee and Assignee hereby acquires from
Assignor the Assignor's entire partnership interest in UE, Ltd., including but not
limited to, Assignor's capital account as well as the right, title and interest of
Assignor in and to the properties (real and personal), capital, cash flow
distributions, and profits and losses of UE, Ltd. allocable to Assignor. Assignee
hereby agrees to assume (but only to the extent that Assignor may have any
personal liability thereon, and only as between the parties hereto and solely for the
benefit of Assignor) all liabilities, obligations and responsibilities of Assignor
under the UE, Ltd. partnership agreement, as amended."

Turning to the litigation materials, Plaintiffs served interrogatories in the federal

case defining UE Defendants' affiliates as including the Estate. In this case, OLC, OLC

president Borden, and others filed a cross-complaint, which stated they believed cross-

defendants (including Defendants and the Estate) "were agents, representatives, affiliates,

59
members, partners and/or employees of each of the [cross-]defendants." Finally,

Plaintiffs' closing trial brief took the position that prior to the assignment, the Estate was

a UEL affiliate (by virtue of its limited partner status).

With respect to the trial testimony, the Estate's attorney, Farley, testified about the

release. Her testimony reflected the Estate added the release provision to the draft

Purchase Agreement and she was "aware of that language or part of the team that drafted

or approved" it. Farley stated "affiliates" meant "whoever touched this property,"

including "any prior owners of the property," and explained the reasons for including it.

She testified she told Borden "he was waiving all rights against anybody by virtue of

purchasing this," but she did not tell him what she meant by "anybody," or that she

intended "affiliate" to include UEL and Baldwin. She indicated he did not ask questions

about the release. As for assigns, Farley testified UEL was an assign of the Estate

"[b]ecause we sold to [UEL] the 920 acres and we assigned our . . . interest in [UEL]

back to it back in March of 1998."

Borden also testified about the release. When asked what affiliate meant, Borden

stated "it's an entity that's controlled . . . by or controlling another entity, like a subsidiary

company." He testified nobody told him "before [he] signed the document" that the word

included Defendants or prior owners. Borden testified he assumed "assigns" meant

"somebody that was a legal beneficiary of whatever terms were incorporated in this

agreement." Plaintiffs' counsel asked "[o]f the Estate?" and Borden agreed.

Farley and Rose Patek also testified about entities over which Patek had control

and her recusal from marketing of the Property. Farley indicated, among other things,

60
that Rose and Patrick Patek were Foundation trustees and controlled the Foundation and

the Jewels of Charity (a nonprofit spun off from the Foundation). Patek confirmed she

and her husband were officers of the Foundation and stated the Foundation controlled

three of seven director seats in the Jewels of Charity (held by her and her family). Farley

also indicated that after an initial effort to sell the Property, to which Estate beneficiaries

objected, the court authorized CNB to be the sole co-executor to market the Property.

Patek explained the court "asked [her] to recuse [her]self . . . on the land side of the deal"

and that CNB "would be in charge of . . . remarketing the land at that time."

b. Applicable law

A release agreement is governed under general principles of contract law.

(General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, 439.) "The goal of

contractual interpretation is to determine and give effect to the mutual intention of the

parties." (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 763.) "Although the intent

of the parties determines the meaning of the contract . . . , the relevant intent is

'objective'—that is, the objective intent as evidenced by the words of the instrument, not a

party's subjective intent." (Shaw v. Regents of Univ. of Cal. (1997) 58 Cal.App.4th 44,

54-55, citation & fn. omitted.)

"A contract, made expressly for the benefit of a third person, may be enforced by

him at any time before the parties thereto rescind it." (Civ. Code, § 1559.) "The third

party need not be identified by name. It is sufficient if the [third party] claimant belongs

to a class of persons for whose benefit it was made." (Principal Mutual Life Ins. Co. v.

Vars, Pave, McCord & Freedman (1998) 65 Cal.App.4th 1469, 1485.)

61
The standard of review here turns on the role of extrinsic evidence. " 'An

appellate court is not bound by a construction of the contract based solely on the terms of

the written instrument without the aid of evidence . . . , where there is no conflict in the

evidence . . . , or a determination has been made upon incompetent evidence . . . .' "

(Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, citations omitted; City of

Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [accord].)

This remains the case "[e]ven where uncontroverted evidence allows for conflicting

inferences to be drawn . . . ." (Scheenstra v. California Dairies, Inc. (2013) 213

Cal.App.4th 370, 390.)

c. Analysis

i. The Estate attorney's testimony as to her intent is incompetent
and we apply independent review

Plaintiffs contend our review is independent, because the court's interpretation

rests largely on undisputed facts, and the only conflicting testimony — from Farley —

was improper extrinsic evidence. We agree.

