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February 2012

Gordon & Rees Team Wins Summary Judgment in Major Environmental Contamination Matter

On the eve of a trial expected to last six months, and in the face of a $20 million demand, partners Jack McCowan, Gery Zacher, Kristin Reyna, and Matthew Nugent obtained summary judgment on behalf of a major multinational corporation alleged to be responsible for perchloroethylene (PCE) contamination in groundwater near a former industrial site in Orange County. In Orange County Water District v. Northrop Corp., et al., filed in 2004, the plaintiff contended that Gordon & Rees's client was the successor-in-interest to a defunct corporation and, on that basis, was jointly and severally liable with other defendants for more than $150 million in costs to remediate PCE contamination that threatened plaintiff's drinking water wells in northern Orange County.

After earlier obtaining summary adjudication of plaintiff's negligence and punitive damages allegations, the Gordon & Rees team took advantage of a recent settlement in a related bankruptcy matter between the Orange County Water District and the former parent company of the client's predecessor. In a motion for summary judgment based on the bankruptcy court settlement agreement, the good faith papers filed in the civil litigation and the civil court's prior order dismissing the claims against the parent and predecessor, Gordon & Rees argued that, even though the client itself was not a party to the agreement, did not participate in the negotiations that resulted in the agreement, and did not contribute to the settlement, it was nevertheless released by the agreement and the claims against it dismissed by the court's order, because it was alleged to be liable solely as a successor to the released predecessor entity, and was, in effect, the predecessor entity by operation of law due to their merger.

Plaintiff vigorously disputed Gordon & Rees's characterization of the scope and effect of the release, arguing that it did not intend to release the firm's client, that the terms of the release did not encompass the claims against the client, and that if granted, the motion would result in an unfair windfall to the firm's client. However, the Court granted the motion, finding that Gordon & Rees's client was released by the bankruptcy settlement agreement, the claims against it dismissed by the prior order of the court, and that the plaintiff failed to present sufficient rebuttal evidence to support a triable issue of fact in the face of the substantial evidence presented by Gordon & Rees. The victory is noteworthy not only because of the substantial demand and amount in controversy, but because Gordon & Rees is alone among multiple defendants in extricating its client from the case without paying anything in settlement.

Jack B. McCowan Jr.
Matthew P. Nugent
Kristin N. Reyna DeHart
P. Gerhardt Zacher