Opinion
No. CIV. S-05-2295 LKK/JFM.
June 15, 2006
ORDER
This suit arises out of contamination of groundwater at Mather Air Force Base in Sacramento County, California ("Mather"). On March 15, 2006, plaintiff, California-American Water Company ("Cal-Am"), filed a first amended complaint against defendants, the United States of America ("United States") and the United States Department of the Air Force ("Air Force"), alleging seven causes of action: (1) Cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq.; (2) Implied contribution under CERCLA; (3) Negligence; (4) Negligence Per Se; (5) Continuing Public Nuisance; (6) Continuing Private Nuisance; and (7) Trespass.
Pending before the court is defendants' motion to dismiss claims three through seven.
I. ALLEGATIONS OF THE COMPLAINT
Allegations are derived from plaintiff's first amended complaint filed on March 17, 2006.
Plaintiff, Cal-Am, is a public utility that provides water to commercial and residential customers in the County of Sacramento. Cal-Am purchased the water supply assets at issue in the instant case from Citizens Utilities Company of California ("CUCC" or "Citizens") in January 2002.
Cal-Am owns a parcel of real property located on Mars Way in Sacramento County, California, Assessor's Parcel Number 068-0142-027-0000, on which a drinking water supply well, known as the "Mars Well," is located. Before it was contaminated, the Mars Well was an excellent source of drinking water, capable of producing water at the rate of at least 690 gallons per minute ("gpm"). The Mars Well is a component of Cal-Am's suburban system, through which Cal-Am supplies water to residential and commercial customers in eastern Sacramento County.
At all times relevant to this dispute, the Air Force owned and operated the property known as Mather Air Force Base. The Air Force base consists of approximately 5,845 acres in the City of Rancho Cordova in eastern Sacramento County, California. As a result of the operations conducted by defendants and/or during their ownership or operation of Mather, significant quantities of hazardous substances were released into the soil and groundwater at Mather, including carbon tetrachloride, tetrachloroethylene ("PCE") and trichloroethylene ("TCE"). All of these chemicals are hazardous substances and are carcinogens. Plaintiff alleges that these substances have migrated in the groundwater to various off-site locations and have contaminated and threaten to contaminate the Mars Well.
In March 2000, the Central Valley Regional Water Quality Control Board concluded in its comments on the Air Force's Draft First Revision, Mather AFT Off-Base Water Supply Contingency Plan, that "[p]umping of the Mars Well will draw contaminants from the Mather plume toward the Mars Well and induce a downward vertical gradient." Plaintiff avers that the Mars Well "cannot be safely operated without exceeding [Water Quality Objectives] and exacerbating plume migration."
In December 2002, Montgomery Wason Harza, an environmental consulting firm working at Mather on behalf of the Air Force, concluded in a report prepared for the Air Force Center for Environmental Excellence that if the Mars Well were pumped continuously at a rate of 400 gpm, the plumes of PCE and and carbon tetrachloride originating at Mather would be drawn towards the well in concentrations at or near applicable Maximum Contaminant Levels (MCLs). Cal-Am is prohibited by California law from providing drinking water to customers where such water contains contaminants at levels in excess of the applicable MCL.
Due to the presence in the groundwater of hazardous substances that were released at and from Mather, the demonstration of such hazardous substances on the Mars Well, and the risk that continuing to pump groundwater from the Mars Well could draw the Mather contaminant plume to it and/or increase concentrations of hazardous substances in that well while the Air Force undertakes to abate such damage, Cal-Am has refrained from using the Mars Well to supply water to its customers.
Plaintiff maintains that it has incurred costs to obtain alternative water supplies, including the costs of constructing a water storage tank and booster station, and other costs and damages. Cal-Am contends that these costs constitute recoverable response costs under CERCLA.
Cal-Am has notified the Air Force of the detection of hazardous substances in the water drawn from the Mars Well, and that the loss of the well impaired Cal-Am's ability to supply water to its customers. The Air Force has failed and refused to provide a temporary or permanent source of water to compensate for the loss of use of the Mars Well, despite Cal-Am's repeated requests, both orally and in writing, that it provide such a source.
