Pacific Resources Associates LLC v. Suzy Cleaners

Opinion

1 2 3 4 5 6 7 10 11 PACIFIC RESOURCES ASSOCIATES Case No.: 3:20-cv-00234-RBM-DEB LLC, a Delaware limited liability 12 company, et al., ORDER: 13 Plaintiffs, (1) DENYING THE KIMS’ MOTION 14 v. TO BIFURCATE TRIAL ON 15 TRESPASS AND NUISANCE SUZY CLEANERS, an organization, et CLAIMS 16 al.,

17 Defendants. (2) DENYING THE KIMS’ MOTION TO SEVER THE TRESPASS AND 18 NUISANCE CLAIMS 19 [Doc. 215] 20 21 22 On July 26, 2024, Guhn Y. Kim and Yun Soon Kim, individually and as husband 23 and wife, and Guhn Y. Kim and Yun Soon Kim, as trustees of The Kim Family Trust of 24 2017 (collectively, “the Kims”) filed a Motion to Bifurcate Trial on Trespass and Nuisance 25 Claims (“Motion to Bifurcate”), or, Alternately, Motion to Sever the Trespass and 26 Nuisance Claims (“Motion to Sever”) (collectively, “Motions”). (Doc. 215.) 27 On August 12, 2024, Kim Hortman Buhler, administrator and executor of the Estate 28 of Barbara Hortman, and Kim Hortman Buhler and Norman Alton Hortman, III, trustees 1 of The Norman Alton Hortman and Barbara Hortman Revocable Trust No. 1 Dated July 2, 2 1985 (collectively, the “Hortmans”) filed an Opposition to the Kims’ Motion to Bifurcate 3 and Motion to Sever (“Opposition”). (Doc. 224.) On August 19, 2024, the Kims filed a 4 Reply to the Hortmans’ Opposition (“Reply”). (Doc. 226.) 5 The Court finds this matter suitable for determination without oral argument 6 pursuant to Civil Local Rule 7.1(d)(1). For the reasons discussed below, the Kims’ 7 Motions are DENIED. 9 A. Factual Background 10 1. Pacific Resources and the 1680 Property 11 Pacific Resources Associates LLC (“Pacific Resources”) owned the property located 12 at 1680 East Valley Parkway, Escondido, California 92027, a storefront in the Valley Plaza 13 shopping center, from February 12, 2001 until November 2022 (the “1680 Property”). 14 (Doc. 114 at 9.1) 15 2. M&E, the Barawids, the Hortman Parties, and the 1718 Property 16 M&E Brothers, LLC (“M&E”) owns the property located at 1718 East Valley 17 Parkway, Escondido, California 92027, another storefront in the Valley Plaza shopping 18 center (the “1718 Property”). (Case No. 3:22-cv-01892-RBM-DEB, Doc. 13 at 2.) The 19 1718 Property is located east of Plaintiff’s 1680 Property. (Doc. 223 at 9.) M&E acquired 20 the 1718 Property from Michael L. Barawid, Edward L. Barawid, and Flor De Lys L. 21 Barawid (the “Barawids”) on December 29, 2004. (Case No. 3:22-cv-01892-RBM-DEB, 22 Doc. 13 at 2.) The Hortman Parties held title to the 1718 Property between September 3, 23 1987 and August 17, 1999. (Id.) 24 25 26 27 28 1 1 3. The Kims and the 1654 Property 2 Guhn Y. Kim and Yun Soon Kim, individually and as husband and wife, and Guhn 3 Y. Kim and Yun Soon Kim, as trustees of The Kim Family Trust of 2017 (collectively, 4 “the Kims”) own the property located at 1654 East Valley Parkway, Escondido, California 5 92027, a third storefront in the Valley Plaza shopping center (the “1654 Property”). (Case 6 No. 3:22-cv-01892-RBM-DEB, Doc. 34 at 46–47.) The 1654 Property is located west of 7 Plaintiff’s 1680 Property. (Doc. 223 at 9.) The 1654 Property is currently home to Suzy 8 Cleaners. (Case No. 3:22-cv-01892-RBM-DEB, Doc. 34 at 46–47.) 9 B. Procedural History 10 1. The 2020 Pacific Resources Action 11 Pacific Resources initially filed this case on February 6, 2020—over four years ago. 12 (Doc. 1.) Pacific Resources then amended its Complaint on February 3, 2023 (Doc. 83) 13 and on May 1, 2023 (Doc. 114). Pacific Resources alleged that the former and current 14 owners and operators of the drycleaning businesses located at the 1654 Property and the 15 1718 Property released perchloroethylene (“PCE”) into the soil beneath the properties, 16 which then migrated and contaminated the soil beneath Pacific Resource’s 1680 Property. 