Seattle Times Company v. Leathercare, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 25, 2020
• Docket: 18-35773
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION SEP 25 2020 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SEATTLE TIMES COMPANY, Nos. 18-35773 19-35056 Plaintiff-Appellant, 19-35252

v. D.C. No. 2:15-cv-01901-TSZ

LEATHERCARE, INC.; STEVEN RITT, an individual, and the marital community MEMORANDUM* composed of Steven Ritt and Laurie Rosen-Ritt; LAURIE ROSEN-RITT,

Defendants-Appellees,

v.

TB TS/RELP LLC; TOUCHSTONE SLU, INC.,

Third-party-defendants- Appellees.

SEATTLE TIMES COMPANY, No. 18-35966

Plaintiff-Appellee, D.C. No. 2:15-cv-01901-TSZ

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. LEATHERCARE, INC.; STEVEN RITT, an individual, and the marital community composed of Steven Ritt and Laurie Rosen-Ritt; LAURIE ROSEN-RITT,

Third-party-defendants- Appellants.

SEATTLE TIMES COMPANY, No. 19-35068

LEATHERCARE, INC.; STEVEN RITT, an individual, and the marital community composed of Steven Ritt and Laurie Rosen-Ritt; LAURIE ROSEN-RITT,

Defendants-Appellants,

Third-party-defendants.

2 SEATTLE TIMES COMPANY, No. 19-35433

Plaintiff-Appellant, D.C. No. 2:15-cv-01901-TSZ

LEATHERCARE, INC.; STEVEN RITT, an individual, and the marital community composed of Steven Ritt and Laurie Rosen-Ritt; LAURIE ROSEN-RITT,

Appeal from the United States District Court for the Western District of Washington Thomas S. Zilly, District Judge, Presiding

Argued and Submitted May 8, 2020 Seattle, Washington

Before: KLEINFELD, W. FLETCHER, and RAWLINSON, Circuit Judges.

These consolidated appeals stem from protracted litigation involving the

extensive contamination of commercial property previously used for dry-cleaning

operations. Appellant Seattle Times Company (Seattle Times) appeals the district

court’s dismissal of its claims brought under the Comprehensive Environmental

3 Response, Compensation, and Liability Act (CERCLA) against Appellees

LeatherCare, Inc. (LeatherCare) and Steven Ritt (Ritt), and its claim pursuant to

Washington’s Model Toxics Control Act (MTCA) against Ritt. Additionally,

Seattle Times appeals the district court’s award of costs to Appellees Touchstone

SLU LLC and TB TS/RELP LLC (Touchstone) pursuant to an Environmental

Remediation and Indemnity Agreement (ERIA).

In separate appeals, Seattle Times challenges the district court’s award of

attorneys’ fees and its determination of prevailing party status, which LeatherCare

contests in a conditional cross-appeal. Touchstone also appeals the district court’s

denial of its request for prejudgment interest on the amounts owed by Seattle

Times under the ERIA.

1. The district court properly denied Seattle Times’ motion for partial

summary judgment on its CERCLA § 107(a) claim. Although Seattle Times and

LeatherCare stipulated to certain elements of liability under CERCLA § 107(a),

there was a material factual dispute concerning the geographic scope of the

contamination on the property, and the parties’ responsibilities for the associated

remedial costs. In any event, the district court ultimately dismissed Seattle Times’

claim because the interim action plan for remediation of the property failed to

substantially comply with the National Contingency Plan, a requisite element of

4 CERCLA § 107(a) liability to which Seattle Times and LeatherCare did not

stipulate. See Seattle Times Co. v. LeatherCare, Inc., 337 F. Supp. 3d 999, 1048-

49 (W.D. Wash. 2018); AmeriPride Servs. Inc. v. Texas E. Overseas Inc., 782 F.3d

474, 489 (9th Cir. 2015) (stating that “[t]o prevail in a private cost recovery action

under [CERCLA § 107(a)], a plaintiff must establish, among other things, that the

release of a hazardous substance caused the plaintiff to incur response costs that

were necessary and consistent with the national contingency plan”) (citation and

internal quotation marks omitted).