As a proximate result of the releases of hazardous substances at the Mather Base and of the contamination of the Mars Well, Cal-Am has incurred costs related to obtaining alternative water supplies, including costs related to constructing a 3 million gallon water storage tank and equipment, which it jointly owns and shares with the County of Sacramento.
Cal-Am has received partial compensation of its Mather Tank construction costs from Aerojet and McDonnell Douglas Corporation in the amount of $1.2 million, but defendants have failed and refused to compensate Cal-Am for the balance or any portion thereof.
Cal-Am has also incurred increased operational and maintenance costs at the Mars Well. Cal-Am incurred such costs, in part, as a result of releases of hazardous substances from Mather for which defendants are asserted to be legally responsible, and, in part, on account of releases of hazardous substances from other facilities for which Aerojet-General Corporation and McDonnell Douglas Corporation are responsible.
On or about February 7, 2003, Cal-Am served the Air Force with a Notice of Claim for damages, setting forth its claims for compensation for the loss of the Mars Well and construction of the Mather Tank. Cal-Am is unaware of any response made on behalf of the Air Force to this Notice of Claim, and is informed and believes that the Air Force has not responded to it.
II. PROCEDURAL HISTORY
Before filing its first amended complaint, which is at issue in this motion, Cal-Am initially pled that contaminants had been detected in the Mars Well as early as 1997. Original Compl. at ¶ 8; see also Kempster Dec. at ¶¶ 9 10 (regarding testing in 1999). It also originally pled that by virtue of its purchase of the well in 2002, it "received an assignment of [CUCC's] claims against third parties, which assignment included claims against the defendants relating to the groundwater contamination emanating from Mather." Id. at ¶ 3. The Original Complaint couched the tank construction and monitoring costs as being incurred by "Citizens and Cal-Am." Original Compl. at ¶ 15.
Apparently in response to the original complaint, the United States' counsel verbally provided citations to Cal-Am's counsel relating to the Assignment of Claims Act and electronically provided counsel copies of the 2000 claim of CUCC, found at McCain Dec., Ex. 1.
Defendant explains that in late February, Cal-Am's counsel contacted counsel for the United States and requested that the United States delay filing any answer or motion to dismiss until March 17, 2006, so as to accommodate counsel's vacation plans. On February 22, 2006, the parties discussed the request by telephone and the United States additionally asked counsel to voluntarily dismiss the case based upon the Assignment of Claims Act and the FTCA statute of limitations.
Counsel for the United States further informed Cal-Am's counsel that in 2000, CUCC had already made a claim with the Air Force for the damages at issue in the instant action. Furthermore, Cal-Am asked for a tolling agreement, which the Air Force refused to sign. Cal-Am's counsel stated that he was unaware of either the Assignment of Claims Act or the 2000 CUCC claim.
Because Cal-Am did not agree to the voluntary dismissal, the United States informed Cal-Am's counsel that it would file this motion on the agreed-upon date of March 17, 2006. On March 15, 2006, Cal-Am filed its Amended Complaint. In its Amended Complaint, Cal-Am removed all references to the assignment of the claim by CUCC. Compare Original Compl. at ¶¶ 3, 5 15 with Amended Compl. at ¶ 3, 5, 12. Cal-Am also omitted pertinent facts relating to the statute of limitations, including the fact that CUCC's well had trace levels of contaminants since at least 1997. Original Compl. at ¶¶ 8-10. Furthermore, it omitted the fact that CUCC had closed the well years before Cal-Am purchased it in 2002. Compare Original Compl. at ¶ 13 with Amended Compl. at ¶ 10.
III. STANDARDS FOR DISMISSAL UNDER FED. R. CIV. P. 12(b)(1)
It is well established that the party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278 (1936); Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986). On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), the standards that must be applied vary according to the nature of the jurisdictional challenge.