17 (Id. at 9–11.) Pacific Resources alleged that it incurred substantial response, removal, and 18 remediation costs. (Id. at 10–13.) Pacific Resources asserted three causes of action under 19 the federal Comprehensive Environmental Response, Compensation, and Liability Act 20 (“CERCLA”), one cause of action under California’s Hazardous Substances Account Act 21 (“HSAA”), and nine additional tort and equitable causes of action under California state 22 common law. (Id. at 13–26.) Pacific Resources has since settled all of its claims. (See 23 Docs. 168, 169, 195.) 24 On April 27, 2023, the Kims, the owners of the 1654 Property, answered Pacific 25 Resource’s Second Amended Complaint, denying all liability. (Doc. 115.) The Kims also 26 filed third-party claims against M&E, the Barawids, the Hortman Parties, and other former 27 owners and operators of the drycleaning businesses previously located at the 1718 Property 28 for (1) contribution under CERCLA, (2) equitable indemnity, (3) indemnity/contribution 1 under the HSAA, (4) federal declaratory relief, (5) state law contribution, (6) trespass, and 2 (7) private nuisance (the “Kims’ Third-Party Complaint”). (Doc. 115 at 17–27.) The 3 Kims’ Third-Party Complaint is the subject of their Motions and this Order.2 4 Likewise, on May 19, 2023, the Hortman Parties answered Pacific Resources’ 5 Second Amended Complaint, denying all liability. (Doc. 129.) Additionally, the Hortman 6 Parties filed crossclaims for contribution and/or indemnity under CERCLA, HSAA, and 7 California Civil Code section 1432 against the Kims and M&E, among others. (Doc. 129 8 at 32.) The Hortman Parties also filed a Third-Party Complaint against prior owners and 9 operators of the 1718 Property dating back to the 1960s for contribution and/or indemnity 10 under CERCLA, HSAA, and California Civil Code section 1432.3 (Doc. 129 at 48–63.) 11 2. The 2022 M&E Action 12 On November 30, 2022, Defendant M&E filed a separate action against the Hortman 13 Parties (Case No. 22-cv-01892-RBM-DEB, Doc. 1), which it then amended on March 22, 14 2023 (Case No. 22-cv-01892-RBM-DEB, Doc. 13) and July 19, 2024 (Doc. 209). M&E 15 contends that it is entitled to the recovery of response costs and contribution for the 16 investigation and cleanup of its 1718 Property (id. at 15–19, 26), as well as damages for 17 negligence, public and private nuisance, trespass, waste, and fraudulent conveyance (id. at 18 19–28). 19 On June 13, 2024, in response to M&E’s separate action against them, the Hortmans’ 20 filed Counterclaims and a Third-Party Complaint against the Kims, among others. (See 21 Case No. 3:22-cv-01892-RBM-DEB, Doc. 34.) 22 23 24

25 2 In a recent Joint Status Report, the Kims noted that they recently settled with M&E and 26 the Barawids for an undisclosed amount (see Doc. 248 at 7); however, the Court is not 27 certain precisely which claims were settled. 3 As of the date of this Order, not all the prior owners and operators of the 1718 Property 28 1 C. The Kims’ Motion to Bifurcate 2 In their Motion to Bifurcate, the Kims argue that the bifurcation of the state law tort 3 claims in their Third-Party Complaint is necessary to preserve their right to a jury trial on 4 those claims. (Doc. 215-1 at 8–9.) The Kims also argue that balancing the relevant 5 factors—e.g., judicial economy, the conservation of resources, the risk of prejudice, 6 convenience, the risk of confusion, and more—weighs in favor of bifurcation. (Id. at 9– 7 11.) Specifically, the Kims argue that the issue of the source of the contamination is 8 common to all claims and will be decided by the jury and then inform the Court’s 9 subsequent decision on the CERCLA and HSAA claims. (Id.) 10 In their Opposition, the Hortmans respond that the Court may conduct a combined 11 jury and bench trial, which will serve judicial economy by avoiding duplicative evidence 12 and expert testimony while still preserving the Kims’ right to a jury trial. (Doc. 224 at 3– 13 5.) The Hortmans explain that duplicating costly expert testimony will prejudice them. 14 (Id. at 5–7.) The Hortmans also argue that the Kims’ concerns regarding their advanced 15 age and the Hortmans’ delay tactics are unfounded, that the Kims arguments contradict 16 previous arguments, and that a combined jury and bench trial will avoid confusion. (Id. at 17 7–8.) 