Northern California Record

Tuesday, February 25, 2020

Condominium owners continue to fight Shell over contaminated soil, water

By Dee Thompson | Aug 15, 2017

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SAN FRANCISCO -- A condominium complex built on the site of a former fuel distribution terminal has lost part of its case against Shell Oil. An appellate court found Shell not guilty of negligence but the question of Shell’s failure to remove all its petroleum products from the soil and water at the site, thus creating a continuing nuisance, remain to be settled by the lower court.

The Estuary Owners Association v. Shell Oil Company originally was filed in the Alameda County Superior Court. The Estuary Owners case and two cases brought by condominium owners were consolidated into one case, in which Shell was accused of contaminating the soil and groundwater at the site where the condominiums were built.

From 1925 until 1980 Shell used the Estuary Condominium property as a fuel distribution terminal. As the June 28, the appellate court order explains, “Petroleum products were delivered to the property by pipeline and rail car, and stored in both above ground and underground storage tanks with a total capacity of 69,730 barrels (2,028,660 gallons). In 1980, the property was purchased by Simmons Terminal Corporation (Simmons), which continued to use it as fuel distribution terminal for several years.”

From 1985 until approximately 2003 the property was used as a demolition contracting business, ICONCO. They left underground pipelines in place but used two of the above ground storage tanks. 

In 2002 the California Regional Water Quality Control Board (the water board) found that the soil and groundwater at the site were contaminated by leaks from the fuel storage.

In 2002 and 2003 measures were taken to clean up the site, including “...excavation of an approximately 80,000 square foot area of petroleum-impacted soil to depths ranging from 7 to 12 feet, treatment with “oxygen release compound” to help degrade petroleum hydrocarbons, and backfill with soil that did not exceed the site cleanup goals,” (appellate court’s June 28, order).

In 2003, SIgnature at the Estuary LLC (Signature) bought the property in order to build a residential townhouse development.

Restrictions to the property deed were recorded in 2004 detailing the cleanup of the site. 

Between 2004 and 2006 the townhouses were constructed on the site. Signature submitted to the water board a risk management plan in October 2004. It noted that in August 2004, 17 groundwater monitoring wells were installed. Also, “...a deed restriction had been prepared restricting future activities related to residual contamination; the covenants, conditions and restrictions (CCRs) for the residential development would reference the risk management plan; and sellers of the townhouses would be required to disclose the risk management plan to future buyers,” the appellate court order ruled.

Signature sought reimbursement from Shell in October 2004 for costs of the cleanup. Years of litigation followed between Signature, Shell, and contractors and other defendants. 

In 2015, Shell won its motion for summary judgment, with the trial court “...finding that the negligence causes of action were not supported because Shell owed no duty of care to appellants and were barred by the applicable three-year statute of limitations, and that all the causes of action were barred by the 10-year statute of repose for latent construction defects” said the appellate court order. 

A statute of repose extinguishes a cause of action completely, according to, which said “once the period of duration under a statute of repose is expired, there is no suit to avoid, because the statute of repose extinguishes the cause of action, and failure to plead the statute of repose as an affirmative defense could not resurrect a cause of action that no longer exists.” 

Judgment in favor of Shell was entered on March 26, 2015. Signature appealed that judgment. 

The State of California First Appellate District, found in June 2017 affirmed judgment as to causes of action for negligence, but it reversed the judgment regarding nuisance. The case was remanded. 

Questions remain about Shell’s mishandling of petroleum products and failure to adequately remediate them.

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