If the challenge to jurisdiction is a facial attack, i.e., the defendant contends that the allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate the existence of jurisdiction, the plaintiff is entitled to safeguards similar to those applicable when a Rule 12(b)(6) motion is made. The factual allegations of the complaint are presumed to be true, and the motion is granted only if the plaintiff fails to allege an element necessary for subject matter jurisdiction. See 2A J. Moore, J. Lucas G. Grotheer, Moore's Federal Practice, ¶ 12.07 (2d ed. 1987); see also Eaton v. Dorchester Development, Inc., 692 F.2d 727, 731 (11th Cir. 1982); Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981), cert. denied, 454 U.S. 897 (1981); Mortensen v. First Fed. Sav. Loan Ass'n., 549 F.2d 884, 891 (3d Cir. 1977). A complaint will be dismissed for lack of subject matter jurisdiction (1) if the case does not "arise under" any federal law or the United States Constitution, (2) if there is no case or controversy within the meaning of that constitutional term, or (3) if the cause is not one described by any jurisdictional statute. Baker v. Carr, 369 U.S. 186, 198 (1962).
If the challenge to jurisdiction is made as a "speaking motion" attacking the truth of the jurisdictional facts alleged by the plaintiff, a different set of standards must be applied.Thornhill Pub. Co., Inc. v. General Tel. Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). Where the jurisdictional issue is separable from the merits of the case, the district court is free to hear evidence regarding jurisdiction and to rule on that issue prior to trial, resolving factual disputes where necessary.Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983); Thornhill, 594 F.2d at 733. "In such circumstances `[n]o presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.'" Augustine, 704 F.2d at 1077 (quotingThornhill, 594 F.2d at 733).
However, where the jurisdictional issue and substantive issues are so intertwined that the question of jurisdiction is dependent on the resolution of factual issues going to the merits, the jurisdictional determination should await a determination of the relevant facts on either a motion going to the merits or at trial.Augustine, 704 F.2d at 1077 (citing Thornhill, 594 F.2d at 733-35; 5 C. Wright A. Miller, Federal Practice Procedure § 1350, at 558 (1969 Supp. 1987)). On a motion going to the merits, the court must, of course, employ the standard applicable to a motion for summary judgment. Farr v. United States, 990 F.2d 451, 454 n. 1 (9th Cir. 1993), cert. denied, 510 U.S. 1023 (1993).
When a plaintiff is seeking to recover from the United States on a damage claim purportedly assigned to it, to the extent the claim is voided by the Assignment of Claims Act, the complaint is subject to dismissal for lack of standing. See Atlas Hotels, Inc. v. United States, 140 F.3d 1245, 1247 (9th Cir. 1998);Westinghouse Elec. Co., 56 Fed. Cl. 564, 568-569 (Fed.Cl. 2003). Put simply, if the injury for which the assignee seeks recovery is not his own injury but that which was purportedly assigned to him, and this purported assignment is void, the assignee has no injury in fact, and thus lacks standing.Westinghouse Elec. Co., 56 Fed. Cl. at 568-569.
For purposes of ruling on a motion to dismiss for lack of standing, the plaintiff bears the burden of proof, consistent with Rule 12(b)(1). Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998) ("The party invoking federal jurisdiction bears the burden of establishing its existence."); Wilbur v. Locke, 423 F.3d 1101, 1107 (9th Cir. 2005). When the government introduces facts and evidence in support of its motion to dismiss for lack of standing based on the Assignment of Claims Act, some courts have converted the jurisdictional motion to a Rule 56 motion. Westinghouse Elec. Co., 56 Fed. Cl. at 568.
In the case at bar, the court considered various documents outside of the pleadings, but the court is not required to convert the motion to one for summary judgment. Based on the parties' papers and their arguments, it is clear that the relevant facts for purposes of this motion, those which were obtained from documents outside of the complaint, are largely undisputed. See McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988), cert. denied, 489 U.S. 1052 (1989) (On a motion to dismiss for lack of subject matter jurisdiction, a district court may consider matters outside the pleadings without converting the motion into one for summary judgment under Fed.R.Civ.P. 56).