Extrinsic evidence may be introduced " 'to explain the meaning of a written

contract . . . [if] the meaning urged is one to which the written contract terms are

reasonably susceptible,' " but cannot be used to " 'add to, detract from, or vary the terms

of' " an integrated agreement. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336,

343, 345.) Here, the court's analysis (described post) reflects the relevant release terms

are clear and consistent with their accepted meanings, and we agree. The court

considered extrinsic evidence in interpreting these provisions. Most evidence was

62
relevant to the affiliate, assign, or successor issues implicated by the release terms, and

was thus admissible — but not in conflict. Farley's testimony reflected different

meanings for affiliate and assign than those set forth in the contract — and thus was not

competent. (Casa Herrera, at p. 345; see Morrow v. Los Angeles Unified School Dist.

(2007) 149 Cal.App.4th 1424, 1444 [witness's "opinion as to the meaning and legal effect

of a contract" was inadmissible as to interpretation of contract].)35

We recognize party intent can be relevant in third party beneficiary cases. (See,

e.g., Hess v. Ford Motor Co. (2002) 27 Cal.4th 516 [considering uncontroverted extrinsic

evidence in assessing claim that release had a mutual mistake]; Cline v. Homuth (2015)

235 Cal.App.4th 699, 705-706 [noting parties in third party beneficiary cases generally

" ' "should be allowed to testify as to their actual intention," ' " while confirming

admissible evidence is that " ' "relevant to prove a meaning to which the language is

'reasonably susceptible' " ' "].) But such evidence is not always relevant, including where

it contradicts contract terms. (See, e.g., Rodriguez v. Oto (2013) 212 Cal.App.4th 1020,

1035 [testimony as to intent did not raise triable issue where "intention was fully and

accurately expressed by the language of the release"]; Cline, at p. 712 ["evidence of

35 Farley's statement that she told Borden he was "waiving all rights against
anybody" does not render her testimony relevant, given it was contrary to the contract,
she never told him what she meant by "anybody," and there is no evidence he shared her
view. (See PV Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210
Cal.App.4th 132, 157 ["subjective statements of 'understanding' are irrelevant . . . ,
particularly where there is no evidence that [the other party] had the same
understanding"].)

63
undisclosed subjective intent of Cline and his attorney is insufficient to establish that the

parties intended that Homuth be excluded from the release."].)

Given the clear language of the release, Farley's contradictory trial testimony was

not relevant and we are not bound by the trial court's interpretation.

ii. Defendants are not affiliates of the Estate

Plaintiffs contend the court erred in concluding UEL was an affiliate of the Estate

based on common control, focusing on the fact that Rose Patek did not control the Estate.

The court's interpretation was erroneous, including for this reason.

Common control is a basis for an affiliate relationship. (See, e.g., Corp. Code,

§ 150 ["A corporation is an 'affiliate' of . . . another specified corporation if it directly, or

indirectly through one or more intermediaries, controls, is controlled by or is under

common control with the other specified corporation."]; Black's Law Dict., supra, at

p. 69, col. 2 ["affiliate" is a "corporation that is related to another corporation by

shareholdings or other means of control"].) Control typically involves authority to direct

the management of an entity. (See, e.g., Corp. Code, § 160, subd. (a) [generally,

" 'control' " means "possession, direct or indirect, of the power to direct or cause the

direction of the management and policies of a corporation."].) Assessing whether

someone controls an entity implicates corporate formalities. (See, e.g., Liberty Prop.

Trust v. Republic Prop. Corp. (D.C. Cir. 2009) 577 F.3d 335, 340-341 ["[A]ppellees

argue Kramer and Grigg controlled the trust, which was the general partner of the limited

partnership, and so controlled the limited partnership as well. . . . [¶] . . . Even assuming

64
it were proper to disregard the corporate form, [they] did not exercise sufficient control of

the limited partnership . . . ."].)36

The trial court determined: "California law is clear that common control of

entities directly or indirectly through intermediaries makes them 'affiliates' of each other."

With respect to the UE Defendants, the court found "[t]he Pateks were . . . in common

control of the Estate . . . and [UEL] with the power to direct or cause the direction of

each," noting, among other things, Rose's role as coexecutor of the Estate and the Pateks'

control of UEL via their control of the charities (including the Foundation, which the

court found owned nearly 100 percent of UEL after the assignment). The court also

made findings unrelated to control. The court found the evidence "establishe[d] that the

intertwining and long-standing relationship between UE, the Pateks, the Patrick family,

and later the Patrick Estate" was known to Plaintiffs' parent company, HomeFed, before

the sale. The court also found evidentiary admissions by Plaintiffs, citing the federal

interrogatories, cross-complaint, and closing trial brief. Finally, the court cited Farley's

testimony that the release extended to all prior owners (and described her testimony at

length), while noting elsewhere that Borden did not ask her about its scope. We address

the court's findings as to the Baldwin Defendants, post.

