Moreland Properties LLC v. Goodyear Tire & Rubber Company

Opinion

UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT AUG 26 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS MORELAND PROPERTIES LLC, a No. 24-2451 Colorado Limited Liability Company, D.C. No. 2:20-cv-02297-SRB Plaintiff - Appellant, District of Arizona, Phoenix v. ORDER GOODYEAR TIRE & RUBBER COMPANY, named as The Goodyear Tire & Rubber Company, an Ohio Corporation and GOODYEAR FARMS INCORPORATED, an Arizona Corporation,

Defendants - Appellees.

Before: GRABER, BERZON, and BENNETT, Circuit Judges.

The memorandum disposition filed on June 12, 2025, is withdrawn. A

replacement memorandum disposition and a partial dissent by Judge Graber will be

filed concurrently with this order.

With these amendments, the panel has unanimously voted to deny Appellant’s

petition for rehearing. Judge Bennett has voted to deny the petition for rehearing en

banc, and Judge Berzon and Judge Graber have so recommended. The full court has

been advised of the petition for rehearing en banc, and no judge has requested a vote

on whether to rehear the matter en banc. Fed. R. App. P. 40. The petition for

rehearing en banc is denied. No additional petitions for rehearing may be filed. NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 26 2025 MOLLY C. DWYER, CLERK FOR THE NINTH CIRCUIT U.S. COURT OF APPEALS

MORELAND PROPERTIES LLC, a No. 24-2451 Colorado Limited Liability Company, D.C. No. 2:20-cv-02297-SRB Plaintiff - Appellant, MEMORANDUM* v.

GOODYEAR TIRE & RUBBER COMPANY, named as The Goodyear Tire & Rubber Company, an Ohio Corporation; GOODYEAR FARMS INCORPORATED, an Arizona Corporation,

Defendants - Appellees.

Appeal from the United States District Court for the District of Arizona Susan R. Bolton, District Judge, Presiding

Argued and Submitted March 26, 2025 Submission Withdrawn April 8, 2025 Resubmitted June 10, 2025 Phoenix, Arizona

Before: GRABER, BERZON, and BENNETT, Circuit Judges. Partial Concurrence and Partial Dissent by Judge GRABER. Plaintiff Moreland Properties, LLC (“Moreland”) appeals (1) the district

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

1 court’s grant of summary judgment for Defendants Goodyear Farms, Inc. and the

Goodyear Tire and Rubber Company (collectively, “Goodyear”) on Moreland’s

fraud claim and (2) the district court’s judgment for Goodyear following a bench

trial on Moreland’s Comprehensive Environmental Response, Compensation, and

Liability Act (“CERCLA”) claim. We affirm on both issues.

1. The district court correctly concluded that Moreland’s fraud claim was time

barred. Arizona applies a three-year limitations period to fraud claims. Ariz. Rev.

Stat. § 12-543(3). The statute of limitations does not begin to run “until the discovery

by the aggrieved party of the facts constituting the fraud or mistake.” Id. Discovery

occurs at the point “when the defrauded party discovers or with reasonable diligence

could have discovered the fraud.” Mister Donut of Am., Inc. v. Harris, 723 P.2d 670,

672 (Ariz. 1986). Because a claim accrues when a reasonably diligent party would

have discovered it, this discovery rule includes a corollary “duty to investigate.” Doe

v. Roe, 955 P.2d 951, 962 (Ariz. 1998); Walk v. Ring, 44 P.3d 990, 994 (Ariz. 2002).

As a result, the statute of limitations “may begin to run before a person has actual

knowledge of the fraud or even all the underlying details of the alleged fraud.” Mister

Donut, 723 P.2d at 672; see also Coronado Dev. Corp. v. Superior Ct. of Ariz. ex

rel. County of Cochise, 678 P.2d 535, 537 (Ariz. Ct. App. 1984).

The report from Western Technologies Inc. (“WTI”) in January 2015 showed

an average arsenic concentration of around 50 mg/kg. Goodyear’s 2004 Declaration

2 of Environmental Use Restriction (“DEUR”) had reported a 95% upper confidence

limit mean arsenic concentration of only 10 mg/kg. The WTI report’s findings were

sufficiently alarming that the prospective buyer to whom Moreland had intended to

sell the land withdrew from the sale, and Moreland initiated remediation efforts.