IV. ANALYSIS
The United States moves to dismiss claims three through seven of plaintiff's first amended complaint. In those causes of action, Cal-Am maintains that it has incurred damages and costs related to contamination emanating from Mather Air Force Base. Specifically, Cal-Am alleges that it has incurred costs in order to obtain alternative water supplies, including the costs of construction of a water storage tank and booster station, and damages as a result of defendants' releases of hazardous substances, and of defendants' failure and refusal to replace lost water supplies. While Cal-Am contends that these costs constitute recoverable response costs under CERCLA, it acknowledges that certain of its claims are brought pursuant to the Federal Tort Claims Act, 28 U.S.C. §§ 2671- 2680 ("FTCA").
The government concedes that although the Anti-Assignment Act bars Cal-Am from recovering all costs that CUCC incurred, "Cal-Am's CERCLA claims [claims one and two] survives this Motion to Dismiss." It concedes that certain costs, such as the $25,000 Cal-Am alleges it incurred for tank construction after it purchased the well, are recoverable under CERCLA. Repl. Br. at 14. Thus, the court need not engage in any analysis as to claims one and two.
The government urges dismissal of the action because it argues that plaintiff lacks standing as to any non-CERLA claim. It argues that plaintiff seeks to recover from the United States on a damage claim purportedly assigned to it, in contravention of the Assignment of Claims Act, 31 U.S.C. § 3727. In the alternative, defendant argues that plaintiff's claims should be dismissed as time-barred under the FTCA and because plaintiff has failed to comply with the exhaustion of administrative claim requirements set forth under the FTCA.
Below, I explain why causes of actions three through seven must be dismissed pursuant to the Assignment of Claims Act and, accordingly, why the court need not reach defendants' arguments under the FTCA.
A. ASSIGNMENT OF CLAIMS ACT
The case at bar involves the Assignment of Claims Act ("the Act"), which prohibits the assignment of a claim against the United States for property damage. The Assignment of Claims Act provides that "a transfer or assignment of any part of a claim against the United States Government:
. . . may be made only after a claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has been issued. The assignment shall specify the warrant, must be made freely, and must be attested to by 2 witnesses. The person making the assignment shall acknowledge it before an official who may acknowledge a deed, and the official shall certify the assignment. The certificate shall state that the official completely explained the assignment when it was acknowledged. . . .31 U.S.C. § 3727(a) (b); see also Atlas Hotels, Inc. v. United States, 140 F.3d 1245, 1246-1247 (9th Cir. 1998). With limited exceptions, the requirements of the Assignment of Claims Act must be satisfied to transfer a valid claim against the United States. See Segal v. Rochelle, 382 U.S. 375, 382 (1966); see also In re Freeman, 489 F.2d 431, 432-433 (9th Cir. 1973) ("failure to comply with the Assignment of Claims Act renders the assignment null and void so far as the United States is concerned").
The Assignment of Claims Act is said to serve various purposes. The Supreme Court has explained that "[i]ts primary purpose was undoubtedly to prevent persons of influence from buying up claims against the United States." United States v. Aetna Cas. Sur. Co., 338 U.S. 366, 373 (1949). Other purposes include protecting the United States from making multiple payments of claims, protection from having to investigate the alleged assignments, and protection from having to "deal with persons who were strangers to the damage and are seeking to enforce a claim which their assignors have forsworn." United States v. Shannon, 342 U.S. 288, 293 (1952).
The Assignment of Claims Act applies to voluntary assignments such as the one in the case at bar. Aetna, 338 U.S. at 373-376. In Shannon, the High Court held that a conveyance of property is a voluntary assignment. 342 U.S. at 290; see also Cadwalder v. United States, 45 F.3d 297, 300-301 (9th Cir. 1995) (FTCA claim for property damage could not be assigned to subsequent purchaser of property); Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (Fed.Cl. 2003), aff'd., 97 Fed. Appx. 931 (Fed. Cir. 2004) ("the sale of assets alone involves a voluntary transaction that falls within the scope of the Anti-Assignment Act).
