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November 2013

Appellate Court Affirms Gordon & Rees’s Summary Judgment Win for Client in Pollution Case

Gordon & Rees San Francisco partners Jack “Skip” McCowan, P. Gerhardt Zacher and Don Willenburg and San Diego partners Kristin N. Reyna and Matthew Nugent recently won an appeal in a major environmental contamination case, affirming the summary judgment won earlier for the firm’s client.

In 2004, the Orange County Water District (OCWD) sued multiple defendants regarding alleged perchloroethylene contamination in groundwater near multiple industrial sites. The plaintiff contended that Gordon & Rees’s client was the successor-in-interest by merger to a defunct corporation that formerly owned and operated one of the sites, and was jointly and severally liable with other defendants for more than $150 million in costs to remediate the contamination. The settlement demand against the client was in the mid-eight figures.

Gordon & Rees persuaded both the trial and appellate courts to rule that plaintiff's settlement with a co-defendant released our client, pursuant to a release executed by plaintiff that did not name our client, for which our client paid nothing, regarding which our client was not involved in negotiations, and which plaintiff did not intend to cover our client. The settling defendant had owned the client’s predecessor before it merged with the client. Gordon & Rees argued that the client should be released by the agreement and the claims against it dismissed, because the settlement agreement released the client's predecessor company. The client 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 the merger.

In 2012 -- on the eve of a trial that ultimately lasted seven months and in the face of the eight-figure demand -- the trial court granted the summary judgment motion and subsequently granted the client’s request for costs. The OCWD appealed both decisions.

In its Nov. 13 unpublished opinion, the appellate court affirmed the trial court. It wrote that under the plain language of the settlement agreement, the predecessor was released.  Thus, Gordon & Rees’s client “was released by operation of law” due to their merger and the OCWD’s appeal of the trial court’s refusal to tax the client’s costs “was without merit.”

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