18 D. The Kims’ Motion to Sever 19 As an alternative to bifurcation, the Kims argue that the Court should sever their 20 trespass and nuisance claims under Federal Rule of Civil Procedure 21. (Doc. 215-1 at 11– 21 12.) The Hortmans did not address the Kims’ Motion to Sever. 23 Federal Rule of Civil Procedure 42(b) provides, “[f]or convenience, to avoid 24 prejudice, or to expedite and economize, the court may order a separate trial of one or more 25 separate issues, claims, crossclaims, counterclaims, or third-party claims. When ordering 26 a separate trial, the court must preserve any federal right to a jury trial.” 27 “Under Rule 42(b), the district court has broad discretion to bifurcate a trial to permit 28 deferral of costly and possibly unnecessary proceedings pending resolution of potentially 1 dispositive preliminary issues.” Jinro Am. Inc. v. Secure Invs., Inc., 266 F.3d 993, 998 (9th 2 Cir. 2001) (citing Exxon Co. v. Sofec, Inc., 54 F.3d 570, 575 (9th Cir.1995)). “Factors to 3 be considered when deciding whether to bifurcate a trial include: complexity of issues, 4 factual proof, risk of jury confusion, difference between the separated issues, the chance 5 that separation will lead to economy in discovery, and the possibility that the first trial may 6 be dispositive of the case. Bifurcation should be ordered only when it will result in judicial 7 economy and will not unduly prejudice any party.” MySpace, Inc. v. Graphon Corp., 732 8 F. Supp. 2d 915, 917 (N.D. Cal. 2010) (citing Calmar, Inc. v. Emson Rsch., Inc., 850 F. 9 Supp. 861, 865–66 (C.D. Cal.1994)). “Whether and how to bifurcate trials is a matter left 10 within the sound discretion of the district court.” Id. (citation omitted); see e.g., Exxon Co., 11 54 F.3d at 575–76, aff’d sub nom. Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830 (1996) 12 (affirming bifurcation of trial to first establish causation). 13 A “district judge act[s] within his authority in bifurcating the legal and equitable 14 claims pursuant to [Rule] 42 ….” Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 15 165, 170 (9th Cir. 1989). “When legal and equitable claims are joined in the same action, 16 the trial judge has only limited discretion in determining the sequence of trial and ‘that 17 discretion ... must, wherever possible, be exercised to preserve jury trial.’” Id. (quoting 18 Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510 (1959)). “‘Only under the most 19 imperative circumstances ... can the right to a jury trial of legal issues be lost through prior 20 determination of equitable claims.’” Id. (quoting same). 21 “The Supreme Court has held that ‘where equitable and legal claims are joined in 22 the same action, there is a right to jury trial on the legal claims which must not be infringed 23 either by trying the legal issues as incidental to the equitable ones or by a court trial of a 24 common issue existing between the claims.’” Id. (quoting Ross v. Bernhard, 396 U.S. 531, 25 537–38 (1970)). “Thus, where there are issues common to both the equitable and legal 26 claims, ‘the legal claims involved in the action must be determined prior to any final court 27 determination of the equitable claims.’” Id. (quoting Dairy Queen, Inc. v. Wood, 369 U.S. 28 469, 479 (1962)) (emphasis added). “Otherwise, ‘prior non-jury trial of the equitable 1 claims may infringe the right to jury trial on the legal claims because of the collateral 2 estoppel or res judicata effect of a prior judicial determination of issues common to the two 3 sets of claims.’” Id. (quoting Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 4 674, 690 (9th Cir. 1976)). However, “[w]here the ‘legal and equitable claims asserted in a 5 single action are entirely independent, the order of trial is immaterial, and may be left in 6 the discretion of the court.’” Id. at 171 (quoting 9 C. Wright & A. Miller, Federal Practice 7 and Procedure § 2305, at 35 (1971)). 