Although defendant cites primarily to the original complaint in support of the fact that CUCC assigned any claims it had against the government to Cal-Am, plaintiff concedes in its opposition brief that an assignment did occur and that it did initially file a suit based, at least in part, on this assignment. Opp'n at 6.
On the other hand, the statute does not affect transfers that occur by "operation of law." Danielson v. United States, 416 F.2d 408, 410 (9th Cir. 1969). Transfers by operation of law include "corporate mergers, consolidations, and reorganizations, where in essence [the party with standing to sue the government] continues with the same entity, but in a different form."Westinghouse Elec. Co., 56 Fed. Cl. at 569.
Plaintiff does not contend that it has complied with the requirements of the Assignment of Claims Act. Rather, plaintiff asserts that it has suffered its own "injuries in fact." First, plaintiff claims that it does not bring suit to recover on claims that CUCC was entitled to bring, but on other tank construction costs, tank operation, maintenance and tax costs, and increased monitoring costs. Opp'n at 7. Second, plaintiff maintains that "these costs were incurred by Cal-Am and none were incurred by Citizens," that is, these costs were not in existence at the time of the sale, and that it will incur additional costs in the future. Id. Below, I explain why both arguments are unavailing.
B. CAL-AM ALLEGES IDENTICAL CLAIMS ASSERTED BY CUCC IN 2000
I first address Cal-Am's contention that its claims against the United States are wholly different from those that CUCC may have had against defendants prior to the sale of CUCC's assets to Cal-Am. A comparison of Cal-Am's first amended complaint with CUCC's 2000 claim letter to defendants makes clear that the claim Cal-Am now seeks to recover on is the identical claim that CUCC attempted to settle with defendants in 2000. The damages asserted by CUCC in 2000 and the damages now asserted by Cal-Am are also identical. Accordingly, the record does not support Cal-Am's contention that "it does not bring suit to recover on claims that CUCC was entitled to bring."
On April 4, 2000, CUCC sent a letter to the Air Force seeking to negotiate a settlement of its damages due to the Mars Well closure and requesting that the Air Force execute a tolling agreement for CUCC's trespass, nuisance, and state and federal claims. McCain Dec., Ex. 1. CUCC articulated that the closure of the well was a result of "contamination released from Mather Air Force Base." The letter noted that CUCC first detected tetrachloroethylene ("PCE") and trichloroethylene ("TCE") in water samples collected in the well water. CUCC sought costs related to "replac[ing] lost water supplies," and increased monitoring costs for the Mars Well itself. Id. CUCC characterized its damages as follows:
As a direct and proximate result of groundwater contamination associated with the Mather plumes, Citizens' ability to drill new wells within its service areas is severely limited, either by regulatory agencies or by inherent risk. . . .
Citizens [CUCC] carefully evaluated the various alternatives to address the threat to its Suburban service area, and determined that the most cost effective approach in the short term to assure an adequate water supply was the construction of a 3.1 million gallon water storage tank, and a booster station to transport the water to Citizens' distribution system. This will allow Citizens to pump the production wells that do not contain contamination at greater frequency and store the water for use during periods of peak demand, or if any production wells must be taken out of service.
In addition to the damages incurred to replace lost water supplies, Citizens has also been forced to perform sampling at its wells at a far greater frequency because of the existence of the Mather Base plumes. . . .Id., Ex. 1 at USAF00417.
These damages, according to CUCC, were "directly attributable to the contamination released at Mather Base." The Air Force declined the offer. Approximately two years later, in 2002, CUCC sold its water system, including the tank and the dormant Mars Well to Cal-Am. As part of the transaction, Cal-Am received an assignment of CUCC's claims against third parties, "which assignment included CUCC's claims against the defendants herein relating to the groundwater contamination from Mather." Original Compl. at 2.