36 See also, e.g., Seroctin Research & Techs., Inc. v. Unigen Pharms., Inc. (D. Utah
2008) 541 F.Supp.2d 1238, 1243 (finding unpersuasive argument that "members of the
same family of companies" were affiliates, where strongest evidence was they were
owned by same person); In re Blinds to Go Share Purchase Lit. (1st Cir. 2006) 443 F.3d
1, 7 (rejecting claim that word "indirect" expanded voting control to "include practical
control of any kind"; "[i]n context, the word refers only to corporate structure").

65
The trial court erred in interpreting affiliate to include the UE Defendants. While

the court recognized the term affiliate was clear and that affiliate status can be based on

common control, it failed to analyze whether the Pateks actually had control over the

Estate (or UEL, for that matter). Its other findings were irrelevant.

First, Plaintiffs contend Rose Patek did not control the Estate as a co-executor,

because the probate court retains ultimate control. Although we decline to find an

executor could never exercise control sufficient to establish common control, we

conclude the probate court's authority, including over property sales, limited Patek's

control here. A personal representative does have direction over an estate, and can take

some actions without authorization. (Prob. Code, § 9600, subd. (a) [personal

representative has "management and control of the estate"]; see, e.g., id., §§ 9650,

subds. (a)-(b) [take possession of property, collect debts, receive profits, and pay taxes],

9760 [continue operation of decedent's business for up to six months].) But the

representative generally must file accounts with the court (id., §§ 10950-10951), and

various powers require court authorization (id., § 9610), including real property sales.

(See, e.g., id., §§ 10300 et seq. [governing real property sales], 10310, subd. (a) [court

"shall examine" necessity of sale and benefit to beneficiaries (unless will provides for

sale), and representative's efforts to obtain best price], 10313, subd. (a) [court "shall make

an order confirming" sale if it appears, among other things, good reason existed and the

66
sale was legal and fairly conducted].)37 Courts have long recognized these limitations.

(See, e.g., Estate of Palm (1945) 68 Cal.App.2d 204, 212 [affirming removal of

administrator; executor's "possession and handling of the property are subject to the

control of the probate court"]; Estate of Beach (1975) 15 Cal.3d 623, 643 (Estate of

Beach) ["The executor . . . derives his power to act as such from the will, or order of the

court; but in his conduct of the affairs of the estate, he is subjected largely to the

discretion and control of the court."]; Shannon v. Superior Court (1990) 217 Cal.App.3d

986, 993 [executor is "an officer of the court . . . , subject to the continuing control of the

court"].)38

We address two issues raised by Defendants. First, they argue Rose Patek's

recusal reflects common control. If anything, the recusal reflects a lack of control on her

part. If a joint representative is unable to act, the court may "authorize the remaining . . .

representative[] to act as to all matters embraced within its order." (Prob. Code, § 9630,

subd. (c).) After the court asked Patek to recuse herself, and she did so, the remaining

coexecutor — CNB — had sole authority to market the Property, subject to probate court

37 Authority is further limited where there are joint co-executors. (Prob. Code,
§ 9630, subd. (a)(1) ["Where there are two personal representatives, both must concur to
exercise a power."].)

38 We reject Defendants' contention that the cases are factually distinguishable
(which is not relevant to our analysis), or that courts draw a distinction between control
and supervision (which the cases do not reflect). (Cf. Estate of Beach, supra, 15 Cal.3d
at p. 643 [executor mismanagement claim is "based on conduct that is subject to the
independent control and supervision of the . . . court"].)

67
approval of the sale. Second, Defendants note the trial court cited testimony that Rose

Patek was an Estate trustee, and contend a trustee has " 'the power to acquire or dispose

of property' " under Probate Code section 16226. Even assuming Patek were an Estate

"trustee" (and the Patrick Will does not reflect this), that provision applies to trusts, not

decedent estates, and is inapposite. (Prob. Code, § 16226; cf. County of Los Angeles v.

Morrison (1940) 15 Cal.2d 368, 371 ["[A]lthough a . . . representative of an estate, in a

broad sense, does act in the capacity of a trustee . . . , nevertheless he is not a trustee in

the general acceptation of the term."].)

Although Plaintiffs do not focus on the UEL control findings, we note the court's

analysis is even less convincing in that context. The court focused on the Pateks' alleged

control of the charities, including the Foundation, which owned the largest share of UEL

after the assignment. Control of a limited partnership generally rests with its general

partner, not whatever limited partner owns the largest share — or any limited partner, for

that matter. (See Corp. Code, §§ 15904.02-15904.03, 15903.02-15903.03.) The UEL

Partnership Agreement is consistent with these principles, and provides management

authority solely to the general partner, John Knox, not to the Foundation or any other

limited partner.39 We recognize Plaintiffs represented the Estate had control over UEL

39 See, e.g., UEL Partnership Agreement sections 8.1 ("Except to the extent
other

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4206367. Public record. Not legal advice.