Further, William Moreland testified that he understood the WTI report to mean that

“the property is not as stated in the DEUR” and that, as a result, “I couldn’t sell it

saying there’s a DEUR as I bought it. And this DEUR is misrepresented or it’s

fraudulent. I couldn’t do it.” The WTI report therefore put a reasonable person on

notice that fraud may have occurred and that an investigation was called for.

That scienter is one of the facts constituting fraud, see Merck & Co. v.

Reynolds, 559 U.S. 633, 648-49 (2010), does not affect the date at which a

reasonably diligent plaintiff in Moreland’s position would have begun investigating.

The WTI report’s finding of extremely elevated arsenic levels was sufficient to put

a reasonable person on notice to investigate whether Goodyear misrepresented the

concentrations in the DEUR and, if so, whether it did so knowingly, even though the

report did not address those issues.

When Moreland did investigate the reason for the inconsistency between its

sampling and the DEUR, it took approximately one month for it to discover that

Goodyear allegedly had not “take[n] sufficient pre- and post-confirmation arsenic

samples” to “delineate, confirm, or further excavate the areas of arsenic impacted

3 soil,” even though it was required to do so by the work plan approved by the Arizona

Department of Environmental Quality (“ADEQ”). It is these findings on which

Moreland relied to allege both the falsity of the DEUR and scienter. Had Moreland

acted as a reasonably diligent plaintiff would have and begun investigating the basis

for the arsenic inconsistency after receiving the WTI report, it would have

discovered the facts constituting fraud—including those suggesting scienter—in

early 2015. Because Moreland filed suit on November 30, 2020, more than three

years later, its fraud claim is barred by the statute of limitations.

2. The district court correctly found for Goodyear on Moreland’s CERCLA

claim. To recover, Moreland had to show that its response action was “consistent

with” the National Contingency Plan (“NCP”). Carson Harbor Vill., Ltd. v. County

of Los Angeles, 433 F.3d 1260, 1265 (9th Cir. 2006); see 42 U.S.C. § 9607(a)(4)(B).

“A private party response action will be considered ‘consistent with the NCP’ if the

action, when evaluated as a whole, is in substantial compliance with the applicable

requirements. . . .” 40 C.F.R. § 300.700(c)(3)(i).

A. “CERCLA and the National Contingency Plan divide response actions into

two broad categories: removal actions and remedial actions.” United States v. W.R.

Grace & Co., 429 F.3d 1224, 1227 (9th Cir. 2005); see also 42 U.S.C. § 9601(23),

(24). “[B]oth types of actions have substantial requirements, but the [NCP’s]

requirements for remedial actions are much more detailed and onerous.” W.R.

4 Grace, 429 F.3d at 1228 (citation omitted). “[R]emoval actions encompass interim,

partial time-sensitive responses taken to counter serious threats to public health.” Id.

at 1245; see also Santa Clarita Valley Water Agency v. Whittaker Corp., 99 F.4th

458, 478 (9th Cir. 2024). “Remedial actions, on the other hand, are often described

as permanent remedies to threats for which an urgent response is not warranted.”

W.R. Grace, 429 F.3d at 1228 (footnote omitted); see also Santa Clarita, 99 F.4th at

478.

The district court properly characterized Moreland’s response as a remedial

action. Moreland’s response did not address a time-sensitive public health threat,

because there was “no evidence that the elevated arsenic or toxaphene

concentrations in the soil required ‘immediate attention.’” The only evidence of risk

Moreland provided was that the degree of arsenic contamination on the land

exceeded the applicable Arizona Soil Remediation Level (“SRL”) set by ADEQ;

Moreland presented no evidence that the risk was time-sensitive or substantial

enough to necessitate an immediate response. That the land was a vacant,

undeveloped lot suggests there was minimal risk that someone would come into

contact with the contaminated soil, and there was evidence introduced at trial that

the soil presented no risk of groundwater contamination.