On November 5, 2005, Cal-Am brought this action, alleging nearly identical injuries based on the same wrongdoing on the part of defendants. That complaint was amended on March 16, 2006. The amended complaint, too, is nearly identical to the original complaint, although it omits any reference to an assignment of CUCC's claims. As with CUCC, Cal-Am avers that its damages arises out of "contamination of groundwater that is used by Cal-Am as a source of drinking water." As CUCC previously claimed, Cal-Am's injuries arise out of groundwater by the very same contaminants, PCE and TCE. Compl. at 2-3. Indentically with CUCC claim, Cal-Am also alleges that its damages were incurred due to lost water supplies, the cost of building a water storage tank and booster station, and that it must sample its water supplies at a greater frequency. Compl. at 2.
Because Cal-Am has failed to identify a claim in causes of action three through seven that is different from those previously raised by CUCC, and because it failed to comply with the Anti-Assignment Act, the court must dismiss claims three through seven of Cal-Am's amended complaint. The claims currently before the court involve a voluntary transaction and the sale of assets which fall precisely within the scope of the Anti-Assignment Act.
C. ASSIGNMENT OF FUTURE CLAIMS
Second, I address plaintiff's contention that it has incurred "costs and damages of its own," and that "it will surely incur additional costs and damages in the future." Opp'n at 7. Plaintiff appears to make the argument that even though its damages stem from the same cause, it may escape the breadth of the Anti-Assignment Act because it suffers future damages which are different from those incurred by CUCC. Plaintiff's argument does not lie. The transactional documents in the sale of CUCC's assets to Cal-Am demonstrate that the parties intended to assign to Cal-Am all rights, both present and future, relating to the water supply assets. Because the parties did not comply with the Anti-Assignment Act, however, such rights are not a predicate for recovery.
On May 24, 2006, the court issued an order directing Cal-Am to file transactional documents in the sale of CUCC's assets to Cal-Am "relating to CUCC's assignments of claims to Cal-Am involving groundwater contamination emanating from Mather."
There is no specific language in the "Asset Purchase Agreement which identifies and assigns CUCC's claims against the United States Air Force to Cal-Am." Cal-Am's Filing of Transactional Docs. at 2. Articles I and II of the Agreement, however, establish that CUCC assigned to Cal-Am all rights, including future rights, as they relate to the water assets.
Article I of the Agreement first establishes the term, "Acquired Assets," as follows:
all of each Seller Party's right, title, and interest in, under and to all of the assets, properties and rights exclusively used in the Business as a going concern of every kind, nature and description existing on the Closing Date, whether such assets, properties and rights are located and whether such assets, properties and rights are real, personal or mixed, tangible or intangible, and whether or not any of such assets, properties and rights have any value for accounting purposes or are carried or reflected on or specifically referred to in Seller's books or financial's statements, including all of the assets, properties and rights exclusively relating to the Business enumerated below.
Attach. at p. 1, § 1.1.1.
The Agreement goes on to note that "Acquired Assets" includes "all water tanks, reservoirs, water works, plant and systems, purification and filtration systems, pumping stations, pumps, wells, mains, water pipes, hydrants, equipment, machinery, vehicles . . . and other tangible personal property . . . used exclusively in the Business." Attach. 1 at p. 2, § 1.1.1(b).
"Acquired Assets" also includes "choses of action" and "claims" arising out of occurrences "before or after the Closing Date" and "exclusively related to any of the Acquired Assets. . . ." Attach. 1, at p. 3, § 1.1.1(j). Finally, the purchase agreement contemplates that Cal-Am, "Buyer," would assume liabilities specifically related to pollution "known or unknown. . . ."
"Choses of Action" refers to "a right of bringing an action or right to recover a debt or money" or "a right of proceeding in a court of law to procure payment of sum of money, or right to recover a personal chattel or a sum of money by action." Black's Law Dictionary, Sixth Edition (1990).