2. In allocating orphan shares for contamination caused by the property’s

former owner, Troy Laundry Co. (Troy), the district court did not clearly err in

determining that Troy utilized hazardous materials in its dry-cleaning operations,

and was no longer subject to liability due to its dissolution in 1986. See Seattle

Times Co., 337 F. Supp. 3d 999 at 1020, 1024-25; see also Resilient Floor

Covering Pension Trust Fund Bd. of Trustees v. Michael’s Floor Covering, Inc.,

801 F.3d 1079, 1088 (9th Cir. 2015) (articulating that “[w]e review the district

court’s findings of fact after a bench trial for clear error”) (citation omitted); RCW

§ 23B.14.340 (requiring commencement of suit within two years of the dissolution

of a corporation). The district court also did not clearly err in determining that

Troy’s corporate successor did not assume Troy’s liabilities, and there was no

5 evidence that Troy’s corporate formalities were disregarded after it became a

subsidiary of the acquiring corporation. See Seattle Times, 337 F. Supp. 3d at 1025

n.19; see also Minton v. Ralston Purina Co., 47 P.3d 556, 562 (Wash. 2002) (en

banc) (explaining that, absent piercing of the corporate veil, a parent corporation is

not liable for acts of its subsidiaries).

3. The district court properly dismissed Seattle Times’ CERCLA claims

against LeatherCare and Ritt because the interim action plan for remediation of the

property did not substantially comply with the National Contingency Plan. See

Seattle Times, 337 F. Supp. 3d at 1048-49. The district court correctly concluded

that the underlying feasibility study failed to provide the requisite detailed analysis

in screening out potential remedial alternatives to excavation and disposal of

contaminated soil from the property. See Carson Harbor Village v. Cty. of Los

Angeles, 433 F.3d 1260, 1268 (9th Cir. 2006) (explaining that “the feasibility study

must include a detailed analysis on the limited number of alternatives that represent

viable approaches to remedial action after evaluation in the screening stage”)

(citation, alteration, and internal quotation marks omitted).

4. The district court did not clearly err in determining that Ritt was not

personally liable as an operator of a facility under the MTCA. See Seattle Times,

337 F. Supp. 3d at 1051; see also Resilient Floor Covering Pension Trust Fund Bd.

6 of Trustees, 801 F.3d at 1088 (reviewing for clear error). Ritt did not “possess the

requisite level of control to support operator liability,” because he did not “manage,

direct, or conduct operations specifically related to pollution.” Pope Res., LP v.

Wash. State Dept. of Nat. Res., 418 P.3d 90, 98-99 (Wash. 2018) (citation omitted).

Notably, Seattle Times and LeatherCare stipulated that LeatherCare was the former

operator of the property under CERCLA, with no mention of Ritt’s personal

involvement in any contamination.

5. The district court did not err in awarding costs in favor of Touchstone

pursuant to the ERIA. See Seattle Times, 337 F. Supp. 3d at 1068-69. The district

court reasonably concluded that the ERIA’s definition of incremental costs did not

preclude Touchstone from utilizing trucks to directly transport contaminated soil to

a landfill, id. at 1054-55, and requiring Touchstone to wait for available rail

transport would have “unreasonably interfere[d] with” Touchstone’s “ongoing

development project work.” See Estate of Carter v. Carden, 455 P.3d 197, 202

(Wash. Ct. App. 2019) (explaining that “[w]hen considering the language of a

written agreement, we impute an intention corresponding to the reasonable

meaning of the words used in the writing”) (citation and internal quotation marks

omitted). Although the ERIA afforded Seattle Times the right to select the

disposal site, it did not expressly provide a corresponding contractual right to select

7 the mode of transportation.

Additionally, the district court properly awarded costs for sales tax, markups

for services associated with the removal of contaminated soil, and pre-disposal soil

sampling and analysis based on its interpretation of the contractual provisions,

Washington law, and evidence presented at trial. See Seattle Times, 337 F. Supp.

3d at 1054-55, 1057-62, 1064 n.57, 1067-68.

6. The district court properly denied Touchstone’s request for

prejudgment interest because the damages were not liquidated as required under

Washington law. See McLelland v. Paxton, 453 P.3d 1, 22 (Wash. Ct. App. 2019)

(explaining that “[a] liquidated claim arises from the availability of data which, if

believed, makes it possible to compute the amount with exactness, without reliance

on opinion or discretion”) (citation omitted). In awarding costs in favor of

Touchstone, the district court was required to determine whether Seattle Times

breached the ERIA in the context of the CERCLA and MTCA remedial actions, as

well as the reasonableness of Touchstone’s request for costs based on trucking

contaminated soil, sales tax, markups, and pre-disposal soil sampling and analysis.

The district court also opined that Touchstone was not entitled to certain costs that

it requested. See Seattle Times, 337 F. Supp. 3d at 1056-57, 1061-62, 1064, 1066.