8 There is some disagreement among federal courts as to whether CERCLA claims 9 brought under 42 U.S.C. §§ 9607 or 9613(f)(1) are equitable or legal in nature. See Hatco 10 Corp. v. W.R. Grace & Co. Conn., 59 F.3d 400, 414 (3d Cir. 1995) (holding “that in suits 11 brought under 42 U.S.C. §§ 9607 or 9613(f)(1), the parties are not entitled to a jury trial.”); 12 City of Banning v. Dureau, No. ED CV 12-00043 BRO (SPx), 2013 WL 6063344, at *1 13 (C.D. Cal. Nov. 18, 2013) (same); Carson Harbor Vill., Ltd. v. Unocal Corp., 287 F. Supp. 14 2d 1118, 1127 n.5 (C.D. Cal. 2003) (same); California Dep’t of Toxic Substances Control 15 v. Alco Pac., Inc., 217 F. Supp. 2d 1028, 1046 (C.D. Cal. 2002); but see AMW Materials 16 Testing, Inc. v. Town of Babylon, 584 F.3d 436, 452 (2d Cir. 2009) (“[I]t is by no means 17 clear that the restitution provided by § 9607(a) is equitable, rather than legal, in nature.”); 18 California Dep’t of Toxic Substances Control v. Jim Dobbas, Inc., No. 2:14-595 WBS 19 EFB, 2014 WL 4627248, at *6 (E.D. Cal. Sept. 16, 2014) (“In light of the uncertainty over 20 whether the right to a jury exists under CERCLA, and the need to err on the side of 21 preserving that right … the court finds disposal of Dobbas’s jury demand for these claims 22 inappropriate on a motion to strike.”). Nevertheless, the Kims and the Hortmans appear to 23 agree that their CERCLA and HSAA claims are equitable claims not subject to a jury trial, 24 and the Court need not resolve this issue at this time. See e.g., Torres v. Igdaloff, No. 2:17- 25 cv-04059-MCS-JEM, 2021 WL 4527748, at *2 (C.D. Cal. July 19, 2021) (“The parties 26 opposing the motion do not dispute that the CERCLA and HSAA claims seek equitable 27 relief, are not jury triable.”). Therefore, the Court looks to other California district courts 28 for guidance on the best course of action. 1 In Santa Clarita Valley Water Agency v. Whittaker Corporation, cited by the 2 Hortmans in their Opposition, the Ninth Circuit addressed eight issues on appeal following 3 an 11-day combined jury and bench trial on the parties’ state common law, CERCLA, and 4 Resource Conservation and Recovery Act (“RCRA”) claims. 99 F.4th 458, 466–70 (2024). 5 The Ninth Circuit explained that the “[t]he common claims for negligence, trespass, public 6 nuisance, and private nuisance were tried before the jury in an 11-day trial” and that 7 “[f]ollowing the jury trial, the district court issued its Findings of Fact and Conclusions of 8 Law (‘FF/CL’) as to the statutory claims tried to the bench.” Id. at 469. The district court’s 9 FF/CL’s reveal that “[m]ost of the state claims were tried to a jury … leaving the federal 10 claims (and certain related state claims) for [the district court] to decide.” Santa Clarita 11 Valley Water Agency v. Whittaker Corp., No. 2:18-CV-06825-SB-RAO, 2022 WL 12 1976552, at *1 (C.D. Cal. June 6, 2022). Therefore, the “CERCLA, HSAA, and RCRA 13 claims … were tried to the bench rather than the jury. The parties had an opportunity to 14 present additional evidence for this part of the case but elected not to do so, except for one 15 witness ….” Id. at *8. Thus, it appears the district court first held a jury trial on the parties’ 16 state law claims and then subsequently heard additional evidence pertaining solely to the 17 bench trial portion of the case. This interpretation is supported by the proposed “bench 18 plans” filed with the district court.4 (See Case No. 2:18-cv-06825-SB-RAO, Docs. 424– 19 26.) 20 In contrast, in Torres v. Igdaloff, the district court found that bifurcating trial was 21 appropriate. 2021 WL 4527748, at *2. The district court reasoned: 22

