The court of appeal has cleared the way for the Modesto Redevelopment Agency to sue manufacturers and suppliers of dry cleaning solvents and equipment.

While the First District Court of Appeal did not rule on the Redevelopment Agency’s claims, the unanimous appellate panel did overturn a lower court decision to dismiss the lawsuit against the manufacturers and suppliers. By potentially making more parties liable for the cleanup of contamination, the decision could bolster redevelopment agencies’ efforts to clean up tainted land and water.

At issue is liability for contamination from two dry cleaning solvents, perchloroethylene (PERC) and trichloroethylene. The city argued that dry cleaners dumped the solvents into the city’s sewer system and let the solvents leak into the environment. The city sued a collection of manufacturers, distributors and dry cleaners. Under the Polanco Act (Health & Safety Code § 33459), a redevelopment agency may remediate contaminated properties within a project area and may recover the costs from the responsible parties. The definition of a “responsible party” is contained in the Porter Cologne Water Quality Control Act (Water Code § 13000 et seq.).

San Francisco Superior Court Judge Richard Kramer granted summary judgment for the manufacturers and distributors, but he also asked for guidance from the appellate court.

Writing for the First District, Justice Maria Rivera first dealt with the common law definition of nuisance, concluding, “[L]iability for nuisance does not hinge on whether the defendant owns, possesses or controls the property, nor on whether he is in a position to abate the nuisance; the critical question is whether the defendant created or assisted in the creation of the nuisance.”

The court then moved to the question of whether the city’s claims under the Polanco Act fell within the realm of nuisance or of product liability law. The court turned toSelma Pressure Treating Co. v. Osmose Wood Preserving Co., (1990) 221 Cal.App.3d 1601, a case that also involved manufacturers, distributors and end users of hazardous materials.

“We agree with the first stated conclusion in Selma — that those who create or assist in creating a system that causes hazardous wastes to be disposed of improperly, or who instruct users to dispose of wastes improperly, can be held liable under the law of nuisance,” Rivera wrote. “Here, for example, the city claims that, with knowledge of the hazards involved, some of the defendants instructed the dry cleaners to set up their equipment to discharge solvent-containing wastewater into the drains and sewers, and that others gave dry cleaners instructions to dispose of spilled PERC on or in the ground. We conclude that these kinds of affirmative actions or instructions could support a finding that those defendants assisted in creating a nuisance.”

But the court distinguished those parties that provided instruction to dry cleaners from manufacturers that made products but offered no guidance to end users.

“[W]e conclude that those who took affirmative steps directed toward the improper discharge of solvent wastes — for instance, by manufacturing a system designed to dispose of wastes improperly or by instructing users of its products to dispose of wastes improperly — may be liable under that statute [Water Code § 13304, subdivision (a)], but those who merely placed solvents into the stream of commerce without warning of the dangers of improper disposal are not liable under that section of the Porter-Cologne Act,” the court ruled.

The First District returned the case to the trial court with instructions to “apply the standards articulated in this decision” to the facts in Modesto.

The Case:
City of Modesto Redevelopment Agency v. Superior Court, No. A104367, 04 C.D.O.S. 4692, 2004 DJDAR 6452. Filed May 28, 2004. Modified June 28, 2004 at 2004 DJDAR 7928.
The Lawyers:
For Modesto: Duane C. Miller, Miller, Axline & Sawyer, (916) 924-8600.
For Dow Chemical (real party in interest): Gennaro Filice, Filice, Brown, Essa & McLeod, (510) 444-3131.