Dutch Girl Plaza LLC v. Marathon Petroleum Corporation

Background

Dutch Girl Plaza LLC and Steven H. Depper, identified as a member of Dutch Girl, alleged that they own a property at 2094 Mount Diablo Boulevard. Dutch Girl uses the property as an eco-friendly dry-cleaning facility and had obtained approvals to convert it into a mixed-use residential and commercial development.

The adjacent property at 2098 Mount Diablo Boulevard had been operated as a gas station by defendants for many years. The complaint alleged that a leaking underground storage tank was removed in 1987 and that contamination, including petroleum products, later migrated from the gas-station property onto the Dutch Girl property and into its groundwater. The plaintiffs alleged that contamination remained, that chemicals were detected in indoor air in February 2023, and that the contamination could create hazards during construction and interfere with future development.

The plaintiffs asserted 14 claims, including claims under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), California’s Carpenter-Presley-Tanner Hazardous Substances Act (HSAA), continuing trespass, private and public nuisance, negligence, negligence based on statutory violations, equitable and express indemnity, declaratory and injunctive relief, and California’s Proposition 65.

Rule 12(b)(6) standard and materials considered

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts and a legally recognized theory to support a claim. The court generally had to accept the complaint’s factual allegations as true and view them favorably to the plaintiffs, but it did not have to accept conclusory allegations or unreasonable inferences.

The court took judicial notice of the existence of a government webpage but not the truth of matters stated on that webpage. It incorporated four agreements and a Proposition 65 notice referenced in the complaint. It declined to consider a later indemnity agreement attached to the plaintiffs’ opposition because the complaint did not plead that agreement and the plaintiffs had not asked the court to judicially notice or incorporate it. The court also declined to consider a case-closure letter that the complaint mentioned only briefly.

CERCLA and HSAA claims

The court dismissed the CERCLA and HSAA claims with leave to amend because the complaint did not allege facts taking the claimed contamination outside those statutes’ petroleum exclusions. The plaintiffs relied on allegations concerning waste oil and argued in their opposition that it could contain non-petroleum contaminants such as TCE and PCE. The court found that the complaint itself did not plead the presence of TCE, PCE, or other contaminants that would remove the alleged pollution from the exclusions.

The court also held that, on the face of the complaint, the CERCLA claim fell outside CERCLA’s six-year limitations period for the cleanup costs at issue. The complaint characterized earlier work as remediation and alleged that the Regional Board closed the site in 2024, which the court viewed as indicating that the work was intended as a permanent remedy.

As to HSAA, the parties agreed that a three-year limitations period applied. The plaintiffs acknowledged that they had learned of some contamination migration in 2007 and incurred some costs before February 2022. They relied on a 2019 indemnity agreement and the discovery rule, but the court did not consider that agreement because it was not properly before the court. It therefore dismissed the HSAA claim with leave to amend.

Continuing trespass and private nuisance

The court denied dismissal of the continuing-trespass and continuing-private-nuisance claims. It explained that whether contamination is permanent or continuing generally depends on whether it can be discontinued or abated at reasonable cost, and that the issue is ordinarily a factual question.

The court found this case close or doubtful at the pleading stage because the complaint described a complicated history, including several allegedly unsuccessful remediation efforts and recurring site issues over many years. The court therefore declined to decide at that early stage that the alleged contamination was not continuing.

Public nuisance

The court denied dismissal of the public-nuisance claim. The defendants relied on the Regional Board’s case-closure report to challenge the plaintiffs’ allegations that the alleged nuisance affected a community or neighborhood. Because the court had declined to consider that report, it rejected this basis for dismissal.

Negligence and negligence per se

The court dismissed the negligence claim with leave to amend. The defendants argued that the claim was untimely because the complaint alleged that the plaintiffs first learned about the contamination in or around 2007. The plaintiffs relied on the 2019 indemnity agreement to support application of the discovery rule, but that agreement was not part of the complaint. The plaintiffs requested an opportunity to amend, and the court dismissed the claim with leave to amend.

The court dismissed the negligence-per-se claim. The plaintiffs alleged generally that the defendants’ failure to control the release of hazardous substances violated several state and federal statutes, but they did not explain how each defendant’s conduct satisfied the relevant statutory requirements. The court would not allow the opposition brief to add allegations missing from the complaint.

Indemnity claims

The court dismissed the equitable-indemnity claim because the plaintiffs did not plead the required adverse judgment or settlement. The court rejected the plaintiffs’ argument that the claim could be asserted prospectively based on potential liability or costs because the cited cases did not support that theory in this case.

The court also dismissed the express-indemnity claim. The plaintiffs referred to agreements in the complaint but did not identify the specific contractual provisions allegedly breached. They also relied on the 2019 indemnity agreement, which the court could not consider because it was not pleaded in the complaint.

Declaratory and injunctive relief

The court denied dismissal of the request for declaratory relief because the court allowed the private-nuisance, public-nuisance, and trespass claims to proceed. The court explained that declaratory relief is a remedy rather than an independent cause of action.

The discussion of injunctive relief states that the plaintiffs’ freestanding claim for injunctive relief was dismissed without prejudice to seeking that remedy in an amended complaint tied to a claim supporting it. The conclusion, however, states that the court denied the motion as to injunctive relief. The order does not explain this apparent inconsistency.

Proposition 65

The court dismissed the Proposition 65 claim. It held that a claim based on the facts described in the plaintiffs’ 2018 notice was barred by the one-year statute of limitations. It further held that the plaintiffs had not pleaded that they provided the notice required for a timely Proposition 65 claim based on later events. The court found the plaintiffs’ allegations about discovering Proposition 65 chemicals in indoor air in February 2023 insufficient because the action was filed more than one year later, and it noted the tension between that position and the plaintiffs’ reliance on a 2018 notice stating an intent to sue over Proposition 65 violations.

Equitable tolling and punitive damages

The court found that the plaintiffs’ general allegations that defendants concealed information, failed to address contamination, and made misleading statements were too vague to support equitable tolling. Although the alleged history made it conceivable that the plaintiffs might establish equitable tolling, the complaint did not plead enough facts to make that theory plausible.

The court dismissed the request for punitive damages. Under the applicable California statute, a corporate employer’s liability for punitive damages based on an employee’s acts requires specified conduct by an officer, director, or managing agent. The complaint’s only reference to punitive damages was in the prayer for relief, without even conclusory allegations of oppression, malice, or fraud.

Disposition

The court granted the motion to dismiss in part and dismissed the plaintiffs’ CERCLA, HSAA, negligence, negligence-per-se, equitable-indemnity, express-indemnity, Proposition 65, and punitive-damages claims. The court denied the motion as to the continuing-trespass, continuing-private-nuisance, continuing-public-nuisance, and declaratory-judgment claims. The conclusion also says the motion was denied as to injunctive relief, although the discussion says the freestanding injunctive-relief claim was dismissed without prejudice.

The court granted leave to amend. The plaintiffs could file an amended complaint within 28 days, solely to correct the deficiencies identified in the order.