As a result, the district court necessarily had to rely on “opinion or discretion” in

8 resolving the extensive litigation related to Seattle Times’ contractual obligations.

McLelland, 453 P.3d at 22 (citation omitted).

7. The district court correctly held that Seattle Times was not a

prevailing party over LeatherCare. Notably, the district court held that Seattle

Times was partly responsible for contamination of the property as its owner for

twenty-five years because it “took few corrective actions, and [contamination was]

allowed to travel farther and deeper in the subsurface soil, reaching the adjacent

right-of-way and the groundwater,” Seattle Times failed to conduct “any

meaningful investigation” prior to its purchase of the property, and engaged in

insufficient remediation actions after contamination was discovered on the

property. Seattle Times, 337 F. Supp. 3d at 1073-74. Based on the district court’s

findings, Seattle Times was not a prevailing party under the MTCA. See Douglass

v. Shamrock Paving, Inc., 406 P.3d 1155, 1161 (Wash. 2017) (delineating the

standard for prevailing party status under the MTCA as “the party that either

recovers remedial action costs or successfully defends against a claim for such

costs”) (citation omitted).

8. The district court did not err in determining that Ritt was not a

prevailing party over Touchstone. Touchstone did not focus on Ritt’s personal

liability as an operator under the MTCA, and its claims were directed at

9 LeatherCare at trial. In turn, Touchstone did not qualify as a prevailing party over

Ritt because it was not awarded any remedial costs from Ritt independent of

LeatherCare. See Douglass, 406 P.3d at 1161.1

9. The district court did not abuse its discretion in awarding attorneys’

fees to Touchstone. See Cronin v. Cent. Valley Sch. Dist., 456 P.3d 843, 856

(Wash. Ct. App. 2020) (explaining that reversal of a fee award is warranted “only

if the decision is manifestly unreasonable, is based on untenable grounds, or is

made for untenable reasons, with the last category including errors of law”)

(citation omitted). The district court arrived at a tenable basis for the fee award,

sufficiently explained its reasoning in awarding fees and its calculation of certain

multipliers and reductions, reasonably accepted Touchstone’s segregation of fees

for work performed on the breach of contract and MTCA claims, and properly

excluded fees for clerical work performed by a paralegal consistent with

Washington law. See William G Hulbert Jr. & Clare Mumford Hulbert Revocable

Living Trust v. Port of Everett, 245 P.3d 779, 789 (Wash. Ct. App. 2011) (stating

that “[a]n explicit hour-by-hour analysis of each lawyer’s time sheets is

1 In its cross-appeal, LeatherCare asserts that it was a prevailing party over Seattle Times because Seattle Times was liable for a significant portion of the cleanup costs. However, we need not and do not address the cross-appeal because LeatherCare acknowledges that, if we affirm the district court’s prevailing party determination, dismissal of its conditional cross-appeal is warranted. 10 unnecessary as long as the award is made with a consideration of the relevant

factors and reasons sufficient for review are given for the amount awarded”)

(citation and internal quotation marks omitted); see also Absher Const. Co. v. Kent

Sch. Dist. No. 415, 917 P.2d 1086, 1088 (Wash. Ct. App. 1995), as modified

(delineating the bases for reducing fees for non-attorney work).

10. The district court did not abuse its discretion in awarding attorneys’

fees to Ritt. The district court reasonably segregated the fees applicable to

LeatherCare and Ritt based on the corresponding billing entries. See Loeffelholz v.

Citizens for Leaders with Ethics & Accountability Now (C.L.E.A.N.), 82 P.3d 1199,

1213-14 (Wash. Ct. App. 2004), as amended (affording the district court discretion

to conduct its own segregation analysis). The district court also adequately

explained the basis for the fee award, reasonably calculated the fee award based on

work performed in support of Ritt’s defense, and correctly excluded fees

performed for non-attorney work. See Cronin, 456 P.3d at 856; Absher Const. Co.,

917 P.2d at 1088; William G Hulbert Jr. & Clare Mumford Hulbert Revocable

Living Trust, 245 P.3d at 789.

AFFIRMED.2

2 Appellees LeatherCare, Inc., Steven Ritt, and Lauren Rosen-Ritt’s Motion To Take Judicial Notice filed July 2, 2019, is GRANTED as to the appeal bond (continued...) 11 2 (...continued) filed in the district court and DENIED as to the newspaper article published in the Puget Sound Business Journal. 12