§ 1.1.1(j) provides that "acquired assets" includes:
all rights or choses in action arising out of occurrences before or after the Closing Date and exclusively related to any of the Acquired Assets, including third party warranties and guarantees and all related claims, credits, rights of recovery and set-off and other similar contractual rights, as to third parties held by or in favor of Seller; provided, however, that (notwithstanding the foregoing provisions of this Section 1.1.1(j)), to the extent that Seller pays or discharges a liability related to the Business or any of the Acquired Assets and related to such a right or chose in action (whether by reason of indemnification under the Agreement or otherwise), Buyer will reassign or reconvey to Seller such a right or chose in action to the extent that such a right or chose in action relates to a recovery of amounts paid to buyer.
The Asset Agreement provides that:
"Buyer shall assume liabilities and obligations" for "any liability, obligation or responsibility of Seller for conditions at the Real Estate, whether based on statutory or common law, now or hereafter in effect, known or unknown, contingent or actual, relating to or arising from pollution, contamination or protection of the environment, human health or safety or natural resources or relating to or arising from the presence or Release or threat of Release of Hazardous Substances into the environment at the Real Estate. . . ."
Attach., p. 12, § 2.3.1(d).
Read together, these four provisions of the "Asset Purchase Agreement" make plain that CUCC assigned to Cal-Am "all rights" or "choses in action" which "aris[e] out of occurrences before or after the Closing Date" as they relate to any of the "acquired assets," including equipment related to the "water assets" and equipment purchased by Cal-Am. Attach. at p. 3, § 1.1.1 (b), (j). The agreement also explicitly provides that Cal-Am would assume liabilities related to the property "known or unknown . . . relating to arising from pollution, contamination or protection of the environment. . . ." Attach. at p. 12, § 2.3.1(d). In sum, CUCC effectively assigned to Cal-Am any future rights or "choses of action" that CUCC may have had against the United States relating to contamination emanating from Mather Air Force Base.
The assignability of future rights depends on local law. In re Freeman, 489 F.2d 431, 433 (9th Cir. 1973) (citing Danning v. Mintz, 367 F.2d 304, 308 (9th Cir. 1966)). Under California law — the law applicable here — a future right can be assigned. It becomes operative at the time the right assigned comes into existence or becomes recoverable, without any further act on the part of the transferor, and relates back to the date of the assignment. Id. (citing Prudential Insur. Co. v. Broadhurst, 157 Cal.App.2d 375, 378 (1958)). Accordingly, where, as here, CUCC assigned to Cal-Am all present and future rights relating to contamination emanating from Mather Air Force Base, the assigned future right related back, and thus required compliance with the Act. "Failure to comply with the assignment of Claim Act renders the assignment null and void so far as the United States is concerned." Id. at 433. In sum, Cal-Am's argument that it may recover on future costs that were not incurred by CUCC fails because the Asset Purchase Agreement contemplated the assignment of future rights and because the plaintiff failed to comply with the requirements of the Anti-Assignment Act, the cause of action is barred.
In In re Freeman, the Ninth Circuit explained that while failure to comply with the Anti-Assignment Act may render claims as to the United States "null and void," such failure does not render the assignment void as between the parties. 489 F.3d at 433. In re Freeman involved a wife who, as part of her divorce settlement, entered into an agreement where she would assign to her husband any federal income tax refund due. The court held that assignments of future interests were permissible under California law so that the Assignment of Claims Act did not disturb the assignment void as between the husband and wife, even though it was void as between the parties and the United States.
Accordingly, the court need not discuss arguments related to the FTCA and the applicable statute of limitations under state law. The parties discuss at length in their papers and supplemental briefs whether, under California law, a subsequent purchaser with knowledge of the property's condition lacks standing to bring a tort claim for its own costs in repairing the pre-existing condition of the property. The court, however, need not reach these state law questions. The court notes, however, the Supreme Court has explained that application of the Anti-Assignment statute, with respect to voluntary assignments, may be applied to preclude an action under the FTCA, the statute under which claims three through seven are brought. See United States v. Shannon, 342 U.S. 288, 290 (1952).
V. CONCLUSION
Defendant's motion to dismiss is GRANTED as to claims three through seven.IT IS SO ORDERED.