23 4 Prior to trial, the district court denied the defendant’s request to bifurcate the trial into 24 two phases, the first of which would have been a bench trial on the plaintiff’s innocent 25 landowner CERCLA defense, which the defendant argued might have eliminated the need for a subsequent jury trial on the state law claims. See Santa Clarita Valley Water Agency 26 v. Whittaker Corp., No. 2:18-cv-06825-SB-RAO, 2021 WL 4340520, at *1 (C.D. Cal. July 27 22, 2021). Without discussing the parties’ rights to a jury trial, the district court expressed concern regarding issues of preemption and decided that bifurcation would not be the 28 1 The parties opposing the motion do not dispute that the CERCLA and HSAA claims seek equitable relief, are not jury triable, and are separable from the 2 jury triable claims. This case features multiple sets of parties asserting a 3 complicated network of claims against one another. Bifurcating trial would significantly streamline both proceedings by reducing the number and type of 4 competing claims at each proceeding. Trying the CERCLA and HSAA claims 5 at the same time as the tort and contract claims would waste the jury’s time when the parties present evidence pertaining solely to the statutory claims, 6 and would carry a high risk of confusing the jury, especially as to the measure 7 of damages. The Court finds persuasive [the] argument that, given the magnitude of the costs to be allocated under the statutory claims relative to 8 the potential recovery for the tort and contract claims, adjudicating the 9 CERCLA and HSAA claims first may render a jury trial on the remaining claims unnecessary or facilitate a settlement of the remaining claims. Thus, 10 the risk the parties will endure significant prejudice by expending time and 11 resources on a second trial is low. Convenience, judicial economy, and reducing the risk of confusion far outweigh any potential prejudice the 12 opposing parties may suffer from trying the equitable claims separately. The 13 Court exercises its discretion to bifurcate trial and will conduct a bench trial of the equitable claims before a jury trial of the legal claims. 14

15 Id. 16 After careful consideration of the Kims’ and the Hortmans’ positions, as well as a 17 thorough review of the relevant case law, at this time, the Court finds that a combined jury 18 and bench trial, similar to the one conducted by the district court in Santa Clarita Valley 19 Water Agency v. Whittaker Corporation, is the most prudent course of action. A combined 20 jury and bench trial will preserve the Kims’ right to a jury trial on their state common law 21 tort claims. In addition, a combined jury and bench trial promotes judicial economy and 22 efficiency by limiting the amount of duplicative evidence and expert testimony and 23 avoiding the confusion of issues for the jury. While the Court appreciates the Kims’ 24 concerns regarding their advanced age, these concerns do not outweigh the Court’s analysis 25 above.5 26

27 5 While the Court finds that a combined jury and bench trial sufficiently preserves the 28 1 it. CONCLUSION 2 Based on the foregoing, the Kims’ Motion to Bifurcate is DENIED. Additionally, 3 ||because the Kims’ arguments regarding severance are the same as their arguments 4 |/regarding bifurcation (see Doc. 215-1 at 11-12), the Kims’ Motion to Sever is also 5 || DENIED. 7 ||DATE: November 12, 2024 Et Lcale Marleaes 2 9 HON-RUTH BERMUBEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of denying the Kims’ Motion to Bifurcate, the Court refrains from outlining a more specific course of action at this time. 10