Moreland’s response was also “comprehensive” and “permanent,” not

“interim” or “partial.” W.R. Grace, 429 F.3d at 1228, 1245. By Moreland’s own

5 estimation, the excavation reduced the soil’s arsenic concentration to 9.9 mg/kg and

the toxaphene concentration to 4.9 mg/kg. These values are below the current

residential SRLs, indicating that Moreland’s response “fully eliminate[d] the public

health threat” posed by the contamination. Id. at 1247.

That Moreland’s ADEQ-approved work plan referred to the response as a

“removal” is not pertinent. An ADEQ employee explained during trial that ADEQ’s

approval of Moreland’s work plan involved no substantive determination that

Moreland’s response was a removal action under CERCLA, nor would ADEQ’s

interpretation of CERCLA be entitled to deference. See Arizona v. City of Tucson,

761 F.3d 1005, 1014 (9th Cir. 2014).

Accordingly, Moreland’s response is properly characterized as a remedial

action.

B. Because Moreland’s response was a remedial action, the NCP required,

among other things, that Moreland conduct a feasibility study containing “[a]

detailed analysis” of “alternatives that represent viable approaches to remedial

action.” 40 C.F.R. § 300.430(e)(9)(i). “One of the hallmarks of the feasibility study

requirement is assessing a variety of possible alternatives and providing analysis of

the costs, implementability, and effectiveness of each, and choosing the best

alternative for the site at issue.” Carson Harbor, 433 F.3d at 1268; see also 40 C.F.R.

§ 300.430(e)(9)(iii) (listing criteria that the feasibility study must consider).

6 Moreland has submitted no evidence to show that it conducted the required

feasibility study or otherwise analyzed remedial alternatives. Its work plan

considered only excavation. Its 2017 sampling report likewise did not assess any

remedial alternatives. Although the WTI report noted that “[l]ess expensive

remediation/mitigation alternatives are potentially available,” it did not list those

alternatives, or analyze the costs, effectiveness, or other features of such alternatives,

aside from stating that they “often involve increased agency interaction and

frequently less certainty in the schedule for the project.” Because “discussing a

single remediation alternative does not establish substantial compliance with the

feasibility study requirements of the National Contingency Plan,” these documents

do not suffice. Carson Harbor, 433 F.3d at 1268. The feasibility studies Marsh

Aviation commissioned in the 1990s do not satisfy the NCP’s requirement, as they

addressed only the toxaphene contamination; no remedial options to resolve the

arsenic contamination at issue in Moreland’s remediation were discussed. Further,

because the studies were conducted before Goodyear’s remediation attempt, they did

not accurately characterize the scope of the contamination Moreland confronted or

the relative merits of various remedial options available to Moreland.

In sum, Moreland did not substantially comply with the feasibility study

requirement, so its remediation was inconsistent with the NCP. Because Moreland

is barred from recovering on that ground, we do not consider whether Moreland

7 complied with the NCP’s public participation requirement or whether its response

costs were necessary.

AFFIRMED.

8 FILED Moreland Properties LLC v. Goodyear Tire & Rubber Co., No. 24-2451 AUG 26 2025 MOLLY C. DWYER, CLERK GRABER, Circuit Judge, concurring in part and dissenting in part: U.S. COURT OF APPEALS

I agree with the disposition’s analysis of the federal claim, and I join that

part entirely. But I respectfully disagree with the disposition’s analysis of the state-

law fraud claim. I would hold that, construing the facts in the light most favorable

to Plaintiff, as we must, a reasonable juror could decide that the 2015 report did not

trigger an immediate duty to investigate whether Defendant had committed

fraud. See Walk v. Ring, 44 P.3d 990, 995 (Ariz. 2002) (holding that a reasonable

juror could conclude that no immediate duty to investigate a dentist’s negligence

arose from severe pain following a dental procedure); see also Satamian v. Great

Divide Ins., 545 P.3d 918, 926 (Ariz. 2024) (holding that the date of discovery may

vary depending on the specific cause of action). I therefore would reverse the

summary judgment and remand for further proceedings on the state-law claim.